March 25, 2010 CONFIDENTIAL - Goodyear Corporate · 2020-06-26 · Citi 2016 Industrials Conference...

Citi 2016 Industrials Conference

June 14, 2016

Forward-Looking Statements

Certain information contained in this presentation constitutes 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, that 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: our ability to implement successfully our strategic initiatives; actions and initiatives taken by both

current and potential competitors; foreign currency translation and transaction risks; a labor strike, work

stoppage or other similar event; deteriorating economic conditions or an inability to access capital markets;

work stoppages, financial difficulties or supply disruptions at our suppliers or customers; the adequacy of our

capital expenditures; increases in the prices paid for raw materials and energy; our failure to comply with a

material covenant in our debt obligations; potential adverse consequences of litigation involving the

company; as well as the effects of more general factors such as changes in general market, economic or

political 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.

2

Company Overview

Goodyear tires are sold

in two distinct tire markets...

(% of 2015 Units of 164.8 million)

...and serve customers

around the world

(% of 2015 Revenue of ~$15.9 billion)

…available in a diverse

selection of products...

(% of 2015 Revenue of ~$15.9 billion)

OE ~20% of 2015 Revenue

Goodyear is a tire industry leader with powerful brands, a broad product

offering and global distribution

Consumer

20%

Retail

8%

Other

9%

Chemical

3%

Commercial

Includes:

OTR, Farm,

Race, &

Aviation

60%North

America

49%

Europe, Middle

East & Africa

32%

Latin

America

7%

Asia Pacific

12%

Replacement Market69%

OE Market

31%

Company Overview

Note: 2015 revenue and unit volume excludes revenue of $531 million and 1.4 million units related to our Venezuela subsidiary which was deconsolidated on December 31, 2015;

OE = Original Equipment, OTR = Off the Road 5

2013201220112010

$1.0

$0.7

$0.2

$0.4

Strong Free Cash Flow(b)

$1.0

2014

$1.0

2013201220112010

$1.6

$1.2$1.4

$0.9

Segment Operating Income

(a) See Segment Operating Income reconciliation for 2010 through 2015 in Appendix on page 36.

(b) See Reconciliation for Free Cash Flow from Operations in Appendix on page 40.

(a)

6

$ In billions

Past Performance Provides Strong Foundation For The Future

201320122010

$0.7

$0.5

$0.3

~$0

North America Turnaround

2011

Segment Operating Income

2014

$1.1

$0.8

2014

$1.7

2015

$2.0

2015

20152014201320122011

$0.7

$1.9

$3.5$3.1

Progress on Global Unfunded Pension

Fully funded,

froze, and

de-risked U.S.

plans

2015

$0.6

$0.3B loss

in 2009

Goodyear Then…And Now

7

Goodyear products

represented on 75% of

2015 Top 15 Selling

SUVs and Light Trucks

in the USA

Industry Leading Products

0

2

4

6

8

10

12

2010 2011 2012 2013 2014 2015

USA Light Truck & SUV Sales(in millions)

New Vehicle SalesSource: IHS

Industry migration to High-Value-Added tires advantages Goodyear given

manufacturing know-how, product innovation and value of our brand

8

• There is no industry standard definition of “HVA”. For Goodyear …

• Consumer HVA tires incorporate one or more of the following features:

– Rim diameter 17” or greater

– Reduced sidewall height

– Speed-rated H or higher

• Commercial HVA tires have specific performance characteristics (e.g., Fuel Max, DuraSeal)

and are retreadable

• HVA tires are more complex to manufacture than LVA tires

• Converting LVA to HVA capacity may not be a one-for-one conversion in tire units

– Segmented mold

– Advanced tread compounds

– Extra load constructions

LVA Tire

(Low-Value-Added)

HVA Tire

(High-Value-Added)Silica

Tread

Additional

Components

For HandlingCarbon Fiber

Dual Reinforced

Sidewalls

Dual Tread

Zones with

TredLock

Technology

HVA Tire TechnologyA “Tire” Is Not a “Tire”

Goodyear delivering results through an integrated approach

Iconic brand

Industry leading products

Pervasive distribution

Strong customer relations

Consumer-centric focus

Right Tire

Right Time

Right Place

Right Cost

Market-Back Innovation Enabling Investments

AND

Sales & Marketing Excellence Operational Excellence

9

Advantaged Value Proposition

10

Goodyear’s JourneySegment Operating Income (a)

$0.9B

$1.4B$1.2B

$1.6B$1.7B

$2.0B

$119M

$1.9B

------------------------------ Actual ------------------------ Without Venezuela

Venezuela

in 2015

Record!

Record!

Record!

Record!Record!

Achieved

2011-2013

$1.6B target

$2.1B to

$2.2B

Target of 10-15%

growth from core

business

Record!

Consistently meeting our financial targets despite challenging

economic environments globally

(a) See Segment Operating Income reconciliation for 2010 through 2015 in Appendix on page 36.(b) We are unable to present a quantitative reconciliation of our forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP financial

measures, because management cannot reliably predict the necessary components of those U.S. GAAP financial measures without unreasonable effort. These components could be significant to the calculation of those U.S. GAAP financial measures in the future.

$ In billions

2010 2011 2012 2013 2014 2015 2015 2016(b)

First Quarter 2016 Financial Performance

First Quarter Highlights

12(a) See First Quarter Segment Operating Income and Margin reconciliation in Appendix on page 37.

• Record first quarter Segment Operating Income of $419 million

with 11.4% SOI margin(a)

• Core Segment Operating Income (excludes Venezuela) grew

14%(a)

• Americas segment earnings of $260 million, SOI margin of 13%

• Asia Pacific segment earnings of $79 million, SOI margin of 16%

(a) See First Quarter Segment Operating Income and Margin reconciliation in Appendix on page 37.

(b) See Adjusted Diluted Earnings Per Share reconciliation in Appendix on pages 34 and 35.

In millions, except EPS

13

March 31, March 31,

2016 2015 Change

Units 41.5 40.8 2%

Net Sales 3,691$ 4,024$ (8)%

Gross Margin 26.8% 23.8% 3.0 pts

SAG 615$ 608$ 1%

Segment Operating Income(a) 419$ 388$ 8%

Segment Operating Margin(a) 11.4% 9.6% 1.8 pts

Goodyear Net Income 184$ 224$

Goodyear Net Income Per Share

Weighted Average Shares Outstanding 267 270

Basic 0.69$ 0.83$

Weighted Average Shares Outstanding - Diluted 271 274

Diluted 0.68$ 0.82$

Cash Dividends Declared Per Common Share 0.07$ 0.06$

Adjusted Diluted Earnings Per Share (b) 0.72$ 0.54$

Three Months Ended

Core SOI

growth

of 14%(a)

+33%

3%

excluding

Venezuela

2.1 pts

excluding

Venezuela(a)

First Quarter 2016 Income Statement

First Quarter 2016Segment Operating Results

14

(a) Core Segment Operating Income is Total Segment Operating Income excluding the operating income from our Venezuelan subsidiary which was deconsolidated on 12/31/15.

(b) Raw material variance of $68 million excludes raw material cost saving measures of $39 million, which are included in Cost Savings.

(c) Estimated impact of inflation (wages, utilities, energy, transportation and other).

(d) Includes the impact of other tire related businesses, including the sale of the North American motorcycle business.

$ In millions

$388 Cost

Savings

$39

$366

$419

Venezuela

Price/Mix

Raw

Materials(b)

Inflation(c)

Other(d)

$68($34)

($30)

$22

$53

($33)

Unabsorbed

Fixed Cost

Currency

($12)

$8

$47 $38

Q1

2016Q1

2015

Core

SOI(a)

Volume

$47

Q1

2015

Total

SOI $14

+14%

Net Cost

Savings

Net P/M vs

Raws

Total Volume

Impact

Strong Core SOI growth driven by balanced performance

(a) Working capital represents accounts receivable and inventories, less accounts payable – trade.

(b) See Total Debt and Net Debt reconciliation in Appendix on page 38. 15

First Quarter 2016 Balance Sheet

$ In millions

March 31, December 31, March 31,2016 2015 2015

Cash and cash equivalents 1,079$ 1,476$ 1,613$

Accounts receivable 2,482 2,033 2,523Inventories 2,636 2,464 2,538Accounts payable - trade (2,653) (2,769) (2,612)

Working capital(a)

2,465$ 1,728$ 2,449$

Total debt(b)

6,075$ 5,708$ 6,185$

Net debt(b)

4,996$ 4,232$ 4,572$

16

Free Cash Flow from Operations

$ In millions

(a) Gain on Recognition of Deferred Royalty Income is due to a one-time pre-tax gain of $155 million on the recognition of deferred income resulting

from the termination of a licensing agreement associated with the sale of our former Engineered Products business.

(b) Other includes amortization and write-off of debt issuance costs, net pension curtailments and settlements, net rationalization charges, net (gains)

losses on asset sales, compensation and benefits less pension expense, other current liabilities, and other assets and liabilities.

(c) See Free Cash Flow from Operations reconciliation in Appendix on page 40.

Trailing Twelve

Months Ended

2016 2015 March 31, 2016

Net Income 189$ 236$ 329$

Depreciation and Amortization 174 172 700

Change in Working Capital (611) (569) (84)

Pension Expense 18 36 117

Provision for Deferred Income Taxes 46 91 34

Gain on Recognition of Deferred Royalty Income(a)

- (155) -

Capital Expenditures (253) (204) (1,032)

Loss on Deconsolidation of Venezuelan Subsidiary - - 646

Other(b)

(148) (21) 70

Free Cash Flow from Operations (non-GAAP)(c) (585)$ (414)$ 780$

Three Months Ended

March 31,

Capital Allocation Plan

18

2014-2016 Capital Allocation Plan Delivering Shareholder Returns

Debt Repayment /

Pension Funding

Growth CapEx

Restructurings

Dividends/ Share

Repurchase

~ $0.7B

$1.1 - $1.3B(a)

~$0.9B

Executing on the 2014-2016 Capital Allocation Plan

~$0.9B

$3.6 - $3.8B

(a) $0.65B previously approved by the Board of Directors with $0.45B authorized for share repurchase on May 27, 2014; additional $0.65B authorized for share repurchase by the Board of Directors on February 4, 2016 with actual amount dependent on Company performance including the achievement of financial targets.

Through March 31, 2016

Dividends paid: $147 million

Repurchases of $463 million

19

New Americas Consumer Tire Plant

0

50

100

150

200

250

300

350

400

450

500

2012 2013 2014 2015 2016 2017 2018 2019

Americas Consumer Tire Industryterms: Millions of Tires - Replacement & OE - North and Latin America

403421

434 434443 450

460 468

2014-2019 Growth

Total = +34M (~7M/year, ~2%/year)

HVA = +76M (~15M/year, ~5%/year)

(a)

• Goodyear building previously announced

tire plant in San Luis Potosi, Mexico

• Central location effectively supports

strong and growing demand for HVA tires

across the Americas

• Annual capacity at ~6 million tires;

first production planned for mid-2017

• Total Capex to be $500 to $550 million

during 2015-2018, and funded within

existing capital allocation plan

53%

58%62%

65%68%

70%72%

74%

Low

Value

Added

(LVA)

High

Value

Added

(HVA)HVA as % of

entire industry

Goodyear building world-class factory to meet growing demand for

High-Value-Added consumer tires across the Americas

(a) Source: LMC International and Goodyear internal analysis, November 2015

Shareholder Return Program

20

Increased to $0.07 per share as of

December 1, 2015 payment

Anticipate increases over time as

cash flow and leverage improves

Regular Dividend

~$70 million annually

Total share repurchases of $463

million through March 31, 2016

Remain committed to repurchasing

additional shares

More than offsetting new shares issued

under equity compensation programs

Share Repurchase

Up to $1.1 billion

Shareholder return program demonstrates strong commitment to

shareholders and confidence in strategy

Balance Sheet ManagementLeverage Ratios

4.1x

3.4x

2.9x

2.5x

~2.0x - 2.1x

Leverage consistent with commitment to achieving investment grade metrics

Reduces cost of capital

Improves global access to credit

Targeting investment grade balance sheet by the end of 2016

Adjusted Debt / EBITDAP(a)(b)

Greater ability to extend maturities

Ability to reduce cash balances

21

2012 2014 2016T(c)2013

(a) Total debt plus global pension liability, divided by net income before interest expense, income tax expense, depreciation and amortization expense, net periodic pension cost, rationalization charges, other (income) and expense, and the loss on the deconsolidation of our Venezuelan subsidiary.

(b) See the EBITDAP, Adjusted Debt & Leverage Ratio reconciliation in Appendix on page 39.

(c) We are unable to present a quantitative reconciliation of our forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures, because management cannot reliably predict the necessary components of those U.S. GAAP financial measures without unreasonable effort. These components could be significant to the calculation of those U.S. GAAP financial measures in the future.

2015

22

Key Takeaways

• Goodyear is a different company following the turnaround of

our North American business and funding/freezing of US

pension plans

• Goodyear is advantaged in a competitive industry; our results

give us confidence

• Targeting continued earnings growth in 2016 with strong free

cash flow generation

• Balanced capital allocation plan demonstrates commitment to

reaching investment grade, continuing to grow the business,

and returning capital to shareholders

Appendix

2016 Key Segment Operating Income Drivers (As presented April 27, 2016)

Driver

2015 Results

excluding

Venezuela

Outlook

2016 vs 2015Comments

Global Volume +3% ~3%• Core business unit volume of

164.8 million in 2015; no change

Net Price/Mix vs.

Raw Materials$77 million ~$75 million

• Raw material costs down ~2%; prior

outlook was down ~5%; no net change

Overhead

Absorption($3) million ~$50 million • No change

Cost Savings vs.

Inflation$227 million ~$135 million • No change

Foreign Exchange ($142) million ~($45) million • No change

Motorcycle ($7) million ~($30) million• Sale of the North American motorcycle

business; weighted to Q2; no change

Other $8 million ~($35) million• Plant start up costs and advertising; no

change

25

2016 Outlook - Other Financial Assumptions(As presented April 27, 2016)

2016 FY Assumption

Interest Expense $350 - $375 million

Financing Fees ~$45 million

Income TaxExpense: ~30% of global pre-tax operating income

Cash: 10-15% of global pre-tax operating income

Depreciation & Amortization ~$700 million

Global Pension Expense $65 - $85 million

Global Pension Cash

Contributions$50 - $75 million

Working Capital Use of ~$50 million

Capital Expenditures $1.0 - $1.1 billion

Corporate Other ~$165 million

26

27

$689

$2,356

$1,017

($321) ($376)

($10) ($30)

$549

$1,822

$327

($985)

($553) ($594)

($107)

2010 2011 2012 2013 2014 2015 2016 Q1

Price/Mix Raw Materials

(b)

(e)

Price/Mix vs. Raw Materials(a)

(a) Reflects impact on Segment Operating Income. Includes Venezuela through 2015. Raw materials include the impact of raw material cost savings measures.(b) Raw material variance of $549 million includes raw material cost savings measures of $136 million. (c) Raw material variance of $1,822 million includes raw material cost savings measures of $177 million.(d) Raw material variance of $327 million includes raw material cost savings measures of $249 million.(e) Raw material variance of ($985) million includes raw material cost savings measures of $228 million.(f) Raw material variance of ($553) million includes raw material cost savings measures of $269 million.(g) Raw material variance of ($594) million includes raw material cost savings measures of $228 million.(h) Raw material variance of ($107) million includes raw material cost savings measures of $39 million.

(f)(g)

(d)

(c)

(h)

$ In millions

2015 Venezuela Key Metrics

28

Venezuela

Q1 Q2 Q3 Q4 2015

Full Year

Units (000s) 377 318 385 312 1,392

Revenue $94 $115 $155 $167 $531

Operating

Income$22 $36 $39 $22 $119

Foreign

Currency

Exchange(a)

($1) ($12) ($8) ($5) ($26)

NOTE: The Venezuela subsidiary was deconsolidated effective December 31, 2015

(a) In addition to the foreign currency exchange impact in Venezuela, 2015 included $8 million of foreign currency exchange losses on bolivar denominated assets held by other Goodyear entities.

$ In millions

Global Raw Material Usage(a)

29

*Petrochemical-based

(a) Based on Goodyear internal analysis

Natural Rubber

20%

Synthetic Rubber

25%

Carbon Black22%

Pigments / Chemicals /

Oils17%

Fabrics3%

Wire / Other13%

Breakout by Weight

Natural Rubber

20%

Synthetic Rubber

28%

Carbon Black12%

Pigments / Chemicals /

Oils18%

Fabrics10%

Wire / Other12%

Breakout by Cost

*

*

*

*

*

*

*

*

First Quarter 2016

Maturity Schedule

$ In millions

30

Note: Based on March 31, 2016 balance sheet values and excludes notes payable, capital leases and other domestic and foreign debt.

(a) At March 31, 2016, our borrowing base, and therefore our availability, under the US revolving credit facility was $618 million below the facility’s stated amount

of $2.0 billion. Also, the total amount outstanding was $270 million and $284 million of letters of credit were issued under the revolving credit facility.

(b) At March 31, 2016, the amounts available and utilized under the €340 million Pan-European securitization program totaled $247 million (€217 million).

(c) At March 31, 2016, the total amount outstanding under the €550 million European revolving credit facility was $268 million (€235 million) and no letters of

credit were issued.

U.S. revolving credit

facility refinanced on

April 7, 2016; maturity

extended to 2021

$900 million 6.5% senior

notes redeemed on

June 13, 2016 utilizing

proceeds from the

May 13, 2016 offering of

$900 million 5.0% senior

notes due in 2026

$1.1

$2.0

March 31, 2016

First Quarter 2016

Liquidity Profile

(a) Total liquidity comprised of $1,079 million of cash and cash equivalents, as well as $1,988 million of unused availability under various credit agreements. 31

Cash &

Equivalents

Available

Credit Lines

Liquidity Profile

$3.1(a)

$ In billions

In millions

32

• Strong SOI performance with income growth of 15% excluding Venezuela

• Volume decline explained by Venezuela deconsolidation (0.4 million), sale of

GDTNA (0.3 million) and continued recessionary environment in Brazil

• U.S. total consumer flat

• SOI growth driven by positive price / mix and benefit from lower raw material costs

2016 2015 Change

Units 18.0 19.2 (6.0%)

Net Sales $1,951 $2,243 (13.0%)

Operating Income $260 $248 4.8%

Margin 13.3% 11.1%

Americas

First Quarter

15%

excluding

Venezuela

First Quarter 2016Segment Results

In millions

33

2016 2015 Change

Units 16.2 15.9 1.7%

Net Sales $1,251 $1,331 (6.0%)


Margin 6.4% 5.5%

Europe, Middle East and Africa

First Quarter

• Consumer volume up 2%, with strong OE up 5% and Replacement up slightly

• Winter channel inventory levels normalized post Q1 sell-out

• Commercial volume up 3%, with strong OE up 9% and Replacement up 1%

• SOI improvement driven by impact of higher volume


In millions

34

• Volume growth of 28% driven by growth in key markets

• 11% when excluding new Japanese replacement business

• Double digit growth in China in both OE and replacement

• Continued strong performance in India

• SOI gains from volume partially offset by increased SAG / advertising

2016 2015 Change

Units 7.3 5.7 28.1%

Net Sales $489 $450 8.7%


Margin 16.2% 14.9%

First Quarter

Asia Pacific


$ and shares in millions (except EPS)

35

First Quarter 2016 Significant Items(After Tax and Minority Interest)

As

Reported

Rationalizations,

Asset Write-offs,

and Accelerated

Depreciation

Debt

Repayments

Insurance

Recovery -

Discontinued

Products

Discrete Tax

Items As Adjusted

Net Sales 3,691$ -$ -$ -$ -$ 3,691$

Cost of Goods Sold 2,701 (2) - - - 2,699

Gross Margin 990 2 - - - 992

SAG 615 - - - - 615

Rationalizations 11 (11) - - - -

Interest Expense 91 - (2) - - 89

Other (Income) Expense 6 - (10) 3 - (1)

Pre-tax Income 267 13 12 (3) - 289

Taxes 78 1 - (1) 12 90

Minority Interest 5 - - - (1) 4

Goodyear Net Income 184$ 12$ 12$ (2)$ (11)$ 195$

EPS 0.68$ 0.05$ 0.04$ (0.01)$ (0.04)$ 0.72$

$ and shares in millions (except EPS)

36

First Quarter 2015 Significant Items(After Tax and Minority Interest)

As

Reported

Rationalizations,

Asset Write-offs,

and Accelerated

Depreciation

Discrete Tax

Items

Charges for

Labor Claims

Related to a

Closed Facility

in Greece

Gain on

Recognition of

Deferred

Royalty

Income As Adjusted

Net Sales 4,024$ -$ -$ -$ -$ 4,024$

Cost of Goods Sold 3,066 (3) (3) - - 3,060

Gross Margin 958 3 3 - - 964

SAG 608 - - - - 608

Rationalizations 16 (16) - - - -

Interest Expense 107 - - - - 107

Other (Income) Expense (132) - - (4) 155 19

Pre-tax Income 359 19 3 4 (155) 230

Taxes 123 1 (4) - (56) 64

Minority Interest 12 4 2 - - 18

Goodyear Net Income 224$ 14$ 5$ 4$ (99)$ 148$

EPS 0.82$ 0.05$ 0.02$ 0.01$ (0.36)$ 0.54$

Reconciliation for Segment Operating Income / Margin for 2010 - 2015

$ In millions

37

(a) Interest expense and Other income (expense) have been adjusted to reflect the impact of the accounting standards update on the

presentation of debt issuance costs which requires the amortization of debt issuance costs to be included in interest expense rather

than Other income (expense). This standard was adopted January 1, 2016.

2010 2011 2012 2013 2014 2015

Total Segment Operating Income 917$ 1,368$ 1,248$ 1,580$ 1,712$ 2,022$

Rationalizations (240) (103) (175) (58) (95) (114)

Interest expense(a) (335) (350) (385) (407) (444) (438)

Other income (expense)(a) (167) (53) (111) (82) (286) 141

Asset write-offs and accelerated depreciation (15) (50) (20) (23) (7) (8)

Corporate incentive compensation plans (71) (70) (69) (108) (97) (103)

Pension curtailments/settlements - (15) 1 - (33) (137)

Intercompany profit elimination (14) (5) (1) 4 4 (3)

Loss on deconsolidation of Venezuelan subsidiary - - - - - (646)

Retained expenses of divested operations (20) (29) (14) (24) (16) (14)

Other (47) (75) (34) (69) (51) (92)

Income before Income Taxes 8$ 618$ 440$ 813$ 687$ 608$

United States and Foreign Tax Expense (Benefit) 172 201 203 138 (1,834) 232

Less: Minority Shareholders Net Income 52 74 25 46 69 69

Goodyear Net Income (Loss) (216)$ 343$ 212$ 629$ 2,452$ 307$

Sales $18,832 $22,767 $20,992 $19,540 $18,138 $16,443

Return on Sales (1.1)% 1.5% 1.0% 3.2% 13.5% 1.9%

Total Segment Operating Margin 4.9% 6.0% 5.9% 8.1% 9.4% 12.3%

December 31,

Twelve Months Ended

Reconciliation for First Quarter Segment Operating Income / Margin

$ In millions

38

2016 2015

Core Segment Operating Income 419$ 366$

Venezuela subsidiary operating income - 22

Total Segment Operating Income 419$ 388$

Rationalizations (11) (16)

Interest expense (91) (107)

Other income (expense) (6) 132

Asset write-offs and accelerated depreciation (2) (3)

Corporate incentive compensation plans (26) (13)

Intercompany profit elimination (2) (4)

Retained expenses of divested operations (5) (2)

Other (9) (16)

Income before Income Taxes 267$ 359$

United States and Foreign Tax Expense 78 123

Less: Minority Shareholders Net Income 5 12

Goodyear Net Income 184$ 224$

Sales (as reported) $3,691 $4,024

Sales (excluding Venezuela) $3,691 $3,930

Return on Sales 5.0% 5.6%

Total Segment Operating Margin 11.4% 9.6%

Core Segment Operating Margin 11.4% 9.3%

Three Months Ended

March 31,

39

Reconciliation for Total Debtand Net Debt

$ In millions

March 31, December 31, March 31,

2016 2015 2015

Long-Term Debt and Capital Leases 5,685$ 5,074$ 5,924$

Notes Payable and Overdrafts 76 49 23

Long-Term Debt and Capital Leases Due Within One Year 314 585 238

Total Debt 6,075$ 5,708$ 6,185$

Less: Cash and Cash Equivalents 1,079 1,476 1,613

Net Debt 4,996$ 4,232$ 4,572$

40

Reconciliation for EBITDAP, Adjusted Debt & Leverage Ratio

$ In millions

(a) Net periodic pension cost excludes curtailments/settlements and termination benefits.

(b) Other includes (i) rationalization charges, (ii) other (income) expense and (iii) the loss on the deconsolidation of our Venezuelan subsidiary effective December 31, 2015.

2012 2013 2014 2015

Net Income $237 $675 $2,521 $376

Interest Expense 385 407 444 438

Income Tax (Benefit) Expense 203 138 (1,834) 232

Depreciation and Amortization 687 722 732 698

Pension Expense(a) 307 285 158 135

Other(b) 286 140 381 619

EBITDAP, as adjusted $2,105 $2,367 $2,402 $2,498

2012 2013 2014 2015

Notes Payable and Overdrafts 102 14 30 49

Long-Term Debt and Capital Leases Due Within One Year 96 73 148 585

Long-Term Debt and Capital Leases 4,845 6,110 6,172 5,074

Total Debt $5,043 $6,197 $6,350 $5,708

Global Unfunded Pension Obligations $3,522 $1,855 $714 $642

Adjusted Debt $8,565 $8,052 $7,064 $6,350

Adjusted Debt/EBITDAP 4.1x 3.4x 2.9x 2.5x

Year Ended December 31,

Reconciliation for Free Cash Flow from Operations

a) Working capital represents total changes in accounts receivable, inventories and accounts payable – trade.

b) Pension expense is the net periodic pension cost before curtailments, settlements and termination benefits as reported in the pension-related note in

the Notes to Consolidated Financial Statements.

c) Other includes amortization and write-off of debt issuance costs, net pension curtailments and settlements, net rationalization charges, net (gains)

losses on asset sales, compensation and benefits less pension expense, other current liabilities, and other assets and liabilities. 41

The amounts below are calculated from the Consolidated Statements of Cash Flows except for pension expense, which is as reported in the pension-

related note in the Notes to Consolidated Financial Statements.

$ In millions

Trailing Twelve

Months Ended

Dec. 31,

2010

Dec. 31,

2011

Dec. 31,

2012

Dec. 31,

2013

Dec. 31,

2014

Dec. 31,

2015

March 31,

2016

March 31,

2015

March 31,

2016

Net Income (164)$ 417$ 237$ 675$ 2,521$ 376$ 189$ 236$ 329$

Depreciation and Amortization 652 715 687 722 732 698 174 172 700

Change in Working Capital(a)52 (650) 457 415 (1) (42) (611) (569) (84)

Pension Expense(b)300 266 307 285 158 135 18 36 117

Provision for Deferred Income Taxes 6 (55) 16 (34) (1,970) 79 46 91 34

Gain on Recognition of Deferred Royalty Income - - - - - (155) - (155) -

Capital Expenditures (944) (1,043) (1,127) (1,168) (923) (983) (253) (204) (1,032)

Loss on Deconsolidation of Venezuelan Subsidiary - - - - - 646 - - 646

Other(c)540 516 124 109 464 197 (148) (21) 70

Free Cash Flow from Operations (non-GAAP) 442$ 166$ 701$ 1,004$ 981$ 951$ (585)$ (414)$ 780$

Capital Expenditures 944 1,043 1,127 1,168 923 983 253 204 1,032

Pension Contributions and Direct Payments (405) (294) (684) (1,162) (1,338) (103) (25) (26) (102)

Rationalization Payments (57) (142) (106) (72) (226) (144) (24) (26) (142)

Cash Flow from Operating Activities (GAAP) 924$ 773$ 1,038$ 938$ 340$ 1,687$ (381)$ (262)$ 1,568$

Cash Flow from Investing Activities (GAAP) (859) (902) (1,123) (1,136) (851) (1,262) (257) (180) (1,339)

Cash Flow from Financing Activities (GAAP) 179 994 (426) 1,082 (11) (985) 213 (34) (738)

Three Months EndedYear Ended

March 25, 2010 CONFIDENTIAL - Goodyear Corporate · 2020-06-26 · Citi 2016 Industrials Conference...

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Transcript of March 25, 2010 CONFIDENTIAL - Goodyear Corporate · 2020-06-26 · Citi 2016 Industrials Conference...