Goodyear Reports(POOR) Results for 2002's First Quarter
AKRON, Ohio, April 24 The Goodyear Tire & Rubber Company today reported a net loss of $63.2 million (39 cents per share) for the first quarter of 2002. This compares with a net loss of $46.7 million (30 cents per share) in the first quarter of 2001.
First quarter 2002 results include a pre-tax charge of $10 million (4 cents per share) principally related to the return of inventory to Goodyear following the April 6, 2002, closure of Penske Automotive Centers in the United States.
The 2002 first quarter was also adversely affected by approximately $95 million in costs resulting from significant production cutbacks in the fourth quarter of 2001 due to inventory reduction programs and lower demand during that period.
Additionally, the 2002 results were negatively impacted by $13 million in foreign currency exchange, primarily due to currency devaluation in Argentina.
Results for the 2001 quarter included after-tax rationalization charges of $57.1 million (36 cents per share) and an after-tax gain of $13.9 million (9 cents per share) resulting from the sale of land and buildings in the United Kingdom. Excluding these adjustments, Goodyear posted a loss of $3.5 million (2 cents per share) in the year-ago quarter.
``Ongoing industry weakness in retail tire demand in North America and other key markets had a negative impact on our first quarter results,'' said Sam G. Gibara, chairman and chief executive officer.
``While I am disappointed in reporting a loss, we expect to make progress in the second quarter. Our commitment to cash generation continues to remain a priority. Goodyear's working capital requirements at the end of the first quarter were over $1 billion below comparable levels a year ago,'' he added.
Worldwide, Goodyear's first quarter sales were $3.3 billion in 2002, down 3.0 percent from $3.4 billion in 2001. Tire unit volume in 2002's first quarter was 53.0 million units, an increase of 0.3 million, or 0.7 percent, from the 2001 period.
The company estimates that the effects of currency movements reduced sales by approximately $95 million and operating income by $15 million in the 2002 quarter.
Capital expenditures in 2002's first quarter were $75.8 million, down from $103.9 million in the 2001 period.
Depreciation and amortization expense in 2002's first quarter was $146.8 million compared with $160.4 million in 2001.
Business Segments
First quarter segment operating income was $32.9 million in 2002 and $105.3 million in 2001. Segment operating income does not reflect rationalizations and asset sales in 2001.
North American Tire First Quarter
(in millions) 2002 2001
Tire Units 26.2 25.8
Sales $1,651.8 $1,624.4
Operating Income (Loss) (51.3) 15.4
Margin (3.1)% 0.9%
North American Tire's unit volume in 2002's first quarter was up 1.5 percent from 2001. Replacement volume decreased 2.5 percent. Shipments to original equipment customers were up 10.5 percent.
Sales increased in the quarter due to the higher original equipment volume, the Ford Motor Co. tire replacement program and price increases enacted during the quarter.
During the first quarter, Goodyear supplied approximately 500,000 tires in connection with the Ford replacement program, which ended on March 31, 2002.
The operating loss in the 2002 quarter was primarily a result of higher costs due to the impact of fourth quarter 2001 production cutbacks, the charge related to the Penske business and a shift in channel and product mix.
European Union Tire First Quarter
(in millions) 2002 2001
Tire Units 15.1 15.6
Sales $744.9 $799.3
Operating Income 16.6 31.4
Margin 2.2% 3.9%
European Union Tire's unit volume in 2002's first quarter was down 3.2 percent from 2001. Replacement volume decreased 6.7 percent. Shipments to original equipment customers were up 4.0 percent.
Sales decreased in the first quarter primarily due to the effects of currency translation, lower volume and a shift in mix toward lower-priced original equipment tires. Higher costs due to the impact of fourth quarter 2001 production cutbacks, lower volume and a weaker euro versus the U.S. dollar contributed to the decline in operating income.
The company estimates that the effects of currency movements reduced sales by approximately $15 million and operating income by $2 million in the 2002 quarter.
Eastern Europe, Africa and
Middle East Tire First Quarter
(in millions) 2002 2001
Tire Units 3.8 3.4
Sales $174.5 $163.4
Operating Income 10.8 5.9
Margin 6.2% 3.6%
Eastern Europe, Africa and Middle East Tire's volume in 2002's first quarter was up 12.1 percent from 2001. Replacement volume increased 18.4 percent for the quarter. Shipments to original equipment customers were down 7.2 percent for the quarter.
Sales increased from 2001 for the quarter due to higher replacement market volume, particularly in Turkey and Poland. Operating income increased due to a shift in mix to higher-margin replacement tires, lower raw material costs and the benefits of prior restructuring programs.
The company estimates that the effects of currency movements reduced sales by approximately $45 million and operating income by $3 million in the 2002 quarter.
Latin American Tire First Quarter
(in millions) 2002 2001
Tire Units 4.9 5.0
Sales $245.6 $257.7
Operating Income 25.4 22.8
Margin 10.3% 8.8%
Latin American Tire's volume in 2002's first quarter decreased 1.6 percent from 2001. Replacement volume decreased 2.5 percent for the quarter. Shipments to original equipment customers were up 0.6 percent for the quarter.
Sales decreased in the 2002 period due to currency translation, particularly in Argentina and Venezuela, and lower volume. Price increases partially offset currency movements. Despite lower volume, operating income increased in the quarter due to price increases, the benefits of cost reduction programs and lower raw material costs.
The company estimates that the effects of currency movements reduced sales by approximately $30 million and operating income by $8 million in the 2002 quarter.
- Asia Tire First Quarter
- (in millions) 2002 2001
- Tire Units 3.0 2.9
- Sales $121.7 $119.0
- Operating Income 7.6 3.9
- Margin 6.2% 3.3%
Asia Tire's unit volume in 2002's first quarter was up 5.4 percent from the 2001 period. Replacement volume was up 5.5 percent. Shipments to original equipment customers were up 5.1 percent.
Sales increased in the 2002 quarter due to higher volume. Operating income improved as a result of lower raw material costs, the benefits of cost reduction programs and higher volume.
The company estimates that the effects of currency movements reduced sales by approximately $5 million and operating income by $2 million in the 2002 quarter.
Engineered Products First Quarter
(in millions) 2002 2001
Sales $283.1 $299.4
Operating Income 10.2 9.5
Margin 3.6% 3.2%
Engineered Products' sales in 2002's first quarter decreased primarily because of the continued economic slowdown in the United States. Most major product lines had lower sales compared to 2001. Despite lower sales volume, cost reduction and productivity improvement programs resulted in improved operating income.
Chemical Products First Quarter
(in millions) 2002 2001
Sales $196.3 $291.6
Operating Income 13.6 16.4
Margin 6.9% 5.6%
Chemical Products' sales and operating income decreased in 2002's first quarter due to the sale of the company's Specialty Chemical business in December 2001, reduced sales to the tire industry and lower net selling prices resulting from decreased raw material costs. Lower energy costs and cost reduction programs benefited margins.
Goodyear will hold an investor conference call at 10:30 a.m. ET today. Shareholders, members of the media, and other interested persons may access the conference call on the Internet at www.goodyear.com/investor/events.html or via telephone by calling (706) 634-5954 before 10:25 a.m. A taped replay of the conference call will be available after 2 p.m. by calling (706) 645- 9291 and entering access code 3523114.
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 95,000 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.
(financial statements follow)
The Goodyear Tire & Rubber Company and Subsidiaries
Consolidated Statement of Income
(In millions, except per share) First Quarter
Ended March 31
2002 2001
(unaudited)
Net Sales $3,311.2 $3,414.2
Cost of Goods Sold 2,761.1 2,785.6
Selling, Administrative and
General Expense 529.4 547.9
Rationalizations -- 79.0
Interest Expense 61.0 68.7
Other (Income) Expense 13.9 (6.5)
Foreign Currency Exchange 13.3 (9.9)
Equity in Earnings of Affiliates 4.6 5.1
Minority Interest in
Net Income of Subsidiaries 13.5 7.8
Loss before Income Taxes (85.6) (63.5)
United States and Foreign Taxes
on Loss (22.4) (16.8)
Net Loss $(63.2) $(46.7)
Per Share of Common Stock - Basic
Net Loss $(0.39) $(0.30)
Average Shares Outstanding 163.2 158.2
Per Share of Common Stock - Diluted
Net Loss $(0.39) $(0.30)
Average Shares Outstanding 163.2 158.2
The Goodyear Tire & Rubber Company and Subsidiaries
Consolidated Balance Sheet
(In millions)
Mar. 31 Dec. 31
Assets 2002 2001
(unaudited)
Current Assets:
Cash and Cash Equivalents $646.4 $959.4
Accounts and Notes Receivable,
less allowance - $87.3 ($84.9 in 2001) 1,732.8 1,486.8
Inventories:
Raw Materials 367.9 398.8
Work in Process 111.8 112.5
Finished Product 1843.9 1,869.6
2,323.6 2,380.9
Prepaid Expenses and Other Current Assets 392.1 427.9
Total Current Assets 5,094.9 5,255.0
Long Term Accounts and Notes Receivable 166.7 143.8
Investments in Affiliates, at Equity 95.1 82.7
Other Assets 261.2 263.0
Goodwill and Other Intangible Assets 705.0 698.1
Deferred Income Taxes 685.9 674.9
Deferred Charges 1,276.7 1,279.3
Properties and Plants,
Less Accumulated Depreciation - $6,100.2
($6,030.6 in 2001) 5,028.2 5,116.1
Total Assets $13,313.7 $13,512.9
Liabilities
Current Liabilities:
Accounts Payable - Trade $1,392.6 $1,359.2
Compensation and Benefits 875.4 897.2
Other Current Liabilities 323.3 396.1
United States and Foreign Taxes 275.6 309.3
Notes Payable 269.7 255.0
Long Term Debt due within One Year 407.4 109.7
Total Current Liabilities 3,544.0 3,326.5
Long Term Debt and Capital Leases 2,883.9 3,203.6
Compensation and Benefits 2,842.4 2,848.9
Other Long Term Liabilities 485.5 482.3
Minority Equity in Subsidiaries 792.6 787.6
Total Liabilities 10,548.4 10,648.9
Shareholders' Equity
Preferred Stock, no par value:
Authorized 50 shares, unissued -- --
Common Stock, no par value:
Authorized 300 shares
Outstanding Shares - 163.3 (163.2 in 2001)
After Deducting 32.4 Treasury Shares
(32.5 in 2001) 163.3 163.2
Capital Surplus 1,247.7 1,245.4
Retained Earnings 3,109.9 3,192.7
Accumulated Other Comprehensive Income (1,755.6) (1,737.3)
Total Shareholders' Equity 2,765.3 2,864.0
Total Liabilities and Shareholders' Equity $13,313.7 $13,512.9