News Column

GOODYEAR TIRE & RUBBER CO /OH/ - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

April 29, 2014

All per share amounts are diluted and refer to Goodyear net income (loss) available to common shareholders. OVERVIEW The Goodyear Tire & Rubber Company is one of the world's leading manufacturers of tires, with one of the most recognizable brand names in the world and operations in most regions of the world. We have a broad global footprint with 51 manufacturing facilities in 22 countries, including the United States. We operate our business through four operating segments representing our regional tire businesses: North America; Europe, Middle East and Africa ("EMEA"); Latin America; and Asia Pacific. In the first quarter of 2014, we experienced stabilizing industry conditions in developed markets as the economic recovery in Europe and the United States continued. However, we experienced weakening industry conditions in emerging markets. Labor-related issues at our manufacturing facility in Venezuela, combined with social unrest and economic uncertainty in that country, adversely impacted Latin America, and slowing growth adversely impacted Asia Pacific. Despite these challenges, our segment operating income increased 23.5% to $373 million in the first quarter of 2014, including segment operating income of $156 million in North America and $110 million in EMEA. Tire unit shipments increased 1.2% compared to the first quarter of 2013, primarily in EMEA. In the first quarter of 2014, we realized approximately $111 million of cost savings, including raw materials cost saving measures of approximately $57 million, which exceeded the impact of general inflation and additional expenditures for advertising, marketing and research and development. In the first quarter of 2014, we closed one of our manufacturing facilities in Amiens, France. We expect annualized cost savings of approximately $75 million following closure of the Amiens facility and exit of the farm tire business. We realized savings of $6 million in the first quarter of 2014 and expect total savings of approximately $40 million in 2014. We expect to finalize decisions regarding the timing of our exit from the remainder of the farm tire business in EMEA during 2014. In the first quarter of 2014, we made contributions of $1,167 million, including discretionary contributions of $907 million, to fully fund our hourly U.S. pension plans. As a result, and in accordance with our master collective bargaining agreement with the United Steelworkers, the hourly U.S. pension plans will be frozen to future accruals effective April 30, 2014. Following these contributions, we changed our target asset allocation for these plans to a portfolio of substantially all fixed income securities designed to offset the future impact of discount rate movements on the plans' funded status. As a result of future accrual freezes to pension plans in North America, we recognized curtailment charges of $33 million in the first quarter of 2014. Net sales were $4,469 million in the first three months of 2014, compared to $4,853 million in the first three months of 2013. Net sales decreased for the quarter due to lower sales in other tire-related businesses, primarily third-party chemical sales in North America, unfavorable foreign currency translation, primarily in Latin America and Asia Pacific, and a decline in price and product mix, primarily in EMEA and North America as a result of the impact of lower raw material costs on pricing. In the first quarter of 2014, Goodyear net loss was $51 million, compared to net income of $33 million in the first quarter of 2013. In the first quarter of 2014, Goodyear net loss available to common shareholders was $58 million, or $0.23 per share, compared to net income available to common shareholders of $26 million, or $0.10 per share, in the first quarter of 2013. Goodyear net loss in the first quarter of 2014 compared to net income in the first quarter of 2013 was driven by an increased net remeasurement loss resulting from the devaluation of the Venezuelan bolivar fuerte; higher net rationalization charges, primarily related to the closure of one of our manufacturing facilities in Amiens, France; pension curtailment and settlement charges in 2014, primarily related to plans in North America and EMEA; and increased interest expense due to higher average debt balances and average interest rates, partially offset by improved segment operating income. Our total segment operating income for the first quarter of 2014 was $373 million, compared to $302 million in the first quarter of 2013. The $71 million increase in segment operating income was due primarily to a decline in raw material costs of $155 million, which more than offset the effects of lower price and product mix of $81 million, and lower conversion costs of $54 million. These improvements were partially offset by higher selling, administrative and general ("SAG") expenses of $23 million, driven by increased incentive compensation costs, and unfavorable foreign currency translation of $16 million. See "Results of Operations - Segment Information" for additional information. At March 31, 2014, we had $1,853 million of Cash and cash equivalents as well as $1,751 million of unused availability under our various credit agreements, compared to $2,996 million and $2,726 million, respectively, at December 31, 2013. Cash and cash equivalents decreased by $1,143 million from December 31, 2013 due primarily to contributions of $1,167 million, including discretionary contributions of $907 million, to fully fund our hourly U.S. pension plans. See "Liquidity and Capital Resources" for additional information. - 31-



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We continue to expect our full-year tire unit volume for 2014 will be up between 2% and 3% compared to 2013 and cost savings to offset general inflation and additional expenditures for advertising, marketing and research and development. We now expect a favorable impact from changes in unabsorbed fixed costs of $50 million to $75 million in 2014, with the remaining benefits of increased consumer and commercial tire production being largely offset by reduced off-the-road ("OTR") tire production for the remainder of 2014. Based on current raw material spot prices, for the full year of 2014, we expect our raw material costs will be lower than 2013. We now expect net raw material costs and price and product mix to be slightly positive in 2014, in spite of the negative mix impact of reduced OTR tire sales. Natural and synthetic rubber prices and other commodity prices have experienced significant volatility, and this estimate could change significantly based on fluctuations in the cost of these and other key raw materials. In order to mitigate some of the impact of raw material costs, we are continuing to focus on price and product mix, to substitute lower cost materials where possible and to work to identify additional substitution opportunities, to reduce the amount of material required in each tire, and to pursue alternative raw materials. See "Forward-Looking Information - Safe Harbor Statement" for a discussion of our use of forward-looking statements in this Form 10-Q.

RESULTS OF OPERATIONS



CONSOLIDATED

Net sales in the first quarter of 2014 were $4,469 million, decreasing $384 million, or 7.9%, from $4,853 million in the first quarter of 2013. Goodyear net loss was $51 million in the first quarter of 2014, compared to net income of $33 million in the first quarter of 2013. Goodyear net loss available to common shareholders was $58 million, or $0.23 per share, in the first quarter of 2014, compared to net income available to common shareholders of $26 million, or $0.10 per share, in the first quarter of 2013. Net sales decreased in the first quarter of 2014, due primarily to lower sales in other tire-related businesses of $202 million, primarily in North America due to a decrease in the volume of third-party chemical sales, unfavorable foreign currency of $126 million, primarily in Latin America and Asia Pacific, and a decline in price and product mix of $98 million, primarily in EMEA and North America as a result of the impact of lower raw material costs on pricing. These declines were partially offset by higher tire volume of $44 million, primarily in EMEA. Worldwide tire unit sales in the first quarter of 2014 were 40.0 million units, increasing 0.5 million units, or 1.2%, from 39.5 million units in the first quarter of 2013. The increase in units was driven primarily by EMEA, partially offset by a decrease in Latin America, primarily in Venezuela. Replacement tire volume increased 0.7 million units, or 2.6%, primarily in EMEA. Original equipment ("OE") tire volume decreased 0.2 million units, or 1.8%, primarily in Latin America. Cost of goods sold ("CGS") in the first quarter of 2014 was $3,518 million, decreasing $422 million, or 10.7%, from $3,940 million in the first quarter of 2013. CGS decreased due to lower costs in other tire-related businesses of $202 million, lower raw material costs of $155 million, favorable foreign currency translation of $95 million, primarily in Latin America and Asia Pacific, and lower conversion costs of $54 million. These decreases were partially offset by higher volume of $42 million, primarily in EMEA. Conversion costs were favorably impacted by lower under-absorbed fixed overhead costs of approximately $48 million due to higher production volume, primarily in EMEA and North America. CGS in the first quarter of 2014 included pension expense of $44 million, excluding the pension curtailment and settlement charges described below, which decreased from $63 million in the first quarter of 2013, due primarily to increased funding and returns on higher pension assets related to our North America plans. CGS in the first quarter of 2014 included a pension curtailment loss of $33 million ($32 million after-tax and minority) as a result of the future accrual freezes to pension plans in North America and a pension settlement loss of $5 million ($4 million after-tax and minority) related to lump sum payments to settle certain liabilities for our U.K. pension plans. The first quarter of 2014 also included accelerated depreciation of $1 million ($1 million after-tax and minority) compared to $5 million ($4 million after-tax and minority) in the 2013 period, which was primarily related to the plan to close one of our manufacturing facilities in Amiens, France. CGS was 78.7% of sales in the first quarter of 2014 compared to 81.2% in the first quarter of 2013. CGS also included savings from rationalization plans of $10 million and an additional savings of $6 million related to the the closure of one of our manufacturing facilities in Amiens, France. SAG in the first quarter of 2014 was $667 million, increasing $22 million, or 3.4%, from $645 million in the first quarter of 2013. The increase in SAG was due to higher incentive compensation costs, primarily driven by improved operating results in recent years and an increase in the Company's stock price. SAG was 14.9% of sales in the first quarter of 2014, compared to 13.3% in the first quarter of 2013. SAG in the first quarter of 2014 included pension expense of $14 million, compared to $16 million in 2013, primarily related to North America. SAG also included savings from rationalization plans of $6 million. We recorded net rationalization charges of $41 million ($29 million after-tax and minority) in the first quarter of 2014. Net charges include charges of $61 million for associate severance and idle plant costs, partially offset by a pension curtailment gain of $20 - 32-



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million, primarily related to the closure of one of our manufacturing facilities in Amiens, France. Rationalization actions initiated in the first quarter of 2014 primarily consisted of manufacturing headcount reductions related to EMEA's plans to improve operating efficiency. In addition, EMEA and Asia Pacific also initiated plans to reduce SAG headcount. We recorded net rationalization charges of $7 million in the first quarter of 2013 ($6 million after-tax and minority). Interest expense in the first quarter of 2014 was $105 million, increasing $20 million, or 23.5%, from $85 million in the first quarter of 2013. Interest expense increased due to higher average debt balances of $6,685 million in the first quarter of 2014 compared to $5,834 million in the first quarter of 2013 and higher average interest rates of 6.28% in the first quarter of 2014 compared to 5.83% in the first quarter of 2013. Other Expense in the first quarter of 2014 was $168 million, increasing $42 million, or 33.3%, from $126 million in the first quarter of 2013. Net foreign currency exchange losses included in Other Expense increased $30 million in the first quarter of 2014 reflecting a net remeasurement loss of $157 million ($132 million after-tax and minority) resulting from the devaluation of the Venezuelan bolivar fuerte against the U.S. dollar, compared to $115 million ($92 million after-tax and minority) in the first quarter of 2013. Foreign currency exchange also reflects net gains and losses resulting from the effect of exchange rate changes on various foreign currency transactions worldwide. For further discussion on Venezuela, refer to "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources." Other Expense in the first quarter of 2014 also included charges of $7 million ($7 million after-tax and minority) related to labor claims for a previously closed facility in EMEA. Other Expense in the first quarter of 2014 and 2013 both included net losses on asset sales of $2 million ($2 million after-tax and minority). Other Expense in the first quarter of 2014 and 2013 also included royalty income of $9 million and $10 million, respectively. A substantial portion of royalty income results from the amortization of deferred revenue from prepaid trademark licensing royalties associated with the sale of our former Engineered Products business to The Carlyle Group in 2007. In the first quarter of 2014, The Carlyle Group announced that it has entered into an agreement to sell that business to Continental AG. If that transaction is consummated, we expect to terminate the licensing agreement and recognize the unamortized balance of the deferred revenue, which would result in a one-time gain totaling approximately $170 million. Tax expense in the first quarter of 2014 was $8 million on a loss before income taxes of $30 million. In the first quarter of 2013, we recorded tax expense of $19 million on income before income taxes of $50 million. Income tax expense in the first quarter of 2013 was favorably impacted by $12 million ($12 million after minority interest) due primarily to an enacted tax law change. In addition to this discrete item, the differences between our effective tax rate and the U.S. statutory rate in both years were primarily attributable to charges that are not deductible for tax purposes related to the devaluation of the bolivar fuerte in Venezuela and continuing to maintain a full valuation allowance on our U.S. deferred tax assets. At January 1, 2014, our valuation allowance on our U.S. deferred tax assets was approximately $2,400 million. Since 2002, Goodyear has maintained a full valuation allowance on its U.S. net deferred tax asset position. Each reporting period we assess the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. A significant piece of objective negative evidence that we evaluate is the cumulative losses incurred in recent periods. Through 2012, our history of U.S. operating losses limited the weight we applied to other subjective evidence such as our projections for future profitability. Before we would change our judgment on the need for a full valuation allowance a sustained period of operating profitability is required. Considering the duration and magnitude of our U.S. operating losses it is our judgment that we have not yet achieved profitability of a duration and magnitude sufficient to release our valuation allowance against our deferred tax assets. Our conclusion to maintain a full valuation allowance on our U.S. deferred tax assets considered the following recent positive evidence. In 2013, we delivered a full year of U.S. earnings driven by North America's operating results. During the first quarter of 2014, we fully funded our hourly U.S. pension plans and, in accordance with our master collective bargaining agreement with the United Steelworkers, the hourly U.S. pension plans will be frozen to future accruals effective April 30, 2014. Freezing these plans reduces future earnings volatility and enables us to more accurately forecast and deliver sustained profitable U.S. operating results. Profits in recent quarters now provide us the opportunity to apply greater significance to our forecasts in our assessment of the need to retain a valuation allowance. If we achieve another full year of significant U.S. earnings in 2014 and forecasts for 2015 and beyond show continued profitability, we may have sufficient evidence to release all or a significant portion of our valuation allowance on our U.S. deferred tax assets during 2014. We believe it is reasonably possible that this positive evidence will be available. We measure deferred tax assets and liabilities using the enacted tax laws that apply in the years that we anticipate our deferred tax assets and liabilities will be recovered or paid. New U.S. corporate income tax laws enacted prior to a release of our valuation allowance could materially impact the value of our deferred tax assets and would be considered in our assessment of the need for a valuation allowance. In the periods after which our U.S. valuation allowance is released, we would expect an increase in our effective tax rate as a result of recording tax expense on our U.S. earnings. Until such time that we exhaust our tax credits and tax loss carryforwards, the release of the valuation allowance would not affect our cash tax payments. - 33-



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Our losses in various foreign taxing jurisdictions in recent periods represented sufficient negative evidence to require us to maintain a full valuation allowance against certain of our net deferred tax assets. However, it is reasonably possible that sufficient positive evidence required to release all, or a portion, of certain valuation allowances will exist during 2014. This may result in a reduction of the valuation allowance and a one-time tax benefit of up to $80 million ($60 million net of minority interest). Minority shareholders' net income in the first quarter of 2014 was $13 million, compared to a net loss of $2 million in 2013. The increase was due primarily to increased earnings in our joint venture in Europe.

SEGMENT INFORMATION Segment information reflects our strategic business units ("SBUs"), which are organized to meet customer requirements and global competition and are segmented on a regional basis. Results of operations are measured based on net sales to unaffiliated customers and segment operating income. Each segment exports tires to other segments. The financial results of each segment exclude sales of tires exported to other segments, but include operating income derived from such transactions. Segment operating income is computed as follows: Net Sales less CGS (excluding asset write-off and accelerated depreciation charges) and SAG (including certain allocated corporate administrative expenses). Segment operating income also includes certain royalties and equity in earnings of most affiliates. Segment operating income does not include net rationalization charges (credits), asset sales and certain other items. Total segment operating income in the first quarter of 2014 was $373 million increasing $71 million from $302 million in the first quarter of 2013. Total segment operating margin (segment operating income divided by segment sales) in the first quarter of 2014 was 8.3%, compared to 6.2% in the first quarter of 2013. Management believes that total segment operating income is useful because it represents the aggregate value of income created by our SBUs and excludes items not directly related to the SBUs for performance evaluation purposes. Total segment operating income is the sum of the individual SBUs' segment operating income. Refer to the Note to the Consolidated Financial Statements No. 6, Business Segments, for further information and for a reconciliation of total segment operating income to Income (Loss) before Income Taxes. North America Three Months Ended March 31, Percent



(In millions) 2014 2013 Change Change Tire Units 14.6 14.8 (0.2 ) (1.4 )% Net Sales $ 1,879$ 2,166$ (287 ) (13.3 )% Operating Income 156 127 29 22.8 % Operating Margin 8.3 % 5.9 %

North America unit sales in the first quarter of 2014 decreased 0.2 million units, or 1.4%, to 14.6 million units. OE tire volume decreased 0.2 million units, or 5.1%, partially driven by a decline in consumer OE tire volume mainly related to the adverse winter weather conditions early in the quarter that impacted the vehicle production of certain OE manufacturers. Replacement tire volume, also impacted by adverse winter weather conditions, remained flat. Net sales in the first quarter of 2014 were $1,879 million, decreasing $287 million, or 13.3%, from $2,166 million in the first quarter of 2013. The decrease was due primarily to lower sales in our other tire-related businesses of $201 million, driven by a decrease in volume of third-party chemical sales. In addition, net sales declined due to lower price and product mix of $52 million, as a result of the impact of lower raw material costs on pricing, lower tire volume of $22 million, and unfavorable foreign currency translation of $12 million. Operating income in the first quarter of 2014 was $156 million, increasing $29 million, or 22.8%, from $127 million in the first quarter of 2013. The increase in operating income was due primarily to lower conversion costs of $47 million. The decrease in conversion costs included lower under-absorbed overhead of $17 million resulting from higher production volumes, favorable pension costs of $15 million and reduced profit sharing of $10 million. Operating income also benefited from a decline in raw material costs of $61 million, which more than offset the effect of lower price and product mix of $58 million. These improvements were partially offset by increased transportation costs of $9 million, increased SAG expenses of $5 million due primarily to higher incentive compensation costs, and lower volume of $4 million. Conversion costs and SAG expenses included net savings from rationalization plans of $7 million and $3 million, respectively.

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Operating income in the first quarter of 2014 excluded net pension curtailment charges of $33 million and a net rationalization reversal of $1 million. Operating income in the first quarter of 2013 excluded net rationalization charges of $2 million and a net loss on asset sales of $1 million. Europe, Middle East and Africa

Three Months Ended March 31, Percent (In millions) 2014 2013 Change Change Tire Units 16.2 15.1 1.1 7.3 % Net Sales $ 1,676$ 1,607$ 69 4.3 % Operating Income 110 31 79 254.8 % Operating Margin 6.6 % 1.9 % Europe, Middle East and Africa unit sales in the first quarter of 2014 increased 1.1 million units, or 7.3%, to 16.2 million units. OE tire volume increased 0.5 million units, or 11.4%, and replacement tire volume increased 0.6 million units, or 5.8%. Increased unit volumes reflect higher industry volumes across EMEA during the quarter. Net sales in the first quarter of 2014 were $1,676 million, increasing $69 million, or 4.3%, from $1,607 million in the first quarter of 2013. Net sales increased due primarily to higher tire volume of $111 million and favorable foreign currency translation of $20 million. These increases were partially offset by unfavorable price and product mix of $60 million, driven by the impact of lower raw material costs on pricing. Operating income in the first quarter of 2014 was $110 million, increasing $79 million, or 254.8%, from $31 million in the first quarter of 2013. Operating income increased due primarily to a decline in raw material costs of $60 million, which more than offset the effect of lower price and product mix of $21 million. Operating income was also positively impacted by lower conversion costs of $21 million, higher tire volume of $19 million and net savings of $6 million from the closure of one of our Amiens, France manufacturing facilities. Decreased conversion costs included lower under-absorbed overhead of $35 million resulting from higher production volumes, partially offset by increased wages and depreciation. Operating income in 2014 was also negatively impacted by $11 million for a charge related to the expected cost of a Commercial customer satisfaction program. SAG expenses included net savings from rationalization plans of $2 million. The exit of our farm tire business in EMEA and closure of one of our Amiens, France manufacturing facilities are expected to improve EMEA operating income by approximately $75 million annually following the closure, with savings of approximately $40 million in 2014. The Amiens facility closed in the first quarter of 2014. We expect to finalize decisions regarding the timing of our exit from the remainder of the farm tire business in EMEA during 2014. Operating income in the first quarter of 2014 excluded net rationalization charges of $38 million, primarily related to the closure of one of our Amiens, France manufacturing facilities, charges of $7 million related to labor claims with respect to a previously closed facility, a net loss on asset sales of $2 million and charges for accelerated depreciation of $1 million. Operating income in the first quarter of 2013 excluded a charge of $5 million related to accelerated depreciation at one of our Amiens, France manufacturing facilities, net rationalization charges of $3 million and a net loss on asset sales of $2 million. Latin America Three Months Ended March 31, Percent (In millions) 2014 2013 Change Change Tire Units 4.0 4.5 (0.5 ) (11.0 )% Net Sales $ 422$ 513$ (91 ) (17.7 )% Operating Income 42 60 (18 ) (30.0 )% Operating Margin 10.0 % 11.7 %



Latin America unit sales in the first quarter of 2014 decreased 0.5 million units, or 11.0%, to 4.0 million units. OE tire volume decreased 0.4 million units, or 30.2%, driven primarily by weaker consumer OE vehicle production in Brazil and our selective fitment strategy in the consumer OE business. Replacement tire volume decreased 0.1 million units, or 1.8%, driven by a decline of 0.3 million units in Venezuela as a result of labor-related issues, partially offset by strong volume growth of 0.2 million units, or 9.9%, in other countries across the region.

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Net sales in the first quarter of 2014 were $422 million, decreasing $91 million, or 17.7%, from $513 million in the first quarter of 2013. Net sales decreased due primarily to unfavorable foreign currency translation of $93 million, mainly in Brazil and Venezuela, and lower tire volume of $52 million. These decreases were partially offset by improved price and product mix of $49 million, including a favorable shift from OE to replacement products, and higher sales in other tire-related businesses of $6 million. Operating income in the first quarter of 2014 was $42 million, decreasing $18 million, or 30.0%, from $60 million in the first quarter of 2013. Operating income decreased primarily due to lower tire volume of $14 million, higher conversion costs of $12 million, increased SAG expenses of $12 million, unfavorable foreign currency translation of $8 million and costs of $4 million associated with the expansion of one of our Brazilian manufacturing facilities. These decreases were partially offset by improved price and product mix of $20 million and lower raw material costs of $14 million. Conversion costs were negatively impacted by higher under-absorbed fixed overhead costs of $6 million due primarily to lower production volume in Venezuela and overall inflation, including wages and benefits. The increase in SAG expenses is due primarily to overall inflation, including wages and benefits, and higher incentive compensation costs. SAG expenses included savings from rationalization plans of $2 million. Operating income in the first quarter of 2014 and 2013 excluded net foreign currency exchange losses of $157 million and $115 million, respectively, related to the devaluation of the Venezuelan bolivar fuerte. In addition, Latin America's operating income in the first quarter of 2013 excluded a net gain on asset sales of $1 million. Latin America's results in the first quarter of 2014 were negatively impacted by our Venezuelan operations, which produced an operating loss of $8 million in the first quarter of 2014, declining $9 million from operating income of $1 million in the first quarter of 2013. The decline in operating income resulted from a significant reduction in production levels, changes in the exchange rate applicable to settle certain transactions and government price and profit margin controls. Latin America's results in the first quarter of 2013 were negatively impacted by the February 2013 devaluation of the Venezuelan bolivar fuerte against the U.S. dollar. On April 5, 2014, associates at our Venezuelan manufacturing facility ratified our new labor contract. Prior to the agreement, labor-related issues in Venezuela resulted in reduced production and sales. While we expect the environment in Venezuela to remain volatile, recent developments related to government price and profit margin controls, which may limit our ability to offset the impact of the change in the exchange rate used to remeasure our financial statements (to the SICAD I auction rate), and the labor issues described above are expected to adversely impact Latin America's 2014 operating income by approximately $40 million to $60 million compared to 2013. For further information see "Note to the Consolidated Financial Statements No. 3, Other Expense," and "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" in this Form 10-Q and "Item 1A. Risk Factors," and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources - Overview" in our 2013 Form 10-K. In 2014, costs associated with the expansion of one of our Brazilian manufacturing facilities are expected to negatively impact Latin America's segment operating income by $20 million to $25 million compared to 2013. Asia Pacific Three Months Ended March 31, Percent



(In millions) 2014 2013 Change Change Tire Units 5.2 5.1 0.1 1.5 % Net Sales $ 492$ 567$ (75 ) (13.2 )% Operating Income 65 84 (19 ) (22.6 )% Operating Margin 13.2 % 14.8 %

Asia Pacific unit sales in the first quarter of 2014 increased 0.1 million units, or 1.5%, to 5.2 million units. Replacement tire volume increased 0.1 million units, or 2.7%, while OE tire volume remained flat. The increase in replacement tire unit volume was primarily due to growth in India and China, partially offset by a decline in Australia as a result of a continued weak economic environment. Net sales in the first quarter of 2014 were $492 million, decreasing $75 million, or 13.2%, from $567 million in the first quarter of 2013. Net sales decreased due to unfavorable foreign currency translation of $41 million, primarily driven by the depreciation of the Australian dollar and Indian rupee, unfavorable price and product mix of $35 million, driven primarily by the impact of unfavorable mix due to lower OTR product sales and the impact of lower raw material costs on pricing, and lower sales in other tire-related businesses of $6 million, primarily in our retail operations. These decreases were partially offset by higher volumes of $7 million. Operating income in the first quarter of 2014 was $65 million, decreasing $19 million, or 22.6%, from $84 million in the first quarter of 2013. Operating income decreased due primarily to lower price and product mix of $22 million, partially driven by the - 36-



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impact of unfavorable mix due to lower OTR product sales. Lower price and product mix was partially offset by the effect of lower raw material costs of $20 million. Operating income was also negatively impacted by unfavorable foreign currency translation of $8 million, higher SAG expenses of $7 million, driven primarily by wages and benefits, lower insurance recoveries of $7 million related to the fourth quarter 2011 Thailand flood, higher conversion costs of $2 million and lower income from other tire-related businesses of $1 million, primarily in our retail operations. The decreases were partially offset by lower start-up expenses for our new manufacturing facility in Pulandian, China of $11 million and higher volume of $1 million. Operating income in the first quarter of 2014 excluded net rationalization charges of $4 million, primarily in Australia. Operating income in the first quarter of 2013 excluded net rationalization charges of $2 million. In the first quarter of 2013, on a consolidated basis, we recorded a $9 million net benefit ($6 million after-tax and minority), which included $7 million in Asia Pacific, due to insurance recoveries for the fourth quarter 2011 flood in Thailand. In 2014, decreases in start-up expenses at our manufacturing facility in Pulandian, China are anticipated to improve Asia Pacific's segment operating income by $20 million to $25 million compared to 2013. - 37-



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LIQUIDITY AND CAPITAL RESOURCES Our primary sources of liquidity are cash generated from our operating and financing activities. Our cash flows from operating activities are driven primarily by our operating results and changes in our working capital requirements and our cash flows from financing activities are dependent upon our ability to access credit or other capital. In the first quarter of 2014, we experienced stabilizing industry conditions in developed markets as the economic recovery in Europe and the United States continued. However, we experienced weakening industry conditions in emerging markets. Labor-related issues at our manufacturing facility in Venezuela, combined with social unrest and economic uncertainty in that country, adversely impacted Latin America, and slowing growth adversely impacted Asia Pacific. We have now fully funded substantially all of our U.S. pension plans, thereby addressing a significant legacy liability and effecting a significant improvement in our capital structure. The successful execution of our pension strategy will improve earnings and operating cash flow and provide greater transparency to our underlying tire business. At March 31, 2014, we had $1,853 million in Cash and cash equivalents, compared to $2,996 million at December 31, 2013. For the three months ended March 31, 2014, net cash used by operating activities was $1,543 million due primarily to pension contributions and direct payments of $1,223 million and cash used for working capital of $590 million. Net cash used by investing activities was $211 million, driven primarily by capital expenditures of $229 million. Net cash provided by financing activities was $795 million primarily driven by net borrowings of $845 million. At March 31, 2014, we had $1,751 million of unused availability under our various credit agreements, compared to $2,726 million at December 31, 2013. The table below presents unused availability under our credit facilities at those dates: March 31, December 31, (In millions) 2014 2013



First lien revolving credit facility $ 939$ 1,155 European revolving credit facility

37 546 Pan-European accounts receivable facility - 179 Other domestic and international debt 293 373 Notes payable and overdrafts 482 473 $ 1,751$ 2,726 We have deposited our cash and cash equivalents and entered into various credit agreements and derivative contracts with financial institutions that we considered to be substantial and creditworthy at the time of such transactions. We seek to control our exposure to these financial institutions by diversifying our deposits, credit agreements and derivative contracts across multiple financial institutions, by setting deposit and counterparty credit limits based on long term credit ratings and other indicators of credit risk such as credit default swap spreads, and by monitoring the financial strength of these financial institutions on a regular basis. We also enter into master netting agreements with counterparties when possible. By controlling and monitoring exposure to financial institutions in this manner, we believe that we effectively manage the risk of loss due to nonperformance by a financial institution. However, we cannot provide assurance that we will not experience losses or delays in accessing our deposits or lines of credit due to the nonperformance of a financial institution. Our inability to access our cash deposits or make draws on our lines of credit, or the inability of a counterparty to fulfill its contractual obligations to us, could have a material adverse effect on our liquidity, financial position or results of operations in the period in which it occurs. During the first quarter of 2014, we made contributions of $1,167 million, including $907 million of discretionary contributions, to fully fund our hourly U.S. pension plans. Following these contributions, the Company changed its target asset allocation for these plans to a portfolio of substantially all fixed income securities designed to offset the future impact of discount rate movements on the plans' funded status. Our hourly U.S. pension plans, along with our frozen and fully funded U.S. pension plans, are invested in a portfolio of substantially all fixed income securities. Changes in general interest rates and corporate (AA or better) credit spreads impact our discount rate and thereby our U.S. pension benefit obligation. If corporate (AA or better) interest rates increase or decrease in parallel (i.e., across all maturities), the investment actions described above would mitigate a substantial portion of the expected change in our U.S. pension benefit obligation. For example, if corporate (AA or better) interest rates increased or decreased by 0.50%, the actions described above would mitigate approximately 90% of the expected change in our U.S. pension benefit obligation. We expect our 2014 cash flow needs to include capital expenditures of approximately $900 million to $1.0 billion. We also expect interest expense to range between $430 million and $455 million and, when and if future dividends are declared, dividends on our common stock to be $54 million. We expect to contribute approximately $1.3 billion to our funded U.S. and non-U.S. pension plans in 2014, inclusive of our first quarter 2014 U.S. pension contributions of $1,167 million. We intend to operate the business - 38-



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in a way that allows us to address these needs with our existing cash and available credit if they cannot be funded by cash generated from operations. We have commenced arbitration proceedings seeking the dissolution of our global alliance with Sumitomo Rubber Industries, Ltd. ("SRI"), damages and other appropriate relief. The dissolution of the global alliance could require us to make a payment to acquire SRI's interests in Goodyear Dunlop Tires Europe B.V. ("GDTE") and Goodyear Dunlop Tires North America, Ltd. ("GDTNA"), which could be offset by payments to us in respect of the dissolution or for damages. We do not anticipate that the resolution of the arbitration proceedings will have a material adverse impact on our customers, results of operations or liquidity. We expect that any net payment by us to SRI could be made from our cash generated from operations, existing cash or available credit. Subject to those arbitration proceedings, SRI also has certain minority exit rights under the global alliance agreements that, if triggered and exercised, could require us to make a payment to acquire SRI's interests in GDTE and GDTNA following the determination of the fair value of SRI's interests. For further information regarding our global alliance with SRI, including the events that could trigger SRI's exit rights, see "Item 1. Business. Description of Goodyear's Business - Global Alliance" in our 2013 Form 10-K. As of the date of this filing, SRI has not provided us written notice of its intention to exercise any exit rights that may have become exercisable. Our ability to service debt and operational requirements is also dependent, in part, on the ability of our subsidiaries to make distributions of cash to various other entities in our consolidated group, whether in the form of dividends, loans or otherwise. In certain countries where we operate, such as China, Venezuela, Argentina and South Africa, transfers of funds into or out of such countries by way of dividends, loans, advances or payments to third-party or affiliated suppliers are generally or periodically subject to certain requirements, such as obtaining approval from the foreign government and/or currency exchange board before net assets can be transferred out of the country. In addition, certain of our credit agreements and other debt instruments limit the ability of foreign subsidiaries to make distributions of cash. Thus, we would have to repay and/or amend these credit agreements and other debt instruments in order to use this cash to service our consolidated debt. Because of the inherent uncertainty of satisfactorily meeting these requirements or limitations, we do not consider the net assets of our subsidiaries, including our Chinese, Venezuelan, Argentinian and South African subsidiaries, that are subject to such requirements or limitations to be integral to our liquidity or our ability to service our debt and operational requirements. At March 31, 2014, approximately $660 million of net assets, including $365 million of cash and cash equivalents, were subject to such requirements, including $261 million of cash in Venezuela. The requirements we must comply with to transfer funds out of China, Argentina and South Africa have not adversely impacted our ability to make transfers out of those countries. Our Venezuelan subsidiary, C.A. Goodyear de Venezuela ("Goodyear Venezuela"), manufactures, markets and distributes consumer and commercial tires throughout Venezuela. A substantial portion of the raw materials used in the production of the tires it manufactures, including natural and synthetic rubber, are imported from other Goodyear facilities and from third parties. Certain finished tires are also imported from other Goodyear manufacturing facilities. In addition, Goodyear Venezuela is a party to various service and licensing agreements with other Goodyear companies. Since Venezuela's economy is considered to be highly inflationary under U.S. generally accepted accounting principles, the U.S. dollar is the functional currency of Goodyear Venezuela. All gains and losses resulting from the remeasurement of its financial statements are reported in Other Expense. 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. As a result of the devaluation, we recorded a $115 million remeasurement loss on bolivar fuerte-denominated net monetary assets and liabilities, including deferred taxes, primarily related to cash deposits in Venezuela, in the first quarter of 2013. Through December 31, 2013, substantially all of our transactions were subject to the approval of the Commission for the Administration of Currency Exchange ("CADIVI"). In January 2014, the Venezuelan government announced the formation of the National Center of Foreign Trade ("CENCOEX") to replace CADIVI. In addition, effective January 24, 2014, Venezuela's exchange rate applicable to the settlement of certain transactions, including payments of dividends and royalties, changed to an auction-based floating rate, the Complementary System of Foreign Currency Administration ("SICAD I") rate, which was 11.4 and 10.7 bolivares fuertes to the U.S. dollar at January 24, 2014 and March 31, 2014, respectively. The official exchange rate for settling certain transactions, including imports of essential goods, such as certain raw materials needed for the production of tires, remained at 6.3 bolivares fuertes to the U.S. dollar. In addition, effective March 24, 2014, the Venezuelan government implemented a third currency exchange rate, SICAD II, which is open to all companies in Venezuela to obtain U.S. dollars for any purpose. The SICAD II rate is also an auction-based floating rate and was approximately 50 bolivares fuertes to the U.S. dollar at March 31, 2014. We are required to remeasure our bolivar-denominated monetary assets and liabilities at the rate expected to be available for future dividend remittances by Goodyear Venezuela. We expect that future remittances of dividends by Goodyear Venezuela will be transacted at the SICAD I rate and, therefore, we recorded a remeasurement loss of $157 million on bolivar fuerte-denominated net monetary assets and liabilities, including deferred taxes, primarily related to cash deposits in Venezuela, using the SICAD I rate of 11.4 bolivares fuertes to the U.S. dollar as of January 24, 2014. We also recorded a subsidy receivable of $50 million related to certain U.S. dollar-denominated payables for goods that are expected to be settled at the official exchange rate of 6.3 - 39-



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bolivares fuertes per U.S. dollar. At March 31, 2014, the subsidy receivable was $45 million. A portion of this subsidy will reduce cost of goods sold in periods when the related inventory is sold. If we remeasured our bolivar fuerte-denominated assets and liabilities at the SICAD II rate of approximately 50 bolivares fuertes to the U.S. dollar at March 31, 2014, we would have recorded an additional remeasurement loss of approximately $235 million, including the derecognition of the subsidy receivable. In the first quarter of 2014, we used the official exchange rate of 6.3 bolivares fuertes to the U.S. dollar to settle foreign currency transactions in Venezuela and did not use the SICAD I or SICAD II rates to settle any transactions. If in the future we convert bolivares fuertes at a rate other than the March 31, 2014 SICAD I rate of 10.7 bolivares fuertes to the U.S. dollar, or the official exchange rate is revised, we may realize additional losses that would be recorded in the Statements of Operations. At March 31, 2014, we had bolivar fuerte-denominated monetary assets of $354 million, which consisted primarily of $261 million of cash, $49 million of accounts receivable and $32 million of deferred tax assets, and bolivar fuerte-denominated monetary liabilities of $112 million, which consisted primarily of $57 million of intercompany payables, including $24 million of dividends, $18 million of compensation and benefits, $16 million of long term benefits and $12 million of accounts payable - trade. At December 31, 2013, we had bolivar fuerte-denominated monetary assets of $496 million, which consisted primarily of $443 million of cash, $18 million of deferred tax assets and $17 million of accounts receivable, and bolivar fuerte-denominated monetary liabilities of $180 million, which consisted primarily of $96 million of intercompany payables, including $41 million of dividends, $25 million of accounts payable - trade, $24 million of long term benefits and $20 million of short term compensation and benefits. All monetary assets and liabilities were remeasured at 10.7 and 6.3 bolivares fuertes to the U.S. dollar at March 31, 2014 and December 31, 2013, respectively. Goodyear Venezuela's sales were 0.8% and 1.9% of our net sales for the three months ended March 31, 2014 and 2013, respectively. Goodyear Venezuela's cost of goods sold were 1.1% and 2.1% of our cost of goods sold for the three months ended March 31, 2014 and 2013, respectively. Goodyear Venezuela's operating loss was $8 million in the first quarter of 2014 as compared to operating income of $1 million in the first quarter of 2013. Goodyear Venezuela's sales are bolivar fuerte-denominated, its cost of goods sold are approximately 70% bolivar fuerte-denominated and approximately 30% U.S. dollar-denominated and its SAG is approximately 85% bolivar fuerte-denominated and approximately 15% U.S. dollar-denominated A further 10% decrease in the SICAD I rate to 11.77 bolivares fuertes to the U.S. dollar would decrease Goodyear Venezuela's operating income by approximately $11 million on an annual basis, before any potential offsetting actions. This sensitivity assumes the official rate for settling imports of essential goods, including certain raw materials needed for the production of tires, remains unchanged. During the three months ended March 31, 2014, Goodyear Venezuela settled $6 million of U.S. dollar-denominated intercompany payables through CADIVI/CENCOEX. For the three months ended March 31, 2014, all of the payables were settled at the exchange rate of 6.3 bolivares fuertes to the U.S. dollar. In the first quarter of 2014, we continued to obtain approval for the import of raw materials at the official exchange rate of 6.3 bolivares fuertes to the U.S. dollar. At March 31, 2014, settlements pending before CADIVI/CENCOEX were approximately $148 million, of which approximately $31 million are expected to be settled at the SICAD I rate and approximately $117 million are expected to be settled at 6.3 bolivares fuertes to the U.S. dollar. At March 31, 2014, $16 million of our requested settlements were pending up to 180 days, $33 million were pending from 180 to 360 days and $99 million were pending over one year. Amounts pending up to 180 days include imported tires and raw materials of $15 million, amounts pending from 180 to 360 days include imported tires and raw materials of $31 million, and amounts pending over one year include imported tires and raw materials of $66 million, dividends payable of $24 million, and intercompany charges for royalties of $7 million. Currency exchange controls in Venezuela continue to limit our ability to remit funds from Venezuela. Goodyear Venezuela contributed a significant portion of Latin America's sales and operating income in 2013. The continuing economic and political uncertainty, difficulties importing raw materials and finished goods, floating foreign exchange rates and government price and profit margin controls in Venezuela may also adversely impact Latin America's operating income in future periods. In response to conditions in Venezuela, we continuously evaluate the prices for our products while remaining competitive and have taken steps to address our operational challenges, including securing necessary approvals for import licenses and increasing the local production of certain tires. Our pricing policies take into account factors such as fluctuations in raw material and other production costs, market demand and adherence to government price and profit margin controls. We will also manage our operations in Venezuela to limit our net investment and working capital exposure through adjustments to our production volumes, which could also result in further earnings volatility. These and other restrictions could limit our ability to benefit from our investment and maintain a controlling interest in Goodyear Venezuela. We will continue to assess the information relative to available Venezuelan exchange rates and the impact on our financial position, results of operations and liquidity. We believe that our liquidity position is adequate to fund our operating and investing needs and debt maturities in 2014 and to provide us with flexibility to respond to further changes in the business environment. - 40-



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Operating Activities Net cash used in operating activities was $1,543 million in the first three months of 2014, compared to $937 million in the first three months of 2013. Operating cash flows were unfavorably impacted by increased pension contributions and direct payments of $315 million, increased working capital needs of $255 million, and decreased earnings of $69 million which reflects increased non-cash charges of $42 million for the remeasurement of the Venezuelan bolivar fuerte. The increase in cash used for working capital in 2014 was primarily due to an increase in inventories in North America in 2014 to support sales growth. The increase in pension contributions was due primarily to first quarter 2014 discretionary contributions to fully fund our hourly U.S. pension plans. Investing Activities Net cash used in investing activities was $211 million in the first three months of 2014, compared to $283 million in the first three months of 2013. Capital expenditures were $229 million in the first three months of 2014, compared to $271 million in the first three months of 2013. Beyond expenditures required to sustain our facilities, capital expenditures in 2014 primarily related to expansion of manufacturing capacity in North America, Japan and Brazil. Expenditures in 2013 primarily related to expansion of manufacturing capacity in Japan, Brazil and Chile. Financing Activities Net cash provided by financing activities was $795 million in the first three months of 2014, compared to $1,462 million in the first three months of 2013. Financing activities in 2014 included net borrowings of $845 million used to fund working capital needs and capital expenditures. Net borrowings of $1,486 million in 2013 included net proceeds of $885 million from the first quarter issuance of $900 million in aggregate principal amount of 6.5% senior notes due 2021 and borrowings of approximately $256 million under the European revolving credit facility, used primarily to fund pension contributions, working capital needs and capital expenditures. Credit Sources In aggregate, we had total credit arrangements of $9,190 million available at March 31, 2014, of which $1,751 million were unused, compared to $9,293 million available at December 31, 2013, of which $2,726 million were unused. At March 31, 2014, we had long term credit arrangements totaling $8,682 million, of which $1,269 million were unused, compared to $8,806 million and $2,253 million, respectively, at December 31, 2013. At March 31, 2014, we had short term committed and uncommitted credit arrangements totaling $508 million, of which $482 million were unused, compared to $482 million and $473 million, respectively, at December 31, 2013. The continued availability of the short term uncommitted arrangements are at the discretion of the relevant lender and may be terminated at any time. Outstanding Notes At March 31, 2014, we had $3,358 million of outstanding notes, compared to $3,356 million at December 31, 2013. For additional information on our outstanding notes, refer to the Note to Consolidated Financial Statements, No. 14, Financing Arrangements and Derivative Financial Instruments, in our 2013 Form 10-K and Note 7, Financing Arrangements and Derivative Financial Instruments, in this Form 10-Q. $2.0 Billion Amended and Restated First Lien Revolving Credit Facility due 2017 Our amended and restated $2.0 billion first lien revolving credit facility is available in the form of loans or letters of credit, with letter of credit availability limited to $800 million. Loans under this facility initially bear interest at LIBOR plus 150 basis points, based on our current liquidity. Subject to the consent of the lenders whose commitments are to be increased, we may request that the facility be increased by up to $250 million. Our obligations under the facility are guaranteed by most of our wholly-owned U.S. and Canadian subsidiaries. Our obligations under the facility and our subsidiaries' obligations under the related guarantees are secured by first priority security interests in a variety of collateral. Availability under the facility is subject to a borrowing base, which is based on eligible accounts receivable and inventory of The Goodyear Tire & Rubber Company and certain of its U.S. and Canadian subsidiaries, after adjusting for customary factors that are subject to modification from time to time by the administrative agent or the majority lenders at their discretion (not to be exercised unreasonably). Modifications are based on the results of periodic collateral and borrowing base evaluations and appraisals. 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. In addition, if the amount of outstanding borrowings and letters of credit under the facility exceeds the borrowing base, we are required to prepay borrowings and/or cash collateralize letters of credit sufficient to eliminate the excess. As of March 31, 2014, our borrowing base, and therefore our availability, under the facility was $587 million below the facility's stated amount of $2.0 billion. - 41-



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At March 31, 2014, the amount outstanding under the first lien revolving credit facility was $100 million. At December 31, 2013, there were no borrowings outstanding under the first lien revolving credit facility. Letters of credit issued totaled $374 million at March 31, 2014 and $375 million at December 31, 2013. $1.2 Billion Amended and Restated Second Lien Term Loan Facility due 2019 Our obligations under this facility are guaranteed by most of our wholly-owned U.S. and Canadian subsidiaries and are secured by second priority security interests in the same collateral securing the $2.0 billion first lien revolving credit facility. Subject to the consent of the lenders making additional term loans, we may request that the facility be increased by up to $300 million. At March 31, 2014 and December 31, 2013, this facility was fully drawn. €400 Million Amended and Restated Senior Secured European Revolving Credit Facility due 2016 Our amended and restated €400 million revolving credit facility consists of a €100 million German tranche that is available only to Goodyear Dunlop Tires Germany GmbH (the "German borrower") and a €300 million all-borrower tranche that is available to GDTE, the German borrower and certain of GDTE's other subsidiaries. Up to €50 million in letters of credit are available for issuance under the all-borrower tranche. GDTE and certain of its subsidiaries in the United Kingdom, Luxembourg, France and Germany provide guarantees to support the facility. GDTE's obligations under the facility and the obligations of its subsidiaries under the related guarantees are secured by security interests in a variety of collateral. Goodyear and its U.S. subsidiaries and primary Canadian subsidiary that guarantee our U.S. senior secured credit facilities described above also provide unsecured guarantees to support the facility. At March 31, 2014, the amounts outstanding under the German tranche and all-borrower tranche were $138 million (€100 million) and $372 million (€270 million), respectively. At December 31, 2013, there were no borrowings outstanding under the revolving credit facility. Letters of credit issued under the all-borrower tranche totaled $5 million (€3 million) at March 31, 2014 and December 31, 2013. Each of our first lien revolving credit facility and our European revolving credit facility have customary representations and warranties including, as a condition to borrowing, that all such representations and warranties are true and correct, in all material respects, on the date of the borrowing, including representations as to no material adverse change in financial condition since December 31, 2011 under the first lien facility and December 31, 2010 under the European facility. Each of the facilities described above have customary defaults, including cross-defaults to material indebtedness of Goodyear and our subsidiaries. For a description of the collateral securing the above facilities as well as the covenants applicable to them, please refer to "Covenant Compliance" below, the Note to the Consolidated Financial Statements No. 14, Financing Arrangements and Derivative Financial Instruments, in our 2013 Form 10-K and Note 7, Financing Arrangements and Derivative Financial Instruments, in this Form 10-Q. Accounts Receivable Securitization Facilities (On-Balance Sheet) GDTE and certain of its subsidiaries are parties to a pan-European accounts receivable securitization facility that provides up to €450 million of funding and expires on July 30, 2015. Availability under this facility is based on eligible receivable balances. The facility is subject to the customary renewal of its back-up liquidity commitments, which expire on October 17, 2014. The facility involves an ongoing daily sale of substantially all of the trade accounts receivable of certain GDTE subsidiaries to a bankruptcy-remote French company controlled by one of the liquidity banks in the facility. These subsidiaries retain servicing responsibilities. At March 31, 2014, the amounts available and utilized under this program totaled $364 million (€264 million). At December 31, 2013, the amounts available and utilized under this program totaled $386 million (€280 million) and $207 million (€150 million), respectively. The program did not qualify for sale accounting, and accordingly, these amounts are included in Long Term Debt and Capital Leases. In addition to the pan-European accounts receivable securitization facility discussed above, subsidiaries in Australia have an accounts receivable securitization program that provides up to $79 million (85 million Australian dollars) of funding. Availability under this program is based on eligible receivable balances. At March 31, 2014, the amounts available and utilized under this program were $79 million and $49 million, respectively. At December 31, 2013, the amounts available and utilized under this program were $76 million and $18 million, respectively. The receivables sold under this program also serve as collateral for the related facility. We retain the risk of loss related to these receivables in the event of non-payment. These amounts are included in Long Term Debt and Capital Leases due Within One Year. Accounts Receivable Factoring Facilities (Off-Balance Sheet) Various subsidiaries sell certain of their trade receivables under off-balance sheet programs. For these programs, we have concluded that there is no risk of loss to us from non-payment of the sold receivables. At March 31, 2014, the gross amount of receivables sold was $264 million, compared to $301 million at December 31, 2013. - 42-



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Supplier Financing We have entered into payment processing agreements with several financial institutions. Under these agreements, the financial institution acts as our paying agent with respect to accounts payable due to our suppliers. These agreements also allow our suppliers to sell their receivables to the financial institutions at the sole discretion of both the supplier and the financial institution on terms that are negotiated between them. We are not notified when our suppliers sell receivables under these programs. Our obligations to our suppliers, including the amounts due and scheduled payment dates, are not impacted by our suppliers' decisions to sell their receivables under the programs. At March 31, 2014 and December 31, 2013, agreements for such supplier financing programs totaled approximately $400 million. Covenant Compliance Our amended and restated first lien revolving and second lien credit facilities and some of the indentures governing our notes contain certain covenants that, among other things, limit our ability to incur additional debt or issue redeemable preferred stock, make certain restricted payments or investments, incur liens, sell assets, incur restrictions on the ability of our subsidiaries to pay dividends to us, enter into affiliate transactions, engage in sale and leaseback transactions, and consolidate, merge, sell or otherwise dispose of all or substantially all of our assets. These covenants are subject to significant exceptions and qualifications. We have additional financial covenants in our first lien revolving and second lien credit facilities that are currently not applicable. We only become subject to these financial covenants when certain events occur. These financial covenants and related events are as follows: • 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 March 31, 2014, our availability under this facility of $939 million, plus our Available Cash of $556 million, totaled $1,495 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.



In addition, our amended and restated European revolving credit facility contains non-financial covenants similar to the non-financial covenants in our first and second lien credit facilities that are described above and a financial covenant applicable only to GDTE and its subsidiaries. This financial covenant provides that we are not permitted to allow GDTE's ratio of Consolidated Net J.V. Indebtedness to Consolidated European J.V. EBITDA for a period of four consecutive fiscal quarters to be greater than 3.0 to 1.0 at the end of any fiscal quarter. Consolidated Net J.V. Indebtedness is determined net of the sum of cash and cash equivalents in excess of $100 million held by GDTE and its subsidiaries, cash and cash equivalents in excess of $150 million held by the Parent Company and its U.S. subsidiaries and availability under our first lien revolving credit facility if the ratio of EBITDA to Consolidated Interest Expense described above is not applicable and the conditions to borrowing under the first lien revolving credit facility are met. Consolidated Net J.V. Indebtedness also excludes loans from other consolidated Goodyear entities. This financial covenant is also included in our pan-European accounts receivable securitization facility. At March 31, 2014, we were in compliance with this financial covenant. Our amended and restated credit facilities also state that we may only incur additional debt or make restricted payments that are not otherwise expressly permitted if, after giving effect to the debt incurrence or the restricted payment, our ratio of EBITDA to Consolidated Interest Expense for the prior four fiscal quarters would exceed 2.0 to 1.0. Certain of our senior note indentures have substantially similar limitations on incurring debt and making restricted payments. Our credit facilities and indentures also permit the incurrence of additional debt through other provisions in those agreements without regard to our ability to satisfy the ratio-based incurrence test described above. We believe that these other provisions provide us with sufficient flexibility to incur additional debt necessary to meet our operating, investing and financing needs without regard to our ability to satisfy the ratio-based incurrence test. There are no known future changes to, or new covenants in, any of our existing debt obligations at March 31, 2014 other than as described above. Covenants could change based upon a refinancing or amendment of an existing facility, or additional covenants may be added in connection with the incurrence of new debt. At March 31, 2014, we were in compliance with the currently applicable material covenants imposed by our principal credit facilities and indentures.

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The terms "Available Cash," "EBITDA," "Consolidated Interest Expense," "Consolidated Net Secured Indebtedness," "Pro Forma Senior Secured Leverage Ratio," "Consolidated Net J.V. Indebtedness" and "Consolidated European J.V. EBITDA" have the meanings given them in the respective credit facilities. Potential Future Financings In addition to our previous financing activities, we may seek to undertake additional financing actions which could include restructuring bank debt or capital markets transactions, possibly including the issuance of additional debt or equity. Given the challenges that we face and the uncertainties of the market conditions, access to the capital markets cannot be assured. Our future liquidity requirements may make it necessary for us to incur additional debt. However, a substantial portion of our assets are already subject to liens securing our indebtedness. As a result, we are limited in our ability to pledge our remaining assets as security for additional secured indebtedness. In addition, no assurance can be given as to our ability to raise additional unsecured debt. Dividends and Common Stock Repurchase Program Under our primary credit facilities and some of our note indentures, we are permitted to pay dividends on and repurchase our capital stock (which constitute restricted payments) as long as no default will have occurred and be continuing, additional indebtedness can be incurred under the credit facilities or indentures following the payment, and certain financial tests are satisfied. In the first three months of 2014, we paid cash dividends of $7 million on our mandatory convertible preferred stock. On March 6, 2014, the Company's Board of Directors (or a duly authorized committee thereof) declared cash dividends of $0.7344 per share of mandatory convertible preferred stock or $7 million in the aggregate. The dividend was paid on April 1, 2014 to stockholders who presented the preferred stock for mandatory conversion on that date. No further dividends will be paid on our preferred stock following the conversion to shares of common stock on April 1, 2014. In the first three months of 2014, we paid cash dividends of $12 million on our common stock. On April 14, 2014, the Company's Board of Directors (or a duly authorized committee thereof) declared cash dividends of $0.05 per share of common stock, or approximately $14 million in the aggregate. The dividend will be paid on June 2, 2014 to stockholders of record as of the close of business of May 1, 2014. Future quarterly dividends are subject to Board approval. On September 18, 2013, the Board of Directors authorized $100 million for use in the Company's common stock repurchase program. That authorization expires on September 20, 2016. We intend to repurchase shares of common stock in open market transactions in order to offset new shares issued under equity compensation programs. During the first three months of 2014, the Company repurchased 850,000 shares at an average price, including commissions, of $27.12 per share, or $23 million in the aggregate. The restrictions imposed by our credit facilities and indentures did not affect our ability to pay the dividends on or repurchase our capital stock as described above, and are not expected to affect our ability to pay similar dividends or make similar repurchases in the future. Asset Dispositions The restrictions on asset sales imposed by our material indebtedness have not affected our strategy of divesting non-core businesses, and those divestitures have not affected our ability to comply with those restrictions. - 44-



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FORWARD-LOOKING INFORMATION - SAFE HARBOR STATEMENT Certain information in this Form 10-Q (other than historical data and information) may constitute forward-looking statements regarding events and trends that may affect our future operating results and financial position. The words "estimate," "expect," "intend" and "project," as well as other words or expressions of similar meaning, are intended to identify forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this Form 10-Q. Such statements are based on current expectations and assumptions, are inherently uncertain, are subject to risks and should be viewed with caution. Actual results and experience may differ materially from the forward-looking statements as a result of many factors, including: • if we do not successfully implement our strategic initiatives, our operating results, financial condition and liquidity may be materially adversely affected; • 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; • 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 business, results of operations, financial position and liquidity could be materially adversely affected; • our long term ability to meet our obligations, to repay maturing indebtedness or to implement strategic initiatives may be dependent on our ability to access capital markets in the future and to improve our operating results; • financial difficulties, work stoppages, supply disruptions or economic conditions affecting 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; • 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 operations; • our international operations have certain risks that may materially adversely affect our operating results, financial condition and liquidity; • 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 are subject to extensive government regulations that may materially adversely affect our operating results; • the arbitration proceedings we have brought to dissolve our global alliance with SRI and the terms and conditions of the existing global alliance agreements with SRI could require us to make a substantial payment to acquire SRI's minority interests in GDTE and GDTNA; • 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.



It is not possible to foresee or identify all such factors. We will not revise or update any forward-looking statement or disclose any facts, events or circumstances that occur after the date hereof that may affect the accuracy of any forward-looking statement.

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