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

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
47 manufacturing facilities in 21 countries, including the United States. We
operate our business through three operating segments representing our regional
tire businesses: Americas; Europe, Middle East and Africa; and Asia Pacific.
This management's discussion and analysis provides comparisons of material
changes in the consolidated financial statements for the years ended December
31, 2019 and 2018. For a comparison of the years ended December 31, 2018 and
2017, refer to Management's Discussion and Analysis of Financial Condition and
Results of Operations included in our annual report on Form 10-K for the year
ended December 31, 2018.
Results of Operations
In 2019, challenging macro-economic industry conditions persisted throughout
much of the year, including higher raw material costs, foreign currency
headwinds due to a strong U.S. dollar, lower OE industry volumes, softening
demand in Europe, weak market conditions in China, and economic volatility in
Latin America, particularly in Brazil. These headwinds were partially offset by
continued strength in U.S. consumer replacement sales.
In order to continue to drive growth in our business and address the challenging
economic environment, we remain focused on our key strategies by:
•      Developing great products and services that anticipate and respond to the

needs of consumers;

• Building the value of our brand, helping our customers win in their

markets, and becoming consumers' preferred choice; and

• Improving our manufacturing efficiency and creating an advantaged supply

chain focused on reducing our total delivered costs, optimizing working

capital levels and delivering best in industry customer service.

Our 2019 results reflect a 2.4% decrease in tire unit shipments compared to
2018. In 2019, we realized approximately $199 million of cost savings, including
raw material cost saving measures of approximately $93 million, which exceeded
the impact of general inflation. Our raw material costs, including cost saving
measures, increased by approximately 4% in 2019 compared to 2018.
Net sales were $14,745 million in 2019, compared to $15,475 million in 2018. Net
sales decreased in 2019 primarily due to unfavorable foreign currency
translation, primarily in EMEA, lower volume, primarily in EMEA, and lower sales
in other tire-related businesses, primarily due to a decrease in third-party
sales of chemical products in Americas, partially offset by improvements in
price and product mix, primarily in EMEA and Americas.
Goodyear net loss in 2019 was $311 million, or $1.33 per diluted share, compared
to Goodyear net income of $693 million, or $2.89 per diluted share, in 2018. The
decrease in Goodyear net income in 2019 was primarily driven by lower segment
operating income, the net gain recognized on the TireHub transaction in 2018,
higher income tax expense and higher rationalization expense.
Our total segment operating income for 2019 was $945 million, compared to $1,274
million in 2018. The $329 million, or 25.8%, decrease in segment operating
income was primarily due to the impact of higher raw material costs of $185
million, primarily in Americas and EMEA, lower volume of $81 million, primarily
in EMEA, higher selling, administrative and general expense ("SAG") of $47
million, primarily due to higher wages and benefits driven by higher incentive
compensation, lower income in other tire-related businesses of $38 million,
driven by lower third-party chemical sales in Americas, the impact of
unfavorable foreign currency translation of $38 million, and higher conversion
costs of $36 million, primarily in EMEA and Asia Pacific. These decreases more
than offset improvements in price and product mix of $120 million, primarily in
Americas and EMEA. Refer to "Results of Operations - Segment Information" for
additional information.
Liquidity
At December 31, 2019, we had $908 million in Cash and cash equivalents as well
as $3,578 million of unused availability under our various credit agreements,
compared to $801 million and $3,151 million, respectively, at December 31, 2018.
Cash flows from operating activities of $1,207 million, which are driven by the
profitability of our strategic business units ("SBUs") and changes in working
capital, were used to fund capital expenditures of $770 million, dividends paid
on our common stock of $148 million, and net debt repayments of $119 million.
Refer to "Liquidity and Capital Resources" for additional information.
Outlook
We expect to continue to experience challenging global industry conditions in
2020, including lower global OE industry demand, particularly in Europe and
Asia, foreign currency headwinds, weak consumer replacement demand in Europe,
and volatility in emerging markets. We anticipate our consumer OE tire unit
volume to decline by about 2.0 million units in 2020, primarily in

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Asia Pacific. We also expect that the changes we plan to pursue to our
distribution network in Europe could reduce our consumer replacement tire unit
volume by up to 1.5 million units in 2020.
In 2020, we expect to continue to see benefits from pricing actions that we
implemented to recover raw material cost increases and continued strong
performance in our sales of 17-inch and above consumer replacement tires.
For the full year of 2020, we expect our raw material costs will be essentially
flat compared to 2019, excluding transactional foreign currency and raw material
cost saving measures. 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. 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.
The recent coronavirus outbreak in China has caused the temporary closure of
many businesses in China, including our Pulandian manufacturing facility, which
has limited business activity and automotive production.  Given the dynamic
nature of this situation, our outlook does not currently include any impact from
the coronavirus since that impact cannot be reasonably estimated at this time.
Refer to "Item 1A. Risk Factors" 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" for a discussion of our
use of forward-looking statements.

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RESULTS OF OPERATIONS - CONSOLIDATED
All per share amounts are diluted and refer to Goodyear net income (loss).
Goodyear net loss in 2019 was $311 million, or $1.33 per share, compared to
Goodyear net income of $693 million, or $2.89 per share, in 2018. The decrease
in Goodyear net income in 2019 was driven by lower segment operating income, the
net gain recognized on the TireHub transaction in 2018, higher income tax
expense and higher rationalization expense.
Net Sales
Net sales in 2019 of $14,745 million decreased $730 million, or 4.7%, compared
to $15,475 million in 2018, primarily due to unfavorable foreign currency
translation of $451 million, primarily in EMEA, lower volume of $307 million,
primarily in EMEA, and lower sales in other tire-related businesses of $168
million, primarily due to a decrease in third-party sales of chemical products
in Americas, partially offset by improvements in price and product mix of $196
million, primarily in EMEA and Americas. Goodyear worldwide tire unit net sales
were $12,524 million and $13,060 million in 2019 and 2018, respectively.
Consumer and commercial net sales were $8,835 million and $2,953 million,
respectively, in 2019. Consumer and commercial net sales were $9,167 million and
$3,002 million, respectively, in 2018.
The following table presents our tire unit sales for the periods indicated:
                                   Year Ended December 31,
(In millions of tires)            2019        2018    % Change
Replacement Units
United States                    40.3         38.9       3.6  %
International                    74.7         76.2      (2.0 )
Total                           115.0        115.1      (0.1 )
OE Units
United States                    11.2         13.2     (15.2 )
International                    29.1         30.9      (5.8 )
Total                            40.3         44.1      (8.5 )

Goodyear worldwide tire units 155.3 159.2 (2.4 )

The decrease in worldwide tire unit sales of 3.9 million units, or 2.4%,
compared to 2018, included a decrease of 0.1 million replacement tire units, or
0.1%, comprised primarily of a decrease in EMEA partially offset by an increase
in Americas. OE tire units decreased by 3.8 million units, or 8.5%, primarily
due to lower vehicle production globally. Consumer and commercial unit sales in
2019 were 141.9 million and 11.7 million, respectively. Consumer and commercial
unit sales in 2018 were 145.5 million and 11.8 million, respectively.
Cost of Goods Sold
Cost of goods sold ("CGS") was $11,602 million in 2019, decreasing $359 million,
or 3.0%, from $11,961 million in 2018. CGS was 78.7% of sales in 2019 compared
to 77.3% of sales in 2018. CGS in 2019 decreased due to foreign currency
translation of $345 million, primarily in EMEA and Americas, lower volume of
$226 million, primarily in EMEA, lower costs in other tire-related businesses of
$130 million, driven by lower third-party chemical sales in Americas, and lower
start-up costs of $36 million associated with our new plant in San Luis Potosi,
Mexico. These decreases were partially offset by higher raw material costs of
$185 million, primarily in Americas and EMEA, higher costs related to product
mix of $76 million, primarily in EMEA and Asia Pacific, the year-over-year
impact of favorable indirect tax settlements in Brazil of $42 million, and
higher conversion costs of $36 million, primarily in EMEA and Asia Pacific. CGS
in 2019 included pension expense of $14 million compared to $15 million in 2018.
CGS in 2019 and 2018 also included incremental savings from rationalization
plans of $20 million and $41 million, respectively.
CGS in 2019 included accelerated depreciation and asset write-offs of $15
million ($12 million after-tax and minority) and favorable indirect tax
settlements in Brazil of $11 million ($7 million after-tax and minority) and in
the U.S. of $6 million ($5 million after-tax and minority). CGS in 2018 included
accelerated depreciation and asset write-offs of $4 million ($3 million
after-tax and minority) and favorable indirect tax settlements in Brazil of $53
million, of which $51 million ($39 million after-tax and minority) related to
years prior to 2018, and in the U.S. of $4 million ($3 million after-tax and
minority).

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Selling, Administrative and General Expense
SAG was $2,323 million in 2019, increasing $11 million, or 0.5%, from $2,312
million in 2018. SAG was 15.8% of sales in 2019 compared to 14.9% of sales in
2018. The increase in SAG was primarily due to higher wages and benefits of $65
million, primarily due to higher incentive compensation, and higher information
technology expense of $11 million, partially offset by foreign currency
translation of $68 million. SAG in 2019 included pension expense of $15 million
compared to $17 million in 2018. SAG in 2019 and 2018 also included incremental
savings from rationalization plans of $17 million and $34 million, respectively.
Rationalizations
We recorded net rationalization charges of $205 million ($165 million after-tax
and minority) in 2019. Net rationalization charges include $115 million in EMEA,
primarily related to a plan to modernize two of our manufacturing facilities in
Germany, and $90 million in Americas, primarily related to a plan to curtail
production of tires for declining, less profitable segments of the tire market
at our Gadsden, Alabama manufacturing facility.
We recorded net rationalization charges of $44 million ($32 million after-tax
and minority) in 2018. Net rationalization charges included charges of $31
million related to global plans to reduce SAG headcount, $16 million related to
plans to reduce manufacturing headcount and improve operating efficiency in
EMEA, and $15 million related to the closure of our tire manufacturing facility
in Philippsburg, Germany. Net rationalization charges in 2018 also included
reversals of $19 million for actions no longer needed for their originally
intended purposes.
Upon completion of the 2019 plans, we estimate that annual segment operating
income will benefit from an improvement in CGS of approximately $140 million.
The savings realized in 2019 from rationalization plans totaled $37 million ($20
million CGS and $17 million SAG).
For further information, refer to the Note to the Consolidated Financial
Statements No. 3, Costs Associated with Rationalization Programs, in this Form
10-K.
Interest Expense
Interest expense was $340 million in 2019, increasing $19 million from $321
million in 2018. The increase was primarily due to higher average debt balances
of $6,408 million in 2019 compared to $6,218 million in 2018 and a higher
average interest rate of 5.31% in 2019 compared to 5.16% in 2018.
Other (Income) Expense
Other (Income) Expense in 2019 was expense of $98 million, compared to income of
$174 million in 2018. The $272 million change in Other (Income) Expense was
primarily driven by the gain, net of transaction costs, of $272 million ($207
million after-tax and minority) recognized on the TireHub transaction in 2018, a
decrease in interest income on favorable indirect tax settlements in Brazil of
$30 million, and charges of $25 million ($25 million after-tax and minority)
related to flooding at our Beaumont, Texas chemical facility in 2019. These
increases in expense were partially offset by an increase in net gains on asset
sales of $15 million, $12 million ($12 million after-tax and minority) in
expenses related to hurricanes Harvey and Irma in 2018, and a net gain on
insurance recoveries of $4 million ($3 million after-tax and minority) in 2019.
Non-service related pension and other postretirement benefits expense of $118
million in 2019 includes pension settlement charges of $5 million ($4 million
after-tax and minority). Non-service related pension and other postretirement
benefits expense of $121 million in 2018 includes pension settlement charges of
$22 million ($17 million after-tax and minority) and a one-time charge of $9
million ($7 million after-tax and minority) related to the adoption of the new
accounting standards update which no longer allows non-service related pension
and other postretirement benefits cost to be capitalized in inventory.
Net (gains) losses on asset sales were a gain of $16 million ($15 million
after-tax and minority) in 2019 as compared to a gain of $1 million ($1 million
after-tax and minority) in 2018.
Other (Income) Expense in 2019 included interest income on favorable indirect
tax settlements in Brazil of $8 million ($5 million after-tax and minority),
compared to interest income on favorable indirect tax settlements in Brazil of
$38 million ($29 million after-tax and minority) in 2018. Other (Income) Expense
in 2019 included charges of $5 million ($4 million after-tax and minority),
compared to charges of $4 million ($3 million after-tax and minority) in 2018,
for non-asbestos legal claims related to discontinued products. Other (Income)
Expense in 2019 also included a net gain of $2 million ($2 million after-tax and
minority) related to an acquisition and $2 million ($2 million after-tax and
minority) of favorable foreign currency translation on indirect tax items.
For further information, refer to the Note to the Consolidated Financial
Statements No. 5, Other (Income) Expense, in this Form 10-K.

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Income Taxes
Income tax expense in 2019 was $474 million on income before income taxes of
$177 million. In 2019, income tax expense was unfavorably impacted by net
discrete adjustments totaling $386 million ($386 million after minority
interest). Discrete adjustments were due to non-cash charges of $334 million
related to an acceleration of royalty income in the U.S. from the sale of
certain European royalty payments to Luxembourg and $150 million related to an
increase in our valuation allowance on tax losses in Luxembourg, which were
partially offset by a non-cash tax benefit of $98 million related to a reduction
of our U.S. valuation allowance for foreign tax credits.
At December 31, 2019, our valuation allowance on certain of our U.S. federal,
state and local deferred tax assets was $13 million, primarily related to state
tax loss and credit carryforwards, and our valuation allowance on our foreign
deferred tax assets was $969 million. At December 31, 2018, our valuation
allowance on certain U.S. federal, state and local deferred tax assets was $113
million and our valuation allowance on our foreign deferred tax assets was $204
million.
Foreign source taxable income for the fourth quarter of 2019 includes
accelerated royalty income in the U.S. of $2.1 billion received from Luxembourg
as payment for the purchase of the right to receive technology royalties from
our European operations for a period of 12 years. External specialists assisted
management with this transaction. The royalty sale transaction resulted in a
U.S. tax charge of $334 million and a deferred tax asset and offsetting
valuation allowance of $576 million in Luxembourg.
Foreign source taxable income for the fourth quarter of 2019 also includes $320
million of accelerated cross-border sales of inventory from the U.S. to Canada,
resulting in a U.S. tax charge of approximately $70 million that was offset by
the establishment of a deferred tax asset.
The federal portion of the tax charges related to both the royalty acceleration
and Canadian prepayment transactions was fully offset by the utilization of
foreign tax credits of approximately $310 million. In addition, as a result of
these transactions, we released an existing U.S. valuation allowance on foreign
tax credits of $98 million.
We considered our current forecasts of future profitability in assessing our
ability to realize our remaining net foreign tax credits of $403 million. These
forecasts include the impact of recent trends, including various macroeconomic
factors such as raw material prices, on our profitability, as well as the impact
of tax planning strategies. Macroeconomic factors, including raw material
prices, possess a high degree of volatility and can significantly impact our
profitability. As such, there is a risk that future foreign source income will
not be sufficient to fully utilize these foreign tax credits. However, we
believe our forecasts of future profitability along with three significant
sources of foreign income as described in "Critical Accounting Policies" provide
us sufficient positive evidence to conclude that it is more likely than not that
our foreign tax credits, net of remaining valuation allowances, will be fully
utilized prior to their various expiration dates.
Income tax expense in 2018 was $303 million on income before income taxes of
$1,011 million. In 2018, income tax expense was unfavorably impacted by net
discrete adjustments of $65 million ($65 million after minority interest).
Discrete adjustments were primarily due to charges totaling $135 million related
to deferred tax assets for foreign tax credits, including the establishment of a
valuation allowance on foreign tax credits of $98 million, partially offset by a
tax benefit of $88 million related to a worthless stock deduction created by
permanently ceasing operations of our Venezuelan subsidiary during the fourth
quarter of 2018. Income tax expense in 2018 also included net charges of $18
million for various other discrete tax adjustments, including those related to
finalizing our accounting for certain provisional items related to the Tax Cuts
and Jobs Act that was enacted on December 22, 2017 (the "Tax Act").
Our losses in various foreign taxing jurisdictions in recent periods represented
sufficient negative evidence to require us to maintain a full valuation
allowance against certain of our net deferred tax assets. In Luxembourg, we
maintained a valuation allowance on all deferred tax assets with limited lives.
As a result of recent negative evidence, including cumulative losses in the most
recent three-year period and a forecast of continued losses for 2020, we
increased our valuation allowance on our net deferred tax assets in Luxembourg
to now include losses with unlimited lives, resulting in a non-cash tax charge
of $150 million. 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, refer to "Critical Accounting Policies" and Note to the
Consolidated Financial Statements No. 6, Income Taxes, in this Form 10-K.
Minority Shareholders' Net Income
Minority shareholders' net income was $14 million in 2019, compared to $15
million in 2018. Minority shareholders' net income in 2019 includes $7 million
($7 million after-tax and minority) of expense related to an indirect tax
settlement in Turkey.


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RESULTS OF OPERATIONS - SEGMENT INFORMATION
Segment information reflects our SBUs, which are organized to meet customer
requirements and global competition and are segmented on a regional basis.
Results of operations are measured based on net sales to unaffiliated customers
and segment operating income. Each segment exports tires to other segments. The
financial results of each segment exclude sales of tires exported to other
segments, but include operating income derived from such transactions. Segment
operating income is computed as follows: Net Sales less CGS (excluding asset
write-off and accelerated depreciation charges) and SAG (including certain
allocated corporate administrative expenses). Segment operating income also
includes certain royalties and equity in earnings of most affiliates. Segment
operating income does not include net rationalization charges (credits), asset
sales and certain other items.
Total segment operating income was $945 million in 2019, and $1,274 million in
2018. Total segment operating margin (segment operating income divided by
segment sales) in 2019 was 6.4%, compared to 8.2% in 2018.
Management believes that total segment operating income is useful because it
represents the aggregate value of income created by our SBUs and excludes items
not directly related to the SBUs for performance evaluation purposes. Total
segment operating income is the sum of the individual SBUs' segment operating
income. Refer to the Note to the Consolidated Financial Statements No. 8,
Business Segments, for further information and for a reconciliation of total
segment operating income to Income before Income Taxes.
Americas
                      Year Ended December 31,
(In millions)      2019        2018        2017
Tire Units          70.4        70.9        70.9
Net Sales        $ 7,922     $ 8,168     $ 8,212
Operating Income     550         654         847
Operating Margin     6.9 %       8.0 %      10.3 %


Americas unit sales in 2019 decreased 0.5 million units, or 0.7%, to 70.4
million units. Replacement tire volume increased 1.3 million units, or 2.5%,
primarily in our consumer business in the United States driven by growth in
17-inch and above rim size tires. OE tire volume decreased 1.8 million units, or
10.6%, primarily in our consumer business in the United States, driven by lower
vehicle production, including the impact resulting from a strike at a major OE
customer, and our OE selectivity strategy.
Net sales in 2019 were $7,922 million, decreasing $246 million, or 3.0%,
compared to $8,168 million in 2018. The decrease in net sales was driven by a
decrease in other tire-related businesses of $160 million, primarily due to a
decrease in third-party sales of chemical products, unfavorable foreign currency
translation of $105 million, primarily related to the Argentine peso and the
Brazilian real, and a decrease in volume of $41 million. These decreases were
partially offset by improvements in price and product mix of $58 million, driven
by an increase in pricing.
Operating income in 2019 was $550 million, decreasing $104 million, or 15.9%,
from $654 million in 2018. The decrease in operating income was due to increased
raw material costs of $108 million, which more than offset favorable price and
product mix of $70 million, a decrease in favorable indirect tax settlements in
Brazil of $42 million, higher SAG of $35 million, primarily due to higher wages
and benefits driven by higher incentive compensation, lower income in other
tire-related businesses of $33 million, primarily due to lower third-party
chemical sales driven by lower global demand by tire manufacturers, unfavorable
foreign currency translation of $11 million, and lower volume of $8 million.
Income in other tire-related businesses included a $7 million negative impact
related to flooding at our Beaumont, Texas chemical facility. These decreases
were partially offset by lower start-up costs of $36 million associated with our
new plant in San Luis Potosi, Mexico and lower conversion costs of $29 million,
reflecting a benefit from overhead absorption. Conversion costs included
incremental savings from rationalization plans of $14 million.
Operating income in 2019 excluded rationalization charges of $90 million and
accelerated depreciation and asset write-offs of $13 million. Operating income
in 2018 excluded the net gain recognized on the TireHub transaction of $272
million, rationalization charges of $3 million and net gains on asset sales of
$3 million.
Price and product mix improvements include TireHub equity losses of $33 million
and $15 million in 2019 and 2018, respectively. These losses reflect higher than
expected start-up expenses and additional costs incurred to build out TireHub's
distribution footprint for future growth. We expect to continue to incur our
share of these losses as TireHub transitions through its start-up phase, however
these losses are expected to moderate in 2020.

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Americas' results are highly dependent upon the United States, which accounted
for 81% of Americas' net sales in both 2019 and 2018. Results of operations in
the United States are expected to continue to have a significant impact on
Americas' future performance.
Europe, Middle East and Africa
                      Year Ended December 31,
(In millions)      2019        2018        2017
Tire Units          55.1        57.8        57.1
Net Sales        $ 4,708     $ 5,090     $ 4,928
Operating Income     202         363         367
Operating Margin     4.3 %       7.1 %       7.4 %


Europe, Middle East and Africa unit sales in 2019 decreased 2.7 million units,
or 4.6%, to 55.1 million units. Replacement tire volume decreased 1.4 million
units, or 3.3%, primarily in our consumer business, driven by increased
competition and decreased industry demand. OE tire volume decreased 1.3 million
units, or 8.5%, primarily in our consumer business, driven by lower vehicle
production and our exit of declining, less profitable market segments.
Net sales in 2019 were $4,708 million, decreasing $382 million, or 7.5%,
compared to $5,090 million in 2018. Net sales decreased primarily due to
unfavorable foreign currency translation of $287 million, driven by the
weakening of the euro, Turkish lira, South African rand and Polish zloty, and
lower volume of $217 million. These decreases were partially offset by
improvements in price and product mix of $117 million, driven by our continued
focus on 17-inch and above rim size consumer tires and price increases on
commercial replacement tire sales.
Operating income in 2019 was $202 million, decreasing $161 million, or 44.4%,
compared to $363 million in 2018. Operating income decreased due to lower volume
of $59 million, higher raw material costs of $57 million, higher conversion
costs of $43 million, driven by inflation, unfavorable foreign currency
translation of $19 million, higher SAG of $15 million, primarily due to
inflation, higher research and development costs of $6 million, $5 million of
start-up costs, primarily at our new plant in Luxembourg, and higher
transportation costs of $5 million. These decreases in operating income were
partially offset by improvements in price and product mix of $64 million. SAG
and conversion costs included incremental savings from rationalization plans of
$15 million and $6 million, respectively.
Operating income in 2019 excluded net rationalization charges of $115 million,
net gains on asset sales of $16 million, and accelerated depreciation and asset
write-offs of $2 million. Operating income in 2018 excluded net rationalization
charges of $36 million, accelerated depreciation and asset write-offs of $4
million, and net losses on asset sales of $2 million.
EMEA's results are highly dependent upon Germany, which accounted for 21% and
33% of EMEA's net sales in 2019 and 2018, respectively. The decline in sales
reported in Germany is primarily related to a business reorganization that
centralized our OE sales for EMEA in Luxembourg. Results of operations in
Germany are expected to continue to have a significant impact on EMEA's future
performance.
Asia Pacific
                      Year Ended December 31,
(In millions)      2019        2018        2017
Tire Units          29.8        30.5        31.2
Net Sales        $ 2,115     $ 2,217     $ 2,237
Operating Income     193         257         342
Operating Margin     9.1 %      11.6 %      15.3 %


Asia Pacific unit sales in 2019 decreased 0.7 million units, or 2.3%, to 29.8
million units. OE tire volume decreased 0.7 million units, or 5.5%, primarily in
our consumer business in India and China as a result of lower vehicle
production. Replacement tire volume remained consistent.
Net sales in 2019 were $2,115 million, decreasing $102 million, or 4.6%, from
$2,217 million in 2018. Net sales decreased due to unfavorable foreign currency
translation of $59 million, primarily related to the weakening of the Australian
dollar, Chinese yuan and Indian rupee, lower volume of $49 million, and lower
sales in other tire-related businesses of $15 million, primarily in the retail
business. These decreases were partially offset by improvements in price and
product mix of $21 million.

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Operating income in 2019 was $193 million, decreasing $64 million, or 24.9%,
from $257 million in 2018. Operating income decreased due to higher conversion
costs of $22 million, primarily due to the impact of lower tire production on
overhead absorption, higher raw material costs of $20 million, lower volume of
$14 million, and unfavorable price and product mix of $14 million.
Operating income in 2018 excluded net rationalization charges of $3 million.
Asia Pacific's results are highly dependent upon China and Australia. China
accounted for 26% and 27% of Asia Pacific's net sales in 2019 and 2018,
respectively. Australia accounted for 27% of Asia Pacific's net sales in both
2019 and 2018. Results of operations in China and Australia are expected to
continue to have a significant impact on Asia Pacific's future performance.

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CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial statements and related
notes to the financial statements. On an ongoing basis, management reviews its
estimates, based on currently available information. Changes in facts and
circumstances may alter such estimates and affect our results of operations and
financial position in future periods. Our critical accounting policies relate
to:
• general and product liability and other litigation,

• workers' compensation,

• recoverability of goodwill,

•      deferred tax asset valuation allowances and uncertain income tax
       positions, and

• pensions and other postretirement benefits.

General and Product Liability and Other Litigation. We have recorded liabilities
totaling $293 million, including related legal fees expected to be incurred, for
potential product liability and other tort claims, including asbestos claims, at
December 31, 2019. General and product liability and other litigation
liabilities are recorded based on management's assessment that a loss arising
from these matters is probable. If the loss can be reasonably estimated, we
record the amount of the estimated loss. If the loss is estimated within a range
and no point within the range is more probable than another, we record the
minimum amount in the range. As additional information becomes available, any
potential liability related to these matters is assessed and the estimates are
revised, if necessary. Loss ranges are based upon the specific facts of each
claim or class of claims and are determined after review by counsel. Court
rulings on our cases or similar cases may impact our assessment of the
probability and our estimate of the loss, which may have an impact on our
reported results of operations, financial position and liquidity. We record
receivables for insurance recoveries related to our litigation claims when it is
probable that we will receive reimbursement from the insurer. Specifically, we
are a defendant in numerous lawsuits alleging various asbestos-related personal
injuries purported to result from alleged exposure to asbestos in certain
products previously manufactured by us or present in certain of our facilities.
Typically, these lawsuits have been brought against multiple defendants in
federal and state courts.
We periodically, and at least annually, update, using actuarial analyses, our
existing reserves for pending claims, including a reasonable estimate of the
liability associated with unasserted asbestos claims, and estimate our
receivables from probable insurance recoveries. In determining the estimate of
our asbestos liability, we evaluated claims over the next ten-year period. Due
to the difficulties in making these estimates, analysis based on new data and/or
changed circumstances arising in the future may result in an increase in the
recorded obligation, and that increase may be significant. We had recorded gross
liabilities for both asserted and unasserted asbestos claims, inclusive of
defense costs, totaling $153 million at December 31, 2019.
We maintain certain primary and excess insurance coverage under
coverage-in-place agreements, and also have additional excess liability
insurance with respect to asbestos liabilities. We record a receivable with
respect to such policies when we determine that recovery is probable and we can
reasonably estimate the amount of a particular recovery. This determination is
based on consultation with our outside legal counsel and takes into
consideration agreements with certain of our insurance carriers, the financial
viability and legal obligations of our insurance carriers, and other relevant
factors.
As of December 31, 2019, we recorded a receivable related to asbestos claims of
$95 million, and we expect that approximately 60% of asbestos claim related
losses would be recoverable through insurance through the period covered by the
estimated liability. Of this amount, $13 million was included in Current Assets
as part of Accounts Receivable at December 31, 2019. The recorded receivable
consists of an amount we expect to collect under coverage-in-place agreements
with certain primary and excess insurance carriers as well as an amount we
believe is probable of recovery from certain of our other excess insurance
carriers. Although we believe these amounts are collectible under primary and
certain excess policies today, future disputes with insurers could result in
significant charges to operations.
Workers' Compensation. We had recorded liabilities, on a discounted basis, of
$198 million for anticipated costs related to U.S. workers' compensation claims
at December 31, 2019. The costs include an estimate of expected settlements on
pending claims, defense costs and a provision for claims incurred but not
reported. These estimates are based on our assessment of potential liability
using an analysis of available information with respect to pending claims,
historical experience and current cost trends. The amount of our ultimate
liability in respect of these matters may differ from these estimates. We
periodically, and at least annually, update our loss development factors based
on actuarial analyses. The liability is discounted using the risk-free rate of
return.
For further information on general and product liability and other litigation,
and workers' compensation, refer to Note to the Consolidated Financial
Statements No. 19, Commitments and Contingent Liabilities, in this Form 10-K.


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Recoverability of Goodwill. Goodwill is tested for impairment annually or more
frequently if an indicator of impairment is present. Goodwill totaled $565
million at December 31, 2019.
We test goodwill for impairment on at least an annual basis, with the option to
perform a qualitative assessment to determine whether further impairment testing
is necessary or to perform a quantitative assessment by comparing the fair value
of a reporting unit to its carrying amount, including goodwill. Under the
qualitative assessment, an entity is not required to calculate the fair value of
a reporting unit unless the entity determines that it is more likely than not
(defined as a likelihood of more than 50%) that its fair value is less than its
carrying amount. If under the quantitative assessment the fair value of a
reporting unit is less than its carrying amount, then an impairment charge is
recorded for that difference, not to exceed the total goodwill allocated to that
reporting unit. Our policy is to perform a quantitative assessment at least once
every five years.
As a result of industry conditions, the decrease in our market capitalization
and the length of time since the last quantitative assessment was performed for
all reporting units, management performed a quantitative assessment as of
October 31, 2019, the date of our annual goodwill impairment testing. Based upon
the results of our assessment, there were no impairments of the Company's
goodwill. Fair values substantially exceeded the carrying amounts for each
reporting unit tested, except for the EMEA reporting unit discussed below. In
addition, we assessed the period from October 31, 2019 to December 31, 2019 and
determined there were no factors that caused us to change our conclusions as of
October 31, 2019.
We determine the estimated fair value for each reporting unit based on
discounted cash flow projections and market values for comparable businesses.
Our estimates of future cash flows include assumptions concerning future
operating performance and economic conditions and may differ from actual future
cash flows. Under the discounted cash flow approach, fair value is calculated as
the sum of the projected discounted cash flows of the reporting unit over the
next five years and the terminal value at the end of those five years and is
dependent on estimates for future revenue, operating margin, capital
expenditures, rationalization activities and working capital changes, as well as
expected long-term growth rates for cash flows and an appropriate discount rate.
The risk adjusted discount rate used is consistent with the weighted average
cost of capital for companies in the tire industry and is intended to represent
a rate of return that would be expected by a market participant. Under the
market value approach, market multiples are derived from market prices of stocks
of companies that are in the tire industry. The appropriate multiple is applied
to the forecasted revenues and earnings before interest, taxes, depreciation and
amortization of the reporting unit to obtain an estimated fair value.
As of December 31, 2019, goodwill of $411 million is allocated to the EMEA
reporting unit. As of the October 31, 2019 measurement date, EMEA had an
estimated fair value that exceeded its carrying value, including goodwill, by
approximately 10%. The most critical assumptions used in the calculation of the
fair value of the EMEA reporting unit are the projected long term operating
margin, discount rate, and the selection of market multiples. The projected long
term operating margin utilized in our fair value estimates is consistent with
the reporting unit operating plan and is dependent on the successful execution
of our business plan, overall industry growth rates and the competitive
environment. As a result, the long term operating margin could be adversely
impacted by our ability to execute our business plan as well as by volatile
macroeconomic factors such as raw material prices, industry conditions or
competition. Our business plan includes rationalization programs, aligned
distribution actions, and recovering past raw material cost increases by
improving price and product mix, including through continued focus on higher
margin tires. The discount rate could be adversely impacted by changes in the
macroeconomic environment and volatility in the equity and debt markets.
Although management believes its estimate of fair value is reasonable, if the
EMEA reporting unit's future financial performance falls below our expectations
or there are negative revisions to significant assumptions, or if our market
capitalization declines further, and if such a decline becomes indicative that
the fair value of our reporting units has declined below their carrying values,
we may need to record a material, non-cash goodwill impairment charge in a
future period.
Deferred Tax Asset Valuation Allowances and Uncertain Income Tax Positions. At
December 31, 2019, our valuation allowance on certain of our U.S. federal, state
and local deferred tax assets was $13 million, primarily related to state tax
loss and credit carryforwards, and our valuation allowance on our foreign
deferred tax assets was $969 million. At December 31, 2018, our valuation
allowance on certain U.S. federal, state and local deferred tax assets was $113
million and our valuation allowance on our foreign deferred tax assets was $204
million.
We record a reduction to the carrying amounts of deferred tax assets by
recording a valuation allowance if, based on the available evidence, it is more
likely than not such assets will not be realized. The valuation of deferred tax
assets requires judgment in assessing future profitability and the tax
consequences of events that have been recognized in either our financial
statements or tax returns.
We consider both positive and negative evidence when measuring the need for a
valuation allowance. The weight given to the evidence is commensurate with the
extent to which it may be objectively verified. Current and cumulative financial
reporting results are a source of objectively verifiable evidence. We give
operating results during the most recent three-year period a significant weight
in our analysis. We typically only consider forecasts of future profitability
when positive cumulative operating results exist in the most recent three-year
period. We perform scheduling exercises to determine if sufficient taxable
income of the appropriate character exists in the periods required in order to
realize our deferred tax assets with limited lives (such as tax

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loss carryforwards and tax credits) prior to their expiration. We consider tax
planning strategies available to accelerate taxable amounts if required to
utilize expiring deferred tax assets. A valuation allowance is not required to
the extent that, in our judgment, positive evidence exists with a magnitude and
duration sufficient to result in a conclusion that it is more likely than not
that our deferred tax assets will be realized.
At December 31, 2019, our net deferred tax assets include $403 million of
foreign tax credits, net of a valuation allowance of $3 million, as compared to
$637 million, net of a valuation allowance of $103 million, at December 31,
2018. If not utilized, these foreign tax credits will expire from 2022 to 2028.
These credits were generated primarily from the receipt of foreign dividends.
Our earnings and forecasts of future profitability along with three significant
sources of foreign income provide us sufficient positive evidence to utilize
these credits, despite the negative evidence of their limited carryforward
periods. Those 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
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 considered our current forecasts of future profitability in assessing our
ability to realize our remaining net foreign tax credits. These forecasts
include the impact of recent trends, including various macroeconomic factors
such as raw material prices, on our profitability, as well as the impact of tax
planning strategies. Macroeconomic factors, including raw material prices,
possess a high degree of volatility and can significantly impact our
profitability. As such, there is a risk that future foreign source income will
not be sufficient to fully utilize these 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
evidence to conclude that it is more likely than not that our foreign tax
credits, net of remaining valuation allowances, will be fully utilized prior to
their various expiration dates.
We recognize the effects of changes in tax rates and laws on deferred tax
balances in the period in which legislation is enacted. We remeasure existing
deferred tax assets and liabilities considering the tax rates at which they will
be realized. We also consider the effects of enacted tax laws in our analysis of
the need for valuation allowances.
Effective January 1, 2018, the Tax Act subjects a U.S. parent to current tax on
its "global intangible low-taxed income" ("GILTI"). To the extent that we incur
expense under the GILTI provisions, we will treat it as a component of income
tax expense in the period incurred.
The calculation of our tax liabilities involves dealing with uncertainties in
the application of complex tax regulations, including those for transfer
pricing. We recognize liabilities for anticipated tax audit issues based on our
estimate of whether, and the extent to which, additional taxes will be due. If
we ultimately determine that payment of these amounts is unnecessary, we reverse
the liability and recognize a tax benefit during the period in which we
determine that the liability is no longer necessary. We also recognize income
tax benefits to the extent that it is more likely than not that our positions
will be sustained when challenged by the taxing authorities. We derecognize
income tax benefits when, based on new information, we determine that it is no
longer more likely than not that our position will be sustained. To the extent
we prevail in matters for which liabilities have been established, or determine
we need to derecognize tax benefits recorded in prior periods, our results of
operations and effective tax rate in a given period could be materially
affected. An unfavorable tax settlement would require use of our cash, and lead
to recognition of expense to the extent the settlement amount exceeds recorded
liabilities, resulting in an increase in our effective tax rate in the period of
resolution. To reduce our risk of an unfavorable transfer price settlement, the
Company applies consistent transfer pricing policies and practices globally,
supports pricing with economic studies and seeks advance pricing agreements and
joint audits to the extent possible. A favorable tax settlement would be
recognized as a reduction of expense to the extent the settlement amount is
lower than recorded liabilities and, in the case of an income tax settlement,
would result in a reduction in our effective tax rate in the period of
resolution. We report interest and penalties related to uncertain income tax
positions as income tax expense.
For additional information regarding uncertain income tax positions and
valuation allowances, refer to Note to the Consolidated Financial Statements
No. 6, Income Taxes, in this Form 10-K.

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Pensions and Other Postretirement Benefits. We have recorded liabilities for
pension and other postretirement benefits of $684 million and $241 million,
respectively, at December 31, 2019. Our recorded liabilities and net periodic
costs for pensions and other postretirement benefits are based on a number of
assumptions, including:
• life expectancies,


• retirement rates,


• discount rates,

• long term rates of return on plan assets,

• inflation rates,

• future compensation levels,

• future health care costs, and

• maximum company-covered benefit costs.

Certain of these assumptions are determined with the assistance of independent
actuaries. Assumptions about life expectancies, retirement rates, future
compensation levels and future health care costs are based on past experience
and anticipated future trends. The discount rate for our U.S. plans is based on
a yield curve derived from a portfolio of corporate bonds from issuers rated AA
or higher as of December 31 and is reviewed annually. Our expected benefit
payment cash flows are discounted based on spot rates developed from the yield
curve. The mortality assumption for our U.S. plans is based on actual historical
experience, an assumed long term rate of future improvement based on published
actuarial tables, and current government regulations related to lump sum payment
factors. The long term rate of return on U.S. plan assets is based on estimates
of future long term rates of return similar to the target allocation of
substantially all fixed income securities. Actual U.S. pension fund asset
allocations are reviewed on a monthly basis and the pension fund is rebalanced
to target ranges on an as-needed basis. These assumptions are reviewed regularly
and revised when appropriate. Changes in one or more of them may affect the
amount of our recorded liabilities and net periodic costs for these benefits.
Other assumptions involving demographic factors such as retirement age and
turnover are evaluated periodically and are updated to reflect our experience
and expectations for the future. If actual experience differs from expectations,
our financial position, results of operations and liquidity in future periods
may be affected.
The weighted average discount rate used in estimating the total liability for
our U.S. pension and other postretirement benefit plans was 3.22% and 3.14%,
respectively, at December 31, 2019, compared to 4.24% and 4.16%, respectively,
at December 31, 2018. The decrease in the discount rate at December 31, 2019 was
due primarily to lower yields on highly rated corporate bonds. Interest cost
included in our U.S. net periodic pension cost was $173 million in 2019,
compared to $157 million in 2018 and $160 million in 2017. Interest cost
included in our worldwide net periodic other postretirement benefits cost was
$11 million in 2019, compared to $12 million in 2018 and $13 million in 2017.
The following table presents the sensitivity of our U.S. projected pension
benefit obligation, accumulated other postretirement benefits obligation, and
annual expense to the indicated increase/decrease in key assumptions:
                                                               + / - Change at December 31, 2019
(Dollars in millions)                    Change                 PBO/ABO                 Annual Expense
Pensions:
Assumption:
Discount rate                           +/- 0.5%      $                 267         $                  4

Other Postretirement Benefits:
Assumption:
Discount rate                           +/- 0.5%      $                   4         $                  -
Health care cost trends - total cost    +/- 1.0%                          1                            -


Changes in general interest rates and corporate (AA or better) credit spreads
impact our discount rate and thereby our U.S. pension benefit obligation. Our
U.S. pension plans are invested in a portfolio of substantially all fixed income
securities designed to offset the impact of future discount rate movements on
liabilities for these plans. If corporate (AA or better) interest rates increase
or decrease in parallel (i.e., across all maturities), the investment portfolio
described above is designed to mitigate a substantial portion of the expected
change in our U.S. pension benefit obligation. For example, if corporate (AA or
better) interest rates increased or decreased by 0.5%, the investment portfolio
described above would be expected to mitigate more than 85% of the expected
change in our U.S. pension benefit obligation.
At December 31, 2019, our net actuarial loss included in Accumulated Other
Comprehensive Loss ("AOCL") related to global pension plans was $3,162 million,
$2,380 million of which related to our U.S. pension plans. The net actuarial
loss included in AOCL related to our U.S. pension plans is a result of declines
in U.S. discount rates and plan asset losses that occurred prior to 2015, plus
the impact of prior increases in estimated life expectancies. For purposes of
determining our 2019 U.S. pension total

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benefits cost, we recognized $112 million of the net actuarial losses in 2019.
We will recognize approximately $110 million of net actuarial losses in 2020
U.S. net periodic pension cost. If our future experience is consistent with our
assumptions as of December 31, 2019, actuarial loss recognition over the next
few years will remain at an amount near that to be recognized in 2020 before it
begins to gradually decline. In addition, if annual lump sum payments from a
pension plan exceed annual service and interest cost for that plan, accelerated
recognition of net actuarial losses will be required through a settlement in
total benefits cost.
The actual rate of return on our U.S. pension fund was 15.90%, (1.90%) and 8.70%
in 2019, 2018 and 2017, respectively, as compared to the expected rate of 5.25%,
4.58% and 5.08% in 2019, 2018 and 2017, respectively. We use the fair value of
our pension assets in the calculation of pension expense for all of our
U.S. pension plans.
The weighted average amortization period for our U.S. pension plans is
approximately 17 years.
Service cost of pension plans was recorded in CGS, as part of the cost of
inventory sold during the period, or SAG in our Consolidated Statements of
Operations, based on the specific roles (i.e., manufacturing vs.
non-manufacturing) of employee groups covered by each of our pension plans. 

In

2019, 2018 and 2017, approximately 45% and 55% of service cost was included in
CGS and SAG, respectively.  Non-service related net periodic pension costs were
recorded in Other (Income) Expense.
Globally, we expect our 2020 net periodic pension cost to be approximately $110
million to $130 million, including approximately $35 million of service cost,
compared to $132 million in 2019, which included $29 million of service cost.
The decrease in expected net periodic pension cost is primarily due to lower
interest cost for our U.S. pension plans from decreases in interest rates.
We experienced a decrease in our U.S. discount rate at the end of 2019 and a
large portion of the $30 million net actuarial loss included in AOCL for our
worldwide other postretirement benefit plans as of December 31, 2019 is a result
of the overall decline in U.S. discount rates over time. For purposes of
determining 2019 worldwide net periodic other postretirement benefits cost, we
recognized $3 million of net actuarial losses in 2019. We will recognize
approximately $4 million of net actuarial losses in 2020. If our future
experience is consistent with our assumptions as of December 31, 2019, actuarial
loss recognition over the next few years will remain at an amount near that to
be recognized in 2020 before it begins to gradually decline.
For further information on pensions and other postretirement benefits, refer to
Note to the Consolidated Financial Statements No. 17, Pension, Other
Postretirement Benefits and Savings Plans, in this Form 10-K.

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LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW
Our primary sources of liquidity are cash generated from our operating and
financing activities. Our cash flows from operating activities are driven
primarily by our operating results and changes in our working capital
requirements and our cash flows from financing activities are dependent upon our
ability to access credit or other capital.
In the first quarter of 2019, we amended and restated our European revolving
credit facility. Significant changes include extending the maturity to March 27,
2024, increasing the available commitments from €550 million to €800 million,
decreasing the interest rate margin by 25 basis points and decreasing the annual
commitment fee by 5 basis points.
For further information on the other strategic initiatives we pursued in 2019,
refer to "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations - Overview."
At December 31, 2019, we had $908 million of Cash and Cash Equivalents, compared
to $801 million at December 31, 2018. The increase in cash and cash equivalents
of $107 million was primarily due to cash flows from operating activities of
$1,207 million, driven by segment operating income of $945 million and cash from
working capital of $82 million. These sources of cash were partially offset by
cash used in investing activities of $800 million, primarily reflecting capital
expenditures of $770 million, and cash used in financing activities of $307
million, primarily due to cash used for dividends of $148 million and net debt
repayments of $119 million.
At December 31, 2019 and 2018, we had $3,578 million and $3,151 million,
respectively, of unused availability under our various credit agreements. The
table below provides unused availability by our significant credit facilities as
of December 31:
(In millions)                           2019       2018

First lien revolving credit facility $ 1,662 $ 1,633 European revolving credit facility 899 629 Chinese credit facilities

                 290        199
Mexican credit facilities                   -        140

Other domestic and international debt 338 221 Notes payable and overdrafts

              389        329
                                      $ 3,578    $ 3,151


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 2020 cash flow needs to include capital expenditures of
approximately $800 million. We also expect interest expense to range between
$350 million and $375 million, restructuring payments to be $125 million to $150
million, dividends on our common stock to be approximately $150 million, and
contributions to our funded non-U.S. pension plans to be $25 million to $50
million. We expect working capital to be a use of cash of $50 million to $100
million in 2020. We intend to operate the business in a way that allows us to
address these needs with our existing cash and available credit if they cannot
be funded by cash generated from operations.
We believe that our liquidity position is adequate to fund our operating and
investing needs and debt maturities in 2020 and to provide us with flexibility
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 and South Africa, transfers of funds into or out of such countries by way
of dividends, loans, advances or payments to third-party or affiliated suppliers
are generally or periodically subject to certain requirements, such as obtaining
approval from the foreign government and/or currency exchange board before net
assets can be transferred out of the country. In addition, certain of our credit
agreements and other debt instruments limit the ability of foreign

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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 and South African
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 December 31, 2019, approximately $711 million of net assets,
including $102 million of cash and cash equivalents, were subject to such
requirements. The requirements we must comply with to transfer funds out of
China and South Africa have not adversely impacted our ability to make transfers
out of those countries.
Cash Position
At December 31, 2019, significant concentrations of cash and cash equivalents
held by our international subsidiaries included the following amounts:
•      $337 million or 37% in Asia Pacific, primarily China, India and Japan

($278 million or 35% at December 31, 2018),

• $214 million or 24% in EMEA, primarily Belgium ($261 million or 33% at

December 31, 2018), and

• $190 million or 21% in Americas, primarily Brazil, Canada and Chile ($134

million or 17% at December 31, 2018).

Operating Activities
Net cash provided by operating activities was $1,207 million in 2019, increasing
$291 million compared to net cash provided by operating activities of $916
million in 2018.
The increase in net cash provided by operating activities was driven by an
increase in cash provided by working capital of $202 million and lower cash
payments for rationalizations of $115 million, reflecting cash payments made
during 2018 related to the closure of our tire manufacturing facility in
Philippsburg, Germany. Also, cash flows from operating activities were favorably
impacted by an increase in Balance Sheet accruals for Compensation and Benefits
of $210 million, primarily due to higher wages and benefits, including higher
incentive compensation, and a lower decrease in Other Current Liabilities in
2019 as compared to 2018 providing a net benefit of $131 million, primarily due
to changes in indirect taxes. These impacts were partially offset by a decrease
in operating income from our SBUs of $329 million.
Working capital was a source of cash of $82 million in 2019 as compared to a use
of cash of $120 million in 2018, reflecting the Company's continued focus on
reducing working capital, including actions taken with our vendors and customers
related to accounts payable and accounts receivable and managing production
levels, as well as the impact of moderating raw material prices during 2019.
Investing Activities
Net cash used by investing activities was $800 million in 2019, compared to $867
million in 2018. Capital expenditures were $770 million in 2019, compared to
$811 million in 2018. Beyond expenditures required to sustain our facilities,
capital expenditures in 2019 and 2018 primarily related to investments in
additional 17-inch and above capacity around the world.
Financing Activities
Net cash used by financing activities was $307 million in 2019, compared to $243
million in 2018. Financing activities in 2019 included net debt repayments of
$119 million. Financing activities in 2018 included net borrowings of $135
million. We paid dividends on our common stock of $148 million and $138 million
in 2019 and 2018, respectively. We repurchased $220 million of our common stock
in 2018 and did not repurchase any shares in 2019.
Credit Sources
In aggregate, we had total credit arrangements of $9,078 million available at
December 31, 2019, of which $3,578 million were unused, compared to $8,971
million available at December 31, 2018, of which $3,151 million were unused. At
December 31, 2019, we had long term credit arrangements totaling $8,320 million,
of which $3,189 million were unused, compared to $8,212 million and $2,822
million, respectively, at December 31, 2018. At December 31, 2019, we had short
term committed and uncommitted credit arrangements totaling $758 million, of
which $389 million were unused, compared to $759 million and $329 million,
respectively, at December 31, 2018. 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 December 31, 2019, we had $3,311 million of outstanding notes, compared to
$3,314 million at December 31, 2018.
$2.0 Billion Amended and Restated First Lien Revolving Credit Facility due 2021
Our amended and restated first lien revolving credit facility is available in
the form of loans or letters of credit, with letter of credit availability
limited to $800 million. Availability under the facility is subject to a
borrowing base, which is based primarily on (i)

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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, and (iii) certain cash in an amount not to exceed $200
million. To the extent that our eligible accounts receivable and 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 $2.0
billion. In addition, if the amount of outstanding borrowings and letters of
credit under the facility exceeds the borrowing base, we are required to prepay
borrowings and/or cash collateralize letters of credit sufficient to eliminate
the excess. As of December 31, 2019, our borrowing base, and therefore our
availability, under the facility was $301 million below the facility's stated
amount of $2.0 billion. Based on our current liquidity, amounts drawn under this
facility bear interest at LIBOR plus 125 basis points, and undrawn amounts under
the facility will be subject to an annual commitment fee of 30 basis points.
At December 31, 2019 and 2018, we had no borrowings and $37 million of letters
of credit issued under the revolving credit facility.
During 2016, we began entering into bilateral letter of credit agreements. At
December 31, 2019, we had $351 million in letters of credit issued under
bilateral 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 December 31, 2019 and 2018, the amounts outstanding under this facility were
$400 million.
€800 Million Amended and Restated Senior Secured European Revolving Credit
Facility due 2024
On March 27, 2019, we amended and restated our European revolving credit
facility. Significant changes to the European revolving credit facility include
extending the maturity to March 27, 2024, increasing the available commitments
thereunder from €550 million to €800 million, decreasing the interest rate
margin by 25 basis points and decreasing the annual commitment fee by 5 basis
points to 25 basis points. Loans will now 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.
The 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 Goodyear
Europe B.V. ("GEBV"), GDTG and Goodyear Dunlop Tires 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. 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 December 31, 2019 and 2018, 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, 2015 under the first lien facility and December 31,
2018 under the European facility.
Accounts Receivable Securitization Facilities (On-Balance Sheet)
GEBV and certain other of our European subsidiaries are parties to a
pan-European accounts receivable securitization facility that expires in 2023.
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 18,
2018 through October 15, 2020, the designated maximum amount of the facility is
€320 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) September 26, 2023, (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 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 15,
2020.

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At December 31, 2019, the amounts available and utilized under this program
totaled $327 million (€291 million). At December 31, 2018, the amounts available
and utilized under this program totaled $335 million (€293 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 December 31, 2019 and 2018, the
amount of receivables sold was $548 million and $568 million, respectively.
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 program. Agreements for such supplier financing programs totaled up to
$500 million at December 31, 2019 and 2018.
Further Information
After 2021, it is unclear whether banks will continue to provide LIBOR
submissions to the administrator of LIBOR, and no consensus currently exists as
to what benchmark rate or rates may become accepted alternatives to LIBOR. In
the United States, efforts to identify a set of alternative U.S. dollar
reference interest rates include proposals by the Alternative Reference Rates
Committee that has been convened by the Federal Reserve Board and the Federal
Reserve Bank of New York. Additionally, the International Swaps and Derivatives
Association, Inc. launched a consultation on technical issues related to new
benchmark fallbacks for derivative contracts that reference certain interbank
offered rates, including LIBOR.  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 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 are in the process of evaluating our financing obligations
and other contracts that refer to LIBOR. Our second lien term loan facility and
our European revolving credit facility, which constitute the most significant of
our LIBOR-based debt obligations that mature after 2021, contain "fallback"
provisions that address the potential discontinuation of LIBOR and facilitate
the adoption of an alternate rate of interest. Our first lien revolving credit
facility matures in 2021 and we have not issued any long term floating rate
notes. Our 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 this Form 10-K.
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 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 $200 million. If this were to

occur, our ratio of EBITDA to Consolidated Interest Expense may not be

less than 2.0 to 1.0 for the most recent period of four consecutive fiscal

quarters. As of December 31, 2019, our availability under this facility of

$1,662 million plus our Available Cash of $211 million totaled $1,873

       million, which is in excess of $200 million.



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• 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 December 31, 2019,
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.
As of December 31, 2019, 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 our previous financing activities, we may seek to undertake
additional financing actions which could include restructuring bank debt or
capital markets transactions, possibly including the issuance of additional debt
or equity. Given the inherent uncertainty of market conditions, access to the
capital markets cannot be assured.
Our future liquidity requirements may make it necessary for us to incur
additional debt. However, a substantial portion of our assets are already
subject to liens securing our indebtedness. As a result, we are limited in our
ability to pledge our remaining assets as security for additional secured
indebtedness. In addition, no assurance can be given as to our ability to raise
additional unsecured debt.
Dividends and Common Stock Repurchase Program
Under our primary credit facilities and some of our note indentures, we are
permitted to pay dividends on and repurchase our capital stock (which constitute
restricted payments) as long as no default will have occurred and be continuing,
additional indebtedness can be incurred under the credit facilities or
indentures following the payment, and certain financial tests are satisfied.
During 2019, 2018 and 2017 we paid cash dividends of $148 million, $138 million
and $110 million, respectively, on our common stock. On January 14, 2020, the
Company's Board of Directors (or a duly authorized committee thereof) declared
cash dividends of $0.16 per share of our common stock, or approximately $37
million in the aggregate. The cash dividend will be paid on March 2, 2020 to
stockholders of record as of the close of business on February 3, 2020. Future
quarterly dividends are subject to Board approval.
On September 18, 2013, the Board of Directors approved our common stock
repurchase program and, from time to time, approved increases in the amount
authorized to be purchased under that program. The program expired on
December 31, 2019. During 2019, we did not repurchase any shares under this
program. Since 2013, we repurchased 52,905,959 shares at an average price,
including commissions, of $28.99 per share, or $1,534 million in the aggregate.

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The restrictions imposed by our credit facilities and indentures did not affect
our ability to pay the dividends on or repurchase our capital stock as described
above, and are not expected to affect our ability to pay similar dividends or
make similar repurchases in the future.
Asset Dispositions
The restrictions on asset sales imposed by our material indebtedness have not
affected our ability to divest non-core businesses, and those divestitures have
not affected our ability to comply with those restrictions.


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COMMITMENTS AND CONTINGENT LIABILITIES
Contractual Obligations
The following table presents our contractual obligations and commitments to make
future payments as of December 31, 2019:

(In millions)                       Total        2020        2021        2022        2023        2024       Beyond 2024
Debt Obligations(1)               $  5,444     $   907     $   250     $   391     $ 1,648     $   85     $       2,163
Finance Lease Obligations(2)           249             4          15           2           1          2               225
Interest Payments(3)                 1,670           270         218         205         190        129               658

Operating Lease Obligations(4) 1,124 242 192 141 109 81

               359
Pension Benefits(5)                    310          62          62          62          62         62                NA
Other Postretirement Benefits(6)       153          17          17          16          16         15                72
Workers' Compensation(7)               261          39          23          18          14         11               156
Binding Commitments(8)               2,405       1,310         390         181         152        130               242
Uncertain Income Tax Positions(9)        8           2           4           -           -          -                 2
                                  $ 11,624     $ 2,853     $ 1,171     $ 1,016     $ 2,192     $  515     $       3,877


(1)    Debt obligations include Notes Payable and Overdrafts, and excludes the
       impact of deferred financing fees and unamortized discounts.

(2) The minimum lease payments for finance lease obligations are $813 million.

(3) These amounts represent future interest payments related to our existing

debt obligations and finance leases based on fixed and variable interest

rates specified in the associated debt and lease agreements. The amounts

provided relate only to existing debt obligations and do not assume the

refinancing or replacement of such debt or future changes in variable

interest rates.

(4) Operating lease obligations have not been reduced by minimum sublease

rentals of $13 million, $9 million, $6 million, $4 million, $2 million and

$4 million in each of the periods above, respectively, for a total of

$38 million. Payments, net of minimum sublease rentals, total

$1,086 million. The present value of the net operating lease payments,

including sublease rentals, is $834 million. The operating leases relate

to, among other things, real estate, vehicles, data processing equipment

and miscellaneous other assets. No asset is leased from any related party.

(5) The obligation related to pension benefits is actuarially determined and

is reflective of obligations as of December 31, 2019. Although subject to

change, the amounts set forth in the table represent the mid-point of the

range of our expected contributions for funded U.S. and non-U.S. pension

       plans, plus expected cash funding of direct participant payments to our
       U.S. and non-U.S. pension plans.


We made significant contributions to fully fund our U.S. pension plans in 2013
and 2014. We have no minimum funding requirements for our funded U.S. pension
plans under current ERISA law or the provisions of our USW collective bargaining
agreement, which requires us to maintain an annual ERISA funded status for the
hourly U.S. pension plan of at least 97%.
Future U.S. pension contributions will be affected by our ability to offset
changes in future interest rates with asset returns from our fixed income
portfolio and any changes to ERISA law. For further information on the U.S.
pension investment strategy, refer to Note to the Consolidated Financial
Statements No. 17, Pension, Other Postretirement Benefits and Savings Plans, in
this Form 10-K.
Future non-U.S. contributions are affected by factors such as:
• future interest rate levels,

• the amount and timing of asset returns, and

•          how contributions in excess of the minimum requirements could impact
           the amount and timing of future contributions.

(6) The payments presented above are expected payments for the next 10 years.

The payments for other postretirement benefits reflect the estimated

benefit payments of the plans using the provisions currently in effect.

Under the relevant summary plan descriptions or plan documents we have the

right to modify or terminate the plans. The obligation related to other

postretirement benefits is actuarially determined on an annual basis.

(7) The payments for workers' compensation obligations are based upon recent

historical payment patterns on claims. The present value of anticipated

       claims payments for workers' compensation is $198 million.



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(8) Binding commitments are for raw materials, capital expenditures,

utilities, and various other types of contracts. The obligations to

purchase raw materials include supply contracts at both fixed and variable

       prices. Those with variable prices are based on index rates for those
       commodities at December 31, 2019.


(9)    These amounts primarily represent expected payments with interest for

uncertain income tax positions as of December 31, 2019. We have reflected

them in the period in which we believe they will be ultimately settled

based upon our experience with these matters.

Additional other long term liabilities include items such as general and product
liabilities, environmental liabilities and miscellaneous other long term
liabilities. These other liabilities are not contractual obligations by nature.
We cannot, with any degree of reliability, determine the years in which these
liabilities might ultimately be settled. Accordingly, these other long term
liabilities are not included in the above table.
In addition, pursuant to certain long term agreements, we will purchase varying
amounts of certain raw materials and finished goods at agreed upon base prices
that may be subject to periodic adjustments for changes in raw material costs
and market price adjustments, or in quantities that may be subject to periodic
adjustments for changes in our or our suppliers' production levels. These
contingent contractual obligations, the amounts of which cannot be estimated,
are not included in the table above.
We do not engage in the trading of commodity contracts or any related derivative
contracts. We generally purchase raw materials and energy through short term,
intermediate and long term supply contracts at fixed prices or at formula prices
related to market prices or negotiated prices. We may, however, from time to
time, enter into contracts to hedge our energy costs.
At December 31, 2019, we had an agreement to provide a revolving loan commitment
to TireHub of $50 million. No amounts were drawn on that commitment as of
December 31, 2019.
Off-Balance Sheet Arrangements
An off-balance sheet arrangement is any transaction, agreement or other
contractual arrangement involving an unconsolidated entity under which a company
has:
• made guarantees,

• retained or held a contingent interest in transferred assets,

• undertaken an obligation under certain derivative instruments, or

• undertaken any obligation arising out of a material variable interest in

an unconsolidated entity that provides financing, liquidity, market risk

or credit risk support to the company, or that engages in leasing, hedging

or research and development arrangements with the company.

We have entered into certain arrangements under which we have provided
guarantees that are off-balance sheet arrangements. Those guarantees totaled
approximately $74 million at December 31, 2019. For further information about
our guarantees, refer to Note to the Consolidated Financial Statements No. 19,
Commitments and Contingent Liabilities, in this Form 10-K.

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FORWARD-LOOKING INFORMATION - SAFE HARBOR STATEMENT
Certain information in this Annual Report on Form 10-K (other than historical
data and information) may constitute forward-looking statements regarding events
and trends that may affect our future operating results and financial position.
The words "estimate," "expect," "intend" and "project," as well as other words
or expressions of similar meaning, are intended to identify forward-looking
statements. You are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date of this Annual Report on Form 10-K.
Such statements are based on current expectations and assumptions, are
inherently uncertain, are subject to risks and should be viewed with caution.
Actual results and experience may differ materially from the forward-looking
statements as a result of many factors, including:
•      if we do not successfully implement our strategic initiatives, our

operating results, financial condition and liquidity may be materially

adversely affected;

• we face significant global competition and our market share could decline;

•      deteriorating economic conditions in any of our major markets, or an
       inability to access capital markets or third-party financing when
       necessary, may materially adversely affect our operating results,
       financial condition and liquidity;


•      raw material and energy costs may materially adversely affect our
       operating results and financial condition;

• if we experience a labor strike, work stoppage or other similar event our

business, results of operations, financial condition and liquidity could

be materially adversely affected;

• our international operations have certain risks that may materially

adversely affect our operating results, financial condition and liquidity;

• we have foreign currency translation and transaction risks that may

materially adversely affect our operating results, financial condition and

       liquidity;


•      our long term ability to meet our obligations, to repay maturing

indebtedness or to implement strategic initiatives may be dependent on our

       ability to access capital markets in the future and to improve our
       operating results;

• financial difficulties, work stoppages, supply disruptions or economic

       conditions affecting our major OE customers, dealers or suppliers could
       harm our business;

• our capital expenditures may not be adequate to maintain our competitive

       position and may not be implemented in a timely or cost-effective manner;


•      we have a substantial amount of debt, which could restrict our growth,

place us at a competitive disadvantage or otherwise materially adversely

affect our financial health;

• any failure to be in compliance with any material provision or covenant of

our debt instruments, or a material reduction in the borrowing base under

our revolving credit facility, could have a material adverse effect on our

liquidity and operations;

• our variable rate indebtedness subjects us to interest rate risk, which

could cause our debt service obligations to increase significantly;

• we have substantial fixed costs and, as a result, our operating income

       fluctuates disproportionately with changes in our net sales;


•      we may incur significant costs in connection with our contingent
       liabilities and tax matters;

• our reserves for contingent liabilities and our recorded insurance assets

are subject to various uncertainties, the outcome of which may result in

our actual costs being significantly higher than the amounts recorded;

• we are subject to extensive government regulations that may materially

       adversely affect our operating results;


•      we may be adversely affected by any disruption in, or failure of, our
       information technology systems due to computer viruses, unauthorized

access, cyber-attack, natural disasters or other similar disruptions;

•if we are unable to attract and retain key personnel, our business could be
materially adversely affected; and
•      we may be impacted by economic and supply disruptions associated with

events beyond our control, such as war, acts of terror, political unrest,

public health concerns, labor disputes or natural disasters.

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

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