<PAGE> 1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
COMMISSION FILE NUMBER: 1-1927
THE GOODYEAR TIRE & RUBBER COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
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)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (216) 796-2121
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
<S> <C>
Common Stock, Without Par Value New York Stock Exchange
Midwest Stock Exchange
Pacific Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Midwest Stock Exchange
Pacific Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
------------------------------------
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein or in the definitive proxy
statement incorporated by reference in Part III of this Form 10-K. [X].
------------------------------------
The aggregate market value of Registrant's outstanding Common Stock held by
nonaffiliates of the Registrant on February 16, 1994, determined using the per
share closing price thereof on the New York Stock Exchange Composite
Transactions tape of $47.00 on that date, was approximately $7,096,019,909.00.
------------------------------------
SHARES OF COMMON STOCK, WITHOUT PAR VALUE, OUTSTANDING AT FEBRUARY 16, 1994:
151,133,755
------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE:
PORTIONS OF REGISTRANT'S DEFINITIVE PROXY STATEMENT, DATED FEBRUARY 26, 1994,
FOR ITS 1994 ANNUAL MEETING OF SHAREHOLDERS ARE INCORPORATED BY REFERENCE INTO
PART III.
<PAGE> 2
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
COMMISSION FILE NUMBER: 1-1927
THE GOODYEAR TIRE & RUBBER COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
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)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (216) 796-2121
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ------------------------
<S> <C>
Common Stock, Without Par Value New York Stock Exchange
Midwest Stock Exchange
Pacific Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Midwest Stock Exchange
Pacific Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
------------------------------------
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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein or in the definitive proxy
statement incorporated by reference in Part III of this Form 10-K. [ ].
------------------------------------
The aggregate market value of Registrant's outstanding Common Stock held by
nonaffiliates of the Registrant on February 16, 1995, determined using the per
share closing price thereof on the New York Stock Exchange Composite
Transactions tape of $36.375 on that date, was approximately $5,503,988,149.87.
------------------------------------
SHARES OF COMMON STOCK, WITHOUT PAR VALUE, OUTSTANDING AT FEBRUARY 16, 1995:
151,498,275
------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE:
PORTIONS OF REGISTRANT'S DEFINITIVE PROXY STATEMENT, DATED FEBRUARY 27, 1995,
FOR ITS 1995 ANNUAL MEETING OF SHAREHOLDERS ARE INCORPORATED BY REFERENCE INTO
PART III.
<PAGE> 3
<TABLE>
THE GOODYEAR TIRE & RUBBER COMPANY
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
TABLE OF CONTENTS
<CAPTION>
ITEM PAGE
NUMBER NUMBER
------ ------
<C> <S> <C>
PART I
1 Business................................................... 1
2 Properties................................................. 12
3 Legal Proceedings.......................................... 14
4 Submission of Matters to a Vote of Security Holders........ 17
4(A) Executive Officers of Registrant........................... 17
PART II
5 Market for Registrant's Common Equity and Related
Stockholder Matters...................................... 20
6 Selected Financial Data.................................... 21
7 Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 22
8 Financial Statements and Supplementary Data................ 30
9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure...................... 51
PART III
10 Directors and Executive Officers of the Registrant......... 51
11 Executive Compensation..................................... 51
12 Security Ownership of Certain Beneficial Owners and
Management............................................... 51
13 Certain Relationships and Related Transactions............. 51
PART IV
14 Exhibits, Financial Statement Schedules, and Reports on
Form 8-K................................................. 52
Signatures................................................. 54
Index to Financial Statement Schedules..................... FS-1
Index of Exhibits.......................................... X-1
</TABLE>
<PAGE> 4
THE GOODYEAR TIRE & RUBBER COMPANY
PART I
ITEM 1. BUSINESS.
BUSINESS OF GOODYEAR
The Goodyear Tire & Rubber Company is an Ohio corporation organized in
1898. Its principal offices are located at 1144 East Market Street, Akron, Ohio
44316-0001. Its telephone number is (216) 796-2121. The term "Registrant"
wherever used herein refers solely to The Goodyear Tire & Rubber Company. The
terms "Goodyear" and the "Company" wherever used herein refer to The Goodyear
Tire & Rubber Company together with all of its domestic and foreign subsidiary
companies, unless the context indicates to the contrary.
Goodyear is one of the world's leading manufacturers of tires and rubber
products, engaging in operations around the world. Goodyear's net sales in 1994
were $12.3 billion. Goodyear recorded net income for 1994 of $567.0 million.
Goodyear's worldwide employment averaged 90,298 during 1994.
Goodyear's principal business is the development, manufacture, distribution
and sale of tires for most applications throughout the world. Goodyear also
manufactures and markets several lines of rubber products for the transportation
industry and various industrial and consumer markets and numerous rubber-related
chemicals for various applications, provides automotive repair and other
services and sells various other products.
Registrant's Celeron subsidiaries engage in various crude oil
transportation, gathering, purchasing and selling activities. The All American
Pipeline System is a heated crude oil pipeline extending from two points along
the California coast to McCamey, Texas, which transports offshore California
crude oil from Las Flores and Gaviota, California, and onshore California and
Alaska North Slope crude oil from other points in California, to various other
system terminals in California and to McCamey, Texas.
RECENT DEVELOPMENTS IN GOODYEAR'S BUSINESS
During 1994, Goodyear introduced the Eagle Aquatred, a new high performance
radial passenger tire designed to combine superior handling with enhanced wet
traction performance, to the North American replacement market. The Eagle RS-A
high performance passenger tire, which features three separate areas on the
asymmetric tread for enhanced traction, was offered to automobile manufacturers
for installation as original equipment and the Intrepid, a moderately priced wet
traction passenger tire, was introduced to the replacement market. Goodyear also
announced the Wrangler Aquatred for light trucks, sport-utility vehicles and
vans, which was introduced to the North American replacement market in January
of 1995. The EMT (extended mobility tire) version of the Eagle GS-C is the first
passenger tire with run-flat capability when mounted on conventional wheels. An
all season high performance tire, the Eagle GS-C EMT is available as an option
on the Corvette.
Goodyear continued its program designed to enhance production capacity and
efficiency through plant modernization and expansion projects. An expansion of
the Fayetteville, North Carolina tire plant was completed during 1994.
Significant plant modernization and expansion projects are presently underway at
the Company's Gadsden, Alabama, Topeka, Kansas, Napanee, Ontario, Valleyfield,
Quebec, Americana, Brazil, Sao Paulo, Brazil, Bogor, Indonesia, and Kuala
Lumpur, Malaysia tire plants and at the Company's Beaumont, Texas and Houston,
Texas synthetic rubber plants.
During 1994, the Company completed its acquisition of 75% of the equity of
a tire company in Dalian, People's Republic of China, which will commence tire
production operations in the first half of 1995. The Company also acquired 60%
of the equity of an engineered rubber
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products company in Qingdao, People's Republic of China, which manufactures
automotive brake, air conditioning and radiator hose and hose assemblies.
FINANCIAL INFORMATION ABOUT GOODYEAR'S INDUSTRY SEGMENTS
Financial information relating to Goodyear's "Industry Segments" for each
of the three years in the period ended December 31, 1994 appears in Note 16
captioned "Business Segments", and in the tabulation captioned "Industry
Segments" at Note 16, of the Notes to Financial Statements set forth in Item 8
of this Annual Report, at pages 46 and 47, respectively, and is incorporated
herein by specific reference.
DESCRIPTION OF GOODYEAR'S BUSINESS -- INDUSTRY SEGMENTS
TIRES
Goodyear's principal Industry Segment is the development, manufacture,
distribution and sale of tires and related products and services (the "Tires
Segment"). The principal class of products in the Tires Segment is tires for
most applications. No other class of products or services in the Tires Segment
accounted for as much as 10% of Goodyear's sales in any of the last three years.
The table below sets forth the percentage of Goodyear's net sales and operating
income attributable to the Tires Segment, and the percentage of Goodyear's sales
attributable to tires, for each of the three years ended December 31, 1994:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Tires Segment sales............................ 85.5% 85.6% 82.9%
Tires Segment operating income................. 84.7% 85.7% 68.8%
Tire Sales........................... 76.7% 76.0% 73.5%
</TABLE>
The products and services comprising the Tires Segment include:
TIRES. Goodyear manufactures and markets throughout the world a broad line
of rubber tires for automobiles, trucks, buses, tractors, farm implements,
earthmoving equipment, aircraft, industrial equipment and various other
applications, in each case for sale to original equipment manufacturers and in
the replacement market.
Goodyear offers two basic constructions of tires, radial and bias-ply.
Various belting and reinforcing materials are used, including nylon and
polyester tire cord and steel.
A variety of Goodyear-brand radial passenger tire lines are sold in the
United States, including the AQUATRED, INTREPID, REGATTA, and CORSA GT all
season tire lines, the all season EAGLE performance touring tire lines and the
EAGLE "Gatorback" and EAGLE AQUATRED high performance tire lines. The major
lines of Goodyear-brand radial light truck tires offered in the United States
are the WRANGLER and WORKHORSE lines. Goodyear manufactures and sells several
lines of radial passenger and light truck tires in Europe, led by a broad line
of EAGLE all season and high performance passenger tires including the EAGLE
AQUATRED and the WRANGLER light truck tire line. In Asia and Latin America, both
radial and bias-ply Goodyear-brand passenger and light truck tires are
manufactured and sold, led by the EAGLE AQUATRED in Asia and the AQUATRED in
Latin America.
Goodyear manufactures and markets three constructions of radial medium
truck tires, one using fabric, one using fabric and steel and another, the
UNISTEEL Series, using an all-steel cord and belt construction. Goodyear also
offers a full line of bias-ply medium truck tires. Goodyear produces several
lines of tires for other applications, including radial and bias-ply tires for
farm machinery, heavy equipment and aircraft, and inner tubes for truck tires
and various other applications. Goodyear manufactures and sells new and
retreaded aircraft tires in the United States, Europe, Latin America and Asia.
2
<PAGE> 6
The Kelly-Springfield Tire Company, a wholly-owned subsidiary of Registrant
("Kelly-Springfield"), manufactures and sells numerous lines of radial and
bias-ply passenger and truck tires in the United States replacement market and
sells various lines of Kelly-brand tires in the replacement markets in Canada
and certain other countries. Brad Ragan, Inc., a 74.5% owned subsidiary of
Registrant ("Brad Ragan"), is a tire retailing and commercial tire sales,
retreading and service chain with operations in various regions of the United
States.
RELATED PRODUCTS AND SERVICES. Goodyear also retreads truck, aircraft and
heavy equipment tires, primarily as a service to its commercial customers, and
manufactures and sells tread rubber and other tire retreading materials for
various applications. Additional products and services in the Tires Segment
include: automotive repair services provided by Goodyear through its retail
outlets; the sale to dealers and consumers of automotive repair and maintenance
items, automotive equipment and accessories and other items, including
televisions and stereos, household appliances, home and garden equipment and
supplies, and recreational equipment; the operation of four rubber plantations
and the processing and sale of natural rubber; and miscellaneous other products
and services.
MARKETS AND DISTRIBUTION -- COMPETITION
The Company offers a broad line of tires for most applications and for all
classes of customers. In the United States and many other countries, the Company
sells Goodyear-brand tires to vehicle manufacturers for use as original
equipment on vehicles they produce. In the United States and most other
countries, the Company sells Goodyear-brand, other house brand and private brand
tires through various channels of distribution for sale to vehicle owners for
replacement purposes. Worldwide, the Company's sales of passenger, truck and
farm tires to the replacement market substantially exceed its sales of
passenger, truck and farm tires to original equipment manufacturers.
Because of their superior durability, handling and fuel economy, most
passenger and light and medium highway truck tires sold in the United States, in
Europe and in many other countries are radials. Except for bias-ply temporary
spare tires, all passenger tires sold in the United States to automobile
manufacturers since 1982 have been radials. During 1994, substantially all
passenger tires sold to automobile manufacturers outside the United States and
in the United States replacement market were radials. High performance tires
constituted approximately 29% of the United States passenger tire market in
1994, compared to approximately 22% in 1989. During 1994, approximately 94% of
all light and medium highway truck tires sold in the United States to truck
manufacturers were radials, compared to 84% in 1989, and 84% of all light and
medium highway truck tires sold in the United States replacement market were
radials, compared to 64% in 1989. During 1994, approximately 79% of all light
and medium truck tires sold by the Company in the United States, and
approximately 48% of all light and medium truck tires sold by the Company
outside the United States, were radial.
Goodyear's tires are sold under highly competitive conditions in the United
States and other countries. On a worldwide basis, Goodyear has two major
competitors: Bridgestone (based in Japan) and Michelin (based in France).
Goodyear also competes worldwide with several other major foreign based tire
manufacturing concerns, including Continental, Pirelli, Sumitomo, Toyo, Yokohama
and several Korean tire companies. Goodyear's principal competitors with
operations in the United States are Bridgestone, The Firestone Tire & Rubber
Company (acquired by Bridgestone in 1988), Michelin, Uniroyal-Goodrich Tire
Company (acquired by Michelin in 1990), Continental, General Tire Inc. (acquired
by Continental in 1987) and Cooper Tire Company.
Goodyear competes with other tire manufacturers on the basis of price,
warranty, service, consumer convenience and product design, performance and
reputation. The Company believes Goodyear-brand tires enjoy a high recognition
factor throughout the world and have a reputa-
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tion for high quality and value. Kelly-brand and various house-brand tire lines
offered by the Company compete primarily on the basis of price and performance.
Goodyear is a major supplier, on a direct sale basis, of tires to most
manufacturers of automobiles, trucks, farm and construction equipment and other
vehicles, both in the United States and numerous other countries. Goodyear sells
tires to the major automobile and truck manufacturers located in the United
States: Ford, General Motors, Chrysler, Toyota, Nissan, Honda, Diamond-Star,
NUMMI, AAI, Navistar, Mack Truck, Freightliner, Peterbilt and Kenworth. Goodyear
supplies tires to several European manufacturers, including Fiat, Daimler-Benz,
Volkswagen, Volvo, Ferrari, Jaguar, BMW, Lotus, Peugeot, Alfa Romeo and Renault,
to six Japanese manufacturers, Nissan, Mazda, Toyota, Honda, Mitsubishi and
Isuzu, and to subsidiaries of General Motors, Ford and Chrysler throughout the
world. Goodyear also supplies major manufacturers of construction and
agricultural equipment, including Caterpillar, J. I. Case, John Deere,
Massey-Ferguson and New Holland N.V.
Goodyear-brand tires for the United States replacement market are sold
through various channels of distribution. The principal method of distribution
is a large network of independent dealers and franchisees. Goodyear-brand tires
are also sold to several regional and national retail marketing firms, including
Sears Roebuck & Co. and Wal-Mart. In addition, approximately 1,046 retail
outlets (including auto service centers, commercial tire & service centers and
leased space in department stores) are operated by the Registrant under the
Goodyear name or under various other trade styles and approximately 160 retail
and commercial tire sales outlets are operated by subsidiaries of the
Registrant, including Brad Ragan/Carolina Tire.
Kelly-Springfield manufactures and markets under its own trade names
several lines of passenger and truck tires, primarily through independent
dealers. Kelly-Springfield also sells private brand and its own associate brands
of tires to independent dealers, to national and regional wholesale marketing
organizations, to retail chain marketers, including Wal-Mart and Big-O, to
service stations and to various other retail marketers. The major portion of
Kelly-Springfield's sales are private brand and associate brand passenger tires.
Goodyear sells tires outside the United States to original equipment
manufacturers and in the replacement market through independent wholesale
distributors and its own wholesale distribution organizations and, in some
countries, through its own retail stores. In certain countries Goodyear
contracts for the manufacture by others of Goodyear-brand tires.
No customer or group of affiliated customers accounted for as much as 5.1%
of Goodyear's consolidated net sales during 1994, 1993 or 1992. Worldwide,
Goodyear's annual net sales to its ten largest customers, including their
respective affiliates, represented less than 21.0% of Goodyear's consolidated
net sales for each of 1994, 1993 or 1992. No customer or group of affiliated
customers accounted for as much as 4.1% of Tire Segment sales during 1994, 1993
or 1992. The ten largest customers of the Tires Segment represented less than
20.9% of Tire Segment sales for 1994.
Based on a composite of industry sources and information published by the
Rubber Manufacturers Association (the "RMA"), it is estimated that approximately
228 million passenger tires were sold in the United States during 1994. The
following table indicates the percentage change in annual unit sales of
passenger tires in the United States:
TOTAL UNITED STATES PASSENGER TIRE MARKET --
PERCENTAGE INCREASE (DECREASE) IN ANNUAL UNIT SALES
<TABLE>
<CAPTION>
1994 VS 1993 1994 VS 1992
------------ ------------
<S> <C> <C>
Replacement.................................. 2.8% 2.3%
Original Equipment........................... 11.7% 26.2%
Total U.S. Passenger Tire Market............. 4.9% 7.5%
</TABLE>
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Based on current economic forecasts, Goodyear expects the total market for
passenger tires in the United States in 1995 to increase approximately 1.9%
compared to 1994. Goodyear estimates that demand for original equipment
passenger tires in the United States during 1995 will be approximately 1.0%
higher than in 1994 and that demand for passenger tires in the United States
replacement market during 1995 will be approximately 2.2% higher than in 1994.
Based on a composite of industry sources and information published by the
RMA, it is estimated that approximately 49 million light and medium highway
truck tires were sold in the United States during 1994, an increase of 10.4%
compared to 1993 and 19.2% compared to 1992. Goodyear estimates that demand for
light and medium highway truck tires in the United States will be approximately
the same in 1995 as during 1994.
The following table indicates the percentage change in Goodyear's annual
unit sales of passenger, truck and farm tires worldwide:
GOODYEAR WORLDWIDE UNIT SALES OF PASSENGER, TRUCK AND FARM TIRES--
PERCENTAGE INCREASE IN ANNUAL UNIT SALES
<TABLE>
<CAPTION>
1994 VS 1993 1994 VS 1992
------------ ------------
<S> <C> <C>
United States.................................. 6.3% 11.9%
Foreign........................................ 7.7% 11.2%
Worldwide...................................... 7.0% 11.6%
</TABLE>
Based on information available from various industry and other sources and
information published by the RMA, the Company sells more tires in the United
States than any other tire manufacturer and, on the basis of annual net sales,
is the third largest tire manufacturer in the world. Based on various industry
and other sources, it is estimated that the Company's share of the worldwide
(excluding Eastern Europe, the Commonwealth of Independent States and the
People's Republic of China) auto, truck and farm tire markets was approximately
20% in 1994, 20% in 1993 and 19.4% in 1992.
Related products and services, including automotive parts, automotive
maintenance and repair services and associated merchandise, are sold in the
United States through approximately 1,206 retail outlets operated by the
Company. Automotive repair and maintenance items, automotive equipment and
accessories and other items, which are purchased for resale by the Company, are
distributed to many of the Company's tire dealers and franchisees. Related
products are sold principally in the United States and Canada under highly
competitive conditions.
GOVERNMENT REGULATIONS -- TIRES
The National Highway Traffic Safety Administration ("NHTSA"), under
authority granted to it by the National Traffic and Motor Vehicle Safety Act of
1966, as amended, has established various standards and regulations relating to
motor vehicle safety, some of which apply to tires sold in the United States for
highway use. The NHTSA has the authority to order the recall of automotive
products, including tires, having defects deemed to present a significant safety
risk.
NHTSA has issued "Tire Registration" regulations, which require the
registration of tires for the purpose of identification in the event of a
product recall, and "Uniform Tire Quality Grading" regulations, which require
the grading of passenger tires for treadwear, traction and temperature
resistance pursuant to prescribed testing procedures and the molding of such
grades into the sidewall of each tire. Passenger and highway truck tires are
required to be identified by ten-digit manufacturing identification codes molded
on the sidewall of each tire. The effect of compliance with these regulations on
Goodyear's sales and profits cannot be determined. However, these regulations
have increased the cost of producing and marketing passenger tires in the United
States.
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OTHER INFORMATION REGARDING TIRES SEGMENT
Goodyear does not consider its Tires Segment business to be seasonal to any
significant degree. Goodyear maintains a significant inventory of new tires and
certain other products in order to rationalize production schedules and assure
prompt availability of such products to its customers. Goodyear manages its
inventory in order to minimize working capital requirements and avoid
unnecessary increases in unit production costs while balancing production
schedules with fluctuations in demand.
Goodyear offers its customers various financing and extended payment
programs from time to time. Goodyear does not believe these programs, when
considered in the aggregate, require an unusual amount of working capital
relative to the volume of sales involved and the prevailing practices in the
tire industry.
During 1994, 1993 and 1992, tire industry capacity utilization increased
compared to 1991 and 1990 (when there was significant excess capacity),
primarily as a result of growth in original equipment demand in the United
States and in worldwide replacement demand. Continued high levels of capacity
utilization during 1995 will be dependent on continued high production levels by
the original equipment manufacturers in the United States and growth in the
original equipment markets in Europe, Asia and Latin America, coupled with
continued high levels of demand in the replacement markets in the United States
and throughout the world.
Goodyear's radial passenger and truck tire plants in North America and
Europe were operated at approximately 92% of capacity during 1994, 1993 and
1992. Goodyear's worldwide tire capacity utilization was approximately 90%
during 1994, 1993 and 1992. In order to maintain its competitive position,
respond to changing market conditions and optimize production efficiencies,
Goodyear has a continuing program for modernizing and increasing the capacity of
its existing radial passenger and truck tire facilities. Goodyear has expansion
projects planned or underway at several of its existing tire plants and certain
other tire manufacturers are building or have announced plans to install
additional capacity for passenger tires and light and medium truck tires over
the next few years.
GENERAL PRODUCTS
Another Industry Segment is the development, manufacture, distribution and
sale of numerous rubber, chemical and plastic products (the "General Products
Segment"). No class of products or services in the General Products Segment
accounted for as much as 10% of Goodyear's net sales in any of the last three
years. The table below sets forth the percentage of Goodyear's net sales and
operating income attributable to the General Products Segment for each of the
three years ended December 31, 1994:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
General Products Segment Sales............................ 13.8% 13.9% 16.6%
General Products Segment Operating Income................. 14.3% 15.3% 32.7%
</TABLE>
The products and services comprising the General Products Segment include:
VEHICLE COMPONENTS. Goodyear manufactures automotive belts and hoses, air
springs, engine mounts, instrument panels and various body and chassis parts for
motor vehicles made of rubber, fiberglass and reinforced plastics.
INDUSTRIAL RUBBER PRODUCTS. Goodyear produces various industrial rubber
products, including: conveyor, transmission and power transmission belts,
belting and other products; air, steam, oil, water, gasoline and dry materials
hose and hydraulic hose for industrial applications; tank and pipe lining; noise
abatement materials; air springs and bellows; and dock fenders. Goodyear also
manufactures various rubber and plastic custom designed and engineered
6
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products, including rubber railroad crossings, rubber treads for tank tracks and
miscellaneous molded and extruded products.
CHEMICAL PRODUCTS. Goodyear produces a broad line of synthetic rubber,
rubber latices, organic chemicals used in rubber and plastic processing and
vinyl resins and latices.
SHOE AND GRAPHIC PRODUCTS. Goodyear, utilizing products obtained under
offtake agreements, markets heels, soles and strips for new shoes and shoe
repair from rubber and other synthetic materials. Goodyear also manufactures gum
for graphic products for the printing industry.
MARKETS AND DISTRIBUTION -- OTHER INFORMATION
Most products of the General Products Segment are sold directly to
manufacturers or sold through independent wholesale distributors. During 1994,
the five largest customers of the General Products Segment accounted for
approximately 23.4% of General Products Segment sales and no customer accounted
for more than 15.5% of General Products Segment sales. Goodyear does not
maintain a significant inventory when considered in relation to the volume of
business conducted.
The General Products Segment consists of a large number of product lines in
respect of which several manufacturers produce some, but not all, of the
products manufactured by Goodyear. There are numerous suppliers of automotive
belts and hose products and other rubber and plastic components for motor
vehicles. Goodyear is a leading manufacturer of such products. Goodyear is a
leading producer of industrial rubber products, an industry served by more than
50 major firms. There are numerous firms participating in the engineered
products market, Goodyear being one of the leading suppliers. Several major
firms are significant suppliers of one or more chemical products similar to
those manufactured by Goodyear. Goodyear is a major producer of synthetic
rubber, rubber chemicals and latex. These markets are highly competitive, with
quality, service and price being the most significant factors to most customers.
Goodyear considers its products to be competitive in quality, service and price.
OIL TRANSPORTATION
Goodyear's crude oil transportation and related activities (the "Oil
Transportation Segment") are conducted by the Celeron group of companies
("Celeron"). The table below sets forth the percentage of Goodyear's net sales
and operating income (or loss), attributable to the Oil Transportation Segment
for each of the three years ended December 31, 1994:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1994 1993 1992
---- ----- -----
<S> <C> <C> <C>
Oil Transportation Segment Sales......................... .7% .5% .5%
Oil Transportation Segment Operating Income (Loss)....... 1.0% (1.0%) (1.5%)
</TABLE>
All American Pipeline Company, a wholly-owned subsidiary of Registrant
("All American"), owns and operates a heated crude oil pipeline system which
extends approximately 1,225 miles from the California Coast in the Santa Barbara
Channel -- Santa Maria Basin area to central Texas (the "All American System").
Celeron Gathering Company, a wholly-owned subsidiary of Registrant ("Celeron
Gathering"), engages in the gathering, exchanging, purchasing and selling of
crude oil and, in that connection, owns and operates a 43-mile gathering
pipeline in the San Joaquin Valley, California (the "Celeron Gathering System").
Celeron Trading & Transportation Company, a wholly-owned subsidiary of
Registrant, is engaged in various crude oil exchanging, purchasing and selling
activities.
7
<PAGE> 11
ALL AMERICAN CRUDE OIL PIPELINE SYSTEM
The All American System is a heated crude oil pipeline system, consisting
of a 1,225 mile mainline segment extending from Gaviota, California, to McCamey,
Texas, an 11 mile segment extending from Las Flores to Gaviota and related
terminal and oil storage facilities. The All American System is capable of
transporting up to 300,000 barrels per day of heavy crude oils, 450,000 barrels
per day of lighter crude oils or lower daily volumes of combinations of heavy
crude oils (which may require heating) from fields on the outer continental
shelf along the California coast in the Santa Barbara Channel -- Santa Maria
Basin area ("OCS Crude Oil") and lighter crude oils (which do not require
heating) from various onshore California fields ("California Crude Oil") or
other sources to McCamey, Texas, for delivery through other pipelines to
refineries in the Mid-continent region and along the Texas Gulf Coast.
The All American System transports California Crude Oil produced in the San
Joaquin Valley area of California and Alaska North Slope crude oil ("ANS Crude
Oil") received from other pipelines from insert points in central California to
terminals located near McCamey, Texas. The All American System also transports
OCS Crude Oil from Las Flores and Gaviota, California, to other system outlets
in California for delivery through other pipelines to refineries in the Los
Angeles Basin and in the greater San Francisco area and to McCamey, Texas, for
delivery via other pipelines to refineries in the Mid-continent region and along
the Texas Gulf Coast.
In August of 1993, several producers of OCS Crude Oil entered into
transportation agreements with the All American System whereunder the producers
have agreed to transport available quantities of OCS Crude Oil at specified
tariff rates. During 1994, most of the OCS Crude Oil tendered pursuant to the
transportation agreements was transported from Las Flores and Gaviota to All
American System outlet stations in central California for delivery via other
pipelines to refineries in the Los Angeles Basin or the San Francisco Bay area,
with the balance transported to McCamey, Texas, for delivery via other pipelines
to refineries in the Mid-continent region and along the Texas Gulf Coast. It is
anticipated that the volume of OCS Crude Oil tendered to the All American System
pursuant to the transportation agreements will increase during 1995 and 1996 and
that a higher percentage of the OCS Crude Oil tendered will be transported to
McCamey, Texas, for delivery via other pipelines to refineries in the Mid-
continent region or along the Texas Gulf Coast.
The average daily volume of crude oil transported by the All American
System was approximately 185,000 barrels per day in 1994 and 1993 and 164,000
barrels per day during 1992. The average tariff per barrel of oil transported
during 1994 was $1.29, compared to $1.03 during 1993 and $1.06 during 1992. The
All American System transported oil tendered for shipment an average distance of
652 miles in 1994, 725 miles in 1993 and 760 miles in 1992.
CELERON GATHERING SYSTEM
Celeron Gathering owns and operates the Celeron Gathering System, a 43-mile
crude oil gathering pipeline system, which has a design capacity of up to
100,000 barrels per day. Celeron Gathering uses the Celeron Gathering System in
connection with its gathering, exchanging, purchasing and selling of crude oil
produced in the South Belridge area of the San Joaquin Valley. Celeron Gathering
sells or exchanges substantially all of the crude oil it acquires in the San
Joaquin Valley, the major portion of which is ultimately sold to or exchanged
with refiners located in the Mid-continent and Texas Gulf Coast areas. Celeron
Gathering also trades crude oil in California, most of which is used by refiners
located in the Los Angeles Basin or in Northern California.
GOVERNMENT REGULATION
The All American System is a common carrier pipeline system and, as such,
under current law is subject to the general jurisdiction of the Federal Energy
Regulatory Commission (the
8
<PAGE> 12
"FERC"). Pursuant to the Interstate Commerce Act, the All American System is
subject to FERC regulation as to tariffs, annual reporting requirements and
other operating matters. In accordance with current laws and the regulations of
the FERC, the All American System has filed with the FERC tariffs for
transportation services being offered to shippers desiring to transport crude
oil through the All American System or portions thereof. The All American System
will file an Annual Report on FERC Form No. 6 with the FERC in March of 1995 in
respect of its activities during 1994. The Celeron Gathering System is a
proprietary intrastate gathering pipeline system and, as such, is not subject to
the general jurisdiction of the FERC.
GENERAL BUSINESS INFORMATION
SOURCES AND AVAILABILITY OF RAW MATERIALS
The principal raw materials used in Goodyear's products are synthetic and
natural rubber. Goodyear purchases substantially all of its requirements for
natural rubber in the world market. Synthetic rubber accounted for approximately
54% of all rubber consumed by Goodyear worldwide during 1994, compared to 61% in
1993, 56% in 1992 and 55% in 1991. The Company's plants located in Beaumont and
Houston, Texas, supply the major portion of its synthetic rubber requirements in
the United States. Approximately 59% of the synthetic rubber used by Goodyear
outside the United States is supplied by third parties. The principal raw
materials used in the production of synthetic rubber are butadiene and styrene
purchased from independent suppliers and isoprene purchased from independent
suppliers or produced by Goodyear from purchased materials.
Nylon and polyester yarn, substantial quantities of which are processed in
Goodyear's textile mills, and wire for radial tires, a portion of which is
produced by Goodyear, are used in significant quantities by Goodyear. Other
important raw materials used by Goodyear are carbon black, pigments, chemicals
and bead wire. Substantially all of these raw materials are purchased from
independent suppliers, except for certain chemicals which Goodyear manufactures.
Goodyear purchases most of the materials and supplies it uses in significant
quantities from several suppliers, except in those instances where only one or a
few qualified sources are available. As in 1994, Goodyear anticipates the
continued availability (subject to possible spot shortages) of all such
materials during 1995.
Goodyear uses substantial quantities of petrochemical feedstocks and fuels
in the production of tires and other rubber products, synthetic rubber and latex
and other products. Supplies of petrochemical feedstocks, petroleum and natural
gas based fuels have been and are expected to continue to be adequate for the
Company's manufacturing plants.
Petrochemical feedstock, natural rubber and other raw material prices
increased during the second half of 1994. The Company expects that additional
increases in raw material prices will occur during 1995.
PATENTS AND TRADEMARKS
Goodyear owns approximately 1,609 patents issued by the United States
Patent Office and approximately 5,691 patents issued or granted in other
countries around the world, and also has licenses under numerous patents of
others, covering various improvements in the design and manufacture of its
products and in processes and equipment for the manufacture of its products.
Goodyear also has approximately 327 patent applications currently on file with
the United States Patent Office and approximately 3,745 patent applications on
file in other countries around the world. While Goodyear considers that such
patents, patent applications and licenses as a group are of material importance,
it does not consider any one patent, patent application or license, or any
related group of them, to be of such importance that the loss or expiration
thereof would materially affect its business considered as a whole or the
business of any of its Industry Segments.
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<PAGE> 13
Goodyear owns and uses approximately 990 different trademarks, including
several using the word "Goodyear". These trademarks are protected by
approximately 6,780 registrations worldwide. Goodyear also has approximately 790
trademark applications pending in the United States and other jurisdictions.
While Goodyear believes such trademarks as a group are of importance, the only
trademarks Goodyear considers material to its business are those using the word
"Goodyear". Goodyear believes all of its significant trademarks are valid and
will have unlimited duration as long as they are adequately protected and
appropriately used.
BACKLOG
Goodyear does not consider its backlog of orders to be material to, or a
significant factor in, evaluating and understanding any of its Industry Segments
or its business considered as a whole.
GOVERNMENT BUSINESS
The total amount of Goodyear's business during 1994 under contracts or
subcontracts which were subject to termination at the election of the United
States Government amounted to approximately .6% of Goodyear's consolidated net
sales for 1994, compared to .9% for 1993 and 1.0% for 1992.
RESEARCH AND DEVELOPMENT
Goodyear expends significant amounts each year on research for the
development of new, and the improvement of existing, products and manufacturing
processes and equipment. Goodyear maintains substantial research and development
centers for tires and related products in Akron, Ohio, and Colmar-Berg,
Luxembourg; tire technical centers in Cumberland, Maryland, and Tsukuba, Japan;
and tire proving grounds in Akron, Ohio, San Angelo, Texas, Mireval, France, and
Colmar-Berg, Luxembourg. Goodyear operates substantial research and development
facilities for other products in Akron, Ohio, and Orsay, France.
During the years ended December 31, 1994, 1993, 1992, 1991 and 1990,
Goodyear expended, directly or indirectly, $341.3 million, $320.0 million,
$325.9 million, $330.0 million and $331.3 million, respectively, on research,
development and certain engineering activities relating to the design,
development, improvement and modification of new and existing products and
services and to the formulation and design of new manufacturing processes and
equipment and improvements on existing processes and equipment. Goodyear
estimates that it will expend approximately $340.0 million for research and
development activities during 1995.
EMPLOYEES
As of December 31, 1994, Goodyear employed approximately 90,712 people
throughout the world. Of the approximately 45,168 persons employed in the United
States at December 31, 1994, approximately 12,697 were covered by a master
collective bargaining agreement, dated July 20, 1994, with the United Rubber,
Cork, Linoleum and Plastic Workers of America ("URW"), which agreement will
expire on April 19, 1997. Of the remaining domestic employees at December 31,
1994, approximately 9,406 were covered by other contracts with the URW and
various other unions and approximately 23,065 were not represented by any union.
COMPLIANCE WITH ENVIRONMENTAL REGULATIONS
Goodyear is subject to extensive regulation under environmental and
occupational health and safety laws and regulations concerning, among other
things, air emissions, discharges to waters and the generation, handling,
storage, transportation and disposal of waste materials and hazardous
substances. Goodyear has a continuing program to ensure its compliance with
Federal, State and local environmental and occupational safety and health laws
and regulations. During 1994, 1993, 1992, 1991 and 1990, Goodyear made capital
expenditures aggregating
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<PAGE> 14
approximately $11.7 million, $13.4 million, $13.7 million, $9.6 million and
$13.5 million, respectively, for environmental improvement and occupational
safety and health compliance projects in respect of its facilities worldwide.
Goodyear presently estimates that it will make capital expenditures for
pollution control facilities and occupational safety and health projects of
approximately $19.9 million during 1995 and approximately $29.4 million during
1996. In addition, Goodyear expended approximately $73 million during 1994, and
Goodyear estimates that it will expend approximately $84 million during 1995 and
approximately $92 million during 1996, to maintain and operate its pollution
control facilities and conduct its other environmental and occupational safety
and health activities, including the control and disposal of hazardous
substances, which amounts are expected to be sufficient to comply with
applicable existing environmental and occupational safety and health laws and
regulations and are not expected to have a material adverse effect on Goodyear's
competitive position in the industries in which it participates. At December 31,
1994, Goodyear had reserved $116.4 million for anticipated costs associated with
the clean-up of hazardous substances at various sites. Goodyear anticipates that
in the future it will incur increased costs and additional charges associated
with environmental compliance and cleanup projects necessitated by the
identification of new waste sites, the impact of new and increasingly stringent
environmental laws, such as the Clean Air Act, and regulatory standards and the
availability of new technologies.
FINANCIAL INFORMATION ABOUT FOREIGN AND
DOMESTIC OPERATIONS AND EXPORT SALES
Financial information relating to Goodyear's "Geographic Segments" for each
of the three years in the period ended December 31, 1994 appears in Note 16,
captioned "Business Segments", and in the tabulation captioned "Geographic
Segments" at Note 16 of the Notes to Financial Statements set forth in Item 8 of
this Annual Report, at pages 46 and 48, respectively, and is incorporated herein
by specific reference.
The Company, through its foreign subsidiaries, engages in manufacturing or
sales operations in most countries in the world, including manufacturing
operations in 25 foreign countries. Foreign sales represented approximately 42%,
42% and 42% of total sales and foreign operating income represented
approximately 50%, 49% and 41% of total operating income in 1994, 1993 and 1992,
respectively. Goodyear's foreign manufacturing operations consist primarily of
the production of tires. Industrial rubber and certain other products are also
manufactured in certain of the Company's foreign plants.
Goodyear also participates in joint ventures in various countries. In 1987,
Goodyear and Pacific Dunlop Limited established South Pacific Tyres, an
Australian partnership, and South Pacific Tyres N.Z. Limited, a New Zealand
company, in each of which Goodyear and Pacific Dunlop Limited each have a 50%
equity interest, which entities operate five tire manufacturing plants, 20
retread plants and a chain of approximately 523 retail outlets in Australia, New
Zealand and Papua - New Guinea. Other joint venture interests of the Company
include: (1) a 50% interest in Nippon Giant Tire Co., Ltd., which manufactures
earthmover tires in Japan; and (2) a 50% (40.4% net equity) interest in a tire
manufacturing facility under construction near Bombay, which is scheduled to be
completed in 1996. During 1994, Goodyear acquired a 75% interest in a tire
manufacturing company in Dalian, People's Republic of China, and a 60% interest
in an engineered rubber products company in Qingdao, People's Republic of China.
In addition to the ordinary risks of the marketplace, the Company's foreign
operations and the results thereof in some countries are affected by price
controls, import controls, labor regulations, tariffs, extreme inflation or
fluctuations in currency values. Furthermore, in certain countries where
Goodyear operates (primarily countries located in Central and South America),
transfers of funds from foreign operations are generally or periodically subject
to the availability of foreign exchange in the host country and other related
restrictive governmental regulations.
11
<PAGE> 15
ITEM 2. PROPERTIES.
Goodyear manufactures its products in 73 manufacturing facilities located
around the world. There are 32 plants at 31 locations in 16 states of the United
States and 41 plants at 38 locations in 25 other countries.
The following table identifies by location each of the Company's 73
manufacturing facilities, indicates the principal product or products
manufactured therein and sets forth the approximate number of square feet of
usable floor space. In addition, each Industry Segment using the facility is
indicated after the products manufactured therein with the following references:
(A), which indicates use by the Tires Segment; and (B), which indicates use by
the General Products Segment. Except as indicated in the Notes to the following
table of Manufacturing Facilities, Goodyear owns the land, buildings and
manufacturing equipment comprising each facility.
MANUFACTURING FACILITIES
<TABLE>
<CAPTION>
APPROXIMATE
FLOOR SPACE
(IN THOUSANDS
PRODUCT(S) MANUFACTURED- OF SQUARE
PLANT LOCATION INDUSTRY SEGMENT(S) FEET)
------------------------------------ ---------------------------------------------------------
<S> <C> <C>
UNITED STATES
Akron, Ohio (2 Plants) Tires and Chemicals (A) and (B) 2,162
Asheboro, North Carolina Tire Wire Cord (A) 284
Bayport, Texas Rubber Processing Chemicals (A) and (B) 42
Beaumont, Texas Synthetic Rubber, Rubber Chemicals and 612
Hydrocarbon Resins (A) and (B)
Calhoun, Georgia Latex (B) 60
Cartersville, Georgia Textile Mill (A) and (B) 663
Danville, Virginia Tires (A) 2,106
Decatur, Alabama Textile Mill (A) 656
Fayetteville, North Carolina Tires (A) 1,998
Freeport, Illinois Tires (A) 1,161
Gadsden, Alabama (1) Tires (A) 2,826
Greensburg, Ohio Air Springs (B) 113
Greenville, Texas Tread Rubber (A) 24
Hannibal, Missouri (2) Hose Products (B) 30
Houston, Texas Synthetic Rubber (A) and (B) 675
Jackson, Ohio (2) Automotive and Commercial Reinforced 222
Plastics (B)
Lawton, Oklahoma (2) Tires (A) 1,840
Lincoln, Nebraska Belting and Hose Products (B) 950
Logan, Ohio (2) Automotive and Commercial 369
Custom Foam Products (B)
Marysville, Ohio Conveyor Belting (B) 374
Mt Pleasant, Iowa Hose Products (B) 116
Niagara Falls, New York Chemicals and Vinyl Resins (A) and (B) 313
Norfolk, Nebraska Hose Products (B) 257
Radford, Virginia Tread Rubber (A) 55
St Marys, Ohio Molded and Extruded Rubber Products (B) 829
Spartanburg, South Carolina (3) Tread Rubber (A) 99
Stow, Ohio (3) Tire Molds (A) 132
Sun Prairie, Wisconsin Hose Products (B) 175
Topeka, Kansas Tires (A) 2,940
Tyler, Texas Tires (A) 1,313
Union City, Tennessee Tires (A) 2,068
CANADA
Bowmanville, Ontario Conveyor Belts (B) 323
Collingwood, Ontario Hose Products (B) 205
Medicine Hat, Alberta Tires (A) 115
Napanee, Ontario Tires (A) 748
Owen Sound, Ontario V-Belts and Graphic Products (B) 108
Quebec City, Quebec Molded Products and Tread Rubber (A) and 172
(B)
St. Alphonse de Granby, Hose Products (B) 163
Quebec
Valleyfield, Quebec Tires (A) 1,002
</TABLE>
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<PAGE> 16
<TABLE>
<CAPTION>
APPROXIMATE
FLOOR SPACE
(IN THOUSANDS
PRODUCT(S) MANUFACTURED- OF SQUARE
PLANT LOCATION INDUSTRY SEGMENT(S) FEET)
------------------------------------ ---------------------------------------------------------
<S> <C> <C>
EUROPE
FRANCE -- Amiens Tires (A) 715
LeHavre (3) Chemicals (B) 272
GERMANY -- Fulda(3) Tires (A) 1,361
Philippsburg Tires (A) 984
GREECE -- Salonika Tires (A) 268
ITALY -- Cisterna di Latina Tires (A) 550
LUXEMBOURG
Colmar-Berg (4 Plants) (3) Tires, Fabrics, Steel Tire Cord, 2,121
Tire Molds and Machines (A)
MOROCCO -- Casablanca Tires (A) 220
TURKEY -- Adapazari Tires (A) 665
Izmit Tires and Tubes (A) 380
UNITED KINGDOM
Wolverhampton, England Tires (A) 1,813
LATIN AMERICA
ARGENTINA -- Buenos Aires Tires (A) 957
BRAZIL -- Americana Tires, Fabric Dipping and Films 1,591
(A) and (B)
Sao Paulo Tires, Tubes, Industrial Rubber Products 1,131
and Fabric (A) and (B)
CHILE -- Santiago Tires, Tubes, Industrial Rubber 812
Products and Batteries (A) and (B)
COLOMBIA -- Cali Tires (A) 459
GUATEMALA -- Guatemala City Tires (A) 344
JAMAICA -- Morant Bay Tires (A) 157
MEXICO -- Mexico City Tires (A) 1,240
San Luis Potosi Hose Products and Air Sleeves (B) 82
PERU -- Lima Tires (A) 411
VENEZUELA -- Valencia Tires and Industrial Rubber 784
Products (A) and (B)
ASIA
CHINA -- Dalian Tires (A) 538
Qingdao Hose Products (B) 145
INDIA -- New Delhi Tires (A) 680
INDONESIA -- Bogor (4) Tires (A) 842
MALAYSIA -- Kuala Lumpur (5) Tires (A) 415
PHILIPPINES -- Manila (6) Tires and Tubes (A) 392
TAIWAN -- Taipei Tires (A) 250
THAILAND -- Bangkok Tires (A) 386
</TABLE>
---------------
NOTES:
(1) Portion of facility is leased by Goodyear and may be purchased pursuant to
the terms of the lease at a nominal option price.
(2) Facility is leased by Goodyear. The lease provides that the Company has the
option to purchase the facility at the expiration of the initial term at an
option price which is either nominal or highly favorable to Goodyear. It is
anticipated that such option will be exercised at the appropriate time if
such facility is then needed in Goodyear's manufacturing operations or its
acquisition would otherwise be advantageous to Goodyear.
(3) Portion of facility is leased by Goodyear.
(4) Facility is situated on land held under a use right which expires in 1997.
It is not possible to obtain fee title under Indonesian law.
(5) Facility is situated on land held under the terms of a land lease which
expires in 2072. It is not possible to obtain fee title to land under
Malaysian law.
(6) Facility is situated on land held under the terms of a land lease having 6
years remaining, with a 25-year renewal option.
13
<PAGE> 17
The manufacturing facilities of Goodyear are, when considered in the
aggregate, modern and adequately maintained. Goodyear's capital expenditures for
new plant and equipment (including investments in two facilities in the People's
Republic of China), for expansion, modernization and replacement of existing
plants and equipment and related assets aggregated $523.0 million in 1994,
$432.3 million in 1993 and $366.6 million in 1992. Of said amounts, $281.6
million in 1994, $277.9 million in 1993 and $242.3 million in 1992 were expended
on facilities located in the United States. The Company estimates that its
capital expenditures during 1995 will aggregate approximately $650.0 million.
During 1994, Goodyear's worldwide tire production facilities were operated
at approximately 90% of rated capacity. The Company's other manufacturing
facilities were operated at less than capacity levels during 1994. Giving effect
to plant expansions and modernizations recently completed or presently underway
or planned, the Company's manufacturing facilities are expected, in general, to
have production capacity sufficient to satisfy existing and presently
anticipated demand for the Company's tires and other products.
In addition to its manufacturing facilities, the Company owns and operates
rubber plantations in Indonesia and Guatemala (50,253 acres). Goodyear also owns
substantial interests in plants located in Australia (tires and retreading),
Japan (earthmover tires) and New Zealand (tires and retreading).
The Company owns and operates research and development facilities and
technical centers in Akron, Ohio, Colmar-Berg, Luxembourg, and Orsay, France.
These facilities occupy more than 3,000,000 square feet of floor space. In
addition, the Company owns its Corporate Headquarters complex in Akron, Ohio,
which has approximately 1.8 million square feet of usable floor space. The
Company also owns and operates tire proving grounds in Akron, Ohio (82 acres),
Colmar-Berg, Luxembourg (124 acres, leased), Mireval, France (450 acres), and
San Angelo, Texas (7,243 acres). The Company also operates tire technical
centers in Cumberland, Maryland, and Tsukuba, Japan.
The Company operates approximately 1,206 retail outlets for the sale of its
tires to consumers in the United States and approximately 387 retail outlets in
other countries. Worldwide, the Company also operates approximately 94 retread
plants and approximately 216 warehouse and distribution facilities.
Substantially all of these facilities are leased. The Company does not consider
any one of these leased properties to be material to its operations. For
additional information regarding leased properties, see Note 5, "Properties and
Plants," and Note 7, "Leased Assets," of the Notes to Financial Statements set
forth in Item 8 of this Annual Report at pages 37 and 41, respectively.
Reference is made to the information set forth in Item 1 under the caption
"Oil Transportation" beginning at page 7, which includes a description of, and
other information regarding, the All American System, the Celeron Gathering
System and related facilities, the principal assets of the Oil Transportation
Segment.
ITEM 3. LEGAL PROCEEDINGS.
At March 20, 1995, Goodyear was a party to the following material legal
proceedings, as defined in the Instructions to Item 103 of Regulation S-K:
(A) Since January 19, 1990, a series of 61 civil actions have been filed
against Registrant in the United States District Court for the District of
Maryland relating to the development of lung disease, cancer and other diseases
by former employees of The Kelly-Springfield Tire Company ("Kelly-Springfield"),
a wholly-owned subsidiary of Registrant, alleged to be the result of exposure to
allegedly toxic substances, including asbestos and certain chemicals, while
working at the Cumberland, Maryland tire plant of Kelly-Springfield, which was
closed in 1987. The plaintiffs allege, among other things, that Registrant, as
the manufacturer or seller of certain materials, negligently failed to warn
Kelly-Springfield employees of the health risks associated
14
<PAGE> 18
with their employment at the Cumberland plant and failed to implement procedures
to preserve their health and safety. The plaintiffs in these civil actions are
seeking an aggregate of $570 million in compensatory damages and $5.66 billion
in punitive damages.
(B) On June 7, 1990, a civil action, Teresa Boggs, et al. v. Divested
Atomic Corporation, et al., was filed in United States District Court for the
Southern District of Ohio by Teresa Boggs and certain other named Plaintiffs on
behalf of themselves and a class comprised of certain other persons who reside
near the Portsmouth Uranium Enrichment Complex, a facility owned by the United
States Government as a part of the United States Department of Energy ("DOE")
and located in Pike County, Ohio (the "Portsmouth Plant"), against Divested
Atomic Corporation ("DAC"), the successor by merger of Goodyear Atomic
Corporation ("GAC"), Registrant and Martin Marietta Energy Systems, Inc.
("MMES"). GAC had operated the Portsmouth Plant pursuant to a series of
contracts with the DOE for several years until November 16, 1986, when MMES
assumed operation of the Portsmouth Plant. The Plaintiffs allege that the past
and present operators of the Portsmouth Plant, GAC (then a wholly-owned
subsidiary of Registrant) and MMES, contaminated certain areas near the
Portsmouth Plant with radioactive or other hazardous materials, or both, causing
property damage and emotional distress. Plaintiffs seek $300 million in
compensatory damages, $300 million in punitive damages and unspecified amounts
for medical monitoring and cleanup costs.
(C) In September of 1990, a civil action, Eastman Kodak Company, et al. v.
Goodyear, et al. (No. CIV-2-90-221), was filed by Eastman in the United States
District Court for the Eastern District of Tennessee, Northeastern Division,
whereunder Eastman alleges infringement of a patent, which expired in December
of 1994, in respect of certain processes used in the manufacture of polyester
resin at the Pt. Pleasant, West Virginia polyester resin plant owned and
operated by Registrant until sold to Shell Oil Company on December 18, 1992.
Eastman is seeking monetary damages trebled for alleged willfulness, interest
and costs.
(D) In December of 1993, certain civil actions filed against Registrant and
numerous other defendants in Judicial District Court, Galveston, Texas, by 72
individual plaintiffs were consolidated into a single action (Whalen, et al. v.
AES, Inc., et al., Cause No. 93-CV0211). Certain plaintiffs have withdrawn or
been dismissed from these cases. The remaining 48 plaintiffs allege that they
suffered personal injuries and property damage as the result of Registrant and
other named defendants (the owners and operators of the site and several other
corporations also alleged to be generators of wastes) allegedly depositing
hazardous wastes at the McGinnis Waste Disposal Site located at Hall's Bayou
Ranch, Texas. The plaintiffs allege, among other things, that the defendants
were grossly negligent and committed fraud and are seeking an aggregate of $2
billion in actual damages, $13 billion in punitive damages and such further
relief as may be appropriate.
(E) In July of 1994, a civil action, Taylor Tire Company, et al. vs.
Goodyear (Cause No. 94-1050K), was filed in the United States District Court for
the Southern District of California against Registrant on behalf of a purported
class of plaintiffs consisting of the four named tire dealers who are customers
of Registrant and all tire retailers located in the State of California who are,
or were at December 31, 1991 or at any time thereafter, contract dealers of
Registrant and leased or are leasing a facility from Registrant or are, or were
at any time after December 31, 1991, franchisees of Registrant. The complaint
alleges that, in the course of Registrant's commercial relationships and
dealings with the members of the class, Registrant, among other things, breached
its fiduciary duty and the implied covenants of good faith and fair dealing with
respect to all members of the class, engaged in unfair business practices in
violation of the California Business and Professions Code with respect to all
members of the class, violated the California Franchise Investment Law and the
California Corporation Code with respect to certain members of the class and
breached the franchise agreements it entered into with certain members of the
class. The plaintiffs are seeking unspecified actual and punitive damages,
recision of all contracts, and injunctive and other relief.
(F) On January 13, 1995, a civil action, Gregory Tire, et al. v. Goodyear,
et al. (Cause No. 95-00409), was filed in the 192nd Judicial District Court,
Dallas County, Texas, against
15
<PAGE> 19
Registrant (and two employees of Registrant) by 22 tire dealers located in Texas
who are customers of Registrant, either as independent dealers or franchisees.
The complaint alleges, among other things, that in the course of Registrant's
commercial relationships and dealings with the plaintiffs, Registrant violated
the Texas Business Opportunities Act and the Texas Deceptive Trade Practices
Act, breached its fiduciary duty to the plaintiffs, breached its covenants of
good faith and fair dealings with the plaintiffs, violated the Texas Free
Enterprise Act, violated the Texas Antitrust Act, breached certain contracts
with the plaintiffs and committed common law fraud. The plaintiffs are seeking
unspecified compensatory damages, exemplary damages equal to the greater $230
million or 10% of Registrant's net worth and injunctive and other relief.
(G) On March 15, 1995, a civil action, Orion Tire Corporation, et al. vs.
Goodyear, et al. (Cause No. SA CV 95-221), was filed in the United States
District Court for the Central District of California, against Registrant,
Goodyear International Corporation, a wholly-owned subsidiary of Registrant
("GIC"), Samir F Gibara, an Executive Vice President of Registrant, John M Ross,
Vice President and General Counsel of Registrant, and three other employees of
Registrant by Orion Tire Corporation, a California corporation, China Tire
Holdings Limited, a Bermuda corporation, and China Strategic Holdings Limited, a
Hong Kong corporation. The plaintiffs allege, among other things, that in
connection with Goodyear's acquisition of a 75% interest in a tire manufacturing
facility in Dalian, People's Republic of China in 1994 the Registrant and GIC
engaged in tortious interference with certain contractual relationships
involving said facility the plaintiffs had allegedly theretofore established
with the entities which owned the Dalian tire manufacturing facility (which
entities are controlled by the Dalian municipal government), committed tortious
interference with prospective economic advantages of the plaintiffs, violated
the California Cartwright Act by engaging in an unlawful combination and
conspiracy in restraint of trade and committed trade libel and defamation by
making oral defamatory and written libelous statements concerning the plaintiffs
to various parties. In addition, all defendants are alleged to have engaged in a
civil conspiracy to induce the entities which owned the Dalian facility to
breach their contracts with the plaintiffs and to have engaged in civil
racketeering. The plaintiffs are seeking an aggregate of at least $1.086 billion
in actual damages from the defendants and an aggregate of $3.256 billion in
exemplary damages from Registrant and GIC, plus exemplary damages of up to 10%
of the net worth of each individual defendant, and such further relief as may be
appropriate.
(H) The United States Environmental Protection Agency ("USEPA"), Region II,
has initiated administrative proceedings against Registrant under the
Comprehensive Environmental Response, Compensation and Liability Act in respect
of the alleged late reporting of regulated air emissions at its Niagara Falls
plant. The USEPA is seeking an aggregate of $165,900 in civil penalties.
(I) In addition to the legal proceedings described above, various other
legal actions, claims and governmental investigations and proceedings covering a
wide range of matters were pending against Registrant and its subsidiaries at
March 20, 1995, including claims and proceedings relating to several waste
disposal sites that have been identified by the USEPA and similar agencies of
various States for remedial investigation and cleanup, which sites were
allegedly used by Goodyear in the past for the disposal of industrial waste
materials. Registrant, based on available information, does not consider any
such action, claim, investigation or proceeding to be material, within the
meaning of that term as used in Item 103 of Regulation S-K and the instructions
thereto.
Registrant, based on available information, has determined with respect to
each legal proceeding pending against Registrant and its subsidiaries at March
20, 1995, either that it is not reasonably possible that Goodyear has incurred
liability in respect thereof or that any liability ultimately incurred will not
exceed the amount, if any, recorded in respect of such proceeding at December
31, 1994 by an amount which would be material relative to the consolidated
financial position, results of operations or liquidity of Goodyear.
16
<PAGE> 20
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of the security holders of the Registrant
during the calendar quarter ended December 31, 1994.
ITEM 4(A). EXECUTIVE OFFICERS OF REGISTRANT.
Set forth below, in accordance with Instruction 3 to Item 401(b) of
Regulation S-K, are: (1) the names and ages of all executive officers (including
executive officers who are also directors) of the Registrant as of March 20,
1995, (2) all positions with the Registrant presently held by each such person
and (3) the positions held by, and principal areas of responsibility of, each
such person during the last five years.
<TABLE>
<CAPTION>
NAME POSITION(S) HELD AGE
---- ---------------- ---
<S> <C> <C>
STANLEY C. GAULT CHAIRMAN OF THE BOARD, 69
CHIEF EXECUTIVE OFFICER AND DIRECTOR
Mr. Gault was elected Chairman of the Board and Chief Executive Officer of Registrant on
June 4, 1991. Mr. Gault was Chairman of the Board and Chief Executive Officer of Rubbermaid
Incorporated from May 1, 1980 to May 1, 1991, when he retired. Prior to 1980, Mr. Gault was an
employee of General Electric Company for 31 years, serving in various executive capacities.
Mr. Gault has been a director of Registrant since February 14, 1989.
HOYT M. WELLS VICE CHAIRMAN OF THE BOARD, PRESIDENT, 68
CHIEF OPERATING OFFICER AND DIRECTOR
Mr. Wells joined Goodyear in 1951, serving in various manufacturing and sales posts until
June 3, 1980, when he was elected a Vice President of Registrant. On June 2, 1987, he was
elected an Executive Vice President of Registrant, serving in such capacity as the executive
officer of Registrant responsible for the worldwide general products operations of Registrant
and its subsidiaries. Mr. Wells was elected President and Chief Operating Officer of
Registrant effective April 1, 1991 and Vice Chairman of the Board, President and Chief
Operating Officer on January 4, 1994. Mr. Wells has been a Director of Registrant since
December 6, 1988.
WILLIAM J. SHARP EXECUTIVE VICE PRESIDENT 53
Mr. Sharp served in various tire production posts until elected a Vice President of
Registrant on January 6, 1987, serving in such capacity as the executive officer of Registrant
responsible for Goodyear's worldwide tire manufacturing operations. Effective April 1, 1991,
Mr. Sharp was elected an Executive Vice President of Registrant for worldwide product supply,
and, in such capacity, was the executive officer of the Registrant responsible for Goodyear's
tire manufacturing and distribution operations and research, development and engineering
activities until October 1, 1992, when he became the executive officer of Registrant
responsible for the operations of Registrant's subsidiaries in Europe. Mr. Sharp has been an
employee of Goodyear since 1964.
SAMIR F. GIBARA EXECUTIVE VICE PRESIDENT 55
Mr. Gibara served in various managerial capacities after joining Goodyear in 1966. He
served as the President and Chief Executive Officer of Goodyear Canada Inc., a subsidiary of
Registrant, from October 1, 1989 through November 30, 1990. He was Chairman of the Board of a
European subsidiary of Registrant from December 1, 1990 until September 30, 1992. Mr. Gibara
was elected a Vice President of Registrant effective October 1, 1992, serving in that capacity
as the executive officer of Registrant responsible for strategic planning and business
development and as the acting Vice President of Finance and the principal financial officer of
Registrant. On May 3, 1994, Mr. Gibara was elected an Executive Vice President of Registrant
and, in such capacity, is the executive officer responsible for the North American Tire
Operations of Registrant.
</TABLE>
17
<PAGE> 21
<TABLE>
<CAPTION>
NAME POSITION(S) HELD AGE
---- ---------------- ---
<S> <C> <C>
ROBERT W. TIEKEN EXECUTIVE VICE PRESIDENT 55
Mr. Tieken joined Goodyear on May 3, 1994, when he was elected an Executive Vice
President and the Chief Financial Officer of Registrant. Prior to joining Goodyear, Mr. Tieken
had been employed by the General Electric Company for 32 years, serving in various financial
management posts, including Vice President, Finance and Information Technology of General
Electric Aerospace from 1988 to April of 1993. From April of 1993 through April of 1994, Mr.
Tieken was the Vice President of Finance of Martin Marietta Corporation, which acquired
General Electric Aerospace in April of 1993. Mr. Tieken is the principal financial officer of
Registrant.
ROBERT M. HEHIR VICE PRESIDENT 63
Dr. Hehir joined Goodyear in August of 1980 as Director of Governmental Environment,
Safety and Health Assurance Programs. On August 4, 1981, he was elected a Vice President of
Registrant. Dr. Hehir is the executive officer of Registrant responsible for Goodyear's
environmental improvement and occupational health compliance programs.
JAMES W. BARNETT VICE PRESIDENT 64
Mr. Barnett served in various posts in Goodyear's replacement tire sales organization
until elected a Vice President of Registrant on September 6, 1984, serving in such capacity
as the executive officer of Registrant responsible for Registrant's replacement tires sales
and marketing in the United States until August 15, 1988. Since August 15, 1988, Mr. Barnett
has served as the executive officer of Registrant responsible for Goodyear's worldwide
original equipment tire sales. Mr. Barnett has been an employee of Goodyear since 1950.
NISSIM CALDERON VICE PRESIDENT 61
Dr. Calderon served in various research management posts until January 1, 1983, when he
was appointed Manager of Tire Materials Research. Dr. Calderon was elected a Vice President of
Registrant on April 7, 1986. He is the executive officer of Registrant responsible for
Goodyear's research programs. Dr. Calderon has been an employee of Goodyear since 1962.
JOHN M. ROSS VICE PRESIDENT AND GENERAL COUNSEL 63
Mr. Ross served as an Assistant Secretary and the Assistant General Counsel of Registrant
from 1973 to June 2, 1987, when he was elected a Vice President and the General Counsel of
Registrant. Mr. Ross joined the Registrant as a member of its legal staff in 1965. Mr. Ross
has been a member of the Ohio Bar since 1965.
JAMES BOYAZIS VICE PRESIDENT AND SECRETARY 58
Mr. Boyazis served in various posts until April 11, 1983, when he was elected Secretary
and Counsel of Goodyear Aerospace Corporation (then a wholly-owned operating subsidiary of
Registrant). From January 1, 1986 to June 2, 1987, Mr. Boyazis served as a member of
Registrant's legal staff. On June 2, 1987, Mr. Boyazis was elected a Vice President and the
Secretary of Registrant. He is also the Associate General Counsel of Registrant. Mr. Boyazis
joined Goodyear in 1963.
JESSE T. WILLIAMS, SR. VICE PRESIDENT 55
Mr. Williams served in various human resources posts until October 1, 1986, when he was
appointed Registrant's Director -- Equal Employment Opportunity. On August 2, 1988, Mr.
Williams was elected a Vice President of Registrant and, in such capacity, was responsible for
corporate compliance with equal employment opportunity laws and regulations until July 1,
1991, when he became the executive officer of Registrant responsible for Goodyear's human
resources, diversity, safety and workers' compensation activities and for compliance with the
various equal employment opportunity, workplace safety and other employment laws and
regulations. Effective March 1, 1993, Mr. Williams became the executive officer of Registrant
responsible for Goodyear's compensation and employment practices. Mr. Williams has been an
employee of Goodyear since 1962.
</TABLE>
18
<PAGE> 22
<TABLE>
<CAPTION>
NAME POSITION(S) HELD AGE
---- ---------------- ---
<S> <C> <C>
JOHN P. PERDUYN VICE PRESIDENT 55
Mr. Perduyn served in various public relations posts until appointed Director of Public
Information in 1980, serving in that post until June 1, 1989. Mr. Perduyn was elected a Vice
President of Registrant effective June 1, 1989, and is the executive officer of Registrant
responsible for Goodyear's public affairs activities. Mr. Perduyn has been an employee of
Goodyear since 1970.
RICHARD P. ADANTE VICE PRESIDENT 48
Mr. Adante served in various engineering and management posts until appointed director of
General Products Manufacturing in 1987. He served as Production Director of Deutsche Goodyear
GmbH, a wholly-owned subsidiary of Registrant, from August of 1988 to April of 1990, when he
was appointed Vice President of merchandise distribution and control. Mr. Adante was elected a
Vice President effective April 1, 1991 and is the executive officer of Registrant responsible
for materials management. Mr. Adante has been an employee of Goodyear since 1966.
H. CLAY ORME VICE PRESIDENT 55
Mr. Orme served in various manufacturing management posts until he was appointed Director
of Tire Manufacturing in 1987. He was elected Vice President of Registrant effective
September 1, 1992, and, in such capacity, is the executive officer of the Registrant
responsible for Goodyear's tire manufacturing and product distribution operations. Mr. Orme
has been an employee of Goodyear since 1962.
GARY A. MILLER VICE PRESIDENT 48
Mr. Miller served in various management and research and development posts until
appointed a Purchasing Agent in 1986. He was Director of Tire Value and Competitive Analysis
from April of 1989 until October 1, 1990, when he was appointed General Manager of Specialty
Tires. Mr. Miller was elected a Vice President of Registrant effective November 1, 1992. He is
the executive officer of Registrant responsible for Goodyear's purchasing operations. Mr.
Miller has been an employee of Goodyear since 1967.
MIKE L. BURNS VICE PRESIDENT 53
Mr. Burns served in various human resources posts until appointed Director of
Organization Development and Training in 1986. He was elected a Vice President of Registrant
effective March 1, 1993. He is the executive officer of Registrant responsible for Goodyear's
human resources and total quality systems. Mr. Burns has been an employee of Goodyear since
1965.
GEORGE E. STRICKLER VICE PRESIDENT AND COMPTROLLER 47
Mr. Strickler served in various accounting, treasury and financial posts until he was
elected an Assistant Comptroller of the Registrant on April 9, 1984, in which capacity he
served as the principal financial officer for the General Products Division until August of
1988 when he became the principal financial officer of the Tire Division. Mr. Strickler was
elected a Vice President and the Comptroller of Registrant effective September 1, 1993. Mr.
Strickler is the executive officer of Registrant responsible for business unit financial
functions, corporate accounting and taxes and is the principal accounting officer of
Registrant. Mr. Strickler has been an employee of Goodyear since 1969.
JAMES C. WHITELEY VICE PRESIDENT 47
Mr. Whiteley served in various quality control and quality assurance managerial posts
until appointed Director of Tire Quality Assurance on June 1, 1990. He was elected a Vice
President of Registrant on November 2, 1993 and is the executive officer of Registrant
responsible for product quality and safety. Mr. Whiteley has been an employee of Goodyear
since 1969.
</TABLE>
19
<PAGE> 23
<TABLE>
<CAPTION>
NAME POSITION(S) HELD AGE
---- ---------------- ---
<S> <C> <C>
RICHARD W. HAUMAN VICE PRESIDENT AND TREASURER 48
Mr. Hauman served in various financial management posts around the world until he was
elected an Assistant Treasurer of Registrant on August 15, 1988. He was elected a Vice
President and the Treasurer of Registrant on October 4, 1994. Mr. Hauman is the executive
officer of Registrant responsible for Goodyear's treasury operations, risk management
activities and pension and medical benefits administration. Mr. Hauman has been an employee
of Goodyear since 1968.
RICHARD J. STEICHEN VICE PRESIDENT 50
Dr. Steichen joined Goodyear in 1973 as a research chemist and served in various research
and development posts until April 1, 1986, when he was appointed Director of Development,
Analytical and Material Testing. On May 16, 1989, he was appointed Director of Polyester
Research and Development, serving in that capacity until August 1, 1991, when he was appointed
Director of Technology Management. On November 1, 1992, Dr. Steichen was appointed the
General Manager of Technology and Quality Assurance of South Pacific Tyres, a joint venture
company 50% owned by Goodyear, serving in that capacity until November 30, 1994. Dr. Steichen
was elected a Vice President of Registrant effective December 1, 1994 and, in that capacity,
is the executive officer of Registrant responsible for Goodyear's worldwide tire technology
activities.
</TABLE>
------------------
No family relationship exists between any of the above named executive
officers or between said executive officers and any other director or nominee
for director of Registrant.
Each executive officer is elected by the Board of Directors at its annual
meeting to a term of one year or until his or her successor is duly elected,
except in those instances where the person is elected at other than an annual
meeting of the Board of Directors in which event such person's tenure will
expire at the next annual meeting of the Board of Directors unless such person
is reelected. The next annual meeting of the Board of Directors is scheduled to
be held on April 10, 1995.
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The principal market for Registrant's Common Stock is the New York Stock
Exchange (Stock Exchange Symbol GT). Registrant's Common Stock is also listed on
the Midwest Stock Exchange and The Pacific Stock Exchange. Overseas listings
include the Amsterdam, Basel, Geneva, Paris and Zurich Stock Exchanges.
Information relating to the high and low sale prices of Registrant's Common
Stock and the dividends paid on such shares during 1994 and 1993 appears under
the caption "Quarterly Data and Market Price Information" in Item 8 of this
Annual Report, at page 50, and is incorporated herein by specific reference. The
first quarter 1995 cash dividend, paid March 15, 1995 to shareholders of record
at February 16, 1995, was $.20 per share.
At February 16, 1995, there were 36,344 record holders of the 151,498,275
shares of the Common Stock of Registrant then outstanding. Approximately
8,531,819 shares of the Common Stock of Registrant were beneficially owned by
approximately 35,178 participants in four Employee Savings Plans sponsored by
the Registrant and certain of its subsidiaries. Bankers Trust Company is the
Trustee for said Employee Savings Plans.
20
<PAGE> 24
ITEM 6. SELECTED FINANCIAL DATA.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
(IN MILLIONS, EXCEPT PER SHARE) 1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Sales........................... $12,288.2 $11,643.4 $11,784.9 $10,906.8 $11,272.5
Income (loss) before Extraordinary
Items and Cumulative Effect of
Accounting Changes................ 567.0 488.7 367.3 74.5 (38.3)
Extraordinary Items --
Early Extinguishment of Debt...... -- (14.6) (15.3) -- --
Tax Benefit of Loss Carryovers.... -- -- -- 22.1 --
Cumulative Effect of
Change in Accounting for
Postemployment Benefits........... -- (86.3) -- -- --
Transition Effect of Change in
Accounting for Non-pension
Postretirement Benefits........... -- -- (1,065.7) -- --
Cumulative Effect of Change in
Accounting for Income Taxes....... -- -- 55.1 -- --
----------- ----------- ----------- ----------- -----------
Net Income (loss)................... $ 567.0 $ 387.8 $ (658.6) $ 96.6 $ (38.3)
=========== =========== =========== =========== ===========
Per Share of Common Stock:
Income (loss) before Extraordinary
Items and Cumulative Effect of
Accounting Changes................ $ 3.75 $ 3.33 $ 2.57 $ .62 $ (.33)
Extraordinary Items --
Early Extinguishment of Debt...... -- (.10) (.11) -- --
Tax Benefit of Loss Carryovers.... -- -- -- .19 --
Cumulative Effect of
Change in Accounting for
Postemployment Benefits........... -- (.59) -- -- --
Transition Effect of Change in
Accounting for Non-pension
Postretirement Benefits........... -- -- (7.46) -- --
Cumulative Effect of Change in
Accounting for Income Taxes....... -- -- .39 -- --
----------- ----------- ----------- ----------- -----------
Net Income (loss)................... $ 3.75 $ 2.64 $ (4.61) $ .81 $ (.33)
=========== =========== =========== =========== ===========
Dividends Per Share................. $ .75 $ .575 $ .275 $ .20 $ .90
Total Assets........................ $ 9,123.3 $ 8,436.1 $ 8,563.7 $ 8,510.5 $ 8,963.6
Long Term Debt and Capital Leases... $ 1,108.7 $ 1,065.9 $ 1,471.1 $ 2,038.1 $ 3,286.4
Shareholders' Equity................ $ 2,803.2 $ 2,300.8 $ 1,930.3 $ 2,731.1 $ 2,097.9
</TABLE>
NOTES: (1) See "Principles of Consolidation" at Note 1 ("Accounting
Policies") to the Financial Statements at page 35.
(2) Per share amounts reflect the two-for-one split of the
Company's Common Stock, distributed on May 4, 1993 in the form
of a dividend of one share of Common Stock on each share of
Common Stock outstanding at the close of business on April 30,
1993.
21
<PAGE> 25
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
CONSOLIDATED
Sales in 1994 were $12.3 billion, increasing 5.5 percent from $11.6 billion
in 1993 and 4.3 percent from $11.8 billion in 1992.
Worldwide tire unit sales increased 7.1 percent from 1993 and 11.6 percent
from 1992. The increase in tire unit sales in 1994 resulted from increased
demand worldwide for the Company's products in both the original equipment and
replacement markets, with increases recorded in all regions. In 1993, tire unit
sales volume increased due primarily to higher original equipment demand,
despite a reduction in original equipment volume in Europe.
Tire revenue growth in 1994 did not keep pace with tire unit growth in that
year due primarily to lower average selling prices resulting from continued
competitive pricing conditions, especially in the U.S. and European replacement
markets, a shift in worldwide unit sales mix toward original equipment tires and
a shift in unit sales mix in the U.S. replacement market toward broad market and
private brand tires. Revenues in 1994 were favorably affected by the
strengthening of currencies in Europe versus the U.S. dollar. Tire revenues did
not grow as much as tire units in 1993, due primarily to the strengthening of
the U.S. dollar versus currencies in Europe, increased sales to original
equipment manufacturers and competitive pricing conditions in the U.S. and
Europe.
Sales revenues also reflect the absence of the cast and blown films and
polyester businesses, which were divested in 1992, and the roofing and laminated
films businesses, which were divested in 1993. For further discussion of
divested assets, refer to the notes to the financial statements No. 2, Other
(Income) and Expense and No. 16, Business Segments.
Cost of goods sold in 1994 of $9.3 billion increased 6.4 percent from 1993
and 3.3 percent from 1992. Cost of goods sold increased as a percent of sales in
1994 due primarily to lower average selling prices, higher raw material costs
and higher labor costs in the U.S. and Brazil. Raw material costs are expected
to increase in 1995. Labor costs in the U.S. were higher in 1994 due to the
effects of a new collective bargaining agreement agreed to by the Company and
the United Rubber Workers of America (URW), effective through the three year
period ending in April 1997, which provides for wage and benefit improvements
over that period totaling approximately 16 percent for the more than 12,000 U.S.
employees covered by this agreement. In addition, approximately 7,900 other
bargaining unit employees were granted similar improvements. Costs in both 1994
and 1993 were favorably impacted by production efficiencies achieved as a result
of sustained high levels of capacity utilization and the effects of cost
containment measures.
The Company's research and development expenditures, all of which were
included in cost of sales, were $341.3 million, $320.0 million and $325.9
million in 1994, 1993 and 1992, respectively. Research and development
expenditures in 1995 are expected to approximate 1994's level.
Charges for environmental cleanup projects totaled $22.8 million in 1994,
all of which were included in cost of sales. This compared to charges for
environmental cleanup projects included in cost of sales totaling $29.7 million
in 1993 and $33.5 million in 1992. A charge of $16.5 million for environmental
cleanup costs related to sold assets was recorded as other expense in 1992. At
22
<PAGE> 26
December 31, 1994, the Company had reserved $116.4 million for environmental
cleanup costs, compared to $117.3 million at December 31, 1993. Environmental
compliance costs may increase in future periods as a result of new and
increasingly stringent laws and regulatory standards. Funding for environmental
cleanup costs is expected to be provided from operations. For further
discussion, refer to the note to the financial statements No. 17, Commitments
and Contingent Liabilities.
Selling, administrative and general expense in 1994 of $2.0 billion
increased 1.9 percent from 1993 but decreased 2.0 percent from 1992. These
expenses amounted to 15.9 percent, 16.5 percent and 16.9 percent of sales in
1994, 1993 and 1992, respectively. The improvement as a percent to sales in each
year reflects the benefits of efficiencies achieved through increased sales
volume and the effects of cost containment measures.
Interest expense in 1994 of $129.4 million decreased 20.3 percent from 1993
and 44.4 percent from 1992, due primarily to reductions in debt totaling
approximately $1.3 billion since the end of 1991. An increase in the proportion
of total domestic variable rate short term debt also contributed to the
improvement.
Other income and expense decreased in 1994 due primarily to the inclusion
of gains on asset sales in 1993 and 1992. Other income and expense in 1993
included gains totaling $24.7 million ($15.0 million after tax or $.10 per
share) resulting from the sale of the laminated films business, the Air Treads
subsidiary's wheel and brake division and a miscellaneous investment. Other
income and expense in 1992 included gains on the sale of the Company's cast and
blown films and polyester business assets totaling $176.5 million ($105.5
million after tax or $.74 per share). In addition, expenses totaling $120.3
million ($76.7 million after tax or $.53 per share) were recorded in 1992 for
workforce reductions, plant closures, asset writedowns and the settlement of a
lawsuit. For further discussion, refer to the note to the financial statements
No. 2, Other (Income) and Expense.
Foreign currency exchange expense in 1994 was $77.6 million, compared to
$113.1 million in 1993 and $77.1 million in 1992. Although exchange expenses
increased in 1993 as a result of a significant strengthening of the dollar
versus the Brazilian cruzeiro, they decreased in 1994 due primarily to the
effects of a new 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 unit sales in 1994 in either Brazil or its export markets, and
it did not have a material effect on the net income contributed by the Company's
operations in Brazil, as lower interest income on time deposits was
substantially offset by lower expenses, primarily foreign currency exchange.
Although segment operating income in Brazil was adversely impacted by lower
interest income on time deposits resulting from the effects of the Real plan,
the contribution of the Company's operations there continued to be significant.
Operations in Brazil accounted for 5.2 percent, 4.8 percent and 4.2 percent of
sales in 1994, 1993 and 1992, respectively, and 14.0 percent, 15.2 percent and
5.2 percent of operating income in each respective year. Due to the volatility
of Brazil's economy, it is uncertain if this level of contribution will continue
in future periods.
The Company's effective tax rate was 33.6 percent, 36.5 percent and 40.2
percent in 1994, 1993 and 1992, respectively. The improvement in each year
resulted primarily from higher U.S. earnings and a more efficient mix of
international and U.S. taxes on international earnings. The effective tax rate
also benefited from the utilization of foreign loss carryovers. For further
discussion of the tax rate, refer to the note to the financial statements No.
15, Income Taxes.
23
<PAGE> 27
Income before extraordinary items and the cumulative effect of accounting
changes was $567.0 million or $3.75 per share in 1994, compared to $488.7
million or $3.33 per share in 1993 and $367.3 million or $2.57 per share in
1992. (Throughout this discussion, per share amounts for 1992 reflect the
two-for-one split of the Company's common stock, which was effected in the form
of a stock dividend distributed on May 4, 1993 to shareholders of record at
April 30, 1993.)
Net income in 1994 was $567.0 million or $3.75 per share, compared to net
income of $387.8 million or $2.64 per share in 1993 and a net loss of $658.6
million or $4.61 per share in 1992. Net income in both 1993 and 1992 was
adversely impacted by the adoption of new accounting standards and expenses
related to the early retirement of debt.
Net income in 1993 was reduced by a one-time non-cash charge of $86.3
million or $.59 per share resulting from the cumulative effect of adopting
Statement of Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits." In 1992, the net loss included a one-time non-cash
charge of $1,065.7 million or $7.46 per share resulting from the full
recognition of the transition obligation associated with Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits
Other than Pensions," and a one-time gain of $55.1 million or $.39 per share
resulting from the adoption of Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes." For further discussion, refer to the notes
to the financial statements No. 13, Postretirement Health Care, Life Insurance
and Postemployment Benefits and No. 15, Income Taxes.
In connection with the Company's debt reduction program, after-tax charges
were recorded totaling $14.6 million or $.10 per share in 1993 and $15.3 million
or $.11 per share in 1992. These charges were related to the early retirement of
certain long term debt obligations, and were accounted for as extraordinary
items.
During 1994, the Company adopted three new accounting standards. The
American Institute of Certified Public Accountants' Statement of Position 93-7,
"Reporting on Advertising Costs," requires costs of advertising to be expensed
when incurred or the first time the advertising takes place. The Financial
Accounting Standards Board's Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity Securities,"
requires certain securities to be classified as either held-to-maturity, trading
or available-for-sale and accounted for according to such classification.
Statement of Financial Accounting Standards No. 116, "Accounting for
Contributions Received and Contributions Made," requires contributions and
pledges to be recognized as revenue or expense in the period received or made.
The adoption of these standards did not have a material effect on the Company's
results of operations or financial position.
SEGMENT INFORMATION
Segment operating income was $1,193.3 million, $1,164.7 million and
$1,110.3 million in 1994, 1993 and 1992, respectively, and segment operating
margin was 9.7 percent, 10.0 percent and 9.4 percent in each respective year.
Segment operating margin was adversely impacted by competitive pricing
conditions in the U.S. and Europe, higher raw material costs, higher labor costs
in the U.S. and Brazil and reduced interest income on time deposits resulting
from the effects of the Real plan.
Gains on asset sales increased segment operating income by $12.2 million in
1993, and the net effect of gains on asset sales, workforce reduction expenses,
plant closure costs and asset writedowns increased segment operating income by
$83.1 million in 1992. For further discussion, refer to the notes to the
financial statements No. 2, Other (Income) and Expense, and No. 16, Business
Segments.
24
<PAGE> 28
INDUSTRY SEGMENTS
TIRES
Sales for 1994 were $10.5 billion, an increase of 5.5 percent from 1993 and
7.6 percent from 1992. Sales in 1994 rose on higher unit volume, which was due
to increased demand worldwide for the Company's products in both the original
equipment and replacement markets, with increases recorded in all regions.
Revenues in 1994 also were favorably affected by the strengthening of
currencies in Europe versus the U.S. dollar. Sales in 1993 increased over 1992
due primarily to higher tire unit sales resulting from increased original
equipment demand, despite a reduction in original equipment volume in Europe.
<TABLE>
<CAPTION>
(Dollars in millions) 1992 1993 1994
--------------------- ---- ---- ----
<S> <C> <C> <C>
Tire Sales $ 9,770.1 $ 9,963.5 $10,508.2
Tire Operating Income $ 763.4 $ 998.5 $ 1,010.6
</TABLE>
The following table presents changes in tire unit sales:
INCREASE IN COMPANY TIRE UNIT SALES FOR THE YEAR
<TABLE>
<CAPTION>
1994 VS. 1993 1994 VS. 1992
------------- -------------
<S> <C> <C>
U.S....................................... 6.5% 12.5%
International............................. 7.9% 10.5%
Worldwide................................. 7.1% 11.6%
</TABLE>
Unit sales in the U.S. increased from 1993 and 1992 in both the original
equipment and replacement markets. Most of the improvement in the U.S. in each
year resulted from increased original equipment volume. Unit sales also reflect
steady improvement compared to 1993 and 1992 in the international original
equipment and replacement markets.
Tire revenue growth in both 1994 and 1993 did not keep pace with tire unit
growth in those years due primarily to lower average selling prices resulting
from continued competitive pricing conditions, especially in the U.S. and
European replacement markets, a shift in worldwide unit sales mix towards
original equipment tires and a shift in sales mix in the U.S. replacement market
toward broad market and private brand tires. Revenues in 1994 were favorably
affected by the strengthening of currencies in Europe versus the U.S. dollar.
Tire revenue growth in 1993 was adversely impacted by the strengthening of the
U.S. dollar versus currencies in Europe.
Operating income for 1994 of $1,010.6 million increased 1.2 percent from
$998.5 million in 1993 and 32.4 percent from $763.4 million in 1992. Operating
income in both 1994 and 1993 increased due primarily to higher tire unit sales
volume, production efficiencies resulting from a sustained high rate of capacity
utilization and the effects of cost containment measures. Operating income in
1994 was adversely impacted by competitive pricing conditions, a shift in sales
mix, higher raw material and labor costs and the effects of the Real plan on
interest income in Brazil.
Operations in Brazil accounted for 5.0 percent, 4.7 percent and 4.0 percent
of tire segment sales in 1994, 1993 and 1992, respectively, and 12.0 percent,
14.1 percent and 3.5 percent of tire segment operating income in each respective
year.
A gain on an asset sale increased tire operating income by $3.1 million in
1993, while the net effect of workforce reduction expenses, plant closure costs
and asset writedowns reduced tire operating income by $78.0 million in 1992.
25
<PAGE> 29
GENERAL PRODUCTS
Sales in 1994 of $1.7 billion increased 5.1 percent from 1993 but decreased
12.9 percent from 1992. Operating income in 1994 of $170.9 million decreased 3.9
percent from $177.8 million in 1993 and 52.9 percent from $362.7 million in
1992.
Sales and operating income in engineered products in both 1994 and 1993
were favorably affected by improved demand, principally in Brazil, and results
in each year reflect increased demand from original equipment manufacturers.
Operating income in 1994 decreased compared to 1993 due to higher raw material
and labor costs and the inclusion of the $9.1 million gain on the sale of the
laminated films business in 1993's results. Sales in chemical products in
both 1994 and 1993 rose on higher volume, but operating income was flat in 1994
and decreased during 1993 due to competitive pricing pressures and higher
manufacturing costs in each year.
<TABLE>
<CAPTION>
(Dollars in millions) 1992 1993 1994
--------------------- ---- ---- ----
<S> <C> <C> <C>
General Products Sales $1,953.9 $1,618.0 $1,700.9
General Products Operating Income $ 362.7 $ 177.8 $ 170.9
</TABLE>
Operations in Brazil accounted for 6.5 percent, 5.7 percent and 3.6 percent
of general products segment sales in 1994, 1993 and 1992, respectively, and 26.9
percent, 20.7 percent and 8.6 percent of general products segment operating
income in each respective year.
The previously mentioned gain on the sale of the laminated films business
increased general products operating income by $9.1 million in 1993, while the
net effect of asset sales, workforce reduction expenses, plant closure costs and
asset writedowns increased general products operating income by $161.1 million
in 1992. In addition, results in 1992 included $430.2 million of sales and $42.9
million of operating income of the cast and blown films, polyester, roofing and
laminated films businesses (excluding any gain recorded on the divestitures),
all of which have been divested by the Company.
OIL TRANSPORTATION
Sales of $79.1 million, $61.9 million and $60.9 million were recorded for
1994, 1993 and 1992, respectively. Sales for this segment consist of tariffs
charged by the All American Pipeline System (the System) and revenues, net of
acquisition costs, resulting from various crude oil gathering, purchasing and
selling activities. Acquisition costs associated with these activities amounted
to approximately $598 million in 1994, $655 million in 1993 and $809 million in
1992. Increased third party oil shipments through the System resulted in lower
levels of crude oil purchasing and selling activities in 1994 and 1993.
Additionally, a higher percentage of crude oil was transferred to Central Texas
for delivery to refineries in the Mid-Continent region and along the Texas Gulf
Coast, resulting in higher tariff revenues.
<TABLE>
<CAPTION>
(Dollars in millions) 1992 1993 1994
--------------------- ---- ---- ----
<S> <C> <C> <C>
Oil Transportation Operating Income ($15.8) ($11.6) $11.8
</TABLE>
26
<PAGE> 30
Operating income in 1994 was $11.8 million, compared to operating losses of
$11.6 million in 1993 and $15.8 million in 1992. The improvement was due
primarily to the previously mentioned higher tariff revenues and the effects of
cost containment measures.
Results of operations of the oil transportation industry segment are
expected to be favorably affected in 1995 and 1996 as a result of increased
throughput of offshore California crude oil transported pursuant to long term
throughput agreements entered into in 1993 with producers of offshore California
crude oil for the transportation of crude oil through a portion of the All
American Pipeline System.
GEOGRAPHIC SEGMENTS
U.S. OPERATIONS
Sales for 1994 of $7.1 billion increased 5.2 percent from 1993 and 5.1
percent from 1992. Operating income for 1994 of $591.5 million increased
slightly from $590.5 million in 1993 but decreased 9.6 percent from $654.3
million in 1992.
Sales in both 1994 and 1993 were higher due to increased unit sales of
tires resulting from increased demand in both the original equipment and
replacement markets, although average tire selling prices decreased as a result
of competitive pricing conditions and a change in mix. Sales in 1994 also
reflect increased chemical volume and higher tariff revenues in the All American
Pipeline System. Operating income in both 1994 and 1993 was favorably impacted
by increased unit sales of tires and other automotive products, production
efficiencies resulting from a high rate of capacity utilization and the effects
of cost containment measures. Operating income in 1994 reflects improved results
in oil transportation activities, but was adversely affected by increased raw
material and labor costs. Sales and operating income in 1994 and 1993 reflect
the absence of the previously mentioned divested General products businesses.
Gains on asset sales increased U.S. operating income by $12.2 million in
1993, while the net effect of gains on asset sales, workforce reduction
expenses, plant closure costs and asset writedowns increased U.S. operating
income by $120.4 million in 1992.
INTERNATIONAL OPERATIONS
Sales for 1994 of $5.2 billion increased 6.0 percent from 1993 and 3.2
percent from 1992. Operating income for 1994 of $601.8 million increased 4.7
percent from $574.6 million in 1993 and 31.1 percent from $459.2 million in
1992.
In Europe, sales in 1994 increased due to higher tire unit sales volume,
improved mix and the effects of currency translations. Sales were adversely
affected by, and operating income decreased due primarily to, competitive
pricing conditions in the region. Sales and operating income in 1994 were also
adversely affected by economic conditions in Turkey, where the Company operates
two tire plants which supply the local and various export markets. Sales in 1993
were adversely impacted by the strengthening of the U.S. dollar versus various
European currencies and slightly lower tire unit sales, but operating income in
that year increased due to lower costs and a shift in mix towards higher margin
replacement tires.
In Latin America, sales and operating income in 1994 increased due
primarily to higher tire unit sales volume and improved results in engineered
products which offset the adverse impact of higher labor costs and the effects
of the Real plan on interest income in Brazil.
Sales and operating income in 1993 increased due primarily to improvements
in Brazil, where results reflected increased demand within the country and in
exports and improved margins.
In Asia, sales and operating income in 1994 increased due primarily to
increased tire unit sales volume. Results also benefited from utilization of new
production capacity in Thailand. Sales and operating income in 1993 decreased
despite slightly higher tire unit sales volume, due
27
<PAGE> 31
in part to a shift in sales mix toward lower margin original equipment tires,
increased competitive pressures and the effect of currency translations.
In Canada, sales and operating income in 1994 were higher due primarily to
increased volume. Sales and operating income in 1993 rose due primarily to
higher original equipment volume, despite the negative effect of the
strengthening of the U.S. dollar.
The net effect of gains on asset sales, workforce reduction expenses, plant
closure costs and asset writedowns reduced international operating income by
$37.3 million in 1992.
For further information relating to industry and geographic segments, refer
to the note to the financial statements No. 16, Business Segments.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $764.6 million during 1994,
as reported on the Consolidated Statement of Cash Flows. Operating cash flows
were reinvested primarily in accounts receivable, reflecting higher sales
volume, capital projects and pension funding, as discussed below.
Net cash used in investing activities was $496.2 million during 1994.
Capital expenditures of $523.0 million were the primary use of cash for
investing activities. Capital expenditures were primarily for plant
modernizations and expansions, acquisitions (primarily in Asia) and new tire
molds and are expected to total approximately $650 million in 1995. At December
31, 1994, the Company had binding commitments for land, buildings and equipment
of approximately $129.4 million.
Net cash used in financing activities was $195.6 million during 1994,
during which time cash payments totaling approximately $166.4 million were made
for the retirement of long term debt. On March 1, 1994 the Company redeemed the
entire outstanding principal amount of its 8.25% First Mortgage Industrial
Revenue Bonds due 2002. The prepayment of principal on March 1, 1994 totaled
approximately $49.7 million. In addition, the 6.30% Yen bank term loan and the
related currency exchange agreement matured in November 1994. Funds required to
repay the loan, net of proceeds from the currency exchange agreement, totaled
approximately $35.5 million. A European subsidiary also retired approximately
$70 million of its Belgian franc bonds.
Consolidated debt at December 31, 1994 was $1,335.6 million, a decrease of
$84.4 million from December 31, 1993. Consolidated debt represents 32.3 percent
of consolidated debt plus shareholders' equity at December 31, 1994, compared to
38.2 percent at the end of 1993. In addition, the Company had off-balance-sheet
standby letters of credit and financial guarantees written totaling
approximately $38.2 million at December 31, 1994. Net debt, which consists of
consolidated debt less cash, cash equivalents and short term securities, was
$1,069.3 million at December 31, 1994, a decrease of $123.0 million from
December 31, 1993.
Throughout 1994, the Company sold certain domestic accounts receivable
under continuous sale programs whereby, as these receivables were collected, new
receivables were sold. Under these agreements, undivided interests in designated
receivable pools are sold to purchasers with recourse limited to the receivables
purchased. At December 31, 1994 and 1993, the outstanding balance of receivables
sold under these agreements amounted to $550 million. The net cumulative
proceeds from sales of accounts and notes receivable under these and other
agreements totaled approximately $4.2 billion during 1994 and $4.0 billion
during 1993 and 1992.
Substantial short term and long term credit sources are available to the
Company globally under normal commercial practices. At December 31,1994 there
were worldwide credit sources totaling $3.2 billion, of which $1.8 billion or 58
percent were unused.
28
<PAGE> 32
During June and July of 1994, the Company restructured its revolving credit
facilities to reduce the amounts committed thereunder and to lower commitment
and usage fees. On July 15, 1994, the Company entered into two new credit
facility agreements, each with 31 domestic and international banks, one
providing for a $900 million five year revolving credit facility and the other
providing for a $300 million 364-day revolving credit facility. The $900 million
five year credit facility agreement provides that the Company may borrow from
time to time until July 15, 1999, when the commitment terminates and any
outstanding loans mature. The $300 million 364-day credit facility agreement
provides that the Company may borrow until July 14, 1995, on which date the
facility commitment terminates, except as it may be extended on a bank by bank
basis. If a bank does not extend its commitment if requested to do so, the
Company may obtain from such bank a two year term loan up to the amount of such
bank's commitment. These facilities replaced bilateral agreements with 40 banks
which provided for an aggregate of $1,054 million of credit facilities through
June 30, 1995 (and thereafter renewable unless terminated) which were terminated
on July 15, 1994 and bilateral agreements with 40 banks which provided for an
aggregate of $521 million of 364-day credit facilities which expired on June 29,
1994. For further information, refer to the note to the financial statements No.
6, Financing Arrangements and Financial Instruments.
The Company has entered into various interest rate contracts to manage the
cost of its floating rate debt. At December 31, 1994, interest rate swap
contracts totaling $445.0 million in notional principal amount were in place
whereunder the Company pays a fixed amount and receives a variable amount
equivalent to LIBOR. The interest rate contracts fix the effective interest cost
of floating rate debt and, at December 31, 1994, had an average life to maturity
of 1.69 years, a weighted average stated fixed rate of 8.95% and would cost an
estimated $7.1 million to sell or unwind. During 1994, the Company paid under
these contracts a weighted average fixed rate of 9.09% and received various
LIBOR rates equivalent to a weighted average of 4.44%. The Company was also
party to an interest rate swap contract of $50.0 million in notional principal
amount at December 31, 1994 whereunder the Company pays a variable rate based on
LIBOR and receives a fixed rate. At December 31, 1994 this contract had a life
to maturity of 3.23 years, a stated fixed rate of 6.69% and would cost an
estimated $1.9 million to sell or unwind. During 1994, the Company paid under
this contract a variable rate averaging 4.34% and received a fixed rate of
6.69%. At December 31, 1994, the interest rate on approximately 73 percent of
the Company's debt was fixed by either the nature of the obligation or through
the interest rate contracts. For further information, refer to the note to the
financial statements No. 6, Financing Arrangements and Financial Instruments.
Improvements in 1994 to the major domestic salaried pension plan and
changes resulting from master labor contract negotiations resulted in an
increase of $204.1 million in the accumulated benefit obligation and $186.2
million in the projected benefit obligation. Compensation and Benefits and
Deferred charges increased as a result of these improvements. During 1994 and
1993, the Company's domestic funding practice has been to fund, from operations,
amounts in excess of the requirements of federal laws and regulations. During
this period, the Company has funded $321.0 million. The Company intends to
continue this practice in 1995.
Funds generated by operations, together with funds available under existing
credit arrangements, are expected to exceed currently anticipated funding
requirements.
29
<PAGE> 33
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX
CONSOLIDATED FINANCIAL STATEMENTS--FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
PAGE
-------------
<S> <C>
Report of Independent Accountants.......................................... 30
Consolidated Statement of Income -- years ended December 31, 1994,
1993 and 1992............................................................ 31
Consolidated Balance Sheet -- December 31, 1994 and 1993................... 32
Consolidated Statement of Shareholders' Equity -- years ended
December 31, 1994, 1993 and 1992......................................... 33
Consolidated Statement of Cash Flows -- years ended
December 31, 1994, 1993 and 1992......................................... 34
Notes to Financial Statements.............................................. 35
Supplementary Data (unaudited)............................................. 50
Financial Statement Schedules.............................................. FS-1
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
The Goodyear Tire & Rubber Company
In our opinion, the consolidated financial statements listed in the index on
this page present fairly, in all material respects, the financial position of
The Goodyear Tire & Rubber Company and subsidiaries at December 31, 1994 and
1993, and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1994, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Notes 13 and 15 to the consolidated financial statements,
the Company changed its method of accounting for postemployment benefits,
effective January 1, 1993, and its method of accounting for postretirement
benefits and for income taxes, effective January 1, 1992.
PRICE WATERHOUSE LLP
Cleveland, Ohio
February 8, 1995
30
<PAGE> 34
<TABLE>
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Dollars in millions, except per share)
<CAPTION>
Year Ended December 31, 1994 1993 1992
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Sales $12,288.2 $11,643.4 $11,784.9
Cost of Goods Sold 9,271.4 8,713.0 8,971.8
Selling, Administrative and General Expense 1,958.2 1,922.1 1,997.3
Interest Expense (Note 14) 129.4 162.4 232.9
Other (Income) and Expense (Note 2) (37.9) (79.1) (147.3)
Foreign Currency Exchange 77.6 113.1 77.1
Minority Interest in Net Income of Subsidiaries 23.8 27.0 23.2
-------------------------------------------------------------------------------------------------
Income before Income Taxes, Extraordinary Items
and Cumulative Effect of Accounting Changes 865.7 784.9 629.9
United States and Foreign Taxes on Income (Note 15) 298.7 296.2 262.6
-------------------------------------------------------------------------------------------------
Income before Extraordinary Items
and Cumulative Effect of Accounting Changes 567.0 488.7 367.3
Extraordinary Item - Early Extinguishment of Debt
(net of tax of $6.1 in 1993, $6.4 in 1992) - (14.6) (15.3)
Cumulative Effect of Change in Accounting for
Postemployment Benefits (net of tax of $55.2) (Note 13) - (86.3) -
Transition Effect of Change in Accounting for Non-Pension
Postretirement Benefits (net of tax of $617.0) (Note 13) - - (1,065.7)
Cumulative Effect of Change in Accounting for
Income Taxes (Note 15) - - 55.1
-------------------------------------------------------------------------------------------------
Net Income (loss) $ 567.0 $ 387.8 $ (658.6)
=================================================================================================
Per Share of Common Stock:*
Income before Extraordinary Items
and Cumulative Effect of Accounting Changes $ 3.75 $ 3.33 $ 2.57
Extraordinary Item - Early Extinguishment of Debt - (.10) (.11)
Cumulative Effect of Change in Accounting for
Postemployment Benefits - (.59) -
Transition Effect of Change in
Accounting for Non-Pension Postretirement Benefits - - (7.46)
Cumulative Effect of Change in Accounting for
Income Taxes - - .39
-------------------------------------------------------------------------------------------------
Net Income (loss) $ 3.75 $ 2.64 $ (4.61)
=================================================================================================
Average Shares Outstanding* 151,203,885 147,086,828 142,808,424
=================================================================================================
<FN>
*1992 has been restated to reflect the two-for-one stock split in
May 1993.
The accompanying notes are an integral part of this financial
statement.
</TABLE>
31
<PAGE> 35
<TABLE>
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<S> <C> <C>
(Dollars in millions)
December 31, 1994 1993
--------------------------------------------------------------------------------------------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 250.9 $ 188.5
Short term securities 15.4 39.2
Accounts and notes receivable (Note 3) 1,524.7 1,314.2
Inventories (Note 4) 1,425.1 1,349.8
Prepaid expenses 406.6 371.1
--------------------------------------------------------------------------------------------------------
Total Current Assets 3,622.7 3,262.8
OTHER ASSETS:
Investments in affiliates, at equity 133.4 107.2
Long term accounts and notes receivable 208.5 173.6
Deferred charges and other miscellaneous assets 775.9 604.6
--------------------------------------------------------------------------------------------------------
1,117.8 885.4
Properties and Plants (Note 5) 4,382.8 4,287.9
--------------------------------------------------------------------------------------------------------
Total Assets $9,123.3 $8,436.1
========================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable - trade $1,013.9 $ 870.0
Compensation and benefits 745.2 657.1
Other current liabilities 259.8 269.6
United States and foreign taxes 326.2 373.1
Notes payable to banks and overdrafts 213.0 313.1
Long term debt due within one year 13.9 41.0
--------------------------------------------------------------------------------------------------------
Total Current Liabilities 2,572.0 2,523.9
Long Term Debt and Capital Leases (Note 6B) 1,108.7 1,065.9
Compensation and Benefits 2,173.4 2,101.0
Other Long Term Liabilities 322.1 321.8
Minority Equity in Subsidiaries 143.9 122.7
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, 151,407,285 (150,515,374 in 1993) 151.4 150.5
Capital surplus 918.5 878.0
Retained earnings 2,194.5 1,740.9
--------------------------------------------------------------------------------------------------------
3,264.4 2,769.4
Foreign currency translation adjustment (421.7) (422.4)
Minimum pension liability adjustment (Note 11) (39.5) (46.2)
--------------------------------------------------------------------------------------------------------
Total Shareholders' Equity 2,803.2 2,300.8
--------------------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $9,123.3 $8,436.1
========================================================================================================
<FN>
The accompanying notes are an integral part of this financial statement.
</TABLE>
32
<PAGE> 36
<TABLE>
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<CAPTION>
<S> <C> <C>
Foreign Minimum
Common Stock Currency Pension Total
---------------- Capital Retained Translation Liability Shareholders'
(Dollars in millions, except per share) Shares Amount Surplus Earnings Adjustment Adjustment Equity
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1991
after deducting 52,328,368 treasury
shares 70,663,515 $ 70.7 $639.1 $2,208.5 $(187.2) $ - $2,731.1
Net loss for 1992 (658.6) (658.6)
Cash dividends 1992--$.275 per share (39.3) (39.3)
Common stock issued (including
1,580,945 treasury shares):
Dividend Reinvestment and
Stock Purchase Plan 45,281 3.1 3.1
Stock compensation plans 1,535,665 1.5 46.3 47.8
Foreign currency translation
adjustment (153.8) (153.8)
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1992
after deducting 50,747,423 treasury
shares 72,244,461 72.2 688.5 1,510.6 (341.0) - 1,930.3
Net income for 1993 387.8 387.8
Cash dividends 1993--$.575 per share (84.9) (84.9)
Stock dividend 1993 72,689,064 72.6 (72.6) -
Common stock issued (including
5,584,285 treasury shares):
Dividend Reinvestment and
Stock Purchase Plan 66,589 .1 3.0 3.1
Stock compensation plans 2,605,544 2.7 74.8 77.5
Conversion of debentures 2,909,716 2.9 111.7 114.6
Foreign currency translation
adjustment (81.4) (81.4)
Minimum pension liability
adjustment (46.2) (46.2)
------------------------------------------------------------------------------------------------------------------------------------
Balance at December 31, 1993
after deducting 45,163,138 treasury
shares 150,515,374 150.5 878.0 1,740.9 (422.4) (46.2) 2,300.8
Net income for 1994 567.0 567.0
Cash dividends 1994--$.75 per share (113.4) (113.4)
Common stock issued (including
891,911 treasury shares):
Dividend Reinvestment and
Stock Purchase Plan 96,691 .1 3.5 3.6
Stock compensation plans 795,220 .8 37.0 37.8
Foreign currency translation
adjustment .7 .7
Minimum pension liability
adjustment 6.7 6.7
------------------------------------------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 31, 1994
after deducting 44,271,227 treasury
shares 151,407,285 $151.4 $918.5 $2,194.5 $(421.7) $(39.5) $2,803.2
===================================================================================================================================
Cash dividends per share for 1992 have been restated to reflect the two-for-one stock split in May 1993.
<FN>
The accompanying notes are an integral part of this financial statement.
</TABLE>
33
<PAGE> 37
<TABLE>
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
(Dollars in millions)
Year Ended December 31, 1994 1993 1992
<S> <C> <C> <C>
----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ 567.0 $ 387.8 $ (658.6)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation 410.3 392.9 445.8
Deferred tax provision 99.8 (36.3) (36.0)
Accounts and notes receivable (192.4) (10.9) (219.6)
Inventories (63.9) (100.2) (71.9)
Accounts payable - trade 139.7 (48.1) 124.2
Domestic pension funding (238.8) (82.2) (172.7)
Other assets and liabilities 42.9 117.8 162.1
Accounting changes - 86.3 1,065.7
Asset sales - (24.7) (164.2)
Workforce reductions and other non-cash charges - - 120.3
Early extinguishment of debt - 20.7 21.7
----------------------------------------------------------------------------------------------------------------------
Total adjustments 197.6 315.3 1,275.4
----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 764.6 703.1 616.8
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (523.0) (432.3) (366.6)
Asset dispositions 19.0 83.6 425.3
Short term securities acquired (287.1) (157.5) (121.1)
Short term securities redeemed 310.6 214.2 95.8
Other transactions (15.7) 9.8 10.5
----------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by investing activities (496.2) (282.2) 43.9
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of foreign currency exchange agreements - 4.1 44.5
Short term debt incurred 385.6 324.8 442.8
Short term debt paid (395.7) (487.6) (325.6)
Long term debt incurred 52.9 2.7 124.4
Long term debt and capital leases paid (166.4) (385.8) (909.3)
Common stock issued 41.4 195.2 50.9
Dividends paid (113.4) (84.9) (39.3)
----------------------------------------------------------------------------------------------------------------------
Net cash used in financing activities (195.6) (431.5) (611.6)
Effect of Exchange Rate Changes on Cash and Cash Equivalents (10.4) (8.4) (5.0)
----------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 62.4 (19.0) 44.1
Cash and Cash Equivalents at Beginning of the Period 188.5 207.5 163.4
----------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 250.9 $ 188.5 $ 207.5
======================================================================================================================
<FN>
The accompanying notes are an integral part of this financial statement.
</TABLE>
34
<PAGE> 38
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
A summary of the significant accounting policies used in the
preparation of the accompanying financial statements follows:
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of all
majority-owned subsidiaries. All significant intercompany transactions have
been eliminated.
The Company's investments in 20% to 50% owned companies in which it has
the ability to exercise significant influence over operating and financial
policies are accounted for on the equity method. Accordingly, the Company's
share of the earnings of these companies is included in consolidated net
income. Investments in other companies are carried at cost.
REVENUE RECOGNITION
Substantially all revenues are recognized when finished products are shipped to
unaffiliated customers or services have been rendered with appropriate
provision for uncollectible accounts. In conformance with oil industry
practice, revenues resulting from sales of crude oil purchased from third
parties are recognized net of the related acquisition costs.
CONSOLIDATED STATEMENT OF CASH FLOWS
Cash and cash equivalents include cash on hand and in the bank as well as all
short term securities held for the primary purpose of general liquidity. Such
securities normally mature within three months from the date of acquisition.
Cash flows associated with items intended as hedges of identifiable
transactions or events are classified in the same category as the cash flows
from the items being hedged.
INVENTORY PRICING
Inventories are stated at the lower of cost or market. Cost is determined using
the last-in, first-out (LIFO) method for a significant portion of domestic
inventories and the first-in, first-out (FIFO) method or average cost method
for other inventories. Refer to Note 4.
PROPERTIES AND PLANTS
Properties and plants are stated at cost. Depreciation is computed on the
straight line method. Accelerated depreciation is used for income tax purposes,
where permitted. Refer to Note 5.
FOREIGN CURRENCY TRANSLATION
Financial statements of international subsidiaries are translated into U.S.
dollars using the exchange rate at each balance sheet date for assets and
liabilities and a weighted average exchange rate for each period for revenues,
expenses and gains and losses. Where the local currency is the functional
currency, translation adjustments are recorded as a separate component of
shareholders' equity. Where the U.S. dollar is the functional currency,
translation adjustments are recorded in income.
INCOME TAXES
Income taxes are recognized during the year in which transactions enter into
the determination of financial statement income, with deferred taxes being
provided for temporary differences between amounts of assets and liabilities
for financial reporting purposes and such amounts as measured by tax laws.
Refer to Note 15.
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments are utilized by the Company to reduce interest
rate and foreign exchange risks. The Company has established a control
environment which includes policies and procedures for risk assessment and the
approval, reporting and monitoring of derivative financial instrument
activities. The Company does not hold or issue derivative financial instruments
for trading purposes.
Interest Rate Contracts - The differentials to be received or paid under
contracts designated as hedges are recognized in income over the life of the
contracts as adjustments to Interest Expense. Gains and losses on terminations
of interest rate contracts are recognized as Other (Income) and Expense when
terminated in conjunction with the retirement of associated debt. Gains and
losses are deferred and amortized to Interest Expense over the remaining life
of the associated debt to the extent that such debt remains outstanding.
Foreign Exchange Contracts - Gains and losses on contracts designated
as hedges of existing assets and liabilities are accrued as exchange rates
change and are recognized in income as Foreign Currency Exchange. Gains and
losses on contracts designated as hedges of net investments in foreign
subsidiaries are accrued as exchange rates change and are recognized in
Shareholders' Equity as Foreign currency translation adjustment. Gains and
losses on contracts designated as hedges of identifiable foreign currency firm
commitments are deferred and included in the measurement of the related foreign
currency transaction. Refer to Note 6.
35
<PAGE> 39
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
ENVIRONMENTAL CLEANUP MATTERS
The Company expenses environmental expenditures related to existing conditions
resulting from past or current operations and from which no current or future
benefit is discernible. Expenditures which extend the life of the related
property or mitigate or prevent future environmental contamination are
capitalized. The Company determines its liability on a site by site basis and
records a liability at the time when it is probable and can be reasonably
estimated. The Company's estimated liability is reduced to reflect the
anticipated participation of other potentially responsible parties in those
instances where it is probable that such parties are legally responsible and
financially capable of paying their respective shares of the relevant costs.
The estimated liability of the Company is not discounted or reduced for
possible recoveries from insurance carriers. Refer to Note 17.
ADVERTISING COSTS
Costs incurred for producing and communicating advertising are expensed when
incurred, including costs incurred under the Company's domestic cooperative
advertising program with dealers and franchisees, which normally are incurred
subsequent to the first time the advertising takes place. Refer to Note 10.
PER SHARE OF COMMON STOCK
Per share amounts have been computed based on the average number of common
shares outstanding. On May 4, 1993, a two-for-one split of the Company's common
stock was effected in the form of a stock dividend of one share of common stock
on each share of common stock outstanding at the close of business on April 30,
1993. The Company's articles of incorporation were amended to increase the
number of authorized shares of common stock from 150,000,000 to 300,000,000
following shareholder approval.
Accordingly, certain share and per share data has been restated, where
required, to retroactively reflect the stock split. Common stock was credited
$1 and retained earnings was charged a like amount for each share of common
stock issued pursuant to the stock split.
RECLASSIFICATION
Certain items previously reported in specific financial statement
captions have been reclassified to conform with the 1994 presentation.
NOTE 2. OTHER (INCOME) AND EXPENSE
<TABLE>
(In millions) 1994 1993 1992
--------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest income $(76.3) $(80.3) $(118.4)
Financing fees and financial instruments 38.4 31.0 59.0
Asset sales - (24.7) (176.5)
Workforce reductions - - 65.0
Plant closures/Asset writedowns - - 46.0
Lawsuit settlement - - 9.3
Miscellaneous - (5.1) (31.7)
--------------------------------------------------------------------------------------
$(37.9) $(79.1) $(147.3)
======================================================================================
</TABLE>
Interest income consists of amounts earned on deposits, primarily from funds
invested in time deposits in Latin America, pending remittance or reinvestment
in the region. For 1992, interest income also included interest on installment
sales, technical assistance fees and other miscellaneous items, which accounts
were reclassified commencing with 1993 business.
1993 The Company sold an investment during the second quarter. A gain of
$12.5 million ($7.9 million after tax or $.05 per share) was recorded. The
Company sold its laminated films subsidiary during the third quarter. A gain of
$9.1 million ($5.2 million after tax or $.03 per share) was recorded. The
Company's Air Treads subsidiary sold its wheel and brake division during the
fourth quarter. A gain of $3.1 million ($1.9 million after tax or $.02 per
share) was recorded.
1992 The Company sold certain business assets as part of its strategy to
divest assets not directly related to its core businesses and to reduce debt.
The blown and cast film business assets were sold to Huntsman Holdings
Corporation for $105.5 million on June 30, 1992. A gain of $46.3 million ($29.6
million after tax or $.21 per share) was recorded on the sale. The Company sold
its polyester business assets to Shell Oil Company on December 18, 1992, for
$308.4 million. A gain on the sale of $130.2 million ($75.9 million after tax
or $.53 per share) was recorded. Additionally, during the second quarter the
Company recorded charges of $13.1 million for the estimated cost of closing its
Madisonville, KY, specialty tire plant and $16.3 million to write down the
assets of its Paracrevea rubber plantation in Latin America. These transactions
resulted in an after-tax charge of $21.3 million or $.15 per share. During the
fourth quarter, the Company recorded a charge of $65.0 million ($39.6 million
after tax or $.27 per share) for the reduction of approximately 975 salaried
associates worldwide. The Company also recorded charges of $25.9 million ($15.8
million after tax or $.11 per share) related to the sale of its rubber roofing
business, the write off of assets associated with its retail distribution
system and the settlement of a lawsuit by the U.S. government involving a
previously discontinued business segment.
36
<PAGE> 40
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 3. ACCOUNTS AND NOTES RECEIVABLE
<TABLE>
<CAPTION>
(In millions) 1994 1993
--------------------------------------------------------------------------------
<S> <C> <C>
Accounts and notes receivable $1,578.7 $1,364.8
Allowance for doubtful accounts (54.0) (50.6)
--------------------------------------------------------------------------------
$1,524.7 $1,314.2
================================================================================
</TABLE>
Throughout the year, the Company sold certain domestic accounts receivable
under continuous sale programs. Under these programs, undivided interests in
designated receivable pools are sold to purchasers with recourse limited to the
receivables purchased. The level of net proceeds from sales under these
programs was $550.0 million at December 31, 1994 and 1993. Fees paid by the
Company under these agreements are based on certain variable market rate
indices and are recorded as Other (Income) and Expense.
The Company sold accounts and notes receivable under these and other
agreements, the net cumulative proceeds of which totaled approximately $4.2
billion during 1994 and $4.0 billion during 1993 and 1992. At December 31, 1994
and 1993, the balance of the uncollected portion of these receivables was
$598.4 million and $601.1 million, respectively.
NOTE 4. INVENTORIES
<TABLE>
<CAPTION>
(In millions) 1994 1993
---------------------------------------------------------------------------------
<S> <C> <C>
Raw materials and supplies $ 269.9 $ 227.5
Work in process 69.8 53.7
Finished product 1,085.4 1,068.6
---------------------------------------------------------------------------------
$1,425.1 $1,349.8
=================================================================================
</TABLE>
The cost of inventories using the last-in, first-out (LIFO) method
(approximately 38.9% of consolidated inventories in 1994 and 38.0% in 1993) was
less than the approximate current cost of inventories by $371.1 million at
December 31, 1994 and $325.0 million at December 31, 1993.
NOTE 5. PROPERTIES AND PLANTS
<TABLE>
<CAPTION>
1994 1993
--------------------------------------- ----------------------------------------
Capital Capital
(In millions) Owned Leases Total Owned Leases Total
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Properties and plants, at cost:
Land and improvements $ 284.4 $ 3.7 $ 288.1 $ 295.5 $ 3.7 $ 299.2
Buildings 1,215.6 42.7 1,258.3 1,169.8 42.2 1,212.0
Machinery and equipment 5,508.7 58.6 5,567.3 5,251.4 61.4 5,312.8
Pipeline 1,432.4 - 1,432.4 1,428.2 - 1,428.2
Construction in progress 323.0 - 323.0 311.5 - 311.5
-----------------------------------------------------------------------------------------------------------------------
8,764.1 105.0 8,869.1 8,456.4 107.3 8,563.7
Accumulated depreciation (4,407.1) (79.2) (4,486.3) (4,197.2) (78.6) (4,275.8)
-----------------------------------------------------------------------------------------------------------------------
$ 4,357.0 $ 25.8 $ 4,382.8 $ 4,259.2 $ 28.7 $ 4,287.9
=======================================================================================================================
</TABLE>
The amortization for capital leases included in the depreciation provision for
1994, 1993 and 1992 was $3.4 million, $5.0 million and $5.5 million,
respectively.
37
<PAGE> 41
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 6. FINANCING ARRANGEMENTS
AND FINANCIAL INSTRUMENTS
A. SHORT TERM DEBT AND CREDIT LINES
At December 31, 1994, the Company had short term credit lines and overdraft
arrangements totaling $1,211.2 million, of which $504.2 million were unused.
The Company had outstanding short term debt amounting to $707.0 million
at December 31, 1994. Domestic short term debt represented $494.0 million of
this total with a weighted average interest rate of 6.04% at December 31, 1994,
and was reclassified to long term, as discussed below. The remaining $213.0
million was international subsidiary short term debt with a weighted average
interest rate of 7.09%.
B. LONG TERM DEBT AND CAPITAL LEASES
<TABLE>
<CAPTION>
(In millions) 1994 1993
----------------------------------------------------------------------
<S> <C> <C>
Promissory notes:
12.15% due 1995 - 2000 $ 30.0 $ 35.0
10.26% due 1999 118.4 118.4
Swiss franc bonds:
5.375% due 2000 130.3 118.2
5.375% due 2006 127.3 116.5
6.30% Yen bank term loan due 1994 - 44.8
Bank term loans due 1995 - 2000 118.0 118.0
Other domestic debt 524.7 385.4
International subsidiary debt 57.7 104.4
----------------------------------------------------------------------
1,106.4 1,040.7
Capital lease obligations:
Industrial revenue bonds 1.0 50.7
Other 15.2 15.5
----------------------------------------------------------------------
1,122.6 1,106.9
Less portion due within one year 13.9 41.0
----------------------------------------------------------------------
$1,108.7 $1,065.9
======================================================================
</TABLE>
At December 31, 1994, the fair value of the Company's long term debt
amounted to $1,098.3 million, compared to the carrying amount of $1,106.4
million ($1,066.9 million and $1,040.7 million, respectively, at December 31,
1993). The difference was attributable primarily to the Swiss franc bonds in
1994 and the promissory notes in 1993. The fair value was estimated using
quoted market prices or discounted future cash flows.
At December 31, 1994, the Company had available long term credit
sources totaling $1,942.5 million, of which $1,313.9 million were unused.
In order to reduce exposure to the effects of changing exchange rates
on consolidated results of operations and future foreign currency denominated
cash flows, the Swiss franc bonds were completely hedged by foreign currency
exchange agreements at December 31, 1994 and 1993, as was the Yen term loan at
December 31, 1993. The Company is entitled to purchase the respective foreign
currencies at fixed contract rates as described in the following table. The
effect of market fluctuations on the carrying amount of these agreements
offsets the effect of market fluctuations on the carrying amount of foreign
currency denominated debt. The carrying amounts of these foreign currency
exchange agreements totaled $103.8 million and $91.0 million at December 31,
1994 and 1993, respectively, which were included in Long term accounts and
notes receivable on the Consolidated Balance Sheet.
<TABLE>
<CAPTION>
1994 1993
------------------ ---------------------
Foreign U.S. Foreign U.S.
(In millions) Currency Dollars Currency Dollars
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Carrying value of debt:
Swiss franc, maturing
2000 - 2006 338.4 $257.6 339.9 $234.7
Yen term loan, maturing 1994 - - 5,000.0 44.8
Contract amounts of foreign
currency exchange agreements:
Swiss franc, maturing
2000 - 2006 338.4 153.8 339.9 154.5
Yen, maturing 1994 - - 5,000.0 34.0
Receivables related to foreign
currency exchange agreements:
Swiss franc - 103.8 - 80.2
Yen - - - 10.8
=============================================================================
</TABLE>
In addition to the principal amounts shown in the chart above, the
Swiss franc and Yen currency exchange agreements also cover(ed) the 5.375
percent and 6.30 percent annual coupon payments, respectively. At December 31,
1994, the fair values of the Swiss franc currency exchange agreements, based on
quoted market prices, were estimated at $81.3 million, including the cover for
both principal and coupon payments ($40.9 million at December 31, 1993). The
fair value of the Yen currency exchange agreement was $11.0 million at December
31, 1993. In each case the fair value was favorable.
The 6.30% Yen bank term loan and the related currency exchange
agreement matured in November 1994. Funds required to repay the loan, net of
proceeds from the currency exchange agreement, totaled approximately $35.5
million, including accrued interest.
The bank term loans due 1995 through 2000 consist of various agreements
which provide for interest at floating rates based upon LIBOR plus a fixed
spread. The weighted average rate in effect under the terms of these
agreements at December 31, 1994 was 5.11%.
During June and July of 1994, the Company restructured its revolving
credit facilities to reduce the amounts committed thereunder and to lower
commitment and usage fees. On July 15, 1994, the Company entered into two new
credit facility agreements, each with 31 domestic and international banks. The
new credit facilities consist of a $900 million five year revolving credit
facility and a $300 million 364-day revolving credit facility. The $900 million
five year credit facility agreement provides that the Company may borrow at any
38
<PAGE> 42
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
time until July 15, 1999, when the commitment terminates and any outstanding
loans mature. The Company pays a commitment fee ranging from 8 to 25 basis
points on the entire amount of the commitment (whether or not borrowed) and a
usage fee on amounts borrowed (other than on a competitive bid or prime rate
basis) ranging from 22 to 30 basis points, which may fluctuate quarterly based
upon the Company's performance as measured by defined ranges of leverage. For
the period July 15, 1994 through December 31, 1994 commitment and usage fee
rates were 18.75 and 26.25 basis points, respectively. The $300 million 364-day
credit facility agreement provides that the Company may borrow until July 14,
1995, on which date the facility commitment terminates, except as it may be
extended on a bank by bank basis. If a bank does not extend its commitment if
requested to do so, the Company may obtain from such bank a two year term loan
up to the amount of such bank's commitment. The Company pays a commitment fee
of 10 basis points on the entire amount of the commitment (whether or not
borrowed) and a usage fee of 35 basis points on amounts borrowed (other than on
a competitive bid or prime rate basis). Under both the five year and the
364-day credit facility agreements, the Company may obtain loans bearing
interest at reserve adjusted LIBOR or a defined certificate of deposit rate,
plus in each case the applicable usage fee. In addition, the Company may obtain
loans based on the prime rate or at a rate determined on a competitive bid
basis. The facility agreements each contain certain covenants which, among
other things, require the Company to maintain at the end of each fiscal quarter
a minimum consolidated net worth and a defined minimum interest coverage ratio
and establishes a limit on the aggregate amount of consolidated debt the
Company and its subsidiaries may incur. These facilities replaced bilateral
agreements with 40 banks which provided for an aggregate of $1,054 million of
credit facilities through June 30, 1995 (and thereafter renewable unless
terminated) which were terminated on July 15, 1994 and the bilateral agreements
with 40 banks which provided for an aggregate of $521 million of 364-day credit
facilities which expired on June 29, 1994.
In December 1994, a credit facility agreement was put in place
whereunder the Company may from time to time during 1995 borrow and have
outstanding up to U.S. $25 million at any one time with an international bank.
Under the terms of the agreement, the Company may repay U.S. dollar borrowings
in either U.S. dollars or a predetermined equivalent amount of certain
available foreign currencies. Available currencies are Belgian francs,
Deutschemarks, French francs and Pounds sterling. Borrowings are discounted at
rates equivalent to 12.5 basis points over a three month reserve adjusted
LIBOR. There were no borrowings outstanding under this agreement at December
31, 1994.
Certain domestic and international subsidiary debt obligations
amounting to $567.4 million at December 31, 1994 ($484.7 million at December
31, 1993), which by their terms are due within one year, are classified as long
term. Such obligations are supported by the revolving credit agreements or
other arrangements, and it is the Company's intent to maintain them as long
term. Short term obligations reclassified to long term at December 31, 1994,
consist primarily of $494.0 million of domestic short term bank borrowings with
a weighted average interest rate of 6.04% at that date, and current maturities
of long term debt.
Other domestic debt represents the previously mentioned reclassified
short term bank borrowings and a secured bank loan obtained by a subsidiary.
International subsidiary debt consists primarily of local currency bank loans
maturing in 1995 - 1998, bearing interest at rates ranging from 0% - 16.25%,
and a U.S. dollar loan maturing in 1999 bearing interest at 8.94%.
In January 1994, the Company called for redemption on March 1, 1994,
the total principal amount outstanding as of December 31, 1993 of its 8.25%
First Mortgage Industrial Revenue Bonds, the final amortization thereof due
2002. The prepayment on March 1, 1994, of the principal amount of Bonds totaled
approximately $49.7 million (included under capital lease obligations in
1993).
Refer to Note 7, Leased Assets for additional information on capital
lease obligations.
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 was a party to various interest rate swap contracts at December 31,
1994 and 1993. These contracts limit the effect of market fluctuations on the
interest cost of floating rate debt. The carrying amounts of these contracts
totaled $2.9 million and $8.6 million at December 31, 1994 and 1993,
respectively, substantially all of which were recorded as Other current
liabilities on the Consolidated Balance Sheet. A summary of contracts in place
and related weighted average interest rates at December 31 follows:
<TABLE>
<CAPTION>
(Dollars in millions) 1994 1993
------------------------------------------------------------------------------
<S> <C> <C>
Fixed rate swap contracts:
Notional principal amount $445.0 $710.0
Pay fixed rate 8.95% 9.23%
Receive variable LIBOR 6.04% 3.44%
Average years to maturity 1.69 2.12
Fair value: (unfavorable) $ (7.1) $(62.3)
Floating rate swap contract:
Notional principal amount $ 50.0 $ 50.0
Pay variable LIBOR 5.50% 3.38%
Receive fixed rate 6.69% 6.69%
Average years to maturity 3.23 4.23
Fair value: favorable (unfavorable) $ (1.9) $ 3.3
==============================================================================
</TABLE>
39
<PAGE> 43
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
The notional principal amount of fixed rate swap contracts was reduced by $265
million during 1994. Included in this amount were a $50 million notional
principal contract which matured in December 1994 and $215 million notional
principal contracts maturing in 1995 and 1997 which were terminated by the
Company to decrease the percentage of total debt comprised of fixed rated debt.
At December 31, 1994, the interest rate on approximately 73 percent of the
Company's debt was fixed by either the nature of the obligation or through the
interest rate contracts, compared to 88 percent at December 31, 1993.
Additionally, fixed rate swap contracts totaling $28.7 million notional
principal in place to hedge international subsidiary floating rate debt
denominated in Canadian dollars were terminated in 1994 as a result of a
reduction in the related floating rate debt.
The Company paid under the fixed rate interest rate swap contracts
weighted average fixed rates of 9.09% and 9.20% and received various LIBOR
rates equivalent to a weighted average of 4.44% and 3.47% based on weighted
average notional principal amounts of approximately $660 million and $692
million during 1994 and 1993, respectively. The Company paid under the floating
rate swap contract 4.34% and 3.36% and received 6.69% and 6.69% during 1994 and
1993, respectively.
Current market pricing models were used to estimate the fair values of
interest rate swap contracts. The improvement in the fair value of the fixed
rate contracts resulted primarily from the reduced average life to maturity of
the contracts and an increase in variable market interest rates.
The annual aggregate maturities of long term debt and capital leases
for the five years subsequent to 1994 are presented below. Maturities of debt
incurred under or supported by revolving credit agreements have been reported
on the basis that the commitments to lend under these agreements will be
terminated effective at the end of their current terms.
<TABLE>
<CAPTION>
(In millions) 1995 1996 1997 1998 1999
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Debt incurred
under or
supported by
revolving credit
agreements $ - $ - $ - $ - $567.4
Other 13.9 23.5 28.7 29.6 150.5
------------------------------------------------------------------------------
$13.9 $23.5 $28.7 $29.6 $717.9
==============================================================================
</TABLE>
C. FOREIGN CURRENCY FORWARD CONTRACTS
In order to reduce the impact of changes in foreign exchange rates on
consolidated results of operations and future foreign currency denominated cash
flows, the Company was a party to various forward exchange contracts at
December 31, 1994 and 1993. These contracts reduce exposure to currency
movements affecting existing foreign currency denominated assets, liabilities
and firm commitments resulting primarily from trade receivables and payables,
equipment acquisitions and intercompany loans. The contract durations match the
duration of the currency positions. The future value of these contracts and the
related currency positions are subject to offsetting market risk resulting from
foreign currency exchange rate volatility. The carrying amounts of these
contracts totaled $.8 million and $6.7 million at December 31, 1994 and 1993,
respectively, and were recorded in both current and long term Accounts and
notes receivable on the Consolidated Balance Sheet. A summary of contracts in
place at December 31 follows:
<TABLE>
<CAPTION>
1994 1993
------------------------ -------------------------
Fair Contract Fair Contract
(In millions) Value Amount Value Amount
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Forward Contracts:
Buy currency $ 99.5 $ 92.4 $ 82.7 $ 82.7
Sell currency 504.4 492.8 317.1 322.7
Contract duration 1/95 - 9/96 1/94 -4/96
==============================================================================
</TABLE>
Current market pricing models were used to estimate the fair values of foreign
currency forward contracts.
The counterparties to the Company's derivative financial instrument contracts
are substantial and creditworthy multinational commercial banks or other
financial institutions which are recognized market makers. Neither the risks of
counterparty nonperformance nor the economic consequences of counterparty
nonperformance associated with these contracts were considered by the Company
to be material.
40
<PAGE> 44
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 7. LEASED ASSETS
Rental expense charged to income follows:
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
------------------------------------------------------------------------------
<S> <C> <C> <C>
Gross rental expense $300.8 $303.5 $313.2
Sublease rental income (51.9) (52.3) (50.4)
------------------------------------------------------------------------------
Net rental expense $248.9 $251.2 $262.8
==============================================================================
</TABLE>
The Company enters into capital and operating leases primarily for its
vehicles, data processing equipment and its wholesale and retail distribution
facilities under varying terms and conditions, including the Company's sublease
of some of its domestic retail distribution network to independent dealers.
Many of the leases provide that the Company will pay taxes assessed against
leased property and the cost of insurance and maintenance.
While substantially all subleases and some operating leases are
cancelable for periods beyond 1995, management expects that in the normal
course of its business nearly all of its independent dealer distribution
network will be actively operated. As leases and subleases for existing
locations expire, the Company would normally expect to renew the leases or
substitute another more favorable retail location. The estimated minimum future
lease payments for capital leases and operating leases, net of anticipated
sublease revenue of $42.5 million in 1995, $36.5 million in 1996, $30.9 million
in 1997, $24.9 million in 1998, $18.4 million in 1999 and $28.0 million in 2000
and thereafter follow:
<TABLE>
<CAPTION>
Capital Operating
(In millions) Leases Leases
------------------------------------------------------------------------------
<S> <C> <C>
1995 $ 2.7 $201.8
1996 2.3 153.5
1997 2.2 118.3
1998 2.2 85.4
1999 2.3 68.7
2000 and thereafter 16.7 302.4
------------------------------------------------------------------------------
Total minimum lease payments $28.4 $930.1
==============================================================================
Present value of net minimum lease obligations $14.9 $639.1
==============================================================================
</TABLE>
Obligations under capital leases were reduced in 1994 as a result of the
prepayment of approximately $49.7 million principal amount outstanding of 8.25%
First Mortgage Industrial Revenue Bonds related to a leased U.S. manufacturing
facility. Refer to Note 5, Properties and Plants and Note 6, Financing
Arrangements and Financial Instruments.
NOTE 8. STOCK COMPENSATION PLANS
The Company's 1982 and 1987 Employees' Stock Option Plans and the 1989 Goodyear
Performance and Equity Incentive Plan provide for the granting of stock options
and stock appreciation rights (SARs). For options previously granted with
SARs, the exercise of a SAR cancels the stock option; conversely, the exercise
of the stock option cancels the SAR. The 1982 and 1987 Plans expired on
December 31, 1986 and April 10, 1989, respectively, except for options and SARs
then outstanding.
The 1989 Plan was adopted at the April 1989 shareholders' meeting. The
1989 Plan empowers the Company to award or grant, from time to time until
December 31, 1998, when the 1989 Plan expires except with respect to awards
then outstanding, to officers and other key managerial, administrative and
professional associates of the Company and its subsidiaries incentive,
non-qualified and deferred compensation stock options, SARs, restricted stock
and restricted unit grants, performance equity and performance unit grants,
other stock-based awards authorized by a committee of the Board of Directors
which administers the 1989 Plan, and any combination of any or all of such
awards, whether in tandem with each other or otherwise. The Company issued
performance equity grants on January 4, 1994 up to a maximum of 111,700 units
of which 10,737 units were canceled in 1994 under the terms of the Plan. The
January 4, 1994 performance equity grants relate to a three year performance
period ending December 31, 1996. On December 6, 1994 the Company also issued
performance equity grants up to a maximum of 103,300 units of which 1,250 have
been canceled. The units granted on December 6, 1994 relate to a three year
performance period ending December 31, 1997. Assuming that there will be full
utilization of the shares of common stock available for awards during the term
of the 1989 Plan, and
41
<PAGE> 45
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
that no other increases or decreases in the number of shares of common stock
outstanding would occur during the term of the 1989 Plan, approximately
21,500,000 shares of the common stock would be available for the grant of
awards through December 31, 1998. The Company also issued 1,800 shares under
the 1994 Restricted Stock Award Plan for nonemployee directors.
<TABLE>
Caption>
1994 1993
----------------------------- ----------------------------
Shares SARs Shares SARs
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding at January 1 6,838,965 705,834 8,155,280 964,520
Options granted 1,694,150 211,600 2,064,979 269,900
Options without SARs exercised (781,263) - (2,967,748) -
Options with SARs exercised (18,850) (18,850) (148,300) (148,300)
SARs exercised (96,138) (96,138) (251,486) (251,486)
Options without SARs expired (21,125) - (48,200) -
Options with SARs expired (3,000) (3,000) (15,300) (15,300)
SARs expired - (17,000) (2,100) (113,500)
Restricted stock granted 1,800 - - -
Restricted stock issued (1,800) - - -
Performance equity units granted 161,250 - 57,350 -
Performance equity units canceled (24,329) - (5,510) -
---------------------------------------------------------------------------------------------------------
Outstanding at December 31 7,749,660 782,446 6,838,965 705,834
=========================================================================================================
Exercisable at December 31 5,079,369 456,021 3,789,240 330,608
=========================================================================================================
Available for grant at December 31 2,990,448 3,194,138
=========================================================================================================
</TABLE>
All options and SARs were granted at an exercise price equal to the fair
market value of the Company's common stock at the date of grant. At December
31, 1994, options were exercisable at prices ranging from $11.25 to $45.25
($11.25 to $37.75 at December 31, 1993). During 1994 and 1993, options were
exercised at prices ranging from $11.25 to $34.375 and $11.25 to $33.75,
respectively. The weighted average price of options exercisable at December 31,
1994 and 1993 was $26.93 and $23.63, respectively. The weighted average price of
options exercised during 1994 and 1993 was $26.23 and $21.27, respectively.
NOTE 9. RESEARCH AND DEVELOPMENT
Research and development cost included in cost of goods sold for 1994, 1993 and
1992 was $341.3 million, $320.0 million and $325.9 million, respectively.
NOTE 10. ADVERTISING COSTS
Advertising costs included in selling, administrative and general expense for
1994, 1993 and 1992 were $248.2 million, $248.2 million and $266.5 million,
respectively.
NOTE 11. PENSIONS
The Company and its subsidiaries provide substantially all associates with
pension benefits. The principal domestic hourly plan provides benefits based on
length of service. The principal domestic plans covering salaried associates
provide benefits based on career average earnings formulas. Associates making
voluntary contributions to these plans receive higher benefits. Other plans
provide benefits similar to the principal domestic plans as well as termination
indemnity plans at certain international subsidiaries.
The Company's domestic funding policy complies with the requirements of
Federal laws and regulations. Plan assets are invested primarily in common
stocks and fixed income securities.
Net periodic pension cost follows:
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 91.8 $ 68.9 $ 63.9
Interest cost on projected benefit obligations 202.6 179.0 171.6
Actual return on assets (.9) (273.1) (79.8)
Net amortization and deferrals (125.3) 158.5 (28.5)
----------------------------------------------------------------------------------------------------
Net periodic pension cost $ 168.2 $ 133.3 $ 127.2
====================================================================================================
</TABLE>
42
<PAGE> 46
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
The following table sets forth the funded status and amounts recognized in the
Company's Consolidated Balance Sheet at December 31, 1994 and 1993. At the end
of 1994 and 1993, assets exceeded accumulated benefits in certain plans and
accumulated benefits exceeded assets in others.
<TABLE>
<CAPTION>
1994 1993
--------------------------------------------------------------------
Assets Exceed Accumulated Assets Exceed Accumulated
Accumulated Benefits Accumulated Benefits
(In millions) Benefits Exceed Assets Benefits Exceed Assets
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $(852.4) $(1,291.4) $(640.2) $(1,315.1)
====================================================================================================================================
Accumulated benefit obligation $(871.8) $(1,500.8) $(652.5) $(1,497.6)
====================================================================================================================================
Projected benefit obligation $(977.8) $(1,551.7) $(778.6) $(1,551.6)
Plan assets 939.9 1,140.1 735.3 1,167.4
------------------------------------------------------------------------------------------------------------------------------------
Projected benefit obligation in excess of plan assets (37.9) (411.6) (43.3) (384.2)
Unrecognized net loss 121.8 51.4 93.2 77.3
Prior service cost not yet recognized in net periodic pension cost 172.1 263.8 108.5 142.1
Unrecognized net (asset) obligation at transition (9.5) 27.6 (9.5) 29.6
Adjustment required to recognize minimum liability - (313.8) - (208.0)
------------------------------------------------------------------------------------------------------------------------------------
Prepaid (accrued) and deferred pension cost recognized in the
Consolidated Balance Sheet $ 246.5 $ (382.6) $ 148.9 $ (343.2)
====================================================================================================================================
1994 1993 1992
-------------------------------------------------------------------------------------
Assumptions: U.S. International U.S. International U.S. International
------------------------------------------------------------------------------------------------------------------------------------
Discount rate 8.5% 0% -12.0% 7.75% 2.0% - 10.0% 8.5% 0% - 11.0%
Rate of increase in compensation levels 4.5% 0% -10.5% 4.5% 0% - 9.0% 4.5% 0% - 9.0%
Expected long term rate of return on assets 9.0% 5.5% -12.0% 9.0% 5.0% - 11.0% 9.0% 5.0% - 11.0%
====================================================================================================================================
</TABLE>
The Company is required to offset the adjustment required to recognize minimum
liability on its Consolidated Balance Sheet with an intangible asset, up to the
amount of unrecognized prior service costs plus unrecognized obligations at
transition that remain at December 31 of each year. Liability amounts in excess
of these two items are offset by a separate reduction in Shareholders' Equity,
net of tax. Accordingly, Shareholders' Equity was reduced by $39.5 million at
December 31, 1994, compared to $46.2 million at December 31, 1993.
Certain international subsidiaries maintain unfunded plans consistent
with local practices and requirements and at December 31, 1994, these plans
accounted for $140.4 million of the Company's accumulated benefit obligation,
$162.6 million of its projected benefit obligation and $7.5 million of its
minimum pension liability adjustment ($135.4 million, $160.2 million and $9.4
million, respectively, at December 31, 1993).
43
<PAGE> 47
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 12. EMPLOYEES' SAVINGS PLANS
Substantially all domestic associates are eligible to participate in savings
plans. Under these plans associates elect to contribute a percentage of their
pay. In 1994, most plans provided for the Company's matching of these
contributions (up to a maximum of 6 percent of the associate's annual pay or,
if less, $9,240) at the rate of 50 percent. Company contributions were $31.7
million, $29.4 million and $27.4 million for 1994, 1993 and 1992, respectively.
NOTE 13. POSTRETIREMENT HEALTH CARE, LIFE INSURANCE AND POSTEMPLOYMENT BENEFITS
The Company adopted Statement of Financial Accounting Standards No.
106, (SFAS 106), "Employers' Accounting for Postretirement Benefits Other than
Pensions," for all U.S. and significant international health care and life
insurance benefit plans effective January 1, 1992. SFAS No. 106 requires the
accrual of postretirement benefits other than pensions during the years an
associate provides services. The transition obligation at January 1, 1992
amounted to $1,065.7 million, or $7.46 per share, net of related taxes of
$617.0 million.
The Company adopted Statement of Financial Accounting Standards No.
112, (SFAS 112), "Employers' Accounting for Postemployment Benefits," effective
January 1, 1993. SFAS 112 requires the accrual of benefit costs for former or
inactive employees, their beneficiaries and covered dependents, after
employment but before retirement. The transition obligation at January 1, 1993
amounted to $86.3 million or $.59 per share, net of related taxes of $55.2
million.
The Company and its subsidiaries provide substantially all domestic
associates and associates at certain international subsidiaries with health
care and life insurance benefits upon retirement. The life insurance and
certain health care benefits are provided by insurance companies through
premiums based on expected benefits to be paid during the year. Substantial
portions of the health care benefits for domestic retirees are not insured and
are paid by the Company.
Net periodic benefit cost follows:
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
---------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during the period $ 23.6 $ 18.5 $ 21.0
Interest cost 144.0 134.8 136.1
Net amortization (1.5) (5.0) -
---------------------------------------------------------------------------
Net periodic benefit cost $166.1 $148.3 $157.1
===========================================================================
</TABLE>
The following table sets forth the funded status and amounts recognized in the
Company's Consolidated Balance Sheet at December 31, 1994 and 1993.
<TABLE>
(In millions) 1994 1993
---------------------------------------------------------------------------
<S> <C> <C>
Actuarial present value of accumulated
benefit obligation:
Retirees $(1,150.4) $(1,180.7)
Vested active plan participants (441.5) (387.2)
Other active plan participants (246.8) (239.7)
---------------------------------------------------------------------------
Accumulated benefit obligation in excess
of plan assets (1,838.7) (1,807.6)
Unrecognized net loss 165.8 138.7
Unrecognized prior service cost (57.3) (63.2)
---------------------------------------------------------------------------
Accrued benefit cost recognized
in the Consolidated Balance Sheet $(1,730.2) $(1,732.1)
===========================================================================
</TABLE>
<TABLE>
<CAPTION>
1994 1993
----------------------------------------------------
Assumptions: U.S. International U.S. International
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Weighted average discount rate 8.5% 5.0% - 9.5% 7.75% 5.0% - 9.0%
Weighted average rate of increase
in compensation levels 4.5% 2.5% - 5.75% 4.5% 2.5% - 5.75%
============================================================================================
</TABLE>
A 9.25 percent annual rate of increase in the cost of health care benefits for
retirees under 65 years of age and a 6.5 percent annual rate of increase for
retirees 65 years and older is assumed in 1995. This rate gradually decreases
to 5 percent in 2000 and remains at that level thereafter. To illustrate the
significance of a one percent increase in the assumed health care cost trend,
the accumulated benefit obligation would increase by $18.1 million at December
31, 1994, and the aggregate service and interest cost by $2.1 million for the
year then ended.
NOTE 14. INTEREST EXPENSE
Interest expense includes interest and amortization of debt discount and
expense less amounts capitalized as follows:
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest expense before capitalization $135.1 $167.4 $236.9
Less capitalized interest 5.7 5.0 4.0
------------------------------------------------------------------------------
$129.4 $162.4 $232.9
==============================================================================
</TABLE>
The Company made cash payments for interest in 1994, 1993 and 1992 of $147.6
million, $181.1 million and $260.7 million, respectively.
44
<PAGE> 48
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 15. INCOME TAXES
The components of income before income taxes, extraordinary items and the
cumulative effect of accounting changes, adjusted for minority interest in net
income of subsidiaries, follow:
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Domestic Operations $409.1 $382.0 $238.7
International Operations 456.6 402.9 391.2
-----------------------------------------------------------------------------------------------------
865.7 784.9 629.9
Minority Interest in Net Income of Subsidiaries 23.8 27.0 23.2
$889.5 $811.9 $653.1
=====================================================================================================
</TABLE>
A reconciliation of Federal income taxes at the U.S. statutory rate to income
taxes provided follows:
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Federal income tax at the statutory rate
(35% in 1994 and 1993, 34% in 1992) $311.3 $284.1 $222.0
Differences applicable to international:
Withholding and U.S. tax on foreign
source income 35.4 29.7 21.5
Loss carryover benefits and losses
with no tax benefit (16.3) (24.5) 4.9
Tax rate variances and permanent
differences (31.7) 3.5 10.9
-----------------------------------------------------------------------------------------------------
Total International (12.6) 8.7 37.3
Other - 3.4 3.3
-----------------------------------------------------------------------------------------------------
United States and foreign taxes on income
(before extraordinary items and
cumulative effect of accounting changes) $298.7 $296.2 $262.6
=====================================================================================================
Effective Tax Rate 33.6% 36.5% 40.2%
=====================================================================================================
</TABLE>
The components of the provision for income taxes by taxing jurisdiction follow:
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 51.2 $ 92.7 $106.0
Foreign income and withholding taxes 169.9 206.2 176.6
State (22.2) 33.6 16.0
-----------------------------------------------------------------------------------------------------
198.9 332.5 298.6
Deferred:
Federal 74.6 (18.8) (19.2)
Foreign 7.9 (3.3) (11.9)
State 17.3 (14.2) (4.9)
-----------------------------------------------------------------------------------------------------
99.8 (36.3) (36.0)
-----------------------------------------------------------------------------------------------------
United States and foreign taxes on income
(before extraordinary items and
cumulative effect of accounting changes) $298.7 $296.2 $262.6
=====================================================================================================
</TABLE>
Temporary differences and carryforwards which give rise to deferred tax assets
and liabilities at December 31, 1994 and 1993 follow:
<TABLE>
<CAPTION>
(In millions) 1994 1993
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
Postretirement benefits other than pensions $ 685.2 $ 694.7
Accrued environmental liabilities 47.0 50.7
General and product liability 57.7 54.2
Alternative minimum tax credit carryforwards 96.2 59.3
Operating loss carryforwards 21.8 39.4
Workers' compensation 62.2 63.2
Vacation and sick pay 72.1 68.2
Other 157.1 180.5
-----------------------------------------------------------------------------------------------------
1,199.3 1,210.2
Valuation allowance (68.9) (96.4)
-----------------------------------------------------------------------------------------------------
Total deferred tax assets 1,130.4 1,113.8
Total deferred tax liabilities - depreciation (702.3) (686.1)
- pensions (165.2) (76.8)
-----------------------------------------------------------------------------------------------------
Total deferred taxes $ 262.9 $ 350.9
=====================================================================================================
</TABLE>
The decrease in the valuation allowance was primarily due to the realization of
loss carryforwards and other benefits which are reflected in the 1994 provi-
sion. The decrease in the current provision, the increase in the deferred
provision and the increase in the deferred liability for pensions all resulted
primarily from increased pension funding.
The Company made net cash payments for income taxes in 1994, 1993 and
1992 of $234.6 million, $266.0 million and $226.6 million, respectively.
No provision for Federal income tax or foreign withholding tax on
retained earnings of international subsidiaries of $1,033.0 million is
required because this amount has been or will be reinvested in properties and
plants and working capital. It is not practicable to calculate the deferred
taxes associated with the remittance of these investments.
The Company adopted Statement of Financial Accounting Standards No. 109,
(SFAS 109) "Accounting for Income Taxes," effective January 1, 1992. SFAS 109
requires the Company to adopt the liability method of accounting for income
taxes, which measures the expected future tax impact of future taxable income
or deductions implicit in the balance sheet. The cumulative effect to January
1, 1992, of the accounting change to SFAS 109 was to increase net income by a
one-time benefit of $55.1 million or $.39 per share. The adoption of SFAS 109
had no cash flow impact.
45
<PAGE> 49
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 16. BUSINESS SEGMENTS
The Tires segment is the principal industry segment, which involves the
development, manufacture, distribution and sale of tires and related products.
These products include tires, tubes, retreads, automotive repair services and
merchandise purchased for resale.
The General products segment involves the manufacture and sale of various
kinds of belts, hose, molded products, foam cushioning accessories, tank
tracks, organic chemicals used in rubber and plastic processing, synthetic
rubber and rubber latices, and other products.
Several business assets, which were part of the General products segment,
were sold in 1993 and 1992 in accordance with the Company's plan to dispose of
assets not related to its core businesses. For further discussion of these
transactions, refer to Note 2, Other (Income) and Expense. Results of
operations of the General products industry segment and the U.S. geographic
segment were reduced because of the dispositions of these business assets.
Sales and operating income, respectively, of the businesses sold, excluding any
gains recorded on the sales, amounted to $28.9 million and $.1 million in 1993
and $430.2 million and $42.9 million in 1992.
The Oil transportation segment consists primarily of the All American
Pipeline System, a common carrier crude oil pipeline extending from California
to Texas. This segment, which also includes a crude oil gathering pipeline in
California, crude oil storage facilities, linefill and related assets, also
engages in various crude oil gathering, purchasing and selling activities.
Segment sales consist of tariffs charged by the All American Pipeline System
and revenues, net of acquisition costs, resulting from various crude oil
gathering, purchasing and selling activities. Acquisition costs associated with
the gathering, purchasing and selling activities amounted to $598 million, $655
million and $809 million for 1994, 1993 and 1992, respectively.
Operating income for each industry and geographic segment consists of total
revenues less applicable costs and expenses. Transfers between industry
segments were not material. Inter-geographic sales were at cost plus a
negotiated mark up.
The following items have been excluded from the determination of operating
income: interest expense, foreign currency exchange, equity in net income of
affiliated companies, minority interest in net income of subsidiaries,
corporate revenues and expenses and income taxes.
Corporate revenues and expenses were those items not identifiable with the
operations of a segment. Corporate revenues were primarily from the sale of
miscellaneous assets. Corporate expenses were primarily central administrative
expenses.
Assets of industry segments represent those assets that were identified
with the operations of each segment. Assets of geographic segments represent
the regional distribution of both operating and corporate assets. Corporate
assets consist of cash and cash equivalents, short term securities, prepaid
expenses, deferred charges and other miscellaneous assets. At December 31,
1994, approximately $112.4 million or 42.2 percent ($86.3 million or 37.9
percent at December 31, 1993) of the Company's cash, cash equivalents and short
term securities were concentrated in Latin America, primarily Venezuela and
Brazil.
Dividends received by the Company and domestic subsidiaries from its
international operations for 1994, 1993 and 1992 were $151.8 million, $239.8
million and $260.8 million, respectively.
Portions of certain items described in Note 2, Other (Income) and Expense
were charged (credited) to the operating income of both the industry and
geographic segments. During 1993, the Company sold its Air Treads subsidiary's
wheel and brake business. The gain of $3.1 million was credited to both the
Tire industry and the U.S. geographic segments. The $9.1 million gain on the
sale of the laminated films business was credited to both the General products
industry and the U.S. geographic segments. For 1992, the respective amounts
were charged (credited) as follows:
<TABLE>
INDUSTRY SEGMENTS
<CAPTION>
(In millions) Tires General products Total
-------------------------------------------------------------------------------------------------------
1992
<S> <C> <C> <C>
Asset sales $ - $(176.5) $(176.5)
Workforce reductions 40.8 6.6 47.4
Plant closures/Asset writedowns 37.2 8.8 46.0
-------------------------------------------------------------------------------------------------------
$ 78.0 $(161.1) $ (83.1)
=======================================================================================================
<CAPTION>
GEOGRAPHIC SEGMENTS
(In millions) United States Europe Latin America Asia Canada Total
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1992
Asset sales $(170.9) $(1.4) $ - $(.2) $(4.0) $(176.5)
Workforce reductions 20.8 17.8 6.0 2.0 .8 47.4
Plant closures/Asset writedowns 29.7 - 16.3 - - 46.0
--------------------------------------------------------------------------------------------------------
$(120.4) $16.4 $22.3 $1.8 $(3.2) $ (83.1)
========================================================================================================
</TABLE>
46
<PAGE> 50
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
<TABLE>
<CAPTION>
INDUSTRY SEGMENTS
(In millions) 1994 1993 1992
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales to Unaffiliated Customers
Tires $ 9,427.6 $ 8,853.3 $ 8,661.4
Related products and services 1,080.6 1,110.2 1,108.7
-------------------------------------------------------------------------------------------------------------
Total Tires 10,508.2 9,963.5 9,770.1
General products 1,700.9 1,618.0 1,953.9
Oil transportation 79.1 61.9 60.9
-------------------------------------------------------------------------------------------------------------
Net Sales $12,288.2 $11,643.4 $11,784.9
=============================================================================================================
Income (loss)
Tires $ 1,010.6 $ 998.5 $ 763.4
General products 170.9 177.8 362.7
Oil transportation 11.8 (11.6) (15.8)
-------------------------------------------------------------------------------------------------------------
Total operating income 1,193.3 1,164.7 1,110.3
Interest expense (129.4) (162.4) (232.9)
Foreign currency exchange (77.6) (113.1) (77.1)
Equity in net income of affiliated companies 25.7 17.6 10.5
Minority interest in net income of subsidiaries (23.8) (27.0) (23.2)
Corporate revenues and expenses (122.5) (94.9) (157.7)
-------------------------------------------------------------------------------------------------------------
Income before income taxes, extraordinary items
and cumulative effect of accounting changes $ 865.7 $ 784.9 $ 629.9
=============================================================================================================
Assets
Tires $ 5,490.7 $ 5,127.9 $ 5,049.8
General products 636.4 566.9 615.6
Oil transportation 1,398.6 1,413.2 1,487.7
-------------------------------------------------------------------------------------------------------------
Total identifiable assets 7,525.7 7,108.0 7,153.1
Corporate assets 1,464.2 1,220.9 1,302.9
Investments in affiliated companies, at equity 133.4 107.2 107.7
-------------------------------------------------------------------------------------------------------------
Assets at December 31 $ 9,123.3 $ 8,436.1 $ 8,563.7
=============================================================================================================
Capital Expenditures
Tires $ 425.4 $ 356.5 $ 291.4
General products 90.2 67.7 65.7
Oil transportation 7.4 8.1 9.5
-------------------------------------------------------------------------------------------------------------
For the year $ 523.0 $ 432.3 $ 366.6
=============================================================================================================
Depreciation
Tires $ 309.4 $ 305.0 $ 348.4
General products 55.1 47.5 56.2
Oil transportation 45.8 40.4 41.2
-------------------------------------------------------------------------------------------------------------
For the year $ 410.3 $ 392.9 $ 445.8
=============================================================================================================
</TABLE>
47
<PAGE> 51
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
<TABLE>
<CAPTION>
GEOGRAPHIC SEGMENTS
(In millions) 1994 1993 1992
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales to Unaffiliated Customers
United States $ 7,130.5 $ 6,777.4 $ 6,787.3
Europe 2,279.8 2,233.3 2,476.1
Latin America 1,512.5 1,403.5 1,325.1
Asia 711.6 644.9 654.0
Canada 653.8 584.3 542.4
-------------------------------------------------------------------------------------------------------------
Net Sales $12,288.2 $11,643.4 $11,784.9
=============================================================================================================
Inter-Geographic Sales
United States $ 373.9 $ 296.9 $ 290.4
Europe 92.5 78.4 66.5
Latin America 159.2 107.7 87.4
Asia 490.7 346.6 325.9
Canada 269.1 233.6 195.3
-------------------------------------------------------------------------------------------------------------
Total $ 1,385.4 $ 1,063.2 $ 965.5
=============================================================================================================
Revenue
United States $ 7,504.4 $ 7,074.3 $ 7,077.7
Europe 2,372.3 2,311.7 2,542.6
Latin America 1,671.7 1,511.2 1,412.5
Asia 1,202.3 991.5 979.9
Canada 922.9 817.9 737.7
Adjustments and eliminations (1,385.4) (1,063.2) (965.5)
-------------------------------------------------------------------------------------------------------------
Total $12,288.2 $11,643.4 $11,784.9
=============================================================================================================
Operating Income
United States $ 591.5 $ 590.5 $ 654.3
Europe 212.0 221.5 216.8
Latin America 278.2 271.1 155.5
Asia 81.3 70.0 82.9
Canada 30.3 12.0 4.0
Adjustments and eliminations - (.4) (3.2)
-------------------------------------------------------------------------------------------------------------
Total $ 1,193.3 $ 1,164.7 $ 1,110.3
=============================================================================================================
Assets
United States $ 5,467.3 $ 5,113.4 $ 5,143.0
Europe 1,541.3 1,433.8 1,462.0
Latin America 809.4 799.2 854.6
Asia 645.4 471.6 466.0
Canada 538.9 521.8 541.4
Adjustments and eliminations (12.4) (10.9) (11.0)
-------------------------------------------------------------------------------------------------------------
Total identifiable assets 8,989.9 8,328.9 8,456.0
Investments in affiliated companies, at equity 133.4 107.2 107.7
-------------------------------------------------------------------------------------------------------------
Assets at December 31 $ 9,123.3 $ 8,436.1 $ 8,563.7
=============================================================================================================
</TABLE>
48
<PAGE> 52
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Continued)
NOTE 17. COMMITMENTS AND CONTINGENT
LIABILITIES
At December 31, 1994, the Company had binding commitments for investments in
land, buildings and equipment of approximately $129.4 million and
off-balance-sheet standby letters of credit and financial guarantees written of
approximately $38.2 million.
At December 31, 1994, the Company had recorded contingent liabilities
aggregating $116.4 million for anticipated costs, including legal and
consulting fees, site studies, the design and implementation of remediation
plans, post-remediation monitoring and related activities, related to various
environmental matters, primarily the remediation of numerous waste disposal
sites and certain properties sold by the Company. The Company had recorded
$117.3 million for such costs at December 31, 1993. Charges for such costs were
$22.8 million, $29.7 million and $50.0 million in 1994, 1993 and 1992,
respectively. The amount of the Company's ultimate liability in respect of
these matters may be affected by several uncertainties, primarily the ultimate
cost of required remediation and the extent to which other responsible parties
contribute, and is expected to be paid over several years. Refer to Note 1,
Accounting Policies, Environmental Cleanup Matters for additional information.
At December 31, 1994 the Company had recorded contingent liabilities
aggregating approximately $183.1 million for potential product liability and
other tort claims, including related legal fees expected to be incurred,
presently asserted against the Company. The Company had recorded $168.3 million
for such matters at December 31, 1993. Charges for such potential liabilities
were $30.0 million, $31.9 million and $32.1 million in 1994, 1993 and 1992,
respectively. The amount recorded was determined on the basis of an assessment
of potential liability using an analysis of pending claims, historical
experience and current trends. The Company has concluded that in respect of any
of the above described contingent liabilities, it is not reasonably possible
that it would incur a loss exceeding the amount already recognized with respect
thereto which would materially affect the Company's financial condition,
results of operations or liquidity.
Various other legal actions, claims and governmental investigations and
proceedings covering a wide range of matters are pending against the Company
and its subsidiaries. Management, after reviewing available information
relating to such matters and consulting with the Company's General Counsel, has
determined with respect to each such matter either that it is not reasonably
possible that the Company has incurred liability in respect thereof or that any
liability ultimately incurred will not exceed the amount, if any, recorded at
December 31, 1994 in respect thereof which would be material relative to the
consolidated financial position, results of operations or liquidity of the
Company. However, in the event of an unanticipated adverse final determination
in respect of certain matters, the Company's consolidated net income for the
period in which such determination occurs could be materially affected.
NOTE 18. PREFERRED STOCK PURCHASE
RIGHTS PLAN
In 1986, the Company authorized 3,000,000 shares of Series A $10.00 Preferred
Stock ("Series A Preferred") issuable only upon the exercise of rights
("Rights") issued under the Preferred Stock Purchase Rights Plan adopted in
July 1986. Each share of Series A Preferred issued would be non-redeemable,
non-voting and entitled to cumulative quarterly dividends equal to the greater
of $10.00 or, subject to adjustment, 100 times the per share amount of
dividends declared on Goodyear common stock during the preceding quarter, and
would also be entitled to a liquidation preference.
Under the Rights Plan, each shareholder of record on July 28, 1986 received
a dividend of one Right per share of Goodyear common stock. When exercisable,
each Right entitles the holder to buy one two-hundredth of a share of Series A
Preferred at an exercise price of $50. The Rights will be exercisable only
after 10 days following the earlier of a public announcement that a person or
group has acquired 20 percent or more of Goodyear common stock or the
commencement of a tender offer for 20 percent or more of Goodyear common stock
by a person or group. The Rights are non-voting and may be redeemed by the
Company at $.05 per Right under certain circumstances. If not redeemed or
exercised, the Rights will expire on July 28, 1996. If a person or group
accumulates 35 percent or more of Goodyear common stock, or a merger takes
place with an acquiring person or group and the Company is the surviving
corporation, or an acquiring person or group engages in certain self-dealing
transactions, each Right (except those held by such acquiring person or group)
will entitle the holder to purchase Goodyear common stock having a market value
then equal to two times the exercise price. If the Company is acquired or a
sale or transfer of 50 percent or more of the Company's assets or earning power
is made, each Right (except those held by the acquiring person or group) will
entitle the holder to purchase common stock of the acquiring entity having a
market value then equal to two times the exercise price.
49
<PAGE> 53
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
SUPPLEMENTARY DATA
(Unaudited)
<TABLE>
QUARTERLY DATA AND MARKET PRICE INFORMATION
(In millions, except per share)
<CAPTION>
<S> <C> <C> <C> <C> <C>
Quarter
--------------------------------------------------------
1994 First Second Third Fourth Year
-------------------------------------------------------------------------------------------------------------------------
Net Sales $2,909.6 $3,052.3 $3,115.8 $3,210.5 $12,288.2
Gross Profit 714.2 791.9 753.4 757.3 3,016.8
Net Income $ 116.0 $ 163.2 $ 151.3 $ 136.5 $ 567.0
=========================================================================================================================
Per Share of Common Stock:
Net Income $ .77 $ 1.08 $ 1.00 $ .90 $ 3.75
=========================================================================================================================
Average Shares Outstanding 151.0 151.2 151.3 151.4 151.2
Price Range of Common Stock:*
High $ 49 1/4 $ 42 1/2 $ 37 1/4 $ 36 1/2 $ 49 1/4
Low 39 1/4 35 3/4 31 5/8 31 3/4 31 5/8
Dividends Paid .15 .20 .20 .20 .75
=========================================================================================================================
Quarter
--------------------------------------------------------
1993 First Second Third Fourth Year
-------------------------------------------------------------------------------------------------------------------------
Net Sales $2,814.0 $3,000.3 $2,913.1 $2,916.0 $11,643.4
Gross Profit 704.8 775.7 748.1 701.8 2,930.4
Income before Extraordinary Items and
Cumulative Effect of Accounting Changes 87.1 152.2 136.2 113.2 488.7
Extraordinary Item - Early Extinguishment
of Debt - (14.6) - - (14.6)
Cumulative Effect of Change in Accounting for
Postemployment Benefits (86.3) - - - (86.3)
-------------------------------------------------------------------------------------------------------------------------
Net Income $ .8 $ 137.6 $ 136.2 $ 113.2 $ 387.8
=========================================================================================================================
Per Share of Common Stock:
Income before Extraordinary Items and
Cumulative Effect of Accounting Changes $ .60 $ 1.05 $ .92 $ .76 $ 3.33
Extraordinary Item - Early Extinguishment
of Debt - (.10) - - (.10)
Cumulative Effect of Change in Accounting for
Postemployment Benefits (.59) - - - (.59)
-------------------------------------------------------------------------------------------------------------------------
Net Income $ .01 $ .95 $ .92 $ .76 $ 2.64
=========================================================================================================================
Average Shares Outstanding 144.8 145.6 147.9 150.1 147.1
Price Range of Common Stock:*
High $ 38 1/8 $ 42 3/4 $ 46 1/4 $ 47 1/4 $ 47 1/4
Low 32 1/2 36 1/4 39 3/4 40 7/8 32 1/2
Dividends Paid .125 .15 .15 .15 .575
=========================================================================================================================
*New York Stock Exchange - Composite Transactions
</TABLE>
50
<PAGE> 54
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE. None.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Information required by Item 401 of Regulation S-K in respect of directors
of Registrant is, pursuant to General Instruction G(3) to Form 10-K,
incorporated herein by specific reference to the text set forth under the
caption "Election of Directors" at pages 3 through 6, inclusive, of Registrant's
Proxy Statement, dated February 27, 1995, for its Annual Meeting of Shareholders
to be held on April 10, 1995 (the "Proxy Statement"). For information regarding
the executive officers of Registrant, reference is made to Part I, Item 4(A), at
pages 17 through 20, inclusive, of this Annual Report.
Based solely on a review of copies of reports on Forms 3, 4 and 5 received
by Registrant, or on written representations from certain directors and officers
that no updating Section 16(a) forms were required to be filed by them,
Registrant believes that no director or officer of Registrant filed a late
report or failed to file a required report under Section 16(a) of the Exchange
Act during or in respect of the year ended December 31, 1994, except that Mr. J.
W. Barnett, a Vice President of Registrant, filed a report on Form 4 with
respect to one transaction twenty-four days after the date required and Messrs.
F J. Kovac and G. R. Hargreaves, Jr., retired officers of Registrant, each filed
a Form 5 relating to a deferred reporting transaction nine days late. To the
knowledge of Registrant, no person owned 10% or more of any class of
Registrant's equity securities registered under the Exchange Act.
ITEM 11. EXECUTIVE COMPENSATION.
Information required by Item 402 of Regulation S-K in respect of management
of Registrant is, pursuant to General Instruction G(3) to Form 10-K,
incorporated herein by specific reference to the text set forth in the Proxy
Statement under the captions "Executive Officer Compensation", "Compensation
Committee Report on Executive Compensation" and "Performance Graph", at pages 9
through 20, inclusive, of the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information required by Item 403 of Regulation S-K relating to the
ownership of Registrant's Common Stock by certain beneficial owners and
management is, pursuant to General Instruction G(3) to Form 10-K, incorporated
herein by specific reference to the text set forth in the Proxy Statement under
the caption "Beneficial Ownership of Common Stock" at pages 7 and 8 of the Proxy
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information required by Item 404 of Regulation S-K relating to certain
transactions by and relationships of management is, pursuant to General
Instruction G(3) to Form 10-K, incorporated herein by specific reference to the
text set forth in the Proxy Statement under the caption "Executive Officer
Compensation" at pages 9 through 16, inclusive, of the Proxy Statement.
51
<PAGE> 55
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K.
A. LIST OF DOCUMENTS FILED AS PART OF THIS REPORT:
1. FINANCIAL STATEMENTS: See Index on page 30 of this Annual Report.
2. FINANCIAL STATEMENT SCHEDULES: See Index To Financial Statement
Schedules attached to this Annual Report at page FS-1. The Financial
Statement Schedule at page FS-1 is by specific reference hereby
incorporated into and made a part of this Annual Report.
3. EXHIBITS REQUIRED TO BE FILED BY ITEM 601 OF REGULATION S-K: See the
Index of Exhibits at pages X-1 through X-8, inclusive, which is by
specific reference hereby incorporated into and made a part of this
Annual Report. The following exhibits, each listed in the Index of
Exhibits, are or relate to compensation plans and arrangements of
Registrant:
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION FILED AS EXHIBIT
------- ------------------------------------------ -------------------------
<C> <S> <C>
10(a) 1994 Performance Recognition Plan E to Form 10-K for year
ended December 31, 1993
10(b) Form of Performance Equity Grant Agreement F to Form 10-K for year
for 1994 under 1989 Plan ended December 31, 1993
10(c) 1995 Performance Recognition Plan E to this Annual Report
on Form 10-K
10(d) 1993 Performance Recognition Plan B to Form 8-K dated
February 17, 1993
10(e) Form of Stock Option Grant Agreement under E to Form 8-K dated
1989 Plan February 17, 1993
10(f) 1982 Employees' Stock Option Plan A-II to Form 10-K for
(as amended) year ended December 31,
1985
10(g) Form of Stock Option Grant Agreement under G to Form 10-K for year
1989 Plan in respect of options granted ended December 31, 1993
January 4, 1994
10(h) 1987 Employees' Stock Option Plan B to Form 10-Q for
quarter ended March 31,
1987
10(i) 1989 Goodyear Performance and Equity A to Form 10-Q for
Incentive Plan ("1989 Plan") quarter ended March 31,
1989
10(j) Goodyear Supplementary Pension Plan A to Form 10-Q for
(as amended) quarter ended March 31,
1990
10(k) Form of Performance Equity Grant Agreement F to this Annual Report
for 1995 under 1989 Plan on Form 10-K
10(l) Retirement Plan for Outside Directors F to Form 8-K dated March
(as amended) 20, 1987
10(m) Goodyear Employee Severance Plan A-II to Form 10-K for
year ended December 31,
1988
10(n) Form of Performance Equity Grant Agreement C to Form 8-K dated
for 1992 under 1989 Plan February 17, 1993
</TABLE>
52
<PAGE> 56
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION FILED AS EXHIBIT
------- ------------------------------------------ -------------------------
<C> <S> <C>
10(o) Form of Performance Equity Grant D to Form 8-K dated
Agreement for 1993 under 1989 Plan February 17, 1993
10(p) Forms of Stock Option Grant Agreements G to this Annual Report
under 1989 Plan in respect of options and on Form 10-K
SARs granted January 4, 1995
10(z) Employment Agreement and related Stock C to Form 10-Q for
Purchase Agreement, each dated August 6, quarter ended June 30,
1991, between Registrant and S. C. Gault 1991
10(aa) Amendment to Employment Agreement, dated A to Form 8-K dated
December 3, 1991, between Registrant and December 18, 1991
S. C. Gault
10(bb) Amendment to Employment Agreement dated C to Form 8-K dated April
June 1, 1991 and to Stock Purchase 22, 1993
Agreement dated August 6, 1991, dated
April 5, 1993, between Registrant and S.
C. Gault
10(cc) Deferred Compensation Plan for Executives B to Form 10-Q for
quarter ended September
30, 1994
10(dd) 1994 Restricted Stock Award Plan for Non- B to Form 10-Q for
employee Directors quarter ended June 30,
1994
10(ee) Amendment to Employment Agreement dated A to Form 10-Q for
June 1, 1991 and to Stock Purchase quarter ended June 30,
Agreement dated August 6, 1991, dated May 1994
3, 1994, between Registrant and S. C.
Gault
</TABLE>
B. REPORTS ON FORM 8-K:
No Current Report on Form 8-K was filed by Registrant with the Securities
and Exchange Commission during the quarter ended December 31, 1994.
53
<PAGE> 57
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS ANNUAL REPORT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
THE GOODYEAR TIRE & RUBBER COMPANY
(Registrant)
<TABLE>
<S> <C>
Date: March 27, 1995 By /s/ STANLEY C. GAULT
----------------------------
Stanley C. Gault, Chairman of the Board
and Chief Executive Officer
</TABLE>
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
ANNUAL REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<S> <C>
Date: March 27, 1995 /s/ STANLEY C. GAULT
------------------------------------------
Stanley C. Gault, Chairman of the Board
and Chief Executive Officer and Director
(Principal Executive Officer)
Date: March 27, 1995 /s/ ROBERT W. TIEKEN
------------------------------------------
Robert W. Tieken, Executive Vice President
(Principal Financial Officer)
Date: March 27, 1995 /s/ GEORGE E. STRICKLER
------------------------------------------
George E. Strickler, Vice President and
Comptroller
(Principal Accounting Officer)
</TABLE>
<TABLE>
<S> <C>
|- -|
| JOHN G. BREEN, Director |
| THOMAS H. CRUIKSHANK, Director | By /s/ ROBERT W. TIEKEN
| GERTRUDE G. MICHELSON, Director| --------------------
| STEVEN A. MINTER, Director | Robert W. Tieken,
Date: March 27, 1995 <| CHARLES W. PARRY, Director |> Signing as Attorney-in-Fact
| AGNAR PYTTE, Director | for the directors whose
| GEORGE H. SCHOFIELD, Director | names appear opposite.
| WILLIAM C. TURNER, Director |
| HOYT M. WELLS, Director |
|- -|
WILLIAM E. BUTLER, Director
</TABLE>
A Power of Attorney, dated February 8, 1995, authorizing Robert W. Tieken
to sign this Annual Report on Form 10-K for the fiscal year ended December 31,
1994 on behalf of certain of the directors of the Registrant is filed as Exhibit
D to this Annual Report.
54
<PAGE> 58
THE GOODYEAR TIRE & RUBBER COMPANY
FINANCIAL STATEMENT SCHEDULES
ITEMS 8 AND 14(A)(2) OF FORM 10-K
FOR CORPORATIONS
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 1994
------------------
INDEX TO FINANCIAL STATEMENT SCHEDULES
FINANCIAL STATEMENT SCHEDULES:
<TABLE>
<CAPTION>
SCHEDULE NO. PAGE NUMBER
------------ -------------
<S> <C> <C>
Valuation and Qualifying Accounts..................... II FS-1
</TABLE>
All other schedules are omitted because they are not applicable or the
required information is shown in the financial statements or notes thereto.
Financial statements and schedules relating to 50 percent or less owned
companies, the investments in which are accounted for by the equity method, have
been omitted as permitted because, considered in the aggregate as a single
subsidiary, these companies would not constitute a significant subsidiary.
<TABLE>
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
(IN MILLIONS) 1994
-------------------------------------------------------------------------------------------------
<CAPTION>
BALANCE ADDITIONS TRANSLATION BALANCE
AT CHARGED DEDUCTIONS ADJUSTMENT AT END
BEGINNING (CREDITED) FROM DURING OF
DESCRIPTION OF PERIOD TO INCOME RESERVES PERIOD PERIOD
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Deducted from accounts and notes
receivable:
For doubtful accounts........... $ 50.6 $ 26.5 $(23.3)(a) $ .2 $ 54.0
Valuation allowance -- deferred
tax assets....................... 96.4 (27.1) (.4) -- 68.9
1993
-------------------------------------------------------------------------------------------------
Deducted from accounts and notes
receivable:
For doubtful accounts........... $ 55.8 $ 26.2 $(25.8)(a) $ (5.6) $ 50.6
Valuation allowance -- deferred
tax assets....................... 231.2 (25.6) (109.2) -- 96.4
1992
-------------------------------------------------------------------------------------------------
Deducted from accounts and notes
receivable:
For doubtful accounts........... $ 51.5 $ 33.0 $(24.4)(a) $ (4.3) $ 55.8
Valuation allowance -- deferred
tax assets....................... -- 231.2 -- -- 231.2
</TABLE>
---------------
<TABLE>
<C> <S>
Note: (a) Accounts and notes receivable charged off.
</TABLE>
FS-1
<PAGE> 59
<TABLE>
THE GOODYEAR TIRE & RUBBER COMPANY
ANNUAL REPORT ON FORM 10-K
FOR YEAR ENDED DECEMBER 31, 1994
INDEX OF EXHIBITS(1)
<CAPTION>
EXHIBIT
TABLE
ITEM EXHIBIT
NO. (2) DESCRIPTION OF EXHIBIT LETTER PAGE
------- -------------------------------------------------------- ------- ------------
<C> <C> <S> <C> <C>
3 ARTICLES OF INCORPORATION AND BY-LAWS
(a) Certificate of Amended Articles of Incorporation of The
Goodyear Tire & Rubber Company, dated December 20, 1954,
and Certificate of Amendment to Amended Articles of
Incorporation of The Goodyear Tire & Rubber Company,
dated April 6, 1993 (two documents comprising
Registrant's Articles of Incorporation as amended
through March 27, 1995) (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, File No. 1-1927).
(b) 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 with the Securities
and Exchange Commission as Exhibit 4.1(B) to
Registrant's Registration Statement on Form S-3, File
No. 33-43144).
4 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS,
INCLUDING INDENTURES
(a) Conformed copy of Rights Agreement, dated as of July 2,
1986, between Registrant and Manufacturers Hanover Trust
Company, Rights Agent (filed with the Securities and
Exchange Commission as Exhibit 4(a) to Registrant's
Current Report on Form 8-K, dated July 2, 1986, and as
Exhibit 2(a) to Registrant's Registration Statement on
Form 8-A, dated July 3, 1986, File No. 1-1927) 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).
<FN>
---------------
(1) See Part IV, Item 14, Part A.1.
(2) Pursuant to Item 601 of Regulation S-K.
</TABLE>
X-1
<PAGE> 60
<TABLE>
<CAPTION>
EXHIBIT
TABLE
ITEM EXHIBIT
NO. (2) DESCRIPTION OF EXHIBIT LETTER PAGE
------- -------------------------------------------------------- ------- ------------
<C> <C> <S> <C> <C>
4 (b) 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, File No. 1-1927).
(c) 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 (incorporated by reference,
filed with the Securities and Exchange Commission as
Exhibit C to Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1993, File No. 1-1927).
(d) 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 with the Securities and Exchange
Commission as Exhibit A to Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1994,
File No. 1-1927).
Information concerning Goodyear's long-term debt is set
forth at Note 6, captioned "Financing Arrangements and
Financial Instruments", at the sub-caption "B. Long Term
Debt and Capital Leases", in the Financial Statements
set forth at Item 8 of this Annual Report, beginning at
page 38, and is incorporated herein by specific
reference. No other instrument defining the rights of
holders of long-term debt relates to securities having
an aggregate principal amount in excess of 10% of the
consolidated assets of Registrant and its subsidiaries.
In accordance with paragraph (iii) to Part 4 of Item 601
of Regulation S-K, the agreements and instruments
defining the rights of holders of long term debt of
Registrant in respect of which the total amount of
securities authorized thereunder does not exceed 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 agreement or
instrument to the Securities and Exchange Commission
upon request.
<FN>
---------------
(2) Pursuant to Item 601 of Regulation S-K.
</TABLE>
X-2
<PAGE> 61
<TABLE>
<CAPTION>
EXHIBIT
TABLE
ITEM EXHIBIT
NO. (2) DESCRIPTION OF EXHIBIT LETTER PAGE
------- -------------------------------------------------------- ------- ------------
<C> <C> <S> <C> <C>
10 MATERIAL CONTRACTS
(a) Performance Recognition Plan of Registrant adopted
effective January 1, 1994 for calendar year 1994
(incorporated by reference, filed with the Securities
and Exchange Commission as Exhibit E to Registrant's
Annual Report on Form 10-K for the year ended December
31, 1993, File No. 1-1927).
(b) Form of Performance Equity Grant Agreement in respect of
awards granted in 1994 under the 1989 Goodyear
Performance and Equity Incentive Plan (incorporated by
reference, filed with the Securities and Exchange
Commission as Exhibit F to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1993, File No.
1-1927).
(c) Performance Recognition Plan of Registrant adopted E X-E-1
effective January 1, 1995 for calendar year 1995.
(d) Performance Recognition Plan of Registrant adopted
effective January 1, 1993 for calendar year 1993
(incorporated by reference, filed with the Securities
and Exchange Commission as Exhibit B to Registrant's
Current Report on Form 8-K dated February 17, 1993, File
No. 1-1927).
(e) Form of Stock Option Grant Agreement under the 1989
Goodyear Performance and Equity Incentive Plan in
respect of options granted in 1992 and 1993
(incorporated by reference, filed with the Securities
and Exchange Commission as Exhibit E to Registrant's
Current Report on Form 8-K dated February 17, 1993, File
No. 1-1927).
(f) 1982 Employees' Stock Option Plan of Registrant, as
amended effective April 7, 1986 (incorporated by
reference, filed with the Securities and Exchange
Commission as Exhibit A-II to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1985, File
No. 1-1927).
(g) Form of Stock Option Grant Agreement under the 1989
Goodyear Performance and Equity Incentive Plan in
respect of options granted January 4, 1994 (incorporated
by reference, filed with the Securities and Exchange
Commission as Exhibit G to Registrant's Annual Report on
Form 10-K for the year ended December 31, 1993, File No.
1-1927).
<FN>
---------------
(2) Pursuant to Item 601 of Regulation S-K.
</TABLE>
X-3
<PAGE> 62
<TABLE>
<CAPTION>
EXHIBIT
TABLE
ITEM EXHIBIT
NO. (2) DESCRIPTION OF EXHIBIT LETTER PAGE
------- -------------------------------------------------------- ------- ------------
<C> <C> <S> <C> <C>
10 (h) 1987 Employees' Stock Option Plan of Registrant, as
adopted by the Board of Directors of Registrant on
February 10, 1987, and approved by Registrant's
shareholders on April 13, 1987 (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, 1987, File
No. 1-1927).
(i) 1989 Goodyear Performance and Equity Incentive Plan of
Registrant, as adopted by the Board of Directors of
Registrant on December 6, 1988, and approved by the
shareholders of Registrant on April 10, 1989
(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, 1989, File No. 1-1927).
(j) Goodyear Supplementary Pension Plan, as amended May 1,
1990 (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, 1990, File No. 1-1927).
(k) Performance Equity Grant Agreement in respect of awards F X-F-1
granted in December of 1994 in respect of 1995 under the
1989 Goodyear Performance and Equity Incentive Plan.
(l) The Goodyear Tire & Rubber Company Retirement Plan for
Outside Directors, adopted December 6, 1983, as amended
November 13, 1986 (incorporated by reference, filed with
the Securities and Exchange Commission as Exhibit F to
Registrant's Current Report on Form 8-K, dated March 20,
1987, File No. 1-1927).
(m) Goodyear Employee Severance Plan, as adopted by the
Board of Directors of Registrant on February 14, 1989
(incorporated by reference, filed with the Securities
and Exchange Commission as Exhibit A-II to Registrant's
Annual Report on Form 10-K for the year ended December
31, 1988, File No. 1-1927).
(n) Form of Performance Equity Grant Agreement in respect of
awards in 1992 under the 1989 Goodyear Performance and
Equity Incentive Plan (incorporated by reference, filed
with the Securities and Exchange Commission as Exhibit C
to Registrant's Current Report on Form 8-K dated
February 17, 1993, File No. 1-1927).
<FN>
---------------
(2) Pursuant to Item 601 of Regulation S-K.
</TABLE>
X-4
<PAGE> 63
<TABLE>
<CAPTION>
EXHIBIT
TABLE
ITEM EXHIBIT
NO. (2) DESCRIPTION OF EXHIBIT LETTER PAGE
------- -------------------------------------------------------- ------- ------------
<C> <C> <S> <C> <C>
10 (o) Form of Performance Equity Grant Agreement in respect of
awards in 1993 under the 1989 Goodyear Performance and
Equity Incentive Plan (incorporated by reference, filed
with the Securities and Exchange Commission as Exhibit D
to Registrant's Current Report on Form 8-K dated
February 17, 1993, File No. 1-1927).
(p) Forms of Stock Option Grant Agreements in respect of G X-G-1
options and SARs granted January 4, 1995 under the 1989
Goodyear Performance and Equity Incentive Plan; Part I,
Form of Agreement for Incentive Stock Options, Part II,
Form of Agreement for Non-Qualified Stock Options, and
Part III, Form of Agreement for Non-Qualified Stock
Options and tandem Stock Appreciation Rights.
(q) Conformed copy of Receivables Sale Agreement
[$200,000,000 Facility], dated as of December 12, 1989,
among Registrant, Asset Securitization Cooperative
Corporation ("ASCC") and Canadian Imperial Bank of
Commerce ("CIBC") (incorporated by reference, filed with
the Securities and Exchange Commission as Exhibit D to
Registrant's Current Report on Form 8-K, dated March 22,
1990, File No. 1-1927).
(r) Conformed copy of Receivables Sale Agreement
[$400,000,000 Facility], dated as of June 15, 1990,
among Registrant, ASCC and CIBC (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 September 30, 1990,
File No. 1-1927).
(s) Conformed copy of Amendment to Receivables Sale
Agreement [$200,000,000 Facility], dated as of March 14,
1991, among Registrant, ASCC and CIBC, amending the
Receivables Sale Agreement [$200,000,000 Facility],
dated as of December 12, 1989, among Registrant, ASCC
and CIBC (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 June 30, 1991, File No. 1-1927).
(t) Conformed copy of Amendment to Receivables Sale
Agreement [$400,000,000 Facility], dated as of March 14,
1991, among Registrant, ASCC and CIBC, amending the
Receivables Sale Agreement [$400,000,000 Facility],
dated as of June 15, 1990, among Registrant, ASCC and
CIBC (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 June 30, 1991, File No. 1-1927).
<FN>
---------------
(2) Pursuant to Item 601 of Regulation S-K.
</TABLE>
X-5
<PAGE> 64
<TABLE>
<CAPTION>
EXHIBIT
TABLE
ITEM EXHIBIT
NO. (2) DESCRIPTION OF EXHIBIT LETTER PAGE
------- -------------------------------------------------------- ------- ------------
<C> <C> <S> <C> <C>
10 (u) Conformed copy of Second Amendment to Receivables Sale
Agreement [$400,000,000 Facility], dated as of September
15, 1991, among Registrant, ASCC and CIBC, amending the
Receivables Sale Agreement [$400,000,000 Facility],
dated as of June 15, 1990, as amended by amendment dated
as of March 14, 1991, among Registrant, ASCC and CIBC
(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
September 30, 1991, File No. 1-1927).
(v) Conformed copy of Second Amendment to Receivables Sale
Agreement [$200,000,000 Facility] dated as of June 25,
1992, among Registrant, ASCC and CIBC, amending the
Receivables Sale Agreement [$200,000,000 Facility],
dated as of December 12, 1989, among Registrant, ASCC
and CIBC (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 September 30, 1992, File No. 1-1927).
(w) Conformed copy of Third Amendment to Receivables Sale
Agreement [$200,000,000 Facility] dated as of July 23,
1992, among Registrant, ASCC and CIBC, amending the
Receivables Sale Agreement [$200,000,000 Facility],
dated as of December 12, 1989, among Registrant, ASCC
and CIBC (incorporated by reference, filed with the
Securities and Exchange Commission as Exhibit C to
Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1992, File No. 1-1927).
(x) Conformed copy of Third Amendment to Receivables Sale
Agreement [$400,000,000 Facility] dated as of July 28,
1992, among Registrant, ASCC and CIBC, amending the
Receivables Sale Agreement [$400,000,000 Facility],
dated as of June 15, 1990, among Registrant, ASCC and
CIBC (incorporation by reference, filed with the
Securities and Exchange Commission as Exhibit D to
Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1992, File No. 1-1927).
(y) Conformed copy of Fourth Amendment to Receivables Sale
Agreement [$400,000,000 Facility] dated as of January
27, 1993, among Registrant, ASCC and CIBC, amending the
Receivables Sale Agreement [$400,000,000 Facility],
dated as of June 15, 1990, among Registrant, ASCC and
CIBC (incorporated by reference, filed with the
Securities and Exchange Commission as Exhibit A to
Registrant's Current Report on Form 8-K dated February
17, 1993, File No. 1-1927).
<FN>
---------------
(2) Pursuant to Item 601 of Regulation S-K.
</TABLE>
X-6
<PAGE> 65
<TABLE>
<CAPTION>
EXHIBIT
TABLE
ITEM EXHIBIT
NO. (2) DESCRIPTION OF EXHIBIT LETTER PAGE
------- -------------------------------------------------------- ------- ------------
<C> <C> <S> <C> <C>
10 (z) Conformed Copy of Employment Agreement, dated August 6,
1991, and related Stock Purchase Agreement, dated August
6, 1991, each between Registrant and Stanley C. Gault,
the Chairman of the Board and Chief Executive Officer of
Registrant (incorporated by reference, filed with the
Securities and Exchange Commission as Exhibit C to
Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1991, File No. 1-1927).
(aa) Conformed copy of Amendment Agreement, dated December 3,
1991, between Registrant and Stanley C. Gault, Chairman
of the Board and Chief Executive Officer of Registrant,
amending that certain Stock Purchase Agreement dated
August 6, 1991 between Registrant and Stanley C. Gault
(incorporated by reference, filed with the Securities
and Exchange Commission as Exhibit A to Registrant's
Current Report on Form 8-K, dated December 18, 1991,
File No. 1-1927).
(bb) Amendment to Employment Agreement dated June 1, 1991 and
to Stock Purchase Agreement dated August 6, 1991, dated
April 5, 1993, between Registrant and S C Gault
(incorporated by reference, filed with the Securities
and Exchange Commission as Exhibit C to Registrant's
Current Report on Form 8-K dated April 22, 1993, File
No. 1-1927).
(cc) The Goodyear Tire & Rubber Company Deferred Compensation
Plan for Executives, as adopted effective October 4,
1994 (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 September 30, 1994, File No. 1-1927).
(dd) 1994 Restricted Stock Award Plan for nonemployee
Directors of Registrant, as adopted effective June 1,
1994 (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 June 30, 1994, File No. 1-1927).
(ee) Amendment, dated May 3, 1994, to Employment Agreement
dated June 1, 1991 and to Stock Purchase Agreement dated
August 6, 1991, between Registrant and S. C. Gault
(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 June
30, 1994, File No. 1-1927).
<FN>
---------------
(2) Pursuant to Item 601 of Regulation S-K.
</TABLE>
X-7
<PAGE> 66
<TABLE>
<CAPTION>
EXHIBIT
TABLE
ITEM EXHIBIT
NO. (2) DESCRIPTION OF EXHIBIT LETTER PAGE
------- -------------------------------------------------------- ------- ------------
<C> <C> <S> <C> <C>
11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(a) Computation of Earnings Per Share A X-A-1
21 SUBSIDIARIES
(a) List of subsidiaries of Registrant at March 20, 1995. B X-B-1
23 CONSENTS OF EXPERTS AND COUNSEL
(a) Consent of Price Waterhouse LLP, independent C X-C-1
accountants, to incorporation by reference of their
report set forth on page 30 of this Annual Report in
certain Registration Statements on Forms S-3 and S-8.
24 POWER OF ATTORNEY
(a) Power of Attorney, dated February 8, 1995, authorizing D X-D-1
Robert W. Tieken, John M. Ross, George E. Strickler,
James Boyazis, or any one or more of them, to sign this
Annual Report on behalf of certain directors of
Registrant.
27 FINANCIAL DATA SCHEDULE H X-H-1
99 ADDITIONAL EXHIBITS
(a) Registrant's definitive Proxy Statement dated February
27, 1995 (portions incorporated by reference, filed with
the Securities and Exchange Commission, File No.
1-1927).
<FN>
---------------
(2) Pursuant to Item 601 of Regulation S-K.
</TABLE>
X-8
<PAGE> 1
EXHIBIT E
PERFORMANCE RECOGNITION PLAN
OF
THE GOODYEAR TIRE & RUBBER COMPANY
EFFECTIVE JANUARY 1, 1995
(HEREINAFTER CALLED THE "PLAN")
I. PURPOSE AND POLICY
It is the declared policy of the Board of Directors of The Goodyear Tire &
Rubber Company ("Goodyear"), in order to provide incentive for extra effort,
that key personnel of the Company shall be compensated in addition to their
fixed compensation by participation in a performance recognition plan. Such key
personnel shall be selected, as hereinafter provided, from the elected officers
and other key employees of the Company.
The Plan is designed to reinforce participant effort and responsibility
towards achieving the total Company business objectives, the objectives of
specific business units and objectives established for individual participants.
Awards to participants provided under this Plan will vary to the extent these
goals and objectives are attained. The basic intent is to tie awards directly to
results that reflect Company growth and success achieved through customer
satisfaction, quality products and enhanced shareholder value.
The policy aforesaid shall be subject annually, and preferably at its first
meeting of the calendar year, to reconsideration by the Board of Directors; and
the Plan shall on such reconsideration be subject to affirmance, discontinuance,
or amendment by the Board of Directors, for such year.
II. DEFINITIONS
For purposes of the Plan, the following terms shall have the following
meanings:
A) Award. Cash payments approved by the Committee and made pursuant
to the objectives established pursuant to the Plan.
B) Company. The Goodyear Tire & Rubber Company or any of its
subsidiaries and affiliates.
C) Participant. A salaried employee of the Company who has been
selected by the Committee to receive an award under the Plan subject to the
attainment of the established goals and objectives.
III. THE COMMITTEE
The "Committee," hereinafter referred to, is the Compensation Committee of
the Board of Directors of Goodyear and shall from time to time be comprised of
all persons who then are members of the Board of Directors and who are not
participants in the Plan; and no member of the Committee shall be eligible for
participation in the Plan while he is serving on the Committee. Action by the
Committee pursuant to any provision of the Plan may be taken at any meeting held
upon not less than five days' notice of its time, place and purpose given to
each member, at which meeting a quorum of not less than four members is present.
If less than a majority of the whole Committee is present, such action must be
by the unanimous vote of those present, otherwise by a majority vote. The
minutes of such meeting (signed by its secretary) evidencing such action, shall
constitute authority for Goodyear to proceed in accordance therewith.
X-E-1
<PAGE> 2
IV. TARGET BONUS
Each participant is granted a target bonus which is subject to adjustment
between zero percent and 150 percent, depending upon the business goal
achievement.
V. SELECTION OF PARTICIPANTS
A) Following affirmance of the Plan as effective for any calendar year, and
after consultation with the Chief Executive Officer of Goodyear (or, if he be
unavailable, with the next ranking officer of Goodyear who may be available),
the Committee shall determine the participants and establish their respective
target bonuses for such calendar year. The Committee shall also review and
approve the goals established for the participants. As to such determination,
the Committee may rely, to the extent it deems available, upon any information
and recommendations obtained from the officer so consulted. As soon as
practicable after the selection of participants, Goodyear shall notify them of
their participation and target bonuses. Participants are not eligible for any
other annual Company bonus or incentive plan.
B) A list, certified by the Committee (or by the officers as to action
pursuant to subparagraph A above), shall evidence the determination of those
persons who are participants in the Plan for such calendar year and their
respective target bonuses and goals therein.
C) With respect to employees who are not officers of Goodyear, the Chairman
of the Board of Goodyear may add such employees as participants in the Plan
during a Plan year and report such additional participants to the Committee from
time to time.
VI. PAYMENT
The Committee, at its sole discretion, shall determine if a payment shall
be made to participants in any Plan year notwithstanding the fact that the
established goals and objectives may have been achieved. If the Committee
determines that there will be a payment, payment of awards due participants with
respect to the Plan will be made after the close of each Plan year once the
achievement of the performance goals have been determined. All awards are
contingent upon the achievement of the stated performance goals for each Plan
year and a determination by the Committee that a payment shall be distributed to
participants. All awards shall be in cash. There shall be deducted from each
award under the Plan the amount of any tax required by governmental authority to
be withheld and paid over by the Company to such government for the account of a
participant entitled to an award.
VII. CHANGE IN PARTICIPANT'S STATUS
A) Any participant who is not an employee of the Company on December 31 of
a Plan year forfeits his or her participation for that year unless employment
termination was due to the employee's death or retirement (other than pursuant
to a deferred vested pension) under the Retirement Plan for Salaried Employees
(or a comparable plan of a Goodyear subsidiary or affiliate).
B) Any participant whose employment terminates during a Plan year due to
retirement shall be entitled only to a pro rata portion of the target bonus,
subject to the adjustment as provided for in Section IV hereof. Such pro rata
bonus is calculated by multiplying the percentage of days actually worked of the
year (i.e., number of days worked divided by 365) by the target bonus.
Notwithstanding the above, a participant who, after retirement, enters into a
relationship either as an employee, consultant, agent or in any manner
whatsoever with an entity that sells products in competition with products sold
by Goodyear and its subsidiaries, forfeits the right to receive a distribution
under this Plan. In the event such participant enters into such a relationship
with a competitor within six months from a distribution under this Plan, the
participant agrees to refund to The Goodyear Tire & Rubber Company any such
distribution the participant had received.
X-E-2
<PAGE> 3
C) Any participant whose employment status changes during a Plan year due
to layoff, leave of absence or disability shall be entitled only to a pro rata
portion of the target bonus, subject to the adjustment as provided for in
Section IV hereof. Such pro rata bonus is calculated by multiplying the
percentage of days actually worked of the year (i.e., number of days worked
divided by 365) by the target bonus.
D) A participant whose employment terminates during a Plan year due to
death shall be entitled only to a pro rata portion of a target bonus and the
target bonus shall not be adjusted under Section IV hereof. Such pro rata bonus
is based on days actually worked and calculated in the same manner as if the
participant had retired and distribution of the bonus shall be made to the
participating employee's executors, administrators, or such other person or
persons as shall, by specific bequest under the last will and testament of the
participating employee, be entitled thereto.
VIII. MISCELLANEOUS CONDITIONS
The Plan and all participation therein shall be subject to the following
conditions:
A) For all purposes of the Plan, termination of a participant's
employment shall be deemed to have occurred whenever he or she is no longer
employed by the Company.
B) Nothing in the Plan shall obligate the Company with respect to
tenure of office or duration of employment of any participant.
C) All right, title and interest in the Plan shall be personal to the
participant and not subject to voluntary or involuntary alienation,
hypothecation, assignment or transfer, except to the extent provided in
Section VII hereof.
D) The Committee shall have power finally to interpret any of the
provisions of the Plan and to lay down any regulations not inconsistent
herewith for its administration.
E) Nothing in the Plan shall prevent or interfere with any
recapitalization or reorganization of Goodyear or its merger or
consolidation with any corporation. In any such case, the recapitalized,
reorganized, merged, or consolidated company shall assume the obligations
of Goodyear under the Plan or such modification hereof as, in the judgment
of the Board of Directors, shall be necessary to adapt it to the changed
situation and shall provide substantially equivalent benefits to the
participants.
X-E-3
<PAGE> 1
EXHIBIT F
THE GOODYEAR TIRE & RUBBER COMPANY
GRANT AGREEMENT
PERFORMANCE EQUITY GRANT
TOM TIRE
000-00-0000
Corporate Officer
3 Eagle Drive
Akron, OH 12345
Dear Tom:
The Directors of The Goodyear Tire & Rubber Company (the "Company") desire to
encourage and facilitate ownership of the Company's Common Stock by key
employees and to provide for additional compensation based on the appreciation
of the Company's Common Stock, thereby providing incentive to promote the
continued growth and success of the Company's business. Accordingly, the 1989
Goodyear Performance and Equity Incentive Plan was adopted effective April 10,
1989 (the "Plan"). A copy of the Plan is attached.
At the meeting of the Compensation Committee of the Board of Directors, you were
awarded a Performance Equity Grant (each Unit equivalent in value to one share
of Common Stock of the Company) as follows:
<TABLE>
<S> <C>
Date of Grant 12-6-94
Number of Equity Units Granted -------
Performance Period 1-1-95 through 12-31-97
</TABLE>
The number of Performance Equity Grant Units specified above (the "Units") which
you will earn at the end of the three-year Performance Period specified above
(the "Performance Period") will be determined by and contingent upon the extent
to which Performance Goals are achieved. The number of Units actually earned may
be adjusted between 0 and 150% of the number of Units stated above, depending on
the level of achievement of Performance Goals. Performance Units earned will be
paid in cash and shares of the Common Stock of the Company at the rate of 50
percent in cash and 50 percent in shares for each unit earned in February, 1998
(unless you elect to defer payment). The Performance Goals and earn out criteria
for the Performance Period for your Performance Equity Grant are described at
Annex A.
The Goodyear Tire & Rubber Company December 6, 1994
------------------------------------------------
Chairman of the Board
Receipt of this Grant Agreement acknowledged:
Date:
------------------------------------------------ ------------------
Grantee
X-F-1
<PAGE> 2
Grant Agreement (Cont'd)
The Performance Equity Grant for the number of Units specified on the preceding
page is granted to you under, and governed by the terms and conditions of, the
Plan and this Grant Agreement. Your execution and return of the enclosed copy of
this Grant Agreement acknowledging receipt of the Units granted herewith
constitutes your agreement to, and acceptance of, all terms and conditions of
the Plan and this Grant Agreement. You also agree that you have read and
understand the provisions of the Plan, this Grant Agreement and Annex A.
Units earned will be determined at the end of the three-year Performance Period
and will be paid in cash and shares of Common Stock of the Company. Shares of
the Common Stock of the Company and cash earned in respect of the Units, whether
received immediately or deferred in whole or in part, will be subject to
withholding taxes as appropriate.
Any cash payment and certificates for shares of Common Stock of the Company
earned will be deliverable to you or your agent, duly accredited to the
satisfaction of the Company, at the principal office of the Company in Akron,
Ohio, or at such other place acceptable to the Company as may be designated by
you.
All rights conferred upon you under the provisions of this Grant Agreement are
personal to you and, except under the provisions of paragraph 14 of the Plan, no
assignee, transferee or other successor in interest shall acquire any rights or
interests whatsoever under this Grant Agreement, which is made exclusively for
the benefit of you and the Company.
As further consideration for the Units granted to you hereunder, you must remain
in the continuous employ of the Company or one or more of its subsidiaries until
December 31, 1997, the end of the Performance Period. Any Units earned will be
prorated in the event of your death, Retirement (as defined in the Plan) or
Disability (as defined in the Plan) or layoff prior to completion of the
Performance Period. Any proration is based on the last date the participant
worked. Nothing contained herein shall restrict the right of the Company or any
of its subsidiaries to terminate your employment at any time, with or without
cause.
If you are entitled to a proration of units earned due to your retirement,
disability or layoff prior to completion of the performance period, you will
forfeit the right to receive any distribution or payment under this Grant if you
enter into a relationship either as an employee, consultant, agent or in any
manner whatsoever with an entity that sells products in competition with
products sold by Goodyear and its subsidiaries. In the event you enter into such
a relationship with a competitor within six months of a distribution or payment
under this Grant, you agree to refund to Goodyear any such distribution or
payment you received.
Any notice to you under this Grant Agreement shall be sufficient if in writing
and if delivered to you or mailed by registered mail directed to you at the
address on record in the Executive Compensation Department. Any notice to the
Company under this Grant Agreement shall be sufficient if in writing and if
Grant delivered to the Chairman of the Board of the Company or mailed by
registered mail directed to the Company for the attention of said officer at
1144 East Market Street, Akron, Ohio 44316-0001. Either you or the Company may,
by written notice, change the address.
X-F-2
<PAGE> 3
ANNEX A
PERFORMANCE GOALS
Performance Goals are based on the aggregate earnings per share of Goodyear
Common Stock for the period January 1, 1995 through December 31, 1997.
MINIMUM PERFORMANCE GOAL FOR PAYMENT
In order for there to be a distribution under this Grant, the aggregate earnings
per share shall be at least $12.15 for the three-year period beginning January
1, 1995.
PERFORMANCE UNIT DISTRIBUTION SCHEDULE
Unit distributions are payable 50 percent in shares of the Company's Common
Stock and 50 percent in cash.
<TABLE>
<CAPTION>
AGGREGATE EARNINGS % OF
PER SHARE UNIT DISTRIBUTION
1/1/95 -- 12/31/97 BASED ON GRANT
------------------ -----------------
<S> <C>
$14.15 150%
13.90 140
13.65 130
13.40 120
13.15 110
12.90 100
12.65 90
12.40 85
12.15 80
<12.15 0
</TABLE>
X-F-3
<PAGE> 1
EXHIBIT G
(PART I)
THE GOODYEAR TIRE & RUBBER COMPANY
NOTICE OF GRANT OF STOCK OPTIONS
AND GRANT AGREEMENT
TOM B TIRE
111-11-1111
Key Employee
1 Eagle Drive
Akron, OH 12345
Dear Tom:
The Directors of The Goodyear Tire & Rubber Company (the "Company") desire to
encourage and facilitate ownership of the Company's Common Stock by key
employees and to provide for additional compensation based on appreciation of
the Company's Common Stock, thereby providing incentive to promote continued
growth and success of the Company's business. Accordingly, the Goodyear 1989
Performance and Equity Incentive Plan (the "Plan") was adopted effective April
10, 1989. A copy of the Plan is attached.
You have been granted Incentive Stock Options for the purchase of Common Stock
as follows:
<TABLE>
<S> <C>
Incentive Stock Option Grant 950000
Date of Grant 01/04/95
Stock Option Plan 89
Option Price per Share $00.00
Total Number of Shares Granted -0-
</TABLE>
Your option shares become exercisable as follows:
<TABLE>
<S> <C>
on January 4, 1996 25%
on January 4, 1997 50%
on January 4, 1998 75%
on January 4, 1999 100%
1-4-95
--------------------------------------------- ----------------
The Goodyear Tire & Rubber Company Date
--------------------------------------------- ----------------
Optionee Date
</TABLE>
X-G-1
<PAGE> 2
ISO Grant Agreement (Cont'd) January 4, 1995
1. These Incentive Stock Options for the number of shares of Common Stock of the
Company indicated on the preceding page (the "Options") are granted to you under
and are governed by the terms and conditions of the Plan and this Grant
Agreement. Your execution and return of the enclosed copy of page one of this
Grant Agreement acknowledging receipt of the Options granted herewith
constitutes your agreement to and acceptance of all terms and conditions of the
Plan and this Grant Agreement. You also agree that you have read and understand
this Grant Agreement.
2. You may exercise the Options granted pursuant to this Grant Agreement through
(1) a cash payment in the amount of the full option exercise price of the shares
being purchased (the "cash exercise"), (2) a payment in full shares of the
Common Stock of the Company having a market value on the date of exercise equal
to the full option exercise price of the shares being purchased (the "share swap
exercise"), or (3) a combination of the cash exercise and share swap exercise
methods. Any exercise of these Options shall be by written notice to the Company
stating the number of shares to be purchased and the exercise method,
accompanied with the payment, or proper proof of ownership if the share swap
exercise method is used. You shall be required to meet the tax withholding
obligations arising from any exercise of these Options in accordance with any
procedures and rules adopted by the Compensation Committee of the Board (the
"Committee").
3. Certificates for shares purchased will be deliverable to you or your agent,
duly accredited to the satisfaction of the Company, at the principal office of
the Company in Akron, Ohio, or at such other place acceptable to the Company as
may be designated by you.
4. As further consideration for the Options granted to you hereunder, you must
remain in the continuous employ of the Company or one or more of its
subsidiaries for a period up to the date or dates the Options become exercisable
as set forth on page one of this Grant Agreement before you will be entitled to
exercise the Options granted. The Options you have been granted shall not in any
event be exercisable after your termination of employment except for Retirement,
death, or Disability.
5. In the event of your Retirement, death or Disability (as defined in the Plan)
during the exercise period on any date which is more than six (6) months after
the Date of Grant specified on the first page of the Grant Agreement, the
Options shall become immediately exercisable. In the event of your Retirement,
the Options shall remain exercisable for the first three months following the
date of your Retirement as Incentive Stock Options and an additional 33 months
as Non-Qualified Stock Options. In the event of your death, the Options may be
exercised up to one year after death as described in paragraph 6 below. In the
event of your Disability, the Options shall be exercisable by you during the
then remaining portion of the aforesaid exercise period.
6. The Options terminate automatically and shall not be exercisable by you from
and after the date on which you cease to be an employee of the Company or one of
its subsidiaries for any reason other than your death, Retirement or Disability.
In the event of your death during the exercise period, the Options may be
exercised up to one year after date of death by the person or persons to whom
your rights in the Options passed by your will or according to the laws of
descent and distribution. Nothing contained herein shall restrict the right of
the Company or any of its subsidiaries to terminate your employment at any time,
with or without cause.
7. The Incentive Stock Options you have been granted shall not in any event be
exercisable after the expiration of ten years from the Date of Grant, specified
on the first page of this Grant Agreement, and to the extent not exercised shall
terminate at the end of such ten-year period.
8. In the event you retire or otherwise terminate your employment with the
Company or a subsidiary and within 18 months after such termination date you
accept employment with a competitor of the Company or a subsidiary, you may
forfeit the benefits of the option granted
X-G-2
<PAGE> 3
ISO Grant Agreement (Cont'd) January 4, 1995
hereunder. If such a competitive situation occurs, the Committee, in its sole
discretion, may require you to return to the Company the economic value of the
stock option which you have realized or obtained by your exercise of the option
granted hereunder at any time during the period beginning on that date which is
six months prior to the date of your termination of employment with the Company.
Additionally, if you have retired from the Company, all stock options which are
granted to you hereunder and which you have not exercised prior to your
competitive engagement shall be automatically cancelled.
9. Each Option granted is not transferable by you otherwise than by will or the
laws of descent and distribution, and is exercisable during your lifetime only
by you.
10. All rights conferred upon you under the provisions of this Grant Agreement
are personal and, except under the provisions of paragraph 14 of the Plan, no
assignee, transferee or other successor in interest shall acquire any rights or
interests whatsoever under this Grant Agreement, which is made exclusively for
the benefit of you and the Company.
11. Any notice to you under this agreement shall be sufficient if in writing and
if delivered to you or mailed to you at the address on record in the Executive
Compensation Department. Any notice to the Company under this agreement shall be
sufficient if in writing and if delivered to the Chairman of the Board of the
Company or mailed by registered mail directed to the Company for the attention
of said officer at 1144 East Market Street, Akron, Ohio 44316-0001. Either you
or the Company may, by written notice, change the address. This agreement shall
be construed and shall take effect in accordance with the laws of the State of
Ohio.
12. Each Option may be exercised only at the times and to the extent, and is
subject to all of the terms and conditions, set forth in this Grant Agreement,
and in the Plan, including any rule or regulation adopted by the Committee.
X-G-3
<PAGE> 4
EXHIBIT G
(PART II)
THE GOODYEAR TIRE & RUBBER COMPANY
NOTICE OF GRANT OF STOCK OPTIONS
AND GRANT AGREEMENT
TOM B TIRE
111-11-1111
Key Employee
1 Eagle Drive
Akron, OH 12345
Dear Tom:
The Directors of The Goodyear Tire & Rubber Company (the "Company") desire to
encourage and facilitate ownership of the Company's Common Stock by key
employees and to provide for additional compensation based on appreciation of
the Company's Common Stock, thereby providing incentive to promote continued
growth and success of the Company's business. Accordingly, the Goodyear 1989
Performance and Equity Incentive Plan (the "Plan") was adopted effective April
10, 1989. A copy of the Plan is attached.
You have been granted Non-Qualified Stock Options for the purchase of Common
Stock as follows:
<TABLE>
<S> <C>
Non-Qualified Stock Option Grant............................. 950000
Date of Grant................................................ 01/04/95
Stock Option Plan............................................ 89
Option Price per Share....................................... $00.00
Total Number of Shares Granted............................... -0-
</TABLE>
Your option shares become exercisable as follows:
<TABLE>
<S> <C>
on January 4, 1997....... 30%
on January 4, 1998....... 60%
on January 4, 1999....... 100%
1-4-95
--------------------------------------------- ----------------
For The Goodyear Tire & Rubber Company Date
--------------------------------------------- ----------------
Optionee Date
</TABLE>
X-G-4
<PAGE> 5
ISO Grant Agreement (Cont'd) January 4, 1995
1. These Non-Qualified Stock Options for the number of shares of Common Stock of
the Company indicated on the preceding page (the "Options") are granted to you
under and are governed by the terms and conditions of the Plan and this Grant
Agreement. Your execution and return of the enclosed copy of page one of this
Grant Agreement acknowledging receipt of the Options granted herewith
constitutes your agreement to and acceptance of all terms and conditions of the
Plan and this Grant Agreement. You also agree that you have read and understand
this Grant Agreement.
2. You may exercise the Options granted pursuant to this Grant Agreement through
(1) a cash payment in the amount of the full option exercise price of the shares
being purchased (the "cash exercise"), (2) a payment in full shares of the
Common Stock of the Company having a market value on the date of exercise equal
to the full option exercise price of the shares being purchased (the "share swap
exercise"), or (3) a combination of the cash exercise and share swap exercise
methods. Any exercise of these Options shall be by written notice to the Company
stating the number of shares to be purchased and the exercise method,
accompanied with the payment, or proper proof of ownership if the share swap
exercise method is used. You shall be required to meet the tax withholding
obligations arising from any exercise of these Options in accordance with any
procedures and rules adopted by the Compensation Committee of the Board (the
"Committee").
3. Certificates for shares purchased will be deliverable to you or your agent,
duly accredited to the satisfaction of the Company, at the principal office of
the Company in Akron, Ohio, or at such other place acceptable to the Company as
may be designated by you.
4. As further consideration for the Options granted to you hereunder, you must
remain in the continuous employ of the Company or one or more of its
subsidiaries for a period up to the date or dates the Options become exercisable
as set forth on page one of this Grant Agreement before you will be entitled to
exercise the Options granted. The Options you have been granted shall not in any
event be exercisable after your termination of employment except for Retirement,
death, or Disability.
5. In the event of your Retirement, death or Disability (as defined in the Plan)
during the exercise period on any date which is more than six (6) months after
the Date of Grant specified on the first page of the Grant Agreement, the
Options shall become immediately exercisable. In the event of your Retirement,
the Options shall remain exercisable for three full years following the date of
your Retirement. In the event of your death, the Options may be exercised up to
one year after death as described in paragraph 6 below. In the event of your
Disability, the Options shall be exercisable by you during the then remaining
portion of the aforesaid exercise period.
6. The Options terminate automatically and shall not be exercisable by you from
and after the date on which you cease to be an employee of the Company or one of
its subsidiaries for any reason other than your death, Retirement or Disability.
In the event of your death during the exercise period, the Options may be
exercised up to one year after date of death by the person or persons to whom
your rights in the Options passed by your will or according to the laws of
descent and distribution. Nothing contained herein shall restrict the right of
the Company or any of its subsidiaries to terminate your employment at any time,
with or without cause.
7. The Non-Qualified Stock Options you have been granted shall not in any event
be exercisable after the expiration of ten years from the Date of Grant,
specified on the first page of this Grant Agreement, and to the extent not
exercised shall terminate at the end of such ten-year period.
8. In the event you retire or otherwise terminate your employment with the
Company or a subsidiary and within 18 months after such termination date you
accept employment with a competitor of the Company or a subsidiary, you may
forfeit the benefits of the option granted hereunder. If such a competitive
situation occurs, the Committee, in its sole discretion, may
X-G-5
<PAGE> 6
ISO Grant Agreement (Cont'd) January 4, 1995
require you to return to the Company the economic value of the stock option
which you have realized or obtained by your exercise of the option granted
hereunder at any time during the period beginning on that date which is six
months prior to the date of your termination of employment with the Company.
Additionally, if you have retired from the Company, all stock options which are
granted to you hereunder and which you have not exercised prior to your
competitive engagement shall be automatically cancelled.
9. Each Option granted is not transferable by you otherwise than by will or the
laws of descent and distribution, and is exercisable during your lifetime only
by you.
10. All rights conferred upon you under the provisions of this Grant Agreement
are personal and, except under the provisions of paragraph 14 of the Plan, no
assignee, transferee or other successor in interest shall acquire any rights or
interests whatsoever under this Grant Agreement, which is made exclusively for
the benefit of you and the Company.
11. Any notice to you under this agreement shall be sufficient if in writing and
if delivered to you or mailed to you at the address on record in the Executive
Compensation Department. Any notice to the Company under this agreement shall be
sufficient if in writing and if delivered to the Chairman of the Board of the
Company or mailed by registered mail directed to the Company for the attention
of said officer at 1144 East Market Street, Akron, Ohio 44316-0001. Either you
or the Company may, by written notice, change the address. This agreement shall
be construed and shall take effect in accordance with the laws of the State of
Ohio.
12. Each Option may be exercised only at the times and to the extent, and is
subject to all of the terms and conditions, set forth in this Grant Agreement,
and in the Plan, including any rule or regulation adopted by the Committee.
X-G-6
<PAGE> 7
EXHIBIT G
(PART III)
THE GOODYEAR TIRE & RUBBER COMPANY
NON-QUALIFIED STOCK OPTION/TANDEM STOCK APPRECIATION RIGHTS
GRANT AGREEMENT
TOM TIRE
000-00-0000
Key Employee
1 Eagle Drive
Akron, OH 12345
The Directors of The Goodyear Tire & Rubber Company (the "Company") desire to
encourage and facilitate ownership of the Company's Common Stock by key
employees and to provide for additional compensation based on appreciation of
the Company's Common Stock, thereby providing incentive to promote continued
growth and success of the Company's business. Accordingly, the 1989 Goodyear
Performance and Equity Incentive Plan (the "Plan") was adopted effective April
10, 1989. A copy of the Plan is attached.
You have been granted Non-Qualified Stock Options for the purchase of Goodyear
Common Stock and tandem Stock Appreciation Rights as follows:
<TABLE>
<S> <C>
Stock Option Plan............................................ 1989 Plan
Non-Qualified Stock Option/SAR............................... 950000
Date of Grant................................................ 01/04/95
Option Price................................................. $00.00
Number of Shares Granted..................................... -0-
</TABLE>
The Company shall determine whether or not you may exercise the Stock Option or
the SARs at the time you notify the Company of your intent to exercise all or
part of this grant.
Your option shares become exercisable as follows:
<TABLE>
<S> <C>
on January 4, 1997....... 30%
on January 4, 1998....... 60%
on January 4, 1999....... 100%
1-4-95
--------------------------------------------- ----------------
The Goodyear Tire & Rubber Company Date
--------------------------------------------- ----------------
Optionee Date
</TABLE>
X-G-7
<PAGE> 8
ISO Grant Agreement (Cont'd) January 4, 1995
1. These Non-Qualified Stock Options for the number of shares of Common Stock of
the Company indicated on the preceding page (the "Options") and the Stock
Appreciation Rights granted in tandem with the Options (the "SARs") are granted
to you under and are governed by the terms and conditions of the Plan and this
Grant Agreement. Your execution and return of the enclosed copy of this Grant
Agreement acknowledging receipt of Options and SARs granted herewith constitutes
your agreement to and acceptance of all terms and conditions of the Plan and
this Grant Agreement, including a recognition of the Company's right to specify
whether or not you may exercise either the stock options or the SARs at the time
you notify the Company of your intent to exercise. You also agree that you have
read and understand this Grant Agreement.
2. If the Company approves the exercise of a stock option, each exercise of the
Options granted pursuant to this Grant Agreement shall be by written notice to
the Company stating the number of shares of the Common Stock of the Company
being purchased, together with a cash payment in the amount of the full option
exercise price of such shares or payment in full shares of the Common Stock of
the Company having a market value on the date of exercise equal to the full
purchase price of the shares being purchased. Withholding tax obligations shall
be satisfied upon any Option exercise.
3. If the Company approves the exercise of the SARs, written notice must be
given to the Company stating the number of shares in the Options in respect of
which the SARs are being exercised. In due course, you will receive payment in
cash in an amount equal to the difference between the Fair Market Value (as
defined in the Plan) of one share of the Common Stock of the Company on the date
of exercise of the SARs and the Option Exercise Price per Share specified in
respect of the Options times the number of shares in respect of which the SARs
shall have been exercised. Such payment shall also be subject to reduction for
withholding taxes.
4. Certificates for shares purchased will be deliverable to you or your agent,
duly accredited to the satisfaction of the Company, at the principal office of
the Company in Akron, Ohio, or at such other place acceptable to the Company as
may be designated by you.
5. Your purchase of shares of Common Stock of the Company pursuant to the
Options shall automatically reduce by a like number the shares subject to the
SARs and, conversely, your exercise of any SARs shall automatically reduce by a
like number the shares of the Common Stock available for purchase by you under
the Options.
6. The Options and SARs you have been granted shall not in any event be
exercisable after the expiration of ten years from the Date of Grant specified
on the first page of this Grant Agreement and, to the extent not exercised,
shall terminate at the end of such ten-year period.
7. Each Option and SAR are not transferable by you otherwise than by will or the
laws of descent and distribution, and are exercisable during your lifetime only
by you.
8. All rights conferred upon you under the provisions of this Grant Agreement
are personal and, except under the provisions of paragraph 14 of the Plan, no
assignee, transferee or other successor in interest shall acquire any rights or
interests whatsoever under this Grant Agreement, which is made exclusively for
the benefit of you and the Company.
9. As further consideration for the Options and SARs granted to you hereunder,
you must remain in the continuous employ of the Company or one or more of its
subsidiaries for a period up to the date or dates they become exercisable as set
forth on page one of this Grant Agreement before you will be entitled to
exercise the Options granted.
10. In the event of your death, Retirement (as defined in the Plan) or
Disability (as defined in the Plan) during the ten-year exercise period on any
date which is more than six (6) months after the Date of Grant specified on the
first page of this Grant Agreement, the Options and SARs
X-G-8
<PAGE> 9
ISO Grant Agreement (Cont'd) January 4, 1995
shall become immediately exercisable and, except as provided below in the event
of your death, shall be exercisable by you for three (3) full years following
the date of your Retirement or Disability. In the event of your death during the
ten-year exercise period, the Options and SARs may be exercised up to one year
after date of death by the person or persons to whom your rights in the options
passed by your will or according to the laws of descent and distribution. The
Options and SARs terminate automatically and shall not be exercisable by you
from and after the date on which you cease to be an employee of the Company or
one of its subsidiaries for any reason other than your death, Retirement or
Disability. Nothing contained herein shall restrict the right of the Company or
any of its subsidiaries to terminate your employment at any time, with or
without cause.
11. In the event you retire or otherwise terminate your employment with the
Company or a subsidiary and within 18 months after such termination date you
accept employment with a competitor of the Company or a subsidiary, you may
forfeit the benefits of the option or stock appreciation right granted
hereunder. If such a competitive situation occurs, the Committee, in its sole
discretion, may require you to return to the Company the economic value of the
stock option or stock appreciation right which you have realized or obtained by
your exercise of the option or stock appreciation right granted hereunder at any
time during the period beginning on that date which is six months prior to the
date of your termination of employment with the Company. Additionally, if you
have retired from the Company, all stock options or stock appreciation rights
which are granted to you hereunder and which you have not exercised prior to
your competitive engagement shall be automatically cancelled.
12. In agreeing to acceptance of this grant, you clearly acknowledge that The
Goodyear Tire & Rubber Company assumes no responsibility for any regulatory or
tax consequences that arise from either the grant or exercise of the options or
the SARs, whether they be the consequences of U.S. or foreign tax rules,
legislation or tax treaties.
13. Prior to the exercise of an option or SAR, notice must be given to the
Company of your intent to exercise. The Company will then advise you whether or
not you may exercise a Stock Option or an SAR and upon receiving such advice you
may then exercise the Stock Option or the SAR.
14. Any notice to you under this agreement shall be sufficient if in writing and
if delivered to you or mailed to you at the address on record in the Executive
Compensation Department. Any notice to the Company under this agreement shall be
sufficient if in writing and if delivered to the Chairman of the Board of the
Company or mailed by registered mail directed to the Company for the attention
of said officer at 1144 East Market Street, Akron, Ohio 44316-0001. Either you
or the Company may, by written notice, change the address.
15. This agreement shall be construed and shall take effect in accordance with
the laws of the State of Ohio.
16. Each Option and/or SAR may be exercised only at the times and to the extent,
and is subject to all of the terms and conditions, set forth in this Grant
Agreement, and in the Plan, including any rule or regulation adopted by the
Committee.
X-G-9
<PAGE> 1
EXHIBIT A
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 for each of the three years ended
December 31, 1994, 1993 and 1992, respectively:
(DOLLARS IN MILLIONS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
1994 1993 1992*
----------- ----------- -----------
<S> <C> <C> <C>
Primary:
Net Income (Loss)............................ $567.0 $387.8 $(658.6)
Adjusted average number of common shares
outstanding............................... 153,133,492 149,895,685 146,000,822
Primary earnings (loss) per share............ $3.70 $2.59 $ (4.51)
Fully Diluted:
Net Income (Loss)............................ $567.0 $387.8 $(658.6)
Add after-tax interest expense applicable
to 6.875% Convertible Debentures due
2003...................................... -- 3.4 6.5
----------- ----------- -----------
Adjusted Net Income (Loss)................... $567.0 $391.2 $(652.1)
Adjusted average number of shares
outstanding............................... 153,133,492 151,773,777 149,843,764
Fully diluted earnings (loss) per share...... $3.70 $2.58 $ (4.35)
<FN>
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 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 18, 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.
---------------
*Restated to reflect the two-for-one split of Registrant's Common Stock
distributed on May 4, 1993, effected in the form of a dividend of one share of
Common Stock on each share of Common Stock outstanding at the close of business
on April 30, 1993.
</TABLE>
X-A-1
<PAGE> 1
EXHIBIT B
SUBSIDIARIES OF THE REGISTRANT (1)(2)(3)
The subsidiary companies of The Goodyear Tire & Rubber Company at March 20,
1995, and the places of incorporation or organization thereof, are:
<TABLE>
<CAPTION>
PLACE OF
INCORPORATION
NAME OF SUBSIDIARY OR ORGANIZATION
------------------ ---------------
<S> <C>
All American Pipeline Company Texas
Brad Ragan, Inc. North Carolina
Celeron Corporation Delaware
Celeron Gathering Corporation Delaware
Celeron Trading & Transportation Company Delaware
Cosmoflex, Inc. Delaware
Divested Atomic Corporation Delaware
Divested Companies Holding Company Delaware
Divested Litchfield Park Properties, Inc. Arizona
Goodyear Energy Inc. Delaware
Goodyear International Corporation Delaware
The Goodyear Rubber Plantations Company Ohio
Goodyear Western Hemisphere Corporation Delaware
The Kelly-Springfield Tire Company Maryland
Lee Tire & Rubber Company Ohio
Murphy's Inc., Sales and Service California
Wingfoot Corporation Delaware
Wingfoot Ventures Seven Inc. Delaware
Wingfoot Ventures Eight Inc. Delaware
Wingfoot Ventures Nine Inc. Delaware
Wingfoot Ventures Ten Inc. Delaware
Wingfoot Ventures Eleven Inc. Delaware
Compania Anonima Goodyear de Venezuela Venezuela
Compania Goodyear del Peru, S.A. Peru
Companhia Goodyear do Brasil Produtos de Borracha Ltda Brazil
Compania Hulera Goodyear--Oxo, S.A. de C.V. Mexico
Corporacion Industriales Mercurio, S.A. de C.V. Mexico
Deutsche Goodyear Holdings GmbH Germany
Deutsche Goodyear GmbH Germany
Goodyear Australia Limited Australia
Goodyear Canada Inc. Canada
Goodyear Chemicals, Europe S.A. France
Goodyear Dalian Ltd. People's Republic of China
Goodyear de Chile S.A.I.C. Chile
Goodyear de Colombia S.A. Colombia
Goodyear Broker's Limited Bermuda
Goodyear Espanola S.A. Spain
Goodyear Export, S.A. Bermuda
Goodyear Export Sales Corporation Barbados
Goodyear France (Pneumatiques) S.A. France
Goodyear Finance Holding S.A. Luxembourg
Goodyear Great Britain Limited England
Goodyear Hellas S.A.I.C. Greece
Goodyear Holding Co. Venezuela
</TABLE>
X-B-1
<PAGE> 2
<TABLE>
<CAPTION>
PLACE OF
INCORPORATION
NAME OF SUBSIDIARY OR ORGANIZATION
------------------ ---------------
<S> <C>
Goodyear India Limited India
Goodyear Italiana S.p.A. Italy
Goodyear Jamaica Limited Jamaica
Goodyear Lastikleri Turk Anonim Sirketi Turkey
Goodyear Malaysia Berhad Malaysia
Goodyear Maroc S.A. Morocco
Goodyear (Nederland) B.V. Netherlands
Goodyear New Zealand, Ltd. New Zealand
The Goodyear Orient Company Pte Limited Singapore
Goodyear Portuguesa, Limited Portugal
Goodyear Philippines Inc. Philippines
Goodyear Qingdao Engineered Elastomers Company Ltd. People's Republic of China
Goodyear S.A. France
Goodyear S.A. Luxembourg
Goodyear Singapore Pte Limited Singapore
Goodyear (Suisse), S.A. Switzerland
Goodyear Taiwan Limited Republic of China
Goodyear (Thailand) Limited Thailand
Goodyear Zimbabwe (Private) Limited Zimbabwe
Gran Industria de Neumaticos Centroamericana, S.A. Guatemala
Granford Manufacturing, Inc. Canada
Gummiwerke Fulda GmbH Germany
Neumaticos Goodyear S.A. Argentina
Nippon Goodyear Kabushiki Kaisha Japan
Philippine Rubber Project Company, Inc. Philippines
P.T. Goodyear Indonesia Indonesia
P.T. Goodyear Sumatra Plantations Indonesia
S.A. Goodyear N.V. Belgium
Svenska Goodyear Aktiebolag Sweden
<FN>
---------------
(1) Each of the 73 subsidiaries named in the foregoing list conducts its
business under its corporate name and, in a few instances, under a shortened
form of its corporate name or in combination with a trade name.
(2) Each of the 73 subsidiaries named in the foregoing list is directly or
indirectly wholly-owned by Registrant, except that in respect of each of the
following subsidiaries Registrant owns the indicated percentage of such
subsidiary's equity capital: Brad Ragan, Inc. 74.5%; Compania Goodyear del
Peru S.A., 78%; Goodyear Dalian Ltd., 75%; Goodyear India Limited, 59.9%;
Goodyear Jamaica Limited, 60%; Goodyear Lastikleri Turk Anonim Sirketi,
50.8%; Goodyear Malaysia Berhad, 51%; Goodyear Maroc S.A., 55%; Goodyear
Qingdao Engineered Elastomers Company Ltd., 60%; Goodyear Taiwan Limited,
75.5%; Goodyear (Thailand) Limited, 53.5%; Gran Industria de Neumaticos
Centroamericana, S.A., 75.8%; P.T. Goodyear Indonesia, 85%; and Goodyear
Philippines Inc., 69%.
(3) In accordance with paragraph (ii) of Part 22 of Item 601(b) of Regulation
S-K, the names of approximately 104 subsidiaries have been omitted from the
foregoing list. The unnamed subsidiaries, considered in the aggregate as a
single subsidiary, would not constitute a significant subsidiary, as defined
in the applicable regulations.
</TABLE>
X-B-2
<PAGE> 1
EXHIBIT C
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements, and in the Prospectuses constituting parts thereof, on Form S-3 (No.
33-8111) and Forms S-8 (Nos. 33-31530, 33-17963, 2-79437 and 2-47905) of The
Goodyear Tire & Rubber Company of our report dated February 8, 1995 appearing on
page 30 of this Form 10-K.
PRICE WATERHOUSE LLP
Cleveland, Ohio
March 27, 1995
X-C-1
<PAGE> 1
EXHIBIT D
THE GOODYEAR TIRE & RUBBER COMPANY
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned directors of THE
GOODYEAR TIRE & RUBBER COMPANY, a corporation organized and existing under the
laws of the State of Ohio (the "Company"), hereby constitute and appoint ROBERT
W. TIEKEN, JOHN M. ROSS, GEORGE E. STRICKLER and JAMES BOYAZIS, and each of
them, their true and lawful attorneys-in-fact and agents, each one of them with
full power and authority to sign the names of the undersigned directors to the
Company's Annual Report to the Securities and Exchange Commission on Form 10-K
for its fiscal year ended December 31, 1994, and to any and all amendments,
supplements and exhibits thereto and any other instruments filed in connection
therewith; provided, however, that said attorneys-in-fact shall not sign the
name of any director unless and until the Annual Report shall have been duly
executed by the officers of the Company then serving as the chief executive
officer of the Company, the principal financial officer of the Company and the
principal accounting officer of the Company; and each of the undersigned hereby
ratifies and confirms all that the said attorneys-in-fact and agents, or any one
of them, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have subscribed these presents this 8th
day of February, 1995.
/s/ John G. Breen /s/ Charles W. Parry
---------------------------------- ----------------------------------
John G. Breen, Director Charles W. Parry, Director
/s/ Thomas H. Cruikshank /s/ Agnar Pytte
---------------------------------- ----------------------------------
Thomas H. Cruikshank, Director Agnar Pytte, Director
/s/ Gertrude G. Michelson /s/ George H. Schofield
---------------------------------- ----------------------------------
Gertrude G. Michelson, Director George H. Schofield, Director
/s/ Steven A. Minter /s/ William C. Turner
---------------------------------- ----------------------------------
Steven A. Minter, Director William C. Turner, Director
/s/ Hoyt M. Wells
----------------------------------
Hoyt M. Wells, Director
X-D-1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Income and the Consolidated Balance Sheet and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000042582
<NAME> GOODYEAR TIRE & RUBBER COMPANY
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 251
<SECURITIES> 15
<RECEIVABLES> 1,579
<ALLOWANCES> 54
<INVENTORY> 1,425
<CURRENT-ASSETS> 3,623
<PP&E> 8,869
<DEPRECIATION> 4,486
<TOTAL-ASSETS> 9,123
<CURRENT-LIABILITIES> 2,572
<BONDS> 1,109
<COMMON> 151
0
0
<OTHER-SE> 2,652
<TOTAL-LIABILITY-AND-EQUITY> 9,123
<SALES> 12,288
<TOTAL-REVENUES> 12,288
<CGS> 9,272
<TOTAL-COSTS> 9,272
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 129
<INCOME-PRETAX> 866
<INCOME-TAX> 299
<INCOME-CONTINUING> 567
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 567
<EPS-PRIMARY> 3.75
<EPS-DILUTED> 0.00
<FN>
<F1>
This schedule shall not be deemed filed for purposes of Section 11 of the
Securities Act or Section 18 of the Securities Exchange Act.
</FN>
</TABLE>
