SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Commission File Number: 1-1927

THE GOODYEAR TIRE & RUBBER COMPANY

(Exact Name of Registrant as Specified in Its Charter)

Ohio		34-0253240
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)
1144 East Market Street, Akron, Ohio		44316-0001
(Address of Principal Executive Offices)		(Zip Code)

(330) 796-2121
(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

 

Number of Shares of Common Stock,
Without Par Value, Outstanding at September 30, 2010:                    242,913,365

 

 

PART I. FINANCIAL INFORMATION

ITEM 1.		FINANCIAL STATEMENTS.

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In millions, except per share amounts)		2010				2009				2010				2009
NET SALES		$	4,962			$	4,385			$	13,760			$	11,864
Cost of Goods Sold			4,120				3,523				11,262				10,095
Selling, Administrative and General Expense			640				617				1,915				1,764
Rationalizations (Note 2)			8				16				16				207
Interest Expense			90				85				241				228
Other Expense (Note 3)			62				4				173				66
Income (Loss) before Income Taxes			42				140				153				(496	)
United States and Foreign Taxes			55				38				151				3
Net (Loss) Income			(13	)			102				2				(499	)
Less: Minority Shareholders Net Income (Loss)			7				30				41				(17	)
Goodyear Net (Loss) Income		$	(20	)		$	72			$	(39	)		$	(482	)
Goodyear Net (Loss) Income — Per Share
Basic		$	(0.08	)		$	0.30			$	(0.16	)		$	(2.00	)
Weighted Average Shares Outstanding (Note 4)			242				242				242				241
Diluted		$	(0.08	)		$	0.30			$	(0.16	)		$	(2.00	)
Weighted Average Shares Outstanding (Note 4)			242				245				242				241

The accompanying notes are an integral part of these consolidated financial statements.

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)

		September 30,				December 31,
(In millions)		2010				2009
Assets:
Current Assets:
Cash and Cash Equivalents		$	1,665			$	1,922
Accounts Receivable, less Allowance — $112 ($110 in 2009)			3,461				2,540
Inventories:
Raw Materials			723				483
Work in Process			165				138
Finished Products			2,105				1,822
			2,993				2,443
Prepaid Expenses and Other Current Assets			284				320
Total Current Assets			8,403				7,225
Goodwill			691				706
Intangible Assets			163				164
Deferred Income Taxes			71				43
Other Assets			459				429
Property, Plant and Equipment less Accumulated Depreciation — $8,810 ($8,626 in 2009)			5,869				5,843
Total Assets		$	15,656			$	14,410
Liabilities:
Current Liabilities:
Accounts Payable-Trade		$	2,813			$	2,278
Compensation and Benefits (Note 8)			727				635
Other Current Liabilities			1,015				844
Notes Payable and Overdrafts (Note 6)			259				224
Long Term Debt and Capital Leases due Within One Year (Note 6)			118				114
Total Current Liabilities			4,932				4,095
Long Term Debt and Capital Leases (Note 6)			4,595				4,182
Compensation and Benefits (Note 8)			3,398				3,526
Deferred and Other Noncurrent Income Taxes			252				235
Other Long Term Liabilities			760				793
Total Liabilities			13,937				12,831
Commitments and Contingent Liabilities (Note 9)
Minority Shareholders’ Equity (Note 1)			592				593
Shareholders’ Equity:
Goodyear Shareholders’ Equity:
Preferred Stock, no par value:
Authorized, 50 shares, unissued			—				—
Common Stock, no par value:
Authorized, 450 shares, Outstanding shares – 243 (242 in 2009) after deducting 8 treasury shares (9 in 2009)			243				242
Capital Surplus			2,799				2,783
Retained Earnings			1,043				1,082
Accumulated Other Comprehensive Loss			(3,226	)			(3,372	)
Goodyear Shareholders’ Equity			859				735
Minority Shareholders’ Equity — Nonredeemable			268				251
Total Shareholders’ Equity			1,127				986
Total Liabilities and Shareholders’ Equity		$	15,656			$	14,410

The accompanying notes are an integral part of these consolidated financial statements.

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In millions)		2010				2009				2010				2009
Net (Loss) Income		$	(13	)		$	102			$	2			$	(499	)
Other Comprehensive Income (Loss):
Foreign currency translation, net of tax of $0 and $1 in 2010 ($0 and $0 in 2009)			279				154				28				202
Reclassification adjustment for amounts recognized in income, net of tax of $0 in all periods			—				(17	)			—				(17	)
Defined benefit plans:
Amortization of prior service cost and unrecognized gains and losses included in total benefit cost, net of tax of $14 and $19 in 2010 ($21 and $38 in 2009)			28				25				110				101
Decrease (increase) in net actuarial losses, net of tax of $1 and $1 in 2010 ($12 and $12 in 2009)			2				9				(11	)			(30	)
Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments and settlements, net of tax of $0 and $0 in 2010 ($0 and $1 in 2009)			—				4				1				7
Unrealized investment gains, net of tax of $0 in all periods			2				5				3				3
Comprehensive Income (Loss)			298				282				133				(233	)
Less: Comprehensive Income (Loss) Attributable to Minority Shareholders			92				70				26				16
Comprehensive Income (Loss) Attributable to Goodyear Shareholders		$	206			$	212			$	107			$	(249	)

The accompanying notes are an integral part of these consolidated financial statements.

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

		Nine Months Ended
		September 30,
(In millions)		2010				2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) Income		$	2			$	(499	)
Adjustments to reconcile net (loss) income to cash flows from operating activities:
Depreciation and amortization			487				471
Amortization and write-off of debt issuance costs			22				14
Net rationalization charges (Note 2)			16				207
Net (gains) losses on asset sales (Note 3)			(26	)			33
Pension contributions and direct payments			(248	)			(304	)
Rationalization payments			(49	)			(183	)
Venezuela currency devaluation (Note 3)			110				—
Changes in operating assets and liabilities, net of asset acquisitions and dispositions:
Accounts receivable			(858	)			(419	)
Inventories			(547	)			1,160
Accounts payable – trade			599				(454	)
Compensation and benefits			333				312
Other current liabilities			202				82
Other assets and liabilities			40				9
TOTAL CASH FLOWS FROM OPERATING ACTIVITIES			83				429
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures			(618	)			(502	)
Asset dispositions (Note 3)			20				40
Increase in restricted cash			(2	)			(98	)
Return of investment in The Reserve Primary Fund			26				40
Other transactions			—				3
TOTAL CASH FLOWS FROM INVESTING ACTIVITIES			(574	)			(517	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Short term debt and overdrafts incurred			94				87
Short term debt and overdrafts paid			(64	)			(181	)
Long term debt incurred			1,625				1,998
Long term debt paid			(1,229	)			(1,142	)
Common stock issued			1				2
Debt related costs and other transactions			(31	)			(24	)
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES			396				740
Effect of exchange rate changes on cash and cash equivalents (Note 3)			(162	)			44
Net Change in Cash and Cash Equivalents			(257	)			696
Cash and Cash Equivalents at Beginning of the Period			1,922				1,894
Cash and Cash Equivalents at End of the Period		$	1,665			$	2,590

The accompanying notes are an integral part of these consolidated financial statements.

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 1. ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared by The Goodyear Tire & Rubber Company (the “Company,” “Goodyear,” “we,” “us” or “our”) in accordance with Securities and Exchange Commission rules and regulations and in the opinion of management contain all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2009 (the “2009 Form 10-K”).

     We are a party to shareholder agreements concerning certain of our less-than-wholly-owned consolidated subsidiaries. Under the terms of certain of these agreements, the minority shareholders have the right to require us to purchase their ownership interests in the respective subsidiaries if there is a change in control of Goodyear or a bankruptcy of Goodyear. Accordingly, we have reported the minority equity in those subsidiaries outside of Shareholders’ Equity.

     Operating results for the three and nine months ended September 30, 2010 are not necessarily indicative of the results expected in subsequent quarters or for the year ending December 31, 2010.

Recently Adopted Accounting Standards

Effective January 1, 2010, we adopted a new standard pertaining to the consolidation of variable interest entities that required us to determine whether a variable interest gives the Company a controlling financial interest in a variable interest entity. This standard also requires an ongoing reassessment of the primary beneficiary of the variable interest entity and eliminates the quantitative approach previously required for determining whether an entity is the primary beneficiary. The adoption of this standard did not have a material impact on our consolidated financial statements.

     Effective January 1, 2010 we also adopted a new standard pertaining to accounting for transfers of financial assets that removed the concept of a qualifying special-purpose entity from accounting for transfers and servicing of financial assets and extinguishment of liabilities. This standard also clarified the requirements for transfers of financial assets that are eligible for sale accounting. The adoption of this standard did not have a material impact on our consolidated financial statements.

Reclassifications

Certain items previously reported in specific financial statement captions have been reclassified to conform to the current presentation.

NOTE 2. COSTS ASSOCIATED WITH RATIONALIZATION PROGRAMS

In order to maintain our global competitiveness, we have implemented rationalization actions over the past several years to reduce high-cost manufacturing capacity and to reduce associate headcount. The net rationalization charges included in Income (Loss) before Income Taxes are as follows:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In millions)		2010				2009				2010				2009
New charges		$	8			$	23			$	35			$	221
Reversals			—				(7	)			(19	)			(14	)
		$	8			$	16			$	16			$	207

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     The following table shows the roll-forward of our liability between periods:

		Associate-				Other
(In millions)		Related Costs				Costs				Total
Balance at December 31, 2009		$	120			$	25			$	145
Charges			15				20				35
Incurred			(31	)			(22	)			(53	)
Reversed to the statement of operations			(15	)			(4	)			(19	)
Balance at September 30, 2010		$	89			$	19			$	108

The rationalization actions taken in 2010 were initiated to reduce our cost structure. North American Tire initiated actions related to the consolidation of multiple warehouses to further improve our supply chain and Asia Pacific Tire initiated the closure of a high-cost tire manufacturing facility in Taipei, Taiwan.

     During the third quarter of 2010, net rationalization charges of $8 million were recorded. New charges of $8 million were comprised of $4 million for plans initiated in 2010 and $4 million for plans initiated primarily in 2009. These charges consist of $4 million for associate severance costs and $4 million for other exit and non-cancelable lease costs. Substantially all of the new charges relate to future cash outflows.

     During the first nine months of 2010, net rationalization charges of $16 million were recorded. New charges of $35 million were comprised of $14 million for plans initiated in 2010, consisting of $11 million for associate severance and pension costs and $3 million for other exit and non-cancelable lease costs, and $21 million for plans initiated primarily in 2009, consisting of $4 million for associate severance costs and $17 million for other exit and non-cancelable lease costs. Substantially all of the new charges relate to future cash outflows. The net charges in 2010 also included the reversal of $19 million of reserves for actions no longer needed for their originally-intended purposes. Approximately 400 associates will be released under 2010 plans of which approximately 300 have been released as of September 30, 2010.

     In the first nine months of 2010, $31 million was incurred for associate severance payments and pension costs, and $22 million was incurred for non-cancelable lease and other exit costs.

     The accrual balance of $108 million at September 30, 2010 consists of $89 million for associate severance costs that are expected to be substantially utilized within the next twelve months and $19 million primarily for long term non-cancelable lease costs.

     Asset write-offs and accelerated depreciation charges of $4 million and $13 million were recorded in cost of goods sold (“CGS”) in the three and nine months ended September 30, 2010, respectively, and were related primarily to the closure of our Taiwan facility.

     In the third quarter of 2009, net rationalization charges of $16 million were recorded. New charges of $23 million were comprised of $12 million for plans initiated in 2009 and $11 million for plans initiated in 2008 and prior years. New charges for the 2009 plans were primarily for associate severance costs which require future cash outflows. New charges for the 2008 and prior year plans include $6 million related to associate severance costs and $5 million primarily for other exit and non-cancelable lease costs. These amounts include $3 million related to future cash outflows and $8 million for other non-cash exit costs, including $6 million for pension settlements. The third quarter of 2009 includes the reversal of $7 million of reserves for actions no longer needed for their originally-intended purposes.

     For the first nine months of 2009, $207 million of net charges were recorded. New charges of $221 million were comprised of $188 million for plans initiated in 2009 and $33 million for plans initiated in 2008 and prior years. New charges for the 2009 plans were primarily for associate severance costs which require future cash outflows. The first nine months of 2009 included the reversal of $14 million of reserves for actions no longer needed for their originally-intended purposes. Approximately 4,000 associates will be released under 2009 plans of which approximately 3,400 have been released as of September 30, 2010. The $33 million of new charges for 2008 and prior year plans consisted of $19 million of associate-related costs and $14 million primarily for other exit and non-cancelable lease costs. These amounts include $22 million related to future cash outflows and $11 million for other non-cash exit costs, including $8 million for pension settlements and curtailments.

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     Asset write-offs and accelerated depreciation charges of $18 million and $40 million were recorded in CGS in the three and nine months ended September 30, 2009, respectively, and primarily related to the closure of our Las Pinas, Philippines and Somerton, Australia tire manufacturing facilities and the discontinuation of a line of tires at one of our plants in North America.

NOTE 3. OTHER EXPENSE

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In millions) (Income) Expense		2010				2009				2010				2009
Net foreign currency exchange (gains) losses		$	5			$	(6	)		$	126			$	1
Financing fees and financial instruments			63				9				83				30
Net (gains) losses on asset sales			(2	)			(7	)			(26	)			33
Royalty income			(7	)			(7	)			(22	)			(22	)
Interest income			(3	)			(4	)			(8	)			(11	)
General and product liability – discontinued products (Note 9)			3				1				14				9
Subsidiary liquidation loss			—				18				—				18
Miscellaneous			3				—				6				8
		$	62			$	4			$	173			$	66

Net foreign currency exchange losses in the third quarter of 2010 were $5 million, compared to $6 million of gains in the third quarter of 2009. Foreign currency exchange reflected net gains and losses resulting from the effect of exchange rate changes on various foreign currency transactions worldwide. Foreign currency exchange losses in the first nine months of 2010 were $126 million, compared to $1 million in the first nine months of 2009. Losses in 2010 included a first quarter loss of $110 million resulting from the January 8, 2010 devaluation of the Venezuelan bolivar fuerte against the U.S. dollar and the establishment of a two-tier exchange structure for essential and non-essential goods. For essential goods the official exchange rate is 2.6 bolivares fuertes to the U.S. dollar and for non-essential goods the official exchange rate is 4.3 bolivares fuertes to the U.S. dollar.

     Effective January 1, 2010, Venezuela’s economy was considered to be highly inflationary under U.S. generally accepted accounting principles since it experienced a rate of general inflation in excess of 100% over the latest three year period, based upon the blended Consumer Price Index and National Consumer Price Index. Accordingly, the U.S. dollar was determined to be the functional currency of our Venezuelan subsidiary. All gains and losses resulting from the remeasurement of its financial statements are determined using official exchange rates and are reported in Other Expense.

     The $110 million foreign currency exchange loss primarily consisted of a $157 million remeasurement loss on bolivar-denominated net monetary assets and liabilities including deferred taxes at the time of the devaluation. The loss was primarily related to cash deposits in Venezuela that were remeasured at the official exchange rate applicable to non-essential goods, and was partially offset by $47 million related to U.S. dollar-denominated payables that will be settled at the official exchange rate applicable to essential goods. Nonmonetary assets and liabilities, which consisted primarily of inventory and property, plant and equipment, were translated at historical rates.

     Increased financing fees in the third quarter of 2010 primarily related to the redemption of $973 million of long term debt. The increase included a $50 million cash premium paid on the redemption and $6 million of financing fees which were written off. Financing fees and financial instruments expense also includes the amortization of deferred financing fees, commitment fees and other charges incurred in connection with financing transactions.

     Net gains on asset sales were $2 million in the third quarter of 2010, compared to $7 million in the third quarter of 2009. Net gains on asset sales were $26 million in the first nine months of 2010, compared to net losses on asset sales of $33 million in the first nine months of 2009. Net gains on asset sales in 2010 included a first quarter gain on the sale of land in Thailand and a second quarter gain on the recognition of a deferred gain from the sale of a warehouse in Guatemala in 2008. The net gains in the third quarter of 2009 related primarily to the sale of property in Luxembourg and the net losses in the first nine months of 2009 were due primarily to the sale of certain of our properties in Akron, Ohio that comprise our current headquarters to Industrial Realty Group (“IRG”) in connection with the development of a proposed new headquarters in Akron, Ohio. Prior to the sale, the facilities remained classified as held and used. Due to significant uncertainties related to the completion of the transaction resulting from prevailing conditions in the credit markets and the ability of IRG to obtain

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

financing, we concluded the sale was not probable and, accordingly, did not write down the facilities to their net realizable value. The headquarters properties were corporate facilities that did not have identifiable cash flows that were largely independent of other assets and liabilities and, accordingly, were tested for impairment at the total company level. No impairment was indicated as a result of that testing.

     Royalty income is derived primarily from licensing arrangements related to divested businesses. Interest income consisted primarily of amounts earned on cash deposits. General and product liability — discontinued products includes charges for claims against us related primarily to asbestos personal injury claims, net of probable insurance recoveries. We recorded $6 million and $3 million of expense related to asbestos claims in the third quarter of 2010 and 2009, respectively. In addition, we recorded $3 million of income related to probable insurance recoveries and a $1 million reduction of probable insurance recoveries in the third quarter of 2010 and 2009, respectively. We recorded $18 million and $16 million of expense related to asbestos claims in the first nine months of 2010 and 2009, respectively. In addition, we recorded $4 million of income related to probable insurance recoveries in both the first nine months of 2010 and 2009.

     We liquidated our subsidiary in Guatemala in the third quarter of 2009 and recognized a loss of $18 million due primarily to the recognition of accumulated foreign currency translation losses.

NOTE 4. PER SHARE OF COMMON STOCK

Basic earnings per share are computed based on the weighted average number of common shares outstanding. Diluted earnings per share are calculated to reflect the potential dilution that could occur if securities were exercised or converted into common stock.

     The following table presents the number of incremental weighted average shares used in computing diluted per share amounts:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In millions)		2010				2009				2010				2009
Weighted average shares outstanding – basic			242				242				242				241
Stock options and other dilutive securities			—				3				—				—
Weighted average shares outstanding – diluted			242				245				242				241

Weighted average shares outstanding – diluted exclude the effects of approximately 4 million equivalent shares for both the three and nine months ended September 30, 2010 and 6 million equivalent shares for the nine months ended September 30, 2009, related to options with exercise prices less than the average market price of our common shares (i.e., “in-the-money” options), as their inclusion would have been anti-dilutive due to the Goodyear net loss.

     Additionally, weighted average shares outstanding – diluted excluded approximately 12 million equivalent shares for both the three and nine months ended September 30, 2010 and excluded approximately 11 million and 13 million equivalent shares for the three and nine months ended September 30, 2009, respectively, related to options with exercise prices greater than the average market price of our common shares (i.e. “underwater” options).

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 5. FAIR VALUE MEASUREMENTS

The following table presents information about assets and liabilities recorded at fair value on the Consolidated Balance Sheet at September 30, 2010 and December 31, 2009:

										Quoted Prices in
		Total Carrying								Active Markets for																Significant
		Value in the								Identical								Significant Other								Unobservable
		Consolidated								Assets/Liabilities								Observable Inputs								Inputs
		Balance Sheet								(Level 1)								(Level 2)								(Level 3)
(In millions)		2010				2009				2010				2009				2010				2009				2010				2009
Assets:
Investments		$	36			$	32			$	36			$	32			$	—			$	—			$	—			$	—
Foreign Exchange Contracts			14				28				—				—				13				27				1				1
Total Assets at Fair Value		$	50			$	60			$	36			$	32			$	13			$	27			$	1			$	1
Liabilities:
Foreign Exchange Contracts		$	45			$	6			$	—			$	—			$	45			$	6			$	—			$	—
Total Liabilities at Fair Value		$	45			$	6			$	—			$	—			$	45			$	6			$	—			$	—

Derivative financial instrument valuations classified as Level 3 included embedded currency derivatives in long-dated operating leases. The valuation of the embedded currency derivatives is based on an extrapolation of forward rates to the assumed expiration of the leases. Realized and unrealized gains and losses related to the embedded currency derivatives are included in Other Expense. Also included in Other Expense was a gain of $2 million and $9 million for the three and nine months ended September 30, 2009, respectively, related to an interest rate basis swap.

     The following table presents changes in fair value for instruments classified as Level 3:

		Nine Months				Twelve Months
		Ended				Ended
		September 30,				December 31,
(In millions)		2010				2009
Asset (liability)
Balance at beginning of period		$	1			$	(9	)
Net realized gains			—				10
Net unrealized losses			—				—
Balance at end of period		$	1			$	1

The following table presents supplemental fair value information about long term fixed rate and variable rate debt, excluding capital leases, at September 30, 2010 and December 31, 2009. The fair value was estimated using quoted market prices or discounted future cash flows.

		September 30,				December 31,
(In millions)		2010				2009
Fixed Rate Debt:
Carrying amount – liability		$	2,627			$	2,442
Fair value – liability			2,838				2,532
Variable Rate Debt:
Carrying amount – liability		$	2,068			$	1,836
Fair value – liability			1,985				1,752

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 6. FINANCING ARRANGEMENTS

At September 30, 2010, we had total credit arrangements of $7,807 million, of which $2,357 million were unused. At that date, 45% of our debt was at variable interest rates averaging 3.72%.

Notes Payable and Overdrafts, Long Term Debt and Capital Leases due Within One Year and Short Term Financing Arrangements

At September 30, 2010, we had short term committed and uncommitted credit arrangements totaling $489 million, of which $230 million were unused. These arrangements are available primarily to certain of our international subsidiaries through various banks at quoted market interest rates. There are no commitment fees associated with these arrangements.

     The following table presents amounts due within one year:

		September 30,				December 31,
(In millions)		2010				2009
Notes payable and overdrafts		$	259			$	224
Weighted average interest rate			4.27	%			4.84	%
Long term debt and capital leases due within one year:
Other domestic and international debt (including capital leases)		$	118			$	114
Weighted average interest rate			9.22	%			4.78	%
Total obligations due within one year		$	377			$	338

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Long Term Debt and Capital Leases and Financing Arrangements

At September 30, 2010, we had long term credit arrangements totaling $7,318 million, of which $2,127 million were unused.

     The following table presents long term debt and capital leases, net of unamortized discounts, and interest rates:

		September 30, 2010								December 31, 2009
						Interest								Interest
(In millions)		Amount				Rate				Amount				Rate
Notes:
7.857% due 2011		$	—							$	650
8.625% due 2011			—								325
9% due 2015			—								260
10.5% due 2016			964								961
8.25% due 2020			993								—
8.75% due 2020			263								—
7% due 2028			149								149
Credit Facilities:
€505 million revolving credit facility due 2012			136				2.53	%			—				—
$1.5 billion first lien revolving credit facility due 2013			—				—				—				—
$1.2 billion second lien term loan facility due 2014			1,200				2.24	%			1,200				2.34	%
Pan-European accounts receivable facility due 2015			446				3.70	%			437				3.58	%
Chinese credit facilities			81				5.35	%			—				—
Other domestic and international debt(1)			463				8.70	%			296				5.87	%
			4,695								4,278
Capital lease obligations			18								18
			4,713								4,296
Less portion due within one year			(118	)							(114	)
		$	4,595							$	4,182

NOTES

$1.0 Billion 8.25% Senior Notes due 2020

On August 13, 2010, we issued $900 million aggregate principal amount of 8.25% senior notes due 2020. These notes were sold at 99.163% of the principal amount at an effective yield of 8.375% and will mature on August 15, 2020. On August 25, 2010, we issued $100 million aggregate principal amount of additional notes, which were sold at 100.750% of the principal amount at an effective yield of 8.119%. These notes are unsecured senior obligations and are guaranteed by our U.S. and Canadian subsidiaries that also guarantee our obligations under our senior secured credit facilities described below.

     We have the option to redeem these notes, in whole or in part, at any time on or after August 15, 2015 at a redemption price of 104.125%, 102.750%, 101.375% and 100.000% during the 12-month periods commencing on August 15, 2015, 2016, 2017 and 2018, respectively, plus accrued and unpaid interest to the redemption date. Prior to August 15, 2015, we may redeem these notes, in whole or in part, at a redemption price equal to 100% of the principal amount plus a make-whole premium and accrued and unpaid interest to the redemption date. In addition, prior to August 15, 2013, we may redeem up to 35% of these notes from the net cash proceeds of certain equity offerings at a redemption price equal to 108.25% of the principal amount plus accrued and unpaid interest to the redemption date.

     The terms of the indenture for these notes, among other things, limit our ability and the ability of certain of our subsidiaries to (i) incur additional debt or issue redeemable preferred stock, (ii) pay dividends, or make certain other restricted payments or investments, (iii) incur liens, (iv) sell assets, (v) incur restrictions on the ability of our subsidiaries to pay dividends to us, (vi) enter into affiliate transactions, (vii) engage in sale and leaseback transactions, and (viii) consolidate,

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

merge, sell or otherwise dispose of all or substantially all of our assets. These covenants are subject to significant exceptions and qualifications. For example, if these notes are assigned an investment grade rating by Moody’s and Standard & Poor’s (“S&P”) and no default has occurred or is continuing, certain covenants will be suspended.

Redemption of Notes

On September 29, 2010, we redeemed all of our outstanding 7.857% notes due 2011, 8.625% senior notes due 2011, and 9% senior notes due 2015. The aggregate redemption price for these redemptions was $1,023 million, including a prepayment premium of $50 million.

Debt Exchange Offer

On March 5, 2010, we completed an offer to exchange our outstanding 7.857% notes due 2011 (“2011 Notes”) for a new series of 8.75% notes due 2020 (“2020 Notes”). A total of $262 million in principal amount of the 2011 Notes were validly tendered, and $282 million in aggregate principal amount of the 2020 Notes were issued in the exchange. We will accrete the difference in the carrying amount of the 2011 Notes and the principal amount of the 2020 Notes as additional interest expense over the life of the 2020 Notes using the effective interest rate method. The direct costs of the exchange offer incurred with third parties were expensed.

     At September 30, 2010, $282 million in aggregate principal amount of the 2020 Notes were outstanding. The 2020 Notes are unsecured senior obligations, are guaranteed by our U.S. and Canadian subsidiaries that also guarantee our obligations under our senior secured credit facilities described below, and will mature on August 15, 2020.

     We have the option to redeem the 2020 Notes, in whole or in part, at any time at a redemption price equal to the greater of 100% of the principal amount of the 2020 Notes or the sum of the present values of the remaining scheduled payments on the 2020 Notes, discounted using a defined treasury rate plus 50 basis points, plus in either case accrued and unpaid interest to the redemption date.

     The terms of the indenture for the 2020 Notes, among other things, limit our ability and the ability of certain of our subsidiaries to (i) incur secured debt, (ii) engage in sale and leaseback transactions, and (iii) consolidate, merge, sell or otherwise dispose of all or substantially all of our assets. These covenants are subject to significant exceptions and qualifications.

CREDIT FACILITIES

€505 Million Amended and Restated Senior Secured European and German Revolving Credit Facilities due 2012

Our amended and restated €505 million European revolving credit facilities consist of a €155 million German revolving credit facility, which is only available to one of the German subsidiaries (the “German borrower”) of Goodyear Dunlop Tires Europe B.V. (“GDTE”), and a €350 million European revolving credit facility, which is available to the same German borrower and to GDTE and certain of its other subsidiaries with a €125 million sublimit for non-German borrowers and a €50 million letter of credit sublimit. Goodyear and its subsidiaries that guarantee our U.S. facilities provide unsecured guarantees to support the European revolving credit facilities and GDTE and certain of its subsidiaries in the United Kingdom, Luxembourg, France and Germany also provide guarantees. GDTE’s obligations under the facilities and the obligations of its subsidiaries under the related guarantees are secured by first priority security interests in a variety of collateral. At September 30, 2010, $54 million (€40 million) was outstanding under the German revolving credit facility and $82 million (€60 million) was outstanding under the European revolving credit facility. At December 31, 2009, there were no borrowings under the German or the European revolving credit facilities. Letters of credit issued under the European revolving credit facility totaled $13 million (€10 million) at September 30, 2010 and $14 million (€10 million) at December 31, 2009.

     These facilities 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 financial condition since December 31, 2006. These facilities also have customary defaults, including cross-defaults to material indebtedness of Goodyear and our subsidiaries.

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

$1.5 Billion Amended and Restated First Lien Revolving Credit Facility due 2013

This facility is available in the form of loans or letters of credit, with letter of credit availability limited to $800 million. Subject to the consent of the lenders whose commitments are to be increased, we may request that the facility be increased by up to $250 million. Our obligations under the facility are guaranteed by most of our wholly-owned U.S. and Canadian subsidiaries. Our obligations under the facility and our subsidiaries’ obligations under the related guarantees are secured by first priority security interests in a variety of collateral.

     This facility has 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 financial condition since December 31, 2006. This facility also has customary defaults, including a cross-default to material indebtedness of Goodyear and our subsidiaries.

     At September 30, 2010, we had no borrowings and $483 million of letters of credit issued under the revolving credit facility. At December 31, 2009, we had no borrowings and $494 million of letters of credit issued under the revolving credit facility.

$1.2 Billion Amended and Restated Second Lien Term Loan Facility due 2014

Our obligations under this facility are guaranteed by most of our wholly-owned U.S. and Canadian subsidiaries and are secured by second priority security interests in the same collateral securing the $1.5 billion first lien revolving credit facility. At September 30, 2010 and December 31, 2009, this facility was fully drawn.

     This facility has customary defaults, including a cross-default to material indebtedness of Goodyear and our subsidiaries.

International Accounts Receivable Securitization Facilities (On-Balance Sheet)

GDTE and certain of its subsidiaries are parties to a pan-European accounts receivable securitization facility that provides up to €450 million of funding and expires in 2015. Utilization under this facility is based on current available receivable balances. The facility is subject to customary annual renewal of back-up liquidity commitments.

     The facility involves an ongoing daily sale of substantially all of the trade accounts receivable of certain GDTE subsidiaries to a bankruptcy-remote French company controlled by one of the liquidity banks in the facility. These subsidiaries retain servicing responsibilities. At September 30, 2010 and December 31, 2009, the amount available, and fully utilized under this program, totaled $446 million (€327 million) and $437 million (€304 million), respectively. The program did not qualify for sale accounting, and accordingly, these amounts are included in long term debt and capital leases.

     In addition to the pan-European accounts receivable securitization facility discussed above, subsidiaries in Australia have accounts receivable programs totaling $68 million at September 30, 2010 and December 31, 2009. The receivables sold under this program also serve as collateral for the facility. The Company retains the risk of loss related to these receivables in the event of non-payment. These amounts are included in Notes payable and overdrafts.

     For a description of the collateral securing the facilities described above as well as the covenants applicable to them, refer to the Note to the Consolidated Financial Statements No. 12, Financing Arrangements and Derivative Financial Instruments, in our 2009 Form 10-K.

Other Foreign Credit Facilities

Our Chinese subsidiary has two financing agreements in China. At September 30, 2010, these non-revolving credit facilities had total unused availability of 3.1 billion renminbi ($459 million) and can only be used to finance the relocation and expansion of our manufacturing facilities in China. The facilities contain covenants relating to our Chinese subsidiary and have customary representations and warranties and defaults relating to our Chinese subsidiary’s ability to perform its obligations under the facilities. One of the facilities (with 1.8 billion renminbi of unused availability at September 30, 2010) matures in 2016 and principal amortization begins in 2013. At September 30, 2010, there were $81 million of borrowings outstanding under this facility. The other facility (with 1.3 billion renminbi of unused availability at September 30, 2010)

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

will mature eight years after the first borrowing and will begin principal amortization five years after the first borrowing. At September 30, 2010, there were no borrowings outstanding under this facility. There were no amounts outstanding under either of the facilities at December 31, 2009.

Debt Maturities

Updates to our debt maturities as disclosed in our 2009 Form 10-K are provided below and reflect the exchange of $262 million of our 7.857% notes due 2011 for $282 million aggregate principal amount of our 8.75% notes due 2020, and the redemption of $388 million of our 7.857% notes due 2011 and $325 million of our 8.625% senior notes due 2011.

(In millions)		2010				2011				2012				2013				2014
Domestic		$	3			$	1			$	1			$	4			$	1,200
International			111				13				95				28				7
		$	114			$	14			$	96			$	32			$	1,207

DERIVATIVE FINANCIAL INSTRUMENTS

We utilize derivative financial instrument contracts and nonderivative instruments to manage interest rate, foreign exchange and commodity price risks. We have established a control environment that includes policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. We do not hold or issue derivative financial instruments for trading purposes.

Foreign Currency Contracts

We will enter into foreign currency contracts in order to manage the impact of changes in foreign exchange rates on our consolidated results of operations and future foreign currency-denominated cash flows. These contracts reduce exposure to currency movements affecting existing foreign currency-denominated assets, liabilities, firm commitments and forecasted transactions resulting primarily from trade receivables and payables, equipment acquisitions, intercompany loans, royalty agreements and forecasted purchases and sales. Contracts hedging short term trade receivables and payables normally have no hedging designation.

     The following table presents fair values for foreign currency contracts not designated as hedging instruments:

		September 30,				December 31,
(In millions)		2010				2009
Fair Values — asset (liability):
Accounts receivable		$	13			$	27
Other assets			1				1
Other current liabilities			(45	)			(6	)
Other long term liabilities			—				—

At September 30, 2010 and December 31, 2009, these outstanding foreign currency derivatives had notional amounts of $1,208 million and $1,252 million, respectively, and were primarily related to intercompany loans. Other Expense included net transaction losses of $63 million and gains of $34 million for the three and nine months ended September 30, 2010, respectively, compared to net transaction losses of $44 million and $102 million for the three and nine months ended September 30, 2009, respectively, on foreign currency derivatives. These amounts were substantially offset in Other Expense by the effect of changing exchange rates on the underlying currency exposures.

     The counterparties to our interest rate and foreign exchange contracts were substantial and creditworthy multinational commercial banks or other financial institutions that are recognized market makers. We control our credit exposure by diversifying across multiple counterparties and by setting counterparty credit limits based on long term credit ratings and other indicators of counterparty credit risk such as credit default swap spreads. We also enter into master netting agreements with counterparties when possible. Based on our analysis, we consider the risk of counterparty nonperformance associated with these contracts to be remote. However, the inability of a counterparty to fulfill its obligations when due could have a material adverse effect on our consolidated financial position, results of operations or liquidity in the period in which it occurs.

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE 7. STOCK COMPENSATION PLANS

Our Board of Directors granted 1.7 million stock options, 0.3 million shares of restricted stock, 0.3 million restricted stock units and 0.1 million performance share units during the nine months ended September 30, 2010 under our 2008 Performance Plan. The 2008 Performance Plan will expire on April 8, 2018. The weighted average exercise price per share and weighted average fair value per share for the stock options was $12.71 and $6.55, respectively. We estimated the fair value of the stock options using the following assumptions in our Black-Scholes model:

Expected term: 6.25 years

Interest rate: 2.68%

Volatility: 50.36%

Dividend yield: Nil

     We measure the fair value of grants of shares of restricted stock, restricted stock units and performance share units at the closing market price of a share of our common stock on the date of the grant. The weighted average fair value per share was $12.74 for grants made during the nine months ended September 30, 2010.

     We recognized stock-based compensation expense of $7 million and $14 million during the three and nine months ended September 30, 2010, respectively. At September 30, 2010, unearned compensation cost related to the unvested portion of all stock-based awards was approximately $27 million and is expected to be recognized over the remaining vesting period of the respective grants, through March 31, 2015. We recognized stock-based compensation expense of $11 million and $25 million during the three and nine months ended September 30, 2009, respectively.

NOTE 8. PENSION, SAVINGS AND OTHER POSTRETIREMENT BENEFIT PLANS

We provide employees with defined benefit pension or defined contribution savings plans.

     Defined benefit pension cost follows:

		U.S.								U.S.
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In millions)		2010				2009				2010				2009
Service cost – benefits earned during the period		$	10			$	9			$	30			$	26
Interest cost on projected benefit obligation			74				77				222				235
Expected return on plan assets			(70	)			(59	)			(210	)			(177	)
Amortization of:
- prior service cost			8				8				23				25
- net losses			34				38				100				116
Total defined benefit pension cost		$	56			$	73			$	165			$	225

		Non-U.S.								Non-U.S.
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In millions)		2010				2009				2010				2009
Service cost – benefits earned during the period		$	6			$	7			$	19			$	20
Interest cost on projected benefit obligation			36				37				108				105
Expected return on plan assets			(32	)			(30	)			(94	)			(85	)
Amortization of:
- prior service cost			—				—				1				1
- net losses			9				10				26				24
Net periodic pension cost			19				24				60				65
Curtailments/settlements/termination benefits			(2	)			9				(1	)			16
Total defined benefit pension cost		$	17			$	33			$	59			$	81

We expect to contribute approximately $300 million to $325 million to our funded U.S. and non-U.S. pension plans in 2010, which includes $200 million to $225 million to our funded U.S. pension plans. For the three and nine months ended September 30, 2010, we contributed $15 million and $71 million, respectively, to our non-U.S. plans and for the three and nine months ended September 30, 2010, we contributed $94 million and $146 million, respectively, to our U.S. plans.

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     The expense recognized for our contributions to defined contribution savings plans was $23 million and $24 million for the three months ended September 30, 2010 and 2009, respectively, and $69 million and $63 million for the nine months ended September 30, 2010 and 2009, respectively.

     We provide certain domestic employees and employees at certain non-U.S. subsidiaries with health care benefits or life insurance benefits upon retirement. Postretirement benefit cost (credit) for the three months ended September 30, 2010 and 2009 was $2 million and $(1) million, respectively, and $13 million, which includes a $7 million adjustment for participant data related to prior periods, and $2 million for the nine months ended September 30, 2010 and 2009, respectively.

     The Medicare Prescription Drug Improvement and Modernization Act provides plan sponsors a federal subsidy for certain qualifying prescription drug benefits covered under the sponsor’s postretirement health care plans. Our postretirement benefit costs are presented net of this subsidy.

NOTE 9. COMMITMENTS AND CONTINGENT LIABILITIES

At September 30, 2010, we had binding commitments for raw materials and investments in buildings and equipment of approximately $1.6 billion, and off-balance-sheet financial guarantees written and other commitments totaling approximately $104 million. In addition, we have other contractual commitments, the amounts of which cannot be estimated, pursuant to certain long-term agreements under which we will purchase minimum amounts of various raw materials and finished goods at agreed upon base prices that are subject to periodic adjustments for changes in raw material costs and market price adjustments, or in quantities that are subject to periodic adjustments for changes in our production levels.

Environmental Matters

We have recorded liabilities totaling $46 million and $43 million at September 30, 2010 and December 31, 2009, respectively, for anticipated costs related to various environmental matters, primarily the remediation of numerous waste disposal sites and certain properties sold by us. Of these amounts, $8 million and $9 million were included in Other Current Liabilities at September 30, 2010 and December 31, 2009, respectively. The costs include legal and consulting fees, site studies, the design and implementation of remediation plans, post-remediation monitoring and related activities, and will be paid over several years. The amount of our ultimate liability in respect of these matters may be affected by several uncertainties, primarily the ultimate cost of required remediation and the extent to which other responsible parties contribute. We have limited potential insurance coverage for future environmental claims.

Workers’ Compensation

We have recorded liabilities, on a discounted basis, totaling $323 million and $301 million for anticipated costs related to workers’ compensation at September 30, 2010 and December 31, 2009, respectively. Of these amounts, $72 million and $75 million were included in Current Liabilities as part of Compensation and Benefits at September 30, 2010 and December 31, 2009, respectively. 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. At September 30, 2010 and December 31, 2009, the liability was discounted using a risk-free rate of return.

General and Product Liability and Other Litigation

We have recorded liabilities totaling $342 million and $300 million, including related legal fees expected to be incurred, for potential product liability and other tort claims presently asserted against us at September 30, 2010 and December 31, 2009, respectively. Of these amounts, $99 million and $73 million were included in Other Current Liabilities at September 30, 2010 and December 31, 2009, respectively. The increase in general and product liability reserves was due primarily to an unexpected, unfavorable judgment involving one claim in which an appellate court affirmed a trial court order that prohibited us from presenting evidence with respect to our liability for that claim. The amounts recorded were estimated based on an assessment of potential liability using an analysis of available information with respect to pending claims, historical

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

experience and, where available, recent and current trends. The amount of our ultimate liability in respect of these matters may differ from these estimates.

Asbestos. We are a defendant in numerous lawsuits alleging various asbestos-related personal injuries purported to result from alleged exposure to certain asbestos products manufactured by us or present in certain of our facilities. Typically, these lawsuits have been brought against multiple defendants in state and Federal courts. To date, we have disposed of approximately 85,800 claims by defending and obtaining the dismissal thereof or by entering into a settlement. The sum of our accrued asbestos-related liability and gross payments to date, including legal costs, totaled approximately $366 million through September 30, 2010 and $349 million through December 31, 2009.

     A summary of recent approximate asbestos claims activity follows. Because claims are often filed and disposed of by dismissal or settlement in large numbers, the amount and timing of settlements and the number of open claims during a particular period can fluctuate significantly. The passage of tort reform laws and creation of deferred dockets for non-malignancy claims in several states has contributed to a decline in the number of claims filed in recent years.

		Nine Months Ended				Year Ended
(Dollars in millions)		September 30, 2010				December 31, 2009
Pending claims, beginning of period			90,200				99,000
New claims filed			1,300				1,600
Claims settled/dismissed			(3,300	)			(10,400	)
Pending claims, end of period			88,200				90,200
Payments (1)		$	22			$	20

We periodically, and at least annually, review 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.

     We had recorded gross liabilities for both asserted and unasserted claims, inclusive of defense costs, totaling $131 million and $136 million at September 30, 2010 and December 31, 2009, respectively. At September 30, 2010, we estimate that it is reasonably possible that our gross liabilities, net of our estimate for probable insurance recoveries, could exceed our recorded amounts by $15 million.

     We recorded a receivable related to asbestos claims of $67 million and $69 million as of September 30, 2010 and December 31, 2009, respectively. We expect that approximately 50% of asbestos claim related losses would be recoverable through insurance through the period covered by the estimated liability. Of these amounts, $10 million and $11 million were included in Current Assets as part of Accounts receivable at September 30, 2010 and December 31, 2009, respectively. The recorded receivable consists of an amount we expect to collect under coverage-in-place agreements with certain primary carriers as well as an amount we believe is probable of recovery from certain of our excess coverage insurance carriers.

     We believe that, at September 30, 2010, we had approximately $180 million in aggregate limits of excess level policies potentially applicable to indemnity payments for asbestos products claims, in addition to limits of available primary insurance policies. Some of these excess policies provide for payment of defense costs in addition to indemnity limits. A portion of the availability of the excess level policies is included in the $67 million insurance receivable recorded at September 30, 2010. We also had approximately $15 million in aggregate limits for products claims, as well as coverage for premise claims on a per occurrence basis, and defense costs available with our primary insurance carriers through coverage-in-place agreements at September 30, 2010.

Other Actions. We are currently a party to various claims and legal proceedings in addition to those noted above. If management believes that a loss arising from these matters is probable and can reasonably be estimated, we record the amount of the loss, or the minimum estimated liability when the loss is estimated using a range, and no point within the range is more probable than another. As additional information becomes available, any potential liability related to these matters is assessed and the estimates are revised, if necessary. Based on currently available information, management believes that the ultimate outcome of these matters, individually and in the aggregate, will not have a material adverse effect on our financial position or overall trends in results of operations. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages or an injunction prohibiting us from selling one

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

or more products. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the financial position and results of operations of the period in which the ruling occurs, or in future periods.

Tax Matters

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. 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 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 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, or that we are required to pay amounts in excess of our liabilities, our effective tax rate in a given period could be materially affected. An unfavorable tax settlement would require use of our cash, and result in an increase in our effective tax rate in the period of resolution. A favorable tax settlement would be recognized as a reduction in our effective tax rate in the period of resolution.

Guarantees

We will from time to time issue guarantees to financial institutions or other entities, on behalf of certain of our affiliates, lessors or customers. Normally there is no separate premium received by us as consideration for the issuance of guarantees. We also generally do not require collateral in connection with the issuance of these guarantees. If our performance under these guarantees is triggered by non-payment or another specified event, we would be obligated to make payment to the financial institution or the other entity, and would typically have recourse to the assets of the affiliate, lessor or customer. The guarantees expire at various times through 2029. We are unable to estimate the extent to which the assets of our affiliates, lessors or customers would be adequate to recover any payments made by us under the related guarantees.

NOTE 10. BUSINESS SEGMENTS

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In millions)		2010				2009				2010				2009
Sales:
North American Tire		$	2,176			$	1,862			$	6,004			$	5,093
Europe, Middle East and Africa Tire			1,696				1,581				4,680				4,242
Latin American Tire			569				486				1,576				1,306
Asia Pacific Tire			521				456				1,500				1,223
Net Sales		$	4,962			$	4,385			$	13,760			$	11,864
Segment Operating Income (Loss):
North American Tire		$	5			$	2			$	7			$	(278	)
Europe, Middle East and Africa Tire			77				106				259				41
Latin American Tire			95				99				237				220
Asia Pacific Tire			57				68				190				140
Total Segment Operating Income (Loss)			234				275				693				123
Rationalizations			(8	)			(16	)			(16	)			(207	)
Interest expense			(90	)			(85	)			(241	)			(228	)
Other expense			(62	)			(4	)			(173	)			(66	)
Asset write-offs and accelerated depreciation			(4	)			(18	)			(13	)			(40	)
Corporate incentive compensation plans			(18	)			(15	)			(45	)			(29	)
Intercompany profit elimination			(3	)			16				(5	)			(13	)
Other			(7	)			(13	)			(47	)			(36	)
Income (Loss) before Income Taxes		$	42			$	140			$	153			$	(496	)

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Rationalizations, as described in Note 2, Costs Associated with Rationalization Programs, Asset sales, as described in Note 3, Other Expense, and Asset write-offs and accelerated depreciation are not charged (credited) to the strategic business units (“SBUs”) for performance evaluation purposes, but were attributable to the SBUs as follows:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(In millions)		2010				2009				2010				2009
Rationalizations:
North American Tire		$	1			$	13			$	6			$	102
Europe, Middle East and Africa Tire			5				1				(2	)			81
Latin American Tire			1				2				4				16
Asia Pacific Tire			1				—				9				6
Total Segment Rationalizations			8				16				17				205
Corporate			—				—				(1	)			2
		$	8			$	16			$	16			$	207
Asset Sales (gain) loss:
North American Tire		$	(1	)		$	(3	)		$	(2	)		$	(3	)
Europe, Middle East and Africa Tire			—				(4	)			(1	)			(1	)
Latin American Tire			—				—				(7	)			(1	)
Asia Pacific Tire			(1	)			—				(16	)			(5	)
Total Segment Asset Sales (gain) loss			(2	)			(7	)			(26	)			(10	)
Corporate			—				—				—				43
		$	(2	)		$	(7	)		$	(26	)		$	33
Asset write-offs and accelerated depreciation:
North American Tire		$	—			$	3			$	1			$	14
Europe, Middle East and Africa Tire			—				—				1				1
Asia Pacific Tire			4				15				11				25
Total Segment Asset write-offs and accelerated depreciation		$	4			$	18			$	13			$	40

NOTE 11. INCOME TAXES

For the third quarter of 2010, we recorded tax expense of $55 million on income before income taxes of $42 million. For the third quarter of 2009, we recorded tax expense of $38 million on income before income taxes of $140 million. Our income tax expense or benefit is allocated among operations and items charged or credited directly to shareholders’ equity. Pursuant to this allocation requirement, a non-cash tax benefit has been allocated to the loss from our U.S. operations, with offsetting tax expense allocated to items, primarily attributable to employee benefits, charged directly to shareholders’ equity. For the three and nine months ended September 30, 2010, the allocated amount is $13 million and $17 million, respectively. For the three and nine months ended September 30, 2009, the allocated amount is $28 million and $36 million, respectively. Income tax expense for the third quarter of 2009 also was impacted unfavorably by a charge of $6 million after minority interest, related to various discrete adjustments.

     For the first nine months of 2010, we recorded tax expense of $151 million on income before income taxes of $153 million. For the first nine months of 2009, we recorded tax expense of $3 million on a loss before income taxes of $496 million. Income tax expense for the first nine months of 2009 also was impacted favorably by $21 million primarily related to a benefit resulting from the settlement of our 1997 through 2003 Competent Authority claim between the United States and Canada.

     The difference between our effective tax rate and the U.S. statutory rate was primarily attributable to continuing to maintain a full valuation allowance against our net Federal and state deferred tax assets.

     At January 1, 2010, we had unrecognized tax benefits of $112 million that, if recognized, would have a favorable impact on our tax expense of $108 million. We had accrued interest of $17 million as of January 1, 2010. If not favorably settled, $49 million of the unrecognized tax benefits and $17 million of the accrued interest would require the use of our cash.

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

In the second quarter, our unrecognized tax benefits increased by $29 million (absent any corresponding future tax refunds and deferred tax assets recorded in the period of $27 million) related to prior tax years in our European operations. It is reasonably possible that our unrecognized tax benefits may decrease by up to $50 million during the next 12 months as a consequence of settling prior tax years in Europe. We do not expect changes during the next 12 months to have a significant impact on our financial position or results of operations.

     Generally, years beginning after 2004 are still open to examination by foreign taxing authorities, including Germany, where we are open to examinations from 2003 onward. In the United States, we are open to examination from 2009 onward.

NOTE 12. CHANGES IN SHAREHOLDERS’ EQUITY

The following tables present the changes in shareholders’ equity for the nine months ended September 30, 2010 and 2009:

		Nine Months Ended September 30, 2010												Nine Months Ended September 30, 2009
						Minority												Minority
		Goodyear				Shareholders’				Total				Goodyear				Shareholders’				Total
		Shareholders’				Equity –				Shareholders’				Shareholders’				Equity –				Shareholders’
(In millions)		Equity				Nonredeemable				Equity				Equity				Nonredeemable				Equity
Balance at beginning of period		$	735			$	251			$	986			$	1,022			$	231			$	1,253
Comprehensive (loss) income:
Net (loss) income			(39	)			19				(20	)			(482	)			13				(469	)
Foreign currency translation (net of tax of $1 in 2010 and $0 in 2009)			48				8				56				171				4				175
Reclassification adjustment for amounts recognized in income, net of tax of $0 in all periods			—				—				—				(17	)			—				(17	)
Amortization of prior service cost and unrecognized gains and losses included in total benefit cost (net of tax of $19 in 2010 and $37 in 2009)			106				—				106				98				—				98
Increase in net actuarial losses (net of tax of $1 in 2010 and $12 in 2009)			(12	)			—				(12	)			(29	)			—				(29	)
Immediate recognition of prior service cost and unrecognized gains and losses due to curtailments and settlements (net of tax of $0 in 2010 and $1 in 2009)			1				—				1				7				—				7
Unrealized investment gains (losses), net of tax of $0 in all periods			3				—				3				3				—				3
Other comprehensive (loss) income			146				8				154				233				4				237
Total comprehensive (loss) income			107				27				134				(249	)			17				(232	)
Dividends declared to Minority Shareholders			—				(10	)			(10	)			—				(3	)			(3	)
Common stock issued from treasury:
Stock-based compensation plans (Note 7)			8				—				8				2				—				2
Other			9				—				9				7				—				7
Balance at end of period		$	859			$	268			$	1,127			$	782			$	245			$	1,027