Goodyear Reports Results for 2000's First Quarter
13 April 2000
Goodyear Reports Results for 2000's First Quarter
* Sales Increase 18%
* Net Income Exceeds Expectations
AKRON, Ohio, April 12 The Goodyear Tire & Rubber Company
today reported net income of $63.6 million (40 cents per share) for the first
quarter of 2000, reflecting improved performance in North American Tire, Latin
America Tire and the global Engineered Products business units. All per-share
amounts are diluted.
"First quarter earnings reflect the benefits of 20 percent unit volume
growth, Dunlop joint venture synergies and global manufacturing
rationalization as shown in the turnaround performance of the company's North
America, Latin America and Engineered Products business units," said Samir G.
Gibara, chairman, chief executive officer and president. First quarter
earnings exceeded the First Call consensus of 35 cents per share.
"We're pleased to see widespread improvement in business fundamentals over
1999's fourth quarter that confirm our turnaround is on track," he said.
First quarter 1999 net income totaled $25.5 million (16 cents per share)
and included after-tax rationalization charges of $116 million.
Worldwide, Goodyear's first quarter sales were $3.5 billion in 2000,
versus $3 billion in 1999. The Dunlop operations contributed almost
$577 million in sales. Tire unit sales were 54.8 million, up 9.1 million
units or 20 percent from 1999's first quarter. The growth reflects the
addition of the company's Dunlop operations in North America and Europe, which
contributed 8.9 million units, as well as strong performances in Asia and
Latin America.
Foreign currency exchange losses of $5.1 million reduced first quarter
2000 earnings, compared to a gain of $34.6 million in the 1999 period,
primarily due to the revaluation of the Brazilian real.
Global capital expenditures in 2000's first quarter were $127.7 million
compared with $148.8 million a year ago.
Depreciation and amortization expense in 2000's first quarter was
$160.4 million compared with $140.1 million in the 1999 period.
Business Segments
First quarter segment operating income was $209.8 million in 2000 and
$229.7 million in 1999. Segment operating income does not reflect the
rationalization charges in 1999.
North American Tire First Quarter
(in millions of dollars) 2000 1999
Sales $1,653.4 $1,507.1
Operating Income 71.6 91.7
Margin 4.3% 6.1%
Tire unit sales in 2000's first quarter were up 12.3 percent from 1999,
principally due to the addition of 2.9 million units sold by the Dunlop
business. Revenues increased on the higher volume. Operating income was down
in the quarter due to higher raw material costs and a less-favorable product
mix.
European Union Tire First Quarter
(in millions of dollars) 2000 1999
Sales $846.5 $503.5
Operating Income 43.7 45.3
Margin 5.2% 9.0%
Tire unit sales were up 60.4 percent for the quarter, principally due to
the addition of the Dunlop business, which sold 5.9 million units. Revenues
increased as a result of the higher unit volume. Contributing to the decline
in operating income in the quarter were additional costs related to
discontinuing tire production in Italy, the adverse margin impact of
competitive market conditions and cost differentials driven by a weak Euro
versus the British pound.
Eastern Europe, Africa and First Quarter
Middle East Tire
(in millions of dollars) 2000 1999
Sales $187.2 $181.2
Operating Income 15.3 9.8
Margin 8.2% 5.4%
Tire unit sales in the first quarter of 2000 were down 0.8 percent from
1999. Revenues and operating income increased due to a more favorable product
mix and economic improvement in the region. Operating income also was
favorably impacted by higher factory utilization levels.
Latin America Tire First Quarter
(in millions of dollars) 2000 1999
Sales $253.3 $240.6
Operating Income 23.4 30.1
Margin 9.2% 12.5%
Tire unit sales increased 2.1 percent for the quarter from 1999. Revenues
were higher as a result of the increased volume and favorable currency
translation. Operating income was down due to higher raw material costs.
Asia Tire First Quarter
(in millions of dollars) 2000 1999
Sales $134.7 $141.0
Operating Income 9.8 3.6
Margin 7.3% 2.6%
First quarter Asian tire unit sales increased 5.3 percent over 1999.
Revenues reflect the increased volume, but were offset by a less favorable
product mix, competitive pricing pressures and the exclusion of sales by
Goodyear Nippon that are now reported within the Sumitomo joint venture, in
which Goodyear holds a 25 percent interest. Operating income increased due to
the cost efficiencies associated with higher volume. Excluding the impact of
the joint venture, tire unit sales would have increased 22 percent and
revenues would have increased 6 percent.
Engineered Products First Quarter
(in millions of dollars) 2000 1999
Sales $314.6 $308.7
Operating Income 23.5 20.5
Margin 7.5% 6.6%
Engineered Products revenues in 2000's first quarter increased primarily
because of stronger sales in the molded rubber and power transmission products
business groups, which offset the loss of sales from the divested interior
trim business. Operating income increased as a result of the higher revenues
and cost reduction efforts. The business continues to experience weak
conveyor belt sales due to depressed commodity markets.
Chemical Products First Quarter
(in millions of dollars) 2000 1999
Sales $273.0 $228.4
Operating Income 22.5 28.7
Margin 8.2% 12.6%
Sales in the Chemical Products business increased in 2000's first quarter
due to stronger volume and higher selling prices. Operating income, however,
decreased because of higher raw material and energy costs.
Goodyear is the world's largest tire company. Headquartered in Akron,
Ohio, the company manufactures tires, engineered rubber products and chemicals
in more than 27 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.
The Goodyear Tire & Rubber Company and Subsidiaries
Consolidated Statement of Income
(In millions, except per share) First Quarter
Ended March 31
2000 1999
(unaudited)
Net Sales $3,536.5 $2,991.2
Cost of Goods Sold 2,788.6 2,331.4
Selling, Administrative and
General Expenses 559.7 444.8
Rationalizations -- 167.4
Interest Expense 62.1 37.7
Other Expense 3.9 5.3
Foreign Currency Exchange 5.1 (34.6)
Minority Interest in
Net Income of Subsidiaries 16.6 4.5
Income before Income Taxes 100.5 34.7
United States and Foreign Taxes
on Income 36.9 9.2
Net Income $63.6 $25.5
Net Income Per Share - Basic $0.41 $0.16
Average Shares Outstanding 156.3 156.0
Net Income Per Share - Diluted $0.40 $0.16
Average Shares Outstanding 158.7 157.8
The Goodyear Tire & Rubber Company and Subsidiaries
Consolidated Balance Sheet
(In millions) March 31 Dec. 31
Assets 2000 1999
Current Assets (unaudited)
Cash and Cash Equivalents $229.8 $241.3
Accounts and Notes Receivable,
less allowance - $86.7 ($81.9 in 1999) 2,395.3 2,296.3
Inventories
Raw Materials 338.8 389.7
Work in Process 102.4 99.2
Finished Product 1,943.4 1,798.3
Total 2,384.6 2,287.2
Investment in Sumitomo 136.0 107.2
Prepaid Expenses and Other Current Assets 366.3 329.2
Total Current Assets 5,512.0 5,261.2
Long Term Accounts and Notes Receivable 89.3 97.7
Investments in Affiliates, at Equity 107.0 115.4
Other Assets 89.1 79.0
Goodwill 544.9 516.9
Deferred Charges 1,240.6 1,271.4
Properties and Plants, Less Accumulated
Depreciation - $5,629.6 ($5,551.4 in 1999) 5,664.1 5,761.0
Total Assets $13,247.0 $13,102.6
Liabilities
Current Liabilities
Accounts Payable - Trade $ 1,320.6 $1,417.5
Compensation and Benefits 777.3 794.5
Other Current Liabilities 301.2 294.5
United States and Foreign Taxes 261.8 249.0
Notes Payable to Banks 1,193.0 862.3
Sumitomo Cross-Investment 126.6 127.8
Long Term Debt due within One Year 181.4 214.3
Total Current Liabilities 4,161.9 3,959.9
Long Term Debt 2,279.2 2,347.9
Compensation and Benefits 2,147.7 2,137.4
Other Long Term Liabilities 139.5 149.1
Minority Equity in Subsidiaries 884.7 891.2
Total Liabilities 9,613.0 9,485.5
Shareholders' Equity
Preferred Stock, no par value
Authorized 50 shares, unissued -- --
Common Stock, no par value
Authorized 300 shares
Outstanding Shares - 156.4 (156.3 in 1999)
After Deducting 39.3 Treasury Shares
(39.3 in 1999) 156.4 156.3
Capital Surplus 1,030.1 1,029.6
Retained Earnings 3,547.9 3,531.4
Accumulated Other Comprehensive Income (1,100.4) (1,100.2)
Total Shareholders' Equity 3,634.0 3,617.1
Total Liabilities and Shareholders' Equity $13,247.0 $13,102.6