Goodyear Reports Results for 2001's Fourth Quarter - Oops Flat Tire!

AKRON, Ohio, Feb. 8 The Goodyear Tire & Rubber Company today reported a net loss of $174.0 million ($1.07 per share) for the fourth quarter of 2001. This compares with a net loss of $102.0 million (65 cents per share) in the fourth quarter of 2000.The fourth quarter 2001 results include after-tax rationalization charges and other adjustments totaling $126.9 million (78 cents per share). Excluding these adjustments, Goodyear posted a loss of $47.1 million (29 cents per share) for the period.The after-tax adjustments recorded in the fourth quarter of 2001 include a gain of $16.9 million (10 cents per share) on the sale of its specialty chemicals business, rationalization charges of $101.2 million (62 cents per share) and a charge of $18.6 million (11 cents per share) against Cost of Goods Sold for a tire replacement program. Equity in Earnings of Affiliates includes a charge of $24.0 million (15 cents per share) for a rationalization program at the company's South Pacific Tyres joint venture in Australia.Results for the 2000 fourth quarter included after-tax rationalization charges of $93.7 million (59 cents per share), a charge of $10.5 million (7 cents per share) for a rationalization at South Pacific Tyres and an after- tax benefit of $18.7 million (12 cents per share) due to the change in the company's inventory costing method. Excluding these adjustments, Goodyear posted a loss of $16.5 million (11 cents per share) in the 2000 quarter.``Depressed economic conditions, continued weak demand around the world and the cost of reducing production to align inventory levels accordingly had a significant impact on our results,'' said Sam G. Gibara, chairman and chief executive officer. ``Reducing our inventory levels through production cutbacks relative to 2000 levels resulted in approximately $320 million of unabsorbed costs during the year, $150 million of this impacted us in the fourth quarter.''During the fourth quarter of 2001, Goodyear generated $806 million of positive cash flow, which included $78.2 million from asset sales and the impact of reducing amounts outstanding under the company's accounts receivable sales program by $165.5 million.The fourth quarter rationalization programs focus on eliminating high-cost tire manufacturing capacity, principally in Europe, Asia and Australia, and other staffing reductions. Employment reductions are expected to total more than 3,500, while annualized savings are expected to exceed $102 million.Goodyear's tire replacement program relates to the company proactively changing certain tires on 15-passenger vans to those of the company's latest design. It is estimated that approximately 200,000 tires could be replaced.Worldwide, Goodyear's fourth quarter sales were $3.47 billion in 2001, down 1.5 percent from $3.53 billion in 2000. Tire unit volume in 2001's fourth quarter was 54.5 million units, down 1.2 million units or 2.2 percent from 2000.Capital expenditures in 2001's fourth quarter were $119.5 million compared with $203.4 million in the 2000 period.Depreciation and amortization expense in 2001's fourth quarter was $159.6 million compared with $154.6 million in the 2000 period.Year-end resultsThe company's net loss for 2001 was $203.6 million ($1.27 per share). For 2000, the company had net income of $40.3 million (25 cents per share).The 2001 results include net after-tax charges of $170.1 million ($1.06 per share). The 2000 results include net after-tax charges of $63.0 million (40 cents per share).The company estimates that the effects of currency movements reduced operating income by approximately $85.0 million in 2001.Net sales for 2001 were $14.1 billion, down 1.9 percent from $14.4 billion in 2000. Tire volume was 219.3 million units, down 4.0 million units or 1.8 percent for the year.The company estimates that the effects of currency movements reduced net sales by approximately $395.0 million in 2001.``Our sales performance, while below 2000's, outperformed the industry,'' Gibara said. ``Industry shipments in North America were down 6 percent for the year and the U.S. consumer replacement market was down 8.5 percent in the fourth quarter, the biggest decline since 1980.``Led by our Goodyear brand, we gained market share around the world. In North America, we added two points of market share,'' he added.During 2001, the company generated $724 million of positive cash flow, which included $249.1 million from the sale of receivables and $118.2 from the sale of other assets. Cash flow benefited from a reduction in inventories of almost $500 million.Capital expenditures for 2001 were $435.4 million compared with $614.5 million in 2000.For the year, depreciation and amortization expense was $636.7 million in 2001 and $630.3 million in 2000.The rationalization programs recorded in the fourth quarter of 2000 and the first quarter of 2001 have been substantially completed. Employment reductions during 2001 totaled about 10,000.Business SegmentsFourth quarter segment operating income was $7.1 million in 2001 and $78.2 million in 2000. For the year, segment operating income was $366.7 million in 2001 and $599.0 million in 2000. Segment operating income does not reflect rationalizations and asset sales in 2001 and 2000. <pre> North American Tire Fourth Quarter Twelve Months (in millions) 2001 2000 2001 2000 Tire Units 27.1 29.1 112.0 115.9 Sales $1,742.7 $1,791.7 $7,152.3 $7,111.3 Operating Income (Loss) (44.5) 63.6 107.8 260.7 Margin (2.6)% 3.5% 1.5% 3.7%

</pre>North American Tire's unit volume in 2001's fourth quarter was down 6.8 percent from 2000. Replacement volume decreased 9.2 percent. Shipments to original equipment customers were down 0.3 percent. For the year, volume was down 3.4 percent. Replacement volume was up 0.2 percent for the year. Shipments to original equipment customers were down 11.3 percent compared with 2000.Sales decreased in the quarter due to the reduced volume and weak replacement tire demand. Despite the lower volume, sales increased for the year due to a change in product mix to higher-priced tires and price increases in the replacement market. Sales were adversely affected by poor economic conditions in the second half of the year.The replacement market for consumer tires was favorably impacted in 2001 and 2000 by replacement programs involving Firestone tires on Ford Motor Co. vehicles. In May 2001, a program involving an estimated 13 million tires began. In August 2000, a replacement program involving an estimated 6.5 million tires was initiated.During the fourth quarter of 2001, North American Tire supplied about 1.0 million tires for the replacement program. During the fourth quarter of 2000, it supplied about 1.5 million tires.For the full year, North American Tire supplied about 5.0 million tires for the replacement program in 2001. During 2000, it supplied about 3.0 million tires.Operating income decreased in both 2001 periods as a result of increased manufacturing costs due to production cutbacks to better align inventory levels with demand and the costs of the company's tire replacement program. Income was favorably impacted by a shift in mix to higher-margin tires and lower research and development costs. <pre> European Union Tire Fourth Quarter Twelve Months (in millions) 2001 2000 2001 2000 Tire Units 15.5 15.0 61.1 60.3 Sales $798.3 $761.9 $3,128.0 $3,198.1 Operating Income (Loss) 5.1 (7.1) 57.2 88.7 Margin 0.6% (0.9)% 1.8% 2.8%

</pre>European Union Tire's unit volume in 2001's fourth quarter was up 3.4 percent from 2000. Replacement volume increased 1.1 percent. Shipments to original equipment customers were up 8.8 percent. For the year, volume was up 1.4 percent with replacement units down 2.0 percent and shipments to original equipment customers up 9.5 percent.Sales increased in the fourth quarter due to the higher volume. Despite the higher volume, sales decreased for the year due to currency translation and a shift in mix towards lower-priced original equipment tires.Operating income increased for the quarter due to the higher volume and cost containment efforts. Income decreased for the year as a result of higher costs for raw materials, the change in product mix and currency translation. <pre> Eastern Europe, Africa, Fourth Quarter Twelve Months Middle East Tire (in millions) 2001 2000 2001 2000 Tire Units 3.7 3.9 14.0 15.6 Sales $180.1 $193.3 $703.1 $793.0 Operating Income 4.6 8.2 20.2 54.6 Margin 2.6% 4.2% 2.9% 6.9%

</pre>Eastern Europe, Africa and Middle East Tire's volume in 2001's fourth quarter was down 4.5 percent from 2000. For the year, volume was down 10.1 percent. Replacement volume decreased 0.5 percent for the quarter and 8.1 percent for the full year. Shipments to original equipment customers were down 20.0 percent for the quarter and 17.2 percent for the 12 months.Sales decreased from 2000 for the quarter and the year due to reduced volumes resulting from poor economic conditions in Turkey, Poland and South Africa.Operating income fell in both periods because of the reduced volume and the effect of production cutbacks to align inventory with demand. <pre> Latin American Tire Fourth Quarter Twelve Months (in millions) 2001 2000 2001 2000 Tire Units 5.2 5.0 20.0 19.7 Sales $257.8 $262.4 $1,012.6 $1,047.9 Operating Income 28.3 14.9 89.8 69.8 Margin 11.0% 5.7% 8.9% 6.7%

</pre>Latin American Tire's volume in 2001's fourth quarter increased 1.8 percent from 2000 and up 1.3 percent for the year. Replacement volume decreased 3.9 percent for the quarter and 6.3 percent for the 12 months. Shipments to original equipment customers were up 20.8 percent for the quarter and 24.9 percent for the year.Sales decreased in both 2001 periods due to currency translation, a shift in mix toward lower-priced original equipment tires and weak economic conditions in the region. Operating income increased in the quarter and the year due to a combination of price adjustments, offsetting currency movements; lower raw material costs; higher volume; and ongoing efficiency initiatives. <pre> Asia Tire Fourth Quarter Twelve Months (in millions) 2001 2000 2001 2000 Tire Units 3.0 2.7 12.2 11.8 Sales $123.7 $119.8 $493.9 $524.6 Operating Income (Loss) 4.2 (1.7) 19.9 17.9 Margin 3.4% (1.4)% 4.0% 3.4%

</pre>Asia Tire's unit volume in 2001's fourth quarter was up 11.5 percent from the 2000 period and up 3.1 percent for the year. Replacement volume was up 13.3 percent for the quarter and unchanged for the 12 months. Shipments to original equipment customers were up 6.9 percent for the quarter and 12.3 percent for the year.Sales increased in the 2001 quarter due to the higher volume, but fell for the year because of currency translation and competitive pricing, despite higher volume.Operating income improved in both 2001 periods as a result of the higher volume, cost containment programs and lower raw material costs. <pre> Engineered Products Fourth Quarter Twelve Months (in millions) 2001 2000 2001 2000 Sales $254.6 $264.1 $1,122.3 $1,174.2 Operating Income (Loss) (5.1) (3.5) 11.6 43.1 Margin (2.0)% (1.3)% 1.0% 3.7%

</pre>Engineered Products' sales in 2001's fourth quarter and 12 months decreased primarily because of reduced demand for hose and power transmission products in the North American original equipment automotive and replacement markets. The operating loss in the quarter and the decline in operating income for the year resulted from the lower volume and production cutbacks to better align inventory levels with demand. <pre> Chemical Products Fourth Quarter Twelve Months (in millions) 2001 2000 2001 2000 Sales $213.2 $282.2 $1,037.3 $1,129.7 Operating Income 14.5 3.8 60.2 64.2 Margin 6.8% 1.3% 5.8% 5.7%

</pre>Chemical Products' sales decreased in 2001's fourth quarter and the year due to lower demand from tiremakers. Operating income increased in the quarter due to lower raw material costs but fell for the year because of lower volume.Goodyear will hold an investor conference call at 8:30 a.m. ET today. Shareholders, members of the media, and other interested persons may access the conference call on the Internet at <a href="http://www.goodyear.com">www.goodyear.com</a> or via telephone by calling (706) 634-5954 before 8:25 a.m. A taped replay of the conference call will be available at 3 p.m. by calling (706) 645-9291 and entering access code 2876760.Goodyear is the world's largest tire company. Headquartered in Akron, Ohio, the company manufactures tires, engineered rubber products and chemicals in more than 90 facilities in 28 countries. It has marketing operations in almost every country around the world. Goodyear employs about 96,000 people worldwide.This news release contains certain forward-looking statements based on current expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed by such statements. These risks and uncertainties include price and product competition, customer demand for the company's products, the ability to control costs and expenses, general industry and market conditions and general domestic and international economic conditions, including interest rate and currency fluctuations. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. <pre> (financial statements follow)

The Goodyear Tire & Rubber Company and Subsidiaries

Consolidated Statement of Income

(In millions, except per share) Fourth Quarter Twelve Months Ended Dec. 31 Ended Dec. 31 2001 2000 2001 2000 (unaudited) Net Sales $3,472.6 $3,526.4 $14,147.2 $14,417.1

Cost of Goods Sold 2,927.5 2,883.9 11,619.5 11,637.3 Selling, Administrative and General Expense 567.1 575.1 2,248.8 2,237.3 Rationalizations 127.8 118.2 206.8 124.1 Interest Expense 71.5 76.9 292.4 282.6 Other (Income) Expense (11.4) 10.4 11.8 27.8 Foreign Currency Exchange 18.0 (7.5) 0.1 (6.7) Equity in Earnings of Affiliates 26.6 17.4 40.6 22.4 Minority Interest in Net Income of Subsidiaries (19.4) (4.0) 0.2 33.5 Income (Loss) before Income Taxes (235.1) (144.0) (273.0) 58.8

United States and Foreign Taxes on Income (61.1) (42.0) (69.4) 18.5

Net Income (Loss) $(174.0) $(102.0) $(203.6) $40.3

Per Share of Common Stock - Basic Net Income (Loss) $(1.07) $(0.65) $(1.27) $0.26

Average Shares Outstanding 163.1 157.6 160.0 156.8

Per Share of Common Stock - Diluted Net Income (Loss) $(1.07) $(0.65) $(1.27) $0.25

Average Shares Outstanding 163.1 157.6 160.0 158.8

The Goodyear Tire & Rubber Company and Subsidiaries Consolidated Balance Sheet (In millions) Dec. 31 Dec. 31

Assets 2001 2000 Current Assets: Cash and Cash Equivalents $959.4 $252.9 Accounts and Notes Receivable, less allowance - $84.9 ($93.3 in 2000) 1,486.8 2,074.7 Inventories: Raw Materials 398.8 480.4 Work in Process 112.5 123.5 Finished Product 1,869.6 2,275.8 2,380.9 2,879.7 Prepaid Expenses and Other Current Assets 427.9 259.9 Total Current Assets 5,255.0 5,467.2

Long Term Accounts and Notes Receivable 143.8 92.8 Investments in Affiliates, at Equity 82.7 102.0 Other Assets 263.0 183.8 Goodwill 569.1 588.4 Deferred Income Taxes 674.9 394.1 Deferred Charges 1,408.3 1,218.7 Properties and Plants, Less Accumulated Depreciation - $6,030.6 ($5,862.6 in 2000) 5,116.1 5,521.0 Total Assets $13,512.9 $13,568.0

Liabilities Current Liabilities: Accounts Payable - Trade $1,359.2 $1,505.2 Compensation and Benefits 897.2 823.6 Other Current Liabilities 396.1 395.6 United States and Foreign Taxes 309.3 208.4 Notes Payable 255.0 1,077.0 Sumitomo 1.2% Convertible Note Payable Due 8/01 -- 56.9 Long Term Debt due within One Year 109.7 159.2 Total Current Liabilities 3,326.5 4,225.9

Long Term Debt and Capital Leases 3,203.6 2,349.6 Compensation and Benefits 2,848.9 2,310.5 Other Long Term Liabilities 482.3 334.1 Minority Equity in Subsidiaries 787.6 844.9 Total Liabilities 10,648.9 10,065.0

Shareholders' Equity Preferred Stock, no par value: Authorized 50 shares, unissued -- -- Common Stock, no par value: Authorized 300 shares Outstanding Shares - 163.2 (157.6 in 2000) After Deducting 32.5 Treasury Shares (38.1 in 2000) 163.2 157.6 Capital Surplus 1,245.4 1,092.4 Retained Earnings 3,192.7 3,558.8 Accumulated Other Comprehensive Income (1,737.3) (1,305.8) Total Shareholders' Equity 2,864.0 3,503.0 Total Liabilities and Shareholders' Equity $13,512.9 $13,568.0 </pre>