Goodyear Sets Sales Records in Fourth Quarter, Full-Year 2007

The Goodyear Tire & Rubber Company, Akron, Ohio, USA. (PRNewsFoto/Goodyear Tire & Rubber Company)

AKRON, OH UNITED STATES

AKRON, Ohio, Feb. 14 /PRNewswire-FirstCall/ –

— Quarterly sales up 11% to $5.2 billion, full-year sales up 5% to
$19.6 billion

— International tire businesses set all-time sales records for quarter,
year

— Fourth quarter income from continuing operations of $61 million,
27 cents per share

— Cost savings programs on target, more than $1 billion achieved to date

— Substantial reduction in net debt and legacy obligations in 2007

— New product engine provides top-line growth opportunities

— On track to achieve next stage financial metrics

The Goodyear Tire & Rubber Company (NYSE: GT) today reported record
sales for the fourth quarter and the full year of 2007.

(Logo: http://www.newscom.com/cgi-bin/prnh/20050204/GTLOGO )

Goodyear’s fourth quarter 2007 sales were $5.2 billion, an 11 percent
increase compared with the 2006 quarter, offsetting lower volumes with
higher prices and a richer product mix. The company estimates that a
12-week strike at its North American facilities in 2006 reduced fourth
quarter 2006 sales by $318 million.

Improved pricing and product mix drove revenue per tire up 10 percent
over the 2006 quarter. Lower volumes reflect weak winter tire sale demand
in Europe and the company’s exit from certain segments of the private label
tire business in North America along with weak conditions in several key
markets.

“Our fourth quarter results show significant gains as we drive sales of
our higher-margin premium product lines,” said Robert J. Keegan, chairman
and chief executive officer.

“This is especially true in our emerging markets businesses in Eastern
Europe, Asia and Latin America. In aggregate, these three businesses grew
sales 20 percent and segment operating income 41 percent in the quarter,”
he said.

“Excluding the impact of the strike, North American Tire’s focus on
innovative new products helped it achieve its highest full-year segment
operating income since 2000,” he said. “Our new product engine will provide
additional growth opportunities in 2008 and beyond.”

Goodyear made further progress during the fourth quarter on its plan to
achieve $1.8 billion to $2 billion in gross cost savings by the end of
2009. “We have now achieved more than $1 billion in savings in 2006 and
2007 and clearly remain on target to reach our four-year goal,” Keegan
said.

“During 2007, we also made substantial progress on improving our
balance sheet with net debt decreasing more than $2 billion,” he said. “We
remain on track to achieve our next stage financial metrics, which include
an 8 percent segment operating income return on sales globally, a 5 percent
segment operating income return on sales in North America and a target of
2.5 times debt-to-EBITDA.”

Fourth quarter segment operating income was $313 million in 2007. This
compares to a segment operating loss of $86 million in the strike-impacted
2006 period.

Segment operating income benefited from improved pricing and product
mix of $119 million in the fourth quarter of 2007, which more than offset
increased raw material costs of $8 million.

Favorable foreign currency translation positively impacted sales by
$315 million and segment operating income by $45 million in the quarter.

Gross margin was 19.4 percent for the 2007 quarter compared to 11.3
percent in last year’s strike-impacted quarter.

Fourth quarter 2007 income from continuing operations was $61 million
(27 cents per share). This compares to a loss of $310 million ($1.74 per
share) in the strike-impacted fourth quarter of 2006.

Including discontinued operations, Goodyear had fourth quarter net
income of $52 million (23 cents per share), compared to a net loss of $358
million ($2.02 per share) last year. All per share amounts are diluted.

The 2007 fourth quarter included $26 million (11 cents per share) in
after-tax rationalization and accelerated depreciation, after-tax losses on
asset sales of $19 million (8 cents per share), after-tax financing fees of
$17 million (7 cents per share) related to debt conversion and reduced tax
expense of $11 million (4 cents per share) due to a tax law change.

The 2006 fourth quarter included the strike impact of $313 million
($1.77 per share); $184 million ($1.03 per share) in after-tax charges for
rationalization, accelerated depreciation and asset write-offs principally
related to plant closures; and a gain of $153 million (86 cents per share)
related to the favorable resolution of a tax contingency.

See the table at the end of this release for a list of significant
items impacting continuing operations from the 2007 and 2006 fourth
quarters.

Business Segments

All four of the company’s tire businesses outside of North America
achieved all-time record sales during the 2007 fourth quarter.

Segment operating income for the Latin America, Asia Pacific and
Eastern Europe, Middle East and Africa units were fourth quarter records.

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

North American Tire Fourth Quarter Twelve Months
(in millions) 2007 2006 2007 2006

Tire Units 20.5 20.4 81.3 90.9
Sales $2,284 $2,078 $8,862 $9,089
Segment Operating Income (Loss) $40 $(301) $139 $(233)
Segment Operating Margin 1.8% (14.5)% 1.6% (2.6)%

North American Tire’s fourth quarter 2007 sales increased 10 percent
over the strike-impacted 2006 period. The company estimates the USW strike
reduced sales in the 2006 quarter by $318 million.

In addition, 2007 fourth quarter sales reflect the company’s exit from
certain segments of the private label tire market and continued weakness in
both the replacement and original equipment markets. This was offset by
improved pricing and product mix as well as market share gains in Goodyear
and Dunlop brand tires.

Fourth quarter segment operating income was significantly improved
compared to the strike-impacted 2006 period. The company estimates the
strike reduced segment operating income by $313 million in the 2006
quarter.

European Union Tire Fourth Quarter Twelve Months
(in millions) 2007 2006 2007 2006

Tire Units 14.0 15.7 59.4 63.5
Sales $1,416 $1,343 $5,393 $4,990
Segment Operating Income $75 $75 $302 $286
Segment Operating Margin 5.3% 5.6% 5.6% 5.7%

European Union Tire’s fourth quarter sales set a record for any
quarter, increasing 5 percent over last year due to improved pricing and
product mix and foreign currency translation, which more than offset the
impact of lower volumes, primarily due to weak winter tire demand.

Fourth quarter segment operating income was flat versus last year, as $48
million in improved pricing and product mix and $10 million of favorable
foreign currency translation were offset by volume declines and manufacturing
inefficiencies in France. Raw material costs increased $1 million compared to
the prior year.

Eastern Europe, Middle
East and Africa Tire Fourth Quarter Twelve Months
(in millions) 2007 2006 2007 2006

Tire Units 5.0 4.7 20.2 20.0
Sales $490 $409 $1,824 $1,562
Segment Operating Income $67 $50 $280 $229
Segment Operating Margin 13.7% 12.2% 15.4% 14.7%

Eastern Europe, Middle East and Africa Tire’s fourth quarter sales
reflected a record for any quarter and a 20 percent increase over the 2006
period primarily due to higher replacement tire volume and strong sales in
Russia.

Segment operating income set a fourth quarter record and increased 34
percent due to improved pricing and product mix of $19 million. Raw
material costs decreased approximately $5 million compared to the prior
year.

Latin American Tire Fourth Quarter Twelve Months
(in millions) 2007 2006 2007 2006

Tire Units 5.6 5.5 21.8 21.2
Sales $513 $415 $1,872 $1,607
Segment Operating Income $92 $64 $359 $326
Segment Operating Margin 17.9% 15.4% 19.2% 20.3%

Latin American Tire’s fourth quarter sales reflected a record for any
quarter and increased 24 percent compared to 2006, driven by higher volume
in original equipment markets as well as improvements in pricing and
product mix and foreign currency translation.

Segment operating income increased 44 percent, reflecting the volume
increases, currency translation and $21 million in improved pricing and
product mix. Raw material costs increased $9 million compared to the 2006
period.

Asia Pacific Tire Fourth Quarter Twelve Months
(in millions) 2007 2006 2007 2006

Tire Units 4.9 4.8 19.0 19.4
Sales $457 $393 $1,693 $1,503
Segment Operating Income $39 $26 $150 $104
Segment Operating Margin 8.5% 6.6% 8.9% 6.9%

Asia Pacific Tire’s fourth quarter sales were a record for any quarter,
increasing 16 percent over 2006, driven by growth in China and India as
well as improvements in pricing and product mix and higher volume.

Segment operating income was a fourth quarter record and 50 percent
higher than 2006 due to pricing and product mix improvements of $13 million
as well as foreign currency translation. Raw material costs decreased
approximately $3 million compared to the prior year.

Full-Year Results

Goodyear’s sales for 2007 were a record $19.6 billion, a 5 percent
increase over 2006 despite a 6.2 percent decline in tire unit volume.

All four of the company’s tire businesses outside of North America
achieved all-time record annual sales during 2007.

Segment operating income was $1.2 billion, compared to $712 million in
2006.

Goodyear’s income from continuing operations of $139 million (65 cents
per share) in 2007 compares to a 2006 loss of $373 million ($2.11 per
share).

Including discontinued operations, Goodyear had 2007 net income of $602
million ($2.65 per share), compared to a loss of $330 million ($1.86 per
share) last year. All per share amounts are diluted.

Improvements in pricing and product mix of approximately $639 million
offset higher raw material costs, which increased 3.5 percent, or
approximately $195 million, compared to 2006. Revenue per tire increased 8
percent compared to 2006.

Conference Call

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

Participating in the call with Keegan will be W. Mark Schmitz,
executive vice president and chief financial officer, and Darren R. Wells,
senior vice president, finance and strategy.

Shareholders, members of the media and other interested persons may
access the call on the Web site or via telephone by calling (706) 634-5954
before 9:55 a.m. A taped replay of the call will be available at 3 p.m. by
calling (706) 634-4556. The replay will also remain available on the Web
site.

Goodyear is one of the world’s largest tire companies. The company
employs about 70,000 people and manufactures its products in more than 60
facilities in 26 countries around the world. For more information about
Goodyear, go to http://www.goodyear.com/corporate.

Certain information contained in this press release may constitute
forward-looking statements for purposes of the safe harbor provisions of
The Private Securities Litigation Reform Act of 1995. There are a variety
of factors, many of which are beyond our control, which affect our
operations, performance, business strategy and results and could cause our
actual results and experience to differ materially from the assumptions,
expectations and objectives expressed in any forward-looking statements.
These factors include, but are not limited to: actions and initiatives
taken by both current and potential competitors; increases in the prices
paid for raw materials and energy; our ability to realize anticipated
savings and operational benefits from our cost reduction initiatives or to
implement successfully other strategic initiatives; whether or not the
various contingencies and requirements are met for the establishment of a
Voluntary Employees’ Beneficiary Association (VEBA) to provide healthcare
benefits for current and future USW retirees; potential adverse
consequences of litigation involving the company; pension plan funding
obligations; as well as the effects of more general factors such as changes
in general market or economic conditions or in legislation, regulation or
public policy. Additional factors are discussed in our filings with the
Securities and Exchange Commission, including our annual report on Form
10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. In
addition, any forward-looking statements represent our estimates only as of
today and should not be relied upon as representing our estimates as of any
subsequent date. While we may elect to update forward-looking statements at
some point in the future, we specifically disclaim any obligation to do so,
even if our estimates change.

MEDIA CONTACT: Keith Price
330-796-1863
ANALYST CONTACT: Greg Dooley
330-796-6704

The Goodyear Tire & Rubber Company and Subsidiaries

Consolidated Statement of Operations

Quarter Ended Year Ended
(In millions, except December 31, December 31,
per share amounts) 2007 2006 2007 2006

NET SALES $5,160 $4,638 $19,644 $18,751

Cost of Goods Sold 4,161 4,116 15,920 15,736
Selling, Administrative and
General Expense 737 690 2,762 2,546

Rationalizations 25 101 49 311
Interest Expense 99 137 450 447
Other (Income) and Expense 13 (51) (1) (87)
Income (Loss) from Continuing
Operations before Income Taxes
and Minority Interest 125 (355) 464 (202)
United States and Foreign Taxes 46 (114) 255 60
Minority Interest 18 69 70 111
Income (Loss) from Continuing
Operations 61 (310) 139 (373)

Discontinued Operations (9) (48) 463 43

NET INCOME (LOSS) $52 $(358) $602 $(330)

Income (Loss) Per Share
- Basic
Income (Loss) from
Continuing Operations $0.28 $(1.74) $0.70 $ (2.11)
Discontinued Operations (0.04) (0.28) 2.30 0.25
Net Income (Loss) Per
Share - Basic $0.24 $(2.02) $3.00 $ (1.86)

Weighted Average Shares
Outstanding 216 178 201 177

Income (Loss) Per Share
- Diluted
Income (Loss) from
Continuing Operations $0.27 $(1.74) $0.65 $ (2.11)
Discontinued Operations (0.04) (0.28) 2.00 0.25
Net Income (Loss) Per
Share - Diluted $0.23 $(2.02) $2.65 $(1.86)

Weighted Average Shares
Outstanding 239 178 232 177

The Goodyear Tire & Rubber Company and Subsidiaries

Consolidated Balance Sheet
December 31,
(Dollars in millions) 2007 2006

Assets
Current Assets:
Cash and cash equivalents $3,463 $3,862
Restricted cash 191 214
Accounts receivable 3,103 2,800
Inventories 3,164 2,601
Prepaid expenses and other current assets 251 289
Current assets of discontinued operations - 413
Total Current Assets 10,172 10,179
Goodwill 713 662
Intangible Assets 167 166
Deferred Income Tax 83 150
Other Assets and Prepaid Pension Assets 458 453
Long Term Assets of Discontinued Operations - 352
Property, Plant and Equipment 5,598 5,067
Total Assets $17,191 $17,029

Liabilities
Current Liabilities:
Accounts payable-trade $2,422 $1,945
Compensation and benefits 897 883
Other current liabilities 753 811
Current liabilities of discontinued
operations - 157
United States and foreign taxes 196 222
Notes payable and overdrafts 225 243
Long term debt and capital leases due
within one year 171 405
Total Current Liabilities 4,664 4,666
Long Term Debt and Capital Leases 4,329 6,562
Compensation and Benefits 3,404 4,935
Long Term Liabilities of Discontinued
Operations - 47
Deferred and Other Noncurrent Income Taxes 274 320
Other Long Term Liabilities 667 380
Minority Equity in Subsidiaries 1,003 877
Total Liabilities 14,341 17,787

Commitments and Contingent Liabilities

Shareholders’ Equity (Deficit)
Preferred Stock, no par value:
Authorized, 50,000,000 shares, unissued - -
Common Stock, no par value:
Authorized, 450,000,000 shares in 2007
and 2006 Outstanding shares,
240,122,374 (178,218,970 in 2006) 240 178
Capital Surplus 2,660 1,427
Retained Earnings 1,602 968
Accumulated Other Comprehensive Loss (1,652) (3,331)
Total Shareholders’ Equity (Deficit) 2,850 (758)
Total Liabilities and Shareholders’
Equity (Deficit) $17,191 $17,029

Non-GAAP Financial Measures

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

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

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

Total Segment Operating Income Reconciliation Table

(In millions) Fourth Quarter Year
Ended Dec. 31 Ended Dec. 31
2007 2006 2007 2006
Total Segment Operating
Income (Loss) $313 $(86) $1,230 712
Rationalizations (25) (101) (49) (311)
Accelerated depreciation (6) (34) (37) (88)
Interest expense (99) (137) (450) (447)
Corporate incentive compensation
plans (13) (26) (77) (66)
Intercompany profit
elimination 1 12 (11) (11)
Retained expenses of
discontinued operations - (11) (17) (48)
Curtailment - - (64) -
Other (46) 28 (61) 57
Income (Loss) from continuing
operations before income taxes
and minority interest 125 (355) 464 (202)
US and foreign taxes (46) 114 (255) (60)
Minority interest (18) (69) (70) (111)
Income (Loss) from continuing
operations 61 (310) 139 (373)
Discontinued operations (9) (48) 463 43
Net Income (Loss) $52 $(358) $602 $(330)

Net Debt Reconciliation Table
(In millions)
Year ended Dec. 31
2007 2006

Long term debt and capital leases $4,329 $6,562
Notes payable and overdrafts 225 243
Long term debt and capital leases due
within one year 171 405
Total debt 4,725 7,210
Less: Cash and cash equivalents 3,463 3,862
Net Debt $1,262 $3,348
Change in Net Debt ($2,086)

Fourth Quarter Significant Items (after tax)

2007
Rationalization charges and accelerated depreciation, $26 million
(11 cents per share)

Net loss on T&WA and Washington, UK asset sales, $19 million
(8 cents per share)

Financing fees related to recent debt conversion, $17 million
(7 cents per share)

Reduced tax expense due to a tax law change, $11 million (4 cents per
share)

2006
12-week USW strike in North America, $313 million ($1.77 per share)

Rationalization charges, accelerated depreciation and asset
write-offs, $184 million ($1.03 per share)

Gain from favorable resolution of a tax contingency, $153 million
(86 cents per share)

SOURCE The Goodyear Tire & Rubber Company