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OFFON

THE GOODYEAR TIRE & RUBBER COMPANY

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

11/05/2021 | 11:05am EST

All per share amounts are diluted and refer to Goodyear net income (loss).

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
55 manufacturing facilities in 23 countries, including the United States. We
operate our business through three operating segments representing our regional
tire businesses: Americas; Europe, Middle East and Africa ("EMEA"); and Asia
Pacific.

Cooper Tire Acquisition

On June 7, 2021 (the "Closing Date"), we completed our previously announced
acquisition of Cooper Tire & Rubber Company ("Cooper Tire") pursuant to the
terms of the Agreement and Plan of Merger, dated February 22, 2021 (the "Merger
Agreement"), by and among Goodyear, Vulcan Merger Sub Inc., a direct, wholly
owned subsidiary of Goodyear ("Merger Sub"), and Cooper Tire. Goodyear acquired
Cooper Tire by way of the merger of Merger Sub with and into Cooper Tire (the
"Merger"), with Cooper Tire surviving the Merger as a wholly owned subsidiary of
Goodyear. In accordance with the terms of the Merger Agreement, upon closing of
the transaction, Cooper Tire stockholders received $41.75 per share in cash and
a fixed exchange ratio of 0.907 shares of Goodyear common stock per share of
Cooper Tire common stock (the "Merger Consideration"). The cash component of the
Merger Consideration totaled $2,155 million and the stockholders of Cooper Tire
received 46.1 million shares of Goodyear common stock valued at $942 million,
based on the closing market price of Goodyear common stock on the last trading
day prior to the Closing Date. For further information, refer to Note to the
Consolidated Financial Statements No. 2, Cooper Tire Acquisition.

The descriptions of, and references to, the Merger Agreement included in this
Quarterly Report on Form 10-Q are qualified in their entirety by the full text
of the Merger Agreement, which is attached as Exhibit 2.1 to our Current Report
on Form 8-K filed on February 25, 2021.

On May 18, 2021, we issued $850 million in aggregate principal amount of 5%
senior notes due 2029 and $600 million in aggregate principal amount of 5.25%
senior notes due July 2031. The net proceeds from these notes, together with
cash and cash equivalents and borrowings under our first lien revolving credit
facility, were used to fund the cash component of the Merger Consideration and
related transaction costs.

On June 7, 2021, we amended and restated our $2.0 billion first lien revolving
credit facility. Changes to the facility include extending the maturity to June
8, 2026 and increasing the amount of the facility to $2.75 billion. The interest
rate for loans under the facility decreased by 50 basis points to LIBOR plus 125
basis points.

The results of Cooper Tire's operations have been included in our consolidated financial statements since the Closing Date.


Transaction and other costs related to the acquisition of Cooper Tire totaled
$55 million during the nine months ended September 30, 2021, of which $49
million ($41 million after-tax and minority) of these costs were included in
Other (Income) Expense and $6 million ($4 million after-tax and minority) were
included in Cost of Goods Sold ("CGS") and Selling, General and Administrative
Expense ("SAG"). There were no transaction costs related to the acquisition of
Cooper Tire during the third quarter of 2021.

The Merger Consideration was allocated on a provisional basis to the estimated
fair value of the assets acquired and liabilities assumed from Cooper Tire as of
the Closing Date. Certain of these fair value estimates, including those related
to Property, Plant and Equipment, Goodwill and Intangible Assets, are
preliminary and subject to change as management completes further analyses and
studies. For further information, refer to Note to the Consolidated Financial
Statements No. 2, Cooper Tire Acquisition, and "Critical Accounting Policies".

Results of Operations


During the third quarter and first nine months of 2021, our operating results
significantly improved compared to 2020, as the overall negative impacts of the
COVID-19 pandemic on tire industry demand, auto production, miles driven and our
tire volume moderated and continued to improve, compared to the severe global
economic disruption experienced throughout much of 2020, particularly in the
first half of the year.

Nonetheless, our results for the third quarter and first nine months of 2021
continued to be negatively influenced by the direct and indirect macroeconomic
effects of the ongoing pandemic. Our global businesses are experiencing varying
stages of recovery, as national and local efforts in many countries to contain
the spread of COVID-19, including renewed stay-at-home orders, continue to
impact economic conditions. Increased demand for consumer products and supply
chain disruptions as a result of the pandemic and other global events, including
port congestion and container shortages, has led to inflationary cost pressures,

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including higher costs for certain raw materials, higher transportation costs
and higher energy costs, as well as shortages of certain automobile parts, such
as semiconductors, which have affected OE manufacturers' ability to produce
consumer and commercial vehicles consistently.

Most of our global tire manufacturing facilities are operating at or near full
capacity to meet current demand, as well as to increase the level of our
finished goods inventory as we continue to restock in order to fulfill
anticipated near-term demand. However, like many companies, we are experiencing
shortages of qualified and reliable workers, particularly in the U.S.
Absenteeism, a tight labor supply and elevated turnover are resulting in
manufacturing inefficiencies, increased training costs and higher wages. To
address this issue, we have accelerated hiring, increased training capacity and
started to adjust future investment plans to consider not just the cost, but
also the availability of qualified workers. Our decisions to change production
levels in the future will be based on an evaluation of market demand signals and
inventory and supply levels, as well as the availability of sufficient qualified
labor and our ability to continue to safeguard the health of our associates.

We continue to monitor the pandemic on a local basis, taking actions to protect
the health and wellbeing of our associates, customers and communities, which
remain our top priority. We also continue to follow guidance from the Centers
for Disease Control and Prevention, which include preventative measures at our
facilities as appropriate, including limiting visitor access and business
travel, remote and hybrid working, masking and social distancing practices, and
frequent disinfection.

In addition, during the first quarter of 2021, a severe winter storm in the U.S.
caused temporary shutdowns of three of our chemical facilities, limited
production at three tire manufacturing facilities, and impacted more than 170
consumer and commercial retail locations. We estimate that the negative impact
on our earnings, primarily in Americas, for the three and nine months ended
September 30, 2021 was approximately $2 million ($2 million after-tax and
minority) and $52 million ($42 million after-tax and minority), respectively.

Our results for the third quarter of 2021 include a 31.6% increase in tire unit
shipments compared to 2020, reflecting the addition of Cooper Tire's operating
results, as well as the pandemic-related recovery noted above. Year-over-year
cost savings, including the impact of temporary fixed cost reductions in 2020,
were unfavorable by $65 million.

Net sales in the third quarter of 2021 were $4,934 million, compared to $3,465
million in the third quarter of 2020. Net sales increased in the third quarter
of 2021 primarily due to the addition of Cooper Tire's net sales of $907
million, improvements in price and product mix, primarily in Americas and EMEA,
higher sales in other tire-related businesses, driven by increased third-party
chemical sales in Americas and increased global aviation tire sales, and higher
tire volume, primarily in Americas and EMEA.

In the third quarter of 2021, Goodyear net income was $132 million, or $0.46 per
share, compared to a net loss of $2 million, or $0.01 per share, in the third
quarter of 2020. The favorable change in Goodyear net income (loss) was
primarily due to higher segment operating income, partially offset by higher
income tax expense.

Our total segment operating income for the third quarter of 2021 was $372
million, compared to $162 million in the third quarter of 2020. The $210 million
increase was primarily due to improvements in price and product mix of $332
million, primarily in Americas and EMEA, the addition of Cooper Tire's operating
income of $48 million, lower conversion costs of $26 million, primarily
reflecting favorable overhead absorption as a result of higher global factory
utilization more than offsetting the nonrecurrence of pandemic-related temporary
cost reductions in 2020, inflationary cost pressures and labor-related
manufacturing inefficiencies, higher earnings in other tire-related businesses
of $23 million, driven by increased global aviation tire sales and increased
retail sales in Americas, and higher tire volume of $22 million. These
improvements in segment operating income were partially offset by higher raw
material costs of $161 million and higher SAG of $49 million.

Net sales in the first nine months of 2021 were $12,424 million, compared to
$8,665 million in the first nine months of 2020. Net sales increased in the
first nine months of 2021 primarily due to higher global tire volume, the
addition of Cooper Tire's net sales since the Closing Date of $1,163 million,
higher sales in other tire-related businesses, driven by increased third-party
chemical, retread and retail sales in Americas, increased Fleet Solutions sales
in EMEA and increased global aviation tire sales, improvements in price and
product mix, and favorable foreign currency translation, primarily in EMEA and
Asia Pacific.

In the first nine months of 2021, Goodyear net income was $211 million, or $0.82
per share, compared to a net loss of $1,317 million, or $5.62 per share, in the
first nine months of 2020. The favorable change in Goodyear net income (loss)
was primarily due to higher segment operating income, a decrease in goodwill and
other asset impairment charges and lower rationalization expense, partially
offset by higher income tax expense and higher interest expense.

Our total segment operating income for the first nine months of 2021 was $897
million, compared to an operating loss of $316 million in the first nine months
of 2020. The $1,213 million favorable change was primarily due to improvements
in price and product mix of $583 million, primarily in Americas and EMEA, lower
conversion costs of $384 million, primarily due to favorable overhead absorption
as a result of higher global factory utilization, higher global tire volume of
$357 million, higher earnings in other tire-related businesses of $115 million,
driven by increased third-party chemical and retail sales in Americas,

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as well as increased global aviation sales, and a favorable indirect tax ruling
in Brazil of $69 million. These improvements in segment operating income were
partially offset by higher raw material costs of $176 million and higher SAG of
$130 million. Total segment operating income for the first nine months of 2021
includes operating income of $32 million related to Cooper Tire. Refer to
"Results of Operations - Segment Information" for additional information.

Liquidity


At September 30, 2021, we had $1,187 million of cash and cash equivalents as
well as $4,195 million of unused availability under our various credit
agreements, compared to $1,539 million and $3,881 million, respectively, at
December 31, 2020. Cash and cash equivalents decreased by $352 million from
December 31, 2020 primarily due to payment of the $1,856 million cash component
of the Merger Consideration, net of cash and restricted cash acquired, and
capital expenditures of $666 million, partially offset by net borrowings of
$2,257 million, including $1,450 million of new senior notes used to fund the
Cooper Tire acquisition. In addition, cash used for operating activities was $2
million in the first nine months of 2021. Cash used for operating activities
reflects cash used for working capital of $1,064 million and rationalization
payments of $162 million, largely offset by net income for the period of $223
million, which includes non-cash charges for depreciation and amortization of
$645 million and an inventory fair value step-up adjustment of $110 million
related to the Cooper Tire acquisition. Refer to "Liquidity and Capital
Resources" for additional information.

On April 6, 2021, we completed a public offering of $550 million in aggregate
principal amount of 5.25% senior notes due April 2031 and $450 million in
aggregate principal amount of 5.625% senior notes due 2033. Net proceeds from
these offerings, together with cash and cash equivalents, were used to redeem
our $1.0 billion 5.125% senior notes due 2023 on May 6, 2021 at a price of 100%
of the principal amount, plus accrued and unpaid interest to the redemption
date.

On September 28, 2021, we issued €400 million in aggregate principal amount of
Goodyear Europe B.V. ("GEBV") 2.75% senior notes due 2028. A portion of the net
proceeds from these notes were used to redeem our existing €250 million 3.75%
senior notes due 2023 on October 28, 2021.

Outlook


While markets have recovered considerably, we continue to face uncertainty in
many countries around the globe as governments continue to implement measures to
slow the pandemic that have the potential to reduce economic activity and
mobility. In addition, OE manufacturers have continued to be affected by
shortages of components and materials, which have limited automobile production
globally. Also, our ability to ship products, particularly to locations where we
do not have manufacturing, will continue to be impacted by ongoing disruptions
in global logistics. In this environment, we expect volume in the fourth quarter
of 2021 to be below the fourth quarter of 2019, excluding the benefit of volume
added from the Cooper Tire acquisition. However, with the added volume of Cooper
Tire, volume trends in the fourth quarter of 2021 are expected to be similar to
the third quarter of 2021, when compared to 2019.

For the full year of 2021, we expect our raw material costs to increase $450
million to $475 million, including the benefit of raw material cost saving
measures. This expectation excludes raw material cost increases related to
Cooper Tire, which we acquired on June 7, 2021, as the incremental impact of
Cooper Tire on our results will be reported separately through the second
quarter of 2022. Natural and synthetic rubber prices and other commodity prices
historically have been volatile, and this estimate could change significantly
based on fluctuations in the cost of these and other key raw materials and
foreign exchange rates. We are continuing to focus on price and product mix, to
substitute lower cost materials where possible, to work to identify additional
substitution opportunities, to reduce the amount of material required in each
tire, and to pursue alternative raw materials. In the fourth quarter of 2021, we
expect the benefits of price and product mix will continue to exceed the impact
of higher raw material costs, which are anticipated to approach $300 million.

In addition to the impact of higher raw material costs, we expect continued
inflationary pressures from incremental wage, benefit, transportation and energy
costs to negatively impact our fourth quarter 2021 results in excess of our
ability to offset these costs with cost savings measures. We also expect higher
manufacturing costs to negatively impact our fourth quarter 2021 results due to
our facilities in the U.S. being affected by higher costs related to higher
turnover and the need to train newly hired staff. Our manufacturing facilities
in China are being affected by rolling blackouts. As a result, we anticipate the
need to focus on price and product mix to manage the impact of these cost
pressures in addition to the impact of higher raw material costs.

During 2021, including the impact of Cooper Tire, we expect to reinvest $300
million to $500 million in working capital. We expect to experience normal
seasonality in working capital during the fourth quarter of 2021, resulting in
positive cash flows from operating activities in excess of capital expenditures.

Our results for the fourth quarter of 2021 will also be impacted by the amortization of purchase accounting adjustments of approximately $10 million based on our preliminary allocation of the Merger Consideration.

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Refer to "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year
ended December 31, 2020 (the "2020 Form 10-K") and our Quarterly Report on Form
10-Q for the quarterly period ended March 31, 2021 for a discussion of the
factors that may impact our business, results of operations, financial condition
or liquidity and "Forward-Looking Information - Safe Harbor Statement" in this
Quarterly Report on Form 10-Q for a discussion of our use of forward-looking
statements.

                             RESULTS OF OPERATIONS

CONSOLIDATED

Three months ended September 30, 2021 and 2020


Net sales in the third quarter of 2021 were $4,934 million, increasing $1,469
million, or 42.4%, from $3,465 million in the third quarter of 2020. Goodyear
net income was $132 million, or $0.46 per share, in the third quarter of 2021,
compared to a net loss of $2 million, or $0.01 per share, in the third quarter
of 2020.

Net sales increased in the third quarter of 2021 primarily due to the addition
of Cooper Tire's net sales of $907 million, improvements in price and product
mix of $297 million, primarily in Americas and EMEA, higher sales in other
tire-related businesses of $128 million, driven by increased third-party
chemical sales in Americas and increased global aviation tire sales, higher tire
volume of $95 million, primarily in Americas and EMEA, and favorable foreign
currency translation of $40 million.

Worldwide tire unit sales in the third quarter of 2021 were 48.2 million units,
increasing 11.6 million units, or 31.6%, from 36.6 million units in the third
quarter of 2020. Replacement tire volume increased globally by 12.1 million
units, or 44.2%. OE tire volume decreased by 0.5 million units, or 7.3%,
reflecting decreases in Americas and EMEA, which were partially offset by an
increase in Asia Pacific.

CGS in the third quarter of 2021 was $3,894 million, increasing $1,119 million,
or 40.3%, from $2,775 million in the third quarter of 2020. CGS increased
primarily due to the addition of Cooper Tire's CGS of $771 million, which
includes $72 million ($53 million after-tax and minority) of amortization
related to a fair value adjustment to the Closing Date inventory that was
acquired by Goodyear, higher raw material costs of $161 million, higher costs in
other tire-related businesses of $105 million, driven by increased third-party
chemical sales in Americas, higher tire volume of $73 million, primarily in
Americas and EMEA, and foreign currency translation of $30 million. These
increases were partially offset by lower costs related to product mix of $35
million, driven by Americas, and lower conversion costs of $26 million,
primarily reflecting favorable overhead absorption as a result of higher global
factory utilization more than offsetting the nonrecurrence of pandemic-related
temporary cost reductions in 2020, inflationary cost pressures and labor-related
manufacturing inefficiencies.

CGS in the third quarter of 2021 and 2020 included pension expense of $6 million
and $4 million, respectively. CGS in the third quarter of 2020 included an
unfavorable indirect tax settlement in Mexico of $6 million ($5 million
after-tax and minority). CGS in the third quarter of 2020 also included asset
write-offs of $4 million ($3 million after-tax and minority), primarily related
to the permanent closure of our Gadsden, Alabama manufacturing facility
("Gadsden"). CGS in the third quarter of 2021 included incremental savings from
rationalization plans of $2 million, compared to $38 million in 2020. CGS was
78.9% of sales in the third quarter of 2021, compared to 80.1% in the third
quarter of 2020.

SAG in the third quarter of 2021 was $727 million, increasing $172 million, or
31.0%, from $555 million in the third quarter of 2020. SAG increased primarily
due to the addition of Cooper Tire's SAG of $98 million, higher wages and
benefits of $26 million, higher advertising expense of $9 million, higher
third-party contracting costs of $8 million, and foreign currency translation of
$7 million.

SAG in the third quarter of 2021 and 2020 included pension expense of $4 million
and $5 million, respectively. SAG in both the third quarter of 2021 and 2020
included incremental savings from rationalization plans of $2 million. SAG was
14.7% of sales in the third quarter of 2021, compared to 16.0% in the third
quarter of 2020.

We recorded net rationalization charges of $13 million ($11 million after-tax
and minority) in the third quarter of 2021 and $25 million ($20 million
after-tax and minority) in the third quarter of 2020. Net rationalization
charges in the third quarter of 2021 primarily related to the permanent closure
of Gadsden and the plan to modernize two of our tire manufacturing facilities in
Germany. Net rationalization charges in the third quarter of 2020 primarily
related to the permanent closure of Gadsden and additional termination benefits
for associates at the closed Amiens, France manufacturing facility. For further
information, refer to Note to the Consolidated Financial Statements No. 4, Costs
Associated with Rationalization Programs.

Interest expense in the third quarter of 2021 was $104 million, increasing $16
million, or 18.2%, from $88 million in the third quarter of 2020. The average
interest rate was 5.11% in the third quarter of 2021 compared to 5.17% in the
third quarter of 2020. The average debt balance was $8,137 million in the third
quarter of 2021 compared to $6,815 million in the third quarter of 2020.

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Other (Income) Expense in the third quarter of 2021 was $9 million of expense,
compared to $32 million of expense in the third quarter of 2020. Other (Income)
Expense for the three months ended September 30, 2021 includes pension
settlement charges of $11 million ($8 million after-tax and minority) and net
gains (losses) on asset and other sales of $10 million ($7 million after-tax and
minority) and $(3) million ($(2) million after-tax and minority), respectively,
primarily related to the sale of land in Hanau, Germany. Other (Income) Expense
in the third quarter of 2020 included pension settlement charges of $16 million
($12 million after-tax and minority). The remainder of the change in Other
(Income) Expense between the third quarter of 2021 and 2020 was driven by a
decrease in the other components of non-service related pension and other
postretirement benefits cost, primarily as a result of lower interest cost from
decreases in discount rates.

For the third quarter of 2021, we recorded income tax expense of $53 million on
income before income taxes of $187 million. In the third quarter of 2020, we
recorded a tax benefit of $13 million on a loss before income taxes of $10
million. The income tax benefit for the three months ended September 30, 2020
includes discrete tax benefits of $14 million ($14 million after minority
interest), primarily to adjust our deferred tax assets in England for an enacted
change in the tax rate during 2020. For further information regarding income
taxes, refer to Note to the Consolidated Financial Statements No. 6, Income
Taxes.

Minority shareholders' net income in the third quarter of 2021 was $2 million, compared to $5 million in 2020.

Nine Months Ended September 30, 2021 and 2020


Net sales in the first nine months of 2021 were $12,424 million, increasing
$3,759 million, or 43.4%, from $8,665 million in the first nine months of 2020.
Goodyear net income was $211 million, or $0.82 per share, in the first nine
months of 2021, compared to a net loss of $1,317 million, or $5.62 per share, in
the first nine months of 2020.

Net sales increased in the first nine months of 2021, primarily due to higher
global tire volume of $1,673 million, the addition of Cooper Tire's net sales of
$1,163 million, higher sales in other tire-related businesses of $381 million,
driven by increased third-party chemical and retail sales in Americas and higher
retread sales in Americas and EMEA, improvements in price and product mix of
$346 million, and favorable foreign currency translation of $194 million,
primarily in EMEA and Asia Pacific.

Worldwide tire unit sales in the first nine months of 2021 were 120.7 million
units, increasing 32.4 million units, or 36.7%, from 88.3 million units in the
first nine months of 2020. Replacement tire volume increased globally by 28.2
million units, or 42.2%. OE tire volume increased globally by 4.2 million units,
or 19.5%.

CGS in the first nine months of 2021 was $9,723 million, increasing $2,180
million, or 28.9%, from $7,543 million in the first nine months of 2020. CGS
increased primarily due to higher global tire volume of $1,316 million, the
addition of Cooper Tire's CGS of $1,006 million, which includes $110 million
($82 million after-tax and minority) of amortization related to a fair value
adjustment to the Closing Date inventory that was acquired by Goodyear, higher
costs in other tire-related businesses of $266 million, driven by higher
third-party chemical and retread sales in Americas, higher raw material costs of
$176 million, and foreign currency translation of $143 million, primarily in
EMEA and Asia Pacific. These increases were partially offset by lower conversion
costs of $384 million, primarily due to favorable overhead absorption as a
result of higher global factory utilization and savings from rationalization
plans, lower costs related to product mix of $237 million, primarily in
Americas, a favorable indirect tax ruling in Brazil of $69 million, of which $66
million ($43 million after-tax and minority) related to prior years, and $26
million of pandemic-related work in process inventory write-offs in 2020,
primarily in Americas and EMEA.

CGS in the first nine months of 2021 and 2020 included pension expense of $15
million and $12 million, respectively. CGS in the first nine months of 2020
included accelerated depreciation of $94 million ($72 million after-tax and
minority), primarily related to the permanent closure of Gadsden. CGS in the
first nine months of 2020 also included an unfavorable indirect tax settlement
in Mexico of $6 million ($5 million after-tax and minority). CGS in the first
nine months of 2021 included incremental savings from rationalization plans of
$60 million, primarily in Americas, compared to $66 million in 2020. CGS was
78.3% of sales in the first nine months of 2021, compared to 87.1% in the first
nine months of 2020.

SAG in the first nine months of 2021 was $1,949 million, increasing $362
million, or 22.8%, from $1,587 million in the first nine months of 2020. SAG
increased primarily due to the addition of Cooper Tire's SAG of $140 million,
higher wages and benefits of $104 million and higher advertising expense of $34
million, both relating to pandemic-related actions taken in 2020, and foreign
currency translation of $48 million, primarily in EMEA and Asia Pacific.

SAG in the first nine months of 2021 and 2020 included pension expense of $13
million for each period. SAG in the first nine months of 2021 included
incremental savings from rationalization plans of $7 million, compared to $4
million in 2020. SAG was 15.7% of sales in the first nine months of 2021,
compared to 18.3% in the first nine months of 2020.

In the first nine months of 2020, we recorded a non-cash impairment charge of
$182 million ($178 million after-tax and minority) related to goodwill of our
EMEA reporting unit and a $148 million non-cash impairment charge ($113 million
after-tax and minority) related to our investment in TireHub.

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We recorded net rationalization charges of $81 million ($72 million after-tax
and minority) in the first nine months of 2021 and $133 million ($104 million
after-tax and minority) in the first nine months of 2020. Net rationalization
charges in the first nine months of 2021 primarily related to the plan to
modernize two of our manufacturing facilities in Germany, the permanent closure
of Gadsden, and a plan to reduce SAG headcount in EMEA. Net rationalization
charges in the first nine months of 2020 primarily related to the permanent
closure of Gadsden and additional termination benefits for associates at the
closed Amiens, France manufacturing facility. For further information, refer to
Note to the Consolidated Financial Statements No. 4, Costs Associated with
Rationalization Programs.

Interest expense in the first nine months of 2021 was $280 million, increasing
$34 million, or 13.8%, from $246 million in the first nine months of 2020. The
average interest rate was 5.28% in the first nine months of 2021 compared to
5.00% in the first nine months of 2020. The average debt balance was $7,073
million in the first nine months of 2021 compared to $6,554 million in the first
nine months of 2020. Interest expense in the first nine months of 2021 included
a $5 million ($4 million after-tax and minority) charge related to the
redemption of our existing $1.0 billion 5.125% senior notes due 2023.

Other (Income) Expense in the first nine months of 2021 was $73 million of
expense, compared to $93 million of expense in the first nine months of 2020.
Other (Income) Expense for the nine months ended September 30, 2021 includes $48
million ($32 million after-tax and minority) of interest income related to the
favorable indirect tax ruling in Brazil, net gains (losses) on asset and other
sales of $10 million ($7 million after-tax and minority) and $(3) million ($(2)
million after-tax and minority), respectively, primarily related to the sale of
land in Hanau, Germany, $49 million of transaction and other costs related to
the acquisition of Cooper Tire, and pension settlement charges of $30 million
($22 million after-tax and minority). Other (Income) Expense in the first nine
months of 2021 also includes an out of period adjustment of $7 million ($7
million after-tax and minority) of expense related to foreign currency exchange
in Americas. Other (Income) Expense in the first nine months of 2020 included
pension settlement charges of $19 million ($14 million after-tax and minority)
and net losses on asset sales of $2 million ($2 million after-tax and minority).
The remainder of the change in Other (Income) Expense between the first nine
months of 2021 and 2020 was driven by a decrease in the other components of
non-service related pension and other postretirement benefits cost, primarily as
a result of lower interest cost from decreases in discount rates.

For the first nine months of 2021, we recorded income tax expense of $95 million
on income before income taxes of $318 million. Income tax expense for the nine
months ended September 30, 2021 includes a net discrete benefit of $30 million
($30 million after minority interest), primarily related to adjusting our
deferred tax assets in England for a recently enacted increase in the tax rate,
partially offset by net discrete charges for various items, including the
settlement of a tax audit in Poland.

In the first nine months of 2020, we recorded income tax expense of $50 million
on a loss before income taxes of $1,267 million. Income tax expense for the nine
months ended September 30, 2020 includes net discrete charges of $278 million
($279 million after minority interest), including the establishment of a $295
million valuation allowance on certain deferred tax assets for foreign tax
credits during the first quarter of 2020.

We record taxes based on overall estimated annual effective tax rates. The
difference between our effective tax rate and the U.S. statutory rate of 21% for
the nine months ended September 30, 2021 primarily relates to the tax on the
favorable indirect tax ruling in Brazil during the second quarter, losses in
foreign jurisdictions in which no tax benefits are recorded, and the discrete
items noted above. The difference between our effective tax rate and the U.S.
statutory rate of 21% for the nine months ended September 30, 2020 primarily
relates to the discrete items noted above, a first quarter non-cash goodwill
impairment charge of $182 million, and forecasted losses for the full year in
foreign jurisdictions in which no tax benefits are recorded, which were
accentuated during 2020 by business interruptions resulting from the COVID-19
pandemic.

At September 30, 2021 and December 31, 2020, we had approximately $800 million
and $1.2 billion of U.S. federal, state and local net deferred tax assets,
respectively, net of valuation allowances totaling $368 million primarily for
foreign tax credits with limited lives. At September 30, 2021, approximately
$500 million of these U.S. net deferred tax assets have unlimited lives and
approximately $300 million have limited lives and expire between 2025 and 2041.
The decrease in our U.S. net deferred tax assets from December 31, 2020
primarily reflects the establishment of deferred tax liabilities for the tax
impacts of certain fair value and other purchase accounting adjustments related
to the Cooper Tire acquisition. In the U.S., we have a cumulative loss for the
three-year period ending September 30, 2021. However, as the three-year
cumulative loss in the U.S. is driven by business disruptions created by the
COVID-19 pandemic, primarily in 2020, we also considered other objectively
verifiable information in assessing our ability to utilize our net deferred tax
assets, including recent favorable recovery trends in the tire industry and our
tire volume as well as expected continued improvement. In addition, the Cooper
Tire acquisition is expected to generate incremental domestic earnings and
provide opportunities for cost and other operating synergies to further improve
our U.S. profitability. These favorable trends, together with tax planning
strategies, may provide sufficient objectively verifiable information to reverse
a portion or all of our U.S. valuation allowance for foreign tax credits within
the next twelve months.

At September 30, 2021 and December 31, 2020, our U.S. net deferred tax assets
included $160 million and $133 million, respectively, of foreign tax credits
with limited lives, net of valuation allowances of $328 million, generated
primarily from the

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receipt of foreign dividends. Our earnings and forecasts of future
profitability, taking into consideration recent trends, along with three
significant sources of foreign income provide us sufficient positive evidence
that we will be able to utilize our remaining foreign tax credits that expire
between 2025 and 2031. Our sources of foreign income are (1) 100% of our
domestic profitability can be re-characterized as foreign source income under
current U.S. tax law to the extent domestic losses have offset foreign source
income in prior years, (2) annual net foreign source income, exclusive of
dividends, primarily from royalties, and (3) tax planning strategies, including
capitalizing research and development costs, accelerating income on cross border
transactions, including sales of inventory or raw materials to our subsidiaries,
and reducing U.S. interest expense by, for example, reducing intercompany loans
through repatriating current year earnings of foreign subsidiaries, all of which
would increase our domestic profitability.

We consider our current forecasts of future profitability in assessing our
ability to realize our deferred tax assets, including our foreign tax credits.
As noted above, these forecasts include the impact of recent trends, including
various macroeconomic factors such as the impact of the COVID-19 pandemic, on
our profitability, as well as the impact of tax planning strategies.
Macroeconomic factors, including the impact of the COVID-19 pandemic, possess a
high degree of volatility and can significantly impact our profitability. As
such, there is a risk that future earnings will not be sufficient to fully
utilize our U.S. net deferred tax assets, including our remaining foreign tax
credits. However, we believe our forecasts of future profitability along with
the three significant sources of foreign income described above provide us
sufficient positive, objectively verifiable evidence to conclude that it is more
likely than not that, at September 30, 2021, our U.S. net deferred tax assets,
including our foreign tax credits, net of valuation allowances, will be fully
utilized.

At September 30, 2021 and December 31, 2020, we had approximately $1.3 billion
of foreign deferred tax assets and valuation allowances of $1.0 billion and $1.1
billion, respectively. 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 these net foreign
deferred tax assets. Most notably, in Luxembourg, we maintain a valuation
allowance of approximately $897 million on all of our net deferred tax assets.
Each reporting period, we assess available positive and negative evidence and
estimate if sufficient future taxable income will be generated to utilize these
existing deferred tax assets. We do not believe that sufficient positive
evidence required to release valuation allowances having a significant impact on
our financial position or results of operations will exist within the next
twelve months.

For further information regarding income taxes and the realizability of our deferred tax assets, including our foreign tax credits, refer to Note to the Consolidated Financial Statements No. 6, Income Taxes.

Minority shareholders' net income in the first nine months of 2021 was $12 million, compared to break-even in 2020.

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, goodwill and other asset impairment charges, and certain other items.

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 Note to the Consolidated Financial Statements No. 8, Business
Segments, for further information and for a reconciliation of total segment
operating income to Income (Loss) before Income Taxes.

Total segment operating income for the third quarter of 2021 was $372 million,
increasing $210 million from $162 million in the third quarter of 2020. Total
segment operating margin (segment operating income divided by segment sales) in
the third quarter of 2021 was 7.5% compared to 4.7% in the third quarter of
2020. Total segment operating income for the first nine months of 2021 was $897
million, a favorable change of $1,213 million from total segment operating loss
of $316 million in the first nine months of 2020. Total segment operating margin
in the first nine months of 2021 was 7.2% compared to (3.6)% in the first nine
months of 2020.

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Americas

                         Three Months Ended September 30,                  

Nine Months Ended September 30,

                                                        Percent                                             Percent
(In millions)       2021         2020       Change       Change        2021        2020        Change       Change
Tire Units             25.9        16.2         9.7         59.3 %       60.4        39.2         21.2          54.1 %
Net Sales         $   2,967$ 1,823$ 1,144         62.8 %   $  7,010$ 4,630$ 2,380          51.4 %
Operating
Income (Loss)           259         106         153        144.3 %        606        (181 )        787            NM
Operating
Margin                  8.7 %       5.8 %                                 8.6 %      (3.9 )%

Three months ended September 30, 2021 and 2020


Americas unit sales in the third quarter of 2021 increased 9.7 million units, or
59.3%, to 25.9 million units. Replacement tire volume increased 10.2 million
units, or 82.7%, primarily due to the addition of Cooper Tire's units and an
increase in our consumer business in the United States, driven by continued
recovery from the economic impacts of the COVID-19 pandemic. OE tire volume
decreased 0.5 million units, or 15.8%, primarily in our consumer business in the
United States. Consumer OE tire volume continued to be negatively affected by
impacts to vehicle production driven by global supply chain disruptions,
including shortages of key manufacturing components, such as semiconductors.

Net sales in the third quarter of 2021 were $2,967 million, increasing $1,144
million, or 62.8%, from $1,823 million in the third quarter of 2020. The
increase in net sales was driven by the addition of Cooper Tire's net sales of
$795 million, improvements in price and product mix of $137 million, higher
sales in other tire-related businesses of $105 million, primarily due to an
increase in third-party sales of chemical products and higher retread and
aviation sales, higher tire volume of $87 million, and favorable foreign
currency translation of $21 million, primarily related to the strengthening of
the Brazilian real, Canadian dollar and Mexican peso.

Operating income in the third quarter of 2021 was $259 million, increasing $153
million, or 144.3%, from $106 million in the third quarter of 2020. The increase
in operating income was due to improvements in price and product mix of $186
million, which more than offset higher raw material costs of $77 million, the
addition of Cooper Tire's operating income of $44 million, higher tire volume of
$20 million, higher earnings in other tire-related businesses of $13 million,
primarily due to higher retail and aviation sales and an increase in third-party
sales of chemical products, and lower conversion costs of $11 million, primarily
reflecting favorable overhead absorption as a result of higher factory
utilization more than offsetting the nonrecurrence of pandemic-related temporary
cost reductions in 2020, inflationary cost pressures and labor-related
manufacturing inefficiencies. These increases were partially offset by higher
SAG of $25 million, primarily related to higher wages and benefits, inflation
and warehousing costs, and increased transportation costs of $22 million. SAG
and conversion costs include incremental savings from rationalization plans of
$2 million and $1 million, respectively. Price and product mix includes TireHub
equity income of $1 million in 2021, while 2020 includes losses of $4 million.
We estimate that the national strike in Colombia and the severe winter storm in
the U.S. that occurred in the first half of 2021 negatively impacted Americas
operating income for the third quarter of 2021 by approximately $5 million ($5
million after-tax and minority) and $1 million, respectively.

Operating income in the third quarter of 2021 excluded rationalization charges
of $11 million, primarily related to the permanent closure of Gadsden. Operating
income in the third quarter of 2020 excluded rationalization charges of $9
million and asset write-offs of $4 million, primarily related to Gadsden.

Nine Months Ended September 30, 2021 and 2020


Americas unit sales in the first nine months of 2021 increased 21.2 million
units, or 54.1%, to 60.4 million units. Replacement tire volume increased 20.0
million units, or 65.8%, and OE tire volume increased 1.2 million units, or
13.5%, primarily due to the addition of Cooper Tire's units and an increase in
our consumer business in the United States, Brazil and Mexico, driven by
continued recovery from the economic impacts of the COVID-19 pandemic. Consumer
OE tire volume continued to be negatively affected by impacts to vehicle
production driven by global supply chain disruptions, including shortages of key
manufacturing components, such as semiconductors.

Net sales in the first nine months of 2021 were $7,010 million, increasing
$2,380 million, or 51.4%, from $4,630 million in the first nine months of 2020.
The increase in net sales was driven by the addition of Cooper Tire's net sales
of $1,018 million, higher tire volume of $966 million, higher sales in other
tire-related businesses of $307 million, primarily due to an increase in
third-party sales of chemical products and higher retail, retread and aviation
sales, and favorable price and product mix of $87 million. We estimate that the
severe winter storm in the U.S. negatively impacted Americas net sales for the
first nine months of 2021 by approximately $35 million.

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Operating income in the first nine months of 2021 was $606 million, a change of
$787 million, from an operating loss of $181 million in the first nine months of
2020. The increase in operating income was due to improvements in price and
product mix of $356 million, which more than offset higher raw material costs of
$99 million, lower conversion costs of $218 million, primarily due to favorable
overhead absorption as a result of higher factory utilization, higher tire
volume of $174 million, higher earnings in other tire-related businesses of $90
million, primarily due to an increase in third-party sales of chemical products
and higher retail and aviation sales, the favorable indirect tax ruling in
Brazil of $69 million, Cooper Tire's operating income of $30 million, and $13
million of pandemic-related work in process inventory write-offs in 2020. These
increases were partially offset by higher SAG of $54 million, primarily due to
higher wages and benefits relating to pandemic-related actions taken in 2020,
inflation and higher warehousing costs, and the net impact of out of period
adjustments totaling $6 million ($6 million after-tax and minority) of expense
primarily related to inventory and accrued freight charges. Conversion costs and
SAG include incremental savings from rationalization plans of $55 million and $6
million, respectively, primarily related to Gadsden. Price and product mix
includes TireHub equity income of $2 million in the first nine months of 2021
compared to a loss of $30 million in the first nine months of 2020. We estimate
that the severe winter storm in the U.S. and the national strike in Colombia
that occurred in the first half of 2021 negatively impacted Americas operating
income for the first nine months of 2021 by approximately $42 million and $9
million ($9 million after-tax and minority), respectively.

Operating income in the first nine months of 2021 excluded rationalization
charges of $29 million, primarily related to the permanent closure of Gadsden.
Operating income in the first nine months of 2020 excluded the TireHub non-cash
impairment charge of $148 million, as well as asset write-offs and accelerated
depreciation of $93 million and rationalization charges of $81 million,
primarily related to Gadsden.

Europe, Middle East and Africa


                         Three Months Ended September 30,                   

Nine Months Ended September 30,

                                                          Percent                                             Percent
(In millions)      2021           2020        Change       Change        2021        2020        Change       Change
Tire Units            14.2          13.2          1.0          7.7 %       38.9        32.1          6.8          21.2 %
Net Sales        $   1,397$ 1,156$    241         20.8 %   $  3,858$ 2,827$ 1,031          36.5 %
Operating
Income (Loss)           81            22           59        268.2 %        198        (141 )        339            NM
Operating
Margin                 5.8 %         1.9 %                                  5.1 %      (5.0 )%

Three months ended September 30, 2021 and 2020


Europe, Middle East and Africa unit sales in the third quarter of 2021 increased
1.0 million units, or 7.7%, to 14.2 million units. Replacement tire volume
increased 1.5 million units, or 14.2%, primarily in our consumer business,
reflecting increased industry demand due to continued recovery from the economic
impacts of the COVID-19 pandemic, the recovery of some tire volume lost in 2020
as a result of our ongoing initiative to align distribution in Europe, and the
addition of Cooper Tire's units. OE tire volume decreased 0.5 million units, or
17.8%, reflecting the negative impact on vehicle production of global supply
chain disruptions, including shortages of key manufacturing components, such as
semiconductors.

Net sales in the third quarter of 2021 were $1,397 million, increasing $241
million, or 20.8%, from $1,156 million in the third quarter of 2020. Net sales
increased primarily due to improvements in price and product mix of $128
million, the addition of Cooper Tire's net sales of $65 million, higher sales in
other tire-related businesses of $23 million, driven by growth in our Fleet
Solutions business and increased aviation sales, higher tire volume of $16
million, and favorable foreign currency translation of $7 million, driven by a
stronger euro, South African rand and British pound partially offset by a weaker
Turkish lira.

Operating income in the third quarter of 2021 was $81 million, an increase of
$59 million, from $22 million in the third quarter of 2020. The increase in
operating income was primarily due to improvements in price and product mix of
$118 million, which more than offset higher raw material costs of $53 million,
lower conversion costs of $12 million, primarily due to favorable overhead
absorption as a result of higher factory utilization, higher earnings in other
tire-related businesses of $6 million, primarily due to increases in aviation
and racing sales, and higher tire volume of $4 million. These increases were
partially offset by higher SAG of $16 million, primarily related to higher
advertising expenses and higher wages and benefits, both relating to
pandemic-related actions taken in 2020 as well as inflation, higher
transportation costs of $8 million, and higher plant industrialization costs of
$5 million. Conversion costs include incremental savings from rationalization
plans of $1 million.

Operating income in the third quarter of 2021 excluded a net gain on asset sales of $8 million, rationalization charges of $2 million and accelerated depreciation of $1 million. Operating income in the third quarter of 2020 excluded net rationalization charges $12 million.

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Nine Months Ended September 30, 2021 and 2020


Europe, Middle East and Africa unit sales in the first nine months of 2021
increased 6.8 million units, or 21.2%, to 38.9 million units. Replacement tire
volume increased 5.6 million units, or 22.2%, primarily in our consumer
business, reflecting increased industry demand due to continued recovery from
the economic impacts of the COVID-19 pandemic and the recovery of some tire
volume lost in 2020 as a result of our ongoing initiative to align distribution
in Europe. OE tire volume increased 1.2 million units, or 17.6%, reflecting
share gains driven by new consumer fitments, partially offset by the negative
impact on vehicle production of global supply chain disruptions, including
shortages of key manufacturing components, such as semiconductors.

Net sales in the first nine months of 2021 were $3,858 million, increasing
$1,031 million, or 36.5%, from $2,827 million in the first nine months of 2020.
Net sales increased primarily due to higher tire volume of $509 million,
improvements in price and product mix of $237 million, favorable foreign
currency translation of $126 million, driven by a stronger euro, South African
rand and British pound partially offset by a weaker Turkish lira, the addition
of Cooper Tire's net sales of $83 million, and higher sales in other
tire-related businesses of $75 million, primarily due to growth in our Fleet
Solutions business and increased motorcycle, retread and racing tire sales.

Operating income in the first nine months of 2021 was $198 million, a change of
$339 million, from an operating loss of $141 million in the first nine months of
2020. The increase in operating income was primarily due to improvements in
price and product mix of $189 million, which more than offset higher raw
material costs of $50 million, higher tire volume of $134 million, lower
conversion costs of $120 million, primarily due to favorable overhead absorption
as a result of higher factory utilization, and $12 million of pandemic-related
work in process inventory write-offs in 2020. These increases were partially
offset by higher SAG of $48 million, primarily related to higher wages and
benefits and higher advertising expenses, both relating to pandemic-related
actions taken in 2020 as well as higher warehousing costs and inflation, higher
transportation costs of $11 million, and higher plant industrialization costs of
$10 million. Conversion costs and SAG include incremental savings from
rationalization plans of $5 million and $1 million, respectively.

Operating income in the first nine months of 2021 excluded net rationalization
charges of $46 million, a net gain on asset sales of $8 million and accelerated
depreciation of $1 million. Operating income in the first nine months of 2020
excluded a non-cash goodwill impairment charge of $182 million, net
rationalization charges of $48 million, net losses on asset sales of $2 million
and accelerated depreciation of $1 million.

Asia Pacific


                            Three Months Ended September 30,                

Nine Months Ended September 30,

                                                              Percent                                                 Percent
(In millions)        2021           2020         Change       Change          2021           2020        Change       Change
Tire Units              8.1            7.2           0.9          12.6 %         21.4          17.0          4.4          25.9 %
Net Sales          $    570$    486$     84          17.3 %    $   1,556$ 1,208$    348          28.8 %
Operating Income         32             34            (2 )        (5.9 )%          93             6           87            NM
Operating Margin        5.6 %          7.0 %                                      6.0 %         0.5 %

Three months ended September 30, 2021 and 2020


Asia Pacific unit sales in the third quarter of 2021 increased 0.9 million
units, or 12.6%, to 8.1 million units. Replacement tire volume increased 0.4
million units, or 10.0%. OE tire volume increased 0.5 million units, or 17.7%.
These increases were primarily due to the addition of Cooper Tire's units.

Net sales in the third quarter of 2021 were $570 million, increasing $84
million, or 17.3%, from $486 million in the third quarter of 2020. Net sales
increased due to the addition of Cooper Tire's net sales of $47 million,
favorable price and product mix of $32 million, and favorable foreign currency
translation of $12 million, primarily related to a stronger Chinese yuan and
Australian dollar.

Operating income in the third quarter of 2021 was $32 million, a decrease of $2
million, or 5.9%, from $34 million in the third quarter of 2020. The decrease in
operating income was primarily due to higher raw material costs of $31 million
and higher SAG of $8 million, primarily related to higher advertising expenses
and higher wages and benefits, both relating to pandemic-related actions taken
in 2020. These decreases were partially offset by improvements in price and
product mix of $28 million, higher earnings in other tire-related businesses of
$4 million, primarily due to higher aviation sales, the addition of Cooper
Tire's operating income of $3 million, and lower conversion costs of $3 million,
primarily due to favorable overhead absorption as a result of higher factory
utilization.

Operating income in the third quarter of 2020 excluded net rationalization charges of $4 million.

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Nine Months Ended September 30, 2021 and 2020


Asia Pacific unit sales in the first nine months of 2021 increased 4.4 million
units, or 25.9%, to 21.4 million units. Replacement tire volume increased 2.6
million units, or 23.3%. OE tire volume increased 1.8 million units, or 31.3%.
These increases were primarily due to continued recovery from the economic
impacts of the COVID-19 pandemic and the addition of Cooper Tire's units,
partially offset by the impact on vehicle production of global supply chain
disruptions, including shortages of key manufacturing components, such as
semiconductors.

Net sales in the first nine months of 2021 were $1,556 million, increasing $348
million, or 28.8%, from $1,208 million in the first nine months of 2020. Net
sales increased due to higher tire volume of $198 million, favorable foreign
currency translation of $66 million, primarily related to a stronger Australian
dollar and Chinese yuan, the addition of Cooper Tire's net sales of $62 million,
and favorable price and product mix of $22 million.

Operating income in the first nine months of 2021 was $93 million, an increase
of $87 million, from $6 million in the first nine months of 2020. The increase
in operating income was primarily due to higher tire volume of $49 million,
lower conversion costs of $46 million, primarily due to favorable overhead
absorption as a result of higher factory utilization, favorable price and
product mix of $38 million, higher earnings in other tire-related businesses of
$9 million, primarily due to higher aviation sales, and the addition of Cooper
Tire's operating income of $3 million. These increases were partially offset by
higher SAG of $28 million, primarily related to higher advertising expenses and
higher wages and benefits, both relating to pandemic-related actions taken in
2020, and higher raw material costs of $27 million.

Operating income in the first nine months of 2020 excluded net rationalization charges of $4 million.

                        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 2021, we completed several financing actions to provide funding for the acquisition of Cooper Tire and to improve our debt maturity profile.


On April 6, 2021, we issued $550 million of 5.25% senior notes due April 2031
and $450 million of 5.625% senior notes due 2033. The net proceeds from these
notes, together with cash and cash equivalents, were used to redeem our existing
$1.0 billion 5.125% senior notes due 2023 on May 6, 2021 at a redemption price
of 100% of the principal amount, plus accrued and unpaid interest to the
redemption date.

On May 18, 2021, we issued $850 million of 5% senior notes due 2029 and $600
million of 5.25% senior notes due July 2031. The net proceeds from these notes,
together with cash and cash equivalents and borrowings under our first lien
revolving credit facility, were used to fund the cash component of the Merger
Consideration and related transaction costs.

On June 7, 2021, we amended and restated our $2.0 billion first lien revolving
credit facility. Changes to the facility include extending the maturity to June
8, 2026, increasing the amount of the facility to $2.75 billion, and including
Cooper Tire's accounts receivable and inventory in the borrowing base for the
facility. The interest rate for loans under the facility decreased by 50 basis
points to LIBOR plus 125 basis points.

Following the Cooper Tire acquisition, $117 million in aggregate principal
amount of Cooper Tire's 7.625% senior notes due 2027 remain outstanding. These
notes also included a $19 million fair value step-up, which is being amortized
against interest expense over the remaining life of the notes. Amortization
during the third quarter of 2021 was approximately $1 million.

On September 28, 2021, we issued €400 million in aggregate principal amount of
GEBV's 2.75% senior notes due 2028. A portion of the net proceeds from these
notes was used to redeem our existing €250 million 3.75% senior notes due 2023
on October 28, 2021 at a redemption price of 100% of the principal amount, plus
accrued and unpaid interest to the redemption date. The remaining net proceeds
will be used for general corporate purposes, which may include repayment of
outstanding borrowings under revolving credit facilities.

At September 30, 2021, we had $1,187 million in cash and cash equivalents,
compared to $1,539 million at December 31, 2020. For the nine months ended
September 30, 2021, net cash used by operating activities was $2 million,
reflecting cash used for working capital of $1,064 million and rationalization
payments of $162 million, largely offset by net income for the period of $223
million, which includes non-cash charges for depreciation and amortization of
$645 million and an inventory fair value step-up adjustment related to the
Cooper Tire acquisition of $110 million. Net cash used by investing activities
was $2,491 million, primarily representing the $1,856 million cash component of
the Merger Consideration, net of cash and restricted cash acquired, and capital
expenditures of $666 million. Cash provided by financing activities was $2,155
million, primarily due to net borrowings of $2,257 million.

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At September 30, 2021, we had $4,195 million of unused availability under our
various credit agreements, compared to $3,881 million at December 31, 2020. The
table below presents unused availability under our credit facilities at those
dates:



                                        September 30,      December 31,
(In millions)                               2021               2020

First lien revolving credit facility $ 2,336 $ 1,535 European revolving credit facility

                 927               982
Chinese credit facilities                          326               297
Mexican credit facility                              -                48
Other foreign and domestic debt                    141               380
Short term credit arrangements                     465               639
                                       $         4,195     $       3,881




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 condition or results of operations in
the period in which it occurs.

We expect our 2021 cash flow needs to include capital expenditures of
approximately $1.0 billion. We also expect interest expense to be approximately
$400 million; rationalization payments to be approximately $225 million; income
tax payments to be approximately $150 million, excluding one-time items; and
contributions to our funded pension plans to be $50 million to $75 million. We
expect working capital to be a use of cash for the full year of 2021 of $300
million to $500 million.

We are continuing to actively monitor our liquidity and intend to operate our
business in a way that allows us to address our cash flow needs with our
existing cash and available credit if they cannot be funded by cash generated
from operating or other financing activities. We believe that our liquidity
position is adequate to fund our operating and investing needs and debt
maturities for the next twelve months and to provide us with the ability to
respond to further changes in the business environment.

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, South Africa, Serbia and Argentina, 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, South African, Serbian and Argentinian subsidiaries, which are
subject to such requirements or limitations to be integral to our liquidity or
our ability to service our debt and operational requirements. At September 30,
2021, approximately $1,010 million of net assets, including approximately $180
million of cash and cash equivalents, were subject to such requirements. The
requirements we must comply with to transfer funds out of China, South Africa,
Serbia and Argentina have not adversely impacted our ability to make transfers
out of those countries.

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Operating Activities


Net cash used by operating activities was $2 million in the first nine months of
2021, compared to net cash used by operating activities of $239 million in the
first nine months of 2020.

The $237 million improvement in net cash used by operating activities was
primarily due to an increase in operating income from our SBUs of $1,213
million, which includes a non-cash charge of $110 million for an inventory fair
value step-up adjustment related to the Cooper Tire acquisition. This
improvement to cash flows from operating activities was partially offset by (i)
a net increase in cash used for working capital of $792 million, (ii) an
increase in cash income tax payments of $132 million, primarily as a result of
higher earnings in 2021 and the receipt of certain tax refunds in 2020, (iii)
year-over-year changes in balance sheet accounts for Compensation and Benefits,
Other Current Liabilities and Other Assets and Liabilities totaling $97 million,
driven by prior year cost actions, payroll tax deferrals and other
pandemic-related impacts to our 2020 balance sheet, (iv) cash paid for
transaction and other costs related to the Cooper Tire acquisition of $41
million, (v) higher pension contributions and direct payments of $31 million,
and (vi) an $18 million increase in cash used for rationalization payments.

The net increase in cash used for working capital reflects increases in cash
used for Inventory of $1,452 million and Accounts Receivable of $461 million,
partially offset by an increase in cash provided by Accounts Payable - Trade of
$1,121 million. These changes were driven by our continued recovery from the
impacts of the COVID-19 pandemic, which include higher sales volume and an
increase in finished goods inventory as we continue to restock in order to meet
anticipated near-term demand.

Investing Activities

Net cash used by investing activities was $2,491 million in the first nine
months of 2021, compared to $515 million in the first nine months of 2020. Net
cash used by investing activities in the first nine months of 2021 includes the
payment of the $1,856 million cash component of the Merger Consideration, net of
cash and restricted cash acquired. Capital expenditures were $666 million in the
first nine months of 2021, including $119 million related to Cooper Tire since
the Closing Date, compared to $487 million in the first nine months of 2020.
Beyond expenditures required to sustain our facilities, capital expenditures in
2021 and 2020 primarily related to investments in additional 17-inch and above
capacity around the world.

Financing Activities

Net cash provided by financing activities was $2,155 million in the first nine
months of 2021, compared to net cash provided by financing activities of $955
million in the first nine months of 2020. Financing activities in the first nine
months of 2021 included net borrowings of $2,257 million, which were partially
offset by debt-related costs and other financing transactions of $98 million.
Financing activities in 2020 included net borrowings of $1,009 million, which
were partially offset by dividends on our common stock of $37 million.

Credit Sources


In aggregate, we had total credit arrangements of $12,377 million available at
September 30, 2021, of which $4,195 million were unused, compared to $9,707
million available at December 31, 2020, of which $3,881 million were unused. At
September 30, 2021, we had long term credit arrangements totaling $11,382
million, of which $3,730 million were unused, compared to $8,632 million and
$3,242 million, respectively, at December 31, 2020. At September 30, 2021, we
had short term committed and uncommitted credit arrangements totaling $995
million, of which $465 million were unused, compared to $1,075 million and $639
million, respectively, at December 31, 2020. The continued availability of the
short term uncommitted arrangements is at the discretion of the relevant lender
and may be terminated at any time.

Outstanding Notes


At September 30, 2021, we had $5,892 million of outstanding notes compared to
$3,860 million at December 31, 2020. The increase from December 31, 2020 was
primarily due to the issuance of $1.45 billion of senior notes to fund a portion
of the acquisition of Cooper Tire, the issuance of €400 million of GEBV senior
notes, and $135 million of Cooper Tire senior notes.

$2.75 billion Amended and Restated First Lien Revolving Credit Facility due 2026


On June 7, 2021, we amended and restated our $2.0 billion first lien revolving
credit facility. Changes to the facility include extending the maturity to June
8, 2026, increasing the amount of the facility to $2.75 billion, and including
Cooper Tire's accounts receivable and inventory in the borrowing base for the
facility. The interest rate for loans under the facility decreased by 50 basis
points to LIBOR plus 125 basis points, based on our current liquidity as
described below.

Our amended and restated first lien revolving credit facility is available in
the form of loans or letters of credit. Up to $800 million in letters of credit
and $50 million of swingline loans are available for issuance under the
facility. 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.

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Availability under the facility is subject to a borrowing base, which is based
on (i) eligible accounts receivable and inventory of The Goodyear Tire & Rubber
Company and certain of its U.S. and Canadian subsidiaries, (ii) the value of our
principal trademarks in an amount not to exceed $400 million, (iii) the value of
eligible machinery and equipment, and (iv) certain cash in an amount not to
exceed $275 million. To the extent that our eligible accounts receivable,
inventory and other components of the borrowing base decline in value, our
borrowing base will decrease and the availability under the facility may
decrease below $2.75 billion. As of September 30, 2021, our borrowing base, and
therefore our availability, under this facility was $395 million below the
facility's stated amount of $2.75 billion.

If Available Cash (as defined in the facility) plus the availability under the
facility is greater than $750 million, amounts drawn under the facility will
bear interest, at our option, at (i) 125 basis points over LIBOR or (ii) 25
basis points over an alternative base rate (the higher of (a) the prime rate,
(b) the federal funds effective rate or the overnight bank funding rate plus 50
basis points or (c) LIBOR plus 100 basis points). If Available Cash plus the
availability under the facility is equal to or less than $750 million, then
amounts drawn under the facility will bear interest, at our option, at (i) 150
basis points over LIBOR or (ii) 50 basis points over an alternative base rate.
Undrawn amounts under the facility will be subject to an annual commitment fee
of 25 basis points.

At September 30, 2021, we had no borrowings and $19 million of letters of credit issued under the revolving credit facility. At December 31, 2020, we had no borrowings and $11 million of letters of credit issued under the revolving credit facility.

At September 30, 2021, we had $318 million in letters of credit issued under bilateral letter of credit agreements.

Amended and Restated Second Lien Term Loan Facility due 2025


Our amended and restated second lien term loan facility matures on March 7,
2025. The term loan bears interest, at our option, at (i) 200 basis points over
LIBOR or (ii) 100 basis points over an alternative base rate (the higher of (a)
the prime rate, (b) the federal funds effective rate or the overnight bank
funding rate plus 50 basis points or (c) LIBOR plus 100 basis points). In
addition, if the Total Leverage Ratio is equal to or less than 1.25 to 1.00, we
have the option to further reduce the spreads described above by 25 basis
points. "Total Leverage Ratio" has the meaning given it in the facility.

At both September 30, 2021 and December 31, 2020, the amount outstanding under this facility was $400 million.

€800 million Amended and Restated Senior Secured European Revolving Credit Facility due 2024


Our amended and restated European revolving credit facility consists of (i) a
€180 million German tranche that is available only to Goodyear Dunlop Tires
Germany GmbH ("GDTG") and (ii) a €620 million all-borrower tranche that is
available to GEBV, GDTG and Goodyear Operations S.A. Up to €175 million of
swingline loans and €75 million in letters of credit are available for issuance
under the all-borrower tranche. Amounts drawn under this facility will bear
interest at LIBOR plus 150 basis points for loans denominated in U.S. dollars or
pounds sterling and EURIBOR plus 150 basis points for loans denominated in
euros, and undrawn amounts under the facility are subject to an annual
commitment fee of 25 basis points. Subject to the consent of the lenders whose
commitments are to be increased, we may request that the facility be increased
by up to €200 million.

At both September 30, 2021 and December 31, 2020, there were no borrowings and no letters of credit outstanding under the European revolving credit facility.


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 our business or financial
condition since December 31, 2020 under the first lien facility and December 31,
2018 under the European facility.

Accounts Receivable Securitization Facilities (On-Balance Sheet)


On October 11, 2021, GEBV and certain other of our European subsidiaries amended
and restated the definitive agreements for our pan-European accounts receivable
securitization facility, extending the term through 2027. The terms of the
facility provide the flexibility to designate annually the maximum amount of
funding available under the facility in an amount of not less than €30 million
and not more than €450 million. For the period from October 16, 2020 through
October 18, 2021, the designated maximum amount for the facility was €280
million. For the period from October 19, 2021 through October 19, 2022, the
designated maximum amount of the facility was increased to €300 million.

The facility involves the ongoing daily sale of substantially all of the trade
accounts receivable of certain GEBV subsidiaries. These subsidiaries retain
servicing responsibilities. Utilization under this facility is based on eligible
receivable balances.

The funding commitments under the facility will expire upon the earliest to
occur of: (a) October 19, 2027, (b) the non-renewal and expiration (without
substitution) of all of the back-up liquidity commitments, (c) the early
termination of the facility according to its terms (generally upon an Early
Amortisation Event (as defined in the facility), which includes, among other
things, events similar to the events of default under our senior secured credit
facilities; certain tax law changes; or certain changes

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to law, regulation or accounting standards), or (d) our request for early termination of the facility. The facility's current back-up liquidity commitments will expire on October 19, 2022.


At September 30, 2021, the amounts available and utilized under this program
totaled $308 million (€266 million). At December 31, 2020, the amounts available
and utilized under this program totaled $291 million (€237 million). The program
does not qualify for sale accounting, and accordingly, these amounts are
included in Long Term Debt and Finance Leases.

Accounts Receivable Factoring Facilities (Off-Balance Sheet)


We have sold certain of our trade receivables under off-balance sheet programs.
For these programs, we have concluded that there is generally no risk of loss to
us from non-payment of the sold receivables. At September 30, 2021, the gross
amount of receivables sold was $523 million, compared to $451 million at
December 31, 2020. The increase from December 31, 2020 is primarily due to the
addition of Cooper Tire's off-balance sheet factoring programs.

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 always
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. Agreements for such financing programs totaled up to $520
million and $500 million at September 30, 2021 and December 31, 2020,
respectively.

Further Information


On March 5, 2021, the ICE Benchmark Administration, the administrator of LIBOR
("IBA"), confirmed its previously announced plans to cease publication of USD
LIBOR on December 31, 2021 for the one week and two month USD LIBOR tenors, and
on June 30, 2023 for all other USD LIBOR tenors. In addition, the IBA will also
cease publication of all tenors of euro, Swiss franc, Japanese yen and British
pound LIBOR on December 31, 2021. In the United States, efforts to identify a
set of alternative U.S. dollar reference interest rates include the
recommendation by the Alternative Reference Rates Committee that has been
convened by the Federal Reserve Board and the Federal Reserve Bank of New York
to use the Secured Overnight Financing Rate, known as SOFR. Additionally, the
International Swaps and Derivatives Association, Inc. launched consultations on
technical issues related to new benchmark fallbacks for derivative contracts
that reference certain interbank offered rates, including LIBOR, and has
developed documentation to incorporate fallback provisions into relevant
derivative contracts. We cannot currently predict the effect of the
discontinuation of, or other changes to, LIBOR or any establishment of
alternative reference rates in the United States, the United Kingdom, the
European Union or elsewhere on the global capital markets. The uncertainty
regarding the future of LIBOR, as well as the transition from LIBOR to any
alternative reference rate or rates, could have adverse impacts on floating rate
obligations, loans, deposits, derivatives and other financial instruments that
currently use LIBOR as a benchmark rate. We have identified and evaluated our
financing obligations and other contracts that refer to LIBOR and expect to be
able to transition those obligations and contracts to an alternative reference
rate upon the discontinuation of LIBOR. Our amended and restated first lien
revolving credit facility, our second lien term loan facility and our European
revolving credit facility, which constitute the most significant of our
LIBOR-based debt obligations, contain fallback provisions that address the
potential discontinuation of LIBOR and facilitate the adoption of an alternate
rate of interest. We have not issued any long term floating rate notes. Our
amended and restated first lien revolving credit facility and second lien term
loan facility also contain express provisions for the use, at our option, of an
alternative base rate (the higher of (a) the prime rate, (b) the federal funds
effective rate or the overnight bank funding rate plus 50 basis points or (c)
LIBOR plus 100 basis points). We do not believe that the discontinuation of
LIBOR, or its replacement with an alternative reference rate or rates, will have
a material impact on our results of operations, financial position or liquidity.

For a further description of the terms of our outstanding notes, first lien
revolving credit facility, second lien term loan facility, European revolving
credit facility and pan-European accounts receivable securitization facility,
refer to Note to the Consolidated Financial Statements No. 15, Financing
Arrangements and Derivative Financial Instruments, in our 2020 Form 10­K and
Note to the Consolidated Financial Statements No. 9, Financing Arrangements and
Derivative Financial Instruments, in this Form 10-Q.

Covenant Compliance


Our first 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, pay dividends,
repurchase shares or make certain other restricted payments or investments,
incur liens, sell assets, incur restrictions on the ability of our subsidiaries
to pay dividends or to make other payments 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

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exceptions and qualifications. Our first and second lien credit facilities and the indentures governing our notes also have customary defaults, including cross-defaults to material indebtedness of Goodyear and its subsidiaries.


We have additional financial covenants in our first 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 $275 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 the most recent period of four consecutive fiscal quarters. As of September
30, 2021, our unused availability under this facility of $2,336 million, plus
our Available Cash of $247 million, totaled $2,583 million, which is in excess
of $275 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 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 GEBV and its subsidiaries. This financial covenant provides that we are
not permitted to allow GEBV's ratio of Consolidated Net GEBV Indebtedness to
Consolidated GEBV 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 GEBV
Indebtedness is determined net of the sum of cash and cash equivalents in excess
of $100 million held by GEBV 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 GEBV Indebtedness also excludes loans from other
consolidated Goodyear entities. This financial covenant is also included in our
pan-European accounts receivable securitization facility. At September 30, 2021,
we were in compliance with this financial covenant.

Our 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.

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 September 30, 2021, we were in compliance with the currently applicable material covenants imposed by our principal credit facilities and indentures.

The terms "Available Cash," "EBITDA," "Consolidated Interest Expense," "Consolidated Net Secured Indebtedness," "Pro Forma Senior Secured Leverage Ratio," "Consolidated Net GEBV Indebtedness" and "Consolidated GEBV EBITDA" have the meanings given them in the respective credit facilities.

Potential Future Financings


In addition to the financing activities described above, 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 inherent uncertainty of market conditions,
access to the capital markets cannot be assured.

Our future liquidity requirements will 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.

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Dividends and Common Stock Repurchases


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 nine months of 2020, we paid cash dividends of $37 million on our
common stock, all of which was paid in the first quarter of 2020. This amount
excludes dividends earned on stock-based compensation plans of approximately $1
million. On April 16, 2020, we announced that we have suspended the quarterly
dividend on our common stock.

We may repurchase shares delivered to us by employees as payment for the
exercise price of stock options and the withholding taxes due upon the exercise
of stock options or the vesting or payment of stock awards. During the first
nine months of 2021, we did not repurchase any shares from employees.

The restrictions imposed by our credit facilities and indentures are not expected to affect our ability to pay dividends or repurchase our capital stock in the future.


Asset Dispositions

The restrictions on asset sales imposed by our material indebtedness have not
affected our ability to divest non-core businesses, and those divestitures have
not affected our ability to comply with those restrictions.

Supplemental Guarantor Financial Information


Certain of our subsidiaries, which are listed on Exhibit 22.1 to this Quarterly
Report on Form 10-Q and are generally holding or operating companies, have
guaranteed our obligations under the $800 million outstanding principal amount
of 9.5% senior notes due 2025, the $900 million outstanding principal amount of
5% senior notes due 2026, the $700 million outstanding principal amount of
4.875% senior notes due 2027, the $850 million outstanding principal amount of
5% senior notes due 2029, the $550 million outstanding principal amount of 5.25%
senior notes due April 2031, the $600 million outstanding principal amount of
5.25% senior notes due July 2031 and the $450 million outstanding principal
amount of 5.625% senior notes due 2033 (collectively, the "Notes").

The Notes have been issued by The Goodyear Tire & Rubber Company (the "Parent
Company") and are its senior unsecured obligations. The Notes rank equally in
right of payment with all of our existing and future senior unsecured
obligations and senior to any of our future subordinated indebtedness. The Notes
are effectively subordinated to our existing and future secured indebtedness to
the extent of the assets securing that indebtedness. The Notes are fully and
unconditionally guaranteed on a joint and several basis by each of our
wholly-owned U.S. and Canadian subsidiaries that also guarantee our obligations
under certain of our senior secured credit facilities (such guarantees, the
"Guarantees"; and, such guaranteeing subsidiaries, the "Subsidiary Guarantors").
The Guarantees are senior unsecured obligations of the Subsidiary Guarantors and
rank equally in right of payment with all existing and future senior unsecured
obligations of our Subsidiary Guarantors. The Guarantees are effectively
subordinated to existing and future secured indebtedness of the Subsidiary
Guarantors to the extent of the assets securing that indebtedness.

The Notes are structurally subordinated to all of the existing and future debt
and other liabilities, including trade payables, of our subsidiaries that do not
guarantee the Notes (the "Non-Guarantor Subsidiaries"). The Non-Guarantor
Subsidiaries will have no obligation, contingent or otherwise, to pay amounts
due under the Notes or to make funds available to pay those amounts. Certain
Non-Guarantor Subsidiaries are limited in their ability to remit funds to us by
means of dividends, advances or loans due to required foreign government and/or
currency exchange board approvals or limitations in credit agreements or other
debt instruments of those subsidiaries.

The Subsidiary Guarantors, as primary obligors and not merely as sureties,
jointly and severally irrevocably and unconditionally guarantee on a senior
unsecured basis the performance and full and punctual payment when due of all
obligations of the Parent Company under the Notes and the related indentures,
whether for payment of principal of or interest on the Notes, expenses,
indemnification or otherwise. The Guarantees of the Subsidiary Guarantors are
subject to release in limited circumstances only upon the occurrence of certain
customary conditions.

Although the Guarantees provide the holders of Notes with a direct unsecured
claim against the assets of the Subsidiary Guarantors, under U.S. federal
bankruptcy law and comparable provisions of U.S. state fraudulent transfer laws,
in certain circumstances a court could cancel a Guarantee and order the return
of any payments made thereunder to the Subsidiary Guarantor or to a fund for the
benefit of its creditors.

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A court might take these actions if it found, among other things, that when the
Subsidiary Guarantors incurred the debt evidenced by their Guarantee (i) they
received less than reasonably equivalent value or fair consideration for the
incurrence of the debt and (ii) any one of the following conditions was
satisfied:

?
the Subsidiary Guarantor was insolvent or rendered insolvent by reason of the
incurrence;
?
the Subsidiary Guarantor was engaged in a business or transaction for which its
remaining assets constituted unreasonably small capital; or
?
the Subsidiary Guarantor intended to incur, or believed (or reasonably should
have believed) that it would incur, debts beyond its ability to pay as those
debts matured.

In applying the above factors, a court would likely find that a Subsidiary
Guarantor did not receive fair consideration or reasonably equivalent value for
its Guarantee, except to the extent that it benefited directly or indirectly
from the issuance of the Notes. The determination of whether a guarantor was or
was not rendered "insolvent" when it entered into its guarantee will vary
depending on the law of the jurisdiction being applied. Generally, an entity
would be considered insolvent if the sum of its debts (including contingent or
unliquidated debts) is greater than all of its assets at a fair valuation or if
the present fair salable value of its assets is less than the amount that will
be required to pay its probable liability on its existing debts, including
contingent or unliquidated debts, as they mature.

Under Canadian federal bankruptcy and insolvency laws and comparable provincial
laws on preferences, fraudulent conveyances or other challengeable or voidable
transactions, the Guarantees could be challenged as a preference, fraudulent
conveyance, transfer at undervalue or other challengeable or voidable
transaction. The test to be applied varies among the different pieces of
legislation, but as a general matter these types of challenges may arise in
circumstances where:

?
such action was intended to defeat, hinder, delay, defraud or prejudice
creditors or others;
?
such action was taken within a specified period of time prior to the
commencement of proceedings under Canadian bankruptcy, insolvency or
restructuring legislation in respect of a Subsidiary Guarantor, the
consideration received by the Subsidiary Guarantor was conspicuously less than
the fair market value of the consideration given, and the Subsidiary Guarantor
was insolvent or rendered insolvent by such action and (in some circumstances,
or) such action was intended to defraud, defeat or delay a creditor;
?
such action was taken within a specified period of time prior to the
commencement of proceedings under Canadian bankruptcy, insolvency or
restructuring legislation in respect of a Subsidiary Guarantor and such action
was taken, or is deemed to have been taken, with a view to giving a creditor a
preference over other creditors or, in some circumstances, had the effect of
giving a creditor a preference over other creditors; or
?
a Subsidiary Guarantor is found to have acted in a manner that was oppressive,
unfairly prejudicial to or unfairly disregarded the interests of any
shareholder, creditor, director, officer or other interested party.

In addition, in certain insolvency proceedings a Canadian court may subordinate
claims in respect of the Guarantees to other claims against a Subsidiary
Guarantor under the principle of equitable subordination if the court determines
that (1) the holder of Notes engaged in some type of inequitable or improper
conduct, (2) the inequitable or improper conduct resulted in injury to other
creditors or conferred an unfair advantage upon the holder of Notes and (3)
equitable subordination is not inconsistent with the provisions of the relevant
solvency statute.

If a court canceled a Guarantee, the holders of Notes would no longer have a claim against that Subsidiary Guarantor or its assets.


Each Guarantee is limited, by its terms, to an amount not to exceed the maximum
amount that can be guaranteed by the applicable Subsidiary Guarantor without
rendering the Guarantee, as it relates to that Subsidiary Guarantor, voidable
under applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.

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Each Subsidiary Guarantor is a consolidated subsidiary of the Parent Company at
the date of each balance sheet presented. The following tables present
summarized financial information for the Parent Company and the Subsidiary
Guarantors on a combined basis after elimination of (i) intercompany
transactions and balances among the Parent Company and the Subsidiary Guarantors
and (ii) equity in earnings from and investments in any Non-Guarantor
Subsidiary. On July 2, 2021, Cooper Tire and certain of its subsidiaries were
added as Subsidiary Guarantors.

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