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8-K - FORM 8-K - GOODYEAR TIRE & RUBBER CO /OH/ | l42530e8vk.htm |
Exhibit 99.1
News Release | ||
Corporate Headquarters: 1144 East Market Street, Akron, Ohio 44316-0001 | Media Website: www.GoodyearNewsRoom.com |
MEDIA CONTACT: | Keith Price | |||||
330-796-1863 | ||||||
ANALYST CONTACT: | Pat Stobb | |||||
330-796-6704 | ||||||
FOR IMMEDIATE RELEASE | ||||||
Goodyear Reports Record Sales, Higher Earnings for First Quarter
| First quarter 2011 sales up 27% from last year, new highs in all 4 business units | ||
| Strong price/mix drove first quarter revenue per tire up 15% over last year | ||
| Segment Operating Income up 36% over last year, on path to 2013 target | ||
| Goodyear net income increases to $103 million |
AKRON, Ohio, April 29, 2011 The Goodyear Tire & Rubber Company today reported higher tire
unit volumes, record sales and higher earnings for the first quarter of 2011.
Im very pleased with our outstanding first quarter results, theyre an excellent first step
on our path to our 2013 targets, said Richard J. Kramer, chairman and chief executive officer.
Improvement in North American Tire is a critical element to achieving our targets. North
American Tires first quarter performance strengthens my confidence in our future, he added.
All of our businesses made great progress in offsetting higher raw material costs through
improved price/mix and in driving sales of new, innovative products.
Goodyears first quarter 2011 sales were $5.4 billion, up 27 percent from the 2010 quarter and
the highest ever achieved by the company in any quarter. Tire unit volumes totaled 46.8 million,
up almost 7 percent from 2010.
First quarter sales reflect a $219 million increase in volume. Sales also benefited from
strong price/mix improvements, which drove revenue per tire up 15 percent over the 2010 quarter,
excluding the impact of foreign currency translation.
Our outstanding revenue-per-tire performance reflects a continued focus on developing and
selling innovative products in targeted market segments, Kramer said.
First quarter sales were also impacted by a $276 million increase in sales in other
tire-related businesses, primarily third-party chemical sales in North America, and favorable
foreign currency translation of $125 million.
The company had segment operating income of $327 million in the first quarter of 2011, up $87
million from the year-ago quarter. Segment operating income reflected higher volume as
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well as improved price/mix of $361 million, which nearly offset $385 million in higher raw material
costs ($352 million net of raw material cost reduction actions).
Goodyears first quarter 2011 net income was $103 million (42 cents per share), compared with
a net loss of $47 million (19 cents per share) in the 2010 quarter. All per share amounts are
diluted.
The 2011 first quarter included total charges of $18 million (7 cents per share) due to
rationalizations and accelerated depreciation and $6 million (2 cents per share) related to
discrete tax charges. All amounts are after taxes and minority interest.
See the table at the end of this release for a list of significant items impacting the 2011
and 2010 quarters.
Business Segment Results
See the note at the end of this release for further explanation and a segment operating income
reconciliation table.
North American Tire
First Quarter | ||||||||
(in millions) | 2011 | 2010 | ||||||
Tire Units |
17.1 | 15.2 | ||||||
Sales |
$ | 2,307 | $ | 1,779 | ||||
Segment Operating Income (Loss) |
$ | 40 | $ | (14 | ) | |||
Segment Operating Margin |
1.7 | % | (0.8 | )% |
North American Tires first quarter 2011 sales increased 30 percent from last year to
$2.3 billion, a first quarter record. Sales reflect a 13 percent increase in tire unit volume
and improved price/mix, which drove a 12 percent increase in revenue per tire, excluding the impact
of foreign currency translation, compared to 2010s first quarter. Original equipment unit volume
increased 8 percent. Replacement tire shipments were up 14.5 percent. Sales were positively
impacted by $210 million from higher sales in other tire-related businesses, primarily third-party
chemical sales.
First quarter 2011 segment operating income of $40 million was a $54 million improvement over
the prior year. The 2011 quarter was impacted by $120 million of higher raw material costs, which
were nearly offset by improved price/mix of $116 million. Fixed cost recovery due to higher
production levels contributed $43 million to segment operating income. An $18 million favorable
impact due to higher volume, as well as lower pension expense and actions to reduce costs also
contributed to higher segment operating income, while higher USW profit sharing expense was an
offset.
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Europe, Middle East and Africa Tire
First Quarter | ||||||||
(in millions) | 2011 | 2010 | ||||||
Tire Units |
19.7 | 18.4 | ||||||
Sales |
$ | 1,959 | $ | 1,529 | ||||
Segment Operating Income |
$ | 153 | $ | 109 | ||||
Segment Operating Margin |
7.8 | % | 7.1 | % |
Europe, Middle East and Africa Tires first quarter sales increased 28 percent from last year
to $2 billion, a first quarter record. Sales reflect a 7 percent increase in tire unit volume,
strong price/mix performance and favorable foreign currency translation. Original equipment unit
volume increased 6 percent. Replacement tire shipments were up 7 percent. First quarter revenue
per tire increased 17 percent in 2011 compared to 2010, excluding the impact of foreign currency
translation.
First quarter 2011 segment operating income of $153 million was $44 million above the prior
year. The 2011 quarter was impacted by $146 million of higher raw material costs, which more than
offset improved price/mix of $124 million. Fixed cost recovery due to higher production levels
contributed $34 million to segment operating income. The $23 million impact of higher volume, as
well as actions to reduce costs also contributed to higher segment operating income.
Latin American Tire
First Quarter | ||||||||
(in millions) | 2011 | 2010 | ||||||
Tire Units |
4.9 | 5.1 | ||||||
Sales |
$ | 585 | $ | 478 | ||||
Segment Operating Income |
$ | 67 | $ | 76 | ||||
Segment Operating Margin |
11.5 | % | 15.9 | % |
Latin American Tires first quarter sales increased 22 percent from last year to $585 million,
a record for any quarter. Original equipment unit volume increased 10 percent. Replacement tire
shipments were down 11 percent. First quarter revenue per tire increased 21 percent in 2011
compared to 2010, excluding the impact of foreign currency translation.
First quarter segment operating income of $67 million was down $9 million from a year ago.
Price/mix improvements of $77 million more than offset $49 million in raw material cost increases.
Segment operating income was negatively impacted by an $8 million depreciation adjustment related
to prior periods and an increase in equity-based taxes of $5 million, as well as lower volume of $7
million and the impact of inflation on costs.
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Asia Pacific Tire
First Quarter | ||||||||
(in millions) | 2011 | 2010 | ||||||
Tire Units |
5.1 | 5.2 | ||||||
Sales |
$ | 551 | $ | 484 | ||||
Segment Operating Income |
$ | 67 | $ | 69 | ||||
Segment Operating Margin |
12.2 | % | 14.3 | % |
Asia Pacific Tires first quarter sales increased 14 percent from last year to $551 million, a
first quarter record. Original equipment unit volume was flat. Replacement tire shipments were
down 4 percent. First quarter revenue per tire increased 8 percent in 2011 compared to 2010,
excluding the impact of foreign currency translation. Favorable foreign currency translation
increased sales by $36 million.
First quarter segment operating income of $67 million was $2 million lower than last year. The
2011 quarter was impacted by improved price/mix of $44 million, which more than offset
$37 million of higher raw material costs. Segment operating income was also impacted by
$7 million in costs related to the planned start up of a new factory in China.
Outlook
Goodyear expects the global tire industry to continue to grow in 2011 and has increased its
forecast for most major segments in North America and Europe. The company now expects that its
unit volumes will increase at the higher end of the previously announced range of 3 percent to
5 percent.
In North America, the consumer replacement industry is expected to grow between 2 percent and
4 percent, consumer original equipment between 5 percent and 10 percent, commercial replacement
between 6 percent and 10 percent and commercial original equipment between
40 percent and 50 percent.
In Europe, the consumer replacement industry is expected to grow between 4 percent and
6 percent, consumer original equipment 4 percent to 8 percent, commercial replacement between
7 percent and 11 percent and commercial original equipment approximately 50 percent.
Goodyear anticipates its raw material costs for the remainder of 2011 will increase 25 percent
to 30 percent compared with the prior year.
Conference Call
Goodyear will hold an investor conference call at 10 a.m. today. Approximately 45 minutes
prior to the commencement of the call, the company will post the financial and other related
information that will be presented on its investor relations Web site:
http://investor.goodyear.com.
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Participating in the conference call will be Richard J. Kramer, chairman and chief executive
officer, and Darren R. Wells, executive vice president and chief financial officer.
Investors, members of the media and other interested persons may access the conference call on
the Web site or via telephone by calling (706) 643-2869 before 9:55 a.m. A taped replay will be
available later by calling (706) 645-9291 (Conference ID: 60687962). The replay will also remain
available on the Web site.
Goodyear is one of the worlds largest tire companies. It employs approximately 72,000 people
and manufactures its products in 55 facilities in 22 countries around the world. Its two
Innovation Centers in Akron, Ohio and Colmar-Berg, Luxembourg strive to develop state-of-the-art
products and services that set the technology and performance standard for the industry. For more
information about Goodyear and its products, go to www.goodyear.com.
Certain information contained in this press release may constitute forward-looking statements
for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995.
There are a variety of factors, many of which are beyond our control, that affect our operations,
performance, business strategy and results and could cause our actual results and experience to
differ materially from the assumptions, expectations and objectives expressed in any
forward-looking statements. These factors include, but are not limited to: our ability to realize
anticipated savings and operational benefits from our cost reduction initiatives or to implement
successfully other strategic initiatives; increases in the prices paid for raw materials and
energy; pension plan funding obligations; actions and initiatives taken by both current and
potential competitors; deteriorating economic conditions or an inability to access capital markets;
work stoppages, financial difficulties or supply disruptions at our suppliers or customers; the
adequacy of our capital expenditures; a labor strike, work stoppage or other similar event; our
failure to comply with a material covenant in our debt obligations; potential adverse consequences
of litigation involving the company; as well as the effects of more general factors such as changes
in general market, economic or political conditions or in legislation, regulation or public policy.
Additional factors are discussed in our filings with the Securities and Exchange Commission,
including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on
Form 8-K. In addition, any forward-looking statements represent our estimates only as of today and
should not be relied upon as representing our estimates as of any subsequent date. While we may
elect to update forward-looking statements at some point in the future, we specifically disclaim
any obligation to do so, even if our estimates change.
(financial statements follow)
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The Goodyear Tire & Rubber Company and Subsidiaries
Consolidated Statement of Operations (unaudited)
Consolidated Statement of Operations (unaudited)
(In millions, except per share amounts) | Three Months Ended | |||||||
March 31, | ||||||||
2011 | 2010 | |||||||
NET SALES |
$ | 5,402 | $ | 4,270 | ||||
Cost of Goods Sold |
4,461 | 3,456 | ||||||
Selling, Administrative and General Expense |
668 | 605 | ||||||
Rationalizations |
9 | 2 | ||||||
Interest Expense |
74 | 74 | ||||||
Other Expense |
4 | 104 | ||||||
Income before Income Taxes |
186 | 29 | ||||||
United States and Foreign Taxes |
62 | 53 | ||||||
Net Income (Loss) |
124 | (24 | ) | |||||
Less: Minority Shareholders Net Income |
21 | 23 | ||||||
Goodyear Net Income (Loss) |
$ | 103 | $ | (47 | ) | |||
Goodyear Net Income (Loss) Per Share of Common Stock |
||||||||
Basic |
$ | 0.42 | $ | (0.19 | ) | |||
Weighted Average Shares Outstanding |
243 | 242 | ||||||
Diluted |
$ | 0.42 | $ | (0.19 | ) | |||
Weighted Average Shares Outstanding |
246 | 242 |
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The Goodyear Tire & Rubber Company and Subsidiaries
Consolidated Balance Sheets (unaudited)
Consolidated Balance Sheets (unaudited)
(In millions, except share data) | March 31, | December 31, | ||||||
2011 | 2010 | |||||||
Assets: |
||||||||
Current Assets: |
||||||||
Cash and Cash Equivalents |
$ | 2,215 | $ | 2,005 | ||||
Accounts Receivable, less Allowance $109 ($106 in 2010) |
3,550 | 2,736 | ||||||
Inventories: |
||||||||
Raw Materials |
826 | 706 | ||||||
Work in Process |
190 | 168 | ||||||
Finished Products |
2,321 | 2,103 | ||||||
3,337 | 2,977 | |||||||
Prepaid Expenses and Other Current Assets |
390 | 327 | ||||||
Total Current Assets |
9,492 | 8,045 | ||||||
Goodwill |
712 | 683 | ||||||
Intangible Assets |
161 | 161 | ||||||
Deferred Income Taxes |
52 | 58 | ||||||
Other Assets |
510 | 518 | ||||||
Property, Plant and Equipment
less Accumulated Depreciation $9,068 ($8,807 in 2010) |
6,329 | 6,165 | ||||||
Total Assets |
$ | 17,256 | $ | 15,630 | ||||
Liabilities: |
||||||||
Current Liabilities: |
||||||||
Accounts Payable-Trade |
$ | 3,358 | $ | 3,107 | ||||
Compensation and Benefits |
792 | 756 | ||||||
Other Current Liabilities |
1,055 | 1,018 | ||||||
Notes Payable and Overdrafts |
245 | 238 | ||||||
Long Term Debt and Capital Leases due Within One Year |
244 | 188 | ||||||
Total Current Liabilities |
5,694 | 5,307 | ||||||
Long Term Debt and Capital Leases |
4,795 | 4,319 | ||||||
Compensation and Benefits |
3,412 | 3,415 | ||||||
Deferred and Other Noncurrent Income Taxes |
262 | 242 | ||||||
Other Long Term Liabilities |
849 | 842 | ||||||
Total Liabilities |
15,012 | 14,125 | ||||||
Commitments and Contingent Liabilities |
||||||||
Minority Shareholders Equity |
628 | 584 | ||||||
Shareholders Equity: |
||||||||
Goodyear Shareholders Equity: |
||||||||
Preferred Stock, no par value: |
||||||||
Authorized, 50 million shares, Outstanding shares 10 million (0 in 2010),
liquidation preference $50 per share |
500 | | ||||||
Common Stock, no par value: |
||||||||
Authorized, 450 million shares, Outstanding shares 244 million (243
million in 2010) after deducting 7 million treasury shares (8 million in
2010) |
244 | 243 | ||||||
Capital Surplus |
2,795 | 2,805 | ||||||
Retained Earnings |
969 | 866 | ||||||
Accumulated Other Comprehensive Loss |
(3,181 | ) | (3,270 | ) | ||||
Goodyear Shareholders Equity |
1,327 | 644 | ||||||
Minority Shareholders Equity Nonredeemable |
289 | 277 | ||||||
Total Shareholders Equity |
1,616 | 921 | ||||||
Total Liabilities and Shareholders Equity |
$ | 17,256 | $ | 15,630 | ||||
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Non-GAAP Financial Measures
This earnings release presents total segment operating income, which is an important
financial measure for the company but is not a financial measure defined by U.S. GAAP.
Total segment operating income is the sum of the individual strategic business units segment
operating income as determined in accordance with U.S. GAAP. Management believes that total
segment operating income is useful because it represents the aggregate value of income created by
the companys SBUs and excludes items not directly related to the SBUs for performance evaluation
purposes. See the table below for the reconciliation of total segment operating income.
Total Segment Operating Income Reconciliation Table
(in millions) | Three Months | |||||||
Ended March 31, | ||||||||
2011 | 2010 | |||||||
Segment Operating Income |
$ | 327 | $ | 240 | ||||
Rationalizations |
(9 | ) | (2 | ) | ||||
Interest expense |
(74 | ) | (74 | ) | ||||
Other expense |
(4 | ) | (104 | ) | ||||
Asset write-offs and accelerated
depreciation |
(9 | ) | (3 | ) | ||||
Corporate incentive compensation plans |
(14 | ) | (7 | ) | ||||
Intercompany profit elimination |
(9 | ) | (9 | ) | ||||
Other |
(22 | ) | (12 | ) | ||||
Income before Income Taxes |
$ | 186 | $ | 29 | ||||
First Quarter Significant Items (after tax and minority interest)
2011
| Rationalizations and accelerated depreciation charges, $18 million (7 cents per share). |
| Discrete tax charges, $6 million (2 cents per share). |
2010
| Charges resulting from Venezuelan currency devaluation, $99 million (41 cents per share) |
| Costs related to debt exchange offer, $5 million (2 cents per share) |
| Rationalizations, asset write-offs and accelerated depreciation charges, $5 million (2 cents per share) |
| Gain from asset sales, $8 million (3 cents per share) |
| Gain related to settlements with certain suppliers, $8 million (3 cents per share) |
| Gain resulting from various discrete tax benefits, $5 million (2 cents per share) |
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