Goodyear Reports Results for Fourth Quarter, 1999
9 February 2000
Goodyear Reports Results for Fourth Quarter, 1999
* Global tire unit sales up 13.2% in fourth quarter
* Fourth quarter income before rationalizations is 30 cents per share
* Significant improvement seen for 2000
AKRON, Ohio, Feb. 9 -- The Goodyear Tire & Rubber Company
today reported net income of $40.8 million (26 cents per share) for the fourth
quarter of 1999. This compares with $121.5 million (78 cents per share)
achieved in the fourth quarter of 1998. All per share amounts are diluted.
Fourth quarter 1999 results include $7.7 million ($6.8 million after tax,
4 cents per share) in net rationalization charges. Excluding the impact of
restructuring, fourth quarter 1999 income was $47.6 million (30 cents per
share).
The 1998 fourth quarter included gains from the sale of assets of $6.5
million after tax (4 cents per share). Before these gains, fourth quarter
1998 income was $115 million (74 cents per share).
For 1999, Goodyear's net income was $241.1 million ($1.52 per share),
which included the impact of net rationalization charges of $171.6 million
($132.5 million after tax, 84 cents per share) and third quarter gains of
$166.7 million ($154.8 million after tax, 97 cents per share) resulting from
the formation of Goodyear's Dunlop joint venture in Europe and the sale of
chemical formulations and customer lists.
The previous year, net income was $682.3 million ($4.31 per share), which
included rationalization reversals and gains on asset sales totaling $96
million after tax (60 cents per share) and an after-tax loss of $34.7 million
(22 cents per share) from the sale of the company's discontinued oil
transportation business.
"While our 1999 financial results were disappointing, Goodyear has laid
the groundwork for significant improvement in 2000 and into the future," said
Samir G. Gibara, chairman, chief executive officer and president.
"We look for improved operating performance in the first quarter of 2000
compared with the fourth quarter of 1999, and further growth in each
successive quarter. We are comfortable with current analysts' estimates for
2000 earnings of approximately $3.00 per share from operations," he said.
"Our gains will come from improving results in North America, economic
recovery in emerging markets, a full year of benefits from the Dunlop joint
ventures and the synergies that come from their integration. Work to
integrate our new Dunlop tire businesses is proceeding smoothly and better
than anticipated. Associates in the two organizations are building strong
working relationships and finding synergy opportunities we had not expected,"
Gibara added.
Worldwide, Goodyear's fourth quarter sales were $3.6 billion in 1999,
versus $3.2 billion in the 1998 period. The Dunlop operations contributed
$620 million in sales during the quarter. Tire unit sales were up 13.2
percent from 1998's fourth quarter.
Sales for 1999 were $12.9 billion compared with $12.6 billion in 1998.
The Dunlop operations contributed approximately $855 million in sales during
1999. Dunlop sales have been consolidated since Sept. 1, 1999. Tire unit
sales were up 6.9 percent for the year.
Sales for the quarter and the year were negatively impacted by the
continuing product shortages in North America; currency translations; and on-
going weak economic conditions in many emerging markets, especially in Latin
America. The negative effect of currency translation reduced sales by an
estimated $390 million for the year.
Global capital expenditures in 1999's fourth quarter were $245 million
compared with $348 million in the 1998 period. For the year, capital
expenditures were $805 million in 1999 and $838 million in 1998.
Depreciation expense in 1999's fourth quarter was $164 million compared
with $136 million in the 1998 period. For the year, depreciation expense was
$557.6 million in 1999 and $487.8 million in 1998.
Business Segments
Fourth quarter segment operating income was $144.3 million in 1999 and
$242.4 million in 1998. For the year, segment operating income was $540.4
million in 1999 and $1.13 billion in 1998. Segment operating income does not
reflect the rationalization charges or the other income items in 1999 and
1998.
North American Tire Fourth Quarter Twelve Months
(in millions of dollars) 1999 1998 1999 1998
Sales $1,645.9 $1,557.2 $6,355.3 $6,235.2
Operating Income 11.6 84.3 19.0 378.6
Margin 0.7% 5.4% 0.3% 6.1%
Tire unit sales in 1999's fourth quarter and 12 months were up 5.6 percent
and 3.8 percent, respectively, from the 1998 periods, due to the addition of
the Dunlop business. Revenue increased in both periods on the higher volume.
Competitive pricing, a change in product mix and product shortages had a
negative impact on revenues in both periods.
Operating income was down in the quarter and year due to a change in
product mix to lower-margin tires, as well as increases in production and
transportation costs.
European Union Tire Fourth Quarter Twelve Months
(in millions of dollars) 1999 1998 1999 1998
Sales $922.7 $566.3 $2,558.6 $2,061.0
Operating Income 64.7 51.9 188.0 199.7
Margin 7.0% 9.2% 7.3% 9.7%
Tire unit sales were up 55.9 percent for the quarter and 25.8 percent for
the year. Sales increased as a result of the addition of the Dunlop joint
venture. Pricing remains competitive, contributing to lower margins.
Operating income increased in the quarter due to the addition of the Dunlop
operations, but was down for the year due to increased production costs not
recovered due to competitive market conditions, and the negative impact of
currency translations.
Eastern Europe, Africa, Fourth Quarter Twelve Months
Middle East Tire
(in millions of dollars) 1999 1998 1999 1998
Sales $213.5 $223.6 $796.2 $850.0
Operating Income 15.5 23.9 49.8 102.4
Margin 7.3% 10.7% 6.3% 12.0%
Tire unit sales were down 7.4 percent for the quarter, and up 8.6 percent
for the year. Sales and operating income fell in both periods as a result of
currency translation, competitive pricing, adverse economic conditions in the
region and the earthquake in Turkey. Operating income decreased in both
periods due to higher production costs.
Latin America Tire Fourth Quarter Twelve Months
(in millions of dollars) 1999 1998 1999 1998
Sales $236.3 $280.5 $930.8 $1,245.6
Operating Income 9.1 32.1 67.7 186.1
Margin 3.9% 11.4% 7.3% 14.9%
Weak economic conditions continue to depress results in Latin America.
Tire unit sales decreased 10.1 percent for the quarter and 14.7 percent for
the year from 1998. Revenues in both periods were down as a result of
competitive pricing and lower volume. Operating income decreased accordingly
as unit costs increased. Revenues and operating income also were adversely
affected by currency translation.
Asia Tire Fourth Quarter Twelve Months
(in millions of dollars) 1999 1998 1999 1998
Sales $136.1 $143.6 $575.9 $501.8
Operating Income (Loss) 9.1 (1.9) 26.0 7.5
Margin 6.7% (1.3)% 4.5% 1.5%
Strong gains in the original equipment market resulted in fourth quarter
and 12-month Asian tire unit sales increasing over the 1998 periods by 1.9
percent and 11.3 percent, respectively. Revenues for the quarter and year,
however, were negatively impacted by competitive pricing pressures. Fourth
quarter and 12 month operating income increased due primarily to productivity
gains from increased plant utilization.
Engineered Products Fourth Quarter Twelve Months
(in millions of dollars) 1999 1998 1999 1998
Sales $274.8 $308.8 $1,210.1 $1,279.3
Operating Income 10.8 21.9 71.0 111.8
Margin 3.9% 7.1% 5.9% 8.7%
Engineered Products revenues in 1999's fourth quarter and 12 months
decreased primarily because of lower sales to the depressed mining industry,
the exit of the interior trim business and the adverse economic conditions in
Latin America. Operating income decreased as a result of the lower revenues
and increased production costs in both periods.
Chemical Products Fourth Quarter Twelve Months
(in millions of dollars) 1999 1998 1999 1998
Sales $245.3 $229.5 $928.4 $970.8
Operating Income 23.5 30.2 118.9 139.6
Margin 9.6% 13.2% 12.8% 14.4%
Sales in the Chemical Products business increased in 1999's fourth quarter
because of higher volume. For the year, however, volume was below 1998
levels. Competitive pricing negatively impacted sales in both periods.
Operating income decreased in the quarter and 12 months, because of
competitive pricing in both periods as well as higher raw material and energy
costs in the quarter. Approximately 50 percent of Chemical Products' sales
are to the company.
Goodyear is the world's largest tiremaker. Headquartered in Akron, Ohio,
the company manufactures tires, engineered rubber products and chemicals in
more than 90 facilities in 30 countries. It has marketing operations in
almost every country around the world. Goodyear, with the addition of its
Dunlop tire joint ventures, employs more than 105,000 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)
Fourth Quarter Twelve Months
Ended Dec. 31 Ended Dec. 31
1999 1998 1999 1998
(unaudited)
Net Sales $3,551.9 $3,203.1 $12,880.6 $12,626.3
Cost of Goods Sold 2,820.2 2,479.2 10,351.4 9,672.9
Selling, Administrative and
General Expenses 581.3 498.7 2,016.7 1,881.1
Rationalizations 7.7 -- 171.6 (29.7)
Interest Expense 55.9 42.1 179.4 147.8
Other (Income) Expense 0.3 (4.9) (147.9) (77.4)
Foreign Currency Exchange 7.2 12.2 (27.6) (2.6)
Minority Interest in
Net Income of Subsidiaries 17.2 5.9 40.3 31.5
Income from Continuing
Operations before
Income Taxes 62.1 169.9 296.7 1,002.7
United States and
Foreign Taxes on Income 21.3 48.4 55.6 285.7
Income from Continuing
Operations 40.8 121.5 241.1 717.0
Discontinued Operations -- -- -- (34.7)
Net Income $40.8 $121.5 $241.1 $682.3
Per Share of Common Stock - Basic
Income from Continuing
Operations $0.26 $0.78 $1.54 $4.58
Discontinued Operations -- -- -- (0.22)
Net Income $0.26 $0.78 $1.54 $4.36
Average Shares Outstanding 156.3 155.9 156.2 156.6
Per Share of Common Stock
- Diluted Income from
Continuing Operations $0.26 $0.78 $1.52 $4.53
Discontinued Operations -- -- -- (0.22)
Net Income $0.26 $0.78 $1.52 $4.31
Average Shares Outstanding 158.8 157.1 158.9 158.3
The Goodyear Tire & Rubber Company and Subsidiaries
Consolidated Balance Sheet
(In millions) Dec. 31 Dec. 31
Assets 1999 1998
Current Assets
Cash and Cash Equivalents $241.3 $239.0
Accounts and Notes Receivable,
less allowance - $81.9
($54.9 in 1998) 2,296.3 1,770.7
Inventories
Raw Materials 389.7 369.9
Work in Process 99.2 87.5
Finished Product 1,798.3 1,707.1
Total 2,287.2 2,164.5
Investment in Sumitomo 107.2 --
Prepaid Expenses and Other
Current Assets 329.2 354.9
Total Current Assets 5,261.2 4,529.1
Long Term Accounts and
Notes Receivable 97.7 173.5
Investments in Affiliates,
at Equity 115.4 111.4
Other Assets 79.0 99.5
Goodwill 516.9 257.4
Deferred Charges 1,271.4 1,059.9
Properties and Plants,
Less Accumulated Depreciation
- $5,551.4 ($5,394.6
in 1998) 5,761.0 4,358.5
Total Assets $13,102.6 $10,589.3
Liabilities
Current Liabilities
Accounts Payable - Trade $1,417.5 $1,131.7
Compensation and Benefits 794.5 751.0
Other Current Liabilities 294.5 351.9
United States and Foreign Taxes 249.0 252.6
Notes Payable to Banks 862.3 763.3
Sumitomo Cross-Investment 127.8 --
Long Term Debt due within
One Year 214.3 26.0
Total Current Liabilities 3,959.9 3,276.5
Long Term Debt 2,347.9 1,186.5
Compensation and Benefits 2,137.4 1,945.9
Other Long Term Liabilities 149.1 175.6
Minority Equity in Subsidiaries 891.2 259.0
Total Liabilities 9,485.5 6,843.5
Shareholders' Equity
Preferred Stock, no par value
Authorized 50 shares, unissued -- --
Common Stock, no par value
Authorized 300 shares
Outstanding Shares - 156.3
(155.9 in 1998) After Deducting
39.3 Treasury Shares
(39.7 in 1998) 156.3 155.9
Capital Surplus 1,029.6 1,015.9
Retained Earnings 3,531.4 3,477.8
Accumulated Other
Comprehensive Income (1,100.2) (903.8)
Total Shareholders' Equity 3,617.1 3,745.8
Total Liabilities and
Shareholders' Equity $13,102.6 $10,589.3