Goodyear to Record Non-Cash Tax Valuation Allowance and Increase in Minimum Pension Liability

AKRON, Ohio, March 17 -- In accordance with the Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," The Goodyear Tire & Rubber Company today announced it will record a non-cash charge of $1.1 billion ($6.17 per share) for the fourth quarter of 2002 to establish a valuation allowance against its net U.S. deferred tax assets.

In addition to this charge, the company's shareholders' equity at Dec. 31, 2002 will also be reduced by $1.3 billion to reflect an increase in its unfunded pension benefit obligations.

These non-cash adjustments will impact both tax expense and shareholders' equity on Goodyear's financial statements, but did not have a direct impact on the company's cash flow.

"SFAS No. 109 gives greater weight to previous cumulative losses than the outlook for future profitability when determining whether deferred tax assets can be used. This valuation allowance will be reviewed periodically and can be reversed, partially or totally, when business results have sufficiently improved to support realization of these deferred tax assets," said Robert W. Tieken, Goodyear executive vice president and chief financial officer.

"We do not believe this charge is a reflection of the long-term prospects of our business as we expect to accomplish a successful turnaround of our United States operations," he added.

The adjustments to shareholders' equity resulted in the company's net worth being below the level required by covenants in its bank loan agreements. Goodyear's bank lenders, however, have waived compliance with these covenants through April 4, 2003.

Goodyear will release its 2002 financial statements following completion of the restructuring, refinancing and extension of its loan agreements, which are currently under discussion with the company's bank lenders. The possibility of these accounting actions was discussed with the company's lenders and ratings agencies as part of this process.

Goodyear is the world's largest tire company. The company manufactures tires, engineered rubber products and chemicals in more than 90 facilities in 28 countries around the world. Goodyear employs about 92,000 people worldwide.

Certain information contained in this press release constitutes forward- looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various economic, financial and industry factors including without limitation the company's ability to implement its cost-cutting plans and achieve its sales targets. Additional factors that may cause actual results to differ materially from those indicated by such forward looking statements are discussed in the company's Form 10-K for the year ended Dec. 31, 2001 and Form 10-Q for the quarter ended Sept. 30, 2002, which are on file with the Securities and Exchange Commission. 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.