AKRON, Ohio, Nov. 3 /PRNewswire-FirstCall/ -- The Goodyear Tire & Rubber Company (NYSE: GT) today reported record third quarter sales driven by growth in international markets.

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The company's third quarter sales of $5.2 billion increased 2 percent from last year as improved pricing, a richer product mix and strength in international markets more than offset lower volume, most notably in North America and Europe. Also impacting sales was the 2007 divestiture of the company's T&WA tire mounting business, which contributed sales of $145 million in last year's third quarter.

Revenue per tire, excluding the impact of foreign currency translation, increased 8 percent over the 2007 quarter, reflecting worldwide gains in pricing and product mix generated by the company's strategy to focus on high- value-added tires.

"Goodyear's solid third quarter concludes a strong nine months of performance, reflecting the successful execution of our business strategies and continued strength in our international businesses," said Robert J. Keegan, chairman and chief executive officer.

"The tire industry is facing challenging business conditions as the global financial crisis and slowing economic conditions are impacting consumer demand in all regions. Our results reflect the economic reality of weakened industry demand and the associated cost impact of production cuts we initiated during the quarter," he added.

"Our leadership team has the experience to operate effectively under these conditions and is taking decisive actions necessary to lessen the impact of falling industry demand. In this environment, you can expect Goodyear associates to drive business innovation, aggressively target costs and advance our business strategies," Keegan said.

"The strength of our strategies and the proactive measures we are taking to address economic challenges position Goodyear well to maximize performance now and when industry demand recovers."

Third quarter 2008 income from continuing operations was $31 million (13 cents per share). This compares to $159 million (67 cents per share) last year. Goodyear had net income of $668 million ($2.75 per share) in the 2007 third quarter, including a gain of $517 million ($2.12 per share) on the sale of its former Engineered Products business. All per share amounts are diluted.

The 2008 quarter was impacted by net rationalization charges and accelerated depreciation of $46 million (19 cents per share), a loss on settlement of postretirement healthcare obligations in connection with the establishment of a Voluntary Employees' Beneficiary Association (VEBA) of $13 million (5 cents per share), expenses related to Hurricanes Gustav and Ike of $7 million (3 cents per share), discrete net tax charges related primarily to German operations of $6 million (2 cents per share), charges related to the exit of its Moroccan business of $5 million (2 cents per share) and a gain on asset sales of $2 million (1 cent per share). All amounts are after taxes and minority interest.

The 2007 quarter was impacted by net rationalization charges and accelerated depreciation of $6 million (2 cents per share), tax expense related primarily to a German tax law change of $12 million (5 cents per share) and a gain on asset sales of $10 million (4 cents per share). All amounts are after taxes and minority interest.

See the table at the end of this release for a list of significant items impacting continuing operations from the 2008 and 2007 third quarters.

Goodyear made significant progress during the third quarter on its four- point plan to achieve more than $2 billion in cost savings from 2006 through 2009. "We have now achieved $1.6 billion in savings and are clearly on a path to significantly surpass $2 billion," Keegan said.

During the quarter, Goodyear sought redemption of $360 million invested in The Reserve Primary Fund. This fund has temporarily frozen withdrawals. As a result, Goodyear has reclassified this $360 million in cash to other current assets. On October 31, the company received $183 million from the fund.

Business Segments

Total segment operating income was $266 million in the third quarter of 2008, down $116 million from the 2007 period. Reductions in tire production due to weak industry demand and the resulting impact on overhead absorption, along with inflationary cost increases, were the primary drivers of higher conversion costs of $150 million during the third quarter of 2008.

Improved pricing and product mix of $280 million in the third quarter of 2008 more than offset increased raw material costs of $238 million.

Foreign currency translation positively impacted sales by $113 million and segment operating income by $8 million in the quarter.

Asia Pacific Tire and Europe, Middle East and Africa Tire achieved record third quarter sales. Latin American Tire's sales were a record for any quarter.

Asia Pacific Tire and Latin American Tire had third quarter record segment operating income.

See the disclosure at the end of this release for further explanation and a segment operating income reconciliation table.

    North American Tire                 Third Quarter      Nine Months
     (in millions)                      2008     2007     2008     2007
    Tire Units                          18.1     20.7     54.2     60.7
    Sales                             $2,185   $2,285   $6,312   $6,578

Segment Operating (Loss) Income (19) 66 37 99

    Segment Operating Margin            (0.9)%    2.9%     0.6%     1.5%

North American Tire's third quarter sales were down $100 million compared to the 2007 period. Impacting sales was the 2007 divestiture of the company's T&WA tire mounting business, which contributed sales of $145 million in the third quarter of 2007. Also, tire volume declined 12.4 percent reflecting significantly weaker market demand in both the original equipment and consumer replacement markets. Sales in the 2008 quarter were positively impacted by improved pricing and product mix and market share gains for Goodyear-branded consumer replacement tires.

    Third quarter segment operating income decreased $85 million compared to
the 2007 quarter due to lower sales and production levels, which resulted in
unabsorbed overhead.  Lower SAG costs were a partial offset.  Pricing and
product mix improvements of $109 million offset increased raw material costs
of $109 million.


    Europe, Middle East
     and Africa Tire                  Third Quarter         Nine Months
     (in millions)                   2008       2007      2008      2007
    Tire Units                       19.7       20.7      58.5      60.6
    Sales                          $1,936     $1,864    $5,910    $5,311
    Segment Operating Income          134        176       457       441
    Segment Operating Margin          6.9%       9.4%      7.7%      8.3%

Europe, Middle East and Africa Tire third quarter sales increased 4 percent over last year as a result of improved pricing and product mix and the favorable impact of currency translation, which more than offset lower volume, particularly in the consumer replacement market. Sales in the 2008 third quarter were positively impacted by market share gains for Goodyear- and Dunlop-branded consumer replacement tires.

    Third quarter segment operating income decreased $42 million from 2007 due
to lower production levels, which resulted in unabsorbed overhead.  Pricing
and product mix improvements of $71 million more than offset $59 million in
higher raw material costs.


    Latin American Tire            Third Quarter        Nine Months
     (in millions)                2008      2007       2008      2007
    Tire Units                     5.3       5.5       15.9      16.3
    Sales                         $581      $491     $1,683    $1,359
    Segment Operating Income       101        99        318       267
    Segment Operating Margin      17.4%     20.2%      18.9%     19.6%

Latin American Tire sales increased 18 percent from the third quarter of 2007 due to improved pricing and product mix and the favorable impact of currency translation. Lower volume was a partial offset.

Third quarter 2008 segment operating income increased 2 percent from last year due to improved pricing and product mix of $61 million, which more than offset higher raw material costs of $40 million. Results were also favorably impacted by currency translation.

    Asia Pacific Tire                Third Quarter        Nine Months
     (in millions)                  2008      2007      2008      2007
    Tire Units                       5.1       4.8      15.4      14.1
    Sales                           $470      $424    $1,448    $1,236
    Segment Operating Income          50        41       151       111
    Segment Operating Margin        10.6%      9.7%     10.4%      9.0%

Asia Pacific Tire third quarter sales were 11 percent higher than the 2007 period primarily due to improved pricing and product mix. Sales in the 2008 quarter were positively impacted by strong volume growth for Goodyear-branded high-value-added tires in the consumer replacement market, most notably in Australia and China.

Segment operating income increased 22 percent in the 2008 third quarter, primarily due to improved pricing and product mix of $39 million, which more than offset higher raw material costs of $30 million.

Year-to-Date Results

Goodyear's sales for the first nine months of 2008 were a record $15.4 billion, a 6 percent increase over 2007 despite a 5 percent decline in tire unit volume. Impacting sales was the 2007 divestiture of the company's T&WA tire mounting business, which contributed sales of $481 million in the first nine months of 2007.

Segment operating income was $963 million in the first nine months of 2008, up $45 million from the 2007 period.

Income from continuing operations for the first nine months of 2008 was $253 million ($1.04 per share). This compares to $78 million (39 cents per share) last year. Goodyear had net income of $550 million ($2.44 per share) in the first nine months of 2007, including the gain on the sale of the Engineered Products business. All per share amounts are diluted.

Improved pricing and product mix of $682 million in the first nine months of 2008 more than offset increased raw material costs of $361 million.

Revenue per tire, excluding the impact of foreign currency translation, was up 8 percent over 2007's first nine months.

"Our performance under challenging conditions this year demonstrates the capabilities of the business model we have put in place and the operating leverage we expect to harness once industry conditions improve," said Keegan.

Conference Call

Goodyear will hold an investor conference call at 10 a.m. today. Prior to the commencement of the call, the company will post the financial and other related information that will be presented on its investor relations Web site: http://investor.goodyear.com.

Participating in the conference call with Keegan will be Darren R. Wells, executive vice president and chief financial officer.

Investors, members of the media and other interested persons may access the conference call on the Web site or via telephone by calling (706) 634-5954 before 9:45 a.m. A taped replay will be available later today by calling (706) 645-9291. The replay will remain available on the Web site.

Goodyear is one of the world's largest tire companies. Fortune magazine named Goodyear the World's Most Admired Motor Vehicle Parts Company in its 2008 list of the World's Most Admired Companies. The publication ranked Goodyear No. 1 in innovation, people management, use of assets and global orientation. The company is also listed on Forbes magazine's list of the Most Respected Companies in America and its list of the Most Trustworthy Companies in America and CRO magazine's ranking of the 100 Best Corporate Citizens. Goodyear employs about 70,000 people and manufactures its products in more than 60 facilities in 25 countries around the world. For more information about Goodyear, go to http://www.goodyear.com/corporate.

Certain information contained in this press release may constitute forward-looking statements for purposes of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. There are a variety of factors, many of which are beyond our control, which affect our operations, performance, business strategy and results and could cause our actual results and experience to differ materially from the assumptions, expectations and objectives expressed in any forward-looking statements. These factors include, but are not limited to: actions and initiatives taken by both current and potential competitors; increases in the prices paid for raw materials and energy; our ability to realize anticipated savings and operational benefits from our cost reduction initiatives or to implement successfully other strategic initiatives; work stoppages, financial difficulties or supply disruptions at our suppliers or customers; potential adverse consequences of litigation involving the company; pension plan funding obligations; deteriorating economic conditions or an inability to access capital markets; as well as the effects of more general factors such as changes in general market or economic conditions or in legislation, regulation or public policy. Additional factors are discussed in our filings with the Securities and Exchange Commission, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. 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.

    The Goodyear Tire & Rubber Company and Subsidiaries
    Consolidated Statements of Income
    (unaudited)



                                       Quarter Ended       Nine Months Ended
    (In millions, except per           September 30,          September 30,
     share amounts)                    2008     2007          2008     2007

    NET SALES                         $5,172   $5,064      $15,353   $14,484

    Cost of Goods Sold                 4,316    4,051       12,473    11,759
    Selling, Administrative and
     General Expense                     627      670        1,997     2,025
    Rationalizations                      34        2          134        24
    Interest Expense                      73      106          238       351
    Other (Income) and Expense             4      (33)         (24)      (14)

    Income from Continuing
     Operations before Income Taxes
     and Minority Interest               118      268          535       339
    United States and Foreign Taxes       66       95          217       209
    Minority Interest                     21       14           65        52
    Income from Continuing
     Operations                           31      159          253        78
    Discontinued Operations               --      509           --       472


    NET INCOME                           $31     $668         $253      $550

    Income Per Share - Basic
      Income from Continuing
       Operations                      $0.13    $0.76        $1.05     $0.40
      Discontinued Operations              -     2.41            -      2.41
      Net Income Per Share - Basic     $0.13    $3.17        $1.05     $2.81

      Weighted Average Shares
       Outstanding                       241      211          241       196

    Income Per Share - Diluted
     Income from Continuing
      Operations                       $0.13    $0.67        $1.04     $0.39
     Discontinued Operations              --     2.08           --      2.05
     Net Income Per Share -
      Diluted                          $0.13    $2.75        $1.04     $2.44

     Weighted Average Shares
      Outstanding                        243      244          243       229



    The Goodyear Tire & Rubber Company and Subsidiaries
    Consolidated Balance Sheets
    (unaudited)
                                                        Sept. 30     Dec. 31
    (In millions)                                         2008         2007
    Assets:
    Current Assets:
      Cash and Cash Equivalents                          $1,606       $3,463
      Restricted Cash                                       178          191
      Accounts Receivable, less Allowance - $90
       ($88 in 2007)                                      3,681        3,103
      Inventories:
         Raw Materials                                      715          591
         Work in Process                                    147          147
         Finished Products                                2,998        2,426
                                                          3,860        3,164
      Prepaid Expenses and Other Current Assets             632          251
         Total Current Assets                             9,957       10,172
    Goodwill                                                715          713
    Intangible Assets                                       162          167
    Deferred Income Tax                                      68           83
    Other Assets                                            421          458
    Property, Plant and Equipment less Accumulated
     Depreciation - $8,506 ($8,329 in 2007)               5,720        5,598
        Total Assets                                    $17,043      $17,191

    Liabilities:
    Current Liabilities:
      Accounts Payable-Trade                             $2,602       $2,422
      Compensation and Benefits                             770          897
      Other Current Liabilities                             816          753
      United States and Foreign Taxes                       259          196
      Notes Payable and Overdrafts                          276          225
      Long Term Debt and Capital Leases due within
       one year                                              80          171
        Total Current Liabilities                         4,803        4,664
    Long Term Debt and Capital Leases                     5,035        4,329
    Compensation and Benefits                             2,026        3,404
    Deferred and Other Noncurrent Income Taxes              266          274
    Other Long Term Liabilities                             713          667
    Minority Equity in Subsidiaries                         986        1,003
        Total Liabilities                                13,829       14,341

    Commitments and Contingent Liabilities

    Shareholders' Equity:
    Preferred Stock, no par value:
     Authorized, 50 shares, unissued                          -            -
    Common Stock, no par value:
     Authorized, 450 shares, Outstanding shares -
      241 (240 in 2007) after deducting 10
      treasury shares (10 in 2007)                          241          240
    Capital Surplus                                       2,699        2,660
    Retained Earnings                                     1,855        1,602
    Accumulated Other Comprehensive Loss                 (1,581)      (1,652)
       Total Shareholders' Equity                         3,214        2,850
       Total Liabilities and Shareholders' Equity       $17,043      $17,191

Non-GAAP Financial Measures

This earnings release presents total segment operating income and net debt, each of which are important financial measures for the company but are not financial measures defined by GAAP.

Total segment operating income is the sum of the individual strategic business units' segment operating income as determined in accordance with Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information." Management believes that total segment operating income is useful because it represents the aggregate value of income created by the company's SBUs and excludes items not directly related to the SBUs for performance evaluation purposes. See the table below for the reconciliation of total segment operating income.

Net debt is total debt (the sum of long term debt and capital leases, notes payable and overdrafts, and long-term debt and capital leases due within one year) minus cash and cash equivalents. Management believes net debt is an important measure of liquidity, which it uses as a tool to assess the company's capital structure and measure its ability to meet its future debt obligations. Cash and cash equivalents are subtracted from the GAAP measure because they could be used to reduce our debt obligations. See the table below for the reconciliation of net debt.

    Total Segment Operating Income Reconciliation Table
    (In millions)                                          Quarter Ended
                                                             Sept. 30,
                                                            (unaudited)
                                                        2008           2007
    Total Segment Operating Income                      $266           $382
     Rationalizations                                    (34)            (2)
     Accelerated depreciation                            (13)            (6)
     Interest expense                                    (73)          (106)
     Interest income                                      13             36
     Corporate incentive and stock based
      compensation plans                                   7            (22)
     Intercompany profit elimination                       7             --
     Curtailments/Settlements                            (11)            --
     Financing fees and financial instruments            (10)           (11)
     Asset sales                                           4             10
     Hurricane losses -- insurance deductible             (7)            --
     Retained net expenses of discontinued
      operations                                          --             (1)
     Other                                               (31)           (12)
     Income from continuing operations
      before income taxes and minority interest          118            268
     U.S. and foreign taxes                              (66)           (95)
     Minority interest                                   (21)           (14)
     Income from continuing operations                    31            159
     Discontinued operations                              --            509
     Net Income                                          $31           $668



    Net Debt Reconciliation Table
    (In millions)
                                                     Sept. 30,      Dec. 31,
                                                       2008           2007
    Long Term Debt and Capital Leases                $ 5,035         $4,329
    Notes Payable and Overdrafts                         276            225
    Long Term Debt and Capital Leases
     Due Within One Year                                  80            171
    Total Debt                                         5,391          4,725
    Less: Cash and Cash Equivalents                    1,606          3,463
    Net Debt                                          $3,785         $1,262
    Change in Net Debt                                $2,523

Third Quarter Significant Items (after taxes and minority interest) Impacting Continuing Operations

2008

-- Net rationalization charges and accelerated depreciation, $46 million (19 cents per share).

-- Loss on settlement of postretirement healthcare obligations in connection with the establishment of a Voluntary Employees' Beneficiary Association (VEBA), $13 million (5 cents per share).

-- Expenses related to Hurricanes Gustav and Ike, $7 million (3 cents per share).

-- Discrete net tax charges related primarily to German operations, $6 million (2 cents per share).

-- Charges related to the exit of Moroccan business, $5 million (2 cents per share).

    -- Gain on asset sales, $2 million (1 cent per share).

2007

-- Net rationalization charges and accelerated depreciation, $6 million (2 cents per share).

-- Reduced value of deferred tax assets primarily due to tax rate reduction in Germany, $12 million (5 cents per share).

-- Gain on asset sales, $10 million (4 cents per share).

SOURCE The Goodyear Tire & Rubber Company