The results -- and restatements -- are in. The Goodyear Tire & Rubber Co. posted a net loss of $434.4 million on sales of $3.91 billion for the fourth quarter of 2003. That compares to a net loss of $1.2 billion on sales of $3.51 billion for the fourth quarter of 2002.
Worldwide tire unit volume dropped 1.5%, from 53.6 million units during 4Q 2002 to 52.8 million units for the same period last year.
All seven of Goodyear's businesses reported improved year-over-year segment operating results during the quarter.
"Our fourth quarter total segment operating income more than doubled compared to the 2002 period, and margins increased in six of our businesses, including North American Tire," says Robert Keegan, chairman, CEO and president.
"Clearly, we are achieving positive results from the initiatives we have implemented in our businesses over the past 18 months. We focused on stabilizing our North American Tire business and accelerating the momentum in our other six businesses in 2003, and we look for both market and financial gains in 2004."
Fourth quarter 2003 results included after-tax rationalization charges of $153.1 million, accelerated depreciation and asset write-offs of $131.4 million principally related to the closure of a tire plant in Huntsville, Ala. The quarter also included an after-tax charge of $72.9 million related to provisions for general and product liability.
For fiscal year 2003 ended December 31, Goodyear recorded a net loss of $802.1 million on record net sales of $15.1 billion. That compares to a net loss of $1.2 billion on sales of $13.9 billion in 2002.
Goodyear cited a favorable currency translation,
higher selling prices, improved product mix and strong replacement sales in the European Union and the Eastern Europe, Asia and Middle East tire businesses as the main reasons for its 9.1% increase in sales.
Results for 2003 also include the following:
* a net after-tax rationalization charge of $114 million;
* an after-tax loss of $10.8 million on the sale of assets; and
* an after-tax charge of $72.5 million related to provisions for general and product liability.
Results in 2002 include a non-cash tax valuation allowance charge of $1.2 billion, a net after-tax gain of $23.7 million resulting from asset sales and net after-tax charges of
$6.4 million from rationalization actions.
Goodyear says it expects to report a strong first-quarter 2004 performance relative to the first quarter of 2003, driven by price and mix improvements as well as cost reductions.
Segment operating results for the first quarter are expected to increase by more than 25% in six of the company's seven businesses compared to the prior-year period (Asia is expected to post flat segment operating income).
"There is much work to be done, but we are attacking our goals very aggressively," says Keegan. "We entered 2004 with a great deal of momentum -- and with high expectations. We are pleased with the results we are seeing for the first quarter of 2004, which will demonstrate that we are gaining traction in our turnaround initiatives."
Although the North American Tire operating unit is not yet performing at the levels Goodyear needs, according to Keegan, positive results "indicate the right plans are in place and the right actions are being taken to start to return this important business to profitability."
During the first quarter of 2004, Goodyear will apply the provisions of FIN 46, a Financial Accounting Standards Board regulation, and expects to consolidate the net assets of South Pacific Tyres Ltd., a tire manufacturer
operating in Australia and New Zealand, as well as T&WA, a wheel mounting operation in the United States.
The company does not expect the application of FIN 46 in the first quarter of 2004 to have a material impact on its results of operations, cash flow or financial position.
The company also provided details of its previously announced restatements of financial
results for the years through 2002 as well as the first nine months of 2003.
Goodyear announced $164.8 million in restatement adjustments in addition to the $84.7 million of adjustments previously disclosed in the third quarter of 2003 and the $31.3 million in adjustments recorded in the second quarter of 2003.
These adjustments include approximately $65 million announced on April 12, 2004, as well as an additional adjustment of $100.1 million resulting from the company's reassessment of the discount rate used in valuing its obligations in respect to domestic pension and other post-retirement benefit plans.
The previously announced investigation into the company's overseas accounting resulted in a reduction of net income through 2003 of $10.7 million (included in the $164.8 million), primarily impacting the company's European Union business. The majority of the adjustments related to accrual accounts that were improperly adjusted between periods or expenses that were improperly deferred.
These adjustments primarily related to accounts receivable, fixed assets, accounts payable and other long-term liabilities that were improperly adjusted.
Details of these adjustments are included in the company's Form 10-K on file with the U.S. Securities and Exchange Commission.
As a result of these actions, financial results for the years 2001 and 2002, as well as quarterly information for 2002 and 2003, have been restated to reflect the accounting adjustments. The restatements also affect periods prior to 2001.
The total impact of the restatements, including the adjustments announced today, increased the net loss by approximately $56.2 million for 2003; by $121.2 million for 2002 (including a tax valuation allowance of $81.2 million); and by $50.5 million for 2001.
The impact on years prior to 2001 was recorded
as a $52.9 million reduction to retained earnings at Jan. 1, 2000.
Goodyear says the lenders under its principal European credit facility have approved an amendment to extend until June 4 the deadline for Goodyear Dunlop Tires Europe BV to submit audited 2003 financial statements.
These financial statements, which historically have been completed by the joint venture after Goodyear's Form 10-K has been filed in the United States, were previously required to be delivered today.
