Ohio (State or Other Jurisdiction of Incorporation or Organization) | 34-0253240 (I.R.S. Employer Identification No.) | |
200 Innovation Way, Akron, Ohio (Address of Principal Executive Offices) | 44316-0001 (Zip Code) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
Number of Shares of Common Stock, Without Par Value, Outstanding at June 30, 2013: | 245,978,681 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(In millions, except per share amounts) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Net Sales | $ | 4,894 | $ | 5,150 | $ | 9,747 | $ | 10,683 | |||||||
Cost of Goods Sold | 3,846 | 4,141 | 7,786 | 8,748 | |||||||||||
Selling, Administrative and General Expense | 691 | 697 | 1,336 | 1,359 | |||||||||||
Rationalizations (Note 2) | 13 | 26 | 20 | 41 | |||||||||||
Interest Expense | 102 | 83 | 187 | 184 | |||||||||||
Other (Income) Expense (Note 3) | (14 | ) | 37 | 112 | 129 | ||||||||||
Income before Income Taxes | 256 | 166 | 306 | 222 | |||||||||||
United States and Foreign Taxes (Note 4) | 63 | 63 | 82 | 111 | |||||||||||
Net Income | 193 | 103 | 224 | 111 | |||||||||||
Less: Minority Shareholders’ Net Income | 5 | 11 | 3 | 23 | |||||||||||
Goodyear Net Income | 188 | 92 | 221 | 88 | |||||||||||
Less: Preferred Stock Dividends | 7 | 7 | 15 | 15 | |||||||||||
Goodyear Net Income available to Common Shareholders | $ | 181 | $ | 85 | $ | 206 | $ | 73 | |||||||
Goodyear Net Income available to Common Shareholders — Per Share of Common Stock | |||||||||||||||
Basic | $ | 0.74 | $ | 0.35 | $ | 0.84 | $ | 0.30 | |||||||
Weighted Average Shares Outstanding (Note 5) | 246 | 245 | 246 | 244 | |||||||||||
Diluted | $ | 0.67 | $ | 0.33 | $ | 0.79 | $ | 0.30 | |||||||
Weighted Average Shares Outstanding (Note 5) | 282 | 281 | 281 | 246 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Net Income | $ | 193 | $ | 103 | $ | 224 | $ | 111 | |||||||
Other Comprehensive Income (Loss): | |||||||||||||||
Foreign currency translation, net of tax of $0 and $0 in 2013 ($0 and $0 in 2012) | (98 | ) | (124 | ) | (155 | ) | (21 | ) | |||||||
Reclassification adjustment for amounts recognized in income, net of tax of $0 and $0 in 2013 ($0 and $0 in 2012) | — | — | 1 | — | |||||||||||
Defined benefit plans: | |||||||||||||||
Amortization of prior service cost and unrecognized gains and losses included in total benefit cost, net of tax of $3 and $7 in 2013 ($2 and $4 in 2012) | 59 | 51 | 120 | 106 | |||||||||||
Decrease in net actuarial losses, net of tax of $2 and $2 in 2013 ($7 and $7 in 2012) | 27 | 27 | 124 | 25 | |||||||||||
Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements, and divestitures, net of tax of $0 and $0 in 2013 ($0 and $0 in 2012) | 1 | — | 1 | — | |||||||||||
Prior service cost from plan amendments, net of tax of $0 and $0 in 2013 ($(2) and $(2) in 2012) | — | (4 | ) | — | (4 | ) | |||||||||
Deferred derivative gains, net of tax of $1 and $1 in 2013 ($0 and $0 in 2012) | 2 | 10 | 6 | 2 | |||||||||||
Reclassification adjustment for amounts recognized in income, net of tax of $1 and $1 in 2013 ($(2) and $(2) in 2012) | 1 | (1 | ) | 1 | (2 | ) | |||||||||
Unrealized investment gains (losses), net of tax of $0 and $0 in 2013 ($0 and $0 in 2012) | (2 | ) | (2 | ) | 15 | 3 | |||||||||
Other Comprehensive Income (Loss) | (10 | ) | (43 | ) | 113 | 109 | |||||||||
Comprehensive Income | 183 | 60 | 337 | 220 | |||||||||||
Less: Comprehensive Income (Loss) Attributable to Minority Shareholders | 2 | (24 | ) | (13 | ) | 16 | |||||||||
Goodyear Comprehensive Income | $ | 181 | $ | 84 | $ | 350 | $ | 204 |
(In millions, except share data) | June 30, | December 31, | |||||
2013 | 2012 | ||||||
Assets: | |||||||
Current Assets: | |||||||
Cash and Cash Equivalents | $ | 2,564 | $ | 2,281 | |||
Accounts Receivable, less Allowance — $100 ($99 in 2012) | 2,880 | 2,563 | |||||
Inventories: | |||||||
Raw Materials | 658 | 743 | |||||
Work in Process | 171 | 169 | |||||
Finished Products | 2,309 | 2,338 | |||||
3,138 | 3,250 | ||||||
Prepaid Expenses and Other Current Assets | 387 | 404 | |||||
Total Current Assets | 8,969 | 8,498 | |||||
Goodwill | 643 | 664 | |||||
Intangible Assets | 139 | 140 | |||||
Deferred Income Taxes | 187 | 186 | |||||
Other Assets | 527 | 529 | |||||
Property, Plant and Equipment, less Accumulated Depreciation — $9,060 ($8,991 in 2012) | 6,919 | 6,956 | |||||
Total Assets | $ | 17,384 | $ | 16,973 | |||
Liabilities: | |||||||
Current Liabilities: | |||||||
Accounts Payable-Trade | $ | 3,213 | $ | 3,223 | |||
Compensation and Benefits (Notes 9 and 10) | 691 | 719 | |||||
Other Current Liabilities | 1,067 | 1,182 | |||||
Notes Payable and Overdrafts (Note 7) | 79 | 102 | |||||
Long Term Debt and Capital Leases due Within One Year (Note 7) | 125 | 96 | |||||
Total Current Liabilities | 5,175 | 5,322 | |||||
Long Term Debt and Capital Leases (Note 7) | 6,325 | 4,888 | |||||
Compensation and Benefits (Notes 9 and 10) | 3,133 | 4,340 | |||||
Deferred and Other Noncurrent Income Taxes | 262 | 264 | |||||
Other Long Term Liabilities | 1,011 | 1,000 | |||||
Total Liabilities | 15,906 | 15,814 | |||||
Commitments and Contingent Liabilities (Note 11) | |||||||
Minority Shareholders’ Equity (Note 1) | 520 | 534 | |||||
Shareholders’ Equity: | |||||||
Goodyear Shareholders’ Equity: | |||||||
Preferred Stock, no par value: (Note 12) | |||||||
Authorized, 50 million shares, Outstanding shares — 10 million (10 million in 2012), liquidation preference $50 per share | 500 | 500 | |||||
Common Stock, no par value: | |||||||
Authorized, 450 million shares, Outstanding shares — 246 million (245 million in 2012) after deducting 5 million treasury shares (6 million in 2012) | 246 | 245 | |||||
Capital Surplus | 2,824 | 2,815 | |||||
Retained Earnings | 1,576 | 1,370 | |||||
Accumulated Other Comprehensive Loss | (4,431 | ) | (4,560 | ) | |||
Goodyear Shareholders’ Equity | 715 | 370 | |||||
Minority Shareholders’ Equity — Nonredeemable | 243 | 255 | |||||
Total Shareholders’ Equity | 958 | 625 | |||||
Total Liabilities and Shareholders’ Equity | $ | 17,384 | $ | 16,973 |
(In millions) | Six Months Ended | ||||||
June 30, | |||||||
2013 | 2012 | ||||||
Cash Flows from Operating Activities: | |||||||
Net Income | $ | 224 | $ | 111 | |||
Adjustments to Reconcile Net Income to Cash Flows from Operating Activities: | |||||||
Depreciation and Amortization | 357 | 337 | |||||
Amortization and Write-Off of Debt Issuance Costs | 8 | 60 | |||||
Net Rationalization Charges (Note 2) | 20 | 41 | |||||
Rationalization Payments | (43 | ) | (48 | ) | |||
Net (Gains) Losses on Asset Sales (Note 3) | (3 | ) | (17 | ) | |||
Pension Contributions and Direct Payments | (993 | ) | (227 | ) | |||
Venezuela Currency Devaluation (Note 3) | 115 | — | |||||
Customer Prepayments and Government Grants | 29 | 51 | |||||
Insurance Proceeds | 17 | 39 | |||||
Changes in Operating Assets and Liabilities, Net of Asset Acquisitions and Dispositions: | |||||||
Accounts Receivable | (391 | ) | (377 | ) | |||
Inventories | 22 | (116 | ) | ||||
Accounts Payable — Trade | 148 | (275 | ) | ||||
Compensation and Benefits | 46 | 15 | |||||
Other Current Liabilities | (38 | ) | 5 | ||||
Other Assets and Liabilities | 20 | (50 | ) | ||||
Total Cash Flows from Operating Activities | (462 | ) | (451 | ) | |||
Cash Flows from Investing Activities: | |||||||
Capital Expenditures | (493 | ) | (490 | ) | |||
Asset Dispositions (Note 3) | 7 | 9 | |||||
Government Grants Received | 4 | — | |||||
Increase in Restricted Cash | (8 | ) | (18 | ) | |||
Short Term Securities Acquired | (60 | ) | (21 | ) | |||
Short Term Securities Redeemed | 48 | 4 | |||||
Other Transactions | — | 4 | |||||
Total Cash Flows from Investing Activities | (502 | ) | (512 | ) | |||
Cash Flows from Financing Activities: | |||||||
Short Term Debt and Overdrafts Incurred | 29 | 34 | |||||
Short Term Debt and Overdrafts Paid | (51 | ) | (42 | ) | |||
Long Term Debt Incurred | 2,115 | 2,266 | |||||
Long Term Debt Paid | (639 | ) | (1,810 | ) | |||
Common Stock Issued | 5 | — | |||||
Preferred Stock Dividends Paid (Note 12) | (15 | ) | (15 | ) | |||
Transactions with Minority Interests in Subsidiaries | (8 | ) | (27 | ) | |||
Debt Related Costs and Other Transactions | (16 | ) | (63 | ) | |||
Total Cash Flows from Financing Activities | 1,420 | 343 | |||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (173 | ) | 4 | ||||
Net Change in Cash and Cash Equivalents | 283 | (616 | ) | ||||
Cash and Cash Equivalents at Beginning of the Period | 2,281 | 2,772 | |||||
Cash and Cash Equivalents at End of the Period | $ | 2,564 | $ | 2,156 |
Other Exit and | |||||||||||
(In millions) | Associate- | Non-cancelable | |||||||||
Related Costs | Lease Costs | Total | |||||||||
Balance at December 31, 2012 | $ | 229 | $ | 23 | $ | 252 | |||||
2013 Charges | 14 | 13 | 27 | ||||||||
Reversed to the Statements of Operations | (3 | ) | (4 | ) | (7 | ) | |||||
Incurred, Net of Foreign Currency Translation of $(3) million and $(1) million, respectively | (32 | ) | (18 | ) | (50 | ) | |||||
Balance at June 30, 2013 | $ | 208 | $ | 14 | $ | 222 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Current Year Plans | ||||||||||||||||
Associate Severance and Other Related Costs | $ | 5 | $ | 4 | $ | 5 | $ | 11 | ||||||||
Other Exit and Non-Cancelable Lease Costs | — | 7 | — | 7 | ||||||||||||
Current Year Plans - Net Charges | $ | 5 | $ | 11 | $ | 5 | $ | 18 | ||||||||
Prior Year Plans | ||||||||||||||||
Associate Severance and Other Related Costs | $ | 6 | $ | 9 | $ | 6 | $ | 10 | ||||||||
Other Exit and Non-Cancelable Lease Costs | 2 | 6 | 9 | 13 | ||||||||||||
Prior Year Plans - Net Charges | 8 | 15 | 15 | 23 | ||||||||||||
Total Net Charges | $ | 13 | $ | 26 | $ | 20 | $ | 41 | ||||||||
Asset Write-off and Accelerated Depreciation Charges | $ | 5 | $ | 4 | $ | 10 | $ | 6 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Net foreign currency exchange (gains) losses | $ | (5 | ) | $ | 6 | $ | 118 | $ | 17 | ||||||
Royalty income | (19 | ) | (10 | ) | (29 | ) | (19 | ) | |||||||
Financing fees and financial instruments | 14 | 34 | 27 | 129 | |||||||||||
Interest income | (7 | ) | (4 | ) | (12 | ) | (8 | ) | |||||||
General and product liability — discontinued products | 5 | — | 8 | 2 | |||||||||||
Net (gains) losses on asset sales | (5 | ) | (13 | ) | (3 | ) | (17 | ) | |||||||
Miscellaneous | 3 | 24 | 3 | 25 | |||||||||||
$ | (14 | ) | $ | 37 | $ | 112 | $ | 129 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(In millions, except per share amounts) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Earnings per share — basic: | |||||||||||||||
Goodyear net income | $ | 188 | $ | 92 | $ | 221 | $ | 88 | |||||||
Less: Preferred stock dividends | 7 | 7 | 15 | 15 | |||||||||||
Goodyear net income available to common shareholders | $ | 181 | $ | 85 | $ | 206 | $ | 73 | |||||||
Weighted average shares outstanding | 246 | 245 | 246 | 244 | |||||||||||
Earnings per common share — basic | $ | 0.74 | $ | 0.35 | $ | 0.84 | $ | 0.30 | |||||||
Earnings per share — diluted: | |||||||||||||||
Goodyear net income | $ | 188 | $ | 92 | $ | 221 | $ | 88 | |||||||
Less: Preferred stock dividends | — | — | — | 15 | |||||||||||
Goodyear net income available to common shareholders | $ | 188 | $ | 92 | $ | 221 | $ | 73 | |||||||
Weighted average shares outstanding | 246 | 245 | 246 | 244 | |||||||||||
Dilutive effect of mandatory convertible preferred stock | 33 | 34 | 33 | — | |||||||||||
Dilutive effect of stock options and other dilutive securities | 3 | 2 | 2 | 2 | |||||||||||
Weighted average shares outstanding — diluted | 282 | 281 | 281 | 246 | |||||||||||
Earnings per common share — diluted | $ | 0.67 | $ | 0.33 | $ | 0.79 | $ | 0.30 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Sales: | |||||||||||||||
North America | $ | 2,201 | $ | 2,451 | $ | 4,367 | $ | 4,948 | |||||||
Europe, Middle East and Africa | 1,577 | 1,596 | 3,184 | 3,534 | |||||||||||
Latin America | 531 | 503 | 1,044 | 1,024 | |||||||||||
Asia Pacific | 585 | 600 | 1,152 | 1,177 | |||||||||||
Net Sales | $ | 4,894 | $ | 5,150 | $ | 9,747 | $ | 10,683 | |||||||
Segment Operating Income: | |||||||||||||||
North America | $ | 204 | $ | 188 | $ | 331 | $ | 268 | |||||||
Europe, Middle East and Africa | 51 | 19 | 82 | 109 | |||||||||||
Latin America | 82 | 58 | 142 | 113 | |||||||||||
Asia Pacific | 91 | 71 | 175 | 138 | |||||||||||
Total Segment Operating Income | 428 | 336 | 730 | 628 | |||||||||||
Less: | |||||||||||||||
Rationalizations | 13 | 26 | 20 | 41 | |||||||||||
Interest expense | 102 | 83 | 187 | 184 | |||||||||||
Other (income) expense | (14 | ) | 37 | 112 | 129 | ||||||||||
Asset write-offs and accelerated depreciation | 5 | 4 | 10 | 6 | |||||||||||
Corporate incentive compensation plans | 35 | 15 | 45 | 22 | |||||||||||
Intercompany profit elimination | (3 | ) | (9 | ) | — | 1 | |||||||||
Retained expenses of divested operations | 6 | 5 | 10 | 9 | |||||||||||
Other (1) | 28 | 9 | 40 | 14 | |||||||||||
Income before Income Taxes | $ | 256 | $ | 166 | $ | 306 | $ | 222 |
(1) | For the three and six months ended June 30, 2013, Other includes the elimination of $16 million and $23 million, respectively, of royalty income attributable to the strategic business units, compared to $7 million and $13 million, respectively, for the three and six months ended June 30, 2012. Other for the three and six months ended June 30, 2013 also includes $5 million and $10 million, respectively, of unallocated corporate costs. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Rationalizations: | |||||||||||||||
North America | $ | 5 | $ | 13 | $ | 7 | $ | 19 | |||||||
Europe, Middle East and Africa | 3 | 5 | 6 | 10 | |||||||||||
Latin America | 2 | — | 2 | 2 | |||||||||||
Asia Pacific | 3 | 8 | 5 | 10 | |||||||||||
Total Segment Rationalizations | $ | 13 | $ | 26 | 20 | 41 | |||||||||
Net (Gains) Losses on Asset Sales: | |||||||||||||||
North America | $ | (3 | ) | $ | (2 | ) | $ | (2 | ) | $ | (4 | ) | |||
Europe, Middle East and Africa | — | (7 | ) | 2 | (8 | ) | |||||||||
Latin America | 1 | (3 | ) | — | (3 | ) | |||||||||
Asia Pacific | (3 | ) | — | (3 | ) | — | |||||||||
Total Segment Asset Sales | (5 | ) | (12 | ) | (3 | ) | (15 | ) | |||||||
Corporate | — | (1 | ) | — | (2 | ) | |||||||||
$ | (5 | ) | $ | (13 | ) | $ | (3 | ) | $ | (17 | ) |
Asset Write-offs and Accelerated Depreciation: | |||||||||||||||
Europe, Middle East and Africa | $ | 5 | $ | — | $ | 10 | $ | — | |||||||
Asia Pacific | — | 4 | — | 6 | |||||||||||
Total Segment Asset Write-offs and Accelerated Depreciation | $ | 5 | $ | 4 | $ | 10 | $ | 6 |
June 30, | December 31, | ||||||
(In millions) | 2013 | 2012 | |||||
Notes payable and overdrafts | $ | 79 | $ | 102 | |||
Weighted average interest rate | 4.36 | % | 4.29 | % | |||
Long term debt and capital leases due within one year | |||||||
Other domestic and international debt (including capital leases) | $ | 125 | $ | 96 | |||
Weighted average interest rate | 6.76 | % | 6.88 | % | |||
Total obligations due within one year | $ | 204 | $ | 198 |
June 30, 2013 | December 31, 2012 | ||||||||||||
Interest | Interest | ||||||||||||
(In millions) | Amount | Rate | Amount | Rate | |||||||||
Notes: | |||||||||||||
6.75% Euro Notes due 2019 | $ | 326 | $ | 330 | |||||||||
8.25% due 2020 | 995 | 994 | |||||||||||
8.75% due 2020 | 267 | 266 | |||||||||||
6.5% due 2021 | 900 | — | |||||||||||
7% due 2022 | 700 | 700 | |||||||||||
7% due 2028 | 149 | 149 | |||||||||||
Credit Facilities: | |||||||||||||
$2.0 billion first lien revolving credit facility due 2017 | — | — | — | — | |||||||||
$1.2 billion second lien term loan facility due 2019 | 1,194 | 4.75 | % | 1,194 | 4.75 | % | |||||||
€400 million revolving credit facility due 2016 | — | — | — | — | |||||||||
Pan-European accounts receivable facility due 2015 | 345 | 2.87 | % | 192 | 3.00 | % | |||||||
Chinese credit facilities | 531 | 5.51 | % | 471 | 6.38 | % | |||||||
Other domestic and international debt(1) | 976 | 8.18 | % | 630 | 8.40 | % | |||||||
6,383 | 4,926 | ||||||||||||
Capital lease obligations | 67 | 58 | |||||||||||
6,450 | 4,984 | ||||||||||||
Less portion due within one year | (125 | ) | (96 | ) | |||||||||
$ | 6,325 | $ | 4,888 |
(1) | Interest rates are weighted average interest rates related to various international credit facilities with customary terms and conditions and the Global and North America Headquarters financing liability described below. |
June 30, | December 31, | ||||||
(In millions) | 2013 | 2012 | |||||
Fair Values — asset (liability): | |||||||
Accounts receivable | $ | 15 | $ | 2 | |||
Other current liabilities | (13 | ) | (24 | ) |
June 30, | December 31, | ||||||
(In millions) | 2013 | 2012 | |||||
Fair Values — asset (liability): | |||||||
Accounts receivable | $ | 5 | $ | — | |||
Other current liabilities | (1 | ) | (5 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(In millions) (Income) Expense | 2013 | 2012 | 2013 | 2012 | |||||||||||
Amounts deferred to Accumulated Other Comprehensive Loss ("AOCL") | $ | (3 | ) | $ | (10 | ) | $ | (7 | ) | $ | (2 | ) | |||
Amount of deferred (gain) loss reclassified from AOCL into CGS | 2 | (3 | ) | 2 | (4 | ) |
Total Carrying Value in the Consolidated Balance Sheet | Quoted Prices in Active Markets for Identical Assets/Liabilities (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||
Investments | $ | 60 | $ | 45 | $ | 60 | $ | 45 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Foreign Exchange Contracts | 20 | 2 | — | — | 20 | 2 | — | — | |||||||||||||||||||||||
Total Assets at Fair Value | $ | 80 | $ | 47 | $ | 60 | $ | 45 | $ | 20 | $ | 2 | $ | — | $ | — | |||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||
Foreign Exchange Contracts | $ | 14 | $ | 29 | $ | — | $ | — | $ | 14 | $ | 29 | $ | — | $ | — | |||||||||||||||
Other | 2 | 3 | — | — | 2 | 3 | — | — | |||||||||||||||||||||||
Total Liabilities at Fair Value | $ | 16 | $ | 32 | $ | — | $ | — | $ | 16 | $ | 32 | $ | — | $ | — |
June 30, | December 31, | ||||||
(In millions) | 2013 | 2012 | |||||
Fixed Rate Debt: | |||||||
Carrying amount — liability | $ | 4,072 | $ | 3,128 | |||
Fair value — liability | 4,213 | 3,378 | |||||
Variable Rate Debt: | |||||||
Carrying amount — liability | $ | 2,311 | $ | 1,798 | |||
Fair value — liability | 2,311 | 1,808 |
U.S. | U.S. | ||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Service cost — benefits earned during the period | $ | 12 | $ | 10 | $ | 23 | $ | 20 | |||||||
Interest cost on projected benefit obligation | 60 | 65 | 121 | 131 | |||||||||||
Expected return on plan assets | (84 | ) | (75 | ) | (168 | ) | (150 | ) | |||||||
Amortization of: — prior service cost | 5 | 6 | 9 | 12 | |||||||||||
— net losses | 50 | 43 | 103 | 89 | |||||||||||
Total defined benefit pension cost | $ | 43 | $ | 49 | $ | 88 | $ | 102 |
Non-U.S. | Non-U.S. | ||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Service cost — benefits earned during the period | $ | 10 | $ | 7 | $ | 20 | $ | 15 | |||||||
Interest cost on projected benefit obligation | 32 | 35 | 65 | 70 | |||||||||||
Expected return on plan assets | (28 | ) | (29 | ) | (56 | ) | (59 | ) | |||||||
Amortization of: — prior service cost | 1 | 1 | 1 | 1 | |||||||||||
— net losses | 14 | 11 | 30 | 23 | |||||||||||
Net periodic pension cost | 29 | 25 | 60 | 50 | |||||||||||
Curtailments/settlements/termination benefits | 2 | — | 2 | — | |||||||||||
Total defined benefit pension cost | $ | 31 | $ | 25 | $ | 62 | $ | 50 | |||||||
Six Months Ended | Year Ended | ||||||
(Dollars in millions) | June 30, 2013 | December 31, 2012 | |||||
Pending claims, beginning of period | 73,200 | 78,500 | |||||
New claims filed | 1,600 | 2,200 | |||||
Claims settled/dismissed | (800 | ) | (7,500 | ) | |||
Pending claims, end of period | 74,000 | 73,200 | |||||
Payments (1) | $ | 10 | $ | 18 |
(1) | Represents cash payments made during the period by us and our insurers on asbestos litigation defense and claim resolution. |
June 30, 2013 | June 30, 2012 | ||||||||||||||||||||||
(In millions) | Goodyear Shareholders’ Equity | Minority Shareholders’ Equity – Nonredeemable | Total Shareholders’ Equity | Goodyear Shareholders’ Equity | Minority Shareholders’ Equity – Nonredeemable | Total Shareholders’ Equity | |||||||||||||||||
Balance at beginning of period | $ | 370 | $ | 255 | $ | 625 | $ | 749 | $ | 268 | $ | 1,017 | |||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||
Net income (loss) | 221 | 16 | 237 | 88 | 18 | 106 | |||||||||||||||||
Foreign currency translation (net of tax of $0 in 2013 and $0 in 2012) | (132 | ) | (15 | ) | (147 | ) | (12 | ) | 3 | (9 | ) | ||||||||||||
Reclassification adjustment for amounts recognized in income (net of tax of $0 in 2013 and $0 in 2012) | 1 | — | 1 | — | — | — | |||||||||||||||||
Amortization of prior service cost and unrecognized gains and losses included in total benefit cost (net of tax of $7 in 2013 and $4 in 2012) | 116 | — | 116 | 103 | — | 103 | |||||||||||||||||
Decrease (increase) in net actuarial losses (net of tax of $2 in 2013 and $7 in 2012) | 122 | — | 122 | 25 | — | 25 | |||||||||||||||||
Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements, and divestitures (net of tax of $0 in 2013 and $0 in 2012) | 1 | — | 1 | — | — | — | |||||||||||||||||
Prior service cost from plan amendments (net of tax of $0 in 2013 and $(2) in 2012) | — | — | — | (4 | ) | — | (4 | ) | |||||||||||||||
Deferred derivative gains (losses) (net of tax of $1 in 2013 and $0 in 2012) | 5 | — | 5 | 2 | — | 2 | |||||||||||||||||
Reclassification adjustment for amounts recognized in income (net of tax of $1 in 2013 and $(2) in 2012) | 1 | — | 1 | (1 | ) | — | (1 | ) | |||||||||||||||
Unrealized investment gains (losses) (net of tax of $0 in 2013 and $0 in 2012) | 15 | — | 15 | 3 | — | 3 | |||||||||||||||||
Other comprehensive income (loss) | 129 | (15 | ) | 114 | 116 | 3 | 119 | ||||||||||||||||
Total comprehensive income (loss) | 350 | 1 | 351 | 204 | 21 | 225 | |||||||||||||||||
Purchase of subsidiary shares from minority interest | (2 | ) | (2 | ) | (4 | ) | — | (18 | ) | (18 | ) | ||||||||||||
Dividends declared to minority shareholders | — | (7 | ) | (7 | ) | — | (8 | ) | (8 | ) | |||||||||||||
Stock-based compensation plans (Note 10) | 7 | — | 7 | 9 | — | 9 | |||||||||||||||||
Preferred stock dividends declared | (15 | ) | — | (15 | ) | (15 | ) | — | (15 | ) | |||||||||||||
Common stock issued from treasury | 5 | — | 5 | — | — | — | |||||||||||||||||
Other | — | (4 | ) | (4 | ) | — | — | — | |||||||||||||||
Balance at end of period | $ | 715 | $ | 243 | $ | 958 | $ | 947 | $ | 263 | $ | 1,210 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
(In millions) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Balance at beginning of period | $ | 515 | $ | 626 | $ | 534 | $ | 607 | |||||||
Comprehensive income (loss): | |||||||||||||||
Net income (loss) | (5 | ) | 1 | (13 | ) | 5 | |||||||||
Foreign currency translation, net of tax of $0 and $0 in 2013 ($0 and $0 in 2012) | 7 | (29 | ) | (8 | ) | (12 | ) | ||||||||
Amortization of prior service cost and unrecognized gains and losses included in total benefit cost, net of tax of $0 and $0 in 2013 ($0 and $0 in 2012) | 2 | 1 | 4 | 3 | |||||||||||
Decrease (increase) in net actuarial losses, net of tax of $0 and $0 in 2013 ($0 and $0 in 2012) | 1 | 1 | 2 | — | |||||||||||
Deferred derivative gains (losses), net of tax of $0 and $0 in 2013 ($0 and $0 in 2012) | — | 3 | 1 | — | |||||||||||
Reclassification adjustment for amounts recognized in income, net of tax of $0 and $0 in 2013 ($0 and $0 in 2012) | — | (1 | ) | — | (1 | ) | |||||||||
Other comprehensive income (loss) | 10 | (25 | ) | (1 | ) | (10 | ) | ||||||||
Total comprehensive income (loss) | 5 | (24 | ) | (14 | ) | (5 | ) | ||||||||
Balance at end of period | $ | 520 | $ | 602 | $ | 520 | $ | 602 |
(In millions) Income (Loss) | Foreign Currency Translation Adjustment | Unrecognized Net Actuarial Losses and Prior Service Costs | Deferred Derivative Gains (Losses) | Unrealized Investment Gains | Total | ||||||||||||||
Balance at beginning of period | $ | (538 | ) | $ | (4,044 | ) | $ | (4 | ) | $ | 26 | $ | (4,560 | ) | |||||
Other comprehensive income (loss) before reclassifications | (132 | ) | 122 | 5 | 15 | 10 | |||||||||||||
Amounts reclassified from accumulated other comprehensive loss | 1 | 117 | 1 | — | 119 | ||||||||||||||
Balance at end of period | $ | (669 | ) | $ | (3,805 | ) | $ | 2 | $ | 41 | $ | (4,431 | ) |
Three Months Ended June 30, 2013 | Six Months Ended June 30, 2013 | |||||||||
(In millions) (Income) Expense | Affected Line Item in the Consolidated Statements of Operations | Amount Reclassified from AOCL | Amount Reclassified from AOCL | |||||||
Foreign Currency Translation Adjustment | Other (Income) Expense (net of tax of $0 and $0 and minority shareholders' equity of $0 and $0) | $ | — | $ | 1 | |||||
Unrecognized Net Actuarial Losses and Prior Service Costs | ||||||||||
Amortization of prior service cost and unrecognized gains and losses | Total benefit cost (net of tax of $3 and $7 and minority shareholders' equity of $2 and $4) | 57 | 116 | |||||||
Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements, and divestitures | Total benefit cost (net of tax of $0 and $0 and minority shareholders' equity of $0 and $0) | 1 | 1 | |||||||
$ | 58 | $ | 117 | |||||||
Deferred derivative (gains) losses | Cost of goods sold (net of tax of $1 and $1 and minority shareholders' equity of $0 and $0) | 1 | 1 | |||||||
Total reclassifications | Goodyear net income | $ | 59 | $ | 119 |
(i) | The Goodyear Tire & Rubber Company (the “Parent Company”), the issuer of the guaranteed obligations; |
(ii) | Guarantor Subsidiaries, on a combined basis, as specified in the indentures related to Goodyear’s obligations under the notes; |
(iii) | Non-guarantor Subsidiaries, on a combined basis; |
(iv) | Consolidating entries and eliminations representing adjustments to (a) eliminate intercompany transactions between the Parent Company, the Guarantor Subsidiaries and the Non-guarantor Subsidiaries, (b) eliminate the investments in our subsidiaries, and (c) record consolidating entries; and |
(v) | The Goodyear Tire & Rubber Company and Subsidiaries on a consolidated basis. |
Condensed Consolidating Balance Sheet | |||||||||||||||||||
June 30, 2013 | |||||||||||||||||||
(In millions) | Parent Company | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Entries and Eliminations | Consolidated | ||||||||||||||
Assets: | |||||||||||||||||||
Current Assets: | |||||||||||||||||||
Cash and Cash Equivalents | $ | 1,153 | $ | 65 | $ | 1,346 | $ | — | $ | 2,564 | |||||||||
Accounts Receivable | 870 | 214 | 1,796 | — | 2,880 | ||||||||||||||
Accounts Receivable From Affiliates | — | 779 | — | (779 | ) | — | |||||||||||||
Inventories | 1,260 | 172 | 1,790 | (84 | ) | 3,138 | |||||||||||||
Prepaid Expenses and Other Current Assets | 72 | 10 | 297 | 8 | 387 | ||||||||||||||
Total Current Assets | 3,355 | 1,240 | 5,229 | (855 | ) | 8,969 | |||||||||||||
Goodwill | — | 25 | 497 | 121 | 643 | ||||||||||||||
Intangible Assets | 111 | 1 | 27 | — | 139 | ||||||||||||||
Deferred Income Taxes | — | 44 | 130 | 13 | 187 | ||||||||||||||
Other Assets | 261 | 69 | 197 | — | 527 | ||||||||||||||
Investments in Subsidiaries | 4,022 | 260 | — | (4,282 | ) | — | |||||||||||||
Property, Plant and Equipment | 2,246 | 137 | 4,557 | (21 | ) | 6,919 | |||||||||||||
Total Assets | $ | 9,995 | $ | 1,776 | $ | 10,637 | $ | (5,024 | ) | $ | 17,384 | ||||||||
Liabilities: | |||||||||||||||||||
Current Liabilities: | |||||||||||||||||||
Accounts Payable-Trade | $ | 800 | $ | 211 | $ | 2,202 | $ | — | $ | 3,213 | |||||||||
Accounts Payable to Affiliates | 615 | — | 164 | (779 | ) | — | |||||||||||||
Compensation and Benefits | 324 | 31 | 336 | — | 691 | ||||||||||||||
Other Current Liabilities | 343 | 53 | 686 | (15 | ) | 1,067 | |||||||||||||
Notes Payable and Overdrafts | — | — | 79 | — | 79 | ||||||||||||||
Long Term Debt and Capital Leases Due Within One Year | 8 | — | 117 | — | 125 | ||||||||||||||
Total Current Liabilities | 2,090 | 295 | 3,584 | (794 | ) | 5,175 | |||||||||||||
Long Term Debt and Capital Leases | 4,378 | — | 1,947 | — | 6,325 | ||||||||||||||
Compensation and Benefits | 1,951 | 180 | 1,002 | — | 3,133 | ||||||||||||||
Deferred and Other Noncurrent Income Taxes | 42 | 11 | 216 | (7 | ) | 262 | |||||||||||||
Other Long Term Liabilities | 819 | 30 | 162 | — | 1,011 | ||||||||||||||
Total Liabilities | 9,280 | 516 | 6,911 | (801 | ) | 15,906 | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||||||||
Minority Shareholders’ Equity | — | — | 316 | 204 | 520 | ||||||||||||||
Shareholders’ Equity: | |||||||||||||||||||
Goodyear Shareholders’ Equity: | |||||||||||||||||||
Preferred Stock | 500 | — | — | — | 500 | ||||||||||||||
Common Stock | 246 | 319 | 993 | (1,312 | ) | 246 | |||||||||||||
Other Equity | (31 | ) | 941 | 2,174 | (3,115 | ) | (31 | ) | |||||||||||
Goodyear Shareholders’ Equity | 715 | 1,260 | 3,167 | (4,427 | ) | 715 | |||||||||||||
Minority Shareholders’ Equity — Nonredeemable | — | — | 243 | — | 243 | ||||||||||||||
Total Shareholders’ Equity | 715 | 1,260 | 3,410 | (4,427 | ) | 958 | |||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 9,995 | $ | 1,776 | $ | 10,637 | $ | (5,024 | ) | $ | 17,384 |
Condensed Consolidating Balance Sheet | |||||||||||||||||||
December 31, 2012 | |||||||||||||||||||
(In millions) | Parent Company | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Entries and Eliminations | Consolidated | ||||||||||||||
Assets: | |||||||||||||||||||
Current Assets: | |||||||||||||||||||
Cash and Cash Equivalents | $ | 802 | $ | 68 | $ | 1,411 | $ | — | $ | 2,281 | |||||||||
Accounts Receivable | 905 | 212 | 1,446 | — | 2,563 | ||||||||||||||
Accounts Receivable From Affiliates | — | 668 | — | (668 | ) | — | |||||||||||||
Inventories | 1,263 | 176 | 1,893 | (82 | ) | 3,250 | |||||||||||||
Prepaid Expenses and Other Current Assets | 64 | 10 | 321 | 9 | 404 | ||||||||||||||
Total Current Assets | 3,034 | 1,134 | 5,071 | (741 | ) | 8,498 | |||||||||||||
Goodwill | — | 25 | 516 | 123 | 664 | ||||||||||||||
Intangible Assets | 110 | 1 | 29 | — | 140 | ||||||||||||||
Deferred Income Taxes | — | 56 | 130 | — | 186 | ||||||||||||||
Other Assets | 240 | 61 | 228 | — | 529 | ||||||||||||||
Investments in Subsidiaries | 3,986 | 299 | — | (4,285 | ) | — | |||||||||||||
Property, Plant and Equipment | 2,260 | 151 | 4,565 | (20 | ) | 6,956 | |||||||||||||
Total Assets | $ | 9,630 | $ | 1,727 | $ | 10,539 | $ | (4,923 | ) | $ | 16,973 | ||||||||
Liabilities: | |||||||||||||||||||
Current Liabilities: | |||||||||||||||||||
Accounts Payable-Trade | $ | 779 | $ | 214 | $ | 2,230 | $ | — | $ | 3,223 | |||||||||
Accounts Payable to Affiliates | 485 | — | 183 | (668 | ) | — | |||||||||||||
Compensation and Benefits | 384 | 31 | 304 | — | 719 | ||||||||||||||
Other Current Liabilities | 350 | 32 | 808 | (8 | ) | 1,182 | |||||||||||||
Notes Payable and Overdrafts | — | — | 102 | — | 102 | ||||||||||||||
Long Term Debt and Capital Leases Due Within One Year | 9 | — | 87 | — | 96 | ||||||||||||||
Total Current Liabilities | 2,007 | 277 | 3,714 | (676 | ) | 5,322 | |||||||||||||
Long Term Debt and Capital Leases | 3,462 | — | 1,426 | — | 4,888 | ||||||||||||||
Compensation and Benefits | 2,941 | 195 | 1,204 | — | 4,340 | ||||||||||||||
Deferred and Other Noncurrent Income Taxes | 41 | 6 | 219 | (2 | ) | 264 | |||||||||||||
Other Long Term Liabilities | 809 | 32 | 159 | — | 1,000 | ||||||||||||||
Total Liabilities | 9,260 | 510 | 6,722 | (678 | ) | 15,814 | |||||||||||||
Commitments and Contingent Liabilities | |||||||||||||||||||
Minority Shareholders’ Equity | — | — | 327 | 207 | 534 | ||||||||||||||
Shareholders’ Equity: | |||||||||||||||||||
Goodyear Shareholders’ Equity: | |||||||||||||||||||
Preferred Stock | 500 | — | — | — | 500 | ||||||||||||||
Common Stock | 245 | 339 | 993 | (1,332 | ) | 245 | |||||||||||||
Other Equity | (375 | ) | 878 | 2,242 | (3,120 | ) | (375 | ) | |||||||||||
Goodyear Shareholders’ Equity | 370 | 1,217 | 3,235 | (4,452 | ) | 370 | |||||||||||||
Minority Shareholders’ Equity — Nonredeemable | — | — | 255 | — | 255 | ||||||||||||||
Total Shareholders’ Equity | 370 | 1,217 | 3,490 | (4,452 | ) | 625 | |||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 9,630 | $ | 1,727 | $ | 10,539 | $ | (4,923 | ) | $ | 16,973 |
Consolidating Statements of Operations | |||||||||||||||||||
Three Months Ended June 30, 2013 | |||||||||||||||||||
(In millions) | Parent Company | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Entries and Eliminations | Consolidated | ||||||||||||||
Net Sales | $ | 2,072 | $ | 677 | $ | 3,244 | $ | (1,099 | ) | $ | 4,894 | ||||||||
Cost of Goods Sold | 1,710 | 620 | 2,668 | (1,152 | ) | 3,846 | |||||||||||||
Selling, Administrative and General Expense | 239 | 43 | 413 | (4 | ) | 691 | |||||||||||||
Rationalizations | 4 | 1 | 8 | — | 13 | ||||||||||||||
Interest Expense | 81 | 8 | 30 | (17 | ) | 102 | |||||||||||||
Other (Income) Expense | (82 | ) | 10 | (9 | ) | 67 | (14 | ) | |||||||||||
Income (Loss) before Income Taxes and Equity in Earnings of Subsidiaries | 120 | (5 | ) | 134 | 7 | 256 | |||||||||||||
United States and Foreign Taxes | 8 | 2 | 51 | 2 | 63 | ||||||||||||||
Equity in Earnings of Subsidiaries | 76 | (6 | ) | — | (70 | ) | — | ||||||||||||
Net Income (Loss) | 188 | (13 | ) | 83 | (65 | ) | 193 | ||||||||||||
Less: Minority Shareholders’ Net Income (Loss) | — | — | 5 | — | 5 | ||||||||||||||
Goodyear Net Income (Loss) | 188 | (13 | ) | 78 | (65 | ) | 188 | ||||||||||||
Less: Preferred Stock Dividends | 7 | — | — | — | 7 | ||||||||||||||
Goodyear Net Income (Loss) available to Common Shareholders | $ | 181 | $ | (13 | ) | $ | 78 | $ | (65 | ) | $ | 181 | |||||||
Comprehensive Income (Loss) | $ | 181 | $ | 3 | $ | 7 | $ | (8 | ) | $ | 183 | ||||||||
Less: Comprehensive Income (Loss) Attributable to Minority Shareholders | — | — | (1 | ) | 3 | 2 | |||||||||||||
Goodyear Comprehensive Income (Loss) | $ | 181 | $ | 3 | $ | 8 | $ | (11 | ) | $ | 181 |
Consolidating Statements of Operations | |||||||||||||||||||
Three Months Ended June 30, 2012 | |||||||||||||||||||
(In millions) | Parent Company | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Entries and Eliminations | Consolidated | ||||||||||||||
Net Sales | $ | 2,174 | $ | 735 | $ | 3,338 | $ | (1,097 | ) | $ | 5,150 | ||||||||
Cost of Goods Sold | 1,888 | 637 | 2,752 | (1,136 | ) | 4,141 | |||||||||||||
Selling, Administrative and General Expense | 230 | 48 | 421 | (2 | ) | 697 | |||||||||||||
Rationalizations | 14 | 1 | 11 | — | 26 | ||||||||||||||
Interest Expense | 62 | 7 | 31 | (17 | ) | 83 | |||||||||||||
Other (Income) Expense | (38 | ) | (7 | ) | 10 | 72 | 37 | ||||||||||||
Income (Loss) before Income Taxes and Equity in Earnings of Subsidiaries | 18 | 49 | 113 | (14 | ) | 166 | |||||||||||||
United States and Foreign Taxes | 5 | 12 | 50 | (4 | ) | 63 | |||||||||||||
Equity in Earnings of Subsidiaries | 79 | (2 | ) | — | (77 | ) | — | ||||||||||||
Net Income (Loss) | 92 | 35 | 63 | (87 | ) | 103 | |||||||||||||
Less: Minority Shareholders’ Net Income (Loss) | — | — | 11 | — | 11 | ||||||||||||||
Goodyear Net Income (Loss) | 92 | 35 | 52 | (87 | ) | 92 | |||||||||||||
Less: Preferred Stock Dividends | 7 | — | — | — | 7 | ||||||||||||||
Goodyear Net Income (Loss) available to Common Shareholders | $ | 85 | $ | 35 | $ | 52 | $ | (87 | ) | $ | 85 | ||||||||
Comprehensive Income (Loss) | $ | 84 | $ | 59 | $ | (30 | ) | $ | (53 | ) | $ | 60 | |||||||
Less: Comprehensive Income (Loss) Attributable to Minority Interest | — | — | (14 | ) | (10 | ) | (24 | ) | |||||||||||
Goodyear Comprehensive Income (Loss) | $ | 84 | $ | 59 | $ | (16 | ) | $ | (43 | ) | $ | 84 |
Consolidating Statements of Operations | |||||||||||||||||||
Six Months Ended June 30, 2013 | |||||||||||||||||||
(In millions) | Parent Company | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Entries and Eliminations | Consolidated | ||||||||||||||
Net Sales | $ | 4,081 | $ | 1,348 | $ | 6,418 | $ | (2,100 | ) | $ | 9,747 | ||||||||
Cost of Goods Sold | 3,445 | 1,208 | 5,336 | (2,203 | ) | 7,786 | |||||||||||||
Selling, Administrative and General Expense | 454 | 84 | 803 | (5 | ) | 1,336 | |||||||||||||
Rationalizations | 5 | 1 | 14 | — | 20 | ||||||||||||||
Interest Expense | 151 | 15 | 54 | (33 | ) | 187 | |||||||||||||
Other (Income) Expense | (127 | ) | 4 | 98 | 137 | 112 | |||||||||||||
Income (Loss) before Income Taxes and Equity in Earnings of Subsidiaries | 153 | 36 | 113 | 4 | 306 | ||||||||||||||
United States and Foreign Taxes | 7 | 34 | 59 | (18 | ) | 82 | |||||||||||||
Equity in Earnings of Subsidiaries | 75 | (10 | ) | — | (65 | ) | — | ||||||||||||
Net Income (Loss) | 221 | (8 | ) | 54 | (43 | ) | 224 | ||||||||||||
Less: Minority Shareholders’ Net Income (Loss) | — | — | 3 | — | 3 | ||||||||||||||
Goodyear Net Income (Loss) | 221 | (8 | ) | 51 | (43 | ) | 221 | ||||||||||||
Less: Preferred Stock Dividends | 15 | — | — | — | 15 | ||||||||||||||
Goodyear Net Income (Loss) available to Common Shareholders | $ | 206 | $ | (8 | ) | $ | 51 | $ | (43 | ) | $ | 206 | |||||||
Comprehensive Income (Loss) | $ | 350 | $ | 16 | $ | (53 | ) | $ | 24 | $ | 337 | ||||||||
Less: Comprehensive Income (Loss) Attributable to Minority Shareholders | — | — | (10 | ) | (3 | ) | (13 | ) | |||||||||||
Goodyear Comprehensive Income (Loss) | $ | 350 | $ | 16 | $ | (43 | ) | $ | 27 | $ | 350 |
Consolidating Statements of Operations | |||||||||||||||||||
Six Months Ended June 30, 2012 | |||||||||||||||||||
(In millions) | Parent Company | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Entries and Eliminations | Consolidated | ||||||||||||||
Net Sales | $ | 4,461 | $ | 1,492 | $ | 7,045 | $ | (2,315 | ) | $ | 10,683 | ||||||||
Cost of Goods Sold | 3,939 | 1,331 | 5,887 | (2,409 | ) | 8,748 | |||||||||||||
Selling, Administrative and General Expense | 431 | 95 | 834 | (1 | ) | 1,359 | |||||||||||||
Rationalizations | 20 | 1 | 20 | — | 41 | ||||||||||||||
Interest Expense | 128 | 11 | 75 | (30 | ) | 184 | |||||||||||||
Other (Income) Expense | (18 | ) | (15 | ) | 18 | 144 | 129 | ||||||||||||
Income (Loss) before Income Taxes and Equity in Earnings of Subsidiaries | (39 | ) | 69 | 211 | (19 | ) | 222 | ||||||||||||
United States and Foreign Taxes | 14 | 19 | 80 | (2 | ) | 111 | |||||||||||||
Equity in Earnings of Subsidiaries | 141 | (5 | ) | — | (136 | ) | — | ||||||||||||
Net Income (Loss) | 88 | 45 | 131 | (153 | ) | 111 | |||||||||||||
Less: Minority Shareholders’ Net Income (Loss) | — | — | 23 | — | 23 | ||||||||||||||
Goodyear Net Income (Loss) | 88 | 45 | 108 | (153 | ) | 88 | |||||||||||||
Less: Preferred Stock Dividends | 15 | — | — | — | 15 | ||||||||||||||
Goodyear Net Income (Loss) available to Common Shareholders | $ | 73 | $ | 45 | $ | 108 | $ | (153 | ) | $ | 73 | ||||||||
Comprehensive Income (Loss) | $ | 204 | $ | 76 | $ | 125 | $ | (185 | ) | $ | 220 | ||||||||
Less: Comprehensive Income (Loss) Attributable to Minority Shareholders | — | — | 20 | (4 | ) | 16 | |||||||||||||
Goodyear Comprehensive Income (Loss) | $ | 204 | $ | 76 | $ | 105 | $ | (181 | ) | $ | 204 |
Condensed Consolidating Statement of Cash Flows | |||||||||||||||||||
Six Months Ended June 30, 2013 | |||||||||||||||||||
(In millions) | Parent Company | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Entries and Eliminations | Consolidated | ||||||||||||||
Cash Flows from Operating Activities: | |||||||||||||||||||
Total Cash Flows from Operating Activities | $ | (439 | ) | $ | (52 | ) | $ | 39 | $ | (10 | ) | $ | (462 | ) | |||||
Cash Flows from Investing Activities: | |||||||||||||||||||
Capital Expenditures | (128 | ) | (9 | ) | (360 | ) | 4 | (493 | ) | ||||||||||
Asset Dispositions | 2 | — | 5 | — | 7 | ||||||||||||||
Government Grants Received | — | — | 4 | — | 4 | ||||||||||||||
Increase in Restricted Cash | — | — | (8 | ) | — | (8 | ) | ||||||||||||
Short Term Securities Acquired | — | — | (60 | ) | — | (60 | ) | ||||||||||||
Short Term Securities Redeemed | — | — | 48 | — | 48 | ||||||||||||||
Capital Contributions and Loans Incurred | (61 | ) | — | (170 | ) | 231 | — | ||||||||||||
Capital Redemptions and Loans Paid | 214 | — | 203 | (417 | ) | — | |||||||||||||
Total Cash Flows from Investing Activities | 27 | (9 | ) | (338 | ) | (182 | ) | (502 | ) | ||||||||||
Cash Flows from Financing Activities: | |||||||||||||||||||
Short Term Debt and Overdrafts Incurred | — | 4 | 96 | (71 | ) | 29 | |||||||||||||
Short Term Debt and Overdrafts Paid | (71 | ) | — | (51 | ) | 71 | (51 | ) | |||||||||||
Long Term Debt Incurred | 900 | — | 1,215 | — | 2,115 | ||||||||||||||
Long Term Debt Paid | (7 | ) | — | (632 | ) | — | (639 | ) | |||||||||||
Common Stock Issued | 5 | — | — | — | 5 | ||||||||||||||
Preferred Stock Dividends Paid | (15 | ) | — | — | — | (15 | ) | ||||||||||||
Capital Contributions and Loans Incurred | 170 | 58 | 3 | (231 | ) | — | |||||||||||||
Capital Redemptions and Loans Paid | (203 | ) | — | (214 | ) | 417 | — | ||||||||||||
Intercompany Dividends Paid | — | — | (6 | ) | 6 | — | |||||||||||||
Transactions with Minority Interests in Subsidiaries | — | — | (8 | ) | — | (8 | ) | ||||||||||||
Debt Related Costs and Other Transactions | (16 | ) | — | — | — | (16 | ) | ||||||||||||
Total Cash Flows from Financing Activities | 763 | 62 | 403 | 192 | 1,420 | ||||||||||||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | — | (4 | ) | (169 | ) | — | (173 | ) | |||||||||||
Net Change in Cash and Cash Equivalents | 351 | (3 | ) | (65 | ) | — | 283 | ||||||||||||
Cash and Cash Equivalents at Beginning of the Period | 802 | 68 | 1,411 | — | 2,281 | ||||||||||||||
Cash and Cash Equivalents at End of the Period | $ | 1,153 | $ | 65 | $ | 1,346 | $ | — | $ | 2,564 |
Condensed Consolidating Statement of Cash Flows | |||||||||||||||||||
Six Months Ended June 30, 2012 | |||||||||||||||||||
(In millions) | Parent Company | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Consolidating Entries and Eliminations | Consolidated | ||||||||||||||
Cash Flows from Operating Activities: | |||||||||||||||||||
Total Cash Flows from Operating Activities | $ | 12 | $ | (21 | ) | $ | (381 | ) | $ | (61 | ) | $ | (451 | ) | |||||
Cash Flows from Investing Activities: | |||||||||||||||||||
Capital Expenditures | (111 | ) | (7 | ) | (374 | ) | 2 | (490 | ) | ||||||||||
Asset Dispositions | 1 | — | 8 | — | 9 | ||||||||||||||
Increase in Restricted Cash | — | — | (18 | ) | — | (18 | ) | ||||||||||||
Short Term Securities Acquired | — | — | (21 | ) | — | (21 | ) | ||||||||||||
Short Term Securities Redeemed | — | — | 4 | — | 4 | ||||||||||||||
Capital Contributions and Loans Incurred | (55 | ) | — | (150 | ) | 205 | — | ||||||||||||
Capital Redemptions and Loans Paid | 19 | — | — | (19 | ) | — | |||||||||||||
Other Transactions | 4 | — | — | — | 4 | ||||||||||||||
Total Cash Flows from Investing Activities | (142 | ) | (7 | ) | (551 | ) | 188 | (512 | ) | ||||||||||
Cash Flows from Financing Activities: | |||||||||||||||||||
Short Term Debt and Overdrafts Incurred | — | — | 34 | — | 34 | ||||||||||||||
Short Term Debt and Overdrafts Paid | — | — | (42 | ) | — | (42 | ) | ||||||||||||
Long Term Debt Incurred | 800 | — | 1,466 | — | 2,266 | ||||||||||||||
Long Term Debt Paid | (756 | ) | — | (1,054 | ) | — | (1,810 | ) | |||||||||||
Preferred Stock Dividends Paid | (15 | ) | — | — | — | (15 | ) | ||||||||||||
Capital Contributions and Loans Incurred | 150 | — | 55 | (205 | ) | — | |||||||||||||
Capital Redemptions and Loans Paid | — | — | (19 | ) | 19 | — | |||||||||||||
Intercompany Dividends Paid | — | — | (59 | ) | 59 | — | |||||||||||||
Transactions with Minority Interests in Subsidiaries | (17 | ) | — | (10 | ) | — | (27 | ) | |||||||||||
Debt Related Costs and Other Transactions | (63 | ) | — | — | — | (63 | ) | ||||||||||||
Total Cash Flows from Financing Activities | 99 | — | 371 | (127 | ) | 343 | |||||||||||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | — | 1 | 3 | — | 4 | ||||||||||||||
Net Change in Cash and Cash Equivalents | (31 | ) | (27 | ) | (558 | ) | — | (616 | ) | ||||||||||
Cash and Cash Equivalents at Beginning of the Period | 916 | 112 | 1,744 | — | 2,772 | ||||||||||||||
Cash and Cash Equivalents at End of the Period | $ | 885 | $ | 85 | $ | 1,186 | $ | — | $ | 2,156 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
Percent | Percent | ||||||||||||||||||||||||||||
(In millions) | 2013 | 2012 | Change | Change | 2013 | 2012 | Change | Change | |||||||||||||||||||||
Tire Units | 14.8 | 15.4 | (0.6 | ) | (3.4 | )% | 29.6 | 31.2 | (1.6 | ) | (4.9 | )% | |||||||||||||||||
Net Sales | $ | 2,201 | $ | 2,451 | $ | (250 | ) | (10.2 | )% | $ | 4,367 | $ | 4,948 | $ | (581 | ) | (11.7 | )% | |||||||||||
Operating Income | 204 | 188 | 16 | 8.5 | % | 331 | 268 | 63 | 23.5 | % | |||||||||||||||||||
Operating Margin | 9.3 | % | 7.7 | % | 7.6 | % | 5.4 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
Percent | Percent | ||||||||||||||||||||||||||||
(In millions) | 2013 | 2012 | Change | Change | 2013 | 2012 | Change | Change | |||||||||||||||||||||
Tire Units | 14.6 | 14.2 | 0.4 | 2.5 | % | 29.7 | 32.2 | (2.5 | ) | (7.9 | )% | ||||||||||||||||||
Net Sales | $ | 1,577 | $ | 1,596 | $ | (19 | ) | (1.2 | )% | $ | 3,184 | $ | 3,534 | $ | (350 | ) | (9.9 | )% | |||||||||||
Operating Income | 51 | 19 | 32 | 168.4 | % | 82 | 109 | (27 | ) | (24.8 | )% | ||||||||||||||||||
Operating Margin | 3.2 | % | 1.2 | % | 2.6 | % | 3.1 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
Percent | Percent | ||||||||||||||||||||||||||||
(In millions) | 2013 | 2012 | Change | Change | 2013 | 2012 | Change | Change | |||||||||||||||||||||
Tire Units | 4.5 | 4.3 | 0.2 | 4.1 | % | 9.0 | 8.6 | 0.4 | 4.6 | % | |||||||||||||||||||
Net Sales | $ | 531 | $ | 503 | $ | 28 | 5.6 | % | $ | 1,044 | $ | 1,024 | $ | 20 | 2.0 | % | |||||||||||||
Operating Income | 82 | 58 | 24 | 41.4 | % | 142 | 113 | 29 | 25.7 | % | |||||||||||||||||||
Operating Margin | 15.4 | % | 11.5 | % | 13.6 | % | 11.0 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
Percent | Percent | ||||||||||||||||||||||||||||
(In millions) | 2013 | 2012 | Change | Change | 2013 | 2012 | Change | Change | |||||||||||||||||||||
Tire Units | 5.6 | 5.3 | 0.3 | 5.3 | % | 10.7 | 10.2 | 0.5 | 5.0 | % | |||||||||||||||||||
Net Sales | $ | 585 | $ | 600 | $ | (15 | ) | (2.5 | )% | $ | 1,152 | $ | 1,177 | $ | (25 | ) | (2.1 | )% | |||||||||||
Operating Income | 91 | 71 | 20 | 28.2 | % | 175 | 138 | 37 | 26.8 | % | |||||||||||||||||||
Operating Margin | 15.6 | % | 11.8 | % | 15.2 | % | 11.7 | % |
June 30, | December 31, | ||||||
(In millions) | 2013 | 2012 | |||||
First lien revolving credit facility | $ | 1,147 | $ | 1,239 | |||
European revolving credit facility | 512 | 519 | |||||
Chinese credit facilities | — | 57 | |||||
Pan-European accounts receivable facility | — | 156 | |||||
Other domestic and international debt | 326 | 531 | |||||
Notes payable and overdrafts | 436 | 447 | |||||
$ | 2,421 | $ | 2,949 |
• | We become subject to the financial covenant contained in our first lien revolving credit facility when the aggregate amount of our Parent Company (The Goodyear Tire & Rubber Company) and guarantor subsidiaries cash and cash equivalents (“Available Cash”) plus our availability under our first lien revolving credit facility is less than $200 million. If this were to occur, our ratio of EBITDA to Consolidated Interest Expense may not be less than 2.0 to 1.0 for any period of four consecutive fiscal quarters. As of June 30, 2013, our availability under this facility of $1,147 million, plus our Available Cash of $1,218 million, totaled $2.4 billion, which is in excess of $200 million. |
• | We become subject to a covenant contained in our second lien credit facility upon certain asset sales. The covenant provides that, before we use cash proceeds from certain asset sales to repay any junior lien, senior unsecured or subordinated indebtedness, we must first offer to use such cash proceeds to prepay borrowings under the second lien credit facility unless our ratio of Consolidated Net Secured Indebtedness to EBITDA (Pro Forma Senior Secured Leverage Ratio) for any period of four consecutive fiscal quarters is equal to or less than 3.0 to 1.0. |
• | if we do not successfully implement our strategic initiatives, our operating results, financial condition and liquidity may be materially adversely affected; |
• | our pension plans are significantly underfunded and further increases in the underfunded status of the plans could significantly increase the amount of our required contributions and pension expense; |
• | we face significant global competition, increasingly from lower cost manufacturers, and our market share could decline; |
• | deteriorating economic conditions in any of our major markets, or an inability to access capital markets or third-party financing when necessary, may materially adversely affect our operating results, financial condition and liquidity; |
• | higher raw material and energy costs may materially adversely affect our operating results and financial condition; |
• | if we experience a labor strike, work stoppage or other similar event our financial position, results of operations and liquidity could be materially adversely affected; |
• | work stoppages, financial difficulties or supply disruptions at our major OE customers, dealers or suppliers could harm our business; |
• | our capital expenditures may not be adequate to maintain our competitive position and may not be implemented in a timely or cost-effective manner; |
• | our long term ability to meet current obligations, to repay maturing indebtedness or to implement strategic initiatives is dependent on our ability to access capital markets in the future and to improve our operating results; |
• | we have a substantial amount of debt, which could restrict our growth, place us at a competitive disadvantage or otherwise materially adversely affect our financial health; |
• | any failure to be in compliance with any material provision or covenant of our secured credit facilities could have a material adverse effect on our liquidity and our results of operations; |
• | our international operations have certain risks that may materially adversely affect our operating results; |
• | we have foreign currency translation and transaction risks that may materially adversely affect our operating results, financial condition and liquidity; |
• | our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly; |
• | we have substantial fixed costs and, as a result, our operating income fluctuates disproportionately with changes in our net sales; |
• | we may incur significant costs in connection with our contingent liabilities and tax matters; |
• | our reserves for contingent liabilities and our recorded insurance assets are subject to various uncertainties, the outcome of which may result in our actual costs being significantly higher than the amounts recorded; |
• | we may be required to provide letters of credit or post cash collateral if we are subject to a significant adverse judgment or if we are unable to obtain surety bonds, which may have a material adverse effect on our liquidity; |
• | we are subject to extensive government regulations that may materially adversely affect our operating results; |
• | the terms and conditions of our global alliance with SRI provide for certain exit rights available to SRI upon the occurrence of certain events, which could require us to make a substantial payment to acquire SRI’s minority interests in GDTE and GDTNA following the determination of the fair value of those interests; |
• | we may be adversely affected by any disruption in, or failure of, our information technology systems; |
• | if we are unable to attract and retain key personnel, our business could be materially adversely affected; and |
• | we may be impacted by economic and supply disruptions associated with events beyond our control, such as war, acts of terror, political unrest, public health concerns, labor disputes or natural disasters. |
(In millions) | |||
Carrying amount — liability | $ | 4,072 | |
Fair value — liability | 4,213 | ||
Pro forma fair value — liability | 4,354 |
(In millions) | |||
Fair value — asset (liability) | $ | 6 | |
Pro forma decrease in fair value | 150 | ||
Contract maturities | 7/13-6/14 |
(In millions) | |||
Accounts receivable | $ | 20 | |
Other Current Liabilities | (14 | ) |
Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||
Period | |||||||||||||
4/1/13-4/30/13 | — | $ | — | — | — | ||||||||
5/1/13-5/31/13 | 20,075 | 15.35 | — | — | |||||||||
6/1/13-6/30/13 | 4,169 | 15.42 | — | — | |||||||||
Total | 24,244 | $ | 15.36 | — | — |
THE GOODYEAR TIRE & RUBBER COMPANY | ||||
(Registrant) | ||||
Date: | July 30, 2013 | By | /s/ Richard J. Noechel | |
Richard J. Noechel, Vice President and Controller (Signing on behalf of the Registrant as a duly authorized officer of the Registrant and signing as the principal accounting officer of the Registrant.) |
Exhibit | ||||
Table | ||||
Item | Exhibit | |||
No. | Description of Exhibit | Number | ||
3 | Articles of Incorporation and By-Laws | |||
(a) | Code of Regulations of the Company, adopted November 22, 1955, and as most recently amended on April 15, 2013. | 3.1 | ||
10 | Material Contracts | |||
(a) | 2013 Performance Plan of the Company, adopted April 15, 2013 (incorporated by reference, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed April 19, 2013, File No. 1-1927). | |||
(b) | Form of Non-Qualified Stock Option Grant Agreement (incorporated by reference, filed as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed June 6, 2013, File No. 1-1927). | |||
(c) | Form of Non-Qualified Stock Option with Tandem Stock Appreciation Right Grant Agreement (incorporated by reference, filed as Exhibit 10.2 to the Company's Current Report on Form 8-K, filed June 6, 2013, File No. 1-1927). | |||
(d) | Form of Amendment to Grant Agreement for Executive Performance Plan. | 10.1 | ||
12 | Statement re Computation of Ratios | |||
(a) | Statement setting forth the Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends. | 12.1 | ||
31 | 302 Certifications | |||
(a) | Certificate of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | 31.1 | ||
(b) | Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | 31.2 | ||
32 | 906 Certifications | |||
(a) | Certificate of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | 32.1 | ||
101 | Interactive Data File | |||
(a) | The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, formatted in XBRL: (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to Consolidated Financial Statements. | 101 |
(Dollars in millions) | Six Months Ended June 30, | Year Ended December 31, | ||||||||||||||||
EARNINGS | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||
Pre-tax income (loss) before adjustment for minority interests in consolidated subsidiaries or income or loss from equity investees | $ | 294 | $ | 406 | $ | 599 | $ | (3 | ) | $ | (365 | ) | $ | 176 | ||||
Add: | ||||||||||||||||||
Amortization of previously capitalized interest | 5 | 8 | 9 | 9 | 8 | 8 | ||||||||||||
Distributed income of equity investees | 21 | 11 | 8 | 4 | 3 | 3 | ||||||||||||
Total additions | 26 | 19 | 17 | 13 | 11 | 11 | ||||||||||||
Deduct: | ||||||||||||||||||
Capitalized interest | 19 | 22 | 31 | 26 | 14 | 23 | ||||||||||||
Minority interest in pre-tax income of consolidated subsidiaries with no fixed charges | 12 | 20 | 9 | 6 | 4 | 11 | ||||||||||||
Total deductions | 31 | 42 | 40 | 32 | 18 | 34 | ||||||||||||
TOTAL EARNINGS (LOSS) | $ | 289 | $ | 383 | $ | 576 | $ | (22 | ) | $ | (372 | ) | $ | 153 | ||||
FIXED CHARGES | ||||||||||||||||||
Interest expense | $ | 187 | $ | 357 | $ | 330 | $ | 316 | $ | 311 | $ | 320 | ||||||
Capitalized interest | 19 | 22 | 31 | 26 | 14 | 23 | ||||||||||||
Amortization of debt discount, premium or expense | 7 | 13 | 14 | 14 | 16 | 17 | ||||||||||||
Interest portion of rental expense (1) | 61 | 121 | 118 | 111 | 105 | 105 | ||||||||||||
Proportionate share of fixed charges of investees accounted for by the equity method | 1 | 1 | 1 | 1 | 1 | 1 | ||||||||||||
TOTAL FIXED CHARGES | $ | 275 | $ | 514 | $ | 494 | $ | 468 | $ | 447 | $ | 466 | ||||||
TOTAL EARNINGS BEFORE FIXED CHARGES | $ | 564 | $ | 897 | $ | 1,070 | $ | 446 | $ | 75 | $ | 619 | ||||||
Preferred Dividends | $ | 15 | $ | 29 | 22 | $ * | $ * | $ * | ||||||||||
Ratio of pre-tax income to net income | 1.37 | 1.86 | 1.48 | * | * | * | ||||||||||||
Preferred Dividend Factor | $ | 21 | $ | 54 | $ | 33 | $ * | $ * | $ * | |||||||||
Total Fixed Charges | 275 | 514 | 494 | 468 | 447 | 466 | ||||||||||||
TOTAL FIXED CHARGES AND PREFERRED DIVIDENDS | $ | 296 | $ | 568 | $ | 527 | $ | 468 | $ | 447 | $ | 466 | ||||||
RATIO OF EARNINGS TO FIXED CHARGES | 2.05 | 1.75 | 2.17 | ** | *** | 1.33 | ||||||||||||
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS | 1.91 | 1.58 | 2.03 | ** | *** | 1.33 |
1. | I have reviewed this quarterly report on Form 10-Q of The Goodyear Tire & Rubber Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ RICHARD J. KRAMER | |
Richard J. Kramer Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of The Goodyear Tire & Rubber Company; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ DARREN R. WELLS | |
Darren R. Wells Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
(1) | the 10-Q Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | the information contained in the 10-Q Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: | July 30, 2013 | /s/ RICHARD J. KRAMER | |
Richard J. Kramer Chairman of the Board, President and Chief Executive Officer The Goodyear Tire & Rubber Company | |||
Dated: | July 30, 2013 | /s/ DARREN R. WELLS | |
Darren R. Wells Executive Vice President and Chief Financial Officer The Goodyear Tire & Rubber Company |
Stock Compensation Plans
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK COMPENSATION PLANS | STOCK COMPENSATION PLANS Our Board of Directors granted 2.1 million stock options and 0.2 million performance share units during the six months ended June 30, 2013 under our stock compensation plans. The weighted average exercise price per share and weighted average fair value per share of the stock option grants during the six months ended June 30, 2013 were $13.01 and $5.97, respectively. We estimated the fair value of the stock options using the following assumptions in our Black-Scholes model: Expected term: 6.25 years Interest rate: 1.04% Volatility: 46.87% Dividend yield: Nil We measure the fair value of grants of performance share units based primarily on the closing market price of a share of our common stock on the date of the grant, modified as appropriate to take into account the features of such grants. The weighted average fair value per share was $13.65 for grants made during the six months ended June 30, 2013. We recognized stock-based compensation expense of $6 million and $8 million during the three and six months ended June 30, 2013, respectively. At June 30, 2013, unearned compensation cost related to the unvested portion of all stock-based awards was approximately $30 million and is expected to be recognized over the remaining vesting period of the respective grants, through June 2017. We recognized stock-based compensation expense of $4 million and $5 million during the three and six months ended June 30, 2012, respectively. Stock based awards are made pursuant to stock compensation plans that are approved by our shareholders. The 2013 Performance Plan was adopted by our shareholders on April 15, 2013 and will expire on April 14, 2023 unless earlier terminated. The 2013 Performance Plan replaced the 2008 Performance Plan, which was terminated on April 15, 2013, except with respect to outstanding awards. |
Financing Arrangements and Derivative Financial Instruments Financing Arrangements and Derivative Financial Instruments (Schedule of Classification of Changes in Fair Values of Foreign Currency Contracts) (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Foreign Currency Cash Flow Derivatives and Hedging Activities [Abstract] | ||||
Amounts deferred to Accumulated Other Comprehensive Loss | $ (3) | $ (10) | $ (7) | $ (2) |
Amount of deferred (gain) loss reclassified from AOCL into CGS | $ 2 | $ (3) | $ 2 | $ (4) |
Consolidated Statements of Comprehensive Income (Parenthetical) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Other Comprehensive Income (Loss): | ||||
Tax on foreign currency translation | $ 0 | $ 0 | $ 0 | $ 0 |
Tax on reclassification adjustment for amounts recognized in income | 0 | 0 | 0 | 0 |
Defined benefit plans: | ||||
Tax on amortization of prior service cost and unrecognized gains and losses included in total benefit cost | 3 | 2 | 7 | 4 |
Tax on decrease in net actuarial losses | 2 | 7 | 2 | 7 |
Tax on immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements and divestitures | 0 | 0 | 0 | 0 |
Tax on prior service cost from plan amendments | 0 | (2) | 0 | (2) |
Tax on deferred derivative gains | 1 | 0 | 1 | 0 |
Tax on reclassification adjustment for amounts recognized in income | 1 | (2) | 1 | (2) |
Tax on unrealized investment gains (losses) | $ 0 | $ 0 | $ 0 | $ 0 |
Other Expense
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Jun. 30, 2013
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
OTHER EXPENSE | OTHER (INCOME) EXPENSE
Net foreign currency exchange gains were $5 million in the second quarter of 2013, compared to net losses of $6 million in the second quarter of 2012. Net losses in the first six months of 2013 were $118 million, which included a net loss of $115 million resulting from the devaluation of the Venezuelan bolivar fuerte against the U.S. dollar, compared to net losses of $17 million in the first six months of 2012. Foreign currency exchange also reflects net gains and losses resulting from the effect of exchange rate changes on various foreign currency transactions worldwide. Effective February 13, 2013, Venezuela's official exchange rate changed from 4.3 to 6.3 bolivares fuertes to the U.S. dollar for substantially all goods. In the first quarter of 2013, we recorded a $115 million remeasurement loss on bolivar-denominated net monetary assets and liabilities, including deferred taxes, primarily related to cash deposits in Venezuela. We also recorded a one-time subsidy receivable of $13 million related to certain U.S. dollar-denominated payables that are expected to be settled at the official subsidy exchange rate of 4.3 bolivares fuertes per U.S. dollar applicable to certain import purchases prior to the devaluation date. A portion of this subsidy will reduce cost of goods sold in future periods when the related inventory is sold. Royalty income in the second quarter of 2013 was $19 million, compared to royalty income of $10 million in the second quarter of 2012. Royalty income in the second quarter of 2013 included a one-time royalty of $8 million related to chemical operations. Royalty income is derived primarily from licensing arrangements related to divested businesses. Financing fees were $14 million in the second quarter of 2013, compared to $34 million in the second quarter of 2012. Financing fees in the second quarter of 2012 included $24 million of debt issuance costs primarily related to the amendment and restatement of our U.S. second lien term loan facility. Financing fees in the first six months of 2013 were $27 million, compared to $129 million in the first six months of 2012. Financing fees in 2012 included, in addition to the second quarter debt issuance costs referred to above, charges of $86 million related to the redemption of $650 million in aggregate principal amount of our outstanding 10.5% senior notes due 2016, of which $59 million related to cash premiums paid on the redemption and $27 million related to the write-off of deferred financing fees and unamortized discount. Financing fees and financial instruments also include the amortization of deferred financing fees, commitment fees and other charges incurred in connection with financing transactions. Interest income consists primarily of amounts earned on cash deposits. General and product liability — discontinued products includes charges for claims against us related primarily to asbestos personal injury claims, net of probable insurance recoveries. Net gains on asset sales were $5 million in the second quarter of 2013, compared to net gains on asset sales of $13 million in the second quarter of 2012. Net gains on asset sales were $3 million for the first six months of 2013, compared to net gains on asset sales of $17 million for the first six months of 2012. Net gains on asset sales in 2013 include gains on the transfer of property in Dalian, China to the Chinese government and the sale of property in North America. Net gains on asset sales in 2012 included a second quarter gain on the sale of a minority interest in a retail business in EMEA and the sale of certain assets related to our bias tire business in Latin America. Miscellaneous expense in the three and six months ended June 30, 2013 includes a charge of $5 million, and in the three and six months ended June 30, 2012 includes a charge of $20 million, related to labor claims in EMEA. |
Costs Associated with Rationalization Programs (Tables)
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Jun. 30, 2013
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Roll-forward liability | The following table shows the roll forward of our liability between periods:
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Net rationalization charges included in Income (Loss) before Income Taxes. | The following table shows net rationalization charges included in Income before Income Taxes:
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Stock Compensation Plans (Details)
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6 Months Ended |
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Jun. 30, 2013
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Share based compensation arrangement by share based payment award fair value assumptions and methodology | |
Expected term (years) | 6 years 3 months |
Interest rate | 1.04% |
Volatility | 46.87% |
Dividend yield | 0.00% |
Commitments and Contingent Liabilities
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Jun. 30, 2013
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COMMITMENTS AND CONTINGENT LIABILITIES | COMMITMENTS AND CONTINGENT LIABILITIES Environmental Matters We have recorded liabilities totaling $44 million and $43 million at June 30, 2013 and December 31, 2012, respectively, for anticipated costs related to various environmental matters, primarily the remediation of numerous waste disposal sites and certain properties sold by us. Of these amounts, $9 million were included in Other Current Liabilities at both June 30, 2013 and December 31, 2012. The costs include legal and consulting fees, site studies, the design and implementation of remediation plans, post-remediation monitoring and related activities, and will be paid over several years. The amount of our ultimate liability in respect of these matters may be affected by several uncertainties, primarily the ultimate cost of required remediation and the extent to which other responsible parties contribute. We have limited potential insurance coverage for future environmental claims. Since many of the remediation activities related to environmental matters vary substantially in duration and cost from site to site and the associated costs for each vary depending on the mix of unique site characteristics, in some cases we cannot reasonably estimate a range of possible losses. Although it is not possible to estimate with certainty the outcome of all of our environmental matters, management believes that potential losses in excess of current reserves for environmental matters, individually and in the aggregate, will not have a material adverse effect on our financial position, cash flows or results of operations. Workers’ Compensation We have recorded liabilities, on a discounted basis, totaling $310 million and $307 million for anticipated costs related to workers’ compensation at June 30, 2013 and December 31, 2012, respectively. Of these amounts, $77 million and $57 million were included in Current Liabilities as part of Compensation and Benefits at June 30, 2013 and December 31, 2012, respectively. The costs include an estimate of expected settlements on pending claims, defense costs and a provision for claims incurred but not reported. These estimates are based on our assessment of potential liability using an analysis of available information with respect to pending claims, historical experience, and current cost trends. The amount of our ultimate liability in respect of these matters may differ from these estimates. We periodically, and at least annually, update our loss development factors based on actuarial analyses. At June 30, 2013 and December 31, 2012, the liability was discounted using a risk-free rate of return. At June 30, 2013, we estimate that it is reasonably possible that the liability could exceed our recorded amounts by approximately $40 million. General and Product Liability and Other Litigation We have recorded liabilities totaling $311 million and $298 million, including related legal fees expected to be incurred, for potential product liability and other tort claims, including asbestos claims, presently asserted against us at June 30, 2013 and December 31, 2012, respectively. Of these amounts, $44 million and $40 million were included in Other Current Liabilities at June 30, 2013 and December 31, 2012, respectively. The amounts recorded were estimated based on an assessment of potential liability using an analysis of available information with respect to pending claims, historical experience and, where available, recent and current trends. Based upon that assessment, at June 30, 2013, we do not believe that estimated reasonably possible losses associated with general and product liability claims in excess of the amounts recorded will have a material adverse effect on our financial position, cash flows or results of operations. However, the amount of our ultimate liability in respect of these matters may differ from these estimates. Asbestos. We are a defendant in numerous lawsuits alleging various asbestos-related personal injuries purported to result from alleged exposure to asbestos in certain products manufactured by us or present in certain of our facilities. Typically, these lawsuits have been brought against multiple defendants in state and Federal courts. To date, we have disposed of approximately 106,400 claims by defending and obtaining the dismissal thereof or by entering into a settlement. The sum of our accrued asbestos-related liability and gross payments to date, including legal costs, by us and our insurers totaled approximately $418 million through June 30, 2013 and $407 million through December 31, 2012. A summary of recent approximate asbestos claims activity follows. Because claims are often filed and disposed of by dismissal or settlement in large numbers, the amount and timing of settlements and the number of open claims during a particular period can fluctuate significantly.
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We periodically, and at least annually, review our existing reserves for pending claims, including a reasonable estimate of the liability associated with unasserted asbestos claims, and estimate our receivables from probable insurance recoveries. We had recorded gross liabilities for both asserted and unasserted claims, inclusive of defense costs, totaling $140 million and $139 million at June 30, 2013 and December 31, 2012, respectively. We recorded a receivable related to asbestos claims of $74 million and $73 million as of June 30, 2013 and December 31, 2012, respectively. We expect that approximately 50% of asbestos claim related losses will be recoverable through insurance during the ten-year period covered by the estimated liability. Of these amounts, $11 million and $10 million was included in Current Assets as part of Accounts Receivable at June 30, 2013 and December 31, 2012, respectively. The recorded receivable consists of an amount we expect to collect under coverage-in-place agreements with certain primary carriers as well as an amount we believe is probable of recovery from certain of our excess coverage insurance carriers. We believe that, at June 30, 2013, we had approximately $160 million in limits of excess level policies potentially applicable to indemnity and defense costs for asbestos products claims. We also had coverage under certain primary policies for indemnity and defense costs for asbestos products claims under remaining aggregate limits, as well as coverage for indemnity and defense costs for asbestos premises claims on a per occurrence basis pursuant to a coverage-in-place agreement. With respect to both asserted and unasserted claims, it is reasonably possible that we may incur a material amount of cost in excess of the current reserve; however, such amounts cannot be reasonably estimated. Coverage under insurance policies is subject to varying characteristics of asbestos claims including, but not limited to, the type of claim (premise vs. product exposure), alleged date of first exposure to our products or premises and disease alleged. Depending upon the nature of these characteristics, as well as the resolution of certain legal issues, some portion of the insurance may not be accessible by us. Other Actions. We are currently a party to various claims and legal proceedings in addition to those noted above. If management believes that a loss arising from these matters is probable and can reasonably be estimated, we record the amount of the loss, or the minimum estimated liability when the loss is estimated using a range, and no point within the range is more probable than another. As additional information becomes available, any potential liability related to these matters is assessed and the estimates are revised, if necessary. Based on currently available information, management believes that the ultimate outcome of these matters, individually and in the aggregate, will not have a material adverse effect on our financial position or overall trends in results of operations. Our recorded liabilities and estimates of reasonably possible losses for the contingent liabilities described above are based on our assessment of potential liability using the information available to us at the time and, where applicable, any past experience and recent and current trends with respect to similar matters. Our contingent liabilities are subject to inherent uncertainties, and unfavorable judicial or administrative decisions could occur which we did not anticipate. Such an unfavorable decision could include monetary damages, fines or other penalties or an injunction prohibiting us from taking certain actions or selling certain products. If such an unfavorable decision were to occur, it could result in a material adverse impact on our financial position and results of operations in the period in which the decision occurs, or in future periods. Income Tax and Other Tax Matters The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize liabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is unnecessary, we reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary. We also recognize income tax benefits to the extent that it is more likely than not that our positions will be sustained when challenged by the taxing authorities. We derecognize income tax benefits when based on new information we determine that it is no longer more likely than not that our position will be sustained. To the extent we prevail in matters for which liabilities have been established, or determine we need to derecognize tax benefits recorded in prior periods, our results of operations and effective tax rate in a given period could be materially affected. An unfavorable tax settlement would require use of our cash, and lead to recognition of expense to the extent the settlement amount exceeds recorded liabilities and, in the case of an income tax settlement, result in an increase in our effective tax rate in the period of resolution. A favorable tax settlement would be recognized as a reduction of expense to the extent the settlement amount is lower than recorded liabilities and, in the case of an income tax settlement, would result in a reduction in our effective tax rate in the period of resolution. While the Company applies consistent transfer pricing policies and practices globally, supports transfer prices through economic studies, seeks advance pricing agreements and joint audits to the extent possible and believes its transfer prices to be appropriate, such transfer prices, and related interpretations of tax laws, are occasionally challenged by various taxing authorities globally. We have received various tax assessments challenging our interpretations of applicable tax laws in various jurisdictions. Although we believe we have complied with applicable tax laws, have strong positions and defenses and have historically been successful in defending such claims, our results of operations could be materially adversely affected in the case we are unsuccessful in the defense of existing or future claims. In September 2011, the State of Sao Paulo, Brazil issued an assessment to us for allegedly improperly taking tax credits for value-added taxes paid to a supplier of natural rubber during the period from January 2006 to August 2008. The assessment, including interest and penalties, totals 92 million Brazilian real (approximately $41 million). We have filed a response contesting this assessment and are defending the matter. In the event we are unsuccessful in defending the assessment, our results of operations could be materially affected. We also received assessments from the State of Sao Paulo, Brazil in December 2010 for allegedly improperly taking tax credits for value-added taxes paid to other suppliers of natural rubber during the period from January 2006 to October 2009. These assessments, including interest and penalties, totaled 88 million Brazilian real (approximately $39 million). In the second quarter of 2013, we paid 51 million Brazilian real ($23 million) pursuant to a special payment program offered by the State of Sao Paulo in satisfaction of the December 2010 assessments, which approximated the previously recorded reserve. Guarantees We have off-balance sheet financial guarantees and other commitments totaling approximately $21 million at June 30, 2013, compared to $45 million at December 31, 2012, primarily related to our obligations in connection with the financing of the construction of our new Global and North America Headquarters facility. In addition, we will from time to time issue guarantees to financial institutions or other entities on behalf of certain of our affiliates, lessors or customers. Normally there is no separate premium received by us as consideration for the issuance of guarantees. We also generally do not require collateral in connection with the issuance of these guarantees. If our performance under these guarantees is triggered by non-payment or another specified event, we would be obligated to make payment to the financial institution or the other entity, and would typically have recourse to the affiliate, lessor or customer. The guarantees expire at various times through 2023. We are unable to estimate the extent to which our affiliates’, lessors’ or customers’ assets would be adequate to recover any payments made by us under the related guarantees. |
Financing Arrangements and Derivative Financial Instruments Financing Arrangements and Derivative Financial Instruments (Senior Notes - Narrative) (Details) (6.5% Notes due 2021, USD $)
In Millions, unless otherwise specified |
6 Months Ended |
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Jun. 30, 2013
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Debt Instrument [Line Items] | |
Debt Instrument, Issuance Date | Feb. 25, 2013 |
Debt Instrument, Face Amount | $ 900 |
Debt Instrument, Interest Rate, Stated Percentage | 6.50% |
Notes sold at as a percentage of principle amount | 100.00% |
Debt Instrument, Maturity Date | Mar. 01, 2021 |
Percent of Notes That May Be Redeemed With Certain Equity Offerings | 35.00% |
Debt Instrument, Restrictive Covenants | The terms of the indenture for these notes, among other things, limit our ability and the ability of certain of our subsidiaries to (i) incur additional debt or issue redeemable preferred stock, (ii) pay dividends or make certain other restricted payments or investments, (iii) incur liens, (iv) sell assets, (v) incur restrictions on the ability of our subsidiaries to pay dividends to us, (vi) enter into affiliate transactions, (vii) engage in sale and leaseback transactions, and (viii) consolidate, merge, sell or otherwise dispose of all or substantially all of our assets. These covenants are subject to significant exceptions and qualifications. For example, if these notes are assigned an investment grade rating by Moody's and Standard & Poor's and no default has occurred or is continuing, certain covenants will be suspended. |
Period Commencing March 1, 2016 [Domain]
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Debt Instrument [Line Items] | |
Redemption Price In Percentage | 104.875% |
Redemption Price In Percentage With Proceeds Of Certain Equity Offerings | 106.50% |
Period Commencing March 1, 2017 [Domain]
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Debt Instrument [Line Items] | |
Redemption Price In Percentage | 103.25% |
Period Commencing March 1, 2018 [Domain]
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Debt Instrument [Line Items] | |
Redemption Price In Percentage | 101.625% |
Period Commencing March 1, 2019 [Domain]
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Debt Instrument [Line Items] | |
Redemption Price In Percentage | 100.00% |
Period Prior to March 1, 2016 [Member]
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Debt Instrument [Line Items] | |
Redemption Price In Percentage Plus A Make-Whole Premium | 100.00% |
Stock Compensation Plans (Details) (Textual) (USD $)
In Millions, except Per Share data, unless otherwise specified |
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Stock Compensation Plans (Textuals) [Abstract] | ||||
Weighted average exercise price per share | $ 13.01 | |||
Weighted average fair value per share for the stock, other than option | $ 13.65 | |||
Weighted average fair value per share for the stock options | $ 5.97 | |||
Stock-based compensation expense recognized | $ 6 | $ 4 | $ 8 | $ 5 |
Unearned compensation cost related to the unvested portion of all stock-based awards | $ 30 | $ 30 | ||
Performance Plan 2008
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options granted | 2.1 | |||
Granted, other than options | 0.2 |
Business Segments (Tables)
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Jun. 30, 2013
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Segment Reporting Information |
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Rationalizations, Asset sales, Other Expense and Asset write-offs and accelerated depreciation attributable to the SBUs | Rationalizations, as described in Note 2, Costs Associated with Rationalization Programs, net (gains) losses on asset sales, as described in Note 3, Other (Income) Expense, and asset write-offs and accelerated depreciation are not (credited) charged to the strategic business units (“SBUs”) for performance evaluation purposes, but were attributable to the SBUs as follows:
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Earning Per Share (Tables)
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Jun. 30, 2013
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basic and Diluted Earnings per common share | Basic and diluted earnings per common share are calculated as follows:
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Financing Arrangements and Derivative Financial Instruments (Schedule of Amounts Due Within One Year) (Details) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
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Dec. 31, 2012
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Notes payable and overdrafts long term debt and capital leases due with in one year and short term financing arrangements | ||
Notes Payable and Overdrafts | $ 79 | $ 102 |
Long term debt and capital leases due within one year: | ||
Other domestic and international debt (including capital leases) | 125 | 96 |
Total obligations due within one year | $ 204 | $ 198 |
Notes payable and overdrafts
|
||
Notes payable and overdrafts long term debt and capital leases due with in one year and short term financing arrangements | ||
Weighted Average Interest Rate | 4.36% | 4.29% |
Long term debt and capital leases due within one year
|
||
Long term debt and capital leases due within one year: | ||
Weighted average interest rate | 6.76% | 6.88% |
Consolidating Financial Information (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Consolidating Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidating Balance Sheet |
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Consolidating Statement of Operations |
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Consolidating Statement of Cash Flows |
|
Income Taxes (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Dec. 31, 2012
|
|
Income Taxes (Textuals) [Abstract] | |||||
Tax expense | $ 63 | $ 63 | $ 82 | $ 111 | |
Income before income taxes | 256 | 166 | 306 | 222 | |
Unfavorable impact of prior year tax | 5 | ||||
Favorable tax impact due to law change | 4 | ||||
Tax contingencies recognized | 3 | 3 | 6 | ||
Unrecognized tax benefits | 82 | ||||
Favorable impact of unrecognized tax benefits if recognized | 70 | ||||
Accrued interest | 20 | ||||
Unsettled unrecognized tax benefits that would require cash | $ 24 |
Financing Arrangements and Derivative Financial Instruments (Credit Facilities and Other Domestic Debt - Narrative) (Details)
In Millions, unless otherwise specified |
6 Months Ended | 6 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
USD ($)
|
Dec. 31, 2012
USD ($)
|
Jun. 30, 2013
First Lien Revolving Credit Facility Due 2017
USD ($)
|
Dec. 31, 2012
First Lien Revolving Credit Facility Due 2017
USD ($)
|
Jun. 30, 2013
Second Lien Term Loan Facility Due 2019
USD ($)
|
Dec. 31, 2012
Second Lien Term Loan Facility Due 2019
USD ($)
|
Jun. 30, 2013
Pan-European accounts receivable facility due 2015
EUR (€)
|
Jun. 30, 2013
Australia Accounts Receivable Securitization Facility [Member]
USD ($)
|
Jun. 30, 2013
Australia Accounts Receivable Securitization Facility [Member]
AUD
|
Jun. 30, 2013
Australia Accounts Receivable Securitization Facility [Member]
USD ($)
|
Jun. 30, 2013
Australia Accounts Receivable Securitization Facility [Member]
AUD
|
Dec. 31, 2012
Australia Accounts Receivable Securitization Facility [Member]
USD ($)
|
Jun. 30, 2013
Chinese credit facilities
USD ($)
|
Dec. 31, 2012
Chinese credit facilities
USD ($)
|
Jun. 30, 2013
Revolving Credit Facility Due 2016 Member
USD ($)
|
Dec. 31, 2012
Revolving Credit Facility Due 2016 Member
USD ($)
|
Dec. 31, 2012
Revolving Credit Facility Due 2016 Member
EUR (€)
|
Jun. 30, 2013
Revolving Credit Facility Due 2016 Member
EUR (€)
|
Jun. 30, 2013
German Tranche [Member]
USD ($)
|
Jun. 30, 2013
German Tranche [Member]
EUR (€)
|
Dec. 31, 2012
German Tranche [Member]
USD ($)
|
Dec. 31, 2012
German Tranche [Member]
EUR (€)
|
Jun. 30, 2013
All borrower tranche Member
USD ($)
|
Jun. 30, 2013
All borrower tranche Member
EUR (€)
|
Dec. 31, 2012
All borrower tranche Member
USD ($)
|
Dec. 31, 2012
All borrower tranche Member
EUR (€)
|
Jun. 30, 2013
Pan-European accounts receivable facility due 2015
USD ($)
|
Jun. 30, 2013
Pan-European accounts receivable facility due 2015
EUR (€)
|
Dec. 31, 2012
Pan-European accounts receivable facility due 2015
USD ($)
|
Dec. 31, 2012
Pan-European accounts receivable facility due 2015
EUR (€)
|
Jun. 30, 2013
Global And North American Tire Headquarters
USD ($)
|
|
Line of Credit Facility [Line Items] | |||||||||||||||||||||||||||||||
Line of Credit Facility, Amount Outstanding | $ 0 | $ 0 | $ 1,194 | $ 1,194 | $ 57 | $ 57 | $ 40 | $ 531 | $ 471 | $ 0 | $ 0 | $ 0 | € 0 | $ 0 | € 0 | $ 0 | € 0 | $ 345 | € 265 | $ 192 | € 145 | ||||||||||
Line of Credit Facility, Current Borrowing Capacity | 57 | 57 | 99 | 345 | 265 | 348 | 264 | ||||||||||||||||||||||||
Line of Credit Facility, Maximum Borrowing Capacity | 2,000 | 1,200 | 450 | 87 | 95 | 87 | 95 | 400 | 100 | 300 | |||||||||||||||||||||
Line of Credit Facility, Borrowing Capacity, Description | Availability under the facility is subject to a borrowing base, which is based primarily on eligible accounts receivable and inventory of The Goodyear Tire & Rubber Company and certain of its U.S. and Canadian subsidiaries. To the extent that our eligible accounts receivable and inventory decline, our borrowing base will decrease and the availability under the facility may decrease below $2.0 billion. | ||||||||||||||||||||||||||||||
Line of Credit Facility, Interest Rate Description | Amounts drawn under this facility will bear interest at LIBOR plus 150 basis points. | The term loan bears interest at LIBOR plus 375 basis points, subject to a minimum LIBOR rate of 100 basis points. | Amounts drawn under this facility will bear interest at LIBOR plus 250 basis points for loans denominated in U.S. dollars or pounds sterling and EURIBOR plus 250 basis points for loans denominated in euros. | ||||||||||||||||||||||||||||
Line of Credit Facility, Borrowing Base Amount Below Stated Amount | 459 | ||||||||||||||||||||||||||||||
Line Of Credit Additional Borrowing Capacity Which May Be Requested From Lenders | 250 | 300 | |||||||||||||||||||||||||||||
Letters of Credit Outstanding, Amount | 394 | 407 | 10 | 7 | 10 | 7 | |||||||||||||||||||||||||
Sublimit on letter of credit | 800 | 50 | |||||||||||||||||||||||||||||
Debt Instrument, Collateral | Availability under this facility is based on eligible receivable balances. | Availability under this program is based on eligible receivable balances. | Availability under this program is based on eligible receivable balances. | The receivables sold under this program also serve as collateral for the related facility. | The receivables sold under this program also serve as collateral for the related facility. | ||||||||||||||||||||||||||
Off-balance Sheet Accounts Receivable Securitization | 282 | 243 | |||||||||||||||||||||||||||||
Restricted cash related to funds obtained under credit facilities | 32 | 0 | |||||||||||||||||||||||||||||
Agreement Period For Occupying Facility | 27 years | ||||||||||||||||||||||||||||||
Head quarters Estimated Financing Liability | 150 | ||||||||||||||||||||||||||||||
Total long term debt excluding capital leases | $ 6,383 | $ 4,926 | $ 345 | $ 192 |
Commitments and Contingent Liabilities Commitments and Contingent Liabilities (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number Of Claims Filed | A summary of recent approximate asbestos claims activity follows. Because claims are often filed and disposed of by dismissal or settlement in large numbers, the amount and timing of settlements and the number of open claims during a particular period can fluctuate significantly.
________________________________
|
Reclassifications out of Accumulated Other Comprehensive Loss Reclassifications out of Accumulated Other Comprehensive Income (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Reclassifications out of Accumulated Other Comprehensive Loss [Line Items] | ||||
Tax Expense | $ (63) | $ (63) | $ (82) | $ (111) |
Net (Income) Loss Attributable to Minority Shareholders | (5) | (11) | (3) | (23) |
Goodyear Net (Income) Loss | (188) | (92) | (221) | (88) |
Reclassification Out of Accumulated Other Comprehensive Income [Member]
|
||||
Reclassifications out of Accumulated Other Comprehensive Loss [Line Items] | ||||
Goodyear Net (Income) Loss | 59 | 119 | ||
Reclassification Out of Accumulated Other Comprehensive Income [Member] | Foreign Currency Translation Adjustment
|
||||
Reclassifications out of Accumulated Other Comprehensive Loss [Line Items] | ||||
Other Expense, net of tax and minority shareholders' equity | 0 | 1 | ||
Tax Expense | 0 | 0 | ||
Net (Income) Loss Attributable to Minority Shareholders | 0 | 0 | ||
Reclassification Out of Accumulated Other Comprehensive Income [Member] | Amortization of prior service cost and unrecognized gains and losses [Member]
|
||||
Reclassifications out of Accumulated Other Comprehensive Loss [Line Items] | ||||
Total benefit cost, net of tax and minority shareholders' equity | 57 | 116 | ||
Tax Expense | 3 | 7 | ||
Net (Income) Loss Attributable to Minority Shareholders | 2 | 4 | ||
Reclassification Out of Accumulated Other Comprehensive Income [Member] | Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments, settlements and divestitures [Member]
|
||||
Reclassifications out of Accumulated Other Comprehensive Loss [Line Items] | ||||
Total benefit cost, net of tax and minority shareholders' equity | 1 | 1 | ||
Tax Expense | 0 | 0 | ||
Net (Income) Loss Attributable to Minority Shareholders | 0 | 0 | ||
Reclassification Out of Accumulated Other Comprehensive Income [Member] | Unrecognized Net Actuarial Losses and Prior Service Costs
|
||||
Reclassifications out of Accumulated Other Comprehensive Loss [Line Items] | ||||
Total benefit cost, net of tax and minority shareholders' equity | 58 | 117 | ||
Reclassification Out of Accumulated Other Comprehensive Income [Member] | Deferred Derivative Gains (Losses)
|
||||
Reclassifications out of Accumulated Other Comprehensive Loss [Line Items] | ||||
Cost of Goods Sold, Net of Tax and Minority Interest | 1 | 1 | ||
Tax Expense | 1 | 1 | ||
Net (Income) Loss Attributable to Minority Shareholders | $ 0 | $ 0 |
Other Expense (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expense |
|
Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Current Assets: | ||
Allowance on accounts receivable | $ 100 | $ 99 |
Accumulated depreciation | $ 9,060 | $ 8,991 |
Goodyear Shareholders' Equity: | ||
Preferred stock, authorized | 50,000,000 | 50,000,000 |
Mandatory convertible preferred stock, outstanding | 10,000,000 | 10,000,000 |
Mandatory convertible preferred stock, liquidation preference | $ 50.00 | $ 50.00 |
Common stock, authorized | 450,000,000 | 450,000,000 |
Common stock, outstanding shares | 246,000,000 | 245,000,000 |
Treasury shares | 5,000,000 | 6,000,000 |
Accounting Policies
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ACCOUNTING POLICIES | ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared by The Goodyear Tire & Rubber Company (the “Company,” “Goodyear,” “we,” “us” or “our”) in accordance with Securities and Exchange Commission rules and regulations and generally accepted accounting principles in the United States of America ("US GAAP") and in the opinion of management contain all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2012 (the “2012 Form 10-K”). We are a party to shareholder agreements concerning certain of our less-than-wholly-owned consolidated subsidiaries. Under the terms of certain of these agreements, the minority shareholders have the right to require us to purchase their ownership interests in the respective subsidiaries if there is a change in control of Goodyear, a bankruptcy of Goodyear, or other circumstances. Accordingly, we have reported the minority equity in those subsidiaries outside of shareholders’ equity. Operating results for the three and six months ended June 30, 2013 are not necessarily indicative of the results expected in subsequent quarters or for the year ending December 31, 2013. Recently Issued Accounting Standards In July 2013, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update requiring the presentation of an unrecognized tax benefit in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryfoward. This net presentation is required unless a net operating loss carryforward, a similar tax loss, or a tax credit carryfoward is not available at the reporting date or the tax law of the jurisdiction does not require, and the entity does not intend to use, the deferred tax asset to settle any additional income tax that would result from the disallowance of the unrecognized tax benefit. The standards update is effective for fiscal years beginning after December 15, 2013, with early adoption permitted. The adoption of this standards update will not have a material impact on our consolidated financial statements. In March 2013, the FASB issued an accounting standards update providing guidance with respect to the release of cumulative translation adjustments into net income when a parent sells either a part or all of its investment in a foreign entity. The standards update also requires the release of cumulative translation adjustments when a company no longer holds a controlling financial interest in a subsidiary or group of assets that is a business within a foreign entity, and provides guidance for the acquisition in stages of a controlling interest in a foreign entity. The standards update is effective for fiscal years beginning after December 15, 2013, with early adoption permitted. The adoption of this standards update will not have a material impact on our consolidated financial statements. In February 2013, the FASB issued an accounting standards update requiring an entity to record obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date. The standards update is effective for fiscal years beginning after December 15, 2013, with early adoption permitted. The adoption of this standards update will not have a material impact on our consolidated financial statements. In July 2012, the FASB issued an accounting standards update with new guidance on annual impairment testing of indefinite-lived intangible assets. The standards update allows an entity to first assess qualitative factors to determine if it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount. If based on its qualitative assessment an entity concludes it is more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, quantitative impairment testing is required. However, if an entity concludes otherwise, quantitative impairment testing is not required. The standards update is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. We assess goodwill and intangible assets with indefinite useful lives for impairment annually as of July 31. The adoption of this standards update will not have an impact on our consolidated financial statements. Recently Adopted Accounting Standards Effective January 1, 2013, we adopted an accounting standards update with new guidance on the presentation of reclassifications from accumulated other comprehensive loss to net income. This standard requires an entity to present reclassifications from accumulated other comprehensive loss to net income either on the face of the statements or in the notes to the consolidated financial statements. Accordingly, we have presented such reclassifications in Note 14, Reclassifications Out Of Accumulated Other Comprehensive Loss, to the consolidated financial statements. Effective January 1, 2013, we adopted accounting standards updates with new guidance on disclosures related to financial instruments and derivative instruments that are either offset by or subject to an enforceable master netting arrangement or similar agreement and have expanded our disclosure to discuss amounts eligible for offsetting under our master netting agreements. Reclassifications and Adjustments Certain items previously reported in specific financial statement captions have been reclassified to conform to the current presentation. In the first quarter of 2012, we recorded an out of period adjustment of $13 million of additional interest expense to correct capitalized interest recorded in prior periods. |
Income Taxes
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6 Months Ended |
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Jun. 30, 2013
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Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES In the second quarter of 2013, we recorded tax expense of $63 million on income before income taxes of $256 million. Income tax expense in the second quarter of 2013 was unfavorably impacted by a $5 million adjustment related to prior years and a $3 million settlement of a foreign tax audit. For the first six months of 2013, we recorded tax expense of $82 million on income before income taxes of $306 million. Income tax expense for the first six months of 2013 was favorably impacted by $4 million due primarily to recently enacted law changes. In the second quarter of 2012, we recorded tax expense of $63 million on income before income taxes of $166 million. Income tax expense in the second quarter of 2012 was unfavorably impacted by $3 million due to various discrete items. For the first six months of 2012, we recorded tax expense of $111 million on income before income taxes of $222 million. Income tax expense for the first six months 2012 was unfavorably impacted by $6 million due primarily to the settlement of prior tax years. We record taxes based on overall estimated annual effective tax rates. In addition to the discrete items noted above, the difference between our effective tax rate and the U.S. statutory rate was primarily attributable to continuing to maintain a full valuation allowance against our net Federal, State and certain foreign jurisdictions' deferred tax assets. At January 1, 2013, we had unrecognized tax benefits of $82 million that if recognized, would have a favorable impact on our tax expense of $70 million. We had accrued interest of $20 million as of January 1, 2013. If not favorably settled, $24 million of the unrecognized tax benefits and all of the accrued interest would require the use of our cash. It is reasonably possible that our total amount of unrecognized tax benefits may change during the next 12 months. However, we do not expect these changes to have a significant impact on our financial position or results of operations. Generally, years from 2007 onward are still open to examination by foreign taxing authorities. We are open to examination in Germany from 2006 onward and in the United States for 2012. |
Costs Associated with Rationalization Programs
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Jun. 30, 2013
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Restructuring and Related Activities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
COSTS ASSOCIATED WITH RATIONALIZATION PROGRAMS | COSTS ASSOCIATED WITH RATIONALIZATION PROGRAMS In order to maintain our global competitiveness, we have implemented rationalization actions over the past several years to reduce high-cost manufacturing capacity and associate headcount. The following table shows the roll forward of our liability between periods:
Rationalization actions initiated in 2013 consisted primarily of manufacturing reductions in Europe, Middle East and Africa (“EMEA”) and Latin America and selling, administrative and general expense (“SAG”) headcount reductions in Asia Pacific and EMEA. The accrual balance of $222 million at June 30, 2013 is expected to be substantially utilized within the next 12 months and includes $168 million relating to plans associated with the announced closure of one of our manufacturing facilities in Amiens, France. The following table shows net rationalization charges included in Income before Income Taxes:
Substantially all of the new charges for the three and six months ended June 30, 2013 and 2012 related to future cash outflows. Net charges for the three and six months ended June 30, 2013 included reversals of $4 million and $7 million, respectively, and net charges for the three and six months ended June 30, 2012 included reversals of $1 million and $2 million, respectively, for actions no longer needed for their originally intended purposes. Approximately 200 associates will be released under plans initiated in 2013, of which approximately 100 associates have been released as of June 30, 2013. In total, approximately 1,600 associates remain to be released under prior year rationalization plans, including approximately 1,200 associates related to the announced plan to exit the farm tire business and close one of our facilities in Amiens, France. Accelerated depreciation charges for the three and six months ended June 30, 2013 related primarily to property and equipment in one of our facilities in Amiens, France. Accelerated depreciation charges for the three and six months ended June 30, 2012 were primarily related to property and equipment in our Dalian, China manufacturing facility. Accelerated depreciation charges for all periods were recorded in cost of goods sold (“CGS”). |
Financing Arrangements and Derivative Financial Instruments (Tables)
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Jun. 30, 2013
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Financing Arrangements and Derivative Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes payable and overdrafts, long term debt and capital leases due with in one year and short term financing arrangements | The following table presents amounts due within one year:
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Long term debt and capital leases, net of unamortized discounts and interest rates | The following table presents long term debt and capital leases, net of unamortized discounts, and interest rates:
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Schedule of foreign exchange contracts not designated as hedging instruments statement of financial position | The following table presents fair values for foreign currency contracts not designated as hedging instruments:
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Schedule of foreign exchange contracts designated as cash flow hedging Instruments statement of financial position | The following table presents fair values for foreign currency contracts designated as cash flow hedging instruments:
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Schedule of Derivative Instruments, (Gain) Loss in Statement of Financial Performance | The following table presents the classification of changes in fair values of foreign currency contracts designated as cash flow hedging instruments (before tax and minority):
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Changes in Shareholders' Equity (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes In Shareholders' Equity | The following tables present the changes in shareholders’ equity for the six months ended June 30, 2013 and 2012:
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Changes in Minority Equity presented outside of Shareholders' Equity | The following table presents changes in Minority Equity presented outside of Shareholders’ Equity:
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Costs Associated with Rationalization Programs (Details 1) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Restructuring Reserve [Roll Forward] | ||||
Beginning Balance | $ 252 | |||
New charges | 27 | |||
Incurred | (50) | |||
Reversed to the statement of operations | (4) | (1) | (7) | (2) |
Ending Balance | 222 | 222 | ||
Associate Related Costs
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Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Reserve, Translation Adjustment | (3) | |||
Restructuring Reserve [Roll Forward] | ||||
Beginning Balance | 229 | |||
New charges | 14 | |||
Incurred | (32) | |||
Reversed to the statement of operations | (3) | |||
Ending Balance | 208 | 208 | ||
Other Exit Costs And Noncancelable Lease Costs
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Restructuring Cost and Reserve [Line Items] | ||||
Restructuring Reserve, Translation Adjustment | (1) | |||
Restructuring Reserve [Roll Forward] | ||||
Beginning Balance | 23 | |||
New charges | 13 | |||
Incurred | (18) | |||
Reversed to the statement of operations | (4) | |||
Ending Balance | $ 14 | $ 14 |
Pension Savings And Other Postretirement Benefit Plans (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 6 Months Ended | 1 Months Ended | 3 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 6 Months Ended | 3 Months Ended | |||||||||||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Mar. 31, 2013
Frozen United States Pension Plans of US Entity, Defined Benefit [Member]
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Feb. 28, 2013
Frozen United States Pension Plans of US Entity, Defined Benefit [Member]
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Dec. 31, 2012
Frozen United States Pension Plans of US Entity, Defined Benefit [Member]
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Jun. 30, 2013
U.S.
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Jun. 30, 2012
U.S.
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Jun. 30, 2013
U.S.
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Jun. 30, 2012
U.S.
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Jun. 30, 2013
Foreign Pension Plans, Defined Benefit
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Jun. 30, 2012
Foreign Pension Plans, Defined Benefit
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Jun. 30, 2013
Foreign Pension Plans, Defined Benefit
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Jun. 30, 2012
Foreign Pension Plans, Defined Benefit
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Aug. 31, 2012
Canadian Other Postretirement Benefit Plans, Change in Benefit Obligation [Member]
Other Postretirement Benefit Plans, Defined Benefit [Member]
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Aug. 31, 2012
U.S. Other Postretirement Benefit Plans, Change in Benefit Obligation [Member]
Other Postretirement Benefit Plans, Defined Benefit [Member]
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Jun. 30, 2013
Required Contributions [Member]
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Mar. 31, 2013
Required Contributions [Member]
Frozen United States Pension Plans of US Entity, Defined Benefit [Member]
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Mar. 31, 2013
Discretionary Contributions [Member]
Frozen United States Pension Plans of US Entity, Defined Benefit [Member]
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Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | ||||||||||||||||||||
Service cost- benefits earned during the period | $ 12 | $ 10 | $ 23 | $ 20 | $ 10 | $ 7 | $ 20 | $ 15 | ||||||||||||
Interest cost on projected benefit obligation | 60 | 65 | 121 | 131 | 32 | 35 | 65 | 70 | ||||||||||||
Expected return on plan assets | (84) | (75) | (168) | (150) | (28) | (29) | (56) | (59) | ||||||||||||
Amortization of prior service cost | 5 | 6 | 9 | 12 | 1 | 1 | 1 | 1 | ||||||||||||
Amortization of net losses | 50 | 43 | 103 | 89 | 14 | 11 | 30 | 23 | ||||||||||||
Net periodic pension cost | 29 | 25 | 60 | 50 | ||||||||||||||||
Curtailments/settlements/termination benefits | 2 | 0 | 2 | 0 | ||||||||||||||||
Total defined benefit pension cost | 43 | 49 | 88 | 102 | 31 | 25 | 62 | 50 | ||||||||||||
Pension Savings and Other Postretirement Benefit Plans (Textuals) [Abstract] | ||||||||||||||||||||
Contributions to pension plans | 50 | 918 | 26 | 56 | 34 | 834 | ||||||||||||||
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), Net Gains (Losses), before Tax | 93 | |||||||||||||||||||
Defined Benefit Plan, Assumptions Used Calculating Benefit Obligation, Discount Rate | 3.82% | 3.61% | ||||||||||||||||||
Defined Benefit Plan, Assumptions Used Calculating Net Periodic Benefit Cost, Expected Long-term Return on Assets | 4.75% | |||||||||||||||||||
Defined Benefit Plan, Fair Value of Plan Assets | 2,072 | |||||||||||||||||||
Expected Current Year Contributions To Funded Pension Plans, Minimum | 275 | |||||||||||||||||||
Expected Current Year Contributions To Funded Pension Plans, Maximum | 325 | |||||||||||||||||||
Expense recognized for contributions to defined savings plans | 23 | 23 | 49 | 50 | ||||||||||||||||
Postretirement benefit cost (credit) | (2) | 0 | (4) | 3 | ||||||||||||||||
Defined Benefit Plan, Benefit Obligation | $ 18 | $ 56 |