<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, 1997
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 March 31, 1997: 155,982,735
==============================================================================
<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,
1997 1996
---- ----
<S> <C> <C>
NET SALES $3,233.2 $3,245.5
Cost of Goods Sold 2,461.0 2,481.2
Selling, Administrative and General Expense 467.0 471.0
Interest Expense 31.0 32.0
Other Expense 7.6 14.0
Foreign Currency Exchange (3.1) 1.9
Minority Interest in Net Income of Subsidiaries 11.5 11.9
------------ ------------
Income before Income Taxes 258.2 233.5
United States and Foreign Taxes on Income 87.8 81.7
------------ ------------
NET INCOME 170.4 151.8
Retained Earnings at Beginning of Period 2,603.0 2,661.0
CASH DIVIDENDS (43.9) (38.6)
------------ ------------
Retained Earnings at End of Period $2,729.5 $2,774.2
============ ============
PER SHARE OF COMMON STOCK:
Net Income $1.09 $0.98
============ ============
Cash Dividends $0.28 $0.25
============ ============
AVERAGE SHARES OUTSTANDING 156,366,328 154,263,097
</TABLE>
The accompanying notes are an integral part of this financial statement.
- 1 -
<PAGE> 3
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
Unaudited
<TABLE>
<CAPTION>
(Dollars in millions) March 31, December 31,
1997 1996
--------- ----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $256.2 $238.5
Accounts and notes receivable,
less allowance (1997-$58.7, 1996-$58.1) 2,026.1 1,706.0
Inventories:
Raw materials 298.9 288.4
Work in process 90.8 77.2
Finished product 1,525.7 1,408.6
--------- --------
1,915.4 1,774.2
Prepaid expenses and other current assets 298.4 306.3
--------- --------
TOTAL CURRENT ASSETS 4,496.1 4,025.0
Investments in Affiliates, at equity 141.7 140.3
Long Term Accounts and Notes Receivable 197.3 216.2
Deferred Charges 1,159.4 1,059.4
Other Assets 164.7 163.0
Properties and Plants,
less accumulated depreciation (1997-$4,957.3, 1996-$4,935.8) 4,085.4 4,067.9
--------- --------
TOTAL ASSETS $10,244.6 $9,671.8
========= ========
LIABILITIES
Current Liabilities:
Accounts payable- trade $1,193.7 $1,096.7
Compensation and benefits 735.9 742.5
Other current liabilities 296.9 300.4
United States and foreign taxes 410.7 382.1
Notes payable to banks 430.5 218.1
Long term debt due within one year 31.0 26.4
--------- --------
TOTAL CURRENT LIABILITIES 3,098.7 2,766.2
Compensation and Benefits 1,974.1 1,988.1
Long Term Debt 1,263.7 1,132.2
Other Long Term Liabilities 245.2 264.9
Minority Equity in Subsidiaries 292.9 241.3
--------- --------
TOTAL LIABILITIES 6,874.6 6,392.7
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 155,982,735 (156,049,974 in 1996)
after deducting 39,695,933 treasury shares (39,628,694 in 1996) 156.0 156.1
Capital Surplus 1,041.3 1,059.4
Retained Earnings 2,729.5 2,603.0
Foreign Currency Translation and Other Adjustments (556.8) (539.4)
--------- --------
TOTAL SHAREHOLDERS' EQUITY 3,370.0 3,279.1
--------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $10,244.6 $9,671.8
========= ========
</TABLE>
The accompanying notes are an integral part of this financial statement.
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<PAGE> 4
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited
<TABLE>
<CAPTION>
(Dollars in millions) Three Months Ended
March 31,
1997 1996
Cash Flows from Operating Activities: ------ ------
<S> <C> <C>
NET INCOME $170.4 $151.8
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation 116.1 111.6
Accounts and notes receivable (300.7) (317.5)
Inventories (103.8) (197.4)
Accounts payable-trade 41.9 (51.2)
Other assets and liabilities 23.3 69.0
------ ------
Total adjustments (223.2) (385.5)
------ ------
NET CASH USED IN OPERATING ACTIVITIES (52.8) (233.7)
Cash Flows from Investing Activities:
Capital expenditures (94.4) (127.9)
Other transactions (86.5) (41.7)
------ ------
NET CASH USED IN INVESTING ACTIVITIES (180.9) (169.6)
Cash Flows from Financing Activities:
Short term debt incurred 377.5 494.5
Short term debt paid (35.6) (56.4)
Long term debt incurred 2.8 14.1
Long term debt paid (36.5) (2.5)
Common stock issued 35.5 45.7
Common stock purchased (42.8) --
Dividends paid (43.9) (38.6)
------ ------
NET CASH PROVIDED BY FINANCING ACTIVITIES 257.0 456.8
Effect of Exchange Rate Changes on Cash and Cash Equivalents (5.6) 0.2
------ ------
Net Change in Cash and Cash Equivalents 17.7 53.7
Cash and Cash Equivalents at Beginning of the Period 238.5 268.3
------ ------
Cash and Cash Equivalents at End of the Period $256.2 $322.0
====== ======
</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
NON-CONSOLIDATED OPERATIONS - SOUTH PACIFIC TYRE
- ------------------------------------------------
In addition to its consolidated operations in the Asia region, the Company
also owns a 50% interest in South Pacific Tyres Ltd (SPT), a partnership with
Pacific Dunlop Ltd of Australia. SPT is the largest tire manufacturer, marketer
and exporter in Australia and New Zealand. The Company is required to use the
equity method to account for its interest in the results of operations and
financial position of SPT.
The following table presents sales and operating income of the Company's
consolidated Asian operations and 100% of the operations of SPT:
<TABLE>
<CAPTION>
(In millions) Three Months Ended March 31
---------------------------
Asia
Segment SPT Total
------- --- -----
<S> <C> <C> <C>
Net Sales:
1997 $199.3 $183.6 $382.9
1996 203.0 193.8 396.8
Operating Profit:
1997 $ 27.5 $ 14.8 $ 42.3
1996 25.5 17.5 43.0
</TABLE>
SUPPLEMENTAL INFORMATION ABOUT NONCASH INVESTING ACTIVITIES
- -----------------------------------------------------------
In the first quarter of 1997 the Company acquired a 60% equity interest in
a South African tire and industrial rubber products business, and assumed $29
million of debt under the terms of the purchase agreement.
In the first quarter of 1996, the Company increased its ownership of a
Polish tire manufacturer from 32.7% to 50.8% by purchasing original issue shares
of this tire manufacturer. This investment, which had been accounted for using
the equity method, is now accounted for as a consolidated subsidiary.
Information in the Consolidated Statement of Cash Flows is presented net of
the effects of these transactions.
PER SHARE OF COMMON STOCK
- -------------------------
Per share amounts have been computed based on the average number of common
shares outstanding.
ADJUSTMENTS
- -----------
All adjustments, consisting of normal recurring adjustments, necessary for
a fair statement of the results of these unaudited interim periods have been
included.
RECLASSIFICATION
- ----------------
Certain items previously reported in specific financial statement captions
have been reclassified to conform with the 1997 presentation.
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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,
1997 1996
---- ----
INDUSTRY SEGMENTS
Sales to Unaffiliated Customers:
<S> <C> <C>
Tires $2,541.6 $2,540.2
Related products and services 210.6 233.6
-------- --------
Total Tires 2,752.2 2,773.8
General products 456.5 439.8
Oil transportation 24.5 31.9
-------- --------
NET SALES $3,233.2 $3,245.5
======== ========
Income:
Tires $266.9 $252.4
General products 46.3 41.7
Oil transportation 15.8 16.7
-------- --------
TOTAL OPERATING INCOME 329.0 310.8
Exclusions from operating income (70.8) (77.3)
-------- --------
INCOME BEFORE INCOME TAXES $258.2 $233.5
======== ========
GEOGRAPHIC SEGMENTS
Sales to Unaffiliated Customers:
United States $1,712.2 $1,730.7
Europe 764.5 763.8
Latin America 383.1 381.4
Asia 199.3 203.0
Canada 174.1 166.6
-------- --------
NET SALES $3,233.2 $3,245.5
======== ========
Operating Income:
United States $142.2 $128.5
Europe 79.6 79.4
Latin America 68.3 71.2
Asia 27.5 25.5
Canada 11.4 6.2
-------- --------
TOTAL $329.0 $310.8
======== ========
</TABLE>
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<PAGE> 7
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
---------------------
CONSOLIDATED
- ------------
Sales in the first quarter of 1997 were $3.23 billion, decreasing slightly
from $3.25 billion in the 1996 period. Net income was $170.4 million or $1.09
per share, increasing 12.3% from net income in the 1996 quarter of $151.8
million or $.98 per share.
Worldwide tire unit sales were 3.6% higher than in the first quarter of
1996, increasing in North America, Europe, Latin America and Asia. Revenues
were also favorably impacted by increased volume in engineered products, but
decreased due primarily to the strengthening of the U.S. dollar versus European
and Asian currencies and continued worldwide competitive pricing pressures.
Cost of goods sold decreased to 76.1% of sales from 76.5% in the 1996
period, reflecting lower raw material costs and improved worldwide productivity.
Selling, administrative and general expense (SAG) declined to 14.4% of sales
from 14.5% in the year-ago quarter, due primarily to lower compensation and
benefit costs in the U.S. Costs and expenses also were favorably affected by the
Company's ongoing cost containment measures.
Other expense decreased in 1997 due in part to lower financing expenses.
Foreign currency exchange was lower due to the favorable impact of the
strengthening of the U.S. dollar on the Company's net monetary exposure. Net
income also benefited from a lower estimated annual effective tax rate than in
1996, resulting primarily from lower U.S. taxes on foreign source income.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128, "Earnings per Share" (SFAS 128). SFAS 128 replaces
primary EPS with basic EPS, which excludes dilution, and requires presentation
of both basic and diluted EPS on the face of the income statement. Diluted EPS
is computed similarly to the current fully diluted EPS. SFAS 128 is effective
for financial statements issued for periods ending after December 15, 1997, and
requires restatement of all prior-period EPS data presented. The adoption of
this statement is not expected to materially affect either future or
prior-period EPS.
-6-
<PAGE> 8
SEGMENT INFORMATION
- -------------------
Segment operating income of $329.0 million increased 5.8% from $310.8
million in the 1996 period. Segment operating margin increased to 10.2% of sales
from 9.6% in the 1996 period.
INDUSTRY SEGMENTS
- -----------------
Three Months Ended
March 31,
1997 1996
---- ----
Segment Contribution to
Consolidated Sales:
Tires 85.1% 85.5%
General Products 14.1 13.6
Oil Transportation .8 .9
Segment Operating Margin:
Tires 9.7% 9.1%
General Products 10.1 9.5
Oil Transportation 64.5 52.4
Consolidated 10.2% 9.6%
Tires
- -----
Sales of $2.75 billion decreased slightly from $2.77 billion in the 1996
period. Operating income of $266.9 million increased 5.8%, however, from $252.4
million in the 1996 period.
Revenues were favorably impacted by higher unit sales in all regions, but
decreased due primarily to the adverse impact of the strengthening of the U.S.
dollar versus currencies in Europe and Asia and worldwide competitive pricing
pressures. Competitive pricing pressures are expected to continue
indefinitely.
The following table presents changes in tire unit sales:
% Increase in Company Tire Unit Sales - First Quarter
-----------------------------------------------------
<TABLE>
<CAPTION>
1997 vs. 1996
-------------
<S> <C>
U.S. 3.3%
International 3.9
Worldwide 3.6
</TABLE>
Operating income increased due to lower raw material costs, improved
productivity, lower SAG and the effects of cost containment measures.
- 7 -
<PAGE> 9
General Products
- ----------------
Sales of $456.5 million increased 3.8% from $439.8 million in the 1996
period. Operating income of $46.3 million increased 10.8% from $41.7 million in
the 1996 period.
Sales and operating income in engineered products increased due primarily
to increased volume, and operating income was favorably impacted by lower raw
material costs and the effects of cost containment measures.
Sales in chemical products decreased due to reduced unit volume and the
absence of the PVC business, which was discontinued in the second quarter of
1996. Operating income increased, however, on lower manufacturing costs.
Oil Transportation
- ------------------
Sales of $24.5 million and operating income of $15.8 million were recorded
in the first quarter of 1997, compared to $31.9 million and $16.7 million,
respectively, in the 1996 period. Results reflected lower throughput and reduced
spreads in purchasing, selling and exchanging activities. Depreciation expense
was lower as a result of the writedown of the All American Pipeline System and
related assets in the fourth quarter of 1996.
GEOGRAPHIC SEGMENTS
- -------------------
<TABLE>
<CAPTION>
Three Months Ended March 31,
1997 1996
---- ----
<S> <C> <C>
Segment Contribution to
Consolidated Sales;
United States 53.0% 53.3%
Europe 23.6 23.5
Latin America 11.8 11.8
Asia 6.2 6.3
Canada 5.4 5.1
Segment Operating Margin:
United States 8.3% 7.4%
Europe 10.4 10.4
Latin America 17.8 18.7
Asia 13.8 12.6
Canada 6.5 5.1
Consolidated 10.2% 9.6%
</TABLE>
- 8 -
<PAGE> 10
In the United States, sales of $1.71 billion decreased 1.1% from $1.73
billion in the 1996 period. Operating income of $142.2 million increased 10.5%,
however, from $128.5 million in the 1996 period.
Sales revenues in the U.S. decreased despite higher tire unit sales, due
primarily to competitive tire pricing pressures, reduced volume in chemical
products and lower revenues in oil transportation operations. Revenues were
favorably impacted, however, by increased volume in engineered products.
Operating income increased due to lower raw material costs, improved
productivity, lower SAG and the effects of cost containment measures.
In Europe, sales of $764.5 million increased slightly from $763.8 million
in the 1996 period. Operating income of $79.6 million increased slightly from
$79.4 million in the 1996 period.
Results in the region were favorably affected by the acquisition of a
majority interest in tire and engineered products manufacturing and
distribution operations in South Africa. Results in the European tire business
decreased due to the effects of currency translation, lower replacement tire
unit sales and competitive pricing pressures.
In Latin America, sales of $383.1 million increased slightly from $381.4
million in the 1996 period. Operating income of $68.3 million decreased 4.1%
from $71.2 million in the 1996 period.
Sales in Latin America increased due to higher tire unit sales and
increased volume in engineered products. Results were adversely affected by
competitive pricing pressures and the devaluation of the Venezuelan bolivar.
In Asia, sales of $199.3 million decreased 1.8% from $203.0 million in the
1996 period. Operating income of $27.5 million increased 8.0%, however, from
$25.5 million in the 1996 period.
Tire unit sales in Asia increased and operating income in the Asian tire
business was higher, reflecting lower raw material costs and the effects of cost
containment and productivity measures on manufacturing costs and SAG. Revenues
in the segment decreased due primarily to the strengthening of the U.S. dollar
versus Asian currencies and lower results in natural rubber operations.
Sales and operating income of the Asia segment reflect the results of the
Company's majority-owned tire business and other operations in the region,
principally the engineered products and natural rubber businesses. In addition,
the Company owns a 50% interest in South Pacific Tyres Ltd (SPT), the largest
tire manufacturer, marketer and exporter in Australia and New Zealand. Results
of operations of SPT are not reported in segment results, and are reflected in
the Company's consolidated statement of income using the equity method.
- 9 -
<PAGE> 11
The following table presents the sales and operating income of the
Company's Asian segment together with 100% fo the sales and operating income
of SPT:
(In millions) Three Months Ended March 31,
----------------------------
Asia
Segment SPT Total
-------- ----- -------
Net Sales:
1997 $199.3 $183.6 $382.9
1996 203.0 193.8 396.8
Operating Income:
1997 $ 27.5 $ 14.8 $ 42.3
1996 25.5 17.5 43.0
In Canada, sales of $174.1 million increased 4.5% from $166.6 million in
the 1996 period. Operating income was $11.4 million, compared to $6.2 million in
the 1996 period. Sales and operating income increased due to higher unit sales
volume of tires and engineered products.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Net cash used in operating activities was $52.8 million during the first
three months of 1997, as reported on the Consolidated Statement of Cash Flows.
Working capital requirements increased for accounts receivable and inventories,
yet remained lower than in the first quarter of 1996.
Net cash used in investing activities was $180.9 million during the first
three months of 1997. Capital expenditures were $94.4 million, primarily for
plant modernizations and expansions and new tire molds. Capital expenditures
were lower than in the 1996 quarter largely as a result of program timing, but
are expected to total $675 million in 1997.
<TABLE>
<CAPTION>
Three Months Ended March 31,
(In millions) 1997 1996
---- ----
<S> <C> <C>
Capital Expenditures $ 94.4 $127.9
Depreciation $116.1 $111.6
</TABLE>
- 10 -
<PAGE> 12
Other investing activities included the Company's acquisition of a majority
ownership interest in tire and engineered products manufacturing and
distribution operations in South Africa.
Net cash provided by financing activities was $257.0 million during the
first three months of 1997, which was used primarily to support the previously
mentioned working capital requirements.
(Dollars in millions) 3/31/97 12/31/96 3/31/96
------- -------- -------
Consolidated Debt $1,725.2 $1,376.7 $1,995.2
Debt/Debt+Equity 33.9% 29.6% 36.8%
The Company actively manages its fixed and floating rate debt mix, within
defined limitations, using refinancings and unleveraged interest rate swaps. The
Company enters into fixed and floating interest rate swaps to alter its exposure
to the impact of changing interest rates. At March 31, 1997 the interest rate on
48% of the Company's debt was fixed by either the nature of the obligation or
through the interest rate contracts.
Contracts in place and related weighted average interest rates follow:
<TABLE>
<CAPTION>
(Dollars in millions) Fixed Rate Floating Rate
Contracts Contracts
---------- -------------
March 31, 1997:
<S> <C> <C>
- Notional principal amount $250.0 $110.0
- Pay fixed rate 7.89% --
- Receive variable LIBOR 5.62 --
- Pay variable LIBOR -- 5.58%
- Receive fixed rate -- 6.24
- Average years to maturity 1.8 6.4
- Fair value: favorable (unfavorable) $ .7 $(3.3)
- Carrying amount: asset (liability) (1.6) --
First quarter - Rate paid 7.99% 5.57%
- Rate received 5.64 6.24
</TABLE>
A fixed rate contract with notional principal amount of $25 million matured
in the first quarter of 1997.
Substantial short term and long term credit sources are available to the
Company globally under normal commercial practices. At March 31, 1997 the
Company had short term uncommitted credit arrangements totaling $1.5 billion, of
which $.7 billion were unused. The Company also had available long term credit
arrangements at March 31, 1997 totaling $2.1 billion, of which $1.2 billion were
unused.
- 11 -
<PAGE> 13
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 March
31, 1997. These contracts reduce exposure to currency movements affecting
existing foreign currency denominated assets, liabilities and firm commitments.
The contract maturities match the maturities 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.
During the first quarter of 1997, the Board of Directors of the Company
approved a three-year share repurchase program, whereunder the Company may
acquire up to $600 million of outstanding Common Stock of the Company. The
program is designed to give the Company better flexibility in funding future
acquisitions and to optimize shareholder value. The repurchase of one million
shares was recorded in the quarter at an average cost of $53.60 per share.
Funds generated by operations, together with funds available under existing
credit arrangements, are expected to exceed the Company's currently anticipated
funding requirements.
-12-
<PAGE> 14
PART II. OTHER INFORMATION
--------------------------
ITEM 1. LEGAL PROCEEDINGS.
- ------- ------------------
Reference is made to the Annual Report of The Goodyear Tire & Rubber
Company (the "Company") on Form 10-K for the year ended December 31, 1996 (the
"Annual Report"), wherein at Item 3, pages 13, 14, 15, and 16, the Company
reported certain legal proceedings. The Company reports the following
developments in respect of one of the legal proceedings described at Item 3 of
the Annual Report.
As reported at paragraph (A) of Item 3 of the Annual Report, since 1990
a series of 65 civil actions have been filed against the Company 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"), then a subsidiary of the Company,
alleged to be the result of exposure to allegedly toxic substances while
working at the Cumberland, Maryland tire plant of Kelly, which was closed in
1987. The plaintiffs are seking an aggregate of $650 million in compensatory
damages and $6.46 billion in punitive damages. On March 5, 1997, the Court
granted the Company's motion for summary judgment and issued an Order and
Judgment dismissing all of these civil actions with prejudice. On April 7,
1997, the plaintiffs appealed the Order and Judgment to the United States Court
of Appeals for the Fourth Circuit.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
- ------- ---------------------------------
(a) EXHIBITS. See the Index of Exhibits at page E-1, which is by
specific reference incorporated into and made a part of this Quarterly Report on
Form 10-Q.
(b) REPORTS ON FORM 8-K. No Current Report on Form 8-K was filed by The
Goodyear Tire & Rubber Company during the quarter ended March 31, 1997.
- 13 -
<PAGE> 15
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: April 14, 1997 By /s/ John W Richardson
---------------------------------
John W Richardson,
Vice President
(Signing on behalf of
Registrant as a duly
authorized officer of
Registrant and signing as the
Principal Accounting Officer
of Registrant.)
- 14 -
<PAGE> 16
THE GOODYEAR TIRE & RUBBER COMPANY
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1997
INDEX OF EXHIBITS (1)
EXHIBIT EXHIBIT
- ------------- ------------
Table Item No.* Description of Exhibit Number Page
- --------------- ------------------------------------------------ ------ -----
3 ARTICLES OF INCORPORATION AND BY-LAWS
-------------------------------------
Certificate of Amended Articles of Incorporation 3.1
of Registrant, dated December 20, 1954, and
Certificate of Amendment to Amended Articles of
Incorporation of Registrant, dated April 6,
1993, and Certificate of Amendment to Amended
Articles of Incorporation of Registrant dated
June 4, 1996, three documents comprising
Registrant's Articles of Incorporation as
amended (incorporated by reference, filed with
the Securities and Exchange Commission as
Exhibit 3.1 to Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1996).
Code of Regulations of The Goodyear Tire & 3.2
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).
4 INSTRUMENTS DEFINING
THE RIGHTS OF SECURITY HOLDERS,
INCLUDING INDENTURES
------------------------------------------------
Conformed copy of Rights Agreement, dated as 4.1
of June 4, 1996, between Registrant and First
Chicago Trust Company of New York, Rights Agent
(incorporated by reference, filed as Exhibit 1
to Registrant's Registration Statement on Form
8-A dated June 11, 1996 and as Exhibit 4(a) to
Registrant's Current Report on Form 8-K dated
June 4, 1996).
- ----------
*Pursuant to Item 601 of Regulation S-K.
E-1
<PAGE> 17
EXHIBIT EXHIBIT
- ------------ ------------
Table Item No.* Description of Exhibit Number Page
- --------------- ------------------------------------------------ ------ -----
Specimen nondenominational Certificate for 4.2
shares of the Common Stock, Without Par Value,
of Registrant; First Chicago Trust Company of
New York as transfer agent and registrar
(incorporated by reference, filed with the
Securities and Exchange Commission as Exhibit
4.3 to Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 1996,
File No. 1-1927).
Conformed copy of Revolving Credit 4.3
Facility Agreement, dated as of July 15, 1994,
among Registrant, the Lenders named therein and
Chemical Bank, as Agent (incorporated by
reference, filed as Exhibit A to Registrant's
Quarterly Report on Form 10-Q for the quarter
ended September 30, 1994, File No. 1-1927).
Conformed copy of Replacement and Restate- 4.4
ment Agreement, dated as of July 15, 1996, among
Registrant, the Lenders named therein and The
Chase Manhattan Bank (formerly Chemical Bank),
as Agent (incorporated by reference, filed as
Exhibit 4.5 to Registrant's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1996,
File 1-1927).
- ----------
*Pursuant to Item 601 of Regulation S-K.
E-2
<PAGE> 18
EXHIBIT EXHIBIT
------- -------
Table Item No.* Description of Exhibit Number Page
- --------------- ------------------------------------------------ ------ -----
4 No instrument defining the rights of holders of
long-term debt which relates to securities
having an aggregate principal amount in excess
of 10% of the consolidated assets of Registrant
and its subsidiaries was entered into during the
quarter ended March 31, 1997. In accordance with
paragraph (iii) to Part 4 of Item 601 of
Regulation S-K, agreements and instruments
defining the rights of holders of long term debt
entered into during the quarter ended March 31,
1997 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.
11 STATEMENT RE COMPUTATION OF
PER SHARE EARNINGS
------------------------------------------------
Statement setting forth the computation of per 11 X-11-1
share earnings.
12 STATEMENT RE COMPUTATION
OF RATIOS
------------------------------------------------
Statement setting forth the computation of Ratio 12 X-12-1
of Earnings to Fixed Charges.
27 FINANCIAL DATA SCHEDULE 27 X-27-1
------------------------------------------------
- ----------
*Pursuant to Item 601 of Regulation S-K.
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,
1997 1996
--------- ---------
<S> <C> <C>
Primary:
Net Income $170.4 $151.8
Adjusted average number of
shares outstanding 158,020,284 156,218,470
PRIMARY EARNINGS PER SHARE $1.08 $0.97
Fully Diluted:
Net Income $170.4 $151.8
Adjusted average number
of shares outstanding 158,021,196 156,554,062
FULLY DILUTED EARNINGS PER SHARE $1.08 $0.97
</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 shares of either Series B
Preferred Stock or the Common Stock of Registrant are issued upon the exercise
of, or in exchange for, such Rights.
Reference is made to Note 19, captioned "Preferred Stock Purchase Rights
Plan", in the Notes to Financial Statements set forth in Item 8 of Registrant's
Annual Report on Form 10-K for the year ended December 31, 1996 at page 50.
X - 11 - 1
<PAGE> 1
EXHIBIT 12
THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
<TABLE>
<CAPTION>
3 Months
Ended
03/31/97 1996 1995 1994 1993 1992
-------- ---- ---- ---- ---- ----
EARNINGS
- --------
<S> <C> <C> <C> <C> <C> <C>
Income before income taxes, extraordinary
items and cumulative effect of accounting changes $258.2 $122.3 $925.8 $865.7 $784.9 $629.9
Add:
Amortization of previously capitalized interest $ 2.7 $11.6 $11.7 $10.2 $10.1 $9.6
Minority interest in net income of
consolidated subsidiaries with fixed charges 11.9 45.9 30.1 16.9 19.0 14.2
Proportionate share of fixed charges of investees
accounted for by the equity method 1.6 6.2 6.3 5.0 4.7 6.9
Proportionate share of net loss of investees
accounted for by the equity method 1.2 2.7 0.5 0.2 0.3 2.2
-------------------------------------------------------------
Total additions $17.4 $66.4 $48.6 $32.3 $34.1 $32.9
Deduct:
Capitalized interest $1.9 $5.4 $5.1 $5.7 $5.0 $4.0
Minority interest in net loss of consolidated subsidiaries 0.8 4.4 3.3 0.3 0.3 1.8
Undistributed proportionate share of net income
of investees accounted for by the equity method 3.8 -- 0.2 7.2 4.0 0.9
-------------------------------------------------------------
Total deductions $6.5 $9.8 $8.6 $13.2 $9.3 $6.7
TOTAL EARNINGS $269.1 $178.9 $965.8 $884.8 $809.7 $656.1
==============================================================
FIXED CHARGES
- -------------
Interest expense $ 31.0 $128.6 $135.0 $129.4 $162.4 $232.9
Capitalized interest 1.9 5.4 5.1 5.7 5.0 4.0
Amortization of debt discount, premium or expense - 0.3 0.4 0.7 0.4 1.0
Interest portion of rental expense 17.4 69.5 77.0 83.0 83.7 87.6
Proportionate share of fixed charges of investees
accounted for by the equity method 1.6 6.2 6.4 5.0 4.7 6.9
--------------------------------------------------------------
TOTAL FIXED CHARGES $ 51.9 $210.0 $223.9 $223.8 $256.2 $332.4
==============================================================
TOTAL EARNINGS BEFORE FIXED CHARGES $321.0 $388.9 $1,189.7 $1,108.6 $1,065.9 $988.5
==============================================================
RATIO OF EARNINGS TO FIXED CHARGES 6.18 1.85 5.31 4.95 4.16 2.97
</TABLE>
Supplemental information - Income before income taxes, extraordinary items
and cumulative effect of accounting changes in 1996 was reduced by a charge of
$755.6 million related to the writedown of the All American Pipeline System and
related assets. Excluding this charge, the ratio of earnings to fixed charges
for 1996 would have been 5.45.
X-12-1
<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>
<MULTIPLIER> 1,000,000
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 256
<SECURITIES> 0
<RECEIVABLES> 2,085
<ALLOWANCES> 59
<INVENTORY> 1,915
<CURRENT-ASSETS> 4,496
<PP&E> 9,043
<DEPRECIATION> 4,957
<TOTAL-ASSETS> 10,245
<CURRENT-LIABILITIES> 3,099
<BONDS> 1,264
<COMMON> 156
0
0
<OTHER-SE> 3,214
<TOTAL-LIABILITY-AND-EQUITY> 10,245
<SALES> 3,233
<TOTAL-REVENUES> 3,233
<CGS> 2,461
<TOTAL-COSTS> 2,461
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31
<INCOME-PRETAX> 258
<INCOME-TAX> 88
<INCOME-CONTINUING> 170
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 170
<EPS-PRIMARY> 1.09
<EPS-DILUTED> 0
<FN> THIS SCHEDULE SHALL NOT BE DEEMED FILED FOR PURPOSES OF SECTION 11 OF THE
SECURITIES ACT OF 1933 OR SECTION 18 OF THE SECURITIES EXCHANGE ACT OF 1934.
</TABLE>
