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Fitch Places Goodyear's Rating on Rating Watch Negative

2 October 2000

Fitch Places Goodyear's Rating on Rating Watch Negative

    CHICAGO--Sept. 29, 2000--Fitch has placed the `A-' senior unsecured debt rating of The Goodyear Tire & Rubber Company on Rating Watch Negative. The company's commercial paper rating is affirmed at `F2'. Goodyear had approximately $3.9 billion of debt outstanding at June 30, 2000.
    The Rating Watch is due to deteriorating earnings in the second half of 2000, instead of the gradual improvement previously expected, with the shortfall attributed largely to rising oil and energy prices, the continuing weakening of the euro and a steep downturn in North American commercial vehicle production. Fitch previously believed that Goodyear would be able to reduce debt from $3.4 billion at 1999 yearend to $2.7-2.9 billion by 2001 yearend, with a substantial portion of this in 2000, as management planned to supplement free operating cash flow with divestiture proceeds of noncore operations to pay down debt. Fitch now estimates that free cash flow for 2000 will likely be $300-500 million lower than previously anticipated.
    Fitch will meet with management within the next few weeks to review plans to combat the increasingly difficult economic environment, in which tiremakers have so far struggled to raise prices and pass along higher oil and energy costs to consumers, as well as flexibility in altering capital spending, working capital investment and dividend levels.