Oct. 28, 2009 (PR Newswire) -- AKRON, Ohio, Oct. 28 /PRNewswire-FirstCall/ --

--  Sales of $4.4 billion, up 11% from second quarter
--  Segment Operating Income of $275 million, up from prior year and second
quarter
--  Inventories reduced by more than $1 billion from year-end 2008
--  Cash and liquidity improve on continued positive cash flow
--  Year-to-date cost savings total $540 million

--  57 new product launches in first nine months surpass full-year 2009
target

The Goodyear Tire & Rubber Company (NYSE: GT) today reported improved third quarter earnings in 2009 and discussed opportunities available to it as markets recover.

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

"The strength of our brands and steady stream of new and innovative tires such as our branded fuel-efficient tires provided marketplace momentum and led a strong third quarter performance," said Robert J. Keegan, chairman and chief executive officer.

"The success of our Top Line, Cost and Cash actions together with improving market conditions and lower raw material costs drove improved third quarter earnings compared to both last year and to the second quarter," he said.

"We are pleased that our results for the quarter were in line with our original operating plan despite more difficult conditions than we had expected at the beginning of the year," Keegan added.

Goodyear said it anticipates year-over-year global industry growth in 2010, especially in markets for tires featuring high-value-added features, larger rim diameters and fuel-efficient technology. The company's industry-leading new product engine, advantaged supply chain and reduced cost structure position it well to capitalize on these market opportunities.

Additionally, the company's strength in high-growth markets of the world in Asia, Latin America and Eastern Europe will allow it to leverage its advantages in these markets and capture a significant portion of that growth potential.

Third Quarter Results

The company's third quarter 2009 sales were $4.4 billion, down 15 percent from 2008's third quarter. Sales were up 11 percent from 2009's second quarter.

Third quarter 2009 sales reflect the $276 million impact of a 7 percent decline in tire unit volume due to lower industry demand as well as a $279 million reduction in sales in other tire-related businesses, primarily third-party chemical sales by North American Tire. Unfavorable foreign currency translation further reduced sales by $159 million.

Goodyear successfully launched 15 new products in the quarter, in addition to the 42 launched in the first half. The company has exceeded its goal of more than 50 new product launches during 2009.

The company had segment operating income of $275 million in the third quarter of 2009, up from $266 million in the 2008 third quarter and $24 million in 2009's second quarter.

Compared to the prior year, third quarter 2009 segment operating income reflects continued weak industry demand, which resulted in a negative volume impact of $64 million and under-absorbed fixed costs of approximately $107 million. The 2009 quarter benefited from $207 million in lower raw material costs.

Goodyear made additional progress during the third quarter on its Four-Point Cost Savings Plan. The company achieved $195 million in new savings during the third quarter, for a total of $540 million in the first nine months of 2009.

During the third quarter of 2009, the company reduced its global work force by 300 positions, adding to approximately 5,500 first half reductions. The company's full-year target was a reduction of 5,000 positions.

Third quarter 2009 Goodyear net income was $72 million (30 cents per share), up from $31 million (13 cents per share) in 2008's third quarter. The company had net losses of $221 million (92 cents per share) in the second quarter of 2009 and $333 million ($1.38 per share) in the 2009 first quarter. All per share amounts are diluted.

The 2009 third quarter was impacted by charges of $29 million (12 cents per share) due to rationalizations, asset write-offs and accelerated depreciation; a non-cash loss of $18 million (8 cents per share) on the liquidation of a subsidiary in Guatemala; a charge of $9 million (4 cents per share) to correct first-half earnings attributable to minority shareholders; expenses of $5 million (2 cents per share) related to the company's new USW labor contract; net tax-related benefits of $22 million (8 cents per share), and a gain on asset sales of $6 million (3 cents per share). All amounts are after taxes and minority interest.

See the table at the end of this release for a list of significant items impacting the 2009 and 2008 third quarters.

Positive cash flow and reduced working capital requirements have combined to improve Goodyear's cash and liquidity position. As part of its supply chain initiative, inventory levels are more than $1 billion below the year-end 2008 level.

Business Segment Results

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

North American Tire             Third Quarter             Nine Months
(in millions)                   2009     2008            2009      2008

Tire Units                      17.1     18.1            45.8      54.2
Sales                         $1,862   $2,185          $5,093    $6,312
Segment Operating Income (Loss)    2      (19)           (278)       37
Segment Operating Margin        0.1%    (0.9)%          (5.5)%     0.6%

North American Tire's third quarter 2009 sales declined 15 percent from last year, reflecting lower sales in other tire-related businesses of $234 million, primarily third-party chemical sales, reduced industry demand, and unfavorable foreign currency translation. Original equipment unit volume declined 21 percent. Replacement tire shipments were up less than 1 percent.

Third quarter 2009 segment operating income of $2 million was a $21 million improvement over the prior year. The quarter benefited from lower raw material costs of $105 million and actions to reduce costs. Lower sales and production levels drove a negative volume impact of $7 million and under-absorbed fixed costs of approximately $40 million. Operating income from other tire-related businesses declined $24 million.

Increased pension expense due to lower 2008 returns on plan assets and higher amortization of net losses more than offset savings resulting from the implementation of the Voluntary Employees' Beneficiary Association (VEBA) in the 2009 quarter.

United Steelworkers members, on September 18, ratified a new, four-year labor contract with the company. The contract enhances the competitiveness of North American Tire's USW-represented tire plants through improvements in productivity, wage and benefit savings and added flexibility. These changes, combined with savings from pre-bargain agreements, are expected to provide cost savings of approximately $555 million over the term of the agreements.

Europe, Middle East and
Africa Tire                     Third Quarter           Nine Months
(in millions)                  2009        2008        2009        2008

Tire Units                     17.8        19.7        49.8        58.5
Sales                        $1,581      $1,936      $4,242      $5,910
Segment Operating Income        106         134          41         457
Segment Operating Margin       6.7%        6.9%        1.0%        7.7%

Europe, Middle East and Africa Tire's third quarter sales declined 18 percent from last year primarily due to lower tire unit volume, reflecting reduced industry demand, as well as unfavorable foreign currency translation. Original equipment unit volume declined 20 percent.