Fitch Assigns 'CCC+' Indicative Rating to Goodyear's Planned $400MM Sr Unsecured Notes

CHICAGO--June 21, 2005--Fitch Ratings has assigned an indicative rating of 'CCC+' to Goodyear Tire & Rubber Company's (GT) planned $400 million issue of senior unsecured notes. GT announced yesterday it intends to issue $400 million of 10-year notes under Rule 144A. Proceeds will be used to repay $200 million outstanding under the company's first lien revolving credit facility and to replace $190 million of cash balances that were used to pay $516 million of 6.375% Euro notes that matured June 6, 2005. The Rating Outlook is Stable.

The rating reflects the substantial amount of senior secured debt relative to the planned notes. It also incorporates Fitch's concerns about GT's high leverage, high-cost structure, and weak profitability and cash flow. In addition, GT's pension plans, which were underfunded by $3.1 billion at the end of 2004, are likely to require substantially higher contributions over the near term. Partly mitigating these concerns are the company's $1.7 billion of cash balances at March 31, 2005 and additional flexibility provided by new bank facilities executed in April 2005 that extended maturities out to 2010. The rating considers Goodyear's well recognized brand name, its position as one of the three largest global tire companies, and progress in addressing its debt structure and operating performance.

GT's segment profit has recently benefited from an improved replacement tire market, higher selling prices, cost saving from previous restructuring, and the favorable impact from foreign currency translation. While the company has seen strong acceptance of new products, margins remain pressured by raw material and transportation costs and a highly competitive environment. In addition, GT's key North American Tire segment suffers from a high cost structure related to labor and pension costs that make margin improvement particularly challenging.

Operating cash flow has improved in recent quarters and could be supplemented by the pending divestitures of GT's North American Farm tire business and its rubber plantation in Indonesia. However, even after the planned debt issuance, additional debt or equity issuance may be needed to meet cash requirements that include capital expenditures and pension contributions as well as long-term debt maturities of approximately $650 million through the end of 2007. GT's cash and borrowing capacity provide adequate liquidity in the short term, but the rating reflects uncertainty surrounding the company's ability to rebuild and sustain stronger cash flow over the long term.

Fitch's rating definitions are available on the agency's public web site, www.fitchratings.com. Published ratings, criteria and methodologies, and relevant policies and procedures are also available from this site, at all times. This document will remain on the public site for seven days. The issuer did not participate in the rating process other than through the medium of its public disclosure.