<PAGE> 1
_______________________________________________________________________________
_______________________________________________________________________________
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
COMMISSION FILE NUMBER: 1-1927
THE GOODYEAR TIRE & RUBBER COMPANY
(Exact name of registrant as specified in its charter)
OHIO 34-0253240
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1144 EAST MARKET STREET, AKRON, OHIO 44316-0001
(Address of principal executive offices) (Zip Code)
(330) 796-2121
(Registrant's telephone number, including area code)
___________________________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
------- -------
___________________________________
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
Number of Shares of Common Stock, Without
Par Value, Outstanding at April 30, 1996: 155,052,952
________________________________________________________________________________
________________________________________________________________________________
<PAGE> 2
The Goodyear Tire & Rubber Company and Subsidiaries
Consolidated Statement of Income and Retained Earnings
Unaudited
<TABLE>
<CAPTION>
(Dollars in millions, except per share) Three Months Ended
March 31,
1996 1995
-------- ---------
<S> <C> <C>
Net Sales $3,245.5 $3,243.3
Cost of Goods Sold 2,481.2 2,487.4
Selling, Administrative and General Expense 471.0 483.5
Interest Expense 32.0 32.0
Other Expense 14.0 2.9
Foreign Currency Exchange 1.9 24.9
Minority Interest in Net Income of Subsidiaries 11.9 7.5
------ --------
Income before Income Taxes 233.5 205.1
United States and Foreign Taxes on Income 81.7 71.8
------ --------
Net Income 151.8 133.3
Retained Earnings at Beginning of Period 2,661.0 2,194.5
Cash Dividends 38.6 30.3
-------- --------
Retained Earnings at End of Period $2,774.2 $2,297.5
======== ========
Per Share of Common Stock:
Net Income $0.98 $0.88
======== ========
Cash Dividends $0.25 $0.20
======== ========
Average Shares Outstanding 154,263,097 151,465,262
</TABLE>
The accompanying notes are an integral part of this financial statement.
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The Goodyear Tire & Rubber Company and Subsidiaries
Consolidated Balance Sheet
Unaudited
<TABLE>
<CAPTION>
(Dollars in millions) March 31, December 31,
1996 1995
-------- ------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $322.0 $268.3
Accounts and notes receivable, less
allowance (1996-$59.6, 1995-$56.2) 1,945.9 1,615.0
Inventories:
Raw materials 326.9 309.8
Work in process 88.5 75.4
Finished product 1,565.3 1,380.0
--------- --------
1,980.7 1,765.2
Prepaid expenses and other current assets 205.8 193.1
--------- --------
Total Current Assets 4,454.4 3,841.6
Investments in Affiliates, at equity 147.1 183.8
Long Term Accounts and Notes Receivable 238.3 252.0
Deferred Charges 827.6 793.3
Other Assets 158.8 157.7
Properties and Plants, less accumulated depreciation
(1996-$4,880.1, 1995-$4,788.7) 4,656.9 4,561.2
--------- --------
Total Assets $10,483.1 $9,789.6
========= ========
Liabilities
Current Liabilities:
Accounts payable-trade $1,123.4 $1,170.7
Compensation and benefits 777.0 711.9
Other current liabilities 261.8 263.9
United States and foreign taxes 396.0 363.1
Notes payable to banks 669.7 211.1
Long term debt due within one year 20.1 15.6
--------- --------
Total Current Liabilities 3,248.0 2,736.3
Long Term Debt and Capital Leases 1,305.4 1,320.0
Compensation and Benefits 1,971.1 1,976.5
Other Long Term Liabilities 291.7 312.2
Minority equity in subsidiaries 233.4 162.9
--------- --------
Total Liabilities 7,049.6 6,507.9
Shareholders' Equity
Preferred Stock, no par value:
Authorized 50,000,000 shares, unissued - -
Common Stock, no par value:
Authorized 300,000,000 shares
Outstanding shares 154,948,642 (153,524,311 in 1995)
after deducting 40,730,026 treasury shares (42,154,357 in 1995) 154.9 153.5
Capital Surplus 1,019.5 975.2
Retained Earnings 2,774.2 2,661.0
Foreign Currency Translation Adjustment (489.8) (481.7)
Minimum Pension Liability Adjustment (25.3) (26.3)
--------- --------
Total Shareholders' Equity 3,433.5 3,281.7
--------- --------
Total Liabilities and Shareholders' Equity $10,483.1 $9,789.6
========= ========
</TABLE>
The accompanying notes are an integral part of this financial statement.
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The Goodyear Tire & Rubber Company and Subsidiaries
Consolidated Statement of Cash Flows
Unaudited
<TABLE>
<CAPTION>
(Dollars in millions) Three Months Ended
March 31,
1996 1995
Cash Flows from Operating Activities: ----- -----
<S> <C> <C>
Net Income $151.8 $133.3
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation 111.6 105.2
Accounts and notes receivable (317.5) (320.8)
Inventories (197.4) (173.6)
Accounts payable-trade (51.2) 5.5
Other assets and liabilities 69.0 3.9
-------- --------
Total adjustments (385.5) (379.8)
-------- --------
Net cash used in operating activities (233.7) (246.5)
Cash Flows from Investing Activities:
Capital expenditures (127.9) (101.4)
Other transactions (41.7) 7.0
-------- --------
Net cash used in investing activities (169.6) (94.4)
Cash Flows from Financing Activities:
Short term debt incurred 494.5 447.6
Short term debt paid (56.4) (93.9)
Long term debt incurred 14.1 84.0
Long term debt and capital leases paid (2.5) (14.7)
Common stock issued 45.7 4.0
Dividends paid (38.6) (30.3)
-------- --------
Net cash provided by financing activities 456.8 396.7
Effect of Exchange Rate Changes on Cash and Cash Equivalents 0.2 (4.5)
-------- --------
Net Change in Cash and Cash Equivalents 53.7 51.3
Cash and Cash Equivalents at Beginning of the Period 268.3 250.9
-------- --------
Cash and Cash Equivalents at End of the Period $322.0 $302.2
======== ========
</TABLE>
The accompanying notes are an integral part of this financial statement.
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<PAGE> 5
The Goodyear Tire & Rubber Company and Subsidiaries
Notes to Consolidated Financial Statements
ADJUSTMENTS
- -----------
All adjustments, consisting of normal recurring adjustments, necessary for a
fair statement of the results of these unaudited interim periods have been
included.
PER SHARE OF COMMON STOCK
- -------------------------
Per share amounts have been computed based on the average number of common
shares outstanding.
INFORMATION ABOUT NONCASH INVESTING AND FINANCING ACTIVITIES
- ------------------------------------------------------------
In 1995 the Company acquired, for cash, 32.7 percent of the outstanding shares
of a Polish tire manufacturer from the Polish government and agreed to purchase
original issue shares. The investment was accounted for using the equity
method. In the first quarter of 1996, the Company purchased original issue
shares of this tire manufacturer, bringing its ownership to 50.8 percent. This
investment is now accounted for as a consolidated subsidiary. Information in
the Consolidated Statement of Cash Flows is presented net of the effects of the
consolidation.
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<PAGE> 6
The Goodyear Tire & Rubber Company and Subsidiaries
Segment Information
Unaudited
<TABLE>
<CAPTION>
(Dollars in millions) Three Months Ended
March 31,
1996 1995
----- -----
<S> <C> <C>
INDUSTRY SEGMENTS
Sales to Unaffiliated Customers:
Tires $2,516.3 $2,493.1
Related products and services 257.5 245.9
-------- --------
Total Tires 2,773.8 2,739.0
General products 439.8 473.7
Oil transportation 31.9 30.6
-------- --------
Net Sales $3,245.5 $3,243.3
======== ========
Income:
Tires $252.4 $246.7
General products 41.7 42.8
Oil transportation 16.7 7.9
-------- --------
Total operating income 310.8 297.4
Exclusions from operating income (77.3) (92.3)
-------- --------
Income before income taxes $233.5 $205.1
======== ========
GEOGRAPHIC SEGMENTS
Sales to Unaffiliated Customers:
United States $1,730.7 $1,810.0
Europe 763.8 672.9
Latin America 381.4 407.0
Asia 203.0 181.3
Canada 166.6 172.1
-------- ---------
Net Sales $3,245.5 $3,243.3
======== =========
Operating Income:
United States $128.5 $122.5
Europe 79.4 68.2
Latin America 71.2 77.1
Asia 25.5 23.4
Canada 6.2 6.2
-------- --------
Total $310.8 $297.4
======== ========
</TABLE>
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The Goodyear Tire & Rubber Company and Subsidiaries
Management's Discussion and Analysis
Of Financial Condition and Results of Operations
RESULTS OF OPERATIONS
---------------------
CONSOLIDATED
- ------------
Sales were $3.25 billion in the first quarter of 1996, compared to $3.24
billion in the 1995 period. Net income was $151.8 million or $.98 per share,
increasing 13.9 percent from $133.3 million or $.88 per share in the 1995
period.
Sales reflected increased tire unit volume in Europe and Asia, but were
adversely affected by reduced demand resulting from lower production volume by
original equipment vehicle manufacturers in North America (U.S. and Canada),
competitive pricing pressures, and a difficult economic environment in Latin
America. Worldwide tire unit sales increased 2 percent from the 1995 period.
Despite higher raw material costs and unchanged sales revenues, cost of
goods sold decreased to 76.5 percent of sales from 76.7 percent in the 1995
period. The improvement reflected increased sales in Europe and Asia, where
gross margins were higher than in North America, improved gross margins in the
chemical and oil transportation businesses, improved worldwide productivity and
efficiencies resulting from continued high levels of capacity utilization.
Selling, administrative and general expense decreased to 14.5 percent of
sales from 14.9 percent in the 1995 period, primarily as a result of ongoing
cost containment measures. Other expense was higher due primarily to a charge
of $6.5 million related to workforce reductions in Latin America, and lower
interest income on time deposits. Foreign currency exchange expense decreased
significantly compared to the 1995 period, during which period European
currencies strengthened versus the U.S. dollar. In order to better reflect the
effects of foreign currency exchange expense on results of operations, in 1996
subsidiaries in countries with highly inflationary economies began recording
such expense in the income statement captions to which it related, the effect
which is not material.
SEGMENT INFORMATION
- -------------------
Segment operating income of $310.8 million increased 4.5 percent from
$297.4 million in the 1995 period. Segment operating margin increased to 9.6
percent of sales from 9.2 percent in the 1995 period, due primarily to
increased sales in Europe and Asia, improved results in the chemical and oil
transportation businesses and lower selling, administrative and general
expenses.
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<PAGE> 8
INDUSTRY SEGMENTS
- -----------------
Tires
- -----
Sales of $2.77 billion increased 1.3 percent from $2.74 billion in the
1995 period, and operating income of $252.4 million increased 2.3 percent from
$246.7 million in the 1995 period.
Sales revenues were favorably affected by increased tire unit sales volume
in Europe and Asia and a shift in sales mix towards the replacement market, but
were adversely impacted by reduced demand resulting from lower production
volume by original equipment vehicle manufacturers in North America and
competitive pricing pressures. Competitive pricing pressures are expected to
continue during 1996. Worldwide tire unit sales increased 2 percent from the
1995 period.
The following table presents changes in tire unit sales:
<TABLE>
<CAPTION>
Increase (Decrease) in Company Tire Unit Sales -- First Quarter
---------------------------------------------------------------
1996 vs. 1995
-------------
<S> <C>
U.S. (5) %
International 11 %
Worldwide 2 %
</TABLE>
Although original equipment tire unit sales increased in Europe and Asia,
worldwide original equipment tire unit sales were lower due primarily to
reduced production volume by vehicle manufacturers in North America. Worldwide
replacement tire unit sales were higher, increasing in the United States,
Europe and Asia.
Despite higher raw material costs and a workforce reduction charge of $5.6
million related to production rationalization in Latin America, operating
income increased due to improved results in Europe and Asia, lower selling,
administrative and general expenses, improved worldwide productivity and
efficiencies resulting from continued high levels of capacity utilization.
General Products
- ----------------
Sales of $439.8 million decreased 7.2 percent from $473.7 million in the
1995 period. Operating income of $41.7 million decreased 2.5 percent from
$42.8 million in the 1995 period. Operating income in the 1996 period included
a charge of $.9 million related to the previously mentioned workforce
reductions in Latin America.
Sales and operating income in engineered products decreased due to reduced
production volume by original equipment vehicle manufacturers in North America.
Sales in chemical products
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<PAGE> 9
decreased due to lower selling prices and reduced unit sales volume. Operating
income increased, however, on lower raw material costs.
Oil Transportation
- ------------------
Sales of $31.9 million and operating income of $16.7 million were recorded
in the first quarter of 1996, compared to $30.6 million and $7.9 million,
respectively, in the 1995 period. Operating income in the 1995 period was
adversely affected by a charge of $5.0 million for the writedown of surplus
pipe and equipment. Higher average tariffs and ongoing cost containment
measures contributed to the improvement.
GEOGRAPHIC SEGMENTS
- -------------------
U.S. Operations
- ---------------
Sales of $1.73 billion decreased 4.4 percent from $1.81 billion in the
1995 period. Operating income of $128.5 million increased 5.1 percent from
$122.5 million in the 1995 period.
Sales decreased due primarily to reduced demand by original equipment
vehicle manufacturers, competitive tire pricing pressures and lower selling
prices and reduced volume in chemical products.
Despite lower sales and higher raw material costs, operating income
increased due primarily to lower raw material costs in chemical products,
improved results in oil transportation activities (which in the 1995 period
were affected by the aforesaid $5.0 million charge), lower selling,
administrative and general expenses, improved productivity and efficiencies
resulting from continued high levels of capacity utilization.
U.S. operations accounted for 53.3 percent of consolidated sales and 41.4
percent of consolidated operating income, compared to 55.8 percent and 41.2
percent, respectively, in the 1995 period.
International Operations
- ------------------------
Sales of $1.52 billion increased 5.7 percent from $1.43 billion in the
1995 period. Operating income of $182.3 million increased 4.1 percent from
$174.9 million in the 1995 period.
In Europe, sales of $763.8 million increased 13.5 percent from $672.9
million in the 1995 period. Operating income of $79.4 million increased 16.5
percent from $68.2 million in the 1995 period.
Sales and operating income in Europe increased due primarily to higher
tire unit sales and the acquisition of a majority
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<PAGE> 10
ownership interest in a tire manufacturing facility in Poland. Results were
also favorably impacted by productivity improvements and the effects of cost
containment measures.
In Latin America, sales of $381.4 million decreased 6.3 percent from
$407.0 million in the 1995 period. Operating income of $71.2 million decreased
7.7 percent from $77.1 million in the 1995 period.
Sales in Latin America decreased and operating income was adversely
affected by difficult economic conditions in the region and lower tire unit
sales in Brazil. Operating income reflected lower selling, administrative and
general expenses and improved productivity, but decreased due primarily to a
workforce reduction charge of $6.5 million related to production
rationalization.
In Asia, sales of $203.0 million increased 12.0 percent from $181.3
million in the 1995 period. Operating income of $25.5 million increased 8.7
percent from $23.4 million in the 1995 period.
Sales and operating income in Asia increased due primarily to higher tire
unit sales. Operating income also benefited from lower selling, administrative
and general expenses and improved productivity.
In Canada, sales of $166.6 million decreased 3.2 percent from $172.1
million in the 1995 period. Operating income of $6.2 million was unchanged
from $6.2 million in the 1995 period.
Sales and operating income in Canada were adversely impacted by lower
production volume by original equipment vehicle manufacturers, although
operating income was favorably affected by productivity improvements and the
effects of cost containment measures.
International operations accounted for 46.7 percent of consolidated sales
and 58.6 percent of consolidated operating income, compared to 44.2 percent and
58.8 percent, respectively, in the 1995 period.
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<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Net cash used in operating activities was $233.7 million during the first
three months of 1996, as reported on the Consolidated Statement of Cash Flows.
Working capital requirements increased for accounts receivable, reflecting
longer average terms resulting from increased sales in Europe and a shift in
sales mix towards replacement tires. Working capital requirements also
increased for inventories, reflecting increased finished goods quantities.
Net cash used in investing activities was $169.6 million during the first
three months of 1996, which consisted primarily of capital expenditures for
plant modernizations and expansions and new tire molds totaling $127.9 million.
Capital expenditures are expected to total $650 million in 1996. Cash was also
used for the acquisition of a lightweight conveyor belting manufacturer in the
United States and an investment in a retail chain in Sweden.
Net cash provided by financing activities was $456.8 million during the
first three months of 1996, primarily to support the previously mentioned
operating and investing activities. Consolidated debt at March 31, 1996 was
$1,995.2 million and amounted to 36.8 of debt and equity, compared to $1,546.7
million and 32.0 percent, respectively, at the end of 1995.
The Company enters into interest rate swap contracts in order to manage
the impact of fluctuations in interest rates on consolidated results of
operations and future cash outflows for interest. During the first quarter,
the Company entered into floating rate contracts with notional principal
amounts totaling $110 million, which increase its exposure to fluctuations in
short term interest rates. A summary of contracts in place and related
weighted average interest rates follows:
<TABLE>
<CAPTION>
(Dollars in millions) Fixed Rate Floating Rate
Contracts Contracts
---------- -------------
March 31, 1996:
<S> <C> <C>
- Notional principal amount $ 275.0 $ 160.0
- Pay fixed rate 8.95% -
- Receive variable LIBOR 5.59% -
- Pay variable LIBOR - 5.38%
- Receive fixed rate - 6.38%
- Average years to maturity 0.92 5.77
- Fair value: (unfavorable) $ (7.90) $ (0.50)
First quarter - Rate paid 8.95% 5.65%
- Rate received 5.76% 6.43%
</TABLE>
Fixed rate contracts with notional principal amounts totaling $120 million
matured in the first quarter of 1996.
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<PAGE> 12
Substantial short term and long term credit sources are available to the
Company globally under normal commercial practices. At March 31, 1996 the
Company had short term uncommitted credit arrangements totaling $1.8 billion,
of which $493.0 million were unused. The Company also had available long term
credit arrangements at March 31, 1996 totaling $1.9 billion, of which $1.2
billion were unused.
Funds generated by operations, together with funds available under
existing credit arrangements, are expected to exceed the Company's currently
anticipated funding requirements.
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<PAGE> 13
PART II. OTHER INFORMATION
---------------------------
ITEM 1. LEGAL PROCEEDINGS
- ------ -----------------
Reference is made to the Annual Report of The Goodyear Tire & Rubber
Company (the "Registrant") on Form 10-K for the year ended December 31, 1995
(the "Annual Report"), wherein at Item 3, pages 14, 15, 16 and 17, Registrant
reported certain legal proceedings. Registrant reports the following
developments in respect of one of the legal proceedings described at Item 3 of
the Annual Report.
As reported at paragraph (G) of Item 3, at page 16, of the Annual
Report, a civil action, Orion Tire Corporation, et al v Goodyear, et al, in the
United States District Court for the Central District of California was filed
on March 15, 1995 against Registrant, Goodyear International Corporation, a
wholly-owned subsidiary of Registrant ("GIC"), Samir F. Gibara, President and
Chief Executive Officer of Registrant, a retired Vice President of Registrant
and three other employees of Registrant by Orion Tire Corporation ("Orion"),
China Tire Holdings Limited ("China Tire"), and China Strategic Holdings
Limited ("China Strategic"). In their complaint, plaintiffs alleged, among
other things, that in connection with Registrant's 1994 acquisition of a 75%
equity interest in a tire manufacturing facility in Dalian, People's Republic
of China (the "Dalian Facility"), Registrant and GIC engaged in tortious
interference with certain contractual relationships of plaintiffs involving the
Dalian Facility, committed tortious interference with certain prospective
economic advantages of plaintiffs, violated the California Cartwright Act and
committed trade libel and defamation in respect of the plaintiffs. In
addition, all defendants were alleged to have engaged in civil racketeering and
in a civil conspiracy to induce the entities that owned the Dalian Facility to
breach their contracts with the plaintiffs.
On March 22, 1996, the Court, ruling on motions filed by Registrant,
issued an order dismissing the individual defendants from the proceedings for
lack of personal jurisdiction and dismissing with prejudice the causes of
action of China Tire against the defendants regarding alleged tortious
interference with prospective economic advantage, tortious interference with
certain contractual relationships, conspiracy to induce breach of contract, and
civil racketeering. In addition, the Court dismissed without prejudice the
causes of action of Orion and China Tire regarding alleged violations of the
California Cartwright Act and the cause of action of China Strategic regarding
alleged trade libel and defamation (and, as a result, China Strategic is no
longer a party to the litigation). Finally, the Court dismissed, with leave to
file an amended complaint by April 22, 1996, the claim of Orion regarding an
alleged conspiracy to induce breach of contract, the claims of Orion and China
Tire regarding alleged trade libel and defamation and the claim of Orion
regarding alleged civil racketeering.
On April 19, 1996, Orion and China Tire filed a First Amended Complaint
- 12 -
<PAGE> 14
against Registrant and GIC (the individual defendants having been dismissed
from the litigation for lack of personal jurisdiction) whereunder: (i) Orion
alleges that Registrant and GIC tortiously interfered with the prospective
economic advantage of Orion by wrongfully obstructing and interfering with
Orion's alleged prospective business ventures involving the Dalian Facility and
tortiously interfered with Orion's alleged prospective contractual
relationships with the Dalian Facility regarding the supply of tires and an
alleged option to purchase an equity interest in the Dalian Facility; and (ii)
each of Orion and China Tire alleges that Registrant and GIC committed trade
libel and defamation by knowingly publishing untrue statements regarding Orion
and China Tire, respectively, to various officials of the Dalian Facility and
various governmental bodies in the People's Republic of China. The Amended
Complaint indicates that the plaintiffs are seeking an aggregate of $1.085
billion in actual damages and $3.255 billion in punitive damages, prejudgment
interest, and such further relief as the Court deems appropriate.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------ ---------------------------------------------------
The Annual Meeting of Shareholders of Registrant was held on April 15,
1996 (the "Annual Meeting"). Proxies for the Annual Meeting were solicited
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Act"), there was no solicitation in opposition to the four
nominees of the Board of Directors listed in the Proxy Statement of Registrant,
dated February 27, 1996, for the Annual Meeting (the "Proxy Statement"), filed
with the Securities and Exchange Commission, and said four nominees were
elected.
The following matters were acted upon by the shareholders of
Registrant at the Annual Meeting, at which 136,686,313 shares of the Common
Stock, without par value, of Registrant (the "Common Stock", the only class of
voting securities of Registrant outstanding), or approximately 88.49 percent of
the 154,470,955 shares of Common Stock outstanding and entitled to vote at the
Annual Meeting, were present in person or by proxies:
1. ELECTION OF DIRECTORS. Four persons were nominated by the Board
of Directors of Registrant for election as directors of Registrant. Samir F.
Gibara, William J. Hudson, Jr., and William C. Turner were nominated as Class I
directors, each to hold office for a three year term expiring at the 1999
Annual Meeting of Shareholders and until his successor shall have been duly
elected and qualified. Gertrude G. Michelson was nominated as a Class III
director, to hold office for a one year term expiring at the 1997 Annual
Meeting of Shareholders and until her successor shall have been duly elected
and qualified. Each nominee was an incumbent director. No other person was
nominated. Each nominee was elected. The votes cast for, or withheld or
abstained with respect to, each nominee were as follows:
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<PAGE> 15
<TABLE>
<CAPTION>
Shares of Common Shares of Common Stock
Name of Director Stock Voted For Withheld or Abstained
---------------- ---------------- ---------------------
Class I Directors
-----------------
<S> <C> <C>
Samir F. Gibara 134,980,347 1,705,966
William J. Hudson, Jr. 134,999,475 1,686,838
William C. Turner 134,828,937 1,857,376
Class III Director
------------------
Gertrude G. Michelson 134,981,167 1,705,146
</TABLE>
The seven directors whose terms of office continue after the Annual Meeting
are: (A) Thomas H. Cruikshank, Steven A. Minter and Agnar Pytte, whose terms
expire in 1997; and (B) John G. Breen, William E. Butler, Stanley C. Gault and
George H. Schofield, whose terms expire in 1998.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS. A
resolution proposed by the Board of Directors of Registrant that the
shareholders ratify the action of the Board of Directors in selecting and
appointing Price Waterhouse LLP as independent accountants for Registrant for
the year ending December 31, 1996 was submitted to, and voted upon by, the
shareholders of Registrant. There were 135,701,758 shares of Common Stock
voted in favor of, and 606,755 shares of Common Stock voted against, said
resolution. The holders of 377,800 shares of Common Stock abstained. There
were no "broker non-votes". The resolution, having received the affirmative
vote of the holders of a majority of the shares of Common Stock outstanding and
entitled to vote at the Annual Meeting, was adopted and the appointment of
Price Waterhouse LLP as the independent accountants for Registrant for 1996 was
ratified by the shareholders. The resolution and related information are set
forth under the caption "Ratification of Appointment of Independent
Accountants" at page 7 of the Proxy Statement.
3. SHAREHOLDER PROPOSAL. A resolution submitted by a shareholder
requesting the Registrant to prepare a report describing its programs,
progress, and future plans relative to the environment and the Coalition of
Environmentally Responsible Economies ("CERES") Principles and using the
standard CERES Report Form as a Guide was submitted to the shareholders. There
were 10,594,668 shares of Common Stock voted in favor of, and 107,553,561
shares of Common Stock voted against, said resolution. In addition, the
holders of 8,998,143 shares of Common Stock abstained from voting on said
resolution and there were "broker non-votes" in respect of 9,539,941 shares of
Common Stock. The resolution, having failed to receive the affirmative vote of
at least a majority of the shares of Common Stock entitled to vote at the
Annual Meeting, was not adopted. The resolution and related
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<PAGE> 16
statements in support thereof and in opposition thereto are set forth under the
captions "Shareholder Proposal" and "Statement of Board of Directors Opposing
The Shareholder Proposal" at pages 7, 8 and 9 of the Proxy Statement.
ITEM 5. OTHER INFORMATION
- ------ -----------------
On March 26, 1996, Registrant filed with the Securities and Exchange
Commission a Rule 415 shelf Registration Statement under the Securities Act of
1933, as amended, on Form S-3 (Commission File No. 333-1955) relating to the
offer and sale from time to time of up to $500,000,000 of debt securities
consisting of debentures, notes and/or other unsecured evidences of
indebtedness in one or more series. The Registration Statement was declared
effective by the Securities and Exchange Commission on April 3, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------ --------------------------------
(a) A list of the exhibits required to be filed as a part of this
Quarterly Report on Form 10-Q is set forth at the Index of Exhibits at page
E-1, which is by specific reference incorporated into and made a part of this
Quarterly Report on Form 10-Q.
(b) No current report on Form 8-K was filed by Registrant during the
quarter ended March 31, 1996.
S I G N A T U R E S
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE GOODYEAR TIRE & RUBBER COMPANY
(Registrant)
Date: May 10, 1996 By /s/ George E. Strickler
--------------------------------------
George E. Strickler,
Vice President and Comptroller
(Signing on behalf of Registrant
as a duly authorized officer of
Registrant and as the Principal
Accounting Officer of Registrant.)
- 15 -
<PAGE> 17
THE GOODYEAR TIRE & RUBBER COMPANY
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
INDEX OF EXHIBITS (1)
EXHIBIT EXHIBIT
- ------------- -------------
Table Item No.* Description of Exhibit Number Page
- --------------- ----------------------------------------------------- ------- ----
<S> <C>
4 INSTRUMENTS DEFINING
THE RIGHTS OF SECURITY HOLDERS,
INCLUDING INDENTURES
-----------------------------------------------------
Certificate of Amended Articles of 4.1
Incorporation of Registrant, dated
December 20, 1954, and Certificate of
Amendment to Amended Articles of
Incorporation of Registrant, dated
April 6, 1993, two documents comprising
Registrant's Articles of Incorporation
as amended (incorporated by reference,
filed as Exhibit 4.1(A) to Registrant's
Registration Statement on Form S-3,
File No. 333-1955).
Code of Regulations of The Goodyear 4.2
Tire & Rubber Company, adopted November
22, 1955, as amended April 5, 1965,
April 7, 1980, April 6, 1981 and April 13,
1987 (incorporated by reference, filed as
Exhibit 4.1(B) to Registrant's Registration
Statement on Form S-3, File No. 333-1955).
Conformed Copy of Rights Agreement, dated 4.3
as of July 2, 1986, between Registrant and
Manufacturers Hanover Trust Company, Rights
Agent and a copy of the Appointment of
Successor Rights Agent, dated March 21, 1990,
whereunder Registrant appointed First Chicago
Trust Company of New York as the Successor Rights
Agent under the Rights Agreement, as amended by
that certain Amendment to Rights Agreement dated
<FN>
__________
*Pursuant to Item 601 of Regulation S-K.
</TABLE>
E-1
<PAGE> 18
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
- ------------- -------------
Table Item No.* Description of Exhibit Number Page
- --------------- ----------------------------------------------------------------- ------ -----
<S> <C>
as of April 6, 1993 between Registrant and First Chicago Trust
Company of New York (incorporated by reference, filed as Exhibit
4.3 to Registrant's Registration Statement on Form S-8,
File No. 33-65187).
Specimen nondenominational Certificate for shares 4.4
of the Common Stock, Without Par Value, of Registrant;
one certificate, First Chicago Trust Company of New York
as transfer agent and registrar (incorporated by reference,
filed as Exhibit 4.2 to Registrant's Registration Statement
on Form S-8, File No. 33-65187).
Conformed copy of Revolving Credit Facility Agreement, 4.5
dated as of July 15, 1994, among Registrant, the Lenders
named therein and Chemical Bank, as Agent (incorporated by
reference, filed as Exhibit A to Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1994,
File No. 1-1927).
No other instrument defining the rights of holders of
long-term debt which relates to securities having an
aggregate principal amount in excess of 10% of the
consolidated assets of Registrant and its subsidiaries
was entered into during the quarter ended March 31, 1996.
In accordance with paragraph (iii) to Part 4 of Item 601 of
Regulation S-K, agreements and instruments, if any, defining
the rights of holders of long term debt entered into during
the quarter ended March 31, 1996 which relate to securities
having an aggregate principal amount less than 10% of the
consolidated assets of Registrant and its Subsidiaries are not
filed herewith. The Registrant hereby agrees to furnish a
copy of any such agreements or instruments to the
Securities and Exchange Commission upon request.
<FN>
__________
*Pursuant to Item 601 of Regulation S-K.
</TABLE>
E-2
<PAGE> 19
<TABLE>
<CAPTION>
EXHIBIT EXHIBIT
- ------------- -------------
Table Item No.* Description of Exhibit Number Page
- --------------- ------------------------------------------------------ ------- ----
<S> <C>
11 STATEMENT RE COMPUTATION OF
PER SHARE EARNINGS
--------------------------------------------
Statement setting forth the computation of 11 X-11-1
per share earnings.
27 FINANCIAL DATA SCHEDULE 27 X-27-1
-----------------------
28 ADDITIONAL EXHIBITS
-------------------
Registrant's definitive Proxy Statement, 28
dated February 27, 1995 (incorporated by
reference, filed with the Securities and
Exchange Commission, File No. 1-1927).
<FN>
__________
*Pursuant to Item 601 of Regulation S-K.
</TABLE>
E-3
<PAGE> 1
EXHIBIT 11
The Goodyear Tire & Rubber Company and Subsidiaries
Computation of Earnings per Share
Set forth below are computations, on a primary basis and on a fully
diluted basis in accordance with subparagraph (b) (11) of Item 601 of
Regulation S-K of the Securities and Exchange Commission, of earnings per share
of the Common Stock, without par value, of Registrant.
<TABLE>
<CAPTION>
(Dollars in millions, except per share) Three Months Ended
March 31,
1996 1995
--------- ---------
Primary:
<S> <C> <C>
Net Income $151.8 $133.3
Adjusted average number of
shares outstanding 156,218,470 152,686,846
Primary earnings per share $0.97 $0.88
Fully Diluted:
Net Income $151.8 $133.3
Adjusted average number
of shares outstanding 156,554,062 152,759,788
Fully diluted earnings per share $0.97 $0.87
</TABLE>
The foregoing computations do not reflect any significant potentially
dilutive effect Registrant's Preferred Stock Purchase Rights Plan could have in
the event such Rights become exercisable and any such shares of either Series A
Preferred Stock or Common Stock of Registrant are issued upon the exercise of
such Rights. Reference is made to 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, 1995 at
page 49.
X - 11 - 1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION ABSTRACTED FROM THE
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS AND THE CONSOLIDATED
BALANCE SHEET AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 322
<SECURITIES> 0
<RECEIVABLES> 2,006
<ALLOWANCES> 60
<INVENTORY> 1,981
<CURRENT-ASSETS> 4,454
<PP&E> 9,537
<DEPRECIATION> 4,880
<TOTAL-ASSETS> 10,483
<CURRENT-LIABILITIES> 3,248
<BONDS> 1,305
<COMMON> 155
0
0
<OTHER-SE> 3,279
<TOTAL-LIABILITY-AND-EQUITY> 10,483
<SALES> 3,245
<TOTAL-REVENUES> 3,245
<CGS> 2,481
<TOTAL-COSTS> 2,481
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32
<INCOME-PRETAX> 234
<INCOME-TAX> 82
<INCOME-CONTINUING> 152
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 152
<EPS-PRIMARY> 0.98
<EPS-DILUTED> 0
<FN>
This schedule shall not be deemed filed for purposes of Section 11 of the
Securities Act or Section 18 of the Securities Exchange Act.
</TABLE>
