goodyear 10k reports 2004

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2004

Commission File Number: 1-1927

THE GOODYEAR TIRE & RUBBER COMPANY(Exact name of Registrant as specified in its charter)

Registrant’s telephone number, including area code: (330) 796-2121Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:None

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.

Yes� No�

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein or in the definitiveproxy statement incorporated by reference in Part III of this Form 10-K.�

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).Yes� No�

The aggregate market value of the voting stock held by nonaffiliates of the Registrant, computed by reference to the last sales price of suchstock as of the closing of trading on June 30, 2004, was approximately $1,592,356,000.

Shares of Common Stock, Without Par Value, outstanding at March 4, 2005:175,780,313

DOCUMENTS INCORPORATED BY REFERENCE:Portions of the Company’s Proxy Statement for the Annual Meeting of Shareholders to be held on April 26, 2005 are incorporated by

reference in Part III.

Ohio(State or other jurisdiction of

incorporation or organization)

34-0253240(I.R.S. Employer

Identification No.)

1144 East Market Street, Akron, Ohio(Address of principal executive offices)

44316-0001(Zip Code)

Title Of Each Class Name Of Each Exchange On Which Registered

Common Stock, Without Par Value New York Stock Exchange

THE GOODYEAR TIRE & RUBBER COMPANY

Annual Report on Form 10-K

For the Fiscal Year Ended December 31, 2004

Table of Contents

Item PageNumber Number

PART I1 Business 12 Properties 143 Legal Proceedings 154 Submission of Matters to a Vote of Security Holders 19

PART II5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities 236 Selected Financial Data 257 Management’s Discussion and Analysis of Financial Condition and Results of Operations 307A Quantitative and Qualitative Disclosures About Market Risk 668 Financial Statements and Supplementary Data 699 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 1559A Controls and Procedures 1559B Other Information 160

PART III10 Directors and Executive Officers of the Registrant 16111 Executive Compensation 16112 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters 16113 Certain Relationships and Related Transactions 16114 Principal Accountant Fees and Services 161

PART IV15 Exhibits and Financial Statement Schedules 162

Signatures 163Index to Financial Statement Schedules FS-1Index of Exhibits X-1

PART I.

ITEM 1. BUSINESS.

BUSINESS OF GOODYEAR

The Goodyear Tire & Rubber Company (the “Company”) is an Ohio corporation organized in 1898. Its principal offices are located at 1144East Market Street, Akron, Ohio 44316-0001. Its telephone number is (330) 796-2121. The terms “Goodyear” and “we,” “us” or “our”wherever used herein refer to the Company together with all of its consolidated domestic and foreign subsidiary companies, unless the contextindicates to the contrary.

We are one of the world’s leading manufacturers of tires and rubber products, engaging in operations in most regions of the world. Our2004 net sales were $18.4 billion and our net income for 2004 was $114.8 million. Together with our U.S. and international subsidiaries andjoint ventures, we develop, manufacture, market and distribute tires for most applications. We also manufacture and market several lines ofpower transmission belts, hoses and other rubber products for the transportation industry and various industrial and chemical markets, as wellas synthetic rubber and rubber-related chemicals for various applications. We are one of the world’s largest operators of commercial truckservice and tire retreading centers. In addition, we operate more than 1,700 tire and auto service center outlets where we offer our products forretail sale and provide automotive repair and other services. We manufacture our products in more than 90 facilities in 28 countries, and wehave marketing operations in almost every country around the world. We employ over 80,000 associates worldwide.

AVAILABLE INFORMATION

We make available free of charge on our website, http://www.goodyear.com, our annual report on Form 10-K, quarterly reports on Form 10-Q,current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after we file or furnish such reports to theSecurities and Exchange Commission (the “SEC”). The information on our website is not a part of this Annual Report on Form 10-K.

RECENT DEVELOPMENTS

Refinancing Plans in 2005. On February 23, 2005 we announced that we intend to refinance approximately $3.3 billion of our credit facilities,including:

We expect to replace these facilities with $3.35 billion in new five-year facilities that will be due in 2010 and include:

The refinancings are subject to market conditions and the execution of definitive documentation and is expected to close in early April2005.

Restatement of Financial Statements. On November 5, 2004, we announced that we would file an amended 2003 Form 10-K to includesummarized financial information related to certain investments in affiliates. We

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• our $1.3 billion asset-based credit facility, due March 31, 2006,

• our $650 million asset-based term loan, due March 31, 2006,

• our $680 million deposit funded credit facility, due September 30, 2007, and

• $650 million in credit facilities for our Goodyear Dunlop Tires Europe B.V. affiliate, due April 30, 2005.

• a $1.5 billion asset-based credit facility,

• a $1.2 billion second lien term loan, and

• the Euro equivalent of $650 million in credit facilities for Goodyear Dunlop Tires Europe B.V.

also announced a restatement of our previously reported financial statements to reflect adjustments that reduced net income through all periodsup to and including the year ended December 31, 2003 by $7.6 million. The restatement also includes an adjustment to correct amisclassification of approximately $360 million of deferred income tax assets and liabilities in our consolidated balance sheet at December 31,2003. This adjustment had no effect on net income. These adjustments were identified prior to the filing of, and included in, our Form 10-Q forthe quarter ending September 30, 2004, and are included in this 2004 Form 10-K. We intend to file an amended Form 10-K for the year endedDecember 31, 2003 as expeditiously as possible.

Subsequent to the filing of the Form 10-Q for the quarter ended September 30, 2004 on November 9, 2004, we identified additionaladjustments that resulted in the further restatement of prior-period financial statements. These additional adjustments reduced net income forall periods up to and including the year ended December 31, 2003 by $17.7 million and have been reflected in this 2004 Form 10-K.

Certain 2004 and 2003 quarterly financial information has also been restated in this Form 10-K to reflect adjustments to our previouslyreported financial information included in our Form 10-Q filings for the quarters ended March 31, 2004, June 30, 2004 and September 30,2004. These adjustments included a benefit of $3.0 million to 2004 year-to-date net income included in the Form 10-Q for the quarter endedSeptember 30, 2004. An additional benefit of $2.5 million to 2004 year-to-date net income was identified subsequent to the filing of the thirdquarter Form 10-Q and is included in this 2004 Form 10-K. We intend to file amended Form 10-Qs for these quarterly periods of 2004 asexpeditiously as possible.

In total, the adjustments included in the Form 10-Q for the quarter ended September 30, 2004 reduced previously-reported net income forall periods through the quarter ended June 30, 2004 by a net amount of $4.6 million. Of this amount, $3.0 million of income related to 2004and $7.6 million of expense related to prior years. Adjustments first reported in this 2004 Form 10-K resulted in a further reduction of netincome for all periods through the quarter ended September 30, 2004 totaling $15.2 million. Of this amount, $2.5 million of income related to2004 and $17.7 million of expense related to prior years. These adjustments reflected the resolution of the SPT accounting matters weannounced on December 30, 2004 and other adjustments that were identified through the implementation of our previously announcedmeasures to improve account reconciliation procedures. For further information, refer to the Note to the Financial Statements No. 2,Restatement, and Supplementary Data (Unaudited).

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New Product Introductions. During 2004, we introduced several new products in our regional tire business units. In North America, theGoodyear Assurance® line of passenger tires was introduced in February. The Assurance® featuring ComforTred TechnologyTM is a premiumauto tire that promises low-noise and high-comfort. The Assurance® featuring TripleTred TechnologyTM features all weather performancethrough three unique tread zones — Water Zone, Ice Zone and Dry Zone and is intended for broad market appeal. We also launched theGoodyear Fortera SLTM Edition tire for luxury SUVs. During the year, we introduced three new Dunlop-brand products, the SP Sport MaxxTM

high performance tire, the Direzza DZ101TM performance tire and the Grandtrek AT20TM tire for SUVs. We launched two new lines of highperformance summer auto tires in Europe: the Goodyear HydraGrip®, developed for rainy and wet weather conditions but also offeringexcellent dry weather performance, and the Dunlop Sport MaxxTM, a tire with outstanding dry handling capabilities. Also introduced in Europewere additional sizes of the Goodyear Marathon LHSTM commercial truck tire, which offers improved payload, fuel consumption, mileage,handling and stability, as well as Fulda Carat ExeleroTM high performance tire. In the Asia/Pacific region, we introduced the GoodyearEagle F1 GSD3TM ultra high performance tire in May. The tire offers excellent handling characteristics with low noise. In January 2005, ourNorth American Tire business introduced two new Goodyear tires for SUVs and light trucks: the Fortera® with SilentArmor TechnologyTM andthe Wrangler® with SilentArmor TechnologyTM. Both of these tires offer durability combined with a smooth, quiet ride. Also launched inNorth America were the Kelly Safari TrexTM with VersaTredTM tire for SUVs, the Kelly EVO-ZTM ultra high performance tire, theDunlop SP60TM all-season tire for passenger cars and the Dunlop Grandtrek PT9000TM for luxury sport trucks and SUVs.

Sale of Assets of North American Farm Tire Business. As part of our continuing effort to divest non-core businesses, on February 28, 2005we announced that we had entered into an agreement to sell the assets of our North American farm tire business to Titan International, Inc., forapproximately $100 million, pending government, regulatory and union approvals. In connection with the transaction, we expect to recordapproximately $35 to $65 million of non-cash pension and retiree medical costs in the quarter in which the transaction closes. Additionalcharges also may be incurred in connection with the closing of the transaction. The assets to be sold include inventories and our manufacturingplant, property and equipment in Freeport, Illinois.

Sale of Indonesia Rubber Plantations. In another action as part of our continuing effort to divest non-core businesses, in November 2004 weentered into an agreement to sell our natural rubber plantations in Indonesia for approximately $65 million, pending government approvals. Werecorded an after-tax loss of $15.6 million in the fourth quarter of 2004 for the write-down of assets, due primarily to the devaluation of theIndonesian rupiah versus the U.S. dollar over the years we held the investment.

Integration of North American Tire and Chemical Products Business Segments. Although we had previously announced our intention toexplore the possible sale of our Chemical Products business segment, on July 21, 2004 we announced our intention to retain this business.Effective January 1, 2005, we integrated Chemical Products into our North American Tire business segment. For further information, refer tothe Note to the Financial Statements No. 24, Subsequent Events.

FORWARD-LOOKING INFORMATION — SAFE HARBOR STATEMENT

Certain information set forth herein (other than historical data and information) may constitute forward-looking statements regarding eventsand trends that may affect our future operating results and financial position. The words “estimate,” “expect,” “intend” and “project,” as well asother words or expressions of similar meaning, are intended to identify forward-looking statements. You are cautioned not to place unduereliance on forward-looking statements, which speak only as of the date of this Annual Report. Such statements are based on currentexpectations and assumptions, are inherently uncertain, are subject to risks and should be viewed with caution. Actual results and experiencemay differ materially from the forward-looking statements as a result of many factors, including:

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• we have not yet completed the implementation of our plan to improve our internal controls and, as described in Item 9A of this report, asof December 31, 2004, we had two material weaknesses in our

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internal controls. If these material weaknesses are not remediated or otherwise mitigated they could result in material misstatements inour financial statements in the future, which would result in additional restatements or impact our ability to timely file our financialstatements in the future;

• pending litigation relating to our restatement could have a material adverse effect on our financial condition;

• an ongoing SEC investigation regarding our accounting restatement could materially adversely affect us;

• we have experienced significant losses in 2001, 2002 and 2003. Although we recorded net income in 2004, we cannot provide assurancethat we will be able to achieve or sustain future profitability. Our future profitability is dependent upon our ability to continue tosuccessfully implement our turnaround strategy for our North American Tire segment;

• we face significant global competition, increasingly from lower cost manufacturers, and our market share could decline;

• our secured credit facilities limit the amount of capital expenditures that we may make;

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

• continued pricing pressures from vehicle manufacturers may materially adversely affect our business;

• our financial position, results of operations and liquidity could be materially adversely affected if we experience a labor strike, workstoppage or other similar difficulty;

• a decline in the value of the securities held by our employee benefit plans or a decline in interest rates would increase our pensionexpense and the underfunded levels of our plans. Termination by the Pension Benefit Guaranty Corporation of any of our U.S. pensionplans would further increase our pension expense and could result in additional liens on material amounts of our assets;

• our long-term ability to meet current obligations and to repay maturing indebtedness, including long-term debt maturing in 2005 and2006 of approximately $1.01 billion and $1.92 billion, respectively, is dependent on our ability to access capital markets in the future andto improve our operating results;

• we have a substantial amount of debt, which could restrict our growth, place us at a competitive disadvantage or otherwise materiallyadversely affect our financial health;

• any failure to be in compliance with any material provision or covenant of our secured credit facilities and the indenture governing oursenior secured notes could have a material adverse effect on our liquidity and our operations;

• our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly;

• if healthcare costs continue to escalate, our financial results may be materially adversely affected;

• we may incur significant costs in connection with product liability and other tort claims;

• our reserves for product liability and other tort claims and our recorded insurance assets are subject to various uncertainties, the outcomeof which may result in our actual costs being significantly higher than the amounts recorded;

• we may be required to deposit cash collateral to support an appeal bond if we are subject to a significant adverse judgment, which mayhave a material adverse effect on our liquidity;

• we are subject to extensive government regulations that may materially adversely affect our ongoing operating results;

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.

DESCRIPTION OF GOODYEAR’S BUSINESS

GENERAL SEGMENT INFORMATION

Our operating segments are North American Tire; European Union Tire; Eastern Europe, Middle East and Africa Tire (“Eastern Europe Tire”)(formerly known as “Eastern Europe, Africa and Middle East Tire”); Latin American Tire; Asia/ Pacific Tire (formerly known as “Asia Tire”)(collectively, the “Tire Segments”); Engineered Products and Chemical Products.

FINANCIAL INFORMATION ABOUT OUR SEGMENTS

Financial information related to our operating segments for the three year period ended December 31, 2004 appears in the Note to the FinancialStatements No. 18, Business Segments, and is incorporated herein by reference.

GENERAL INFORMATION REGARDING TIRE SEGMENTS

Our principal business is the development, manufacture, distribution and sale of tires and related products and services worldwide. Wemanufacture and market numerous lines of rubber tires for:

In each case our tires are offered for sale to vehicle manufacturers for mounting as original equipment (“OE”) and in replacement marketsworldwide. We manufacture and sell tires under the Goodyear-brand, the Dunlop-brand, the Kelly-brand, the Fulda-brand, the Debica-brand,the Sava-brand and various other Goodyear owned “house” brands, and the private-label brands of certain customers. In certain markets wealso:

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• potential changes in foreign laws and regulations could prevent repatriation of future earnings to our parent Company;

• our international operations have certain risks that may materially adversely affect our operating results;

• the terms and conditions of our global alliance with Sumitomo Rubber Industries, Ltd. (SRI) provide for certain exit rights available toSRI in 2009 or thereafter, upon the occurrence of certain events, which could require us to make a substantial payment to acquire SRI’sinterest in certain of our joint venture alliances (which include much of our operations in Europe);

• we have foreign currency translation and transaction risks that may materially adversely affect our operating results; and

• if we are unable to attract and retain key personnel, our business could be materially adversely affected.

• automobiles• trucks• buses• aircraft• motorcycles• farm implements• earthmoving equipment• industrial equipment• various other applications.

• retread truck, aircraft and heavy equipment tires,• manufacture and sell tread rubber and other tire retreading materials,

The principal products of the Tire Segments are new tires for most applications. Approximately 77.6% of our consolidated sales in 2004 wereof new tires, compared to 78.3% in 2003 and 77.5% in 2002. The percentages of each Tire Segment’s sales attributable to new tires during theperiods indicated were:

Each Tire Segment exports tires to other Tire Segments. The financial results of each Tire Segment exclude sales of tires exported to other TireSegments, but include operating income derived from such transactions. In addition, each Tire Segment imports tires from other TireSegments. The financial results of each Tire Segment include sales and operating income derived from the sale of tires imported from otherTire Segments. Sales to unaffiliated customers are attributed to the Tire Segment that makes the sale to the unaffiliated customer.

Tire unit sales for each Tire Segment and for Goodyear worldwide during the periods indicated were:

GOODYEAR’S ANNUAL TIRE UNIT SALES

Our worldwide tire unit sales in the replacement and OE markets during the periods indicated were:

GOODYEAR WORLDWIDE ANNUAL TIRE UNIT SALES — REPLACEMENT AND OE

Tire unit information in 2002 and 2003 does not include the operations of South Pacific Tyres (SPT). Unit sales in 2004 increased by5.5 million replacement units and 0.8 million OE units due to the consolidation of SPT. For further information, refer to the Note to theFinancial Statements No. 8, Investments.

New tires are sold under highly competitive conditions throughout the world. On a worldwide basis, we have two major competitors:Bridgestone (based in Japan) and Michelin (based in France). Other significant competitors include Continental, Cooper, Pirelli, Toyo,Yokohama, Kumho, Hankook and various regional tire manufacturers.

We compete with other tire manufacturers on the basis of product design, performance, price and reputation, warranty terms, customerservice and consumer convenience. Goodyear-brand and Dunlop-brand

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• provide automotive repair services and miscellaneous other products and services, and• manufacture and sell flaps for truck tires and other types of tires.

Year Ended December 31,

Sales of New Tires By 2004 2003 2002

North American Tire 87.9% 86.3% 86.2%European Union Tire 87.4 89.2 85.6Eastern Europe Tire 94.6 94.1 91.8Latin American Tire 92.5 91.1 90.6Asia/ Pacific Tire 82.2 97.7 97.2


2004 2003 2002(In millions of tires)

North American Tire 102.5 101.2 103.8European Union Tire 62.8 62.3 61.5Eastern Europe Tire 18.9 17.9 16.1Latin American Tire 19.6 18.7 19.9Asia/ Pacific Tire 19.5 13.4 13.0

Goodyear worldwide 223.3 213.5 214.3



Replacement tire units 159.6 150.6 147.6OE tire units 63.7 62.9 66.7

Goodyear worldwide tire units 223.3 213.5 214.3

tires enjoy a high recognition factor and have a reputation for performance, quality and value. Kelly-brand, Debica-brand, Sava-brand andvarious other house brand tire lines offered by us, and tires manufactured and sold by us to private brand customers, compete primarily on thebasis of value and price.

We do not consider our tire businesses to be seasonal to any significant degree. A significant inventory of new tires is maintained in orderto optimize production schedules consistent with anticipated demand and assure prompt delivery to customers, especially “just in time”deliveries of tires or tire and wheel assemblies to OE manufacturers. Notwithstanding, tire inventory levels are designed to minimize workingcapital requirements.

NORTH AMERICAN TIRE

Our largest segment, the North American tire business (North American Tire), develops, manufactures, distributes and sells tires and relatedproducts and services in the United States and Canada. North American Tire manufactures tires in nine plants in the United States and threeplants in Canada. Certain Dunlop-brand related businesses of North American Tire are conducted by Goodyear Dunlop Tires North America,Ltd., which is 75% owned by Goodyear and 25% owned by Sumitomo Rubber Industries, Ltd.

Tires. North American Tire manufactures and sells tires for automobiles, trucks, motorcycles, buses, farm implements, earthmovingequipment, commercial and military aircraft and industrial equipment and for various other applications.

Goodyear-brand radial passenger tire lines sold in North America include Assurance® with ComforTred TechnologyTM for the luxurymarket, Assurance® with TripleTred TechnologyTM with broad market appeal, Eagle® high performance and run-flat extended mobilitytechnology (EMT) tires. Dunlop-brand radial passenger tire lines sold in North America include SP Sport® performance tires. The major linesof Goodyear-brand radial tires offered in the United States and Canada for sport utility vehicles and light trucks are Wrangler® and Fortera®.Goodyear also offers Dunlop-brand radials for light trucks such as the RoverTM and Grandtrek® lines. North American Tire also manufacturesand sells several lines of Kelly-brand, other house brands and several lines of private brand radial passenger tires in the United States andCanada.

A full line of Goodyear-brand all-steel cord and belt construction medium radial truck tires, the Unisteel® series, is manufactured and soldfor various applications, including line haul highway use and off-road service. In addition, various lines of Dunlop-brand, Kelly-brand, otherhouse and private brand radial truck tires are sold in the United States and Canadian replacement markets.

Related Products and Services. North American Tire also:

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• retreads truck, aircraft and heavy equipment tires, primarily as a service to its commercial customers,

• manufactures tread rubber and other tire retreading materials for trucks, heavy equipment and aircraft,

• manufactures rubber track for agricultural and construction equipment,

• provides automotive maintenance and repair services at approximately 805 retail outlets,

• sells automotive repair and maintenance items, automotive equipment and accessories and other items to dealers and consumers, and

• provides miscellaneous other products and services.

Markets and Other Information

North American Tire distributes and sells tires throughout the United States and Canada. Tire unit sales to OE customers and in thereplacement markets served by North American Tire during the periods indicated were:

NORTH AMERICAN TIRE UNIT SALES — REPLACEMENT AND OE

North American Tire is a major supplier of tires to most manufacturers of automobiles, motorcycles, trucks, farm and construction equipmentand aircraft that have production facilities located in North America. Our 2004 unit sales in the North American original equipment marketchannel decreased compared to 2003 and 2002 due to our selective fitment strategy in the consumer original equipment business.

Goodyear-brand, Dunlop-brand and Kelly-brand tires are sold in the United States and Canadian replacement markets through severalchannels of distribution. The principal channel for Goodyear-brand tires is a large network of independent dealers. Goodyear-brand, Dunlop-brand and Kelly-brand tires are also sold to numerous national and regional retail marketing firms in the United States. North American Tirealso operates approximately 917 retail outlets (including auto service centers, commercial tire and service centers and leased space indepartment stores) under the Goodyear name or under the Wingfoot Commercial Tire Systems, Allied or Just Tires trade styles. Several linesof house brand tires and private and associate brand tires are sold to independent dealers, national and regional wholesale marketingorganizations and various other retail marketers.

Automotive parts, automotive maintenance and repair services and associated merchandise are sold under highly competitive conditions inthe United States and Canada through retail outlets operated by North American Tire.

North American Tire periodically offers various financing and extended payment programs to certain of its tire customers in thereplacement market. We do not believe these programs, when considered in the aggregate, require an unusual amount of working capitalrelative to the volume of sales involved, and they are consistent with prevailing tire industry practices.

We are subject to regulation by the National Highway Traffic Safety Administration (“NHTSA”), which has established various standardsand regulations applicable to tires sold in the United States for highway use. NHTSA has the authority to order the recall of automotiveproducts, including tires, having safety defects related to motor vehicle safety. In addition, the Transportation Recall Enhancement,Accountability, and Documentation Act (the “TREAD Act”) imposes numerous requirements with respect to tire recalls. The TREAD Act alsorequires tire manufacturers to, among other things, remedy tire safety defects without charge for five years and conform with revised and morerigorous tire standards, once the revised standards are implemented.

EUROPEAN UNION TIRE

Our second largest segment, European Union Tire, develops, manufactures, distributes and sells tires for automobiles, motorcycles, trucks,farm implements and construction equipment in Western Europe, exports tires to other regions of the world and provides related products andservices. European Union Tire manufactures tires in 13 plants in England, France, Germany and Luxembourg. Substantially all of the

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Replacement tire units 70.8 68.6 69.7OE tire units 31.7 32.6 34.1

Total tire units 102.5 101.2 103.8

operations and assets of European Union Tire are owned and operated by Goodyear Dunlop Tires Europe B.V., a 75% owned subsidiary ofGoodyear. European Union Tire:


European Union Tire distributes and sells tires throughout Western Europe. Tire unit sales to OE customers and in the replacement marketsserved by European Union Tire during the periods indicated were:

EUROPEAN UNION TIRE UNIT SALES — REPLACEMENT AND OE

European Union Tire is a significant supplier of tires to most manufacturers of automobiles, trucks and farm and construction equipmentlocated in Western Europe.

European Union Tire’s primary competitor in Western Europe is Michelin. Other significant competitors include Continental, Bridgestone,Pirelli, several regional tire producers and imports from other regions, primarily Eastern Europe and Asia.

Goodyear-brand and Dunlop-brand tires are sold in the several replacement markets served by European Union Tire through variouschannels of distribution, principally independent multi-brand tire dealers. In some markets, Goodyear-brand tires, as well as Dunlop-brand,Fulda-brand, Debica-brand and Sava-brand tires, are distributed through independent dealers, regional distributors and retail outlets, of whichapproximately 337 are owned by Goodyear.

EASTERN EUROPE, MIDDLE EAST AND AFRICA TIRE

Our Eastern Europe, Middle East and Africa Tire segment (“Eastern Europe Tire”) manufactures and sells passenger, truck, farm, bicycle andconstruction equipment tires in Eastern Europe, the Middle East and Africa. Eastern Europe Tire manufactures tires in six plants in Poland,Slovenia, Turkey, Morocco and South Africa. Eastern Europe Tire:

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• manufactures and sells Goodyear-brand, Dunlop-brand and Fulda-brand and other house brand passenger, truck, motorcycle, farm andheavy equipment tires,

• sells Debica-brand and Sava-brand passenger, truck and farm tires manufactured by the Eastern Europe Tire Segment,• sells new, and manufactures and sells retreaded, aircraft tires,• provides various retreading and related services for truck and heavy equipment tires, primarily for its commercial truck tire customers,• offers automotive repair services at retail outlets in which it owns a controlling interest, and• provides miscellaneous related products and services.

Year Ended December 31,2004 2003 2002

(In millions of tires)Replacement tire units 43.9 43.9 41.3OE tire units 18.9 18.4 20.2


• maintains sales operations in most countries in Eastern Europe (including Russia), the Middle East and Africa,• exports tires for sale in Western Europe, North America and other regions of the world,• provides related products and services in certain markets,• manufactures and sells Goodyear-brand, Kelly-brand, Debica-brand, Sava-brand and Fulda-brand tires and sells Dunlop-brand tires

manufactured by European Union Tire,• sells new and retreaded aircraft tires,• provides various retreading and related services for truck and heavy equipment tires,• sells automotive parts and accessories, and• provides automotive repair services.


Eastern Europe Tire distributes and sells tires in most countries in eastern Europe, the Middle East and Africa. Tire unit sales to OE customersand in the replacement markets served by Eastern Europe Tire during the periods indicated were:

EASTERN EUROPE TIRE UNIT SALES — REPLACEMENT AND OE

Eastern Europe Tire has a significant share of each of the markets it serves and is a significant supplier of tires to manufacturers ofautomobiles, trucks, and farm and construction equipment in Morocco, Poland, South Africa and Turkey. Its major competitors are Michelin,Bridgestone, Continental and Pirelli. Other competition includes regional and local tire producers and imports from other regions, primarilyAsia.

Goodyear-brand tires are sold by Eastern Europe Tire in the various replacement markets primarily through independent tire dealers andwholesalers who sell several brands of tires. In some countries, Goodyear-brand, Dunlop-brand, Kelly-brand, Fulda-brand, Debica-brand andSava-brand tires are sold through regional distributors and multi-brand dealers. In the Middle East and most of Africa, tires are sold primarilyto regional distributors for resale to independent dealers. In South Africa and sub-Saharan Africa, tires are also sold through a retail chain ofapproximately 168 retail stores operated by Goodyear under the trade name Trentyre.

LATIN AMERICAN TIRE

Our Latin American Tire segment manufactures and sells automobile, truck and farm tires throughout Central and South America and inMexico (“Latin America”), sells tires to various export markets, retreads and sells commercial truck, aircraft and heavy equipment tires, andprovides other products and services. Latin American Tire manufactures tires in six facilities in Brazil, Chile, Colombia, Peru and Venezuela.

Latin American Tire manufactures and sells several lines of passenger, light and medium truck and farm tires. Latin American Tire also:


Latin American Tire distributes and sells tires in most countries in Latin America. Tire sales to OE customers and in the replacement marketsserved by Latin American Tire during the periods indicated were:

LATIN AMERICAN TIRE UNIT SALES — REPLACEMENT AND OE

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• manufactures and sells pre-cured treads for truck and heavy equipment tires,• retreads, and provides various materials and related services for retreading, truck, aircraft and heavy equipment tires,• manufactures other products, including batteries for motor vehicles,• manufactures and sells new aircraft tires, and• provides miscellaneous other products and services.




ASIA/ PACIFIC TIRE

Our Asia/ Pacific Tire segment manufactures and sells tires for automobiles, light and medium trucks, farm and construction equipment andaircraft throughout the Asia/ Pacific markets. Asia/ Pacific Tire manufactures tires in China, India, Indonesia, Japan, Malaysia, the Philippines,Taiwan and Thailand. In addition, beginning in 2004, Asia/ Pacific Tire information included the manufacturing operations of affiliates inAustralia and New Zealand. Asia/ Pacific Tire also retreads aircraft tires and provides miscellaneous other products and services.

Effective January 1, 2004, Asia/ Pacific Tire includes the operations of South Pacific Tyres, an Australian Partnership, and South PacificTyres N.Z. Limited, a New Zealand company (together, “SPT”), joint ventures 50% owned by Goodyear and 50% owned by Ansell Ltd. SPTis the largest tire manufacturer in Australia and New Zealand, with two tire manufacturing plants and 17 retread plants. SPT sells Goodyear-brand, Dunlop-brand and other house and private brand tires through its chain of 417 retail stores, commercial tire centers and independentdealers. For further information about SPT, refer to the Notes to the Financial Statements No. 8, Investments and No. 18, Business Segments.


Asia/ Pacific Tire distributes and sells tires in most countries in the Asia/ Pacific region. Tire sales to OE customers and in the replacementmarkets served by Asia/ Pacific Tire during the periods indicated were:

ASIA/ PACIFIC TIRE UNIT SALES — REPLACEMENT AND OE

Asia/ Pacific Tire information in 2002 and 2003 does not include the operations of SPT. Unit sales in 2004 increased by 5.5 millionreplacement units and 0.8 million OE units due to the consolidation of SPT.

ENGINEERED PRODUCTS

Our Engineered Products segment develops, manufactures, distributes and sells numerous rubber and thermoplastic products worldwide. Theproducts and services offered by Engineered Products include:

Engineered Products manufactures products at 8 plants in the United States and 19 plants in Australia, Brazil, Canada, Chile, China,France, Mexico, Slovenia, South Africa and Venezuela.


Engineered Products sells its products to manufacturers of vehicles and various industrial products and to independent wholesale distributors.Numerous major firms participate in the various markets served by Engineered Products. There are several suppliers of automotive belts andhose products, air springs, engine mounts and other rubber components for motor vehicles. Engineered Products is a significant supplier ofthese products, and is also a leading supplier of conveyor and power transmission belts and industrial hose products.

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• belts and hoses for motor vehicles,

• conveyor and power transmission belts,

• air, water, steam, hydraulic, petroleum, fuel, chemical and materials handling hose for industrial applications,

• anti-vibration products,

• tank tracks, and

• miscellaneous products and services.

The principal competitors of Engineered Products include Dana, Mark IV, Gates, Bridgestone, Conti-Tech, Trelleborg, Tokai/ DTR, Unipolyand Habasit.

These markets are highly competitive, with quality, service and price all being significant factors to most customers. EPD believes itsproducts are considered to be of high quality and are competitive in price and performance.

CHEMICAL PRODUCTS

Our Chemical Products segment develops, manufactures, distributes and sells synthetic rubber and rubber latices, various resins and organicchemicals used in rubber and plastic processing, and other chemical products. Chemical Products sells to Goodyear’s other business segmentsand to unaffiliated customers. Chemical Products owns 4 manufacturing facilities and conducts natural rubber purchasing operations. InNovember 2004, we entered into an agreement to sell our natural rubber plantations in Indonesia for approximately $65 million, pendinggovernment approvals. Effective January 1, 2005, we integrated Chemical Products into North American Tire. For further information on theintegration, refer to the Note to the Financial Statements No. 24, Subsequent Events.

Approximately 65% of the total pounds of synthetic materials sold by Chemical Products in 2004 was to Goodyear’s other businesssegments. All production is at 4 plants in the United States.


Most external sales of chemical products and natural rubber are made directly to manufacturers of various products.

Several major firms are significant suppliers of one or more chemical products similar to those manufactured by Chemical Products. Theprincipal competitors of Chemical Products include Bayer and Dow. The markets are highly competitive, with product quality and price beingthe most significant factors to most customers. Chemical Products believes its products are generally considered to be of high quality and arecompetitive in price.

GENERAL BUSINESS INFORMATION

Sources and Availability of Raw Materials

The principal raw materials used by Goodyear are synthetic and natural rubber. We purchase substantially all of our requirements for naturalrubber in the world market. Synthetic rubber typically accounts for slightly more than half of all rubber consumed by us on an annual basis.Our plants located in Beaumont, and Houston, Texas, supply the major portion of our synthetic rubber requirements in North America. Wepurchase a significant amount of our synthetic rubber requirements outside North America from third parties.

We use nylon and polyester yarns, substantial quantities of which are processed in our textile mills. Significant quantities of steel wire areused for radial tires, a portion of which we produce. Other important raw materials we use are carbon black, pigments, chemicals and beadwire. Substantially all of these raw materials are purchased from independent suppliers, except for certain chemicals we manufacture. Wepurchase most raw materials in significant quantities from several suppliers, except in those instances where only one or a few qualifiedsources are available. As in 2004, we anticipate the continued availability of all raw materials we will require during 2005, subject to spotshortages.

Substantial quantities of hydrocarbon-based chemicals and fuels are used in the production of tires and other rubber products, syntheticrubber, latex and other products. Supplies of chemicals and fuels have been and are expected to continue to be available to us in quantitiessufficient to satisfy our anticipated requirements, subject to spot shortages.

In 2004, raw materials costs increased approximately $280 million from 2003 levels due to inflation. Raw materials costs are expected toincrease by 6% to 8% during 2005, driven by increases in the cost of oil, steel,

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petrochemicals and natural rubber. Continued volatility in the commodity markets could result in further increases in prices.

Patents and Trademarks

We own approximately 2,550 product, process and equipment patents issued by the United States Patent Office and approximately 5,900patents issued or granted in other countries around the world. We also have licenses under numerous patents of others. We have approximately580 applications for United States patents pending and approximately 3,900 patent applications on file in other countries around the world.While such patents, patent applications and licenses as a group are important, we do not consider any patent, patent application or license, orany related group of them, to be of such importance that the loss or expiration thereof would materially affect Goodyear or any businesssegment.

We own or control and use approximately 1,570 different trademarks, including several using the word “Goodyear” or the word “Dunlop.”Approximately 9,400 registrations and 900 pending applications worldwide protect these trademarks. While such trademarks as a group areimportant, the only trademarks we consider material to our business, or to the business of any of our segments, are those using the word“Goodyear”. We believe our trademarks are valid and most are of unlimited duration as long as they are adequately protected and appropriatelyused.

Backlog

Our backlog of orders is not considered material to, or a significant factor in, evaluating and understanding any of our business segments or ourbusinesses considered as a whole.

Research and Development

Our direct and indirect expenditures on research, development and certain engineering activities relating to the design, development andsignificant modification of new and existing products and services and the formulation and design of new, and significant improvements toexisting, manufacturing processes and equipment during the periods indicated were:

These amounts were expensed as incurred.

Employees

At December 31, 2004, we employed over 84,000 people throughout the world, including approximately 33,000 persons in the United States.Approximately 13,750 of our employees in the United States were covered by a master collective bargaining agreement, dated August 20,2003, with the United Steelworkers of America, A.F.L.-C.I.O.-C.L.C. (“USWA”), which expires on July 22, 2006. In addition, approximately1,100 of our employees in the United States were covered by other contracts with the USWA and various other unions. Unions represent themajor portion of our employees in Europe, Latin America and Asia.

Compliance with Environmental Regulations

We are subject to extensive regulation under environmental and occupational health and safety laws and regulations. These laws andregulations relate to, among other things, air emissions, discharges to surface and underground waters and the generation, handling, storage,transportation and disposal of waste materials and hazardous substances. We have several continuing programs designed to ensure compliancewith federal, state and local environmental and occupational safety and health laws and regulations. We expect capital expenditures forpollution control facilities and occupational safety and health projects will be approximately $24 million during 2005 and approximately$28 million during 2006.

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Year Ended December 31,Restated

2004 2003 2002(In millions)

Research and development expenditures $ 378.2 $ 351.0 $ 386.5

We expended approximately $65 million during 2004, and expect to expend approximately $62 million during 2005 and $60 million during2006, to maintain and operate our pollution control facilities and conduct our other environmental activities, including the control and disposalof hazardous substances. These expenditures are expected to be sufficient to comply with existing environmental laws and regulations and arenot expected to have a material adverse effect on our competitive position.

In the future we may incur increased costs and additional charges associated with environmental compliance and cleanup projectsnecessitated by the identification of new waste sites, the impact of new environmental laws and regulatory standards, or the availability of newtechnologies. Compliance with federal, state and local environmental laws and regulations in the future may require a material increase in ourcapital expenditures and could adversely affect our earnings and competitive position.

INFORMATION ABOUT INTERNATIONAL OPERATIONS

We engage in manufacturing and/or sales operations in most countries in the world, often through subsidiary companies. We havemanufacturing operations in the United States and 27 other countries. Most of our international manufacturing operations are engaged in theproduction of tires. Several engineered rubber products and certain other products are also manufactured in plants located outside the UnitedStates. Financial information related to our geographic areas for the three year period ended December 31, 2004 appears in the Note to theFinancial Statements No. 18, Business Segments, and is incorporated herein by reference.

In addition to the ordinary risks of the marketplace, in some countries our operations are affected by price controls, import controls, laborregulations, tariffs, extreme inflation and/or fluctuations in currency values. Furthermore, in certain countries where we operate, transfers offunds into or out of such countries are generally or periodically subject to various restrictive governmental regulations.

ITEM 2. PROPERTIES.

We manufacture our products in 99 manufacturing facilities located around the world. There are 30 plants in the United States and 69 plants in27 other countries.

NORTH AMERICAN TIRE MANUFACTURING FACILITIES. North American Tire owns (or leases with the right to purchase at a nominal price) andoperates 21 manufacturing facilities in the United States and Canada, including:

These facilities have floor space aggregating approximately 23.1 million square feet. North American Tire also owns a tire plant inHuntsville, Alabama that was closed during 2003 and has floor space aggregating approximately 1.3 million square feet.

EUROPEAN UNION TIRE MANUFACTURING FACILITIES. European Union Tire owns and operates 19 manufacturing facilities in 5 countries,including:

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• 12 tire plants (9 in the United States and 3 in Canada),

• 1 steel tire wire cord plant,

• 1 tire mold plant,

• 2 textile mills,

• 3 tread rubber plants, and

• 2 aero retread plants.

• 13 tire plants,

• 1 tire fabric processing facility,

• 1 steel tire wire cord plant,

• 1 tire mold and tire manufacturing machines facility, and

• 3 tire retread plants.

These facilities have floor space aggregating approximately 13.5 million square feet.

EASTERN EUROPE, MIDDLE EAST AND AFRICA TIRE MANUFACTURING FACILITIES. Eastern Europe Tire owns and operates 6 tire plants in 5countries. These facilities have floor space aggregating approximately 7.4 million square feet.

LATIN AMERICAN TIRE MANUFACTURING FACILITIES. Latin American Tire owns and operates 6 tire plants in 5 countries. Latin American Tirealso manufactures tread rubber and tire molds and operates a fabric processing facility in Brazil. These facilities have floor space aggregatingapproximately 5.7 million square feet.

ASIA/ PACIFIC TIRE MANUFACTURING FACILITIES. Asia/ Pacific Tire owns and operates 11 tire plants in 10 countries, manufactures treadrubber and operates 2 aero-retread plants. These facilities have floor space aggregating approximately 6.3 million square feet.

ENGINEERED PRODUCTS MANUFACTURING FACILITIES. Engineered Products owns (or leases with the right to purchase at a nominal price) 27facilities at 8 locations in the United States and 19 international locations in 10 countries. These facilities have floor space aggregatingapproximately 6.0 million square feet. Certain facilities manufacture more than one group of products. The facilities include:

In the United States and Canada —

• 7 hose products plants• 2 conveyor belting plants• 2 molded rubber products plants• 2 power transmission products plants• 5 mix centers

In Latin America —

• 2 air springs plants• 5 hose products plants• 3 power transmission products plants• 2 conveyor belting plants

In Europe —

• 2 air springs plants• 1 power transmission products plant• 1 hose products plant

In Asia —

• 1 conveyor belting plant• 1 hose products plant

In Africa —

• one conveyor belting and power transmission products plant

CHEMICAL PRODUCTS MANUFACTURING FACILITIES. Chemical Products owns and operates 4 manufacturing facilities. The facilities arelocated in the United States and produce synthetic rubber and rubber latices, synthetic resins, and other organic chemical products. Thesefacilities have floor space aggregating approximately 1.7 million square feet.

PLANT UTILIZATION. Our worldwide tire capacity utilization rate was approximately 88% during 2004, compared to approximately 88% during2003 and 86% during 2002. We expect to have production capacity sufficient to satisfy presently anticipated demand for our tires and otherproducts for the foreseeable future.

OTHER FACILITIES. We also own and operate a natural rubber plantation and rubber processing facility in Indonesia, four research anddevelopment facilities and technical centers, and six tire proving grounds. In November 2004, we entered into an agreement to sell our naturalrubber plantation in Indonesia. We also operate approximately 1,839 retail outlets for the sale of our tires to consumers, approximately 62 tireretreading facilities and approximately 254 warehouse distribution facilities. Substantially all of these facilities are leased. We do not considerany one of these leased properties to be material to our operations. For additional information regarding leased properties, refer to the Notes tothe Financial Statements No. 9, Properties and Plants and No. 10, Leased Assets.

ITEM 3. LEGAL PROCEEDINGS.Heatway Litigation and Settlement

On June 4, 2004, the Company entered into an amended settlement agreement in Galanti et al. v. Goodyear (Case No. 03-209, United StatesDistrict Court, District of New Jersey) that was intended to address the

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claims arising out of a number of Federal, state and Canadian actions filed against the Company involving a rubber hose product, Entran II,that the Company supplied from 1989 to 1993 to Chiles Power Supply, Inc. (d/b/a Heatway Systems), a designer and seller of hydronic radiantheating systems in the United States. Heating systems using Entran II are typically attached or embedded in either indoor flooring or outdoorpavement, and use Entran II hose as a conduit to circulate warm fluid as a source of heat.

On October 19, 2004, the Galanti court conducted a fairness hearing on, and gave final approval to, the amended settlement. As a result,Goodyear will make annual cash contributions to a settlement fund of $60 million, $40 million, $15 million, $15 million and $20 million in2004, 2005, 2006, 2007 and 2008, respectively. In addition to these annual payments, Goodyear contributed approximately $170 millionreceived from insurance contributions to a settlement fund pursuant to the terms of the settlement agreement. The Company does not expect toreceive any additional insurance reimbursements for Entran II related matters. In November 2004, the Company made its first annual cashcontribution, approximately $60 million, to the settlement fund.

Approximately 62 sites were opted out of the amended settlement, five of which have rejoined the class. Of the 57 remaining opt outs,approximately 14 are homesites in Davis et al. v. Goodyear (Case No. 99CV594, District Court, Eagle County, Colorado). In addition, oneadditional opt out is a plaintiff in Cross Mountain Ranch, LP v. Goodyear (Case No. 04CV105, District Court, Routt County, Colorado), whichwas filed in September 2004. Two additional opt outs are plaintiffs in Albers Revocable Trust, et al. v. Goodyear (Case No. 04CV2100,District Court, Arapahoe County, Colorado). Goodyear has been informed that 3 to 4 additional opt outs may file actions against the Companyin the future. Any liability resulting from the following actions also will not be covered by the amended settlement:

Although liability resulting from the opt outs, Malek and Holmes will not be covered by the amended settlement, the Company will beentitled to assert a proxy claim against the settlement fund for the payment such claimant would have been entitled to under the amendedsettlement.

In addition, any liability of the Company arising out of the actions listed below will not be covered by the amended settlement nor will theCompany be entitled to assert a proxy claim against the settlement fund for amounts (if any) paid to plaintiffs in these actions:

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• Malek, et al. v. Goodyear (Case No. 02-B-1172, United States District Court for the District of Colorado), a case involving 25 homesites,in which a federal jury awarded the plaintiffs aggregate damages of $8.1 million of which 40% was allocated to Goodyear. On July 12,2004, judgment was entered in Malek and an additional $4.8 million in prejudgment interest was awarded to the plaintiffs, all of whichwas allocated to Goodyear; and

• Holmes v. Goodyear (Case No. 98CV268-A, District Court, Pitkin County, Colorado), a case involving one site in which the juryawarded the plaintiff $632,937 in damages, of which the jury allocated 20% to Goodyear, resulting in a net award against Goodyear of$126,587. The plaintiff was also awarded $367,860 in prejudgement interest and costs, all of which was allocated to Goodyear.

• Goodyear v. Vista Resorts, Inc. (Case No. 02CA1690, Colorado Court of Appeals), an action involving five homesites, in which a juryrendered a verdict in favor of the plaintiff real estate developer in the aggregate amount of approximately $5.9 million, which damageswere trebled under the Colorado Consumer Protection Act. The total damages awarded were approximately $22.7 million, includinginterest, attorney’s fees and costs. This verdict was upheld by the Court of Appeals in 2004 and Goodyear is petitioning the SupremeCourt of Colorado to review the case;

• Sumerel et al. v. Goodyear et al (Case No. 02CA1997, Colorado Court of Appeals), a case involving six sites in which a judgment wasentered against Goodyear in the amount of $1.3 million plus interest and costs; and

• Loughridge v. Goodyear and Chiles Power Supply, Inc. (Case No. 98-B-1302, United States District Court for the District of Colorado),a case consolidating claims involving 36 Entran II sites, in which a federal jury awarded 34 homeowners aggregate damages of$8.2 million, 50% of which was allocated to

Goodyear is pursuing appeals of Holmes, Loughridge, Malek, Sumerel and Vista and expects that except for liabilities associated with thesecases, and the sites that opt out of the amended settlement, its liability with respect to Entran II matters will be addressed by the amendedsettlement.

The ultimate cost of disposing of Entran II claims is dependent upon a number of factors, including the Company’s ability to resolve claimsnot subject to the amended settlement (including the cases in which the Company has received adverse judgments) and whether or notclaimants opting out of the amended settlement pursue claims against Goodyear in the future.

Japan Investigation

On June 17, 2004, the Company became aware that the Japan Fair Trade Commission had commenced an investigation into alleged unfairbusiness practices by several tire manufacturers and distributors in Japan that supply tires to the Japan National Defense Agency. One of thecompanies being investigated is Goodyear Wingfoot KK, a subsidiary of Goodyear. Depending upon the results of its investigation, the JapanFair Trade Commission may pursue sanctions against the tire manufacturers and distributors.

SEC Investigation

On October 22, 2003, Goodyear announced that it would restate its financial results for the years ended 1998 through 2002 and for the first andsecond quarters of 2003. Following this announcement, the SEC advised the Company that they had initiated an informal inquiry into the factsand circumstances related to the restatement. On February 5, 2004, the SEC advised Goodyear that it had approved the issuance of a formalorder of investigation. The order authorizes an investigation into possible violations of the securities laws related to the restatement andprevious public filings. Goodyear is cooperating fully with the SEC and has provided requested information as expeditiously as possible.Because the SEC investigation is currently ongoing, the outcome cannot be predicted at this time.

Securities Litigation

On October 23, 2003, following the announcement of the restatement, a purported class action lawsuit was filed against the Company in theUnited States District Court for the Northern District of Ohio on behalf of purchasers of Goodyear common stock alleging violations of thefederal securities laws. After that date, a total of 20 of these purported class actions were filed against Goodyear in that court. These lawsuitsname as defendants several of the Company’s present or former officers and directors, including Goodyear’s current chief executive officer,Robert J. Keegan, Goodyear’s current chief financial officer, Richard J. Kramer, and Goodyear’s former chief financial officer, Robert W.Tieken, and allege, among other things, that Goodyear and the other named defendants violated federal securities laws by artificially inflatingand maintaining the market price of Goodyear’s securities. Five derivative lawsuits were also filed by purported shareholders on behalf ofGoodyear in the United States District Court for the Northern District of Ohio and two similar derivative lawsuits originally filed in the Courtof Common Pleas for Summit County, Ohio were removed to federal court. The derivative actions are against present and former directors,Goodyear’s present and former chief executive officers and Goodyear’s former chief financial officer and allege, among other things, breach offiduciary duty and corporate waste arising out of the same events and circumstances upon which the securities class actions are based. Theplaintiffs in the federal derivative actions also allege violations of Section 304 of the Sarbanes-Oxley Act of 2002, by certain of the nameddefendants. Finally, at least 11 lawsuits have been filed in the United States District Court for the Northern District of Ohio against Goodyear,The Northern Trust Company, and current and/or former officers of Goodyear asserting breach of fiduciary claims under the EmployeeRetirement Income Security Act (ERISA) on behalf of a putative class of participants in Goodyear’s Employee Savings Plan for BargainingUnit Employees and Goodyear’s Savings Plan for Salaried Employees. The plaintiffs’ claims in these actions arise out of the same events andcircumstances upon which the securities class actions and derivative actions are based. All of these actions have been consolidated into

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Goodyear. On September 8, 2003, an additional $5.7 million in prejudgment interest was awarded to the plaintiffs, all of which wasallocated to Goodyear.

three separate actions before the Honorable Judge John Adams in the United States District Court for the Northern District of Ohio. On June 28and July 16, 2004, amended complaints were filed in each of the three consolidated actions. The amended complaint in the purported ERISAclass action added certain current and former directors and associates of Goodyear as additional defendants and the Northern Trust Companywas subsequently dismissed without prejudice from this action. On November 15, 2004, the defendants filed motions to dismiss all threeconsolidated cases and the Court is considering these motions. While Goodyear believes these claims are without merit and intends tovigorously defend them, it is unable to predict their outcome.

Asbestos Litigation

Goodyear is currently one of several (typically 50 to 80) defendants in civil actions involving approximately 127,300 claimants (as ofDecember 31, 2004) relating to their alleged exposure to materials containing asbestos in products manufactured by Goodyear or asbestosmaterials at Goodyear facilities. These cases are pending in various state courts, including primarily courts in California, Florida, Illinois,Maryland, Michigan, Mississippi, New York, Ohio, Pennsylvania, Texas and West Virginia, and in certain federal courts relating to theplaintiffs’ alleged exposure to materials containing asbestos. Goodyear manufactured, among other things, rubber coated asbestos sheet gasketmaterials from 1914 through 1973 and aircraft brake assemblies containing asbestos materials prior to 1987. Some of the claimants areindependent contractors or their employees who allege exposure to asbestos while working at certain Goodyear facilities. It is expected that ina substantial portion of these cases there will be no evidence of exposure to a Goodyear manufactured product containing asbestos or asbestosin Goodyear facilities. The amount expended by Goodyear and its insurers on defense and claim resolution during 2004 was approximately$29.9 million. The plaintiffs in the pending cases allege that they were exposed to asbestos and, as a result of such exposure suffer from variousrespiratory diseases, including in some cases mesothelioma and lung cancer. The plaintiffs are seeking unspecified actual and punitive damagesand other relief.

Engineered Products Antitrust Investigation

The Antitrust Division of the United States Department of Justice is conducting a grand jury investigation concerning the closure of a portionof the Company’s Bowmanville, Ontario conveyor belting plant announced in October 2003. In that connection, the Division has soughtdocuments and other information from the Company and several associates. The plant was part of the Company’s Engineered Products divisionand originally employed approximately 120 people. Engineered Products had approximately $1.2 billion in sales in 2003, includingapproximately $200 million of sales related to conveyor belting. Although the Company does not believe that it has violated the antitrust laws,it is cooperating with the Department of Justice.

DOE Facility Litigation

On June 7, 1990, a civil action, Teresa Boggs, et al. v. Divested Atomic Corporation, et al. (Case No. C-1-90-450), was filed in the UnitedStates District Court for the Southern District of Ohio by Teresa Boggs and certain other named plaintiffs on behalf of themselves and aputative class comprised of certain other persons who resided near the Portsmouth Uranium Enrichment Complex, a facility owned by theUnited States Department of Energy located in Pike County, Ohio (the “DOE Plant”), against Divested Atomic Corporation (“DAC”), thesuccessor by merger of Goodyear Atomic Corporation (“GAC”), the Company, and Lockheed Martin Energy Systems (“LMES”). GACoperated the DOE Plant for several years pursuant to a series of contracts with the DOE until LMES assumed operation of the DOE Plant onNovember 16, 1986. The plaintiffs allege that the operators of the DOE Plant contaminated certain areas near the DOE Plant with radioactiveand/or other hazardous materials causing property damage and emotional distress. Plaintiffs claim $300 million in compensatory damages,$300 million in punitive damages and unspecified amounts for medical monitoring and cleanup costs. This civil action is no longer a classaction as a result of rulings of the District Court decertifying the class. On June 8, 1998, a civil action, Adkins, et al. v. Divested AtomicCorporation, et al. (Case No. C2 98-595), was filed in the United States District Court for the Southern District of Ohio, Eastern Division,against DAC, the Company and LMES on behalf of

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approximately 276 persons who currently reside, or in the past resided, near the DOE Plant. The plaintiffs allege, on behalf of themselves and aputative class of all persons who were residents, property owners or lessees of property subject to alleged windborne particulates and water runoff from the DOE Plant, that DAC (and, therefore, the Company) and LMES in their operation of the Portsmouth DOE Plant (i) negligentlycontaminated, and are strictly liable for contaminating, the plaintiffs and their property with allegedly toxic substances, (ii) have in the pastmaintained, and are continuing to maintain, a private nuisance, (iii) have committed, and continue to commit, trespass, and (iv) violated theComprehensive Environmental Response, Compensation and Liability Act of 1980. The plaintiffs are seeking $30 million in actual damages,$300 million in punitive damages, other unspecified legal and equitable remedies, costs, expenses and attorney’s fees.

Notice of Violation

In February 2005, the United States Environmental Protection Agency (“US EPA”) issued a notice of violation to Goodyear alleging violationsof the Clean Air Act and related state and local requirements at its Lincoln, Nebraska Engineered Products facility. The Notice of Violationalleges two violations: (i) the construction of a boiler in 1988 without an appropriate permit, and (ii) the failure to apply the “best availablecontrol technology” for emissions from the boiler. Each violation is subject to potential civil penalties of up to $32,500 per day. Otherenforcement alternatives include a temporary or permanent injunction and a referral to the Department of Justice. The Company is currentlyreviewing this matter and has not yet determined what, if any, losses may arise from the matter.

Other Matters

In addition to the legal proceedings described above, various other legal actions, claims and governmental investigations and proceedingscovering a wide range of matters were pending against Goodyear at December 31, 2004, including claims and proceedings relating to severalwaste disposal sites that have been identified by the United States Environmental Protection Agency and similar agencies of various States forremedial investigation and cleanup, which sites were allegedly used by Goodyear in the past for the disposal of industrial waste materials.Based on available information, we do not consider any such action, claim, investigation or proceeding to be material, within the meaning ofthat term as used in Item 103 of Regulation S-K and the instructions thereto. For additional information regarding the Company’s legalproceedings, refer to the Note to the Financial Statements No. 20, Commitments and Contingent Liabilities.

No matter was submitted to a vote of the security holders of the Company during the quarter ended December 31, 2004.

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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

EXECUTIVE OFFICERS OF THE REGISTRANT

Set forth below are: (1) the names and ages of all executive officers of the Company at March 15, 2005, (2) all positions with the Companypresently held by each such person and (3) the positions held by, and principal areas of responsibility of, each such person during the last fiveyears.

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Name Position(s) Held Age

Robert J. Keegan Chairman of the Board, Chief Executive Officerand President

57

Mr. Keegan joined Goodyear on October 1, 2000. He was elected President and Chief Operating Officer and a Director of the Company onOctober 3, 2000, and President and Chief Executive Officer of the Company effective January 1, 2003. Effective June 30, 2003, he becameChairman. He is the principal executive officer of the Company. Prior to joining Goodyear, Mr. Keegan held various marketing, finance andmanagerial positions at Eastman Kodak Company from 1972 through September 2000, including Vice President from July 1997 to October1998, Senior Vice President from October 1998 to July 2000 and Executive Vice President from July 2000 to September 2000. Mr. Keegan is aClass II director.

Jonathan D. Rich President, North American Tire 49Mr. Rich joined Goodyear in September 2000 and was elected President, Chemical Division on August 7, 2001, serving as the executiveofficer responsible for Goodyear’s chemical products operations worldwide. Effective December 1, 2002, Mr. Rich was appointed, and onDecember 3, 2002 he was elected President, North American Tire and is the executive officer responsible for Goodyear’s tire operations in theUnited States and Canada. Prior to joining Goodyear, Mr. Rich was technical director of GE Bayer Silicones in Leverkusen, Germany. He alsoserved in various managerial posts with GE Corporate R&D and GE Silicones, units of the General Electric Company from 1986 to 1998.

Michael J. Roney President, European Union Tire 50Mr. Roney served in various international financial, sales and managerial posts until September 1, 1998, when he was appointed Vice Presidentfor Asia/ Pacific Tire, in which capacity he was responsible for Goodyear’s tire operations in the Asia, Australia and Western Pacific region.On December 1, 1998, Mr. Roney was appointed President and Managing Director of Compania Hulera Goodyear-Oxo, S.A. de C.V., a whollyowned subsidiary operating in Mexico. Effective July 1, 1999, Mr. Roney was appointed, and on August 3, 1999 he was elected, President,Eastern Europe, Middle East and Africa Tire, serving as the executive officer responsible for Goodyear’s tire operations in Eastern Europe,Middle East and Africa. Mr. Roney was elected President, European Union Tire on May 7, 2001. Mr. Roney is the executive officerresponsible for Goodyear’s tire operations in Western Europe. Goodyear employee since 1981.

Jarro F. Kaplan President, Eastern Europe,Middle East and Africa Tire

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Mr. Kaplan served in various development and sales and marketing managerial posts until he was appointed Managing Director of GoodyearTurkey in 1993 and thereafter Managing Director of Goodyear Great Britain Limited in 1996. He was appointed Managing Director ofDeutsche Goodyear in 1999. On May 7, 2001, Mr. Kaplan was elected President, Eastern Europe, Middle East and Africa Tire and is theexecutive officer responsible for Goodyear’s tire operations in Eastern Europe, the Middle East and Africa. Goodyear employee since 1969.

Eduardo A. Fortunato President, Latin American Tire 51Mr. Fortunato served in various international managerial, sales and marketing posts with Goodyear until he was elected President andManaging Director of Goodyear Brazil in 2000. On November 4, 2003, Mr. Fortunato was elected President, Latin American Tire.Mr. Fortunato is the executive officer responsible for Goodyear’s tire operations in Mexico, Central America and South America. Goodyearemployee since 1975.

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Name Position(s) Held AgePierre Cohade President, Asia/Pacific Tire 43

Mr. Cohade joined Goodyear in October, 2004 and was elected President Asia/ Pacific Tire on October 5, 2004. Mr. Cohade is the executiveofficer responsible for Goodyear’s tire operations in Asia, Australia and the Western Pacific. Prior to joining Goodyear, Mr. Cohade served invarious finance and managerial posts with the Eastman Kodak Company from 1985 to 2001, including chairman of Eastman Kodak’s Europe,Africa, Middle East and Russian Region from 2001 to 2003. From February 2003 to April 2004, Mr. Cohade served as the Executive VicePresident of Groupe Danone’s beverage division.

Timothy R. Toppen President, Engineered Products 49Mr. Toppen served in various research, technology and marketing posts until April 1, 1997 when he was appointed Director of Research andDevelopment for Engineered Products. Mr. Toppen was elected President, Chemical Division, on August 1, 2000, serving in that office until hewas elected President, Engineered Products on August 7, 2001. Mr. Toppen is the executive officer responsible for Goodyear’s EngineeredProducts operations worldwide. Goodyear employee since 1978.

Lawrence D. Mason President, North American Tire Consumer Business 44Mr. Mason joined Goodyear on October 7, 2003 and was elected President, North American Tire Consumer Business effective October 13,2003. Mr. Mason is the executive officer responsible for the business activities of Goodyear’s consumer tire business in North America. Priorto joining Goodyear, Mr. Mason was employed by Huhtamaki — Americas as Division President of North American Foodservice and RetailConsumer Products from 2002 to 2003. From 1983 to 2001, Mr. Mason served in various sales and managerial posts with The Procter &Gamble Company.

Richard J. Kramer Executive Vice President and Chief Financial Officer 41Mr. Kramer joined Goodyear on March 6, 2000, when he was appointed a Vice President for corporate finance. On April 10, 2000, Mr. Kramerwas elected Vice President-Corporate Finance, serving in that capacity as the Company’s principal accounting officer until August 6, 2002,when he was elected Vice President, Finance — North American Tire. Effective August 28, 2003 he was appointed and on October 7, 2003 hewas elected Senior Vice President, Strategic Planning and Restructuring. He was elected Executive Vice President and Chief Financial Officeron June 1, 2004. Mr. Kramer is the principal financial officer of the Company. Prior to joining Goodyear, Mr. Kramer was an associate ofPricewaterhouseCoopers LLP for 13 years, including two years as a partner.

Joseph M. Gingo Executive Vice President, Quality Systems and Chief TechnicalOfficer

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Mr. Gingo served in various research and development and managerial posts until November 5, 1996, when he was elected a Vice President,responsible for Goodyear’s operations in Asia, Australia and the Western Pacific. On September 1, 1998, Mr. Gingo was placed on specialassignment with the office of the Chairman of the Board. From December 1, 1998 to June 30, 1999, Mr. Gingo served as the Vice Presidentresponsible for Goodyear’s worldwide Engineered Products operations. Effective July 1, 1999 to June 1, 2003, Mr. Gingo served as SeniorVice President, Technology and Global Products Planning. On June 2, 2003, Mr. Gingo was elected Executive Vice President, Quality Systemsand Chief Technical Officer. Mr. Gingo is the executive officer responsible for Goodyear’s research and tire technology development andproduct planning operations worldwide. Goodyear employee since 1966.

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Name Position(s) Held AgeMarland J. Copeland Senior Vice President, Business Development, Strategy and

Restructuring43

Mr. Copeland joined Goodyear in August 2000 and served in various financial and managerial posts through November 2002. EffectiveDecember 1, 2002, Mr. Copeland was appointed, and on December 3, 2002 he was elected President of the Chemical Division. Mr. Copelandwas elected Senior Vice President, Business Development, Strategy and Restructuring on December 9, 2004. Mr. Copeland is the executiveofficer responsible for Goodyear’s worldwide business development activities and restructuring efforts. Prior to joining Goodyear,Mr. Copeland served as Finance Manager of Internet Marketing and E-commerce at Intel Corporation from 1997 to 2000.

C. Thomas Harvie Senior Vice President, General Counsel and Secretary 61Mr. Harvie joined Goodyear on July 1, 1995, when he was elected a Vice President and the General Counsel. Effective July 1, 1999,Mr. Harvie was appointed, and on August 3, 1999 he was elected, Senior Vice President and General Counsel. He was elected Senior VicePresident, General Counsel and Secretary effective June 16, 2000. Mr. Harvie is the chief legal officer and is the executive officer responsiblefor the government relations and real estate activities of Goodyear.

Charles L. Sinclair Senior Vice President, Global Communications 53Mr. Sinclair served in various public relations and communications positions until 2002, when he was named Vice President, Public Relationsand Communications for North American Tire. Effective June 16, 2003, he was appointed, and on August 5, 2003, he was elected Senior VicePresident, Global Communications. Mr. Sinclair is the executive officer responsible for Goodyear’s worldwide communications activities.Goodyear employee since 1984.

Christopher W. Clark Senior Vice President, Global Sourcing 53Mr. Clark served in various managerial and financial posts until October 1, 1996, when he was appointed managing director of P.T. GoodyearIndonesia Tbk, a subsidiary of Goodyear. On September 1, 1998, he was appointed managing director of Goodyear do Brasil Productos deBorracha Ltda, a subsidiary of Goodyear. On August 1, 2000, he was elected President, Latin America Tire. On November 4, 2003, Mr. Clarkwas named Senior Vice President, Global Sourcing. Mr. Clark is the executive officer responsible for coordinating Goodyear’s supplyactivities worldwide. Goodyear employee since 1973.

Kathleen T. Geier Senior Vice President, Human Resources 48Ms. Geier served in various managerial and human resources posts until July 1, 2002 when she was appointed and later elected, Senior VicePresident, Human Resources. Ms. Geier is the executive officer responsible for Goodyear’s human resources activities worldwide. Goodyearemployee since 1978.

Thomas A. Connell Vice President and Controller 56Mr. Connell joined Goodyear on September 1, 2003 and was elected Vice President and Controller on October 7, 2003. Mr. Connell serves asGoodyear’s principal accounting officer. Prior to joining Goodyear, Mr. Connell served in various financial positions with TRW Inc. from1979 to June 2003, most recently as its Vice President and Corporate Controller. From 1970 to 1979, Mr. Connell was an audit supervisor withthe accounting firm of Ernst & Whinney.

Donald D. Harper Vice President 58Mr. Harper served in various organizational effectiveness and human resources posts until June 1996, when he was appointed Vice President ofHuman Resources Planning, Development and Change. Effective December 1, 2003, Mr. Harper has served as the Vice President, HumanResources, North America Shared Services. Mr. Harper was elected a Vice President effective December 1, 1998 and is the executive officerresponsible for corporate human resources activities in North America. Goodyear employee since 1968.

No family relationship exists between any of the above named executive officers or between said executive officers and any director ornominee for director of the Company.

Each executive officer is elected by the Board of Directors of the Company at its annual meeting to a term of one year or until his or hersuccessor is duly elected. In those instances where the person is elected at other than an annual meeting, such person’s term will expire at thenext annual meeting.

PART II.

The principal market for Goodyear’s common stock is the New York Stock Exchange (Stock Exchange Symbol GT).

Information relating to the high and low sale prices of shares of Goodyear’s common stock appears under the caption “Quarterly Data andMarket Price Information” in Item 8 of this Annual Report at page 149, and is incorporated herein by reference. Certain of our creditagreements prohibit us from paying dividends on our common stock. At December 31, 2004, there were 25,591 record holders of the175,619,639 shares of Goodyear’s common stock then outstanding.

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Name Position(s) Held Age

William M. Hopkins Vice President 60Mr. Hopkins served in various tire technology and managerial posts until appointed Director of Tire Technology for North American Tireeffective June 1, 1996. He was elected a Vice President effective May 19, 1998. He served as the executive officer responsible for Goodyear’sworldwide tire technology activities until August 1, 1999. Since August 1, 1999, Mr. Hopkins has served as the executive officer responsiblefor Goodyear’s worldwide product marketing and technology planning activities. Goodyear employee since 1967.

Isabel H. Jasinowski Vice President 56Ms. Jasinowski served in various government relations posts until she was appointed Vice President of Government Relations in 1995. OnApril 2, 2001, Ms. Jasinowski was elected Vice President, Government Relations, serving as the executive officer primarily responsible forGoodyear’s governmental relations and public policy activities. Goodyear employee since 1981.

Gary A. Miller Vice President 58Mr. Miller served in various management and research and development posts until he was elected a Vice President effective November 1,1992. Mr. Miller was elected Vice President and Chief Procurement Officer in May 2003. He is the executive officer primarily responsible forGoodyear’s purchasing operations worldwide. Goodyear employee since 1967.

Darren R. Wells Vice President and Treasurer 39Mr. Wells joined Goodyear on August 1, 2002 and was elected Vice President and Treasurer on August 6, 2002. Mr. Wells is the executiveofficer responsible for Goodyear’s treasury operations and risk management and pension asset management activities. Prior to joiningGoodyear, Mr. Wells served in various financial posts with Ford Motor Company units from 1989 to 2000 and was the Assistant Treasurer ofVisteon Corporation from 2000 to July 2002.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIES.

The following table presents information with respect to repurchases of common stock made by the Company during the three monthsended December 31, 2004. These shares were delivered to the Company by employees as payment for the exercise price of stock options aswell as the withholding taxes due upon the exercise of the stock options.

4% Convertible Senior Notes due 2034

On July 2, 2004, the Company completed a private placement of $350 million aggregate principal amount of 4% Convertible Senior Notesdue 2034 (the “Convertible Notes due 2034”). The initial purchasers of the Convertible Notes due 2034 were Goldman, Sachs & Co., DeutscheBank Securities Inc. and J.P. Morgan Securities Inc. (the “Initial Purchasers”). The offering price of the Convertible Notes due 2034 was 100%of the principal amount of the Convertible Notes due 2034, less an aggregate underwriting discount of $9.6 million. Each sale of theConvertible Notes due 2034 to the Initial Purchasers was exempt from registration in reliance on Section 4(2) and Regulation D under theSecurities Act of 1933, as amended, as a transaction not involving a public offering. The Convertible Notes due 2034 were re-offered by theInitial Purchasers to qualified institutional buyers in reliance on Rule 144A under the Securities Act. The Convertible Notes due 2034 areconvertible into shares initially of the Company’s common stock at a conversion rate of 83.07 shares of common stock per $1,000 principalamount of notes, which is equal to an initial conversion price of $12.04 per share. The conversion rate is subject to adjustment in certainevents.

The Convertible Notes due 2034 are convertible at the option of the holder, prior to the close of business on the maturity date, under any ofthe following circumstances: (i) on any business day in any fiscal quarter commencing prior to the maturity date, if the last reported sale priceof the Company’s common stock for at least 20 trading days in the 30 consecutive trading-day period ending on the 11th trading day of suchfiscal quarter is greater than 120% of the applicable conversion price per share of the Company’s common stock on such 11th trading day;(ii) on any business day after June 15, 2029 and through the business day immediately preceding the maturity date, if the last reported saleprice of the Company’s common stock on any trading date after June 15, 2029 is greater than 120% of the applicable conversion price pershare of the Company’s common stock on such trading date; (iii) at any time prior to June 15, 2029, during the five consecutive business dayperiod following any five consecutive trading day period in which the trading price per $1,000 principal amount of notes for each day of thattrading period was less than 98% of the product of the last reported sale price of the Company’s common stock on such corresponding tradingday and the applicable conversion rate; (iv) if the Company has called the notes for redemption; or (v) upon the occurrence of certain specifiedcorporate events or transactions. Upon conversion, the Company has the right to deliver, in lieu of shares of common stock, cash or acombination of cash and shares of common stock.

Holders of the Convertible Notes due 2034 have the right to require the Company to purchase all or a portion of their notes on June 15 ofeach of 2011, 2014, 2019, 2024 and 2029 or upon the occurrence of certain designated events. In each case, the Company will pay a purchaseprice equal to 100% of the principal amount of the notes to be purchased, plus any accrued and unpaid interest to, but excluding the purchasedate, plus, in the case of certain designated events, a make-whole premium.

Goodyear Dunlop Tires North America, Ltd. Employee Savings Plan for Bargaining Unit Employees

Since January 1, 2003 the Goodyear Dunlop Tires North America, Ltd. Employee Savings Plan for Bargaining Unit Employees (the“Plan”) has offered Goodyear common stock as an investment option

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Total Number of Maximum NumberShares Purchased as of Shares that May

Total Number Average Price Part of Publicly Yet Be Purchasedof Shares Paid Announced Plans Under the Plans

Period Purchased Per Share or Programs or Programs

10/1/04-10/31/04 698 $ 9.375 — —11/1/04-11/30/04 8,948 12.247 — —12/1/04-12/31/04 — — — —Total 9,646 12.039 — —

through the Goodyear Common Stock Fund. The Goodyear common stock offered to plan participants was not registered with the Securitiesand Exchange Commission as required by the securities laws. Goodyear intends to register the Goodyear common stock promptly. Planparticipants who purchase shares in the Goodyear Common Stock Fund prior to the registration of these shares have the right to rescind thepurchase of the shares for one year following the purchase. As of December 31, 2004, there were 195,583 shares of Goodyear common stockheld by participants in the Plan.

Notes:

The information contained in the selected financial data has been restated. For further information, refer to the Note to the Financial StatementsNo. 2, Restatement.

(1) Information on the impact of the restatement follows:

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ITEM 6. SELECTED FINANCIAL DATA.


2004 2003 2002 2001 2000(In millions, except per share amounts)

Net Sales $ 18,370.4 $ 15,122.1 $ 13,856.0 $ 14,162.3 $ 14,439.0Net Income (Loss) $ 114.8 $ (807.4) $ (1,246.9) $ (254.7) $ 50.0

Net Income (Loss) Per Share — Basic $ 0.65 $ (4.61) $ (7.47) $ (1.59) $ 0.32

Net Income (Loss) Per Share — Diluted $ 0.63 $ (4.61) $ (7.47) $ (1.59) $ 0.31

Dividends Per Share $ — $ — $ 0.48 $ 1.02 $ 1.20Total Assets 16,533.3 14,701.1 13,013.1 13,719.7 13,539.6Long Term Debt and Capital Leases due Within One Year 1,009.9 113.5 369.8 109.7 159.2Long Term Debt and Capital Leases 4,449.1 4,825.8 2,989.5 3,203.3 2,349.4Shareholders’ Equity (Deficit) 72.8 (32.2) 221.1 2,596.8 3,429.3

Year EndedDecember 31,

2003 2003As Previously AsReported(B) Restated

(In millions, except per share amounts)Net Sales $ 15,119.0 $ 15,122.1Net Loss $ (802.1) $ (807.4)

Net Loss Per Share — Basic $ (4.58) $ (4.61)

Net Loss Per Share — Diluted $ (4.58) $ (4.61)

Dividends Per Share $ — $ —Total Assets 15,005.5 14,701.1Long Term Debt and Capital Leases due Within One Year 113.5 113.5Long Term Debt and Capital Leases 4,826.2 4,825.8Shareholders’ Equity (Deficit) (13.1) (32.2)

(B) As reported in 2003 Form 10-K filed on May 19, 2004.

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As Originally As Previously AsReported(A) Reported(B) Restated

(In millions, except per share amounts)Net Sales $ 13,850.0 $ 13,856.2 $ 13,856.0Net Loss $ (1,105.8) $ (1,227.0) $ (1,246.9)

Net Loss Per Share — Basic $ (6.62) $ (7.35) $ (7.47)

Net Loss Per Share — Diluted $ (6.62) $ (7.35) $ (7.47)

Dividends Per Share $ 0.48 $ 0.48 $ 0.48Total Assets 13,146.6 13,038.7 13,013.1Long Term Debt and Capital Leases due Within One Year 369.8 369.8 369.8Long Term Debt and Capital Leases 2,989.0 2,989.8 2,989.5Shareholders’ Equity 650.6 255.4 221.1



(In millions, except per share amounts)Net Sales $ 14,147.2 $ 14,162.5 $ 14,162.3Net Loss $ (203.6) $ (254.1) $ (254.7)


Net Loss Per Share — Diluted $ (1.27) $ (1.59) $ (1.59)

Dividends Per Share $ 1.02 $ 1.02 $ 1.02Total Assets 13,783.4 13,768.6 13,719.7Long Term Debt and Capital Leases due Within One Year 109.7 109.7 109.7Long Term Debt and Capital Leases 3,203.6 3,203.6 3,203.3Shareholders’ Equity 2,864.0 2,627.8 2,596.8

(A) As reported in 2002 Form 10-K filed on April 3, 2003.


As discussed in the Note to the Financial Statements No. 2, Restatement, restatement adjustments included in the 2003 Form 10-K wereclassified as “Accounting Irregularities,” “Account Reconciliations,” “Out-of-Period,” “Discount Rate,” “Chemical Products Segment” and“Tax Adjustments.” Restatement adjustments included in the 2004 Form 10-K were classified as “SPT”, “General and Product Liability”,“Account Reconciliations” and “Tax Adjustments”.

The increase in net loss in 2003 of $5.3 million was due primarily to tax adjustments. Charges for the write-off of goodwill related to soldassets, adjustments to leased tire assets and changes to the timing of rationalization charges at SPT were substantially offset by the benefit of achange in our estimated liability for general and product liability — discontinued products.

For the restatement of 2003, pretax loss was increased by charges of $5.4 million due to the impact of Account Reconciliations and$2.3 million due to SPT. Pretax loss in 2003 was reduced by benefits of $7.3 million due to General and Product Liability. The net loss in 2003was increased by $4.8 million due to the impact of Tax Adjustments.

Net loss as previously reported in 2002 increased by $121.2 million due primarily to an additional Federal and state deferred tax assetvaluation allowance of $121.6 million.

For the restatement of 2002, pretax loss as previously reported was increased by charges of $14.9 million due to the impact of DiscountRate, $6.8 million due to Account Reconciliations and $3.5 million due to Accounting Irregularities. Pretax loss as previously reported wasreduced by a benefit of $15.2 million due to the impact of Out-of-Period and $14.2 million due to Chemical Products Segment. Net loss aspreviously reported was increased by $122.5 million for Tax Adjustments.

Net loss as restated in 2002 increased by $19.9 million due primarily to charges for tax adjustments, an additional Federal and statedeferred tax asset valuation allowance and changes to the timing of rationalization charges at SPT.

For the restatement of 2002, pretax loss as restated was increased by charges of $3.5 million due to the impact of SPT and $1.8 million dueto Account Reconciliations. The net loss in 2002 was increased by a charge of $7.2 million due to Tax Adjustments.

Net loss as previously reported in 2001 increased by $50.5 million due primarily to the timing of the recognition of manufacturingvariances to reflect the actual cost of inventories of the Chemical Products Segment, the erroneous recording of cost of goods sold for the saleof inventory at Wingfoot Commercial Tire

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(In millions, except per share amounts)Net Sales $ 14,417.1 $ 14,459.9 $ 14,439.0Net Income $ 40.3 $ 51.3 $ 50.0

Net Income Per Share — Basic $ 0.26 $ 0.33 $ 0.32

Net Income Per Share — Diluted $ 0.25 $ 0.32 $ 0.31

Dividends Per Share $ 1.20 $ 1.20 $ 1.20Total Assets 13,568.0 13,576.7 13,539.6Long Term Debt and Capital Leases due Within One Year 159.2 159.2 159.2Long Term Debt and Capital Leases 2,349.6 2,349.6 2,349.4Shareholders’ Equity 3,503.0 3,454.3 3,429.3



Systems, LLC, Accounting Irregularities adjustments and other Account Reconciliation adjustments. On November 1, 2000, Goodyear made acontribution, which included inventory, to Wingfoot Commercial Tire Systems, LLC, a consolidated subsidiary. On a consolidated basis, theinventory was valued at Goodyear’s historical cost. Upon the sale of the inventory, consolidated cost of goods sold was understated by$11 million. Additionally, inventory and fixed asset losses totaling $4.2 million were not expensed as incurred and were written off. ChemicalProducts Segment adjustments were the result of a stand-alone audit conducted in 2003 of a portion of the Chemical Products businesssegment.

For the restatement of 2001, pretax loss as previously reported was increased by charges of $18.9 million due to the impact of ChemicalProducts Segment, $14.5 million due to Out-of-Period, $13.2 million due to Accounting Irregularities, $12.8 million due to AccountReconciliations and $5.5 million due to Discount Rate. The tax effect of restatement adjustments reduced the net loss by $17.9 million.

Net loss as restated in 2001 increased by $0.6 million due primarily to charges for changes in the timing of rationalization charges at SPT,an asset impairment charge at SPT, interest expense related to a long term contractual obligation with SPT and a benefit from the reduction ingoodwill amortization expense due to impact of changing exchange rates.

For the restatement of 2001, pretax loss as restated was reduced by a benefit of $0.6 million due to the impact of SPT, but was increased bycharges of $1.7 million due to Account Reconciliations.

Net income as previously reported in 2000 increased by $11.0 due primarily to Chemical Products Segment adjustments and the AccountReconciliation adjustments, primarily Interplant and Wingfoot Commercial Tire Systems, LLC.

For the restatement of 2000, pretax income as previously reported was reduced by charges of $21.7 million due to the impact of AccountReconciliations. Pretax income increased by benefits of $19.1 million due to the impact of Chemical Products Segment, $14.5 million due toDiscount Rate, $5.8 million due to Out-of-Period and $0.6 million due to Accounting Irregularities. The tax effect of restatement adjustmentswas an expense of $7.3 million.

Net income as restated in 2000 decreased by $1.3 million due primarily to a charge to recognize certain payments we made pursuant to along term supply agreement with SPT as a capital contribution, 50% of which was attributed to our joint venture partner pursuant to theprovisions of Emerging Issues Task Force Issue 00-12, “Accounting by an Investor for Stock-Based Compensation Granted to Employees ofan Equity Method Investee”, and benefits from the tax effect of the SPT capital contribution charge, a reduction in goodwill amortizationexpense due to impact of changing exchange rates and corrections to intercompany accounts at a subsidiary in Europe.

For the restatement of 2000, pretax income as restated was reduced by $7.5 million due to SPT and increased $0.3 million due to AccountReconciliations.

(2) Refer to “Principles of Consolidation” in the Note to the Financial Statements No. 1, Accounting Policies.

(3) Net sales in 2004 increased $1.2 billion resulting from the consolidation of two businesses in accordance with FIN 46. Net Income in2004 included net after-tax charges of $133.3 million, or $0.70 per share-diluted, for rationalizations and related accelerated depreciation,general and product liability-discontinued products, insurance fire loss deductibles and asset sales. Net income in 2004 also included net after-tax benefits of $236.0 million, or $1.23 per share-diluted, from an environmental insurance settlement, net favorable tax adjustments and afavorable lawsuit settlement.

(4) Net Loss in 2003 included net after-tax charges of $515.1 million (as restated), or $2.93 per share-diluted (as restated), forrationalizations, general and product liability-discontinued products, accelerated depreciation and asset write-offs, net favorable taxadjustments, an unfavorable settlement of a lawsuit against Goodyear in Europe, and rationalization costs at Goodyear’s SPT equity affiliate. Inaddition, Engineered Products recorded account reconciliation adjustments in the restatements totaling $18.9 million or $0.11 per share in2003.

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(5) Net Loss in 2002 included net after-tax charges of $22.0 million (as restated), or $0.13 per share-diluted (as restated), for general andproduct liability — discontinued products, asset sales, rationalizations, write-off of a miscellaneous investment and a net rationalizationreversal at Goodyear’s SPT equity affiliate. Net loss in 2002 also included a non-cash charge of $1.22 billion (as restated), or $6.95 per share-diluted (as restated), to establish a valuation allowance against net federal and state deferred tax assets.

(6) Net Loss in 2001 included net after-tax charges of $187.4 million (as restated), or $1.18 per share-diluted (as restated), forrationalizations, asset sales, general and product liability — discontinued products, rationalization costs at Goodyear’s SPT equity affiliate andcosts related to a tire replacement program.

(7) Net Income in 2000 included net after-tax charges of $71.9 million (as restated), or $0.45 per share-diluted (as restated), forrationalizations, a change in Goodyear’s domestic inventory costing method from LIFO to FIFO, rationalization costs at Goodyear’s SPTequity affiliate, general and product liability — discontinued products and asset sales.

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OVERVIEW

The Goodyear Tire & Rubber Company is one of the world’s leading manufacturers of tires and rubber products with one of the mostrecognized brand names in the world. We have a broad global footprint with 99 manufacturing facilities in 28 countries. ThroughDecember 31, 2004, our business was run through seven operating segments: North American Tire; European Union Tire; Eastern Europe,Middle East and Africa Tire (“Eastern Europe Tire”) (formerly known as “Eastern Europe, Africa and Middle East Tire”), Latin AmericanTire; Asia/ Pacific Tire (formerly known as “Asia Tire”); Engineered Products; and Chemical Products.

In 2004, we had net income of $114.8 million, compared to significant net losses for 2003 and 2002 of $807.4 million (as restated) and$1,246.9 million (as restated), respectively. The net loss in 2002 included a non-cash charge of $1.22 billion (as restated) to establish avaluation allowance against our net deferred tax assets. The improvement in 2004 compared to 2003 is due in part to:

Earnings in 2004 also benefited from an increase in segment operating income in each of our operating segments, as set forth below:

In particular, our results are highly dependent upon the results of our North American Tire segment, which accounted for approximately 43%of our consolidated net sales in 2004. In recent years, North American Tire results have been negatively impacted by several factors, includingover-capacity which limits pricing leverage, weakness in the replacement tire market, increased competition from low cost manufacturers, adecline in market share and increases in medical and pension costs. In 2004, North American Tire’s segment operating income improved to$31.5 million on sales of approximately $7.9 billion. The improvement was due primarily to sustained improvement in pricing and a shift inproduct mix toward more profitable Goodyear brand tires. Additional improvement was a result of savings from rationalization programs,lower benefit costs and increased sales in the consumer replacement market and commercial markets. In addition, our second largest segment,European Union Tire, which accounted for approximately 24% of our consolidated net sales in 2004, had its segment operating incomeimprove to $252.7 million on sales of approximately $4.5 billion. Approximately 11% of the increase in segment operating income from 2003to 2004 was attributable to

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

• a decrease in net after-tax rationalization charges of $215.1 million,

• an after-tax gain from a settlement with certain insurance companies related to coverage for environmental matters of $156.6 million,

• a decrease in net after-tax charges for accelerated depreciation and asset writeoffs of $122.0 million,

• a decrease in net after-tax charges for general and product liability — discontinued products of $85.4 million (as restated), and

• an increase in net favorable tax adjustments of $10.5 million.


2004 2003 2002(In millions)Segment Operating Income

North American Tire $ 31.5 $ (130.9) $ (58.1)European Union Tire 252.7 129.8 101.1Eastern Europe, Middle East and Africa Tire 193.8 146.6 93.2Latin American Tire 251.2 148.6 107.6Asia/ Pacific Tire 61.1 49.9 43.7Engineered Products 113.2 46.8 39.0Chemical Products 177.0 120.2 88.2

currency translation, primarily the Euro. The improvement in European Union Tire also reflected improved pricing and product mix.

Although our North American segment’s performance improved in 2004, it contributed just 2.9% of our total segment operating income on41.0% of total segment sales, due primarily to legacy costs for North American retirees such as pension and other postretirement benefitexpenses. In contrast, our Latin American and Eastern Europe Tire segments represented only 13.2% of our total segment sales in 2004, whileapproximately 41.2% of our total segment operating income came from these segments. As a result, increasing competition and unexpectedchanges in government policies or currency values in these regions could have a disproportionate impact on our ability to sustain profitability.

Effective January 1, 2005, Chemical Products was integrated into North American Tire. The integration will not change how we report netincome. During 2004, $818.6 million, or 53.4%, of Chemical Products’ sales and 75.2% of its segment operating income resulted fromintercompany transactions. Beginning with the first quarter of 2005, our total segment sales will no longer reflect these intercompany sales. Inaddition, the segment operating income previously attributable to Chemical Products’ intercompany transactions will no longer be included inthe total segment operating income that we report.

Higher raw material costs, particularly for natural rubber, continue to negatively impact our results. Raw material costs in our Cost ofGoods Sold in 2004 increased by approximately $280 million from 2003. We expect that raw material costs will increase between 6% and 8%in 2005 compared to 2004.

A key indicator of our operating performance is share of sales, especially in our two largest regions, North America and Western Europe.Listed below is our estimated share of sales in each of these two regions for our two primary tire markets: Original Equipment andReplacement.

The above percentages are estimates only and are based on a combination of industry publications and surveys and internal company surveys.In North America, our 2004 share of sales in the replacement segment was comparable to our share in 2003. Our share of sales in thereplacement market increased for the Goodyear brand while share of sales for the Dunlop brand decreased. Our 2004 share of sales in theNorth American original equipment market channel declined compared to 2003 due to our selective fitment strategy in the consumer originalequipment business. In Western Europe, our 2004 share of replacement market sales decreased in all segments compared to 2003. OE marketshare increased in Western Europe due primarily to gains in the commercial market.

We continue to have a significant amount of debt. On December 31, 2004, our debt (including capital leases) on a consolidated basis was$5.68 billion, compared to $5.08 billion at December 31, 2003. As a result of our increased debt level and higher average interest rates, ourinterest expense has continued to increase, reaching $368.8 million in 2004, compared to $296.3 million in 2003 and $242.7 million (asrestated) in 2002. We anticipate undertaking refinancing activities in order to address $1.01 billion and $1.92 billion of long-term debtmaturing in 2005 and 2006, respectively. In addition, refinancing activities will address expected minimum required contributions to ourdomestic pension plans of approximately $400 million to $425 million in 2005 and $600 million to $775 million in 2006, and the need toenhance our financial flexibility and ensure adequate liquidity. In particular, our $650 million European credit facilities mature on April 30,2005 and must be either extended or refinanced. As part of our refinancing efforts, we may seek to access the capital markets, although ourcurrent credit ratings may restrict our ability to do so. Failure to obtain new financing could have a material adverse effect on our liquidity. Inaddition, we continue to review potential asset sales.

We remain subject to a Securities and Exchange Commission (“SEC”) investigation into the facts and circumstances surrounding therestatement of our historical financial statements. We are cooperating fully

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North America Western EuropeEstimated Share Estimated Share

of Sales of Sales2004 2003 2004 2003

Original Equipment 39.8% 41.3% 23.7% 23.4%Replacement 25.4% 25.4% 23.4% 23.8%

with the SEC and have provided requested information as expeditiously as possible. Because the SEC investigation is currently ongoing, theoutcome cannot be predicted at this time. In May 2004, following the conclusion of certain internal investigations initiated by our AuditCommittee, our external auditors advised us that the circumstances they previously identified to us as collectively resulting in a materialweakness in October 2003 had each individually become a material weakness. Our external auditors further identified an additional materialweakness resulting from intentional overrides of internal controls by middle managerial personnel, particularly related to European Union Tireand workers’ compensation liability in the United States, which our internal investigation had identified and brought to the auditor’s attention.Item 9A of this Form 10-K provides a discussion of remediation activities undertaken relative to these previously-identified materialweaknesses and management’s conclusions as to their status of December 31, 2004. In addition, Item 9A of this report discusses management’sassessment of the effectiveness of internal controls over financial reporting under the Sarbanes-Oxley Act of 2002. That report concludes thatour internal controls over financial reporting were ineffective as of December 31, 2004, and cites two material weaknesses in our internalcontrols. Management’s assessment of the effectiveness of internal controls has been audited by our independent registered public accountingfirm. We are currently implementing a remediation plan to address these matters.

Our results of operations, financial position and liquidity could be adversely affected in future periods by loss of market share or lowerdemand in the replacement market or from the original equipment industry, which would result in lower levels of plant utilization that wouldincrease unit costs. Also, we could experience higher raw material and energy costs in future periods. These costs, if incurred, may not berecoverable due to pricing pressures present in today’s highly competitive market. Our future results of operations are also dependent on ourability to (i) successfully implement cost reduction programs to address, among other things, higher wage and benefit costs, and (ii) wherenecessary, reduce excess manufacturing capacity. We are unable to predict future currency fluctuations. Sales and earnings in future periodswould be unfavorably impacted if the U.S. dollar strengthens against various foreign currencies, or if economic conditions deteriorate in theUnited States or Europe. Continued volatile economic conditions or changes in government policies in emerging markets could adverselyaffect sales and earnings in future periods. We may also be impacted by economic disruptions associated with global events including war, actsof terror and civil obstructions.

RESULTS OF OPERATIONS — CONSOLIDATED(All per share amounts are diluted)

Net sales in 2004 were $18.37 billion, compared to $15.12 billion (as restated) in 2003 and $13.86 billion (as restated) in 2002.

Net income of $114.8 million, $0.63 per share, was recorded in 2004. A net loss of $807.4 million (as restated), $4.61 per share (asrestated), was recorded in 2003. A net loss of $1.25 billion (as restated), $7.47 per share (as restated), was recorded in 2002, primarily resultingfrom a non-cash charge of $1.22 billion (as restated), $6.95 per share (as restated) to establish a valuation allowance against our net Federaland state deferred tax assets.

Net Sales

Net sales in 2004 increased approximately $3.2 billion from 2003. The increase was due primarily to the consolidation of two affiliates deemedto be variable interest entities, South Pacific Tyres (SPT) and Tire & Wheels Assemblies (T&WA), in January 2004. The consolidation of thesebusinesses increased net sales in 2004 by approximately $1.2 billion. Additionally, improved pricing and product mix improvements in allSBUs, primarily in North American Tire, increased 2004 net sales by approximately $799 million. Higher unit volume in North American Tire,Latin American Tire, Eastern Europe Tire and European Union Tire, as well as higher volume in Engineered Products and Chemical Products,had a favorable impact on 2004 net sales of approximately $606 million. Currency translation, mainly in Europe, favorably affected 2004 netsales by approximately $542 million.

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The following table presents our tire unit sales for the periods indicated:

Our worldwide tire unit sales in 2004 increased 4.6% from 2003. North American Tire volume in 2004 increased 1.3% from 2003, whileinternational unit sales increased 7.5%. Worldwide replacement unit sales in 2004 increased 6.0% from 2003, due primarily to theconsolidation of SPT and improvement in North American Tire, Latin American Tire and Eastern Europe Tire. Original equipment unit sales in2004 increased 1.2% from 2003, due primarily to the consolidation of SPT and improvement in Eastern Europe Tire, Latin American Tire andEuropean Union Tire. Original equipment and replacement tire unit sales in 2004 increased by approximately 0.8 million and 5.5 million units,respectively, as a result of the consolidation of SPT.

Net sales (as restated) in 2003 increased $1.2 billion from 2002 (as restated) due primarily to favorable currency translation ofapproximately $737 million, mainly in Europe. Favorable pricing and product mix in all business units, primarily Latin American Tire,Chemical Products and North American Tire, accounted for approximately $418 million of the increase in revenues. In Europe, strongreplacement sales also had a favorable impact on 2003 net sales of approximately $104 million.

Our worldwide tire unit sales in 2003 decreased 0.3% from 2002. North American Tire volume decreased 2.5% in 2003, while internationalunit sales increased 1.7%. Worldwide replacement unit sales in 2003 increased 2.0% from 2002, due to increases in all regions except NorthAmerican Tire and Asia/ Pacific Tire. Original equipment unit sales decreased 5.6% in 2003, due primarily to a decrease in North AmericanTire.

Cost of Goods Sold

Cost of goods sold (CGS) was $14.71 billion in 2004, compared to $12.50 billion in 2003 and $11.31 billion in 2002. CGS was 80.1% of salesin 2004, compared to 82.7% in 2003 and 81.6% in 2002. CGS in 2004 increased by approximately $1.0 billion due to the previously mentionedconsolidation of SPT and T&WA in accordance with FIN 46, by approximately $429 million in 2004 due to higher volume and approximately$409 million due to currency translation, primarily in Europe. Manufacturing costs related to changes in product mix increased 2004 CGS byapproximately $210 million. In addition, 2004 raw material costs increased by approximately $280 million, although conversion costs wereflat. Savings from rationalization programs totaling approximately $127 million favorably affected CGS in 2004. CGS in 2004 also includes afourth quarter benefit of approximately $23.4 million ($19.3 million after tax or $0.09 per share) resulting from a settlement with certainsuppliers of various raw materials.

CGS (as restated) in 2003 increased by approximately $554 million from 2002 due to currency movements, primarily in Europe. Inaddition, raw material costs in 2003, largely for natural and synthetic rubber, rose by approximately $335 million. CGS in 2003 also increasedby approximately $133 million due to accelerated depreciation charges, asset impairment charges and write-offs related to 2003 rationalizationactions. Manufacturing costs related to improvements in product mix, primarily in North American Tire, increased 2003 CGS byapproximately $184 million. In addition, costs increased in Latin American Tire due to inflation. Savings from rationalization programs ofapproximately $61 million, mainly in European Union Tire and North American Tire, and the change in vacation policy described below ofapproximately

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(In millions of tires)North American Tire (U.S. and Canada) 70.8 68.6 69.7International 88.8 82.0 77.9

Replacement tire units 159.6 150.6 147.6

North American Tire (U.S. and Canada) 31.7 32.6 34.1International 32.0 30.3 32.6

OE tire units 63.7 62.9 66.7

Goodyear worldwide tire units 223.3 213.5 214.3

$33 million favorably affected 2003 CGS. CGS in 2003 included $16.8 million of net charges related to Engineered Products accountreconciliations that were recorded in conjunction with the restatement.

Research and development expenditures are expensed in CGS as incurred and were $378.2 million in 2004, compared to $351.0 million (asrestated) in 2003 and $386.5 million (as restated) in 2002. Research and development expenditures in 2005 are expected to be approximately$380 to $390 million.

Selling, Administrative and General Expense

Selling, administrative and general expense (SAG) was $2.83 billion in 2004, compared to $2.37 billion in 2003 and $2.20 billion in 2002.SAG in 2004 was 15.4% of sales, compared to 15.7% in 2003 and 15.9% in 2002. SAG increased by approximately $200 million in 2004 dueto the previously mentioned consolidation of SPT and T&WA in accordance with FIN 46. SAG in 2004 included expenses of approximately$30 million for professional fees associated with the restatement and SEC investigation, and approximately $25 million for Sarbanes-Oxleycompliance. We estimate that external costs for Sarbanes-Oxley compliance will be approximately $10 million to $15 million in 2005.Currency translation, primarily in Europe, increased SAG in 2004 by approximately $101 million. Advertising expenses were approximately$46 million higher due in part to the launch of the Assurance tire in North America, and wage and benefit costs rose by approximately$46 million. SAG in 2004 benefited from approximately $28 million in savings from rationalization programs.

SAG (as restated) increased in 2003 due primarily to currency translation, mainly in Europe, of approximately $132 million and higherwages and benefits of approximately $72 million. SAG also reflected increased advertising expense, largely in European Union Tire and NorthAmerican Tire, of approximately $29 million and increased corporate consulting fees of approximately $23 million. SAG was favorablyaffected by savings from rationalization programs of approximately $74 million and by the change in vacation policy described below ofapproximately $34 million.

Other Cost Reduction Measures

During 2002, we announced the suspension of the matching contribution portion of our savings plans for all salaried associates, effectiveJanuary 1, 2003. Effective April 20, 2003, we suspended the matching contribution portion of the savings plan for bargaining unit associates,including those covered by our master contract with the USWA. We contributed approximately $38 million to the savings plans in 2002. Inaddition, we changed our vacation policy for domestic salaried associates in 2002. As a result of the changes to the policy, we did not incurvacation expense for domestic salaried associates in 2003. Vacation expense was approximately $67 million lower in 2003 compared to 2002due to the impact of this change in vacation policy.

Interest Expense

Interest expense in 2004 was $368.8 million, compared to $296.3 million in 2003 and $242.7 million (as restated) in 2002. Interest expenseincreased in 2004 from 2003 due to higher average debt levels, higher average interest rates and the April 1, 2003 restructuring and refinancingof our credit facilities. Interest expense increased in 2003 from 2002 (as restated) due to higher average debt levels. While we expect interestexpense to increase in 2005 due to higher interest rates and higher average debt levels, we expect that the $3.35 billion refinancing weannounced in February 2005 will partially offset this increase by reducing the amount over LIBOR we pay to borrow under the refinancedfacilities.

Other (Income) and Expense

Other (income) and expense was $8.2 million in 2004, compared to $263.4 million (as restated) in 2003 and $56.8 million in 2002. Other(income) and expense included accounts receivable sales fees, debt refinancing fees and commitment fees totaling $116.5 million,$99.4 million and $48.4 million in 2004, 2003 and 2002, respectively. The higher level of financing fees and financial instruments in 2003 and2004 was due to costs resulting from refinancing activities in those years. Amounts in 2004 included $20.5 million of deferred costs written-offin connection with refinancing activities in 2004. Financing fees and financial instruments included $45.6 million in 2003 related to newfacilities in that year. Refer to the Note to the Financial Statements

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No. 11, Financing Arrangements and Derivative Financial Instruments, for further information about refinancing activities. We expect to incuradditional financing fees in the future related to refinancings and capital market transactions.

Other (income) and expense included net charges for general and product liability-discontinued products totaling $52.7 million,$138.1 million (as restated) and $33.8 million in 2004, 2003 and 2002, respectively. These net charges related to asbestos personal injuryclaims and for liabilities related to Entran II claims, net of insurance recoveries. Of the $52.7 million of net expense recorded in 2004,$41.4 million related to Entran II claims ($141.4 million of expense and $100.0 million of insurance recoveries) and $11.3 million related toasbestos claims ($13.0 million of expense and $1.7 million of probable insurance recoveries). Of the $138.1 million (as restated) of net expenserecorded in 2003, $180.4 million related to Entran II claims ($255.4 million of expense and $75.0 million of insurance recoveries) and$(42.3) million (as restated) related to asbestos claims ($24.3 million of expense and $66.6 of probable insurance recoveries). Of the$33.8 million of net expense recorded in 2002, $9.8 million related to Entran II claims and $24.0 million related to asbestos claims. We did notrecord any probable insurance recoveries in 2002. Refer to the Note to the Financial Statements No. 20, Commitments and ContingentLiabilities, for further information about general and product liabilities.

Other (income) and expense in 2004 included a gain of $13.3 million ($10.3 million after tax or $0.05 per share) on the sale of assets inNorth American Tire, European Union Tire and Engineered Products. In addition, a loss of $17.5 million ($17.8 million after tax or $0.09 pershare) was recorded in 2004 on the sale of corporate assets and assets in North American Tire, European Union Tire and Chemical Products,including a loss of $14.5 million ($15.6 million after tax or $0.08 per share) on the write-down of the assets of our natural rubber plantations inIndonesia. Other (income) and expense in 2004 also included a charge of $11.7 million ($11.6 million after tax or $0.07 per share) forinsurance fire loss deductibles related to fires at our facilities in Germany, France and Thailand. During 2004, approximately $36 million ininsurance recoveries were received related to these fire losses.

Other (income) and expense in the 2004 fourth quarter included a benefit of $156.6 million ($156.6 million after tax or $0.75 per share)resulting from a settlement with certain insurance companies. We will receive $159.4 million ($156.6 million plus imputed interest of$2.8 million) in installments in 2005 and 2006 in exchange for releasing the insurers from certain past, present and future environmentalclaims. A significant portion of the costs incurred by us related to these claims had been recorded over the prior years.

Other (income) and expense in 2003 included a loss of $17.6 million ($8.9 million after tax or $0.05 per share) on the sale of20,833,000 shares of common stock of Sumitomo Rubber Industries, Ltd. in the second quarter. A loss of $14.4 million ($13.2 million after taxor $0.08 per share) was recorded in 2003 on the sale of assets in Engineered Products, North American Tire and European Union Tire. A gainof $6.9 million ($5.8 million after tax or $0.04 per share) was recorded in 2003 resulting from the sale of assets in Asia/ Pacific Tire, LatinAmerican Tire and European Union Tire.

Other (income) and expense in 2002 included gains of $28.0 million ($23.7 million after tax or $0.14 per share) resulting from the sale ofassets in Latin American Tire, Engineered Products and European Union Tire. The write-off of a miscellaneous investment of $4.1 million($4.1 million after tax or $0.02 per share) was also included in Other (income) and expense in 2002.

For further information, refer to the Note to the Financial Statements No. 4, Other (Income) and Expense.

Foreign Currency Exchange

Net foreign currency exchange loss was $23.4 million in 2004, compared to a net loss of $40.7 million (as restated) in 2003 and a net gain of$8.7 million (as restated) in 2002. Foreign currency exchange loss in 2004 was lower than in 2003 (as restated), as 2003 (as restated) reflectedthe weakening of the Brazilian Real versus the U.S. dollar. The loss in 2003 (as restated) included approximately $48 million of increasedlosses versus 2002 due to currency movements on U.S. dollar-denominated monetary items in Brazil and Chile. Net

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foreign currency exchange gain in 2002 (as restated) benefited by approximately $16 million from currency movements on U.S. dollar-denominated monetary items in Brazil. A loss of approximately $8 million resulting from currency movements on U.S. dollar-denominatedmonetary items in Argentina was also recorded in 2002.

Equity in (Earnings) Losses of Affiliates

Equity in earnings of affiliates in 2004 was income of $8.4 million, compared to a loss of $14.5 million (as restated) in 2003 and a loss of$13.8 million (as restated) in 2002. The improvement in 2004 was due primarily to improved results at Rubbernetwork.com and theconsolidation of South Pacific Tyres (SPT). Our share of losses at SPT was included in 2003 and 2002. SPT was consolidated effectiveJanuary 1, 2004, pursuant to the provisions of FIN 46.

Income Taxes

For 2004, we recorded tax expense of $207.9 million on income before income taxes and minority interest in net income of subsidiaries of$380.5 million. For 2003, we recorded tax expense of $117.1 million (as restated) on a loss before income taxes and minority interest in netincome of subsidiaries of $657.5 million (as restated). For 2002, we recorded tax expense of $1.23 billion (as restated) on income beforeincome taxes and minority interest in net income of subsidiaries of $36.6 million (as restated).

The difference between our effective tax rate and the U.S. statutory rate was due primarily to our continuing to maintain a full valuationallowance against our net Federal and state deferred tax assets. In 2002 we recorded a non-cash charge of $1.22 billion (as restated) ($6.95 pershare (as restated)) to establish this valuation allowance.

Income tax expense in 2004 includes net favorable tax adjustments totaling $60.1 million. These adjustments related primarily to thesettlement of prior years’ tax liabilities.

In 2002, we determined that earnings of certain international subsidiaries would no longer be permanently reinvested in working capital.Accordingly, we recorded a provision of $50.2 million for the incremental taxes incurred or to be incurred upon inclusion of such earnings inFederal taxable income.

The American Job Creation Act of 2004 (the Act) was signed into law in October 2004 and replaces an export incentive with a deductionfrom domestic manufacturing income. As we are both an exporter and a domestic manufacturer and in a U.S. tax loss position, this changeshould have no material impact on our income tax provision. The Act also provides for a special one-time tax deduction of 85% of certainforeign earnings that are repatriated no later than 2005. We have started an evaluation of the effects of the repatriation provision. We do notanticipate that the repatriation of foreign earnings under the Act would provide an overall tax benefit to us. However, we do not expect to beable to complete this evaluation until our 2005 tax position has been more precisely determined and the U.S. Congress or the U.S. TreasuryDepartment provide additional guidance on certain of the Act’s provisions. Any repatriation of earnings under the Act is not expected to have amaterial impact on our results of operations, financial position or liquidity.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognizeliabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional taxes will be due. If weultimately determine that payment of these amounts is unnecessary, we reverse the liability and recognize a tax benefit during the period inwhich we determine that the liability is no longer necessary. We also recognize tax benefits to the extent that it is probable that our positionswill be sustained when challenged by the taxing authorities. As of December 31, 2004, we had not recognized tax benefits of approximately$180 million relating to the reorganization of legal entities in 2001. Pursuant to the reorganization, our tax payments have been reduced byapproximately $67 million through December 31, 2004. Should the ultimate outcome be unfavorable, we would be required to make a cashpayment for all tax reductions claimed as of that date.

For further information, refer to the Note to the Financial Statements No. 14, Income Taxes.

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Rationalization Activity

To maintain global competitiveness, we have implemented rationalization actions over the past several years for the purpose of reducing excesscapacity, eliminating redundancies and reducing costs. We recorded net rationalization costs of $55.6 million in 2004, $291.5 million in 2003and $5.5 million in 2002. As of December 31, 2004, we had reduced employment levels by approximately 6,800 from January 1, 2002 andapproximately 18,000 since January 1, 2000, primarily as a result of rationalization activities.

2004

In 2004, net charges were recorded totaling $55.6 million ($52.0 million after-tax or $0.27 per share). The net charges included reversals of$39.2 million ($32.2 million after tax or $0.17 per share) related to reserves from rationalization actions no longer needed for their originallyintended purpose, and new charges of $94.8 million ($84.2 million after tax or $0.44 per share). Included in the $94.8 million of new chargesare $77.4 million for plans initiated in 2004. These plans consisted of warehouse, manufacturing and sales and marketing associate reductionsin Engineered Products, a farm tire manufacturing consolidation in European Union Tire, administrative associate reductions in NorthAmerican Tire, European Union Tire and corporate functional groups, and manufacturing, sales and research and development associatereductions in Chemical Products. Approximately 1,400 associates will be released under programs initiated in 2004, of which approximately640 were released by December 31, 2004. The costs of the 2004 actions consisted of $40.1 million related to future cash outflows, primarily forassociate severance costs, $31.9 million in non-cash pension curtailments and postretirement benefit costs, and $5.4 million of noncancelablelease costs and other exit costs. Costs in 2004 also included $16.3 million related to plans initiated in 2003, consisting of $13.7 million fornoncancelable lease costs and other exit costs and $2.6 million of associate-related costs. The reversals are primarily the result of lower thaninitially estimated associate severance costs of $34.9 million and lower leasehold and other exit costs of $4.3 million. Of the $34.9 million ofassociate severance cost reversals, $12.0 million related to previously-approved plans in Engineered Products that were reorganized into the2004 warehouse, manufacturing, and sales and marketing associate reductions.

In 2004, $75.0 million was incurred primarily for associate severance payments, $34.6 million for non-cash pension curtailments andpostretirement benefit costs, and $22.9 million was incurred for noncancelable lease costs and other costs. The remaining accrual balance forall programs was $67.6 million at December 31, 2004, substantially all of which is expected to be utilized within the next 12 months. Inaddition, accelerated depreciation charges totaling $10.4 million were recorded in 2004 for fixed assets that will be taken out of service inconnection with certain rationalization plans initiated in 2004 and 2003 in European Union Tire, Latin American Tire and Engineered Products.During 2004, $7.7 million was recorded as CGS and $2.7 million was recorded as SAG.

2003

In 2003, net charges were recorded totaling $291.5 million ($267.1 million after tax or $1.52 per share). The net charges included reversals of$15.7 million ($14.3 million after tax or $0.08 per share) related to reserves from rationalization actions no longer needed for their originallyintended purpose, and new charges of $307.2 million ($281.4 million after tax or $1.60 per share). The 2003 rationalization actions consistedof manufacturing, research and development, administrative and retail consolidations in North America, Europe and Latin America. Of the$307.2 million of new charges, $174.8 million related to future cash outflows, primarily associate severance costs, and $132.4 million relatedprimarily to non-cash special termination benefits and pension and retiree benefit curtailments. Approximately 4,400 associates will be releasedunder the programs initiated in 2003, of which approximately 2,700 were exited in 2003 and approximately 1,500 were exited during 2004.The reversals are primarily the result of lower than initially estimated associate-related payments of approximately $12 million, favorablesublease contract signings in the European Union of approximately $3 million and lower contract termination costs in the United States ofapproximately $1 million. These reversals do not represent changes in the plans as originally approved by management.

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As part of the 2003 rationalization program, we closed our Huntsville, Alabama tire facility in the fourth quarter of 2003. Of the$307.2 million of new rationalization charges in 2003, approximately $138 million related to the Huntsville closure and were primarily forassociate-related costs, including severance, special termination benefits and pension and retiree benefit curtailments. The Huntsville closurealso resulted in charges to CGS of approximately $35 million for asset impairments and $85 million for accelerated depreciation and the write-off of spare parts. In addition, 2003 CGS included charges totaling approximately $8 million to write-off construction in progress related to theresearch and development rationalization plan, and approximately $5 million for accelerated depreciation on equipment taken out of service atEuropean Union Tire’s facility in Wolverhampton, England.

2002

In 2002, net charges were recorded totaling $5.5 million ($6.4 million after tax or $0.03 per share). The net charges included reversals of$18.0 million ($14.3 million after tax or $0.09 per share) for reserves from rationalization actions no longer needed for their originally intendedpurpose. In addition, new charges were recorded totaling $26.5 million ($23.0 million after tax or $0.14 per share) and other credits wererecorded totaling $3.0 million ($2.3 million after tax or $0.02 per share). The 2002 rationalization actions consisted of a manufacturing facilityconsolidation in Europe, the closure of a mold manufacturing facility and a plant consolidation in the United States, and administrativeconsolidations. Of the $26.5 million charge, $24.2 million related to future cash outflows, primarily associate severance costs, and $2.3 millionrelated to non-cash write-offs of equipment taken out of service in the Engineered Products and North American Tire Segments.

General

Upon completion of the 2004 plans, we estimate that annual operating costs will be reduced by approximately $110 million (approximately$50 million CGS and approximately $60 million SAG), of which $9 million was realized during 2004. We estimate that CGS and SAG werereduced in 2004 by approximately $120 million and $64 million, respectively, as a result of the implementation of the 2003 plans. Plan savingshave been substantially offset by higher SAG and conversion costs including increased compensation and benefit costs.

The remaining reserve for costs related to the completion of our rationalization actions was $67.6 million and $143.0 million atDecember 31, 2004 and 2003, respectively.

For further information, refer to the Note to the Financial Statements No. 3, Costs Associated with Rationalization Programs.

RECENTLY ISSUED ACCOUNTING STANDARDS

We have adopted the provisions of Emerging Issues Task Force (EITF) Issue No. 04-08, “The Effect of Contingently Convertible Debt onDiluted Earnings per Share” (EITF 04-08). This pronouncement requires shares issuable under contingent conversion provisions in debtagreements to be included in the calculation of diluted earnings per share, if the impact is dilutive, regardless of whether the provisions of thecontingent features had been met. The provisions of EITF 04-08 are effective for reporting periods ending after December 15, 2004.Retroactive restatement of diluted earnings per share is required.

There are contingent conversion features included in our $350 million 4% Convertible Senior Notes due 2034, issued on July 2, 2004.Accordingly, average shares outstanding — diluted in 2004 included approximately 29.1 million contingently issuable shares in each of thethird and fourth quarters and 14.5 million shares in the full year. Net income per share — diluted in 2004 included an earnings adjustmentrepresenting avoided after-tax interest expense of $3.5 million in each of the third and fourth quarters, reflecting the assumed conversion.Diluted earnings per share in 2004 were reduced by approximately $0.02 in the third quarter, $0.08 in the fourth quarter and $0.01 in the fullyear as a result of the adoption of this standard.

The Financial Accounting Standards Board (FASB) issued Staff Position No. 129-1, “Disclosure Requirements under FASB StatementNo. 129, Disclosure of Information about Capital Structure, Relating to Contingently Convertible Securities” (FSP 129-1). FSP 129-1 clarifiedcertain disclosure requirements of

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the contingent conversion features of convertible securities. FSP 129-1 was effective immediately upon its release. Our disclosures related toour $350 million 4% Convertible Senior Notes due 2034 are in compliance with the disclosure requirements of FSP 129-1.

The FASB issued, on May 19, 2004, FASB Staff Position No. FAS 106-2, “Accounting and Disclosure Requirements Related to theMedicare Prescription Drug, Improvement and Modernization Act of 2003” (FSP 106-2). FSP 106-2 provides guidance on accounting for theeffects of the new Medicare prescription drug legislation by employers whose prescription drug benefits are actuarially equivalent to the drugbenefit under Medicare Part D. It also contains basic guidance on related income tax accounting, and complex rules for transition that permitvarious alternative prospective and retroactive transition approaches. Based on the proposed regulations, during 2004 we determined that theoverall impact of the adoption of FSP 106-2 was a reduction of expense in 2004 and in future annual periods of approximately $2 million on anannual basis. The adoption of FSP 106-2 also reduced our accumulated postretirement benefit obligation by approximately $19.7 millionduring 2004. On January 21, 2005 final regulations were issued. Based on the clarifications provided in the final regulations, our net periodicpostretirement cost is expected to be lower by approximately $50 million in 2005, and the accumulated postretirement benefit obligation isexpected to be reduced by approximately $475 million to $525 million during 2005.

The FASB has issued Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123R). Underthe provisions of SFAS 123R, companies are required to measure the cost of employee services received in exchange for an award of equityinstruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during whichan employee is required to provide service in exchange for the award, usually the vesting period. We must adopt the provisions of SFAS 123Ras of the beginning of the first interim reporting period that begins after June 15, 2005 (i.e. the third quarter of 2005), with early adoptionencouraged. SFAS 123R applies to all awards granted, modified, repurchased or cancelled by us after June 30, 2005.

SFAS 123R allowed companies various transition approaches. We are currently assessing the timing and the transition method that we willuse for the adoption of SFAS 123R. We expect to recognize additional compensation cost of approximately $3 million to $4 million per quarterthat was not previously required to be recognized, beginning in the quarter in which we first implement the provisions of SFAS 123R. We donot expect the adoption of SFAS 123R to have a material impact on our results of operations, financial position or liquidity.

On October 22, 2004, the American Jobs Creation Act of 2004 (the Act) was signed into law. The Act, when fully phased-in, includes a taxdeduction of up to 9 percent of the lesser of (a) qualified production activities income or (b) taxable income, both as defined in the Act. Inaddition, the Act includes a special one-time tax deduction of 85 percent of certain foreign earnings that are repatriated no later than in the2005 tax year. The FASB issued two staff positions to address the accounting for income taxes in conjunction with the Act. FASB StaffPosition No. 109-1, “Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified ProductionActivities provided by the American Jobs Creation Act of 2004” (FSP 109-1), was effective upon its release on December 22, 2004. FSP 109-1requires us to treat the tax deduction as a special deduction instead of a change in tax rate that would have impacted our existing deferred taxbalances. Based on current earnings levels, this provision should not have a material impact on our income tax provision.

FASB Staff Position No. 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within theAmerican Jobs Creation Act of 2004” (FSP 109-2), established accounting and disclosure requirements for enterprises in the process ofevaluating, or completing the evaluation of, the repatriation provision of the Act. We have started an evaluation of the effects of the repatriationprovision. We do not anticipate repatriating foreign earnings under the Act, as it may not provide an overall tax benefit. However, we do notexpect to be able to complete this evaluation until our 2005 tax position has been more precisely determined and U.S. Congress or theU.S. Treasury Department provide additional clarifying language on key elements of the provision. If we ultimately determine to elect torepatriate earnings under the Act, it would not have a material impact on our results of operations, financial position or liquidity.

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The FASB has issued Statement of Financial Accounting Standards No. 151, “Inventory Costs — an amendment of ARB No. 43,Chapter 4” (SFAS 151). The provisions of SFAS 151 are intended to eliminate narrow differences between the existing accounting standards ofthe FASB and the International Accounting Standards Board (IASB) related to inventory costs, in particular, abnormal amounts of idle facilityexpense, freight, handling costs and spoilage. SFAS 151 requires that these costs be recognized as current period charges regardless of theextent to which they are considered abnormal. The provisions of SFAS 151 are effective for inventory costs incurred during fiscal yearsbeginning after June 15, 2005. The adoption of SFAS 151 is not expected to have a material impact on our results of operations, financialposition or liquidity.

The FASB has issued Statement of Financial Accounting Standards No. 153, “Exchanges of Nonmonetary Assets — an amendment ofAPB Opinion No. 29” (SFAS 153). The provisions of SFAS 153 are intended to eliminate narrow differences between the existing accountingstandards of the FASB and the IASB related to the value on which the measurement of nonmonetary exchanges should be based. APB OpinionNo. 29 (APB 29) provides that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Anexception was provided in APB 29 to measure exchanges of similar productive assets based on book values. SFAS 153 eliminates theexception in APB 29 for similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do nothave commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to changesignificantly as a result of the exchange. The provisions of SFAS 153 are effective for nonmonetary exchanges occurring in periods beginningafter June 15, 2005. The adoption of SFAS 153 is not expected to have a material impact on our results of operations, financial position orliquidity.

The EITF issued Topic 03-06, “Participating Securities and the Two — Class Method under FASB Statement No. 128”, (EITF 03-06).EITF 03-06 requires the use of the two-class method of computing EPS for enterprises with participating securities or multiple classes ofcommon stock. The provisions of EITF 03-06 are effective for fiscal periods beginning after March 31, 2004. The adoption of EITF 03-06 didnot have an impact on our EPS.

UNION AGREEMENT

Our master contract with the USWA committed us to consummate the issuance or placement of at least $250 million of debt securities and atleast $75 million of equity or equity-linked securities by December 31, 2003 or the USWA would have the right to file a grievance and strike.On March 12, 2004, we completed a private offering of $650 million in senior secured notes due 2011, consisting of $450 million of11% senior secured notes and $200 million of floating rate notes at LIBOR plus 8%. On July 2, 2004, we completed a private offering of$350 million in 4% convertible senior notes due 2034 (an equity-linked security). Under the master contract we also committed to launch, byDecember 1, 2004, a refinancing of our U.S. term loan and revolving credit facilities due in April 2005, with loans or securities having a termof at least three years. We completed the refinancing of the U.S. term loan in March 2004 and refinanced the U.S. revolving credit facility inAugust 2004. In the event of a strike by the USWA, our operations and liquidity could be materially adversely affected.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimatesand assumptions that affect the amounts reported in the consolidated financial statements and related notes to the financial statements. Actualresults could differ from those estimates. Significant estimates include:

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• general and product liability and other litigation

• environmental liabilities

• workers’ compensation

• recoverability of goodwill and other intangible assets

On an ongoing basis, management reviews its estimates, based on currently available information. Changes in facts and circumstances mayalter such estimates and affect results of operations and financial position in future periods.

General and Product Liability and Other Litigation. General and product liability and other recorded litigation liabilities are recorded based onmanagement’s analysis that a loss arising from these matters is probable. If the loss can be reasonably estimated, we record the amount of theestimated loss. If the loss is estimated using a range and no point within the range is more probable than another, we record the minimumamount in the range. As additional information becomes available, any potential liability related to these matters is assessed and the estimatesare revised, if necessary. Loss ranges are based upon the specific facts of each claim or class of claim and were determined after review by ourin-house counsel, external counsel or a combination thereof. Court rulings on our cases or similar cases could impact our assessment of theprobability and estimate of our loss, which could have an impact on our reported results of operations, financial position and liquidity. Werecord insurance recovery receivables related to our litigation claims when it is probable 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 allegedexposure to asbestos 1) in certain rubber encapsulated products or aircraft braking systems manufactured by us in the past, or 2) in certain ofour facilities. Typically, these lawsuits have been brought against multiple defendants in state and Federal courts.

Due to the potential exposure that the asbestos claims represent, we began using an independent asbestos valuation firm in connection withthe preparation of our 2003 financial statements. The firm was engaged to review our existing reserves for pending claims, determine whetheror not we could make a reasonable estimate of the liability associated with unasserted asbestos claims, and review our method of determiningour receivables from probable insurance recoveries.

Prior to the fourth quarter of 2003, our estimate for asbestos liability was based upon a review of the various characteristics of the pendingclaims by an experienced asbestos counsel. In addition, at that time we did not have an accrual for unasserted claims, as sufficient informationwas deemed to be not available to reliably estimate such an obligation prior to the fourth quarter of 2003.

After reviewing our recent settlement history by jurisdiction, law firm, disease type and alleged date of first exposure, the valuation firmcited two primary reasons for us to refine our valuation assumptions. First, in calculating our estimated liability, the valuation firm determinedthat we had previously assumed that we would resolve more claims in the foreseeable future than is likely based on our historical record andnationwide trends. As a result, we now assume that a smaller percentage of pending claims will be resolved within the predictable future.Second, the valuation firm determined that it was not possible to estimate a liability for as many non-malignancy claims as we had done in thepast. As a result, our current estimated liability includes fewer liabilities associated with non-malignancy claims than were included prior toDecember 2003.

A significant assumption in our estimated liability is that it represents our estimated liability through 2008, which represents the period overwhich the liability can be reasonably estimated. Due to the difficulties in making these estimates, analysis based on new data and/or changedcircumstances arising in the future could result in an increase in the recorded obligation in an amount that cannot be reasonably estimated, andthat increase could be significant. We had recorded liabilities for both asserted and unasserted claims, inclusive of defense costs, totaling$119.3 million at December 31, 2004 and $134.7 million (as restated) at December 31, 2003. The portion of the liability associated withunasserted asbestos claims was $37.9 million at December 31, 2004 and $54.4 million (as restated) at December 31, 2003. At December 31,2004, our liability with respect to asserted claims and related defense costs was $81.4 million, compared to $80.3 million (as restated) atDecember 31, 2003.

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• deferred tax asset valuation allowance

• pension and other postretirement benefits

• allowance for doubtful accounts

We maintain primary insurance coverage under coverage-in-place agreements as well as excess liability insurance with respect to asbestosliabilities. We record a receivable with respect to such policies when we determine that recovery is probable and we can reasonably estimatethe amount of a particular recovery.

Prior to 2003, we did not record a receivable for expected recoveries from excess carriers in respect of asbestos-related matters. We haveinstituted coverage actions against certain of these excess carriers. After consultation with our outside legal counsel and giving consideration torelevant factors, including the ongoing legal proceedings with certain of our excess coverage insurance carriers, their financial viability, theirlegal obligations and other pertinent facts, we determined an amount we expect is probable of recovery from such carriers. Accordingly, werecorded a receivable during 2003, which represents an estimate of recovery from our excess coverage insurance carriers relating to potentialasbestos-related liabilities.

The valuation firm also reviewed our method of valuing receivables recorded for probable insurance recoveries. Based upon the modelemployed by the valuation firm, as of December 31, 2004, (i) we had recorded a receivable related to asbestos claims of $107.8 million,compared to $121.3 million (as restated) at December 31, 2003, and (ii) we expect that approximately 90% of asbestos claim related losseswould be recoverable up to our accessible policy limits through the period covered by the estimated liability. The receivable recorded consistsof an amount we expect to collect under coverage-in-place agreements with certain primary carriers as well as an amount we believe isprobable of recovery from certain of our excess coverage insurance carriers. Of this amount, $9.4 million and $11.8 million (as restated) wasincluded in Current assets as part of Accounts and notes receivable at December 31, 2004 and 2003, respectively.

In addition to our asbestos claims, we are a defendant in various lawsuits related to our Entran II rubber hose product. During 2004, weentered into a settlement agreement to address a substantial portion of our Entran II liabilities. The claims associated with the plaintiffs thatopted not to participate in the settlement will be evaluated in a manner consistent with our other litigation claims. We had recorded liabilitiesrelated to Entran II claims totaling $307.2 million at December 31, 2004 and $246.1 million at December 31, 2003.

Environmental Matters. We had recorded liabilities totaling $39.5 million at December 31, 2004 and $32.6 million (as restated) atDecember 31, 2003 for anticipated costs related to various environmental matters, primarily the remediation of numerous waste disposal sitesand certain properties sold by us. Our environmental liabilities are based upon our best estimate of the cost to remediate the identifiedlocations. Our process for estimating the costs entails management selecting the best remediation alternative based upon either an internalanalysis or third party studies and proposals. Our estimates are based upon the current law and approved remediation technology. The actualcost that will be incurred may differ from these estimates based upon changes in environmental laws and standards, approval of newenvironmental remediation technology, and the extent to which other responsible parties ultimately contribute to the remediation efforts.

Workers’ Compensation. We had recorded liabilities, on a discounted basis, totaling $230.7 million and $195.7 million (as restated) foranticipated costs related to workers’ compensation at December 31, 2004 and December 31, 2003, respectively. The costs include an estimateof expected settlements on pending claims, defense costs and a provision for claims incurred but not reported. These estimates are based on ourassessment of potential liability using an analysis of available information with respect to pending claims, historical experience, and currentcost trends. The amount of our ultimate liability in respect of these matters may differ from these estimates. We periodically update our lossdevelopment factors based on actuarial analyses. The increase in the liability from 2003 to 2004 was due primarily to an increase in reservesfor existing claims, reflecting revised estimates of our ultimate liability in these cases, and updated actuarial assumptions related to unassertedclaims. At December 31, 2004, the liability was discounted using the risk-free rate of return.

For further information on general and product liability and other litigation, environmental matters and workers’ compensation, refer to theNote to the Financial Statements No. 20, Commitments and Contingencies.

Goodwill and Other Intangible Assets. Generally accepted accounting principles do not permit goodwill or other intangible assets withindefinite lives to be amortized. Rather, these assets must be tested annually for

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impairment. The impairment testing would have to be performed more frequently than on an annual basis as a result of the occurrence of apotential indicator of impairment.

For purposes of our annual impairment testing, we determine the estimated fair values of our reporting units using a valuation methodologybased upon an EBITDA multiple using comparable companies in the global automotive industry sector and a discounted cash flow approach.The EBITDA multiple is adjusted if necessary to reflect local market conditions and recent transactions. The EBITDA of the reporting unitsare adjusted to exclude certain non-recurring or unusual items and corporate charges. EBITDA is based upon a combination of historical andforecasted results. Significant decreases in EBITDA in future periods could be an indication of a potential impairment. Additionally, valuationmultiples in the global automotive industry sector would have to decline in excess of 25% to indicate a potential goodwill impairment.

Goodwill totaled $720.3 million and other intangible assets totaled $162.6 million at December 31, 2004. We completed our 2004 annualvaluation during the third quarter of 2004. The valuation indicated that there was no impairment of goodwill or other intangible assets withindefinite lives.

Deferred Tax Asset Valuation Allowance. At December 31, 2004, we had valuation allowances aggregating $2.1 billion against all of our netFederal and state and some of our foreign net deferred tax assets.

The valuation allowance was calculated in accordance with the provisions of SFAS 109 which requires an assessment of both negative andpositive evidence when measuring the need for a valuation allowance. In accordance with SFAS 109, evidence, such as operating results duringthe most recent three-year period, is given more weight than our expectations of future profitability, which are inherently uncertain. OurU.S. losses in recent periods represented sufficient negative evidence to require a full valuation allowance against our net Federal and statedeferred tax assets under SFAS 109. We intend to maintain a valuation allowance against our net deferred tax assets until sufficient positiveevidence exists to support realization of such assets.

Pensions and Other Postretirement Benefits. Our recorded liability for pensions and postretirement benefits other than pensions is based on anumber of assumptions, including:

Certain of these assumptions are determined with the assistance of outside actuaries. Assumptions about future health care costs, lifeexpectancies, retirement rates and future compensation levels are based on past experience and anticipated future trends, including anassumption about inflation. The discount rate for our U.S. plans is derived from a portfolio of corporate bonds from issuers rated AA- or higherby S&P. The total cash flows provided by the portfolio are similar to the timing of our expected benefit payment cash flows. The long term rateof return on plan assets is based on the compound annualized return of our U.S. pension fund over periods of 15 years or more, asset classreturn expectations and long-term inflation. These assumptions are regularly reviewed and revised when appropriate, and changes in one ormore of them could affect the amount of our recorded net expenses for these benefits. If the actual experience differs from expectations, ourfinancial position, results of operations and liquidity in future periods could be affected.

The discount rate used in determining the recorded liability for our U.S. pension and postretirement plans was 5.75% for 2004, compared to6.25% for 2003 and 6.75% for 2002. The decrease in the rate was due primarily to lower interest rates on long-term highly rated corporatebonds. As a result, interest cost included in our net periodic pension cost increased to $421.0 million in 2004, compared to $399.8 million in2003 and $385.0 million in 2002. Interest cost included in our net periodic postretirement cost was $188.1 million in

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• future health care costs,

• maximum company-covered benefit costs,

• life expectancies,

• retirement rates,

• discount rates,

• long term rates of return on plan assets, and

• future compensation levels.

2004, compared to $174.0 million in 2003 and $186.9 million in 2002. Actual return on plan assets was 12.1% in 2004, compared to expectedreturns of 8.5%.

The following table presents the sensitivity of our projected pension benefit obligation, accumulated other postretirement obligation,shareholders’ equity, and 2005 expense to the indicated increase/decrease in key assumptions:

For further information on pensions, refer to the Note to the Financial Statements No. 13, Pensions, Other Postretirement Benefits and SavingsPlans.

Allowance for Doubtful Accounts. The allowance for doubtful accounts represents an estimate of the losses expected from our accounts andnotes receivable portfolio. The level of the allowance is based on many quantitative and qualitative factors, including historical loss experienceby region, portfolio duration, economic conditions and credit risk quality. The adequacy of the allowance is assessed quarterly.

Different assumptions or changes in economic conditions would result in changes to the allowance for doubtful accounts. The allowancefor doubtful accounts totaled $144.4 million and $128.9 million (as restated) at December 31, 2004 and 2003, respectively.

RESULTS OF OPERATIONS — SEGMENT INFORMATION

Segment information reflects our strategic business units (SBUs), which are organized to meet customer requirements and global competition.The Tire business is managed on a regional basis. Engineered Products and Chemical Products are managed on a global basis.

Results of operations in the Tire and Engineered Products segments were measured based on net sales to unaffiliated customers andsegment operating income. Results of operations of Chemical Products were measured based on net sales (including sales to other SBUs) andsegment operating income. Segment operating income included transfers to other SBUs. Segment operating income was computed as follows:Net Sales less CGS (excluding accelerated depreciation charges, asset impairment charges and asset write-offs) and SAG (including certainallocated corporate administrative expenses). Segment operating income also included equity in (earnings) losses of most unconsolidatedaffiliates. Equity in (earnings) losses of certain unconsolidated affiliates, including SPT (in 2003 and 2002) and Rubbernetwork.com, was notincluded in segment operating income. Segment operating income did not include the previously discussed segment rationalization charges,asset sales and certain asset impairments and write-offs.

Total segment operating income was $1.08 billion in 2004, $511.0 million (as restated) in 2003 and $414.7 million (as restated) in 2002.Total segment operating margin (segment operating income divided by segment sales) in 2004 was 5.6%, compared to 3.2% (as restated) in2003 and 2.9% in 2002.

Effective January 1, 2004, we consolidated our investments in T&WA and SPT pursuant to the provisions of FIN 46R. In 2003 and 2002,results of operations of T&WA and SPT were reflected in our Consolidated Statement of Operations using the equity method. Equity inearnings (loss) of T&WA was included in North American Tire segment operating income in those years.

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+/- Change at December 31, 2004(Dollars in millions)Pensions: Change PBO/ABO Equity 2005 ExpenseAssumption:

Discount rate +/-0.5% $ 260 $ 260 $ 14Actual return on assets +/-1.0% N/A 30 32Estimated return on assets +/-1.0% N/A N/A 30Postretirement Benefits:Assumption:Discount rate +/-0.5% $ 148 N/A $ 4Health care cost trends — total cost +/-1.0% 14 N/A 2

Management believes that total segment operating income is useful because it represents the aggregate value of income created by ourSBUs and excludes items not directly related to the SBUs for performance evaluation purposes. Total segment operating income is the sum ofthe individual SBUs’ segment operating income, as determined in accordance with Statement of Financial Accounting Standard No. 131,“Disclosures about Segments of an Enterprise and Related Information”. Refer to the Note to the Financial Statements No. 18, BusinessSegments, for further information and for a reconciliation of total segment operating income to Income (Loss) before Income Taxes.

North American Tire

North American Tire unit sales in 2004 increased 1.3 million units or 1.3% from 2003 but decreased 1.3 million units or 1.3% from 2002.Replacement unit sales in 2004 increased 2.2 million units or 3.2% from 2003 and 1.1 million units or 1.6% from 2002. Original equipmentvolume in 2004 decreased 0.9 million units or 2.6% from 2003 and 2.4 million units or 7.1% from 2002. Replacement unit volume in 2004increased from 2003 due primarily to higher sales of Goodyear brand tires. OE unit sales in 2004 decreased from 2003 due primarily to aslowdown in the automotive industry that resulted in lower levels of vehicle production and our selective fitment strategy in the consumeroriginal equipment business.

Net sales in 2004 increased 16.4% from 2003 and 17.2% from 2002. Net sales in 2004 increased $523.8 million from 2003 due to theconsolidation of T&WA in January 2004 in accordance with FIN 46. Sales were also favorably affected by approximately $312 millionresulting from favorable pricing and product mix, due primarily to strong sales of Goodyear brand consumer tires and commercial tires. Inaddition, net sales benefited by approximately $271 million due to increased volume, mainly in the commercial OE and consumer replacementand retail markets.

Net sales in 2003 increased 0.6% from 2002. Net sales increased in 2003 due to improved pricing and product mix of approximately$118 million, primarily in the consumer replacement and original equipment markets, and lower product related adjustments of approximately$10 million. The production slowdown by automakers and a decrease in the consumer replacement custom brand channel contributed to lowervolume of approximately $86 million in 2003.

During 2002, we supplied approximately 500 thousand tire units with an operating income benefit of approximately $10 million inconnection with the Ford tire replacement program. Ford ended the replacement program on March 31, 2002.

Operating income in 2004 increased significantly from 2003 and 2002. Operating income in 2004 rose from 2003 (as restated) dueprimarily to improvements in pricing and product mix of approximately $201 million, primarily in the consumer and commercial replacementmarkets. In addition, operating income benefited by approximately $65 million from increased volume, primarily in the consumer replacement,commercial OE and retail markets. Operating income was favorably affected by savings from rationalization programs totaling approximately$78 million. Operating income in 2004 was unfavorably impacted by increased raw material costs of approximately $99 million and highertransportation costs of $32 million. SAG in 2004 was approximately $58 million higher than in 2003, due in part to increased advertising costsof approximately $25 million and increased compensation and benefits costs of approximately $12 million.

Operating income in 2003 (as restated) decreased significantly from 2002 (as restated). Higher raw materials costs of approximately$151 million, higher manufacturing conversion costs of approximately $86 million, primarily related to contractual increases, and lowerconsumer volume of approximately

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2004 2003 2002(In millions)Tire Units 102.5 101.2 103.8Net Sales $ 7,854.6 $ 6,745.6 $ 6,703.0Operating Income (Loss) 31.5 (130.9) (58.1)Operating Margin 0.4% (1.9)% (0.9)%

$12 million adversely impacted 2003 operating income. Operating income benefited by approximately $66 million from savings related torationalization programs and by approximately $37 million due to lower research and development expenditures. Operating income in 2003 (asrestated) included a benefit of approximately $51 million from the previously mentioned change in the domestic salaried associates’ vacationpolicy, and $20 million of insurance recoveries related to general and product liabilities.

Operating income did not include net rationalization charges (credits) totaling $3.5 million in 2004, $191.9 million in 2003 and$(1.9) million in 2002. In addition, operating income did not include (gains) losses on asset sales of $(1.3) million in 2004 and $3.8 million in2003, and the write-off of a miscellaneous investment totaling $4.1 million in 2002.

European Union Tire

European Union Tire unit sales in 2004 increased 0.5 million units or 0.8% from 2003 and 1.3 million units or 2.0% from 2002. Replacementunit sales in 2004 approximated 2003 levels but increased 2.6 million units or 6.4% from 2002. Original equipment volume in 2004 increased0.5 million units or 2.4% from 2003 but decreased 1.3 million units or 7.0% from 2002. Replacement unit sales in 2004 were flat, reflectingproduct shortages, especially in the first half of 2004. OE unit sales in 2004 increased from 2003 due primarily to increased sales of consumertires and improved conditions in the commercial market.

Net sales in 2004 increased 14.1% from 2003 and 34.8% from 2002. Net sales in 2004 increased from 2003 due primarily to a benefit ofapproximately $382 million from currency translation, mainly from the Euro. Net sales rose by approximately $130 million due to improvedpricing and product mix, due primarily to price increases and a shift in mix towards higher priced premium brands. Additionally, higher OEvolume increased 2004 net sales by approximately $41 million.

Net sales in 2003 (as restated) increased 18.1% from 2002. Net sales increased in 2003 compared to 2002 due primarily to a benefit ofapproximately $587 million from currency translation, mainly from the Euro. In addition, net sales rose by approximately $42 million due tohigher volume in the consumer replacement market. Negative pricing and product mix in retail operations adversely impacted net sales in 2003by approximately $30 million.

Operating income in 2004 increased 94.7% from 2003 and 150.0% from 2002. Operating income in 2004 rose from 2003 due primarily toimprovements in pricing and product mix of approximately $135 million. In addition, higher sales volume benefited operating income byapproximately $9 million. In addition, to higher production and productivity improvements increased 2004 operating income by approximately$4 million. Savings from rationalization actions benefited operating income by approximately $47 million. Operating income rose byapproximately $13 million from currency translation. Operating income was adversely impacted by higher raw material costs totalingapproximately $42 million. SAG rose by approximately $39 million, due primarily to higher selling and advertising expenses related topremium brand tires.

Operating income in 2003 (as restated) increased 28.4% from 2002. Operating income in 2003 increased due primarily to savings fromrationalization programs of approximately $57 million, and the benefit of higher production tonnage and increased productivity totalingapproximately $17 million. Operating income rose by approximately $26 million due to the favorable impact of currency translation and byapproximately $10 million from improved volume, particularly in the replacement market. Improved pricing and product mix, mainly in theconsumer replacement and original equipment markets, benefited operating income in 2003 by approximately $5 million. Operating incomewas adversely impacted by higher raw material costs of

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2004 2003 2002(In millions)Tire Units 62.8 62.3 61.5Net Sales $ 4,476.2 $ 3,921.5 $ 3,319.4Operating Income 252.7 129.8 101.1Operating Margin 5.6% 3.3% 3.0%

approximately $50 million, higher pension costs of approximately $18 million and higher SAG costs due to increased advertising ofapproximately $14 million. In addition, operating income in 2003 included a charge of approximately $13 million for an unfavorable courtsettlement.

Operating income did not include net rationalization charges (credits) totaling $23.1 million in 2004, $54.3 million in 2003 and$(0.4) million in 2002. In addition, operating income did not include (gains) losses on asset sales of $(6.2) million in 2004, $1.5 million (asrestated) in 2003 and $(13.7) million (as restated) in 2002.

European Union Tire’s results are highly dependent upon the German market, which accounted for 37% of European Union Tire’s net salesin 2004. Accordingly, results of operations in Germany will have a significant impact on European Union Tire’s future performance and couldalso have an impact on our other segments.

Eastern Europe, Middle East and Africa Tire

Eastern Europe, Middle East and Africa Tire (“Eastern Europe Tire”) unit sales in 2004 increased 1.0 million units or 5.2% from 2003 and2.8 million units or 16.8% from 2002. Replacement unit sales in 2004 increased 0.6 million units or 4.0% from 2003 and 2.1 million units or15.6% from 2002. Original equipment volume in 2004 increased 0.4 million units or 10.7% from 2003 and 0.7 million units or 22.3% from2002. Replacement unit sales in 2004 increased from 2003 due primarily to growth in emerging markets. OE unit sales in 2004 increased from2003 due primarily to growth in the automotive industry in Turkey and South Africa.

Net sales in 2004 increased 19.2% from 2003 and 58.5% from 2002. Net sales in 2004 increased from 2003 due primarily to a benefit ofapproximately $102 million from currency translation, primarily in South Africa, Poland and Slovenia. In addition, net sales rose byapproximately $97 million on improved pricing and mix. Higher overall volume, mainly due to improved economic conditions, increased netsales by $41 million. Negative results in our South African retail business adversely impacted net sales by approximately $32 million, whichreflected the net impact of volume, pricing, product mix and currency translation.

Net sales in 2003 increased 33.0% from 2002. Net sales in 2003 increased from 2002 due primarily to a benefit of approximately$156 million from currency translation, primarily in South Africa and Slovenia. Net sales rose by approximately $62 million on higher volumein both the consumer replacement and original equipment markets. In addition, improved pricing, due primarily to a shift in mix toward higher-priced winter and high performance tires, benefited net sales by approximately $48 million.

Operating income in 2004 increased 32.2% from 2003 and 107.9% from 2002. Operating income in 2004 rose from 2003 due primarily to abenefit of approximately $62 million resulting from price increases and a shift in mix toward high performance tires. Operating incomeincreased by approximately $16 million on higher volume, primarily in Turkey, Russia, South Africa and Central Eastern Europe, and byapproximately $11 million from the favorable effect of currency translation. Operating income was adversely impacted by higher raw materialand conversion costs totaling approximately $28 million. In addition, SAG expense was approximately $16 million higher resulting primarilyfrom increased selling activity in growing and emerging markets.

Operating income in 2003 increased 57.3% from 2002. Operating income increased in 2003 due primarily to a benefit of approximately$33 million from price increases and a shift in mix toward winter and high performance tires. Operating income also benefited byapproximately $24 million from higher volume and approximately $15 million from currency translation, mainly in South Africa and Slovenia,and improved

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(In millions)Tire Units 18.9 17.9 16.1Net Sales $ 1,279.0 $ 1,073.4 $ 807.1Operating Income 193.8 146.6 93.2Operating Margin 15.2% 13.7% 11.5%

conversion costs of approximately $13 million. Operating income was adversely impacted by higher raw material costs of approximately$12 million and higher SAG expense of approximately $12 million, primarily for wages, benefits and advertising.

Operating income did not include net rationalization charges (credits) totaling $3.6 million in 2004, $(0.1) million in 2003 and$(0.4) million in 2002. In addition, operating income did not include losses on asset sales of $0.1 million in 2004.

Latin American Tire

Latin American Tire unit sales in 2004 increased 0.9 million units or 5.0% from 2003 but decreased 0.3 million units or 1.6% from 2002.Replacement unit sales in 2004 increased 0.8 million units or 5.3% from 2003 and 0.8 million units or 5.8% from 2002. Original equipmentvolume in 2004 increased 0.1 million units or 3.9% from 2003 but decreased 1.1 million units or 20.1% from 2002. Replacement unit sales in2004 increased from 2003 due primarily to improved commercial and consumer demand. OE unit sales in 2004 increased slightly from 2003,reflecting improved commercial volume.

Net sales in 2004 increased 19.6% from 2003 and 31.4% from 2002. Net sales in 2004 increased from 2003 due primarily to a benefit ofapproximately $134 million from price increases and improved product mix in the replacement market. Net sales rose by approximately$60 million on higher volume and approximately $7 million from currency translation.

Net sales in 2003 increased 9.8% from 2002. Net sales increased in 2003 due primarily to a benefit of approximately $212 million fromimproved pricing and product mix. Currency translation, mainly in Brazil and Venezuela, adversely impacted net sales by approximately$79 million, and lower volume, primarily in the consumer and commercial original equipment markets, adversely impacted net sales byapproximately $38 million.

Operating income in 2004 increased 69.0% from 2003 and 133.5% from 2002. Operating income in 2004 increased from 2003 dueprimarily to a benefit of approximately $126 million from improved pricing and product mix in the replacement market. Operating incomebenefited by approximately $13 million from higher volume and $5 million from savings from rationalization programs. Operating income wasadversely impacted by higher raw material and conversion costs totaling approximately $41 million and approximately $2 million fromcurrency translation. In addition, SAG expense rose by approximately $11 million, due primarily to increased wages and benefits andadvertising expenses.

Operating income in 2003 (as restated) increased 38.1% from 2002. Operating income in 2003 rose due primarily to a benefit ofapproximately $134 million from improved pricing and product mix, and a benefit of approximately $3 million from higher volume. Operatingincome was adversely impacted by higher raw material costs of approximately $50 million and by approximately $20 million from currencytranslation, primarily in Brazil and Venezuela. In addition, conversion costs related to utilities rose by approximately $12 million and SAGexpense was higher by approximately $11 million, due primarily to expenses related to airships, doubtful accounts and wages and benefits.

Operating income did not include net rationalization charges (credits) totaling $(1.7) million in 2004 and $10.0 million in 2003. In addition,operating income did not include (gains) losses on asset sales of $(2.0) million in 2003 and $(13.7) million in 2002.

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2004 2003 2002(In millions)Tire Units 19.6 18.7 19.9Net Sales $ 1,245.4 $ 1,041.0 $ 947.7Operating Income 251.2 148.6 107.6Operating Margin 20.2% 14.3% 11.4%

Asia/ Pacific Tire

Asia/ Pacific Tire unit sales in 2004 increased 6.1 million units or 45.5% from 2003 and 6.5 million units or 52.4% from 2002. Replacementunit sales in 2004 increased 5.4 million units or 60.0% from 2003 and 5.4 million units or 58.4% from 2002. Original equipment volume in2004 increased 0.7 million units or 15.6% from 2003 and 1.1 million units or 37.4% from 2002. Unit sales in 2004 increased by 5.5 millionreplacement units and 0.8 million OE units due to the consolidation of South Pacific Tyres, as discussed below. Excluding the impact of SPT,replacement unit volume increased slightly, and OE volume decreased due primarily to lower consumer volume.

Effective January 1, 2004, Asia/ Pacific Tire includes the operations of South Pacific Tyres, an Australian Partnership, and South PacificTyres N.Z. Limited, a New Zealand company (together, “SPT”), joint ventures 50% owned by Goodyear and 50% owned by Ansell Ltd. SPTis the largest tire manufacturer in Australia and New Zealand, with two tire manufacturing plants and 14 retread plants. SPT sells Goodyear-brand, Dunlop-brand and other house and private brand tires through its chain of 417 retail stores, commercial tire centers and independentdealers.

Net sales in 2004 increased 125.5% from 2003 and 146.9% from 2002. Net sales in 2004 increased from 2003 due primarily to theconsolidation of SPT, which benefited 2004 sales by $707.4 million. Net sales also rose by approximately $32 million due to improved pricingand product mix, but were adversely impacted by lower volume excluding SPT of $18 million.

Net sales in 2003 increased 9.5% from 2002. Net sales increased in 2003 due primarily to a benefit of approximately $29 million fromincreased volume, largely a result of strong original equipment demand. Net sales also increased by approximately $16 million due to currencytranslation, primarily in India and Australia.

Operating income in 2004 increased 22.6% from 2003 and 40.0% from 2002. Operating income in 2004 increased from 2003 due primarilyto a benefit of approximately $25 million from price increases and improved product mix, and a reduction in conversion costs of approximately$4 million. Operating income was adversely impacted by higher raw material costs totaling approximately $22 million and approximately$3 million from lower volume. In addition, SAG expenses rose by approximately $6 million. The consolidation of SPT increased Asia/ PacificTire operating income by approximately $11.7 million in 2004; however, it reduced operating margin to 4.7% in 2004 from 8.6% in 2003.

Operating income in 2003 (as restated) increased 14.2% from 2002. Operating income in 2003 increased due primarily to a benefit ofapproximately $14 million from improved consumer and farm product mix and higher selling prices in both replacement and originalequipment markets. In addition, operating income increased by approximately $8 million due to currency translation and approximately$7 million due to increased volume in the original equipment market. Operating income was favorably affected in 2003 by approximately$3 million due to increased sales of miscellaneous products and improved equity income. Operating income was adversely impacted by higherraw material costs of approximately $27 million.

Operating income did not include net rationalization charges (credits) totaling $(1.7) million in 2002. In addition, operating income did notinclude (gains) losses on asset sales of $(2.1) million in 2003.

Prior to 2004, results of operations of SPT were not included in Asia/ Pacific Tire, and were included in the Consolidated Statement ofOperations using the equity method.

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2004 2003 2002(In millions)Tire Units 19.5 13.4 13.0Net Sales $ 1,312.0 $ 581.8 $ 531.3Operating Income 61.1 49.9 43.7Operating Margin 4.7% 8.6% 8.2%

SPT operating income in 2003 increased substantially from 2002 due primarily to the benefits of the rationalization programs in the prioryears. SPT operating income did not include net rationalization charges (credits) totaling $8.7 million in 2003 and $3.2 million in 2002. SPTdebt totaled $255.2 million at December 31, 2003 of which $72.0 million was payable to Goodyear.

Engineered Products

Engineered Products sales in 2004 increased 22.1% from 2003 and 30.4% from 2002. Net sales in 2004 increased from 2003 due primarily to abenefit of approximately $194 million resulting from increased volume and approximately $37 million from improved pricing and product mix,each largely as a result of strong sales to military and OE industrial and heavy duty customers. Net sales also rose by approximately$35 million from currency translation. We expect military sales to remain strong in 2005, but anticipate a reduction in such sales in 2006.

Net sales in 2003 increased 6.9% from 2002. Net sales increased in 2003 due primarily to a benefit of approximately $39 million fromcurrency translation. Net sales rose by approximately $30 million on increased military sales and approximately $8 million on improvedpricing and mix.

Operating income in 2004 increased 141.9% from 2003 and 190.3% from 2002. Operating income in 2004 increased from 2003 dueprimarily to a benefit of approximately $75 million from increased volume, largely in military and industrial products. Operating income alsoreflected savings from rationalization programs of approximately $24 million. SAG was approximately $18 million higher and conversioncosts rose approximately $10 million. Operating income in 2003 (as restated) was adversely impacted by charges totaling approximately$19 million related to account reconciliation adjustments in the restatement reported in our 2003 Form 10-K.

Operating income in 2003 (as restated) increased 20.0% from 2002. Operating income in 2003 increased due primarily to benefits ofapproximately $8 million from increased military sales, lower raw material costs of approximately $5 million, and currency translation ofapproximately $5 million. The previously mentioned change in the domestic salaried vacation policy also favorably affected 2003 operatingincome by approximately $8 million. Operating income in 2003 was adversely impacted by unfavorable price/mix of approximately$11 million due to increased sales of original equipment and heavy duty product, and higher SAG costs (excluding the impact of the vacationpolicy change) of approximately $9 million, primarily related to increased sales efforts. As previously mentioned, operating income in 2003included charges totaling approximately $19 million related to account reconciliation adjustments in previously-mentioned restatementreported in our 2003 Form 10-K.

Operating income did not include net rationalization charges totaling $22.8 million in 2004, $29.4 million in 2003 and $4.6 million in 2002.In addition, operating income did not include (gains) losses on asset sales of $(2.5) million in 2004, $6.3 million in 2003 and $(0.6) million in2002.

Chemical Products

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2004 2003 2002(In millions)

Net Sales $ 1,470.3 $ 1,203.7 $ 1,126.3Operating Income 113.2 46.8 39.0Operating Margin 7.7% 3.9% 3.5%


2004 2003 2002(In millions)

Net Sales $ 1,532.6 $ 1,220.8 $ 940.2Operating Income 177.0 120.2 88.2Operating Margin 11.5% 9.8% 9.4%

Chemical Products sales in 2004 increased 25.5% from 2003 and 63.0% from 2002. Approximately 65% of the total pounds of syntheticmaterials sold by Chemical Products in 2004 were to our other segments, compared to 63% in 2003 and 65% in 2002. Natural rubber plantationoperations and a rubber processing facility are included in Chemical Products. In November 2004, we entered into an agreement to sell ournatural rubber plantations in Indonesia for approximately $65 million, pending government approvals.

Net sales in 2004 increased from 2003 due primarily to a benefit of approximately $145 million from increased net selling prices resultingfrom increased base prices and the pass through of rising raw material costs. In addition, net sales rose by approximately $86 million on highervolume and approximately $11 million due to currency translation. Natural rubber operations contributed approximately $70 million to therevenue increase in 2004.

Net sales in 2003 increased from 2002 due primarily to a benefit of approximately $145 million from higher net selling prices resultingfrom the pass through of increased raw material and energy costs. Net sales also increased by approximately $42 million from increasedsynthetic rubber volume, approximately $76 million from higher pricing and volume from the natural rubber operations and approximately$18 million from currency translation, primarily the euro.

Operating income in 2004 increased 47.3% from 2003 and 100.7% from 2002. Operating income in 2004 increased from 2003 dueprimarily to benefits of approximately $75 million from higher net selling prices and improved product mix, approximately $15 million fromhigher volume, approximately $7 million from improved conversion costs and approximately $11 million from currency translation. Thenatural rubber operations contributed approximately $7 million of the improvement through pricing and volume. Operating income wasadversely impacted by higher raw material costs totaling approximately $61 million.

Operating income in 2003 (as restated) increased 36.3% from 2002. Operating income in 2003 increased from 2002 due primarily tobenefits of approximately $145 million from higher net selling prices, approximately $18 million from currency translation and approximately$16 million from improved pricing and volume for natural rubber operations. Increased raw material costs of approximately $127 million andincreased conversion costs of approximately $22 million adversely impacted 2003 operating income.

Operating income did not include net rationalization charges totaling $4.9 million in 2004. In addition, operating income did not include aloss of $14.5 million on the write-down of the assets of our natural rubber plantations in Indonesia in 2004.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2004, we had $1.97 billion in cash and cash equivalents as well as $1.12 billion of unused availability under our variouscredit agreements, compared to $1.55 billion and $335.0 million, respectively, at December 31, 2003. Cash and cash equivalents do not includerestricted cash. Restricted cash included the settlement fund balance related to Entran II litigation as well as cash deposited in support of tradeagreements and performance bonds, and historically has included cash deposited in support of borrowings incurred by subsidiaries. AtDecember 31, 2004, cash balances totaling $152.4 million were subject to such restrictions, compared to $23.9 million at December 31, 2003.

Our ability to service our debt depends in part on the results of operations of our subsidiaries and upon the ability of our subsidiaries tomake distributions of cash to various other entities in our consolidated group, whether in the form of dividends, loans or otherwise. In recentyears, our foreign subsidiaries have been a significant source of cash flow. In certain countries where we operate, transfers of funds into or outof such countries by way of dividends, loans or advances are generally or periodically subject to various restrictive governmental regulationsand there may be adverse tax consequences to such transfers. In addition, certain of our credit agreements and other debt instruments restrictthe ability of foreign subsidiaries to make distributions of cash. At December 31, 2004, approximately $221 million of net assets were subjectto such restrictions, compared to approximately $259 million at December 31, 2003.

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Operating Activities

Net cash provided by (used in) operating activities was $719.8 million in 2004, compared to $(288.8) million (as restated) in 2003 and$686.0 million (as restated) in 2002. Cash flows from operating activities in 2004 were favorably affected by higher segment operating margin,reflecting improved results in North American Tire and savings from rationalization programs. Cash flows from operating activities in 2003included a net outflow of $839.6 million from the sale of accounts receivable, due primarily to the termination of our domestic accountsreceivable securitization program.

Net income from the sale of goods and services is the principal component of our cash flows from operating activities. Net income includedcharges and credits related to cash flows that occurred in prior years (for example, depreciation charges for prior year capital expenditures), andcash flows that are anticipated to occur in future years (for example, expenses recorded in the current period for future pension payments). Thereconciliation of net income to cash flows from operating activities included the following adjustments for non-cash items, as presented on theConsolidated Statement of Cash Flows:

Depreciation in 2004 included approximately $10.4 million of accelerated depreciation charges related to assets taken out of service pursuantto certain rationalization plans. Depreciation in 2003 included approximately $78 million of accelerated depreciation charges related to the2003 Huntsville and Wolverhampton restructuring plans. Amortization totaled $4.5 million, $4.8 million and $4.3 million in 2004, 2003 and2002, respectively.

Amortization of debt issuance costs increased due primarily to costs incurred related to our debt restructuring and refinancing activities.

The deferred tax provision in 2002 included a non-cash charge of $1.22 billion (as restated) to establish a tax valuation allowance againstour net Federal and state deferred tax assets.

In the fourth quarter of 2004 we recorded a benefit of $156.6 million resulting from a settlement with certain insurance companies. We willreceive $159.4 million ($156.6 million plus imputed interest of $2.8 million) in installments in 2005 and 2006 in exchange for releasing theinsurers from certain past, present and future environmental claims. A significant portion of the costs incurred by us related to these claims hasbeen recorded in prior years.

Cash flows from operating activities also included the impact of activities related to certain of our accounts receivable securitization andfactoring programs and to our contributions to our pension plans.

The net cash outflow from the sale of accounts receivable in 2004 was due primarily to the termination of certain of our off-balance-sheetaccounts receivable securitization programs in Europe. As previously

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2004 2003 2002(In millions)

Depreciation and amortization $ 628.7 $ 691.6 $ 605.3Amortization of debt issuance costs 86.1 50.3 17.9Deferred tax provision (4.5) (9.9) 1,131.2Non-cash rationalization charges 32.4 132.4 2.4(Gain) loss on asset sales 7.5 16.4 (23.6)Fire loss deductible expense 11.6 — —Insurance settlement (156.6) — —Minority interest and equity earnings 47.5 39.3 71.4


(In millions)Net cash flows from the sale of accounts receivable $ (117.7) $ (839.6) $ 34.8

mentioned, the net cash outflow from the sale of accounts receivable in 2003 was due primarily to the termination of our domestic off-balance-sheet accounts receivable securitization program.

We expect our minimum pension contribution requirements to increase in future periods. For further information, refer to the discussion underthe caption “Commitments and Contingencies”.

The reconciliation of net income to cash flows from operating activities also included adjustments for changes in operating assets andliabilities. Significant adjustments in 2004 included:

Cash payments for operating activities included the following:

Cash payments for interest increased due primarily to higher average debt levels, increased interest rates and the April 1, 2003 restructuringand refinancing of our credit facilities.

Investing Activities

Net cash used in investing activities was $525.2 million during 2004, compared to $236.0 million in 2003 and $540.3 million in 2002. Capitalexpenditures were as follows:

Capital expenditures in 2004 were $518.6 million, of which $294.0 million was used on projects to increase capacity and improve productivityand quality, and $224.6 million was used for tire molds and various other projects. Capital expenditures were reduced in 2003 in response tobusiness conditions and limitations prescribed by certain of our borrowing arrangements. Capital expenditures are expected to approximate$640 million in 2005, including approximately $350 million for manufacturing improvements and approximately $290 million for molds andvarious other projects.

At December 31, 2004, we had binding commitments for raw materials and investments in land, buildings and equipment of$755.9 million, and off-balance-sheet financial guarantees written and other commitments totaling $18.2 million.

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(In millions)Pension contributions $ (264.6) $ (115.7) $ (226.9)

• a negative adjustment for Accounts receivable, reflecting increased levels of customer financing due in part to higher tire unit sales,pricing improvements and a shift in mix toward replacement tires (which generally have longer terms than OE tires).

• a positive adjustment for Accounts payable, reflecting increased levels of financing by our suppliers due in part to increased raw materialcosts,

• a positive adjustment for long term Compensation and benefits, due in part to non-cash charges for an increase in anticipated benefitpayments in future periods resulting primarily from changes in actuarial assumptions, and

• a positive adjustment for Other long term liabilities, due primarily to non-cash charges for anticipated payments in future periods relatedto general and product liabilities.


2004 2003 2002(In millions)Interest $ 356.5 $ 282.5 $ 259.7Taxes 201.3 73.0 125.9Rationalizations 132.5 214.8 61.2


(In millions)Capital expenditures $ 518.6 $ 375.4 $ 458.1

Cash used for asset acquisitions was $61.8 million in 2004. In June 2004, we exercised our call option and a subsidiary in Luxembourgpurchased the remaining 20% of outstanding shares that it did not already own of Sava Tires d.o.o. (Sava Tires), a joint venture tiremanufacturing company in Kranj, Slovenia, for $51.4 million. On July 13, 2004, we purchased the remaining 50% ownership interest that wedid not already own of Däckia, a major tire retail group in Sweden, for $10.4 million.

Cash provided by asset dispositions in 2003 was $104.4 million, and included net proceeds from the sale of assets in the United States of$85.8 million, in Europe of $14.5 million, in Latin America of $2.0 million and in Asia of $2.1 million. Included in the United States total of$85.8 million is $82.9 million for the sale of 20.8 million shares of SRI. Cash used for asset acquisitions in 2003 included the purchase ofArkansas Best Corporation’s 19% ownership interest in Wingfoot Commercial Tire Systems, LLC (“Wingfoot”) for $71.2 million. Wingfootwas a joint venture company formed by Goodyear and Arkansas Best Corporation to sell and service commercial truck tires, provide retreadservices and conduct related business.

Cash provided by asset dispositions in 2002 was $55.6 million, and included net proceeds from the sale of assets in the United States of$1.3 million, in Europe of $28.7 million and in Latin America of $23.3 million. Cash used for asset acquisitions in 2002 was $54.8 million. Weacquired additional shares of our tire manufacturing subsidiary in Slovenia at a cost of $38.9 million. We also acquired additional shares of ourtire manufacturing subsidiary in Turkey at a cost of $15.9 million.

For further information on investing activities, refer to the Note to the Financial Statements No. 8, Investments.

Financing Activities

Net cash provided by (used in) financing activities was $189.1 million in 2004, compared to $1,087.1 million in 2003 and $(167.5) million in2002. Consolidated debt and our ratio of debt to debt and equity follows:

Consolidated debt increased in 2004 from 2003 primarily due to certain financing actions in 2004 including the completion of a $350 millionconvertible senior notes offering as well as the termination of off-balance-sheet account receivable securitization programs in Europe and theconsolidation of VIEs as defined by FIN 46. Consolidated debt increased in 2003 from 2002 due primarily to the April 1, 2003 restructuringand refinancing of our credit facilities, including the termination of our domestic off-balance-sheet accounts receivable securitization program.

Credit Sources

We had available committed and uncommitted credit facilities totaling $7.30 billion at December 31, 2004, of which $1.12 billion wereunused, compared to $5.90 billion and $335.0 million, respectively, at December 31, 2003.

U.S. Deposit-Funded Credit Facility

On August 18, 2004, we refinanced our then-existing $680 million U.S. revolving credit facility with a U.S. deposit-funded credit facility,which is a synthetic revolving credit and letter of credit facility. Pursuant to the refinancing, the lenders deposited the entire $680 million of thefacility in an account held by the administrative agent, and those funds are used to support letters of credit or borrowings on a revolving basis,in each case subject to customary conditions. The lenders under the new facility will receive annual compensation on the amount of the facilityequivalent to 450 basis points over LIBOR, which includes commitment fees on the entire amount of the commitment (whether drawn orundrawn) and a usage fee on the amounts drawn.

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December 31,Restated

2004 2003 2002(In millions)Consolidated debt $ 5,679.6 $ 5,086.0 $ 3,642.7Debt to debt and equity 98.7% 100.6% 94.3%

The full amount of the facility is available for the issuance of letters of credit or for revolving loans. The $500.7 million of letters of credit thatwere outstanding under the U.S. revolving credit facility as of June 30, 2004 were transferred to the deposit-funded credit facility. As ofDecember 31, 2004, there were no borrowings under the facility and $509.9 million of letters of credit issued under the facility. The facilitymatures on September 30, 2007.

Our obligations under the deposit-funded credit facility are guaranteed by most of our wholly-owned U.S. subsidiaries and by our wholly-owned Canadian subsidiary, Goodyear Canada Inc. Our obligations under this facility and our subsidiaries’ obligations under the relatedguarantees are secured by collateral that includes:

The bond agreement for our Swiss franc bonds due 2006 limits our ability to use our U.S. tire and automotive parts manufacturing facilitiesas collateral for secured debt without triggering a requirement that holders of the bonds be secured on an equal and ratable basis. Themanufacturing facilities indicated above were pledged to ratably secure the bonds to the extent required by the bond agreement. However, theaggregate amount of our debt secured by these manufacturing facilities is limited to 15% of our positive consolidated shareholders’ equity.Consequently, the security interests granted to the lenders under the U.S. senior secured funded credit facility are not required to be shared withthe holders of debt outstanding under our other existing unsecured bond indentures.

The deposit-funded credit facility contains certain covenants that, among other things, limit our ability to incur additional unsecured andsecured indebtedness (including a limit, subject to certain exceptions, of €275 million in accounts receivable transactions), make investmentsand sell assets beyond specified limits. The facility prohibits us from paying dividends on our common stock. We must also maintain aminimum consolidated net worth (as such term is defined in the deposit-funded credit facility) of at least $2.0 billion for quarters ending in2005 and the first quarter of 2006, and $1.75 billion for each quarter thereafter through September 30, 2007. We are not permitted to allow theratio of Consolidated EBITDA to consolidated interest expense to fall below a ratio of 2.00 to 1.00 for any period of four consecutive fiscalquarters. In addition, our ratio of consolidated senior secured indebtedness to Consolidated EBITDA is not permitted to be greater than 4.00 to1.00 at any time.

The deposit-funded credit facility also limits the amount of capital expenditures we may make to $500 million in 2004, 2005 and 2006, and$375 million in 2007 (through September 30, 2007). The amounts of permitted capital expenditures may be increased by the amount of netproceeds retained by us from permitted asset sales and equity and debt issuances. In addition, unused capital expenditures may be carried overinto the next year. As a result of certain activities, the capital expenditure limit for 2004 was increased from $500 million to approximately$1.10 billion. Our capital expenditures for 2004 totaled $518.6 million. The capital expenditure carryover from 2004 was $603.0 million, andin the absence of any other transactions, the limit for 2005 will be $1.10 billion.

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• subject to certain exceptions, perfected first-priority security interests in the equity interests in our U.S. subsidiaries and 65% of theequity interests in our non-European foreign subsidiaries;

• a perfected second-priority security interest in 65% of the capital stock of Goodyear Finance Holding S.A., a Luxembourg company;

• perfected first-priority security interests in and mortgages on our U.S. corporate headquarters and certain of our U.S. manufacturingfacilities;

• perfected third-priority security interests in all accounts receivable, inventory, cash and cash accounts pledged as security under our asset-based facilities; and

• perfected first-priority security interests in substantially all other tangible and intangible assets, including equipment, contract rights andintellectual property.

$1.95 Billion Senior Secured Asset-Based Credit Facilities

In April 2003, we entered into senior secured asset-based credit facilities in an aggregate principal amount of $1.30 billion, consisting of a$500 million revolving credit facility and an $800 million term loan facility. At December 31, 2004, we had no borrowings outstanding underthe revolving credit facility and $800 million drawn against the term loan asset-based facility, compared to $389.0 million and $800.0 million,respectively, at December 31, 2003. The facilities mature on March 31, 2006. On February 20, 2004, we added a $650 million term loantranche to the existing $1.30 billion facility, which was fully drawn as of December 31, 2004. The $650 million tranche was used partially toprepay our U.S. term loan facility, to repay other indebtedness, and for general corporate purposes. The facilities mature on March 31, 2006.

We pay an annual commitment fee of 75 basis points on the undrawn portion of the commitments under the revolving facility. Loans underthe facilities (other than the $650 million term loan tranche) bear interest at LIBOR plus 400 basis points or an alternative base rate (the higherof JPMorgan’s prime rate or the federal funds rate plus 50 basis points) plus 300 basis points. The $650 million term loan tranche bears interestat LIBOR plus 450 basis points or an alternative base rate plus 350 basis points. The basis points on the $650 million term loantranche decrease to 425 and 325 points, respectively, if the ratings of the tranche improve to at least B1 or better from Moody’s and B+ orbetter from Standard & Poors.

A borrowing base (equal to the sum of a percentage of certain accounts receivable and inventory) limits availability under the facilities(other than the $650 million term loan tranche). The calculation of the borrowing base and reserves against inventory and accounts receivableincluded in the borrowing base are subject to adjustment from time to time by the administrative agent and the majority lenders in theirdiscretion (not to be exercised unreasonably). Adjustments would be based on the results of ongoing collateral and borrowing base evaluationsand appraisals. A $50 million availability block further limits availability under the facilities. If at any time the amount of outstandingborrowings under the facilities (other than $650 million term loan tranche) exceeds the borrowing base, we are required to prepay borrowingssufficient to eliminate the excess or maintain compensating deposits with the agent bank.

The facilities are collateralized by first and second priority security interests in all accounts receivable and inventory of Goodyear and itsdomestic and Canadian subsidiaries (excluding accounts receivable and inventory related to our North American joint venture with SRI). Inaddition, effective as of February 20, 2004, collateral included second and third priority security interests on the other assets securing theU.S. facilities. The facilities contain certain representations, warranties and covenants which are materially the same as those in theU.S. facilities, with capital expenditures of $500 million and $150 million permitted in 2005 and 2006 (through March 31), respectively. Inaddition, we must maintain a minimum consolidated net worth of at least $2.0 billion for quarters ending in 2005 and 2006 (through March 31,2006).

Consolidated EBITDA

Under our primary credit facilities, we are not permitted to allow the ratio of Consolidated EBITDA to consolidated interest expense to fallbelow 2.00 to 1.00 (as such terms are defined in each of the primary credit facilities) for any period of four consecutive fiscal quarters. Inaddition, our ratio of consolidated senior secured indebtedness to Consolidated EBITDA (as such terms are defined in each of the restructuredcredit facilities) is not permitted to be greater than 4.00 to 1.00 at any time.

Consolidated EBITDA is a non-GAAP financial measure that is presented not as a measure of operating results, but rather as a measure ofour ability to service debt. It should not be construed as an alternative to either (i) income before income taxes, or (ii) cash flows fromoperating activities. Our failure to comply with the financial covenants in the primary credit facilities could have a material adverse effect onour liquidity and operations. Accordingly, management believes that the presentation of Consolidated EBITDA will provide investors withinformation needed to assess our ability to continue to comply with these covenants. The following table presents the calculation of EBITDAand Consolidated EBITDA for the periods indicated. Other companies may calculate similarly titled measures differently than we do. Certainline items are presented as defined in the primary credit facilities, and do not reflect amounts as presented in the Consolidated Statement ofIncome.

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$650 Million Senior Secured European Facilities

Our joint venture in Europe, Goodyear Dunlop Tires Europe B.V. and subsidiaries (GDTE) is party to a $250 million senior secured revolvingcredit facility and a $400 million senior secured term loan facility. These facilities mature on April 30, 2005. At December 31, 2004, therewere no borrowings outstanding under the senior secured revolving credit facility and the secured term loan facility was fully drawn. Each ofthese facilities was fully drawn at December 31, 2003.

GDTE pays an annual commitment fee of 75 basis points on the undrawn portion of the commitments under the European revolvingfacility. GDTE may obtain loans under the European facilities bearing interest at LIBOR plus 400 basis points or an alternative base rate (thehigher of JPMorgan’s prime rate or the federal funds rate plus 50 basis points) plus 300 basis points.

The collateral pledged under the European facilities includes:

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2004 2003 2002(In millions)Net Income (Loss) $ 114.8 $ (807.4) $ (1,246.9)Consolidated Interest Expense 378.8 314.6 270.8U.S. and Foreign Taxes on Income 207.9 117.1 1,227.9Depreciation and Amortization Expense 628.7 691.6 605.3EBITDA 1,330.2 315.9 857.1

Credit Agreement Adjustments:Other (Income) and Expense (13.1) 287.4 4.7Foreign Currency Exchange 23.4 40.7 (8.7)Equity in (Earnings) Losses of Affiliates (8.4) 14.5 13.8Minority Interest in Net Income (Loss) of Subsidiaries 57.8 32.8 55.6Non-cash Extraordinary Gains — — —Non-cash Non-recurring Items — 54.7 —Rationalizations 55.6 291.5 5.5Less Excess Cash Rationalization Charges (1) — (12.9) —Consolidated EBITDA $ 1,445.5 $ 1,024.6 $ 928.0

(1) “Excess Cash Rationalization Charges” is defined in our April 1, 2003 credit facilities and only contemplates cash expenditures withrespect to rationalization charges recorded on the Consolidated Statement of Income after April 1, 2003. Amounts incurred prior toApril 1, 2003 were not included.

• all of the capital stock of Goodyear Finance Holding S.A. and certain subsidiaries of GDTE,

• a perfected first-priority interest in and mortgages on substantially all the tangible and intangible assets of GDTE in the United Kingdom,Luxembourg, France and Germany, including certain accounts receivable, inventory, real property, equipment, contract rights and cashand cash accounts, but excluding certain accounts receivable used in securitization programs, and

• with respect to the European revolving credit facility, a perfected fourth priority interest in and mortgages on the collateral pledged underthe deposit-funded credit facility and the asset-based facilities, except for real estate other than our U.S. corporate headquarters.

Consistent with the covenants applicable to Goodyear in the U.S. facilities, the European facilities contain certain representations,warranties and covenants applicable to GDTE and its subsidiaries which, among other things, limit GDTE’s ability to:

The European facilities also contain certain additional covenants identical to those in the U.S. facilities. The European facilities also limitthe amount of capital expenditures that GDTE may make to $250 million in 2004 and $100 million in 2005 (through April 30, 2005).

Subject to the provisions in the European facilities and agreements with our joint venture partner, Sumitomo Rubber Industries, Ltd. (SRI),GDTE is permitted to transfer funds to Goodyear. These provisions and agreements include limitations on loans and advances from GDTE toGoodyear and a requirement that transactions with affiliates be consistent with past practices or on arms-length terms.

Any amount outstanding under the term facility is required to be prepaid with:

The U.S. and European facilities can be used, if necessary, to fund ordinary course of business needs, to repay maturing debt, and for otherneeds as they arise.

Other Foreign Credit Facilities

At December 31, 2004, we had short-term committed and uncommitted bank credit arrangements totaling $338.9 million, of which$181.5 million were unused, compared to $347.0 million and $209.4 million at December 31, 2003. The continued availability of thesearrangements is at the discretion of the relevant lender, and a portion of these arrangements may be terminated at any time.

International Accounts Receivable Securitization Facilities — On-Balance-Sheet Financing

On December 10, 2004, GDTE and certain of its subsidiaries entered into a new five-year pan-European accounts receivable securitizationfacility. The facility initially provides €165 million of funding, but has the ability to be expanded to €275 million, and will be subject tocustomary annual renewal of back-up liquidity lines. The new facility replaces an €82.5 million facility in a subsidiary in France.

The new facility involves the twice-monthly sale of substantially all of the trade accounts receivable of certain GDTE subsidiaries to abankruptcy-remote French company controlled by one of the liquidity banks in the facility. These subsidiaries retained servicingresponsibilities. It is an event of default under the facility if:

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• incur additional indebtedness (including a limit of €275 million in accounts receivable transactions),

• make investments,

• sell assets beyond specified limits,

• pay dividends, and

• make loans or advances to Goodyear companies that are not subsidiaries of GDTE.

• 75% of the net cash proceeds of all sales and dispositions of assets by GDTE and its subsidiaries greater than $5 million, and

• 50% of the net cash proceeds of debt and equity issuances by GDTE and its subsidiaries.

• the ratio of our Consolidated EBITDA to our consolidated interest expense falls below 2.00 to 1.00,

• the ratio of our consolidated senior secured indebtedness to our Consolidated EBITDA is greater than 4.00 to 1.00,

• the ratio of GDTE’s third party indebtedness (net of cash held by GDTE and its consolidated subsidiaries in excess of $100 million) to itsConsolidated EBITDA is greater than 3.00 to 1.00, or

• for so long as such a provision is in our European credit facilities, our consolidated net worth is less than $2 billion on or prior toMarch 31, 2006, or is less than $1.75 billion after March 31, 2006, in each case subject to a 60 day grace period.

The financial covenants listed above will be automatically amended to conform to the European Credit Facilities upon the refinancing ofthe European Credit Facilities. The defined terms used in the events of default tests are similar to those in the European Credit Facilities. As ofDecember 31, 2004, net cash inflows of $224.7 million were recorded, representing the amount outstanding and fully utilized under thisprogram. The program did not qualify for sale accounting and accordingly, this amount is included in consolidated long term debt on theConsolidated Balance Sheet. Net cash outflows of $113.1 million were recorded in 2004 related to the termination of the replaced Europeanaccounts receivable securitization programs.

In addition to the pan-European accounts receivable securitization facility discussed above, SPT and other subsidiaries in Australia hadtransferred accounts receivable under other programs totaling $63.2 million and $7.7 million at December 31, 2004 and 2003, respectively.

International Accounts Receivable Securitization Facilities — Off-Balance-Sheet Financing

Various other international subsidiaries have also established accounts receivable continuous sales programs. At December 31, 2004, proceedsavailable to these subsidiaries from the sale of certain of their receivables totaled $4.7 million. These subsidiaries retain servicingresponsibilities.

$650 Million Senior Secured Notes

On March 12, 2004, we completed a private offering of $650 million of senior secured notes, consisting of $450 million of 11% senior securednotes due 2011 and $200 million of floating rate notes due 2011, which accrue interest at LIBOR plus 8%. The proceeds of the notes were usedto prepay the remaining outstanding amount under the then-existing U.S. term loan facility, permanently reduce commitments under the then-existing revolving credit facility by $70 million, and for general corporate purposes. The U.S. term facility had been scheduled to mature inApril 2005. Loans under the retired term facility and the revolving credit facility each bore interest at LIBOR plus 4%. The notes areguaranteed by the same subsidiaries that guarantee the U.S. deposit-funded credit facility and asset-based credit facilities. The notes aresecured by perfected fourth-priority liens on the same collateral securing those facilities (pari-passu with the liens on that domestic collateralsecuring the parent guarantees of the European revolving credit facility).

We have the right to redeem the fixed rate notes in whole or in part from time to time on and after March 1, 2008. The redemption price,plus accrued and unpaid interest to the redemption date, would be 105.5%, 102.75%, and 100.0% on and after March 1, 2008, 2009 and 2010,respectively. We may also redeem the fixed rate notes prior to March 1, 2008 at a redemption price equal to 100% of the principal amount plusa make-whole premium. We have the right to redeem the floating rate notes in whole or in part from time to time on and after March 1, 2008.The redemption price, plus accrued and unpaid interest to the redemption date, would be 104.0%, 102.0%, and 100.0% on and after March 1,2008, 2009 and 2010, respectively. In addition, prior to March 1, 2007, we have the right to redeem up to 35% of the fixed and floating ratenotes with net cash proceeds from one or more public equity offerings. The redemption price would be 111% for the fixed rate notes and 100%plus the then applicable floating rate for the floating rate notes, plus accrued and unpaid interest to the redemption date.

The indenture for the senior secured notes contains restrictions on our operations, including limitations on:

The deposit-funded credit facility also limits the amount of capital expenditures we may make to $500 million in 2004, 2005 and 2006, and$375 million in 2007 (through September 30, 2007). The amounts

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• incurring additional indebtedness or liens,

• paying dividends, making distributions and stock repurchases,

• making investments,

• selling assets, and

• merging and consolidating.

of permitted capital expenditures may be increased by the amount of net proceeds retained by us from permitted asset sales and equity and debtissuances. In addition, unused capital expenditures may be carried over into the next year. As a result of certain activities, the capitalexpenditure limit for 2004 was increased from $500 million to approximately $1.10 billion. Our capital expenditures for 2004 totaled$518.6 million. The capital expenditure carryover from 2004 was $603.0 million, and in the absence of any other transactions, the limit for2005 will be $1.10 billion.

In the event that the senior secured notes have a rating equal to or greater than Baa3 from Moody’s and BBB- from Standard and Poor’s, anumber of those restrictions will not apply, for so long as those credit ratings are maintained.

$350 Million Convertible Note Offering

On July 2, 2004, we completed an offering of $350 million of 4.00% convertible senior notes due June 15, 2034. The notes are convertible intoshares of our common stock initially at a conversion rate of 83.07 shares of common stock per $1,000 principal amount of notes, which is equalto an initial conversion price of $12.04 per share. The proceeds of the notes were used to repay temporarily a revolving credit facility and forworking capital purposes.

$645 Million Senior Secured U.S. Term Facility

At March 12, 2004, all outstanding amounts under the facility were prepaid and the facility was retired. At December 31, 2003, the balance dueon the U.S. term facility was $583.3 million, due to a partial pay down of the balance during the second quarter of 2003.

$680 Million Senior Secured U.S. Revolving Credit Facility

At August 18, 2004, all outstanding amounts under the facility were prepaid and the facility was retired. In addition, $500.7 million of letters ofcredit issued under the facility were transferred to our $680 million senior secured deposit funded credit facility.

Registration Obligations

We are a party to two registration rights agreements in connection with our private placement of $350 million of convertible notes in July 2004and $650 million of senior secured notes in March 2004. The registration rights agreement for the convertible notes requires us to payadditional interest to investors if we do not file a registration statement to register the convertible notes by November 7, 2004, or if suchregistration statement is not declared effective by the SEC by December 31, 2004. The additional interest to investors is at a rate of 0.25% peryear for the first 90 days and 0.50% per year thereafter. We failed to file a registration statement for the convertible notes by November 7,2004, and as a result, will pay additional interest until such time as a registration statement is filed and declared effective. The registrationrights agreement for the senior secured notes requires us to pay additional interest to investors if a registered exchange offer for the notes is notcompleted by December 7, 2004. The additional interest to investors is at a rate of 1.00% per year for the first 90 days, increasing in incrementsof 0.25% every 90 days thereafter, to a maximum of 2.00% per year. Because no such exchange offer was completed by December 7, 2004, wewill pay additional interest until an exchange offer is completed. If the rate of additional interest payable reaches 2.00% per year then theinterest rate for the secured notes will be permanently increased by 0.25% per annum after the exchange offer is completed.

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Credit Ratings

Our credit ratings as of the date of this report are presented below:

Although we do not request ratings from Fitch, the rating agency rates our secured debt facilities “B” and our unsecured debt “CCC+.”

As a result of these ratings and other related events, we believe that our access to capital markets may be limited. Unless our debt creditratings and operating performance improve, our access to the credit markets in the future may be limited. Moreover, a further reduction in ourcredit ratings would further increase the cost of any financing initiatives we may pursue.

A rating reflects only the view of a rating agency, and is not a recommendation to buy, sell or hold securities. Any rating can be revisedupward or downward at any time by a rating agency if such rating agency decides that circumstances warrant such a change.

Turnaround Strategy

We are currently implementing a turnaround strategy for North American Tire that will require us to:

Our ability to successfully implement the cost-cutting strategy is also dependent upon our ability to lower costs and increase productivityfrom levels achieved under the terms of our master contract with the USWA ratified in 2003. Based in part on success in implementing theturnaround strategy, North American Tire had stronger operating results in 2004 than in 2003. However, additional progress in implementingthe turnaround strategy is needed to achieve a satisfactory level of profitability in North American Tire. If the goals of the turnaround strategyare not met, we will not be able to achieve or sustain future profitability, which would impair our ability to meet our debt service obligationsand otherwise negatively affect our operations. There is no assurance that we will successfully implement this turnaround strategy. Inparticular, this strategy and our liquidity could be adversely affected by trends that affected the North American Tire segment negatively inprior years, including:

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S&P Moody’s

Senior Secured Asset-Based Facilities BB B1European Facilities B+ B1$650 Million Asset-Based Tranche B B2$650 Million Senior Secured Notes due 2011 * B3Corporate Rating B+ B1 (implied)Senior Unsecured Debt B- B3

* Private rating

• stabilize margins and market shares,

• simplify the sales and supply chain process,

• execute key cost-cutting strategies,

• implement brand and distribution strategies, and

• grow the business through new product introductions and new sales channels.

• industry overcapacity which limits pricing leverage,

• weakness in the replacement tire market,

• increased competition from low cost manufacturers and a related decline in our market share,

• weak U.S. economic conditions, and

• increases in medical and pension costs.

In addition, the turnaround strategy has been, and may continue to be, impacted negatively by higher raw material and energy costs. During2004, the market price of natural rubber, one of our most important raw materials, oil, an important feedstock for several other raw materials,increased significantly versus the prior year. Based on a combination of our inventory turns and raw material shipment lead times, market pricefluctuations in raw materials typically impact our CGS three to six months subsequent to the raw material purchase date. Furthermore, marketconditions may prevent us from passing these increases on to our customers through timely price increases. We retained The Blackstone GroupL.P. and Bain & Company to provide consulting advice on the turnaround strategy and other possible strategic initiatives to maximizeshareholder value.

Future Liquidity Requirements

At December 31, 2004, we had $1.97 billion in cash and cash equivalents, of which $1.02 billion was held in the United States and$415.6 million was in accounts of GDTE. The remaining amounts were held in our other non-U.S. operations. Our ability to move cash andcash equivalents among our various operating locations is subject to the operating needs of the operating locations as well as restrictionsimposed by local laws and applicable credit facility agreements. At December 31, 2004, approximately $219.9 million of cash was held inlocations where significant tax or legal impediments would make it difficult or costly to execute monetary transfers. Unused availability underour various credit agreements totaled approximately $1.12 billion at December 31, 2004. Based upon our projected operating results, we expectthat cash flow from operations, together with amounts available under our primary credit facilities and other sources of liquidity, will beadequate to meet our anticipated liquidity requirements through December 31, 2005 (including working capital, debt service, pension fundingand capital expenditures).

The aggregate amount of long-term debt maturing in calendar years 2005 and 2006 is approximately $1.01 billion and $1.92 billion,respectively. Included in the amount for 2005 is $400.0 million related to our primary European credit facilities maturing on April 30, 2005 andour €400 million 6.375% Euro Notes due June 2005 (equivalent to approximately $542 million at December 31, 2004). In March 2006,$1.45 billion related to our asset-based facilities matures, and the $250 million 65/8% Senior Notes are due in December 2006.

On February 23, 2005 we announced that we intend to refinance approximately $3.3 billion of our credit facilities, including:


These transactions are subject to market conditions and the execution of definitive documentation and are expected to close in April 2005.We expect to record pretax charges of approximately $40 million for the write-off of unamortized costs related to the replaced facilities, andthe costs of refinancing could be significant. Failure to refinance the European credit facilities or asset-based facilities before they mature couldhave a material adverse affect on our liquidity. In order to ensure that our future liquidity requirements are addressed, we plan to seekadditional financing in the capital markets. Because of our debt ratings, operating performance over the past few years and other factors, accessto the capital markets cannot be assured. Our

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• our $1.3 billion asset-based credit facility, due March 31, 2006,

• our $650 million asset-based term loan, due March 31, 2006,

• our $680 million deposit funded credit facility, due September 30, 2007, and





ongoing ability to access the capital markets is also dependent on the degree of success we have implementing our North American Tireturnaround strategy. Successful implementation of the turnaround strategy is also crucial to ensuring that we have sufficient cash flow fromoperations to meet our obligations. While we made progress in implementing the turnaround strategy in 2004, there is no assurance that ourprogress will continue, or that we will be able to sustain any future progress to a degree sufficient to maintain access to capital markets andmeet liquidity requirements. As a result, failure to complete the turnaround strategy successfully could have a material adverse effect on ourfinancial position, results of operations and liquidity.

Future liquidity requirements also may make it necessary for us to incur additional debt. However, a substantial portion of our assets isalready subject to liens securing our indebtedness. As a result, we are limited in our ability to pledge our remaining assets as security foradditional secured indebtedness. In addition, unless we sustain or improve our financial performance, our ability to raise unsecured debt maybe limited.

In addition to maturing debt, we are required to make contributions to our domestic defined benefit pension plans. These contributions arerequired under the minimum funding requirements of the Employee Retirement Income Security Act (“ERISA”). Although subject to change,we expect to be required by ERISA to make contributions to our domestic pension plans of approximately $400 million to $425 million in2005. At the end of 2005, the current interest rate relief measures used for pension funding calculations expire. If current measures areextended, we estimate that required contributions in 2006 will be in the range of $600 million to $650 million. If new legislation is not enacted,the interest rate used for 2006 and beyond will be based upon a 30-year U.S. Treasury bond rate, as calculated and published by theU.S. government as a proxy for the rate that could be attained if 30-year Treasury bonds were currently being issued. Using an estimate ofthese rates would result in estimated required contributions during 2006 in the range of $725 million to $775 million. The assumptions used todevelop these estimates are described in the Commitments and Contingencies table below. We are not able to reasonably estimate our futurerequired contributions beyond 2006. Nevertheless, we expect that the amount of contributions required in years beyond 2006 will besubstantial. In 2005, in addition to required domestic plan contributions, we expect to contribute approximately $70 million to our fundedinternational pension plans.

Our postretirement benefit plans will require amounts to cover benefit payments in the future. Benefit payments are expected to beapproximately $304 million in 2005, $321 million in 2006 and $274 million in 2007. These estimates are based upon the plan provisionscurrently in effect. Total payments are estimated to be approximately $2.6 billion as calculated on December 31, 2004. The majority of thesepayments would be made more than five years hence. The estimated payments do not include an estimated reduction in our obligations totalingapproximately $475 million to $525 million resulting from the provisions of the Medicare Prescription Drug, Improvement and ModernizationAct of 2003.

Pursuant to an agreement entered into in 2001, Ansell Ltd., our joint venture partner in South Pacific Tyres (SPT), has the right, subject tocertain conditions, during the period beginning August 2005 and ending one year later, to require Goodyear to purchase Ansell’s 50% interestin SPT. The purchase price is a formula price based on the earnings of SPT, subject to various adjustments. If Ansell does not exercise its right,we may require Ansell to sell its interest to us during the 180 days following the expiration of Ansell’s right at a price established using thesame formula.

We are subject to various legal proceedings, including those described in the Note to the Financial Statements No. 20, Commitments andContingent Liabilities. In the event we wish to appeal any future adverse judgment in any proceeding, we would be required to post an appealbond with the relevant court. If we do not have sufficient availability under our facilities to issue a letter of credit to support an appeal bond, wemay be required to (i) pay down borrowings under the facility in order to increase the amount available for issuing letters of credit, or(ii) deposit cash collateral in order to stay the enforcement of the judgment pending an appeal. A significant deposit of cash collateral may havea material adverse effect on our liquidity.

A substantial portion of our borrowings is at variable rates of interest and exposes us to interest rate risk. If interest rates rise, our debtservice obligations would increase. A significant rise in interest rates could have a material adverse effect on our liquidity in future periods.

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Dividends

On February 4, 2003, we announced that we eliminated our quarterly cash dividend. The dividend reduction was decided on by the Board ofDirectors in order to conserve cash. Under our primary credit agreements, we are not permitted to pay dividends on our common stock.

COMMITMENTS AND CONTINGENCIES

Contractual Obligations

The following table presents our contractual obligations and commitments to make future payments as of December 31, 2004:

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Payment Due by Period as of December 31, 2004After

Total 1st Year 2nd Year 3rd Year 4th Year 5th Year 5 Years(In millions)Long Term Debt (1) $ 5,619.2 $ 1,225.2 $ 1,920.6 $ 300.8 $ 104.0 $ 227.4 $1,841.2Capital Lease Obligations (2) 91.1 10.4 9.5 9.0 8.9 8.5 44.8Interest Payments (3) 1,761.4 348.1 229.8 160.1 150.3 162.6 710.5Operating Leases (4) 1,519.3 320.3 262.6 203.1 146.8 110.5 476.0Pension Benefits (5) 1,232.5 482.5 750.0 (5) (5) (5) (5)Other Post Retirement Benefits (6) 2,624.5 303.9 320.7 273.7 266.5 260.3 1,199.4Workers Compensation (7) 285.9 66.0 42.4 29.3 20.3 25.4 102.5Binding Commitments (8) 755.9 705.6 16.1 5.2 4.0 3.9 21.1

$13,889.8 $ 3,462.0 $ 3,551.7 $ 981.2 $ 700.8 $ 798.6 $4,395.5

(1) Long term debt payments include notes payable and reflect long term debt maturities as of December 31, 2004.

(2) The present value of capital lease obligations is $60.4 million.

(3) These amounts represent future interest payments related to our existing debt obligations based on fixed and variable interest ratesspecified in the associated debt agreements. Payments related to variable debt are based on the six-month LIBOR rate at December 31,2004 plus the specified margin in the associated debt agreements for each period presented. The amounts provided relate only to existingdebt obligations and do not assume the refinancing or replacement of such debt.

(4) Operating lease obligations have not been reduced by minimum sublease rentals of $52.2 million, $42.9 million, $34.2 million,$25.6 million, $17.0 million, and $32.0 million in each of the periods above, respectively, for a total of $203.9 million. Net operatinglease payments total $1,315.4 million, with a present value of $946.0 million. The operating leases relate to, among other things,computers and office equipment, real estate 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, 2004. The amountsset forth in the table represent our estimated minimum funding requirements in 2005 and 2006 for domestic defined pension plans underERISA, and $70 million of expected contributions to our funded international pension plans in 2005. Although subject to change, weexpect to be required by ERISA to make contributions to our domestic pension plans of approximately $400 to $425 million in 2005. Theamount in the table for 2005 represents the midpoint of this range plus expected contributions to our funded international plans. Theexpected contributions are based upon a number of assumptions, including:

• an ERISA liability interest rate of 6.10% for 2005, and

• plan asset returns of 8.5% in 2005.

At the end of 2005, the current interest relief rate measures used for pension funding calculations expire. If current measures are extended,we estimate that required contributions in 2006 will be in the range of $600 million to $650 million. If new legislation is not enacted, theinterest rate used for 2006 and beyond

We have recorded long term liabilities for other items including income taxes, general and product liabilities, environmental liabilities andmiscellaneous other long term liabilities. These other liabilities are not contractual obligations by nature. We cannot, with any degree ofreliability, determine the years in which these liabilities might ultimately be settled. Accordingly, they are not included in the above table. Inaddition, the following contingent contractual obligations, the amounts of which can not be estimated, are not included in the above table:

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will be based upon a 30-year U.S. Treasury bond rate, as calculated and published by the U.S. government as a proxy for the rate thatcould be attained if 30-year Treasury bonds were currently being issued. Using an estimate of these rates would result in estimatedrequired contributions during 2006 in the range of $725 million to $775 million. The estimated amount set forth in the table for 2006represents the mid-point of this range. We likely will be subject to additional statutory minimum funding requirements after 2006. We arenot able to reasonably estimate our future required contributions beyond 2006 due to uncertainties regarding significant assumptionsinvolved in estimating future required contributions to our defined benefit pension plans, including:

• interest rate levels,

• the amount and timing of asset returns,

• what, if any, changes may occur in legislation, and

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

We expect the amount of contributions required in years beyond 2006 will be substantial.

(6) The payments for other postretirement benefits reflect the estimated benefit payments of the plans using the provisions currently in effect.We reserve the right to modify or terminate the plans at any time. The obligation related to other postretirement benefits is actuariallydetermined on an annual basis. The estimated payments do not include an estimated reduction in our obligations totaling approximately$475 million to $525 million resulting from the provisions of the Medicare Prescription Drug, Improvement and Modernization Act of2003.

(7) The payments for workers’ compensation are based upon recent historical payment patterns. The present value of anticipated paymentsfor workers’ compensation is $230.7 million.

(8) Binding commitments are for our normal operations and are related primarily to obligations to acquire land, buildings and equipment. Inaddition, binding commitments includes obligations to purchase raw materials through short term supply contracts at fixed prices or atformula prices related to market prices or negotiated prices.

• The terms and conditions of our global alliance with SRI as set forth in the Umbrella Agreement between Goodyear and SRI provide forcertain minority exit rights available to SRI commencing in 2009. In addition, the occurrence of certain other events enumerated in theUmbrella Agreement, including certain bankruptcy events or changes in control of Goodyear, could trigger a right of SRI to require us topurchase these interests immediately. SRI’s exit rights, in the unlikely event of exercise, could require us to make a substantial paymentto acquire Sumitomo’s interest in the alliance.

• Pursuant to an agreement entered into in 2001, Ansell Ltd., our joint venture partner in South Pacific Tyres (SPT), has the right, subjectto certain conditions, during the period beginning August 2005 and ending one year later, to require us to purchase Ansell’s 50% interestin SPT. The purchase price is a formula price based on the earnings of SPT, subject to various adjustments. If Ansell does not exercise itsright, we may require Ansell to sell its interest to us during the 180 days following the expiration of Ansell’s right at a price establishedusing the same formula.

• Pursuant to an agreement entered into in 2001, we are required to purchase minimum amounts of carbon black from a certain supplierfrom January 1, 2003 through December 31, 2006, at agreed upon

We do not engage in the trading of commodity contracts or any related derivative contracts. We generally purchase raw materials andenergy through short term, intermediate and long term supply contracts at fixed prices or at formula prices related to market prices ornegotiated prices. We will, however, from time to time, enter into contracts to hedge our energy costs.

Off-Balance Sheet Arrangements

An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity underwhich a company has:

We have entered into certain arrangements under which we have provided guarantees, as follows:

For further information about guarantees, refer to the Note to the Financial Statements No. 20, Commitments and Contingencies.

Interest Rate Risk

We continuously monitor our fixed and floating rate debt mix. Within defined limitations, we manage the mix using refinancing andunleveraged interest rate swaps. We will enter into fixed and floating interest rate swaps to alter our exposure to the impact of changing interestrates on consolidated results of operations and future cash outflows for interest. Fixed rate swaps are used to reduce our risk of increasedinterest costs during periods of rising interest rates, and are normally designated as cash flow hedges. Floating rate swaps are used to convertthe fixed rates of long-term borrowings into short-term variable rates, and are normally designated as fair value hedges. Interest rate swapcontracts are thus used to separate interest rate risk management from debt funding decisions. At December 31, 2004, the interest rates on 50%of our debt were fixed by either the nature of the obligation or through the interest rate swap contracts, compared to 47% at December 31,2003. We also have from time to time entered into interest rate lock contracts to hedge the risk-free component of anticipated debt issuances.As a result of credit ratings actions and other related events, our access to these instruments may be limited.

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base prices. The base prices are subject to quarterly adjustments for changes in raw material costs and natural gas costs and a one-timeadjustment for other manufacturing costs.

• 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, marketrisk or credit risk support to the company, or that engages in leasing, hedging or research and development arrangements with thecompany.

Amount of Commitment Expiration per PeriodTotal 1st Year 2nd Year 3rd Year 4th Year 5th Year Thereafter

(In millions)Customer Financing Guarantees $ 7.5 $ 2.4 $ 1.4 $ 1.1 $ 0.5 $ 1.0 $ 1.1Affiliate Financing Guarantees 9.8 — 4.9 4.9 — — —Other Guarantees 0.9 — — — 0.1 0.6 0.2Off-Balance Sheet Arrangements $18.2 $ 2.4 $ 6.3 $ 6.0 $ 0.6 $ 1.6 $ 1.3

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The following table presents information on interest rate swap contracts at December 31:

The pro forma fair value assumes a 10% increase in variable market interest rates at December 31 of each year, and reflects the estimated fairvalue of contracts outstanding at that date under that assumption.

Weighted average interest rate swap contract information follows:

The following table presents fixed rate debt information at December 31:

The pro forma information assumes a 100 basis point decrease in market interest rates at December 31 of each year, and reflects the estimatedfair value of fixed rate debt outstanding at that date under that assumption. The sensitivity of our interest rate contracts and fixed rate debt tochanges in interest rates was determined with a valuation model based upon net modified duration analysis. The model assumes a parallel shiftin the yield curve. The precision of the model decreases as the assumed change in interest rates increases.

Foreign Currency Exchange Risk

We enter into foreign currency contracts in order to reduce the impact of changes in foreign exchange rates on consolidated results ofoperations and future foreign currency-denominated cash flows. These contracts reduce exposure to currency movements affecting existingforeign currency-denominated assets, liabilities, firm commitments and forecasted transactions resulting primarily from trade receivables andpayables, equipment

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2004 2003(Dollars in millions)

Fixed Rate Contracts:Notional principal amount $ — $ 325.0Pay fixed rate — 5.00%Receive variable LIBOR — 1.17Average years to maturity — 0.25Fair value — liability $ — $ (3.1)Pro forma fair value — liability — (3.1)

Floating Rate Contracts:Notional principal amount $ 200.0 $ 200.0Pay variable LIBOR 4.31% 2.96%Receive fixed rate 6.63 6.63

Average years to maturity 1.95 2.95Fair value — asset $ 6.0 $ 13.0Pro forma fair value — asset 5.3 12.3

2004 2003 2002(Dollars in millions)Fixed Rate Contracts:

Notional principal amount $ 81.0 $ 325.0 $ 325.0Pay fixed rate 5.00% 5.00% 5.00%Receive variable LIBOR 1.18 1.24 1.91

Floating Rate Contracts:Notional principal amount $ 200.0 $ 207.0 $ 210.0Pay variable LIBOR 3.27% 3.03% 3.68%Receive fixed rate 6.63 6.63 6.63

2004 2003(In billions)

Carrying amount — liability $ 3.05 $ 2.23Fair value — liability 3.22 2.11Pro forma fair value — liability 3.30 2.18

acquisitions, intercompany loans and royalty agreements and forecasted purchases and sales. In addition, the principal and interest on ourSwiss franc bonds due 2006 and €100 million of the Euro Notes due 2005 are hedged by currency swap agreements.

Contracts hedging the Swiss franc bonds and the Euro Notes are designated as cash flow hedges. Contracts hedging short-term tradereceivables and payables normally have no hedging designation.

The following table presents foreign currency contract information at December 31:

We were not a party to any foreign currency option contracts at December 31, 2004 or 2003.

The pro forma change in fair value assumes a 10% change in foreign exchange rates at December 31 of each year, and reflects theestimated change in the fair value of contracts outstanding at that date under that assumption. The sensitivity of our foreign currency positionsto changes in exchange rates was determined using current market pricing models.

Fair values are recognized on the Consolidated Balance Sheet at December 31 as follows:

For further information on interest rate contracts and foreign currency contracts, refer to the Note to the Financial Statements No. 11, FinancingArrangements and Derivative Financial Instruments.

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2004 2003(In millions)

Fair value — asset (liability) $102.0 $ 71.7Pro forma change in fair value (22.3) (22.0)Contract maturities 1/05-10/19 1/04-10/19


Asset (liability):Swiss franc swap — current $ (0.3) $ (1.6)Swiss franc swap — long term 59.5 46.8Euro swaps — current 46.4 20.5Euro swaps — long term — 13.2Other — current asset 5.2 7.2Other — current (liability) (8.8) (14.4)

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Schedules not listed above have been omitted since they are not applicable or are not required, or the information required to be set forththerein is included in the Consolidated Financial Statements or Notes thereto.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Page

Management’s Report on Internal Control over Financial Reporting 70Report of Independent Registered Public Accounting Firm 71Consolidated Financial Statements of The Goodyear Tire & Rubber Company:

Consolidated Statement of Income for each of the three fiscal years in the period ended December 31, 2004 73Consolidated Balance Sheet at December 31, 2004 and December 31, 2003 74Consolidated Statement of Shareholders’ Equity for each of the three fiscal years in the period ended December 31, 2004 75Consolidated Statement of Cash Flows for each of the three fiscal years in the period ended December 31, 2004 76Notes to Financial Statements 77

Supplementary Data (unaudited) 149Financial Statement Schedules:

The following consolidated financial statement schedules of The Goodyear Tire & Rubber Company are filed as part of thisReport on Form 10-K and should be read in conjunction with the Consolidated Financial Statements of The GoodyearTire & Rubber Company:

Schedule I — Condensed Financial Information of Registrant FS-2Schedule II — Valuation and Qualifying Accounts FS-8

Other Financial Statements:Financial Statements of South Pacific Tyres (SPT) FS-9

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as such term isdefined under Rule 13a-15(f) promulgated under the Securities Exchange Act of 1934, as amended. The Company’s internal control overfinancial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and preparation offinancial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations,internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to futureperiods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with thepolicies or procedures may deteriorate.

In order to evaluate the effectiveness of the Company’s internal control over financial reporting as required by Section 404 of the Sarbanes-Oxley Act, management conducted an assessment, including testing, using the criteria in the Internal Control — Integrated Framework, issuedby the Committee of Sponsoring Organizations of the Treadway Commission.

A material weakness is a control deficiency or combination of control deficiencies that result in more than a remote likelihood that amaterial misstatement of the annual or interim consolidated financial statements will not be prevented or detected. As of December 31, 2004,the Company did not maintain effective controls over certain account reconciliations and did not maintain adequate segregation of duties at theapplication control level in certain information technology environments. A description of the material weaknesses that existed as ofDecember 31, 2004, as well as their actual and potential effect on the presentation of the Company’s consolidated financial statements issuedduring their existence, is discussed below.

Because of the material weaknesses described above, management has concluded that, as of December 31, 2004, the Company did notmaintain effective internal controls over financial reporting, based on criteria established in Internal Control — Integrated Framework.

Management’s assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2004 hasbeen audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is includedherein.

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Account Reconciliations. At December 31, 2004, the Company did not maintain effective control over the preparation and review ofaccount reconciliations of certain general ledger accounts. This control deficiency primarily related to account reconciliations of goodwill,deferred charges, fixed assets, compensation and benefits, accounts payable-trade and the accounts of a retail subsidiary in France. Thiscontrol deficiency resulted in misstatements that were part of the restatement of the Company’s consolidated financial statements for 2003,2002 and 2001, for each of the quarters for the year ended December 31, 2003 and for the first, second and third quarters for the yearended December 31, 2004. Additionally, this control deficiency could result in a material misstatement to annual or interim consolidatedfinancial statements that would not be prevented or detected. Accordingly, management has determined that this control deficiencyconstitutes a material weakness.

Segregation of Duties. At December 31, 2004, the Company did not maintain effective controls over the segregation of duties at theapplication control level in certain information technology environments as a result of not restricting the access of certain individuals inboth information technology and finance. These deficiencies existed in varying degrees in certain business segments within the revenueand purchasing processes. This control deficiency did not result in any adjustments to the annual or interim consolidated financialstatements; however, this control deficiency could result in a material misstatement to annual or interim consolidated financial statementsthat would not be prevented or detected. Accordingly, management has determined that this control deficiency constitutes a materialweakness.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholdersof The Goodyear Tire & Rubber Company

We have completed an integrated audit of The Goodyear Tire & Rubber Company’s 2004 consolidated financial statements and of itsinternal control over financial reporting as of December 31, 2004 and audits of its 2003 and 2002 consolidated financial statements inaccordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, arepresented below.

Consolidated financial statements and financial statement schedulesIn our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial

position of The Goodyear Tire & Rubber Company and its subsidiaries at December 31, 2004 and 2003, and the results of their operations andtheir cash flows for each of the three years in the period ended December 31, 2004 in conformity with accounting principles generally acceptedin the United States of America. In addition, in our opinion, the financial statement schedules listed in the accompanying index present fairly,in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Thesefinancial statements and financial statement schedules are the responsibility of the Company’s management. Our responsibility is to express anopinion on these financial statements and financial statement schedules based on our audits. We conducted our audits of these statements inaccordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financialstatements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing theaccounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Webelieve that our audits provide a reasonable basis for our opinion.

As discussed in Note 8 to the consolidated financial statements, the Company adopted the provisions of FASB Interpretation No. 46R(revised December 2003), “Consolidation of Variable Interest Entities,” as of January 1, 2004.

As described in Note 2, “Restatement,” the Company has restated its previously issued consolidated financial statements.

Internal control over financial reportingAlso, we have audited management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting

appearing under Item 8, that The Goodyear Tire & Rubber Company did not maintain effective internal control over financial reporting as ofDecember 31, 2004, because of the effects of not maintaining effective controls over certain account reconciliations and not maintainingadequate segregation of duties at the application control level in certain information technology environments, based on criteria established inInternal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). TheCompany’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on theeffectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company AccountingOversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whethereffective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reportingincludes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluatingthe design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances.We believe that our audit provides a reasonable basis for our opinions. A company’s internal control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles. A company’s internal

71

control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactionsare recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and thatreceipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of thecompany’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections ofany evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions,or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that amaterial misstatement of the annual or interim financial statements will not be prevented or detected. The following material weaknesses havebeen identified and included in management’s assessment.

Account Reconciliations. At December 31, 2004, the Company did not maintain effective control over the preparation and review ofaccount reconciliations of certain general ledger accounts. This control deficiency primarily related to account reconciliations of goodwill,deferred charges, fixed assets, compensation and benefits, accounts payable-trade and the accounts of a retail subsidiary in France. This controldeficiency resulted in misstatements that were part of the restatement of the Company’s consolidated financial statements for 2003, 2002 and2001, for each of the quarters for the year ended December 31, 2003 and for the first, second and third quarters for the year endedDecember 31, 2004. Additionally, this control deficiency could result in a material misstatement to annual or interim consolidated financialstatements that would not be prevented or detected. Accordingly, management has determined that this control deficiency constitutes a materialweakness.

Segregation of Duties. At December 31, 2004, the Company did not maintain effective controls over the segregation of duties at theapplication control level in certain information technology environments as a result of not restricting the access of certain individuals in bothinformation technology and finance. These deficiencies existed in varying degrees in certain business segments within the revenue andpurchasing processes. This control deficiency did not result in any adjustments to the annual or interim consolidated financial statementshowever, this control deficiency could result in a material misstatement to annual or interim consolidated financial statements that would not beprevented or detected. Accordingly, management has determined that this control deficiency constitutes a material weakness.

These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2004consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting doesnot affect our opinion on those consolidated financial statements.

In our opinion, management’s assessment that The Goodyear Tire & Rubber Company did not maintain effective internal control overfinancial reporting as of December 31, 2004, is fairly stated, in all material respects, based on criteria established in Internal Control —Integrated Framework issued by the COSO. Also, in our opinion, because of the effects of the material weaknesses described above on theachievement of the objectives of the control criteria, The Goodyear Tire & Rubber Company has not maintained effective internal control overfinancial reporting as of December 31, 2004, based on criteria established in Internal Control — Integrated Framework issued by the COSO.

/s/ PricewaterhouseCoopers LLPPRICEWATERHOUSECOOPERS LLP

Cleveland, OhioMarch 16, 2005

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES

Consolidated Statement of Income

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

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2004 2003 2002(Dollars in millions, except per share amounts)

Net Sales $ 18,370.4 $ 15,122.1 $ 13,856.0Cost of Goods Sold 14,709.2 12,499.0 11,306.9Selling, Administrative and General Expense 2,833.1 2,374.2 2,202.4Rationalizations (Note 3) 55.6 291.5 5.5Interest Expense (Note 15) 368.8 296.3 242.7Other (Income) and Expense (Note 4) 8.2 263.4 56.8Foreign Currency Exchange (Gain) Loss 23.4 40.7 (8.7)Equity in (Earnings) Losses of Affiliates (8.4) 14.5 13.8Minority Interest in Net Income of Subsidiaries 57.8 32.8 55.6Income (Loss) before Income Taxes 322.7 (690.3) (19.0)United States and Foreign Taxes on Income (Loss) (Note 14) 207.9 117.1 1,227.9Net Income (Loss) $ 114.8 $ (807.4) $ (1,246.9)

Net Income (Loss) Per Share — Basic $ 0.65 $ (4.61) $ (7.47)

Average Shares Outstanding (Note 12) 175.4 175.3 167.0Net Income (Loss) Per Share — Diluted $ 0.63 $ (4.61) $ (7.47)

Average Shares Outstanding (Note 12) 192.3 175.3 167.0


Consolidated Balance Sheet


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2004 2003(Dollars in millions)

AssetsCurrent Assets:

Cash and cash equivalents (Note 1) $ 1,967.9 $ 1,546.3Restricted cash (Note 1) 152.4 23.9Accounts and notes receivable (Note 5) 3,427.4 2,616.3Inventories (Note 6) 2,784.8 2,467.7Prepaid expenses and other current assets 299.2 305.4

Total Current Assets 8,631.7 6,959.6Long Term Accounts and Notes Receivable 288.9 275.7Investments in and Advances to Affiliates 34.9 184.2Other Assets (Note 8) 78.3 71.5Goodwill (Note 7) 720.3 658.2Other Intangible Assets (Note 7) 162.6 150.4Deferred Income Tax (Note 14) 83.4 70.5Prepaid and Deferred Pension Costs (Note 13) 829.9 869.9Deferred Charges 248.1 255.9Properties and Plants (Note 9) 5,455.2 5,205.2

Total Assets $ 16,533.3 $ 14,701.1

LiabilitiesCurrent Liabilities:

Accounts payable-trade $ 1,979.0 $ 1,562.8Compensation and benefits (Note 13) 1,042.0 987.6Other current liabilities 590.3 585.2United States and foreign taxes 271.3 270.7Notes payable (Note 11) 220.6 146.7Long term debt and capital leases due within one year (Note 11) 1,009.9 113.5

Total Current Liabilities 5,113.1 3,666.5Long Term Debt and Capital Leases (Note 11) 4,449.1 4,825.8Compensation and Benefits (Note 13) 5,063.8 4,541.7Deferred and Other Noncurrent Income Taxes (Note 14) 405.8 380.6Other Long Term Liabilities 582.6 464.7Minority Equity in Subsidiaries 846.1 854.0

Total Liabilities 16,460.5 14,733.3Commitments and Contingent Liabilities (Note 20)Shareholders’ Equity (Deficit)Preferred Stock, no par value:

Authorized, 50,000,000 shares, unissued — —Common Stock, no par value:

Authorized, 300,000,000 shares Outstanding shares, 175,619,639 (175,326,429 in 2003) 175.6 175.3Capital Surplus 1,391.8 1,390.2Retained Earnings 1,069.9 955.1Accumulated Other Comprehensive Income (Loss) (Note 19) (2,564.5) (2,552.8)

Total Shareholders’ Equity (Deficit) 72.8 (32.2)Total Liabilities and Shareholders’ Equity $ 16,533.3 $ 14,701.1


Consolidated Statement of Shareholders’ Equity (Deficit)


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AccumulatedOther

Common Stock Comprehensive TotalCapital Retained Income Shareholders’

Shares Amount Surplus Earnings (Loss) Equity(Dollars in millions, except per share)

Balance at December 31, 2001 as originally restated (A)(after deducting 32,512,970 treasury shares) 163,165,698 $ 163.2 $1,245.4 $ 3,089.3 $ (1,870.1) $ 2,627.8

Effect of restatement on periods ending on or before December 31,2001 (0.1) (30.9) (31.0)

Balance at December 31, 2001 (as restated) 163,165,698 $ 163.2 $1,245.4 $ 3,089.2 $ (1,901.0) $ 2,596.8Comprehensive income (loss):

Net loss (1,246.9)Foreign currency translation (net of tax benefit of $0) 74.4Minimum pension liability (net of tax of $42.4) (1,283.6)Unrealized investment gain (net of tax of $0) 7.3Deferred derivative gain (net of tax of $0) 60.6

Reclassification adjustment for amounts recognized inincome (net of tax of $0) (64.5)

Total comprehensive loss (2,452.7)Cash dividends — $0.48 per share (79.8) (79.8)Common stock issued from treasury:

Domestic pension funding 11,300,000 11.3 126.6 137.9Common stock issued for acquisitions 693,740 0.7 15.2 15.9Stock compensation plans 147,995 0.1 2.9 3.0

Balance at December 31, 2002 (as restated)(after deducting 20,371,235 treasury shares) 175,307,433 175.3 1,390.1 1,762.5 (3,106.8) 221.1Comprehensive income (loss):

Net loss (807.4)Foreign currency translation (net of tax benefit of $0) 393.7Minimum pension liability (net of tax of $2.2) 128.3Unrealized investment gain (net of tax of $0) 4.1

Reclassification adjustment for amounts recognized inincome (net of tax of $8.7) 8.8

Deferred derivative gain (net of tax of $0) 46.3Reclassification adjustment for amounts recognized in

income (net of tax of $1.9) (27.2)Total comprehensive loss (253.4)

Common stock issued from treasury:Stock compensation plans 18,996 0.1 0.1

Balance at December 31, 2003 (as restated)(after deducting 20,352,239 treasury shares) 175,326,429 175.3 1,390.2 955.1 (2,552.8) (32.2)Comprehensive income (loss):

Net income 114.8Foreign currency translation (net of tax benefit of $0) 253.2Minimum pension liability (net of tax of $34.2) (283.8)Unrealized investment gain (net of tax of $0) 13.4Deferred derivative gain (net of tax of $0) 29.6

Reclassification adjustment for amounts recognized inincome (net of tax of $(3.5)) (24.1)

Total comprehensive income 103.1Common stock issued from treasury:

Stock compensation plans 293,210 0.3 1.6 1.9Balance at December 31, 2004

(after deducting 20,059,029 treasury shares) 175,619,639 $ 175.6 $1,391.8 $ 1,069.9 $ (2,564.5) $ 72.8

(A) As reported in Form 10-K filed on May 19, 2004.


Consolidated Statement of Cash Flows


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2004 2003 2002(In millions)

Cash Flows from Operating Activities:Net Income (Loss) $ 114.8 $ (807.4) $ (1,246.9)

Adjustments to reconcile net income (loss) to cash flows from operating activities:Depreciation and amortization 628.7 691.6 605.3Amortization of debt issuance costs 86.1 50.3 17.9Deferred tax provision (Note 14) (4.5) (9.9) 1,131.2Rationalizations (Note 3) 32.4 132.4 2.4(Gain) loss on asset sales (Note 4) 7.5 16.4 (23.6)Fire loss deductible expense (Note 4) 11.6 — —Insurance settlement gain (Note 4) (156.6) — —Minority interest and equity earnings 47.5 39.3 71.4Net cash flows from sale of accounts receivable (Note 5) (117.7) (839.6) 34.8Pension contributions (264.6) (115.7) (226.9)Changes in operating assets and liabilities, net of asset acquisitions and

dispositions:Accounts and notes receivable (310.3) (108.1) 47.6Inventories (53.9) 38.2 60.4Accounts payable-trade 151.1 (102.7) 94.1Prepaid expenses and other current assets 64.1 202.1 (131.4)Deferred charges (19.6) 1.9 (9.7)Long term compensation and benefits 687.7 (3.5) 1,512.2Accumulated other comprehensive income (loss) — deferred pension gain

(loss) (244.2) 191.1 (1,265.8)Other long term liabilities 90.9 201.3 (85.6)Other assets and liabilities (31.2) 133.5 98.6Total adjustments 605.0 518.6 1,932.9

Total cash flows from operating activities 719.8 (288.8) 686.0Cash Flows from Investing Activities:

Capital expenditures (518.6) (375.4) (458.1)Short term securities acquired — — (64.7)Short term securities redeemed — 26.6 38.5Asset dispositions 19.3 104.4 55.6Asset acquisitions (61.8) (71.2) (54.8)Other transactions 35.9 79.6 (56.8)

Total cash flows from investing activities (525.2) (236.0) (540.3)Cash Flows from Financing Activities:

Short term debt incurred 162.5 323.1 84.1Short term debt paid (139.2) (469.2) (87.5)Long term debt incurred 2,066.7 2,983.8 38.4Long term debt paid (1,693.9) (1,612.1) (125.2)Common stock issued (Notes 8, 12) 1.8 0.2 18.7Dividends paid to minority interests in subsidiaries (28.9) (38.6) (16.2)Dividends paid to Goodyear shareholders — — (79.8)Debt issuance costs (51.4) (104.1) —Increase in restricted cash (128.5) (23.9) —Other transactions — 27.9 —

Total cash flows from financing activities 189.1 1,087.1 (167.5)Effect of Exchange Rate Changes on Cash and Cash Equivalents 37.9 64.2 (13.7)Net Change in Cash and Cash Equivalents 421.6 626.5 (35.5)Cash and Cash Equivalents at Beginning of the Period 1,546.3 919.8 955.3Cash and Cash equivalents at End of the Period $ 1,967.9 $ 1,546.3 $ 919.8


NOTES TO FINANCIAL STATEMENTS

A summary of the significant accounting policies used in the preparation of the accompanying financial statements follows:

Principles of Consolidation

The consolidated financial statements include the accounts of all majority-owned subsidiaries in which no substantive participating rights areheld by minority shareholders. All intercompany transactions have been eliminated. Our investments in companies in which we have the abilityto exercise significant influence over operating and financial policies are accounted for using the equity method. Accordingly, our share of theearnings of these companies is included in consolidated net income (loss). Investments in other companies are carried at cost.

The consolidated financial statements also include the accounts of entities consolidated pursuant to the provisions of Interpretation No. 46of the Financial Accounting Standards Board, “Consolidation of Variable Interest Entities — an Interpretation of ARB No. 51,” as amended byFASB Interpretation No. 46 (revised December 2003) (collectively, “FIN 46”). FIN 46 requires companies to consolidate, at fair value, theassets, liabilities and results of operations of variable interest entities (VIEs) in which the equity investment at risk is not sufficient to permitthe entity to finance its activities without additional subordinated financial support from other parties. In addition, FIN 46 requiresconsolidation of VIEs in which a company holds a controlling financial interest through means other than the majority ownership of votingequity.

We applied the provisions of FIN 46, effective July 1, 2003, to VIEs representing lease-financing arrangements with special purposeentities (SPEs). Effective January 1, 2004, we applied the provisions of FIN 46 to entities that are not SPEs. This resulted in the consolidationof South Pacific Tyres (SPT), a tire manufacturer, marketer and exporter of tires in Australia and New Zealand, and T&WA, a wheel mountingoperation in the United States which sells to original equipment manufacturers.

Refer to Note 8 and Note 10.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimatesand assumptions that affect the amounts reported in the consolidated financial statements and related notes to financial statements. Actualresults could differ from those estimates. On an ongoing basis, management reviews its estimates, including those related to:

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Note 1. Accounting Policies

• allowance for doubtful accounts,

• recoverability of intangibles and other long-lived assets,

• deferred tax asset valuation allowances,

• workers’ compensation,

• litigation,

• general and product liabilities,

• environmental liabilities,

• pension and other postretirement benefits, and

• various other operating allowances and accruals, based on currently available information.


NOTES TO FINANCIAL STATEMENTS — (Continued)

Changes in facts and circumstances may alter such estimates and affect results of operations and financial position in future periods.

Revenue Recognition

Revenues are recognized when finished products are shipped to unaffiliated customers, both title and the risks and rewards of ownership aretransferred or services have been rendered and accepted, and collectibility is reasonably assured. A provision for sales returns and allowancesis recorded at the time of sale. Appropriate provision is made for uncollectible accounts based on historical experience and specificcircumstances, as appropriate.

Shipping and Handling Fees and Costs

Expenses for transportation of products to customers are recorded as a component of cost of goods sold.

Research and Development Costs

Research and development costs include, among other things, materials, equipment, compensation and contract services. These costs areexpensed as incurred and included as a component of cost of goods sold. Refer to Note 16.

Warranty

We offer warranties on the sale of certain of our products and services and record an accrual for estimated future claims at the time revenue isrecognized. Tire replacement under most of the warranties we offer is on a prorated basis. Warranty reserves are based on past claimsexperience, sales history and other considerations. Refer to Note 20.

Environmental Cleanup Matters

We expense environmental expenditures related to existing conditions resulting from past or current operations and from which no current orfuture benefit is discernible. Expenditures that extend the life of the related property or mitigate or prevent future environmental contaminationare capitalized. We determine our liability on a site by site basis and record a liability at the time when it is probable and can be reasonablyestimated. Our estimated liability is reduced to reflect the anticipated participation of other potentially responsible parties in those instanceswhere it is probable that such parties are legally responsible and financially capable of paying their respective shares of the relevant costs. Ourestimated liability is not discounted or reduced for possible recoveries from insurance carriers. Refer to Note 20.

Legal Expenses

We record a liability for estimated legal and defense costs related to pending general and product liability claims, environmental matters andworkers’ compensation claims. Refer to Note 20.

Advertising Costs

Costs incurred for producing and communicating advertising are generally expensed when incurred. Costs incurred under our cooperativeadvertising program with dealers and franchisees are recorded as reductions of sales as related revenues are recognized. Refer to Note 17.

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Note 1. Accounting Policies (continued)



Rationalizations

We adopted Statement of Financial Accounting Standards No. 146 (SFAS 146), “Accounting for Costs Associated with Exit or DisposalActivities,” effective for all exit or disposal activities initiated after December 31, 2002. SFAS 146 requires, among other things, that liabilitiesfor costs associated with exit or disposal activities be recognized when the liabilities are incurred, rather than when an entity commits to an exitplan. SFAS 146 changes the timing of liability and expense recognition related to exit or disposal activities, but not the ultimate amount of suchexpenses. Refer to Note 3.

Income Taxes

Income taxes are recognized during the year in which transactions enter into the determination of financial statement income, with deferredtaxes being provided for temporary differences between amounts of assets and liabilities for financial reporting purposes and such amounts asmeasured by tax laws. Refer to Note 14.

Cash and Cash Equivalents/ Consolidated Statement of Cash Flows

Cash and cash equivalents include cash on hand and in the bank as well as all short term securities held for the primary purpose of generalliquidity. Such securities normally mature within three months from the date of acquisition. Cash flows associated with items intended ashedges of identifiable transactions or events are classified in the same category as the cash flows from the items being hedged. Unpresentedchecks are recorded within accounts payable-trade and totaled $180.5 million and $139.6 million at December 31, 2004 and 2003, respectively.Cash flows associated with unpresented checks are classified as financing activities.

Restricted Cash and Restricted Net Assets

Restricted cash includes the settlement fund balance related to Entran II litigation as well as cash deposited in support of trade agreements andperformance bonds, and historically has included cash deposited in support of borrowings incurred by subsidiaries. At December 31, 2004,cash balances totaling $152.4 million were subject to such restrictions, compared to $23.9 million at December 31, 2003.

In certain countries where we operate, transfers of funds into or out of such countries by way of dividends, loans or advances are generallyor periodically subject to various restrictive governmental regulations and there may be adverse tax consequences to such transfers. In addition,certain of our credit agreements and other debt instruments restrict the ability of foreign subsidiaries to make distributions of cash. AtDecember 31, 2004, approximately $220.6 million of net assets were subject to such restrictions, compared to approximately $259 million atDecember 31, 2003.

Inventories

Inventories are stated at the lower of cost or market. Cost is determined using FIFO or the average cost method. Costs include direct material,direct labor and applicable manufacturing and engineering overhead. Refer to Note 6.

Goodwill and Other Intangible Assets

Goodwill is recorded when the cost of acquired businesses exceeds the fair value of the identifiable net assets acquired. Goodwill andintangible assets with indefinite useful lives are not amortized, but are tested for impairment annually or when events or circumstances indicatethat impairment may have occurred, as provided in Statement of Financial Accounting Standards No. 142, “Goodwill and Other IntangibleAssets”. We elected to perform the goodwill impairment test annually as of July 31. The carrying amount of goodwill

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and intangible assets with indefinite useful lives is reviewed whenever events or circumstances indicated that revisions might have beenwarranted. Goodwill and intangible assets with indefinite useful lives would be written down to fair value if considered impaired. Intangibleassets with finite useful lives are amortized to their estimated residual values over such finite lives, and reviewed for impairment in accordancewith Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. Refer toNote 7.

Investments

Investments in marketable equity securities are stated at fair value. Fair value is determined using quoted market prices at the end of thereporting period and, when appropriate, exchange rates at that date. Unrealized gains and losses on marketable equity securities classified asavailable-for-sale are recorded in Accumulated Other Comprehensive Income (Loss), net of tax. Refer to Notes 8 and 19.

Properties and Plants

Properties and plants are stated at cost. Depreciation is computed using the straight-line method. Additions and improvements that substantiallyextend the useful life of properties and plants, and interest costs incurred during the construction period of major projects, are capitalized.Repair and maintenance costs are charged to income in the period incurred. Properties and plants are depreciated to their estimated residualvalues over their estimated useful lives, and reviewed for impairment in accordance with Statement of Financial Accounting StandardsNo. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. Refer to Notes 9 and 15.

Foreign Currency Translation

Financial statements of international subsidiaries are translated into U.S. dollars using the exchange rate at each balance sheet date for assetsand liabilities and a weighted-average exchange rate for each period for revenues, expenses, gains and losses. Where the local currency is thefunctional currency, translation adjustments are recorded as Accumulated Other Comprehensive Income (Loss). Where the U.S. dollar is thefunctional currency, translation adjustments are recorded in income.

Derivative Financial Instruments and Hedging Activities

To qualify for hedge accounting, hedging instruments must be designated as hedges and meet defined correlation and effectiveness criteria.These criteria require that the anticipated cash flows and/ or financial statement effects of the hedging instrument substantially offset those ofthe position being hedged.

Derivative contracts are reported at fair value on the Consolidated Balance Sheet as both current and long term Accounts Receivable orOther Liabilities. Deferred gains and losses on contracts designated as cash flow hedges are recorded in Accumulated Other ComprehensiveIncome (Loss) (OCI). Ineffectiveness in hedging relationships is recorded as Other (Income) and Expense in the current period.

Interest Rate Contracts — Gains and losses on contracts designated as cash flow hedges are initially deferred and recorded in OCI. Amountsare transferred from OCI and recognized in income as Interest Expense in the same period that the hedged item is recognized in income. Gainsand losses on contracts designated as fair value hedges are recognized in income in the current period as Interest Expense. Gains and losses oncontracts with no hedging designation are recorded in income in the current period as Other (Income) and Expense.

Foreign Currency Contracts — Gains and losses on contracts designated as cash flow hedges are initially deferred and recorded in OCI.Amounts are transferred from OCI and recognized in income in the same

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period and on the same line that the hedged item is recognized in income. Gains and losses on contracts with no hedging designation arerecorded in income currently as Foreign Currency Exchange.

We do not include premiums paid on forward currency contracts in our assessment of hedge effectiveness. Premiums on contractsdesignated as hedges are recognized in income as Foreign Currency Exchange over the life of the contract.

Net Investment Hedging — Nonderivative instruments denominated in foreign currencies are used to hedge net investments in foreignsubsidiaries. Gains and losses on these instruments are deferred and recorded in OCI as Foreign Currency Translation Adjustment. These gainsand losses are only recognized in income upon the complete or partial sale of the related investment or the complete liquidation of theinvestment.

Termination of Contracts — Gains and losses (including deferred gains and losses in OCI) are recognized in income as Other (Income) andExpense when contracts are terminated concurrently with the termination of the hedged position. To the extent that such position remainsoutstanding, gains and losses are amortized to Interest Expense or Foreign Currency Exchange over the remaining life of that position. Gainsand losses on contracts that we temporarily continue to hold after the early termination of a hedged position, or that otherwise no longer qualifyfor hedge accounting, are recognized in income as Other (Income) and Expense.

Refer to Note 11.

Stock-Based Compensation

We used the intrinsic value method to measure compensation cost for stock-based compensation. Accordingly, compensation cost for stockoptions is measured as the excess, if any, of the quoted market price of our common stock at the date of the grant over the amount an employeemust pay to acquire the stock. Compensation cost for stock appreciation rights and performance units is recorded based on the quoted marketprice of our common stock at the end of the reporting period. Refer to Note 12.

The following table presents the pro forma effect of using the fair value method to measure compensation cost:

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2004 2003 2002(In millions, except per share)

Net income (loss) as reported $ 114.8 $ (807.4) $ (1,246.9)Add: Stock-based compensation expense (income) included in net income (loss) (net of tax) 6.4 1.3 (5.6)Deduct: Stock-based compensation expense calculated using the fair value method (net of tax) (20.2) (28.0) (28.7)Net income (loss) as adjusted $ 101.0 $ (834.1) $ (1,281.2)

Net income (loss) per share:Basic — as reported $ 0.65 $ (4.61) $ (7.47)

— as adjusted 0.58 (4.76) (7.67)Diluted — as reported $ 0.63 $ (4.61) $ (7.47)

— as adjusted 0.56 (4.76) (7.67)



Earnings Per Share of Common Stock

Basic earnings per share were computed based on the average number of common shares outstanding. Diluted earnings per share reflects thedilutive impact of outstanding stock options (computed using the treasury stock method) and in 2004, contingently convertible debt.

We have adopted the provisions of Emerging Issues Task Force Issue No. 04-08, “The Effect of Contingently Convertible Debt on DilutedEarnings per Share”. This pronouncement requires shares, issuable under contingent conversion provisions in debt agreements, to be includedin the calculation of diluted earnings per share regardless of whether the provisions of the contingent features had been met. The provisions ofIssue No. 04-08 are effective for reporting periods ending after December 15, 2004. Retroactive restatement of diluted earnings per share isrequired. Refer to Note 12.

All earnings per share amounts in these notes to financial statements are diluted, unless otherwise noted. Refer to Note 12.

Reclassification

Certain items previously reported in specific financial statement captions have been reclassified to conform to the 2004 presentation.

The Financial Accounting Standards Board (FASB) issued Staff Position No. 129-1, “Disclosure Requirements under FASB StatementNo. 129, Disclosure of Information about Capital Structure, Relating to Contingently Convertible Securities” (FSP 129-1). FSP 129-1 clarifiedcertain disclosure requirements of the contingent conversion features of convertible securities. FSP 129-1 was effective immediately upon itsrelease. Our disclosures related to our $350 million 4% Convertible Senior Notes due 2034 are in compliance with the disclosure requirementsof FSP 129-1.

The FASB issued, on May 19, 2004, FASB Staff Position No. FAS 106-2, “Accounting and Disclosure Requirements Related to theMedicare Prescription Drug, Improvement and Modernization Act of 2003” (FSP 106-2). FSP 106-2 provides guidance on accounting for theeffects of the new Medicare prescription drug legislation by employers whose prescription drug benefits are actuarially equivalent to the drugbenefit under Medicare Part D. It also contains basic guidance on related income tax accounting, and complex rules for transition that permitvarious alternative prospective and retroactive transition approaches. Based on the proposed regulations, during 2004 we determined that theoverall impact of the adoption of FSP 106-2 was a reduction of expense in 2004 and in future annual periods of approximately $2 million on anannual basis. The adoption of FSP 106-2 also reduced our accumulated postretirement benefit obligation by approximately $19.7 millionduring 2004. On January 21, 2005 final regulations were issued. Based on the clarifications provided in the final regulations, our net periodicpostretirement cost is expected to be lower by approximately $50 million in 2005, and the accumulated postretirement benefit obligation isexpected to be reduced by approximately $475 million to $525 million during 2005.

The FASB has issued Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (SFAS 123R). Underthe provisions of SFAS 123R, companies are required to measure the cost of employee services received in exchange for an award of equityinstruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during whichan employee is required to provide service in exchange for the award, usually the vesting period. We must adopt the provisions of SFAS 123Ras of the beginning of the first interim reporting period that begins after June 15,

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Recently Issued Accounting Standards



2005 (i.e. the third quarter of 2005), with early adoption encouraged. SFAS 123R applies to all awards granted, modified, repurchased orcancelled by us after June 30, 2005.

SFAS 123R allowed companies various transition approaches. We are currently assessing the timing and the transition method that we willuse for the adoption of SFAS 123R. We expect to recognize additional compensation cost of approximately $3 million to $4 million per quarterthat was not previously required to be recognized, beginning in the quarter in which we first implement the provisions of SFAS 123R. We donot expect the adoption of SFAS 123R to have a material impact on our results of operations, financial position or liquidity.

On October 22, 2004, the American Jobs Creation Act of 2004 (the Act) was signed into law. The Act, when fully phased-in, includes a taxdeduction of up to 9 percent of the lesser of (a) qualified production activities income or (b) taxable income, both as defined in the Act. Inaddition the Act includes a special one-time tax deduction of 85 percent of certain foreign earnings that are repatriated no later than in the 2005tax year. The FASB issued two staff positions to address the accounting for income taxes in conjunction with the Act. FASB Staff PositionNo. 109-1, “Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activitiesprovided by the American Jobs Creation Act of 2004” (FSP 109-1), was effective upon its release on December 22, 2004. FSP 109-1 requiresus to treat the tax deduction as a special deduction instead of a change in tax rate that would have impacted our existing deferred tax balances.Based on current earnings levels, this provision should not have a material impact on our income tax provision.

FASB Staff Position No. 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within theAmerican Jobs Creation Act of 2004” (FSP 109-2), established accounting and disclosure requirements for enterprises in the process ofevaluating, or completing the evaluation of, the repatriation provision of the Act. We have started an evaluation of the effects of the repatriationprovision. We do not anticipate repatriating foreign earnings under the Act, as it may not provide an overall tax benefit. However, we do notexpect to be able to complete this evaluation until our 2005 tax position has been more precisely determined and Congress or the TreasuryDepartment provide additional clarifying language on key elements of the provision. If we ultimately determine to elect to repatriate earningsunder the Act, it would not have a material impact on our results of operations, financial position or liquidity.

The FASB has issued Statement of Financial Accounting Standards No. 151, “Inventory Costs — an amendment of ARB No. 43,Chapter 4” (SFAS 151). The provisions of SFAS 151 are intended to eliminate narrow differences between the existing accounting standards ofthe FASB and the International Accounting Standards Board (IASB) related to inventory costs, in particular, abnormal amounts of idle facilityexpense, freight, handling costs and spoilage. SFAS 151 requires that these costs be recognized as current period charges regardless of theextent to which they are considered abnormal. The provisions of SFAS 151 are effective for inventory costs incurred during fiscal yearsbeginning after June 15, 2005. The adoption of SFAS 151 is not expected to have a material impact on our results of operations, financialposition or liquidity.

The FASB has issued Statement of Financial Accounting Standards No. 153, “Exchanges of Nonmonetary Assets — an amendment ofAPB Opinion No. 29” (SFAS 153). The provisions of SFAS 153 are intended to eliminate narrow differences between the existing accountingstandards of the FASB and the IASB related to the value on which the measurement of nonmonetary exchanges should be based. APB OpinionNo. 29 (APB 29) provides that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Anexception was provided in APB 29 to measure exchanges of similar productive assets based on book values. SFAS 153 eliminates theexception in APB 29 for similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do nothave commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the

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entity are expected to change significantly as a result of the exchange. The provisions of SFAS 153 are effective for nonmonetary exchangesoccurring in periods beginning after June 15, 2005. The adoption of SFAS 153 is not expected to have a material impact on our results ofoperations, financial position or liquidity.

The EITF issued Topic 03-06, “Participating Securities and the Two-Class Method under FASB Statement No. 128”, (EITF 03-06).EITF 03-06 requires the use of the two-class method of computing EPS for enterprises with participating securities or multiple classes ofcommon stock. The provisions of EITF 03-06 are effective for fiscal periods beginning after March 31, 2004. The adoption of EITF 03-06 didnot have an impact on our EPS.

The financial statements included in this 2004 Form 10-K have been restated to reflect adjustments to our previously reported quarterlyfinancial data and annual financial statements included in our Form 10-K for the year ended December 31, 2003, as filed on May 19, 2004, andour previously-filed quarterly reports on Form 10-Q for the quarters ended March 31, 2004, June 30, 2004, and September 30, 2004. Therestatement also affected periods prior to 2003. References to quarterly amounts are unaudited. All amounts are before tax unless otherwisenoted. Refer to Note 24 for the effect of the restatement on quarterly periods of 2004 and 2003. We intend to file an amended Form 10-K forthe year ended December 31, 2003 as expeditiously as possible.

Our 2003 Form 10-K, filed on May 19, 2004, contained a restatement of our previously-issued quarterly financial data and annual financialstatements. We identified adjustments through May 19, 2004 which reduced previously reported net income in 2003 and prior years by a totalof $280.8 million. Of this amount, $56.2 million was included in 2003 net income and $224.6 million was included in net income in prioryears. The impact on net income for the years ended December 31, 2002 and 2001 was $121.2 million and $50.5 million, respectively. Theimpact related to years prior to 2001 was a decrease in retained earnings of $52.9 million at January 1, 2001. Total shareholders’ equity atSeptember 30, 2003 was reduced by adjustments to Accumulated Other Comprehensive Income (Loss) (OCI) of $183.9 million.

The total reductions in net income of $280.8 million include $31.3 million recorded in the quarter ended June 30, 2003; $84.7 million inadditional items previously reflected in the restated financial results included in the Form 8-K filed on November 20, 2003 and the Form 10-Qfor the quarter ended September 30, 2003 filed on November 19, 2003; and $164.8 million in additional items reflected in the financialstatements included in the Form 10-K for the year ended December 31, 2003 filed on May 19, 2004.

The restatements initially arose out of an intensified effort to reconcile certain general ledger accounts in the second and third quarters of2003. As a result of our efforts to reconcile these accounts, we identified various adjustments that were recorded in the second quarter of 2003and subsequently identified additional adjustments that needed to be recorded. Based on an assessment of the impact of the adjustments,management and the Audit Committee decided to restate our previously issued financial statements on Form 10-Q for the quarter endedSeptember 30, 2003 and for prior periods. Following the identification of these adjustments, PricewaterhouseCoopers LLP (PwC) advised us inOctober 2003 that the failure to identify certain issues that had affected several years financial statements related to the monitoring and reviewof general ledger accounts collectively resulted in a material weakness in internal controls that required strengthening of procedures for accountreconciliations.

In December 2003, we discovered accounting irregularities in our European Union Tire business segment. The Audit Committee initiated aspecial investigation of these irregularities, and this investigation

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Note 2. Restatement

Restatements Included in 2003 Form 10-K



Note 2. Restatement (continued)

was subsequently expanded to other overseas locations. The investigations identified accounting irregularities primarily related to earningsmanagement whereby accrual accounts were improperly adjusted between periods or expenses were improperly deferred. In the first andsecond quarters of 2004, we identified other adjustments. Some of these adjustments resulted from accounting irregularities including theunderstatement of workers’ compensation liability and the valuation of real estate received in payment of trade accounts receivable in Chile.The Audit Committee also initiated an investigation into these adjustments. As a result of these investigations, management and the AuditCommittee decided that a further restatement of our financial statements for 2003 and prior years was necessary.

In May 2004, PwC advised us that the circumstances it previously identified to us as collectively resulting in a material weakness had eachindividually become a material weakness. PwC advised us that this determination was due to the number of previously undetected errors thatwere attributable to the material weakness previously identified. A significant portion of these errors were detected by us. PwC furtheridentified an additional material weakness resulting from intentional overrides of internal controls by those in authority, particularly related tothe European Union Tire segment and workers’ compensation liability in the United States. These material weaknesses, if unaddressed, couldresult in material errors in our financial statements. In addition, PwC advised us that it had identified as reportable conditions our need toenhance certain finance personnel’s knowledge of U.S. GAAP and internal controls and the need to enhance controls related to theestablishment of bank accounts.

The restatement also included changes to the timing of certain previously recognized adjustments not arising from account reconciliationsas well as other adjustments identified during the restatement process.

The adjustments resulting from our initial restatement efforts, the special overseas accounting and workers’ compensation investigationsand the 2003 year-end closing process are described as follows:

Accounting Irregularities. This category includes adjustments reducing income by a total of $29.0 million related to periods endingSeptember 30, 2003 and earlier. Of this amount, $0.4 million of income was included in income in 2003 and $29.4 million of expense wasincluded in income in prior years. These adjustments resulted from the overseas special accounting investigation, the understatement of ourliability for workers’ compensation payments, the improper deferral of manufacturing variances in 1998, and certain adjustments in Chile,including the correction of the valuation of real estate received in payment for trade accounts receivable.

Adjustments reducing income by a total of $9.2 million were included in the restatement as a result of the special accounting investigationin Europe and Asia. The majority of the adjustments addressed accrual accounts that were improperly adjusted between periods or expensesthat were improperly deferred beyond the third quarter of 2003. These adjustments primarily related to accounts receivable, fixed assets,accounts payable-trade and other long-term liability accounts that were improperly adjusted. As part of this investigation, an adjustment wasmade to defer a gain on a sale-leaseback transaction of $3.9 million beyond the third quarter of 2003 that was improperly recognized in priorperiods.

The workers’ compensation adjustments totaled $17.7 million related to periods ending on September 30, 2003 and earlier. Theseadjustments resulted from an understatement of our potential liability for estimated payments relating to workers’ compensation claims byemployees. In the first quarter of 2004, it was noted that claims arising from one of our United States tire manufacturing plants were under-reserved. As a result, with the assistance of the outside administrator we reviewed approximately 85% of the open claims handled by thisadministrator at this plant as well as other facilities and determined that reserves needed to be increased to accurately value the claims. Theunder-reserving resulted in part from improper efforts to reduce, or restrict the amount of increase in, the reserves for certain workers’compensation claims leading to claims data in our workers’ compensation claims database that did not reflect our probable ultimate exposure.Of the $17.7 mil-

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lion adjustment, $4.1 million affected income for the nine months ended 2003, $5.6 million and $2.3 million affected income for the yearsended December 31, 2002 and 2001, respectively, and $5.7 million affected pre-2001 income. In addition, in the fourth quarter of 2003,$6.2 million was recorded relating to the understatement.

In the second quarter of 1999, we discovered that $18.1 million of manufacturing variances at one of our United States tire manufacturingplants had been improperly deferred from 1998 to 1999. When the matter was discovered in the second quarter of 1999, we recorded theremaining costs that had not previously been recorded. As part of this restatement, we reduced income in 1998 by $18.1 million and increasedincome in 1999 by the same amount.

In 2000, our subsidiary in Chile received approximately 13 acres of land in Santiago, Chile, in payment for trade accounts receivable fromone of its Chilean customers. At the time, the subsidiary recorded the land based upon an inappropriate appraisal. In the first quarter of 2004,we had an additional appraisal performed that appropriately valued the land at a much lower value. The Audit Committee requested aninvestigation into the matter, and as a result, we recorded an adjustment to reduce the valuation of the land. The adjustment reduced income by$1.5 million in 2000. We also identified other adjustments in Chile whereby accrual accounts were improperly adjusted between periods orexpenses were improperly deferred. Adjustments of $0.6 million were recorded related to these accounts.

A summary of the accounting irregularities adjustments and the time periods affected follows:

Account Reconciliations. This category includes adjustments totaling $144.9 million resulting from the failure to either reconcile accounts orresolve certain reconciliation issues in a timely manner. Of this amount, $42.8 million was included in income in 2003 and $102.1 million wasincluded in income in prior years. The most significant adjustments in this category relate to certain reconciliations for accounts receivable,inventories, fixed assets, intercompany accounts, prepaid expenses and accounts payable-trade. Certain of these adjustments were associatedwith the integration of a new enterprise resource planning system (ERP) into our accounting processes beginning in 1999.

The following categories represent a majority of the account reconciliation adjustments included in the restatement:

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Year EndedNine Months December 31,

EndedSeptember 30, 2003 2002 2001 Pre-2001 Total

(In millions) (Unaudited)Income (Expense)Accruals and deferred expenses — Europe and Asia $ 4.5 $ 0.5 $ (8.3) $ (2.0) $ (5.3)Deferred income — Europe — (2.9) (1.0) — (3.9)Workers’ compensation (4.1) (5.6) (2.3) (5.7) (17.7)Accruals and deferred expenses — Chile — 4.5 (1.6) (3.5) (0.6)Land valuation — Chile — — — (1.5) (1.5)

$ 0.4 $ (3.5) $ (13.2) $ (12.7) $ (29.0)

A. Interplant. We use an internal system, the Interplant System, to track the procurement and transfer of fixed assets, raw materials andspare parts acquired or manufactured by Goodyear units in the United States for our foreign manufacturing locations. The $28.8 millionInterplant charge corrects an



overstatement of income and assets. The most significant items in this category are 1) fixed assets and inventory of $26.0 million which werenot properly relieved from the Interplant System when they were billed to the foreign manufacturing locations and accordingly now have to beexpensed and 2) the correction of a failure to depreciate $2.8 million of fixed assets.

Adjustments totaling $23.0 million were recorded in OCI in the 2003 Form 10-K filed on May 19, 2004. An adjustment was made torecord an $18.0 million charge to deferred derivative losses, with an offsetting credit to liabilities. This adjustment was associated with threeinterest rate swaps and a cross-currency contract for the period March 2001 through March 2003. An adjustment was also made to record a$6.8 million charge to currency translation, with an offsetting credit to long-term assets. The adjustment affected the period from January 1,2003 to September 30, 2003. These adjustments were identified in conjunction with the completion of account reconciliations.

Out-of-Period Adjustments. This category includes adjustments previously identified but deemed to be immaterial and recorded in the periodwe identified the error or in a subsequent period. Adjustments in this category change the timing of income and expense items that werepreviously recognized. The cumulative amount of out-of-period adjustments was a decrease to income of $0.6 million. Of this amount,

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Note 2.Restatement (continued)

B. North American Tire (NAT) Receivables. The adjustment to accounts receivable of $25.0 million is attributable to amounts erroneouslyrecorded in our general ledger during the period April 1999 to November 2000. During this period, we implemented certain modules ofan ERP accounting system. These modules were not properly integrated with existing systems resulting in an overstatement of sales andaccounts receivable in the general ledger. This overstatement had to be reversed. Billings to customers and cash collections wereappropriate during this period.

C. Engineered Products (EPD). It was not possible to allocate the amount of this adjustment to specific periods and accordingly, werecorded substantially all of this adjustment in the first quarter of 2003. This adjustment includes the write-off of $21.3 millionconsisting of $3.7 million in intercompany accounts and $17.6 million related to payables and other accounts. Several factors relating toour ERP systems implementation resulted in EPD’s inability to locate or recreate account reconciliations for prior periods.

D. Wingfoot Commercial Tire Systems, LLC. On November 1, 2000, we made a contribution, which included inventory, to WingfootCommercial Tire Systems, LLC, a consolidated subsidiary. On a consolidated basis, the inventory was valued at our historical cost.Upon the sale of the inventory, consolidated cost of goods sold was understated by $11.0 million. Additionally, inventory and fixedasset losses totaling $4.2 million were not expensed as incurred and were written off in connection with the restatement.

E. Fixed Assets. The adjustments to other fixed assets totaled $13.1 million and related primarily to the understatement of depreciationexpenses and the write-off of assets previously disposed.

F. General and Product Liability. The expense for general and product claims increased $11.6 million for the third quarter and nine monthsended September 30, 2003, and related to the timing of the recognition of certain liabilities for Entran II claims. We reached finalagreement with one of our insurers in November 2003, prior to filing the third quarter 10-Q, and recorded both a receivable andseparately a corresponding liability related to Entran II matters. This amount was reflected in our amended quarterly report on Form 10-Q/A for the period ended September 30, 2003 filed on August 3, 2004, which has subsequently been restated, as discussed below in“Restatements Included in 2004 Form 10-K”.



$0.8 million of income was included in income in 2003 and $1.4 million of expense was included in income in prior years.

The most significant item in this category relates to the timing of the recognition of certain SAG expenses. As a result of the integration ofthe new enterprise resource planning system into our accounting processes beginning in 1999, certain expenses were incorrectly capitalized ininventory during 2001, 2000 and 1999. In the 2003 Form 10-K, we recorded an adjustment totaling $16.8 million during 2002 to correct theimpact on prior years. Of this amount, $13.9 million applied to 2001.

Discount Rate Adjustments. In preparing our 2003 Form 10-K, we reassessed the estimate of the discount rate used in determining the netperiodic benefit cost and benefit obligations for a majority of its domestic pension, workers’ compensation and other postretirement benefitplans. Consistent with that effort and the restatement process, we determined that it would be appropriate to make similar reassessments fordiscount rates for all periods presented. As a result, the discount rate was revised to 6.75%, 7.25% and 7.50% from 7.25%, 7.75% and 8.00%for 2003, 2002 and 2001, respectively. Total reductions to income for 2000-2003 were $18.9 million, of which $13.0 million decreased incomefor the nine months ended September 30, 2003, and $14.9 million and $5.5 million decreased income for the years ended December 31, 2002and 2001, respectively. Pre-2001 income was increased by $14.5 million as a result of these adjustments. This change also resulted in a chargeto deferred pension costs in accumulated other comprehensive income (loss) (OCI) totaling $150.1 million for the years ended December 31,2002 and 2001. Additionally, in 2002, we had established a valuation allowance against our net Federal and state deferred tax assets.Accordingly, this restatement includes a charge to income tax expense of $81.2 million to provide a valuation allowance against the tax benefitincluded in the adjustment to OCI in 2001, and a charge to OCI of $10.8 million to provide a valuation allowance against the tax benefitincluded in the adjustment to OCI in 2002.

Chemical Products Segment. This category primarily includes adjustments identified as a result of a stand-alone audit conducted in 2003 of aportion of our Chemical Products business segment. The most significant adjustments in this category relate to the timing of the recognition ofmanufacturing variances to reflect the actual cost of inventories, the fair value adjustment of a hedge for natural gas, and the correction ofintercompany profit elimination in inventory to eliminate selling and administrative expenses in inventory. The cumulative effect of ChemicalProduct segment adjustments at September 30, 2003 was a decrease to income of $7.7 million. Of this amount, $(0.6) million was included inincome in 2003 and $8.3 million was included in income in prior years.

Tax Adjustments. As a result of the restatement adjustments included in the 2003 Form 10-K, an additional Federal and state valuationallowance of $121.6 million (including the $81.2 million charge for discount rate adjustments discussed above) was required to be recognizedin 2002, the period in which we previously provided for our valuation allowance. The remaining amounts related to the correction of errors inthe computation of deferred tax assets and liabilities.

On November 5, 2004, we announced that we would file an amended 2003 Form 10-K to include summarized financial information relatedto certain investments in affiliates. We also announced a restatement of our previously reported financial statements. On December 30, 2004,we announced that we were working to resolve an accounting issue concerning an Australian affiliate, South Pacific Tyres (“SPT”), and thatthe resolution of this matter could have an impact on our previously reported financial results. Although the primary focus of this effort was toresolve the accounting treatment for a 10-year supply agreement between the Company and SPT, we also noted the possibility that other itemshaving an impact on SPT’s prior period

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financial statements could arise in the course of the review. On February 25, 2005, we announced that we would restate our 2004 third quarterForm 10-Q for additional adjustments identified subsequent to its filing on November 9, 2004. This Form 10-K reflects the resolution of theSPT accounting matters. The restatements of our previously issued quarterly and annual financial statements reflected adjustments that reducedpreviously reported net income by $19.8 million, of which $12.9 million related to SPT, as discussed below. Of this amount, $5.5 million ofincome was included in 2004 net income and $25.3 million of expense was included in net income in prior years. The impact on net income forthe years ended December 31, 2003 and 2002 was $5.3 million and $19.9 million, respectively. The impact on years prior to 2002 was$0.1 million.

The total reduction in net income of $19.8 million included $4.6 million of expense for additional items previously reflected in the restatedfinancial results included in the Form 10-Q filed on November 9, 2004. Of this amount, $2.7 million of income was recorded in the quarterended March 31, 2004; $0.3 million of income was recorded in the quarter ended June 30, 2004; and $7.6 million of expense was recorded inthe quarter ended September 30, 2004. Additional items totaling $15.2 million of expense are reflected in the financial statements included inthis Form 10-K for the year ended December 31, 2004.

The adjustments included in the restatements are described as follows:

SPT. These adjustments reduced income by $12.9 million and resulted primarily from the recognition of a contractual obligation related to asupply agreement that was entered into in 2000 with our 50% owned affiliate in Australia, South Pacific Tyres, an impairment of certainproperty, plant and equipment, the timing of the recognition of certain rationalization charges and other adjustments identified in conjunctionwith a restatement of SPT’s historical U.S. GAAP financial results. Of this amount, a benefit of $0.6 million was included in income in 2004and charges of $13.5 million were included in income in prior years. The adjustments included a charge that reduced income by $6.9 million torecognize payments we made pursuant to a long term supply agreement as a capital contribution. We made certain payments to SPT totaling$13.8 million under the terms of the supply agreement. As part of this restatement, we are recording 50% of those payments as capitalcontributions to SPT and 50% in expense, representing amounts contributed on behalf of our joint venture partner pursuant to the provisions ofEmerging Issues Task Force Issue 00-12, “Accounting by an Investor for Stock-Based Compensation Granted to Employees of an EquityMethod Investee”. We also recorded a charge that reduced income by $4.3 million for the write-down of assets at a closed manufacturingfacility.

General and Product Liability. We identified adjustments related to general and product liability — discontinued products which increasedincome by $9.5 million. Of this amount, $2.2 million was included in income in 2004 and $7.3 million was included in income in 2003. Theseadjustments were the result of the valuation firm’s review of additional historical defense costs data.

Account Reconciliations. We identified adjustments related to account reconciliation items in 2004 which reduced cumulative income by$4.0 million. Of this amount, a benefit of $2.5 million was included in income in 2004 and charges of $6.5 million were included in income inprior years. These adjustments were primarily comprised of $4.1 million in net expense related to the write-off of goodwill associated withcertain retail stores previously sold in France, $2.9 million in expense related to the write-off of certain deferred charges, $1.8 million inexpense related to a clerical error in recording adjustments to our workers’ compensation reserve as part of our restatement as of December 31,2003, and $1.5 million in expense related to the reconciliation of an intra-company account, partially offset by favorable adjustments related toan overaccrual for payroll deductions of approximately $3.3 million, and additional equity in earnings of affiliates of approximately$1.0 million. Also included in the adjustments were an offsetting charge and credit of $2.7 million identified in 2004 that related to a leased tireasset account. Since it was not possible to allocate these offsetting $2.7 million adjustments to the applicable periods, we recorded bothadjustments in

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the first quarter of 2004. We also reassessed our estimate of the discount rate used in determining net periodic pension cost and benefitobligations for two minor pension plans, and recorded a $1.3 million expense related to these two plans.

Other restatement adjustments included $3.2 million in expense resulting from the incorrect calculation of depreciation on certain fixedassets, $2.6 million in expense related to account reconciliations at a subsidiary in Europe, $2.0 million in expense resulting from the failure torecord expenses related to bank credit facilities and $1.8 million in expense from a physical inventory of fixed assets at a manufacturingfacility. Adjustments were also identified that increased income by $4.8 million related to the reduction of previously recorded amortizationexpense resulting primarily from the revaluation of foreign currency-denominated goodwill related to a subsidiary in Europe from 1996 to2001, $3.8 million for an overstatement of accounts payable, $2.6 million to reverse a loss on an asset write-off recorded in the third quarter of2004 and $1.3 million related to asset sales at a retail chain in Europe. Other less significant adjustments reflected in the restatement amountedto an increase in cumulative income of $0.4 million.

Additionally, we identified an error related to intercompany transactions arising from a programming and systems interface change with acomputer program. This error caused sales and cost of goods sold in North American Tire to be understated by equal amounts. The restatementreflects an increase in sales and costs of goods sold during the first quarter of 2004 of $10.4 million each, and an increase in sales and cost ofgoods sold during the second quarter of 2004 of $10.8 million each to correct this. There was no effect on net income in any period.

We also identified a misclassification of deferred income tax assets and liabilities on our Consolidated Balance Sheet at December 31,2003. We had recorded certain deferred tax assets and liabilities on a gross basis rather than netting short-term deferred tax assets with short-term deferred tax liabilities and long-term deferred tax assets with long-term deferred tax liabilities. The misclassification overstated totalassets and total liabilities by $356.7 million beginning at December 31, 2003. This had no impact on shareholders’ equity, net income, or cashflows.

We also identified an adjustment to OCI totaling $5.8 million, primarily related to the revaluation of various foreign currency-denominatedgoodwill accounts and certain other accounts. This revaluation error resulted in goodwill and minority equity being understated andshareholders’ equity (deficit) being overstated by approximately $40 million, $31 million and $9 million, respectively, at December 31, 2003.The U.S. dollar value of these accounts increased since the time the goodwill was initially recorded, due primarily to the recent strengtheningof the euro.

Tax Adjustments. We identified an additional adjustment to our net deferred tax valuation allowance that reduced net income by$11.5 million. The remaining tax adjustments relate to the correction of errors in the computation of deferred tax assets and liabilities.

Certain 2004 quarterly financial information has also been restated in this Form 10-K to reflect adjustments to our previously reportedfinancial information on Form 10-Q for the quarters ended March 31, 2004, June 30, 2004 and September 30, 2004. Refer to SupplementaryData on page 149 for further information. We intend to file amended Form 10-Qs for these quarterly periods of 2004 as expeditiously aspossible.

The following table sets forth the effects of the restatement adjustments for both “Restatement Included in 2003 Form 10-K” and“Restatement Included in 2004 Form 10-K”, as discussed above, on the

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Consolidated Statement of Operations for the years ended December 31, 2003, 2002, and 2001, as well as the cumulative effect on periodsending prior to January 1, 2001.

Effect of restatement adjustments on Goodyear’s previously issued financial statementsIncrease (decrease) in Income (loss)

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2003 2002 2001 Pre-2001 Total(In millions, except per share amounts)

Net loss as originally reported(A) $ (1,105.8) $ (203.6)Adjustments (pretax):

Accounting Irregularities (3.5) (13.2) $ (12.7) $ (29.4)Account Reconciliations (6.8) (12.8) (82.5) (102.1)Out-of-Period 15.2 (14.5) (2.1) (1.4)Discount Rate Adjustments (14.9) (5.5) 14.5 (5.9)Chemical Products Segment 14.2 (18.9) (3.6) (8.3)

Total adjustments (pretax) 4.2 (64.9) (86.4) (147.1)Tax effect of restatement adjustments (2.9) 17.9 32.3 47.3Tax adjustments (122.5) (3.5) 1.2 (124.8)

Total taxes (125.4) 14.4 33.5 (77.5)Total net adjustments (121.2) (50.5) $ (52.9) $ (224.6)

Net loss as previously reported(B) $ (802.1) $ (1,227.0) $ (254.1)SPT (2.3) (3.5) 0.6 (8.3) (13.5)General and Product Liability 7.3 — — — 7.3Account Reconciliations (5.4) (1.8) (1.7) 2.4 (6.5)

Total adjustments (pretax) (0.4) (5.3) (1.1) (5.9) (12.7)Tax effect of restatement adjustments (0.1) (7.4) 0.5 6.4 (0.6)Tax adjustments (4.8) (7.2) — — (12.0)

Total taxes (4.9) (14.6) 0.5 6.4 (12.6)Total net adjustments (5.3) (19.9) (0.6) $ 0.5 $ (25.3)

Net loss as restated $ (807.4) $ (1,246.9) $ (254.7)

Net Income (Loss) Per Share:Basic as originally reported(A) $ (6.62) $ (1.27)Effect of net adjustments (0.73) (0.32)Basic as previously reported(B) $ (4.58) $ (7.35) $ (1.59)Effect of net adjustments (0.03) (0.12) —Basic as restated $ (4.61) $ (7.47) $ (1.59)

Diluted as originally reported(A) $ (6.62) $ (1.27)Effect of net adjustments (0.73) (0.32)Diluted as previously reported(B) $ (4.58) $ (7.35) $ (1.59)Effect of net adjustments (0.03) (0.12) —Diluted as restated $ (4.61) $ (7.47) $ (1.59)



The following table sets forth the effects of the restatement adjustments discussed above on the Consolidated Statement of Operations forthe year ended December 31, 2003.

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Year EndedDecember 31, 2003

As OriginallyReported(A) Restated

(In millions, except per share amounts)Net Sales $ 15,119.0 $ 15,122.1Cost of Goods Sold 12,495.3 12,499.0Selling, Administrative and General Expense 2,371.2 2,374.2Rationalizations 291.5 291.5Interest Expense 296.3 296.3Other (Income) and Expense 267.3 263.4Foreign Currency Exchange 40.2 40.7Equity in Earnings of Affiliates 12.1 14.5Minority Interest 35.0 32.8Loss Before Income Taxes (689.9) (690.3)U.S. and Foreign Taxes on Income (Loss) 112.2 117.1Net Loss $ (802.1) $ (807.4)

Net Loss Per Share — Basic $ (4.58) $ (4.61)Average Shares Outstanding 175.3 175.3Net Loss Per Share — Diluted $ (4.58) $ (4.61)Average Shares Outstanding 175.3 175.3

(A) As reported in 2003 Form 10-K filed on May 19, 2004.



The following table sets forth the effects of the restatement adjustments discussed above on the Consolidated Statement of Operations forthe years ended December 31, 2002 and 2001.

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Year Ended December 31, 2002As Originally As PreviouslyReported(A) Reported(B) Restated

(In millions, except per share amounts)Net Sales $ 13,850.0 $ 13,856.2 $ 13,856.0Cost of Goods Sold 11,313.9 11,303.9 11,306.9Selling, Administrative and General Expense 2,223.9 2,203.2 2,202.4Rationalizations 8.6 5.5 5.5Interest Expense 241.3 241.7 242.7Other (Income) and Expense 25.8 56.8 56.8Foreign Currency Exchange (10.2) (9.7) (8.7)Equity in Earnings of Affiliates 8.8 13.2 13.8Minority Interest 55.8 55.3 55.6Loss Before Income Taxes (17.9) (13.7) (19.0)U.S. and Foreign Taxes on Income (Loss) 1,087.9 1,213.3 1,227.9Net Loss $ (1,105.8) $ (1,227.0) $ (1246.9)

Net Loss Per Share — Basic $ (6.62) $ (7.35) $ (7.47)Average Shares Outstanding 167.0 167.0 167.0Net Loss Per Share — Diluted $ (6.62) $ (7.35) $ (7.47)Average Shares Outstanding 167.0 167.0 167.0





94


Year Ended December 31, 2001As Originally As PreviouslyReported(A) Reported(B) Restated

(In millions, except per share amounts)Net Sales $ 14,147.2 $ 14,162.5 $ 14,162.3Cost of Goods Sold 11,619.5 11,685.3 11,687.8Selling, Administrative and General Expense 2,248.8 2,220.5 2,219.1Rationalizations 206.8 210.3 210.3Interest Expense 292.4 297.1 298.0Other (Income) and Expense 11.8 40.8 40.8Foreign Currency Exchange 0.1 10.0 8.8Equity in Earnings of Affiliates 40.6 39.7 39.5Minority Interest 0.2 (3.3) (3.0)Loss Before Income Taxes (273.0) (337.9) (339.0)U.S. and Foreign Taxes on Income (Loss) (69.4) (83.8) (84.3)Net Loss $ (203.6) $ (254.1) $ (254.7)

Net Loss Per Share — Basic $ (1.27) $ (1.59) $ (1.59)Average Shares Outstanding 160.0 160.0 160.0Net Loss Per Share — Diluted $ (1.27) $ (1.59) $ (1.59)Average Shares Outstanding 160.0 160.0 160.0





The following table sets forth the effects of the restatement adjustments discussed above on the Consolidated Balance Sheet atDecember 31, 2003.

95


December 31, 2003As Originally As PreviouslyReported(A) Reported(B) Restated

(Dollars in millions)AssetsCurrent Assets:

Cash and cash equivalents $ 1,541.0 $ 1,544.2 $ 1,546.3Short term securities 23.9 23.9 23.9Accounts and notes receivable 2,621.5 2,622.7 2,616.3Inventories 2,465.0 2,464.6 2,467.7Prepaid expenses and other current assets 336.7 305.7 305.4

Total Current Assets 6,988.1 6,961.1 6,959.6Long Term Accounts and Notes Receivable 255.0 255.0 275.7Investments in and Advances to Affiliates 177.5 178.9 184.2Other Assets 74.9 71.5 71.5Goodwill 622.5 618.6 658.2Other Intangible Assets 161.8 161.9 150.4Deferred Income Tax 397.5 70.5 70.5Prepaid and Deferred Pension Costs 868.3 869.9 869.9Deferred Charges 252.7 246.7 255.9Properties and Plants 5,207.2 5,208.9 5,205.2

Total Assets $ 15,005.5 $ 14,643.0 $ 14,701.1


Accounts payable-trade $ 1,572.9 $ 1,574.9 $ 1,562.8Compensation and benefits 983.1 982.7 987.6Other current liabilities 572.2 571.5 585.2United States and foreign taxes 306.1 268.7 270.7Notes payable 137.7 137.7 146.7Long term debt and capital leases due within one year 113.5 113.5 113.5

Total Current Liabilities 3,685.5 3,649.0 3,666.5Long Term Debt and Capital Leases 4,826.2 4,825.8 4,825.8Compensation and Benefits 4,540.4 4,542.6 4,541.7Deferred and Other Noncurrent Income Taxes 689.4 370.1 380.6Other Long Term Liabilities 451.4 451.4 464.7Minority Equity in Subsidiaries 825.7 825.0 854.0

Total Liabilities 15,018.6 14,663.9 14,733.3



The following table sets forth the effects of the restatement adjustments discussed above on the Consolidated Balance Sheet at December 31,2002.

96



(Dollars in millions)Commitments and Contingent LiabilitiesShareholders’ EquityPreferred Stock, no par value:

Authorized, 50,000,000 shares, unissued — — —Common Stock, no par value:

Authorized, 300,000,000 sharesOutstanding shares, 175,309,002 $ 175.3 $ 175.3 $ 175.3

Capital Surplus 1,390.2 1,390.2 1,390.2Retained Earnings 980.4 972.8 955.1Accumulated Other Comprehensive Income (Loss) (2,559.0) (2,559.2) (2,552.8)

Total Shareholders’ Equity (13.1) (20.9) (32.2)Total Liabilities and Shareholders’ Equity $ 15,005.5 $ 14,643.0 $ 14,701.1


(B) As reported in 2004 Form 10-Q filed on November 9, 2004.


(Dollars in millions)AssetsCurrent Assets:

Cash and cash equivalents $ 923.0 $ 918.1 $ 919.8Short term securities 24.3 24.3 24.3Accounts and notes receivable 1,459.7 1,438.1 1,437.4Inventories 2,371.6 2,346.2 2,345.6Prepaid expenses and other current assets 448.1 453.7 453.1

Total Current Assets 5,226.7 5,180.4 5,180.2Long Term Accounts and Notes Receivable 236.3 242.8 242.8Investments in and Advances to Affiliates 141.7 139.2 145.9Other Assets 254.9 253.0 249.6Goodwill 607.4 602.6 589.1Other Intangible Assets 161.3 161.4 146.5Deferred Income Tax 207.5 187.0 187.0Prepaid and Deferred Pension Costs 913.4 913.4 912.5Deferred Charges 205.1 202.7 203.9Properties and Plants 5,192.3 5,156.2 5,155.6

Total Assets $ 13,146.6 $ 13,038.7 $ 13,013.1



97



(Dollars in millions)


Accounts payable-trade $ 1,502.2 $ 1,515.4 $ 1,517.0Compensation and benefits 961.2 913.6 913.7Other current liabilities 481.6 512.3 511.9United States and foreign taxes 473.2 358.2 359.8Notes payable and capital leases 283.4 283.4 283.4Long term debt and capital leases due within one year 369.8 369.8 369.8

Total Current Liabilities 4,071.4 3,952.7 3,955.6Long Term Debt and Capital Leases 2,989.0 2,989.8 2,989.5Compensation and Benefits 4,194.2 4,497.3 4,499.9Deferred and Other Noncurrent Income Taxes 194.9 298.6 305.0Other Long Term Liabilities 306.3 317.1 317.1Minority Equity in Subsidiaries 740.2 727.8 724.9

Total Liabilities 12,496.0 12,783.3 12,792.0Commitments and Contingent LiabilitiesShareholders’ EquityPreferred Stock, no par value:

Authorized, 50,000,000 shares, unissued — — —Common Stock, no par value:

Authorized, 300,000,000 sharesOutstanding shares, 175,309,002 175.3 175.3 175.3

Capital Surplus 1,390.3 1,390.1 1,390.1Retained Earnings 2,007.1 1,782.5 1,762.5Accumulated Other Comprehensive Income (Loss) (2,922.1) (3,092.5) (3,106.8)

Total Shareholders’ Equity 650.6 255.4 221.1Total Liabilities and Shareholders’ Equity $ 13,146.6 $ 13,038.7 $ 13,013.1





To maintain global competitiveness, we have implemented rationalization actions over the past several years for the purpose of reducing excesscapacity, eliminating redundancies and reducing costs. The net amounts of rationalization charges to the Consolidated Statement of Incomewere as follows:

The following table presents the reconciliation of the liability balance between periods:

2004 rationalizations consisted primarily of warehouse, manufacturing and sales and marketing associate reductions in Engineered Products, afarm tire manufacturing consolidation in European Union Tire, administrative associate reductions in North American Tire, European UnionTire and corporate functional groups, and manufacturing, sales and research and development associate reductions in Chemical Products.

In 2004, net charges were recorded totaling $55.6 million ($52.0 million after tax or $0.27 per share). The net charges included reversals of$39.2 million ($32.2 million after tax or $0.17 per share) related to reserves from rationalization actions no longer needed for their originallyintended purpose, and new charges of $94.8 million ($84.2 million after tax or $0.44 per share). Included in the $94.8 million of new chargesare $77.4 million for plans initiated in 2004, as described above. Approximately 1,400 associates will be released under programs initiated in2004, of which approximately 640 were released by December 31, 2004. The costs of the 2004 actions consisted of $40.1 million related tofuture cash outflows, primarily for associate severance

98

Note 3. Costs Associated with Rationalization Programs

2004 2003 2002(In millions)New charges $ 94.8 $ 307.2 $ 26.5Reversals (39.2) (15.7) (18.0)Other credits — — (3.0)

$ 55.6 $ 291.5 $ 5.5

Associate-related Other ThanCosts Associate- Total

relatedRestated Costs Restated

(In millions)Accrual balance at December 31, 2001 $ 69.1 $ 53.3 $ 122.42002 charges 19.5 7.0 26.5Incurred (49.5) (11.7) (61.2)Reversed to goodwill (0.5) — (0.5)Reversed to the income statement (13.3) (4.7) (18.0)Accrual balance at December 31, 2002 25.3 43.9 69.22003 charges 295.3 11.9 307.2Incurred (199.3) (15.5) (214.8)Reversed to goodwill — (2.9) (2.9)Reversed to the income statement (11.7) (4.0) (15.7)Accrual balance at December 31, 2003 109.6 33.4 143.02004 charges 75.7 19.1 94.8Incurred (109.6) (22.9) (132.5)FIN 46 adoption — 1.5 1.5Reversed to the income statement (34.9) (4.3) (39.2)Accrual balance at December 31, 2004 $ 40.8 $ 26.8 $ 67.6



Note 3. Costs Associated with Rationalization Programs (continued)

costs, including $31.9 million in non-cash pension curtailments and postretirement benefit costs and $5.4 million for noncancelable lease costsand other exit costs. Costs in 2004 also included $16.3 million related to plans initiated in 2003, consisting of $13.7 million of noncancelablelease costs and other exit costs and $2.6 million of associate severance costs. The reversals are primarily the result of lower than initiallyestimated associate severance costs of $34.9 million and lower leasehold and other exit costs of $4.3 million. Of the $34.9 million of associateseverance cost reversals, $12.0 million related to previously approved plans in Engineered Products that were reorganized into the 2004warehouse, manufacturing, and sales and marketing associate reductions.

In 2004, $75.0 million was incurred primarily for associate severance payments, $34.6 million for non-cash pension curtailments andpostretirement benefit costs, and $22.9 million was incurred for noncancelable lease costs and other costs. The remaining accrual balance forall programs was $67.6 million at December 31, 2004, substantially all of which is expected to be utilized within the next 12 months.

Accelerated depreciation charges totaling $10.4 million were recorded in 2004 for fixed assets that will be taken out of service inconnection with certain rationalization plans initiated in 2003 and 2004 in European Union Tire, Latin American Tire and Engineered Products.During 2004, $7.7 million was recorded as CGS and $2.7 million was recorded as SAG.

The following table summarizes, by segment, the total charges expected to be recorded and the total charges recorded in 2004, related tothe new plans initiated in 2004:

A significant portion of the additional restructuring costs not yet recorded is expected to be recorded in the first quarter of 2005.

In 2003, net charges were recorded totaling $291.5 million ($267.1 million after tax or $1.52 per share). The net charges included reversalsof $15.7 million ($14.3 million after tax or $0.08 per share) related to reserves from rationalization actions no longer needed for their originallyintended purpose, and new charges of $307.2 million ($281.4 million after tax or $1.60 per share). The 2003 rationalization actions consistedof manufacturing, research and development, administrative and retail consolidations in North America, Europe and Latin America. Of the$307.2 million of new charges, $174.8 million related to future cash outflows, primarily associate severance costs, and $132.4 million relatedprimarily to non-cash special termination benefits and pension and retiree benefit curtailments. Approximately 4,400 associates will be releasedunder the programs initiated in 2003, of which approximately 2,700 were exited in 2003 and approximately 1,500 were exited during 2004.The reversals are primarily the result of lower than initially estimated associate-related payments of approximately $12 million, favorablesublease contract signings in the European Union of approximately $3 million and lower contract termination costs in the United States ofapproximately $1 million. These reversals do not represent changes in the plans as originally approved by management.

99

Charges ChargesExpected Total Recorded in Reversed in

Charge 2004 2004(In millions)North American Tire $ 2.7 $ 2.7 $ —European Union Tire 31.7 29.3 3.5Eastern Europe, Middle East and Africa Tire 3.7 3.7 —Engineered Products 37.4 34.7 —Chemical Products 4.9 4.9 —Corporate 2.1 2.1 0.4

$ 82.5 $ 77.4 $ 3.9



As part of the 2003 rationalization program, we closed our Huntsville, Alabama tire facility in the fourth quarter of 2003. Of the$307.2 million of new rationalization charges in 2003, approximately $138 million related to the Huntsville closure and were primarily forassociate-related costs, including severance, special termination benefits and pension and retiree benefit curtailments. The Huntsville closurealso resulted in charges to CGS of approximately $35 million for asset impairments and $85 million for accelerated depreciation and the write-off of spare parts. In addition, 2003 CGS included charges totaling approximately $8 million to write-off construction in progress related to theresearch and development rationalization plan, and approximately $5 million for accelerated depreciation on equipment taken out of service atEuropean Union Tire’s facility in Wolverhampton, England.

The following table summarizes, by segment, the total charges expected to be recorded, the new charges recorded in 2004, the total chargesrecorded to-date and the total amounts reversed to-date, related to plans initiated in 2003:

A significant portion of the additional restructuring costs not yet recorded is expected to be recorded in the first quarter of 2005.

In 2002, net charges were recorded totaling $5.5 million ($6.4 million after tax or $0.03 per share). The net charges included reversals of$18.0 million ($14.3 million after tax or $0.09 per share) for reserves from rationalization actions no longer needed for their originally intendedpurpose. In addition, new charges were recorded totaling $26.5 million ($23.0 million after tax or $0.14 per share) and other credits wererecorded totaling $3.0 million ($2.3 million after tax or $0.02 per share). The 2002 rationalization actions consisted of a manufacturing facilityconsolidation in Europe, the closure of a mold manufacturing facility and a plant consolidation in the United States, and administrativeconsolidations. Of the $26.5 million charge, $24.2 million related to future cash outflows, primarily associate severance costs, and $2.3 millionrelated to a non-cash write-off of equipment taken out of service in Engineered Products and North American Tire.

100

Note 3. Costs Associated with Rationalization Programs (continued)

Expected Charges Charges ChargesTotal Recorded Recorded Reversed

Charge in 2004 to Date to Date(In millions)North American Tire $ 216.4 $ 10.3 $ 211.0 $ 15.2European Union Tire 63.6 4.3 63.6 6.4Latin American Tire 11.7 1.3 11.7 4.5Engineered Products 29.8 0.4 29.8 12.2Corporate 7.4 — 7.4 2.5

$ 328.9 $ 16.3 $ 323.5 $ 40.8



Net losses on asset sales in 2004 were $4.2 million. Asset sales included a gain of $13.3 million ($10.3 million after tax or $0.05 per share) onthe sale of assets in North American Tire, European Union Tire and Engineered Products. In addition, a loss of $17.5 million ($17.8 millionafter tax or $0.09 per share) was recorded on the sale of corporate assets and assets in North American Tire, European Union Tire andChemical Products, including a loss of $14.5 million on the write-down of assets of our natural rubber plantations in Indonesia.

Net losses on asset sales in 2003 were $25.1 million. Asset sales included a loss of $17.6 million ($8.9 million after tax or $0.05 per share)on the sale of 20,833,000 shares of common stock of Sumitomo Rubber Industries, Ltd. A loss of $14.4 million ($13.2 million after tax or$0.08 per share) was recorded in 2003 on the sale of assets in Engineered Products, North American Tire and European Union Tire. A gain of$6.9 million ($5.8 million after tax or $0.04 per share) was recorded in 2003 resulting from the sale of assets in Asia/ Pacific Tire, LatinAmerican Tire and European Union Tire.

Net gains on asset sales in 2002 were $28.0 million ($23.7 million after tax or $0.14 per share), and resulted from the sale of assets in LatinAmerican Tire, Engineered Products and European Union Tire. The write-off of a miscellaneous investment of $4.1 million ($4.1 million aftertax or $0.02 per share) was also included in Other (income) and expense in 2002.

Interest income consisted primarily of amounts earned on cash deposits. The increase in 2004 and 2003 was due primarily to higher levelsof cash deposits in the United States. At December 31, 2004, significant concentrations of cash, cash equivalents and restricted cash held byour international subsidiaries included the following amounts:

Financing fees and financial instruments included amortization of debt issuance costs and commitment fees, debt refinancing fees andaccounts receivable sales fees totaling $116.5 million, $99.4 million and $48.4 million in 2004, 2003 and 2002, respectively. The increase infinancing fees and financial instruments is due to the costs incurred in connection with the restructuring and refinancing of our bank credit andreceivables securitization facilities, including $20.5 million of deferred costs written-off in 2004 in connection with our refinancing activities in2004. Financing fees and financial instruments included $45.6 million in 2003 related to new facilities. Refer to Note 11.

101

Note 4. Other (Income) and Expense

Restated2004 2003 2002

(In millions)Asset sales $ 4.2 $ 25.1 $ (28.0)Interest income (34.4) (25.9) (18.8)Financing fees and financial instruments 116.5 99.4 48.4General and product liability — discontinued products 52.7 138.1 33.8Insurance fire loss deductible 11.7 — —Environmental insurance settlement (156.6) — —Miscellaneous 14.1 26.7 21.4

$ 8.2 $ 263.4 $ 56.8

• $590.3 million or 27.8% in Europe, primarily Western Europe, ($650.8 million (as restated) or 41.4% at December 31, 2003),

• $197.8 million or 9.3% in Latin America, primarily Brazil, ($176.4 million or 11.2% at December 31, 2003), and

• $140.1 million or 6.6% in Asia ($116.8 million or 7.4% at December 31, 2003).



General and product liability-discontinued products charges were $52.7 million, $138.1 million (as restated) and $33.8 million in 2004,2003 and 2002, respectively. These charges related to asbestos personal injury claims and for liabilities related to Entran II claims, net ofprobable insurance recoveries. Of the $52.7 million of net expense recorded in 2004, $41.4 million related to Entran II claims ($141.4 millionof expense and $100.0 million of insurance recoveries) and $11.3 million related to asbestos claims ($13.0 million of expense and $1.7 millionof probable insurance recoveries). Of the $138.1 million (as restated) of net expense recorded in 2003, $180.4 million related to Entran IIclaims ($255.4 million of expense and $75.0 million of probable insurance recoveries) and $(42.3) million (as restated) related to asbestosclaims ($24.3 million of expense and $66.6 million of probable insurance recoveries). Of the $33.8 million of net expense recorded in 2002,$9.8 million related to Entran II claims and $24.0 million related to asbestos claims. We did not record any probable insurance recoveries in2002.

Insurance fire loss deductible included a charge of $11.7 million ($11.6 million after tax or $0.07 per share) related to fires at our facilitiesin Germany, France and Thailand. During 2004, approximately $36 million in insurance recoveries were received related to these fire losses.At December 31, 2004 we had recorded an insurance receivable of approximately $16.2 million to recover additional expenses associated withthe fire losses in Germany. We did not record any insurance recoveries in excess of the net book value of the assets destroyed (less theinsurance deductible limits) and other costs incurred. Additional insurance recoveries in future periods will be accounted for pursuant to FASBStatement No. 5, “Accounting for Contingencies.”

Environmental insurance settlement in 2004 included a benefit of $156.6 million resulting from a settlement with certain insurancecompanies. We will receive $159.4 million ($156.6 million plus imputed interest of $2.8 million) in installments in 2005 and 2006 in exchangefor releasing the insurers from certain past, present and future environmental claims. A significant portion of the costs incurred by us related tothese claims had been recorded in prior years.

Miscellaneous items included financial transaction taxes in Latin America of $7.5 million, $12.6 million and $7.9 million in 2004, 2003and 2002, respectively. Costs related to the exploration of a possible sale of Chemical Products totaling $3.5 million and $3.4 million wereincluded in 2004 and 2003, respectively. A $6.1 million charge for the adoption of FIN 46 for lease-financing SPEs was recorded in 2003.Charges of $7.2 million for the write-off of miscellaneous investments were recorded in 2002.

Accounts and Notes Receivable included non-trade receivables totaling $456.6 million and $354.6 million at December 31, 2004 and 2003,respectively. These amounts related to an environmental insurance settlement in 2004, derivative financial instruments, general and productliability insurance and various other items.

The allowance for doubtful accounts represents an estimate of the losses expected from our accounts and notes receivable portfolio. Thelevel of the allowance is based on many quantitative and qualitative factors including historical loss experience by region, portfolio duration,economic conditions and credit risk quality. The adequacy of the allowance is assessed quarterly.

102

Note 4. Other (Income) and Expense (continued)

Note 5. Accounts and Notes Receivable

20032004 Restated

(In millions)Accounts and notes receivable $ 3,571.8 $ 2,745.2Allowance for doubtful accounts (144.4) (128.9)

$ 3,427.4 $ 2,616.3



Prior to April 1, 2003, we maintained a program for the continuous sale of substantially all of our domestic trade accounts receivable toWingfoot A/ R LLC, a wholly-owned limited liability subsidiary company that was a bankruptcy-remote special purpose entity. A similarprogram also was maintained for substantially all of the trade accounts receivable of our wholly-owned subsidiary in Canada. The results ofoperations and financial position of Wingfoot A/ R LLC were not included in our consolidated financial statements as provided by Statementof Financial Accounting Standards No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.”This program was terminated on April 1, 2003. Accordingly, accounts receivable sold under this program are now recognized on ourConsolidated Balance Sheet. Our consolidated debt increased by $577.5 million at April 1, 2003 in connection with the termination of thisprogram.

The following table presents certain cash flows related to this program:

Certain of our international subsidiaries had established accounts receivable continuous sales programs whereunder these subsidiaries mayreceive proceeds from the sale of certain of their receivables to SPE affiliates of certain banks. These subsidiaries retained servicingresponsibilities. At December 31, 2004, there were no amounts utilized under these programs. The value in U.S. dollars of which theseinternational subsidiaries could borrow was $104.2 million at December 31, 2003. The following table presents certain cash flows related tothese programs:

In addition, various other international subsidiaries sold certain of their trade receivables under off-balance sheet programs during 2004 and2003. The receivable financing programs of these international subsidiaries did not utilize an SPE at December 31, 2004. At December 31,2004, the value in U.S. dollars of which these international subsidiaries could borrow was $4.8 million, compared to $18.6 million atDecember 31, 2003.

The total amount of financing provided from all domestic and international agreements worldwide was $4.8 million at December 31, 2004,compared to $122.8 million at December 31, 2003.

103

Note 5. Accounts and Notes Receivable (continued)

2003(In millions)Proceeds from collections reinvested in previous securitizations $ 1,089.1Servicing fees received 1.2Reimbursement for rebates and discounts issued 28.2Cash used for termination of program 545.3

2004 2003(In millions)Proceeds from collections reinvested in previous securitizations $ 632.7 $ 1,440.3Reimbursement for rebates and discounts issued 59.3 76.5

Note 6. Inventories

20032004 Restated

(In millions)Raw materials $ 543.0 $ 458.8Work in process 143.6 112.0Finished products 2,098.2 1,896.9

$ 2,784.8 $ 2,467.7



Goodwill and intangible assets with indefinite lives are tested for impairment annually or when events or circumstances indicate thatimpairment may have occurred. We elected to perform the annual impairment testing as of July 31. Based on the results of the testing, noimpairment of goodwill or intangible assets with indefinite lives has been indicated.

The following table presents information about goodwill and other intangible assets:

The net carrying amount of goodwill increased by approximately $45 million during 2004 due to currency translation, approximately$5 million due to the consolidation of SPT and T&WA and approximately $12 million due to the net affect of acquisitions and divestitures.Refer to Notes 1, 8 and 10.

The carrying amount of intangible assets with indefinite lives totaled $116.2 million and $110.0 million (as restated) at December 31, 2004and 2003, respectively. This amount is comprised of the right to use certain brand names and trademarks on a non-competitive basis related toour global alliance with Sumitomo Rubber Industries, Ltd.

Amortization expense for intangible assets totaled $4.5 million, $4.8 million and $4.3 million in 2004, 2003, and 2002, respectively. Weestimate that annual amortization expense related to intangible assets will range from approximately $3 million to $4 million during each of thenext five years and the weighted average remaining amortization period is approximately 18 years.

The net carrying amount of goodwill allocated by reporting unit, and changes during 2004, follow:

104

Note 7. Goodwill and Other Intangible Assets

20032004 Restated

Gross Net Gross NetCarrying Accumulated Carrying Carrying Accumulated CarryingAmount Amortization Amount Amount Amortization Amount

(In millions)Goodwill $ 833.5 $ (113.2) $ 720.3 $ 764.8 $ (106.6) $ 658.2

Intangible assets with indefinite lives $ 123.5 $ (7.3) $ 116.2 $ 117.3 $ (7.3) $ 110.0Trademarks and Patents 50.5 (21.0) 29.5 44.6 (16.8) 27.8Other intangible assets 25.6 (8.7) 16.9 19.9 (7.3) 12.6

Total Other intangible assets $ 199.6 $ (37.0) $ 162.6 $ 181.8 $ (31.4) $ 150.4

Restated Translation &Balance at Purchase Price FIN 46 Other Balance at

December 31, 2003 Allocation Impact Adjustments December 31, 2004(In millions)North American Tire $ 100.6 $ — $ 2.6 $ (1.5) $ 101.7European Union Tire 357.3 13.5 — 29.4 400.2Eastern Europe, Middle East and

Africa Tire 116.7 0.7 — 12.9 130.3Latin American Tire 1.2 — — (0.1) 1.1Asia/ Pacific Tire 62.6 — 1.9 2.5 67.0Engineered Products 19.8 — — 0.2 20.0

$ 658.2 $ 14.2 $ 4.5 $ 43.4 $ 720.3



The net carrying amount of goodwill allocated by reporting unit, and changes during 2003, follow:

Consolidation of Variable Interest Entities

As discussed in Note 1, FIN 46 became effective immediately for all VIEs created after January 31, 2003, and required certain disclosures infinancial statements issued after January 31, 2003, about the nature, purpose, size and activities of all VIEs covered by its provisions, and theirmaximum exposure to loss. FIN 46 also required companies to consolidate VIEs created before February 1, 2003, in financial statements forperiods ending after June 15, 2003. During 2003, the FASB delayed the required implementation date of FIN 46 for entities that are not specialpurpose entities (SPEs) until the first reporting period ending after March 15, 2004.

We applied the provisions of FIN 46, effective July 1, 2003, to VIEs representing lease-financing arrangements with SPEs. We were aparty to lease agreements with several unrelated SPEs that are VIEs as defined by FIN 46. The agreements were related to certain NorthAmerican distribution facilities and certain corporate aircraft. The assets, liabilities and results of operations of these SPEs were consolidated inthe third quarter of 2003. Refer to Note 10.

We had evaluated the impact of FIN 46 for entities that are not SPEs and deferred, until the first quarter of 2004, the application of FIN 46to two previously unconsolidated investments. South Pacific Tyres (SPT), a tire manufacturer, marketer and exporter of tires in Australia andNew Zealand, and T&WA, a wheel mounting operation in the United States which sells to original equipment manufacturers, wereconsolidated effective January 1, 2004. This consolidation was treated as a non-cash transaction on the Consolidated Statements of Cash Flowswith the exception of approximately $24 million of cash and cash equivalents from SPT and T&WA, which was included in Other assets andliabilities in the Operating activities section of the statement. The consolidation of SPT and T&WA resulted in an increase in total assets ofapproximately $371 million and total liabilities of approximately $373 million. Net sales for SPT and T&WA in 2004 were $707.4 million and$523.8 million, respectively, and were included in our consolidated net sales for 2004. SPT recorded net income of $0.4 million in 2004 andT&WA recorded a net loss of $2.7 million in 2004. In connection with the consolidation of SPT and T&WA, we recorded approximately$5 million of goodwill.

Our parent company (Goodyear) and certain of our subsidiaries have guaranteed certain debt obligations of SPT and T&WA. Goodyear,Goodyear Australia PTY Limited (a wholly-owned subsidiary of Goodyear) and certain subsidiaries of Goodyear Australia PTY Limitedguarantee SPT’s obligations under credit

105

Note 7. Goodwill and Other Intangible Assets (continued)

RestatedPurchase Price

Balance at Allocation Translation & Balance atDecember 31, 2002 Reversals Other Adjustments December 31, 2003

(In millions)North American Tire $ 99.6 $ — $ 1.0 $ 100.6European Union Tire 305.9 (2.9) 54.3 357.3Eastern Europe, Middle East and Africa

Tire 103.7 — 13.0 116.7Latin American Tire 1.5 — (0.3) 1.2Asia/ Pacific Tire 60.0 — 2.6 62.6Engineered Products 18.4 — 1.4 19.8

$ 589.1 $ (2.9) $ 72.0 $ 658.2

Note 8. Investments



facilities in the amount of $74.2 million. The guarantees are unsecured. Assets of certain subsidiaries of SPT secure the SPT credit facilities. AtDecember 31, 2004, the carrying amount of the secured assets of these subsidiaries was $224.4 million, consisting primarily of accountsreceivable, inventory and fixed assets. Goodyear has guaranteed an industrial revenue bond obligation of T&WA in the amount of $5.4 million.The guarantee is unsecured.

Investments and Acquisitions

We owned 3,421,305 shares of Sumitomo Rubber Industries, Ltd. (“SRI”) at December 31, 2004 and 2003 (the “Sumitomo Investment”). Thefair value of the Sumitomo Investment was $32.1 million and $18.6 million at December 31, 2004 and 2003, respectively, and was included inOther Assets on the Consolidated Balance Sheet. We have classified the Sumitomo Investment as available-for-sale, as provided in Statementof Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” Accordingly, gains andlosses resulting from changes in the fair value of the Sumitomo Investment are deferred and reported on the Consolidated Balance Sheet asAccumulated Other Comprehensive Income (OCI). At December 31, 2004, OCI included a gross unrealized holding gain on the SumitomoInvestment of $15.6 million ($17.0 million after tax), compared to $2.1 million ($3.6 million after tax) at December 31, 2003.

During 2003, we sold 20,833,000 shares of the Sumitomo Investment for approximately $83 million and recorded a loss of $17.6 million($8.9 million after tax or $0.05 per share). We had acquired a 10% ownership of SRI as part of the 1999 global alliance between the twocompanies. We now hold approximately 1.3% of SRI’s outstanding shares.

During 2002, we acquired additional shares of Sava Tires Joint Venture Holding d.o.o. (“Sava Tire”), a tire manufacturing subsidiary inSlovenia, at a cost of $38.9 million. Our ownership of this subsidiary increased from 60% to 80%. During 2003, we transferred our 80%ownership of Sava Tire to Goodyear Dunlop Tires Europe B.V. (“GDTE”), a 75% owned subsidiary, for $282.3 million. In June 2004, weexercised our call option, purchased the remaining outstanding 20% ownership interest of Sava Tires for approximately $52 million, and sold itto GDTE for approximately $85.2 million. As a result of these transactions, we now indirectly own 75% of Sava Tire, with GDTE’s jointventure partner, SRI, owning the remaining 25%. The acquisition was accounted for using the purchase method of accounting. Pursuant tothese transactions, we recorded additions to goodwill of $0.7 million in 2004 and $6.8 million in 2002. The purchase price allocation has beencompleted at December 31, 2004.

In July 2004, GDTE completed the acquisition of the remaining 50% outstanding ownership interest of Däckia, a major tire retail group inSweden, for approximately $10 million. We originally acquired a 50% stake in 1995. As a result of this transaction, we now indirectly own75% of Däckia, with SRI owning the remaining 25%. The acquisition was accounted for using the purchase method of accounting. The assetvaluations have been completed and the purchase price has been allocated. Pursuant to the purchase and resulting consolidation, we recordedan addition to goodwill of $13.5 million. We also recorded intangible assets, including customer relationships, trademarks and partnerrelationships, totaling $8.2 million.

In 2003, we purchased Arkansas Best Corporation’s remaining 19% ownership interest in Wingfoot Commercial Tire Systems, LLC, ajoint venture company formed by Goodyear and Arkansas Best Corporation to sell and service commercial truck tires, provide retread servicesand conduct related business, for $71.2 million.

Dividends received from our consolidated subsidiaries were $155.1 million, $219.0 million and $113.1 million in 2004, 2003 and 2002,respectively. Dividends received from our unconsolidated affiliates

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Note 8. Investments (continued)



accounted for using the equity method were $3.4 million, $2.8 million and $1.6 million in 2004, 2003 and 2002, respectively.

Non-cash Investing and Financing Activities

In 2002, we issued 11.3 million shares of our Common Stock from Treasury and recorded $137.9 million as a contribution to certain domesticpension plans.

The useful lives of property used in arriving at the annual amount of depreciation provided are as follows: buildings and improvements,40 years; machinery and equipment, 15 years.

Net rental expense charged to income follows:

We enter into leases primarily for vehicles, data processing equipment and our wholesale and retail distribution facilities under varying termsand conditions. A portion of our domestic retail distribution network is sublet to independent dealers. Many of the leases require us to pay taxesassessed against leased property and the cost of insurance and maintenance.

While substantially all subleases and some operating leases are cancellable for periods beyond 2005, management expects that in thenormal course of its business nearly all of its independent dealer distribution network will be actively operated. As leases and subleases forexisting locations expire, we evaluate such leases and either renew the leases or substitute another more favorable retail location.

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Note 8. Investments (continued)

Note 9. Properties and Plants

20032004 Restated

Capital CapitalOwned Leases Total Owned Leases Total

(In millions)Properties and plants, at cost:

Land and improvements $ 360.1 $ 16.6 $ 376.7 $ 343.1 $ 9.3 $ 352.4Buildings and improvements 1,778.6 94.0 1,872.6 1,653.0 67.9 1,720.9Machinery and equipment 10,491.2 102.5 10,593.7 9,873.6 92.1 9,965.7Construction in progress 448.7 — 448.7 418.9 — 418.9

13,078.6 213.1 13,291.7 12,288.6 169.3 12,457.9Accumulated depreciation (7,746.3) (90.2) (7,836.5) (7,168.8) (83.9) (7,252.7)

$ 5,332.3 $ 122.9 $ 5,455.2 $ 5,119.8 $ 85.4 $ 5,205.2

Note 10. Leased Assets

2004 2003 2002(In millions)Gross rental expense $ 349.4 $ 330.5 $ 298.8Sublease rental income (74.0) (64.9) (68.4)

$ 275.4 $ 265.6 $ 230.4



The following table presents minimum future lease payments:

At December 31, 2004 and 2003, we were a party to lease agreements with certain unrelated SPEs that are VIEs as defined by FIN 46. Theagreements were related to certain North American distribution facilities and, in 2003, certain corporate aircraft. The corporate aircraftagreements were terminated during 2004. At December 31, 2004, the carrying amount of these North American distribution facilities totaled$26.8 million. Refer to Note 11.

The assets, liabilities and results of operations of these SPEs were consolidated effective July 1, 2003, pursuant to the provisions of FIN 46.This resulted in an increase in Total Liabilities of approximately $34 million and an increase in Properties and Plants of approximately$28 million. We also recorded a $6.1 million charge in Other (Income) and Expense due to the adoption of FIN 46 for these SPEs. Financingcosts related to these SPEs were included in SAG prior to July 1, 2003. Subsequent to that date, the financing costs were recognized as InterestExpense. Refer to Notes 1 and 8.

At December 31, 2004, we had total credit arrangements totaling $7.30 billion, of which $1.12 billion were unused.

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

At December 31, 2004, we had short term committed and uncommitted credit arrangements totaling $413.1 million, of which $122.5 millionrelated to consolidated VIEs. Of these amounts, $192.4 million and $31.1 million, respectively, were unused. These arrangements are availableprimarily to certain of our international subsidiaries through various banks at quoted market interest rates. There are no commitment feesassociated with these arrangements.

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Note 10. Leased Assets (continued)

2010 and2005 2006 2007 2008 2009 Beyond Total

(In millions)Capital Leases

Minimum lease payments $ 10.4 $ 9.5 $ 9.0 $ 8.9 $ 8.5 $ 44.8 $ 91.1Imputed interest (29.5)Executory costs (1.2)Present value $ 60.4

Operating LeasesMinimum lease payments $ 320.3 $ 262.6 $ 203.1 $ 146.8 $ 110.5 $ 476.0 $ 1,519.3Minimum sublease rentals (52.2) (42.9) (34.2) (25.6) (17.0) (32.0) (203.9)

$ 268.1 $ 219.7 $ 168.9 $ 121.2 $ 93.5 $ 444.0 1,315.4

Imputed interest (369.4)Present value $ 946.0

Note 11. Financing Arrangements and Derivative Financial Instruments



The following table presents information about amounts due within one year at December 31:

Amounts related to VIEs in Notes payable represent short term debt of SPT. Amounts related to VIEs in Long term debt due within one yearrepresented amounts owed by T&WA and under lease-financing arrangements with SPEs. At December 31, 2004, we were a party to leaseagreements with certain SPEs that are VIEs as defined by FIN 46. The agreements were related to certain North American distributionfacilities.

Long Term Debt and Financing Arrangements

At December 31, 2004, we had long term credit arrangements totaling $6.9 billion, of which $923.7 million were unused.

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Note 11. Financing Arrangements and Derivative Financial Instruments (continued)

2004 2003(In millions)Notes payable:

Amounts related to VIEs $ 91.4 $ —Other international subsidiaries 129.2 146.7

$ 220.6 $ 146.7

Weighted-average interest rate 6.35% 4.81%

Long term debt due within one year:Amounts related to VIEs $ 24.4 $ —6.375% Euro Notes due 2005 542.0 —European credit facilities 400.0 —Other (including capital leases) 43.5 113.5

$ 1,009.9 $ 113.5

Weighted-average interest rate 6.78% 5.25%Total obligations due within one year $ 1,230.5 $ 260.2



The following table presents long term debt at December 31:

The following table presents information about long term fixed rate debt at December 31:

The fair value was estimated using quoted market prices or discounted future cash flows. The increase in the carrying amount and fair valuefrom 2003 was due primarily to the issuance of the 11% Notes due 2011 and the 4% Convertible Senior Notes due 2034. The fair valueexceeded the carrying amount at December 31, 2004 due primarily to an improvement in our credit spreads. The fair value of the 65/8% Notesdue 2006 was hedged by floating rate swap contracts with notional principal amounts totaling $200 million at December 31, 2004 and 2003.

The fair value of our variable rate debt approximated its carrying amount at December 31, 2004 and 2003.

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2004 2003(In millions)6.375% Euro Notes due 2005 $ 542.0 $ 504.65.375% Swiss franc bonds due 2006 139.3 128.04.00% Convertible Senior Notes due 2034 350.0 —Notes:

65/8% due 2006 222.5 264.581/2% due 2007 300.0 300.063/8% due 2008 99.9 99.876/7% due 2011 650.0 650.0Floating rate notes due 2011 200.0 —11% due 2011 447.7 —7% due 2028 149.1 149.1

Bank term loans:$645 million senior secured U.S. term facility due 2005 — 583.3$400 million senior secured term loan European facility due 2005 400.0 400.0$800 million senior secured asset-based term loan due 2006 800.0 800.0$650 million senior secured asset-based term loan due 2006 650.0 —

Revolving credit facilities due 2005 and 2006 — 839.0Pan-European accounts receivable facility due 2009 224.7 —Amounts related to VIEs 94.4 60.4Other domestic and international debt 129.0 112.9

5,398.6 4,891.6Capital lease obligations 60.4 47.7

5,459.0 4,939.3Less portion due within one year (1,009.9) (113.5)

$ 4,449.1 $ 4,825.8

2004 2003(In billions)Carrying amount $ 3.05 $ 2.23Fair value 3.22 2.11



The principal and interest of the Swiss franc bonds due 2006 were hedged by currency swap agreements at December 31, 2004 and 2003,as discussed below.

The Euro Notes, Swiss franc bonds, Convertible Senior Notes and other Notes have an aggregate face amount of $3.10 billion and arereported net of unamortized discounts totaling $3.7 million ($1.96 billion and $1.7 million, respectively, at December 31, 2003).

At December 31, 2004, the floating rate term loans due 2005 and 2006 and Notes due 2011 totaled $2.05 billion and were variable rateagreements based upon LIBOR plus a fixed spread. The weighted-average interest rate on amounts outstanding under these agreements was6.87%. At December 31, 2003, $1.78 billion was outstanding at a weighted-average interest rate of 5.17%. The interest rate on $325 millionprincipal amount of these borrowings was hedged by fixed rate swap contracts at December 31, 2003.

At December 31, 2004, there were no borrowings outstanding under the revolving credit facilities due 2005 and 2006. At December 31,2003, amounts outstanding were comprised of $839.0 million of variable rate agreements based upon LIBOR plus a fixed spread, with aweighted-average interest rate of 5.15%.

The five-year pan-European accounts receivable facility due 2009 involves the twice-monthly sale of substantially all of the trade accountsreceivable of certain subsidiaries of GDTE to a bankruptcy-remote French company controlled by one of the liquidity banks in the facility. AtDecember 31, 2004, $224.7 million was outstanding with a weighted-average Euribor-based interest rate of 5.16%.

At December 31, 2004, amounts related to VIEs represented long term debt of SPT and T&WA, and amounts owed under lease-financingarrangements with SPEs. At December 31, 2004, we were a party to lease agreements with certain SPEs that are VIEs as defined by FIN 46.The weighted-average rate in effect under the terms of these loans was 6.41%. The agreements were related to certain North Americandistribution facilities at December 31, 2004. At December 31, 2003, these amounts represented lease-financing arrangements with SPEs relatedto North American distribution facilities and corporate aircraft.

Other domestic and international debt at December 31, 2004, consisted of fixed and floating rate loans denominated in U.S. dollars andother currencies that mature in 2005-2023. The weighted-average interest rate in effect under these loans was 6.15% at December 31, 2004,compared to 6.25% at December 31, 2003.

$350 Million Convertible Senior Note Offering

On July 2, 2004, we completed an offering of $350 million aggregate principal amount of 4.00% Convertible Senior Notes due June 15, 2034.The notes are convertible into shares of our common stock initially at a conversion rate of 83.07 shares of common stock per $1,000 principalamount of notes, which is equal to an initial conversion price of $12.04 per share. The proceeds from the notes were used to repay temporarilya revolving credit facility and for working capital purposes.

$650 Million Senior Secured Notes

On March 12, 2004, we completed a private offering of $650 million of senior secured notes, consisting of $450 million of 11% senior securednotes due 2011 and $200 million of floating rate notes due 2011, which accrue interest at LIBOR plus 8%. The proceeds of the notes were usedto prepay the remaining outstanding amount under the then-existing U.S. term loan facility, permanently reduce commitments under the then-existing revolving credit facility by $70 million, and for general corporate purposes. The notes are guaranteed by the same subsidiaries thatguarantee the U.S. deposit-funded credit facility and asset-based credit facilities. The notes are secured by perfected fourth-priority liens on thesame collateral securing those facilities (pari-passu with the liens on that domestic collateral securing the parent guarantees of the Europeanrevolving credit facility).

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We have the right to redeem the fixed rate notes in whole or in part from time to time on and after March 1, 2008. The redemption price,plus accrued and unpaid interest to the redemption date, would be 105.5%, 102.75%, and 100.0% on and after March 1, 2008, 2009 and 2010,respectively. We may also redeem the fixed rate notes prior to March 1, 2008 at a redemption price equal to 100% of the principal amount plusa make-whole premium. We have the right to redeem the floating rate notes in whole or in part from time to time on and after March 1, 2008.The redemption price, plus accrued and unpaid interest to the redemption date, would be 104.0%, 102.0%, and 100.0% on and after March 1,2008, 2009 and 2010, respectively. In addition, prior to March 1, 2007, we have the right to redeem up to 35% of the fixed and floating ratenotes with net cash proceeds from one or more public equity offerings. The redemption price would be 111% for the fixed rate notes and 100%plus the then applicable floating rate for the floating rate notes, plus accrued and unpaid interest to the redemption date.

The indenture for the senior secured notes contains restrictions on our operations, including limitations on:

The deposit-funded credit facility also limits the amount of capital expenditures we may make to $500 million in 2004, 2005 and 2006, and$375 million in 2007 (through September 30, 2007). The amounts of permitted capital expenditures may be increased by the amount of netproceeds retained by us from permitted asset sales and equity and debt issuances. In addition, unused capital expenditures may be carried overinto the next year. As a result of certain activities, the capital expenditure limit for 2004 was increased from $500 million to approximately$1.10 billion. Our capital expenditures for 2004 totaled $518.6 million. The capital expenditure carryover from 2004 was $603.0 million, andin the absence of any other transactions, the limit for 2005 will be $1.10 billion.

In the event that the senior secured notes have a rating equal to or greater than Baa3 from Moody’s and BBB- from Standard and Poor’s, anumber of those restrictions will not apply, for so long as those credit ratings are maintained.

$645 Million Senior Secured U.S. Term Facility

At December 31, 2003, the balance due on the U.S. term facility was $583.3 million due to a partial pay-down of the balance during the secondquarter of 2003. On March 12, 2004, all outstanding amounts under the facility were prepaid and the facility was retired. The U.S. term facilityhad a maturity date of April 30, 2005.

$650 Million Senior Secured European Facilities

Goodyear Dunlop Tires Europe B.V. and subsidiaries (“GDTE”) is party to a $250 million senior secured revolving credit facility and a$400 million senior secured term loan facility (collectively, the “European facilities”). These facilities mature on April 30, 2005. As ofDecember 31, 2004, there were no borrowings outstanding under the revolving credit facility and $400 million outstanding under the termfacility.

GDTE pays an annual commitment fee of 75 basis points on the undrawn portion of the commitments under the European revolvingfacility. GDTE may obtain loans under the European facilities bearing interest

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• incurring additional indebtedness or liens,

• paying dividends, making distributions and stock repurchases,

• making investments,

• selling assets, and

• merging and consolidating



at LIBOR plus 400 basis points or an alternative base rate (the higher of JPMorgan’s prime rate or the federal funds rate plus 50 basis points)plus 300 basis points.

The collateral pledged under the European facilities includes:

Consistent with the covenants applicable to Goodyear in the U.S. facilities, the European facilities contain certain representations,warranties and covenants applicable to GDTE and its subsidiaries which, among other things, limit GDTE’s ability to:

The European facilities also contain certain additional covenants identical to those in the U.S. facilities. The European facilities also limitthe amount of capital expenditures that GDTE may make to $100 million in 2005 (through April 30).

Subject to the provisions in the European facilities and agreements with our joint venture partner, Sumitomo Rubber Industries, Ltd. (SRI),GDTE is permitted to transfer funds to Goodyear. These provisions and agreements include limitations on loans and advances from GDTE toGoodyear and a requirement that transactions with affiliates be consistent with past practices or on arms-length terms.

Any amount outstanding under the term facility is required to be prepaid with:

The U.S. and European facilities can be used, if necessary, to fund ordinary course of business needs, to repay maturing debt, and for otherneeds as they arise.

U.S. Deposit-Funded Credit Facility

On August 18, 2004, we refinanced our then existing $680 million senior secured U.S. revolving credit facility with a U.S. deposit-fundedcredit facility, which is a synthetic revolving credit and letter of credit facility. Pursuant to the refinancing, the lenders deposited the entire$680 million of the facility in an account held by the administrative agent, and those funds are used to support letters of credit or borrowings ona revolving basis, in each case subject to customary conditions. The lenders under the new facility will receive annual

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• all of the capital stock of Goodyear Finance Holding S.A. and certain subsidiaries of GDTE,

• a perfected first-priority interest in and mortgages on substantially all the tangible and intangible assets of GDTE in the United Kingdom,Luxembourg, France and Germany, including certain accounts receivable, inventory, real property, equipment, contract rights and cashand cash accounts, but excluding certain accounts receivable used in securitization programs, and

• with respect to the European revolving credit facility, a perfected fourth priority interest in and mortgages on the collateral pledged underthe deposit-funded credit facility and the asset-based facilities, except for real estate other than our U.S. corporate headquarters.

• incur additional indebtedness (including a limit of €275 million in accounts receivable transactions),

• make investments,

• sell assets beyond specified limits,

• pay dividends, and

• make loans or advances to Goodyear companies that are not subsidiaries of GDTE.

• 75% of the net cash proceeds of all sales and dispositions of assets by GDTE and its subsidiaries greater than $5 million, and

• 50% of the net cash proceeds of debt and equity issuances by GDTE and its subsidiaries.



compensation on the amount of the facility equivalent to 450 basis points over LIBOR, which includes commitment fees on the entire amountof the commitment (whether drawn or undrawn) and a usage fee on the amounts drawn. The full amount of the facility is available for theissuance of letters of credit or for revolving loans. The $500.7 million of letters of credit that were outstanding under the U.S. revolving creditfacility as of June 30, 2004 were transferred to the deposit-funded credit facility. As of December 31, 2004, there were $509.9 million of lettersof credit issued under the facility. The facility matures on September 30, 2007.

Our obligations under the deposit-funded credit facility are guaranteed by most of our wholly-owned U.S. subsidiaries and by our wholly-owned Canadian subsidiary, Goodyear Canada Inc. Our obligations under this facility and our subsidiaries’ obligations under the relatedguarantees are secured by collateral that includes:

The bond agreement for our Swiss franc bonds due 2006 limits our ability to use our U.S. tire and automotive parts manufacturing facilitiesas collateral for secured debt without triggering a requirement that holders of the bonds be secured on an equal and ratable basis. Themanufacturing facilities indicated above were pledged to ratably secure the bonds to the extent required by the bond agreement. However, theaggregate amount of our debt secured by these manufacturing facilities is limited to 15% of our positive consolidated shareholders’ equity.Consequently, the security interests granted to the lenders under the U.S. senior secured funded credit facility are not required to be shared withthe holders of debt outstanding under our other existing unsecured bond indentures.

The deposit-funded credit facility contains certain covenants that, among other things, limit our ability to incur additional unsecured andsecured indebtedness (including a limit, subject to certain exceptions, of 275 million euros in accounts receivable transactions), makeinvestments and sell assets beyond specified limits. The facility prohibits us from paying dividends on our common stock. We must alsomaintain a minimum consolidated net worth (as such term is defined in the deposit-funded credit facility) of at least $2.0 billion for quartersending in 2005 and the first quarter of 2006, and $1.75 billion for each quarter thereafter through September 30, 2007. We are not permitted toallow the ratio of Consolidated EBITDA to consolidated interest expense to fall below a ratio of 2.00 to 1.00 for any period of four consecutivefiscal quarters. In addition, our ratio of consolidated senior secured indebtedness to Consolidated EBITDA is not permitted to be greater than4.00 to 1.00 at any time.

The deposit-funded credit facility also limits the amount of capital expenditures we may make to $500 million in 2004, 2005 and 2006, and$375 million in 2007 (through September 30, 2007). The amounts of permitted capital expenditures may be increased by the amount of netproceeds retained by us from permitted asset sales and equity and debt issuances. In addition, unused capital expenditures may be carried

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• subject to certain exceptions, perfected first-priority security interests in the equity interests in our U.S. subsidiaries and 65% of theequity interests in our non-European foreign subsidiaries,

• a perfected second priority security interest in 65% of the capital stock of Goodyear Finance Holding S.A., a Luxembourg company,

• perfected first-priority security interests in and mortgages on our U.S. corporate headquarters and certain of our U.S. manufacturingfacilities,

• perfected third-priority security interests in all accounts receivable, inventory, cash and cash accounts pledged as security under our asset-based facilities, and

• perfected first-priority security interests in substantially all other tangible and intangible assets, including equipment, contract rights andintellectual property.



over into the next year. As a result of certain activities, the capital expenditure limit for 2004 was increased from $500 million toapproximately $1.10 billion. Our capital expenditures for 2004 totaled $518.6 million. The capital expenditure carryover from 2004 was$603.0 million, and in the absence of any other transactions, the limit for 2005 will be $1.10 billion.

$1.95 Billion Senior Secured Asset-Based Credit Facilities

In April 2003, we entered into senior secured asset-based credit facilities in an aggregate principal amount of $1.30 billion, consisting of a$500 million revolving credit facility and an $800 million term loan facility. At December 31, 2004, we had no borrowings outstanding underthe revolving credit facility and $800 million drawn against the term loan asset-based facility, compared to $389 million and $800 million,respectively, at December 31, 2003. On February 20, 2004, we added a $650 million term loan tranche to the existing $1.30 billion facility,which was fully drawn as of December 31, 2004. The $650 million tranche is not subject to the borrowing base and provides for junior liens onthe collateral securing the facility. The $650 million tranche was used partially to prepay our U.S. term loan facility, to repay otherindebtedness, and for general corporate purposes. The facilities mature on March 31, 2006.

Availability under the facilities, other than the $650 million term loan tranche, is limited by a borrowing base equal to the sum of (a) 85%of adjusted eligible accounts receivable and (b) (i) if the effective advance rate for inventory is equal to or greater than 85% of the recovery rate(as determined by a third party appraisal) of such inventory, 85% of the recovery rate multiplied by the inventory value, or (ii) if the effectiveadvance rate for inventory is less than 85% of the recovery rate, (A) 35% of eligible raw materials, 65% of adjusted eligible finished goodsrelating to the North American Tire segment, and 60% of adjusted eligible finished goods relating to the retail division, Engineered Productssegment, Chemical Products segment and Wingfoot Commercial Tire Systems minus (B) a rent reserve equal to three months’ rent andwarehouse charges at facilities where inventory is stored and a priority payables reserve based on liabilities for certain taxes or certainobligations related to employees that have a senior or pari passu lien on the collateral.

The calculation of the borrowing base and reserves against accounts receivable and inventory included in the borrowing base are subject toadjustment from time to time by the administrative agent and the majority lenders in their discretion (not to be exercised unreasonably).Adjustments would be based on the results of ongoing collateral and borrowing base evaluations and appraisals. A $50 million availabilityblock further limits availability under the facilities. If at any time the amount of outstanding borrowings under the facilities subject to theborrowing base exceeds the borrowing base, we will be required to prepay borrowings sufficient to eliminate the excess or maintaincompensating deposits with the agent bank.

The facilities are collateralized by first and second priority security interests in all accounts receivable and inventory of Goodyear and itsdomestic and Canadian subsidiaries (excluding accounts receivable and inventory related to our North American joint venture with SRI). Inaddition, effective as of February 20, 2004, collateral included second and third priority security interests on the other assets securing theU.S. facilities. The facilities contain certain representations, warranties and covenants which are materially the same as those in theU.S. facilities, with capital expenditures of $500 million and $150 million permitted in 2005 and 2006 (through March 31), respectively. Inaddition, we must maintain a minimum consolidated net worth of at least $2.00 billion for quarters ending in 2005 and 2006 (throughMarch 31, 2006).

International Accounts Receivable Securitization Facilities-On-Balance-Sheet Financials

On December 10, 2004, GDTE and certain of its subsidiaries entered into a new five-year pan-European accounts receivable securitizationfacility. The facility initially provides €165 million of funding, but has the

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ability to be expanded to €275 million, and will be subject to customary annual renewal of back-up liquidity lines. The new facility replacesan €82.5 million facility in a subsidiary in France.

The new facility involves the twice-monthly sale of substantially all of the trade accounts receivable of certain GDTE subsidiaries to abankruptcy-remote French company controlled by one of the liquidity banks in the facility. These subsidiaries retained servicingresponsibilities. It is an event of default under the facility if:

The financial covenants listed above will be automatically amended to conform to the European Credit Facilities upon the refinancing ofthe European Credit Facilities. The defined terms used in the events of default tests are similar to those in the European Credit Facilities. As ofDecember 31, 2004, the amount outstanding and fully-utilized under this program totaled $224.7 million. The program did not qualify for saleaccounting pursuant to the provisions of Statement of Financial Accounting Standards No. 140, “Accounting for Transfers and Servicing ofFinancial Assets and Extinguishments of Liabilities”, and accordingly, this amount is included in consolidated long term debt.

In addition the to the pan-European accounts receivable securitization facility discussed above, SPT and other subsidiaries in Australia hadtransferred accounts receivable under other programs totaling $63.2 million and $7.7 million at December 31, 2004 and 2003, respectively.

Debt Maturities

The annual aggregate maturities of long term debt and capital leases for the five years subsequent to December 31, 2004 are presented below.Maturities of debt credit agreements have been reported on the basis that the commitments to lend under these agreements will be terminatedeffective at the end of their current terms.

Derivative Financial Instruments

We utilize derivative financial instrument contracts and nonderivative instruments to manage interest rate, foreign exchange and commodityprice risks. We have established a control environment that includes policies and procedures for risk assessment and the approval, reportingand monitoring of derivative financial

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• the ratio of our consolidated EBITDA to our consolidated interest expense falls below 2.00 to 1.00,

• the ratio of our consolidated senior secured indebtedness to our consolidated EBITDA is greater than 4.00 to 1.00,

• the ratio of GDTE’s third party indebtedness (net of cash held by GDTE and its consolidated subsidiaries in excess of $100 million) to itsconsolidated EBITDA is greater than 3.00 to 1.00, or

• for so long as such a provision is in our European credit facilities, our consolidated net worth is less than $2 billion on or prior toMarch 31, 2006, or is less than $1.75 billion after March 31, 2006, in each case subject to a 60 day grace period.

2005 2006 2007 2008 2009(In millions)Debt incurred under revolving credit agreements $ — $ — $ — $ — $ —Other — domestic 440.2 111.0 2.9 6.4 229.8Other — international 569.7 1,814.1 302.4 102.4 2.5

$ 1,009.9 $ 1,925.1 $ 305.3 $ 108.8 $ 232.3



instrument activities. Company policy prohibits holding or issuing derivative financial instruments for trading purposes.

Interest Rate Exchange Contracts

We manage our fixed and floating rate debt mix, within defined limitations, using refinancings and unleveraged interest rate swaps. We willenter into fixed and floating interest rate swaps to hedge against the effects of adverse changes in interest rates on consolidated results ofoperations and future cash outflows for interest. Fixed rate swaps are used to reduce our risk of increased interest costs during periods of risinginterest rates, and are normally designated as cash flow hedges. Floating rate swaps are used to convert the fixed rates of long term borrowingsinto short term variable rates, and are normally designated as fair value hedges. We use interest rate swap contracts to separate interest rate riskmanagement from the debt funding decision. At December 31, 2004, the interest rate on 50% of our debt was fixed by either the nature of theobligation or through the interest rate contracts, compared to 47% at December 31, 2003.

The following tables present contract information and weighted average interest rates. Current market pricing models were used to estimatethe fair values of interest rate exchange contracts.

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December 31, 2003 Settled December 31, 2004(Dollars in millions)Fixed rate contracts:

Notional principal amount $ 325.0 $ 325.0 $ —Pay fixed rate 5.00% 5.00% —Receive variable LIBOR 1.17 1.18 —Average years to maturity 0.25 — —Fair value: asset (liability) $ (3.1) $ — $ —Carrying amount:

Current liability (3.1) — —Long term liability — — —

Floating rate contracts:Notional principal amount $ 200.0 $ — $ 200.0Pay variable LIBOR 2.96% — 4.31%Receive fixed rate 6.63 — 6.63Average years to maturity 2.95 — 1.95Fair value: asset (liability) $ 13.0 $ — $ 6.0Carrying amount:

Current asset 7.4 — 3.7Long term asset 5.6 — 2.3



Weighted average interest rate swap contract information follows:

Interest Rate Lock Contracts

We will use, when appropriate, interest rate lock contracts to hedge the risk-free rate component of anticipated long term debt issuances. Thesecontracts are designated as cash flow hedges of forecasted transactions. Gains and losses on these contracts are amortized to income over thelife of the debt. No contracts were outstanding at December 31, 2004 or 2003.

Foreign Currency Contracts

We will enter into foreign currency contracts in order to reduce the impact of changes in foreign exchange rates on consolidated results ofoperations and future foreign currency-denominated cash flows. These contracts reduce exposure to currency movements affecting existingforeign currency-denominated assets, liabilities, firm commitments and forecasted transactions resulting primarily from trade receivables andpayables, equipment acquisitions, intercompany loans, royalty agreements and forecasted purchases and sales. In addition, the principal andinterest on our Swiss franc bonds due 2006 and €100 million of Euro Notes due 2005 are hedged by currency swap agreements.

Contracts hedging the Swiss franc bonds and the Euro Notes are designated as cash flow hedges. Contracts hedging short term tradereceivables and payables normally have no hedging designation.

Amounts are reclassified from OCI into earnings each period to offset the effects of exchange rate movements on the hedged amounts ofprincipal and interest of the Swiss franc bonds and the Euro Notes. Amounts are also reclassified concurrently with the recognition ofintercompany royalty expense and sales of intercompany purchases to third parties.

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Twelve Months EndedDecember 31,

2004 2003 2002(Dollars in millions)Fixed rate contracts:

Notional principal amount $ 81.0 $ 325.0 $ 325.0Pay fixed rate 5.00% 5.00% 5.00%Receive variable LIBOR 1.18 1.24 1.91

Floating rate contracts:Notional principal amount $ 200.0 $ 207.0 $ 210.0Pay variable LIBOR 3.27% 3.03% 3.68%Receive fixed rate 6.63 6.63 6.63



The following table presents foreign currency contract information at December 31:

The following table presents foreign currency contract carrying amounts at December 31:

We were not a party to any foreign currency option contracts at December 31, 2004 or 2003.

The counterparties to our interest rate and foreign exchange contracts were substantial and creditworthy multinational commercial banks orother financial institutions that are recognized market makers. Due to the creditworthiness of the counterparties, we consider the risk ofcounterparty nonperformance associated with these contracts to be remote. However, the inability of a counterparty to fulfill its obligationswhen due could

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2004 2003Fair Contract Fair Contract

Value Amount Value Amount(In millions)Buy currency:

Euro $ 159.2 $ 115.9 $ 145.7 $ 111.3Swiss franc 139.7 80.6 125.8 80.6Japanese yen 22.6 22.7 13.0 16.7U.S. dollar 144.4 144.9 137.3 136.3All other 13.0 12.6 — —

$ 478.9 $ 376.7 $ 421.8 $ 344.9

Contract maturity:Swiss franc swap 3/06 3/06Euro swap 6/05 6/05All other 1/05 - 10/19 1/04 - 10/19

2004 2003Fair Contract Fair Contract

Value Amount Value Amount(In millions)Sell currency:

British pound $ 217.4 $ 218.8 $ 157.9 $ 155.2Swedish krona 34.1 34.2 44.2 44.3Canadian dollar 62.4 63.4 93.0 91.7Euro 77.0 74.3 71.3 70.0All other 23.0 23.1 19.8 19.8

$ 413.9 $ 413.8 $ 386.2 $ 381.0

Contract maturity 1/05 - 12/05 1/04

2004 2003

Carrying amount — asset (liability):Swiss franc swap — current $ (0.3) $ (1.6)Swiss franc swap — long term 59.5 46.8Euro swaps — current 46.4 20.5Euro swaps — long term — 13.2Other — current asset 5.2 7.2Other — current (liability) (8.8) (14.4)



have a material effect on our consolidated financial position, results of operations or liquidity in the period in which it occurs.

Hedges of Net Investment in Foreign Operations

In order to reduce the impact of changes in foreign exchange rates on consolidated shareholders’ equity, we will from time to time designatecertain foreign currency-denominated non-derivative instruments as hedges of our net investment in various foreign operations. There were nosuch designations at December 31, 2004 or 2003.

Results of Hedging Activities

Charges for ineffectiveness and premium amortization totaled $0.2 million and $1.0 million during the twelve months ended December 31,2004 and 2003, respectively. At December 31, 2004, there were no deferred net pretax gains or losses on hedges of forecasted transactionsexpected to be recognized in income during the twelve months ending December 31, 2005. It is not practicable to estimate the amount ofdeferred gains and losses that will be recognized in income resulting from the remeasurement of certain long term currency exchangeagreements.

Deferred losses totaling $4.2 million were recorded as Foreign Currency Translation Adjustment during the twelve months endedDecember 31, 2003 as a result of the designation of nonderivative instruments as net investment hedges. These gains and losses are onlyrecognized in earnings upon the complete or partial sale of the related investment or the complete liquidation of the investment.

Our 1989 Goodyear Performance and Equity Incentive Plan, the 1997 Performance Incentive Plan of The Goodyear Tire & Rubber Companyand the 2002 Performance Plan of The Goodyear Tire & Rubber Company provide for the granting of stock options and stock appreciationrights (SARs), restricted stock, performance grants and other stock-based awards. For options granted in tandem with SARs, the exercise of aSAR cancels the stock option; conversely, the exercise of the stock option cancels the SAR. The 1989 Plan expired on April 14, 1997, and the1997 Plan expired on December 31, 2001, except, in each case, with respect to grants and awards outstanding. The 2002 Plan will expire by itsterms on April 15, 2005, except with respect to grants and awards then outstanding. A maximum of 12,000,000 shares of our Common Stockare available for issuance pursuant to grants and awards made under the 2002 Plan through April 15, 2005. Stock options and related SARsgranted under the above plans generally have a maximum term of ten years and vest pro rata over four years.

Performance units granted during 2002 and 2001 are earned based on Return on Invested Capital and Total Shareholder Return relative tothe S&P Auto Parts & Equipment Companies (each weighted at 50%) over a three year performance period beginning January 1 of the yearsubsequent to the year of grant. To the extent earned, a portion of the performance units will generally be paid 50% in cash and 50% in stock(subject to deferral under certain circumstances). A portion may be automatically deferred in the form of units until the participant is no longeran employee of the Company. Each unit is equivalent to a share of our Common Stock and payable in cash, shares of our Common Stock or acombination thereof at the election of the participant.

On December 4, 2000, we adopted The Goodyear Tire & Rubber Company Stock Option Plan for Hourly Bargaining Unit Employees,under which options in respect of up to 3,500,000 shares of our Common Stock may be granted. We also adopted on that date the Hourly andSalaried Employee Stock Option Plan, under which options in respect of up to 600,000 shares of our Common Stock may be granted. Stockoptions granted

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Note 12. Stock Compensation Plans and Dilutive Securities



under these plans generally have a maximum term of ten years and vest over one to three years. The Hourly Bargaining Unit Plan expired onSeptember 30, 2001, and the Hourly and Salaried Plan expired on December 31, 2002, except, in each case, with respect to options thenoutstanding.

Stock-based compensation activity for the years 2004, 2003 and 2002 follows:

Significant option groups outstanding at December 31, 2004 and related weighted average price and remaining life information follows:

The 1,562,163 options in the “All other” category were outstanding at exercise prices ranging from $5.52 to $74.25, with a weighted averageexercise price of $24.44. All options, SARs and performance units were granted at an exercise price equal to the fair market value of ourCommon Stock at the date of grant.

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Note 12. Stock Compensation Plans and Dilutive Securities (continued)

2004 2003 2002Shares SARs Shares SARs Shares SARs

Outstanding at January 1 26,999,985 4,965,789 24,476,229 4,110,830 21,841,798 3,398,781Options granted 4,149,660 1,103,052 3,907,552 1,009,588 3,454,724 863,372Options without SARs exercised (293,795) — — — (110,642) —Options with SARs exercised (16,300) (16,300) — — (6,439) (6,439)SARs exercised (360) (360) — — (400) (400)Options without SARs expired (1,105,084) — (1,011,943) — (509,313) —Options with SARs expired (188,931) (188,931) (154,629) (154,629) (144,484) (144,484)Performance units granted — — 8,500 — 227,100 —Performance unit shares issued — — — — (28,196) —Performance units cancelled (222,143) — (225,724) — (247,919) —

Outstanding at December 31 29,323,032 5,863,250 26,999,985 4,965,789 24,476,229 4,110,830

Exercisable at December 31 20,362,573 3,517,595 18,697,146 2,899,381 15,205,724 2,314,354

Available for grant at December 31 965,138 4,846,238 8,497,830

Grant Options Options Exercisable RemainingDate Outstanding Exercisable Price Life (Years)

12/09/04 4,031,135 — $ 12.54 1012/03/03 3,597,453 890,136 6.81 912/03/02 2,554,120 1,376,049 7.94 812/03/01 2,795,299 2,303,256 22.05 712/04/00 5,290,258 5,290,258 17.68 612/06/99 2,956,808 2,956,808 32.00 511/30/98 1,946,282 1,946,282 57.25 412/02/97 1,708,037 1,708,037 63.50 312/03/96 1,452,268 1,452,268 50.00 201/09/96 1,077,217 1,077,217 44.00 1All other 1,562,163 1,362,262 26.23 4.7



Weighted average option exercise price information follows:

Forfeitures and cancellations were insignificant.

Weighted average fair values at date of grant for grants in 2004, 2003 and 2002 follow:

The above fair value of options at date of grant was estimated using the Black-Scholes model with the following weighted averageassumptions:

Earnings Per Share Information

Basic earnings per share have been computed based on the average number of common shares outstanding.

We have adopted the provisions of Emerging Issues Task Force Issue No. 04-08, “The Effect of Contingently Convertible Debt on DilutedEarnings per Share”. Refer to Note 1.

There are contingent conversion features included in our $350 million 4% Convertible Senior Notes due 2034, issued on July 2, 2004.Accordingly, average shares outstanding — diluted in 2004 included approximately 29.1 million contingently issuable shares in each of thethird and fourth quarters and 14.5 million shares in the full year. Net income per share — diluted in 2004 included an earnings adjustmentrepresenting avoided after-tax interest expense of $3.5 million in each of the third and fourth quarters resulting from the assumed conversion ofthe Notes. Diluted earnings per share in 2004 was reduced by approximately $0.02 in the third quarter, $0.08 in the fourth quarter and $0.01 inthe full year as a result of the adoption of this standard.

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

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2004 2003 2002

Outstanding at January 1 $ 26.90 $ 30.28 $ 33.87Granted during the year 12.54 6.81 7.94Exercised during the year 7.61 — 17.78Outstanding at December 31 24.96 26.90 30.28Exercisable at December 31 31.02 33.80 38.13

2004 2003 2002

Options $ 6.36 $ 3.41 $ 3.59Performance units 12.54 6.81 7.94

2004 2003 2002

Expected life (years) 5 5 5Interest rate 3.55% 3.41% 3.18%Volatility 54.7 54.0 47.5Dividend yield — — —

2004 2003 2002

Average shares outstanding — basic 175,377,316 175,314,449 167,020,3754% Convertible Senior Notes due 2034 14,534,884 — —Stock options 2,346,070 — —Average shares outstanding — diluted 192,258,270 175,314,449 167,020,375



In 2004, 2003 and 2002, approximately 23.1 million, 21.4 million and 21.1 million, respectively, equivalent shares related to stock options,restricted stock and performance grants with exercise prices that were greater than the average market price of our common shares wereexcluded from average shares outstanding-diluted, as inclusion would have been anti-dilutive. In addition, in 2003 and 2002, approximately1.0 million and 2.6 million, respectively, equivalent shares of stock options, restricted stock and performance grants with exercise prices thatwere less than the average market price of our common shares were excluded from average shares outstanding -diluted as we were in a net lossposition and inclusion would also have been anti-dilutive.

The following table presents the computation of adjusted net income used in computing net income (loss) per share — diluted. Thecomputation assumes that after-tax interest costs incurred on the 4% Convertible Senior Notes due 2034 would have been avoided had theNotes been converted when issued on July 2, 2004:

We provide substantially all employees with pension benefits. The principal domestic hourly plan provides benefits based on length of service.The principal domestic plans covering salaried employees provide benefits based on final five-year average earnings formulas. Salariedemployees making voluntary contributions to these plans receive higher benefits. Effective January 1, 2005, the U.S. salaried pension plan wasfrozen to new participants. Other pension plans provide benefits similar to the principal domestic plans as well as termination indemnity plansat certain international subsidiaries. At the end of 2004 and 2003, assets exceeded accumulated benefits in certain plans and accumulatedbenefits exceeded assets in others.

We also provide substantially all domestic employees and employees at certain international subsidiaries with health care and life insurancebenefits upon retirement. Insurance companies provide life insurance and certain health care benefits through premiums based on expectedbenefits to be paid during the year. Substantial portions of the health care benefits for domestic retirees are not insured and are paid by us.Benefit payments are funded from operations. At December 31, 2004, our benefit obligation for other postretirement benefits includes$15.2 million for the increase in our contribution requirements based upon the anticipated attainment of certain profit levels by certainbusinesses in 2004, 2005 and 2006.

On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act (the “Act”) was signed into law. The Act willprovide plan sponsors a federal subsidy for certain qualifying prescription drug benefits covered under the sponsor’s postretirement health careplans. FASB Staff Position No. FAS 106-2, “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug,Improvement and Modernization Act of 2003” (the FSP), was issued on May 19, 2004. The FSP provides guidance on accounting for theeffects of the new Medicare prescription drug legislation by employers whose prescription drug benefits are actuarially equivalent to the drugbenefit under Medicare Part D. It also contains basic guidance on related income tax accounting, and complex rules for transition that permitvarious alternative prospective and retroactive transition approaches. Based on the proposed regulations, during 2004 we determined that theoverall impact of the adoption of FSP 106-2 was a reduction of expense in 2004 of approximately $2 million on an annual basis. The adoptionof FSP 106-2 also reduced our accumulated postretirement benefit obligation by approximately $19.7 million during 2004. On January 21,2005 final regulations were issued. Based on the clarifications provided in the final regulations, our net periodic

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2004 2003 2002(In millions)Net Income (Loss) $ 114.8 $ (807.4) $ (1,246.9)After-tax impact of 4% Convertible Senior Notes due 2034 7.0 — —Adjusted Net Income (Loss) $ 121.8 $ (807.4) $ (1,246.9)

Note 13. Pension, Other Postretirement Benefit and Savings Plans



postretirement cost is expected to be lower by approximately $50 million in 2005, and the accumulated postretirement benefit obligation isexpected to be reduced by approximately $475 million to $525 million during 2005.

We use a December 31 measurement date for the majority of our plans.

Pension cost follows:

Postretirement benefit cost follows:

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Note 13. Pension, Other Postretirement Benefit and Savings Plans (continued)

2004 2003 2002(In millions)Service cost — benefits earned during the period $ 85.8 $ 122.6 $ 116.7Interest cost on projected benefit obligation 421.0 399.8 385.0Expected return on plan assets (350.3) (310.6) (391.1)Amortization of unrecognized: — prior service cost 75.2 74.2 81.6

— net (gains) losses 118.0 125.9 36.7— transition amount 1.3 1.1 0.6

Net periodic pension cost 351.0 413.0 229.5Curtailments/settlements 6.8 45.2 0.3Special termination benefits 4.2 43.0 0.8

Total pension cost $ 362.0 $ 501.2 $ 230.6

2004 2003 2002(In millions)Service cost — benefits earned during the period $ 24.7 $ 24.1 $ 19.5Interest cost on accumulated benefit obligation 188.1 174.0 186.9Amortization of unrecognized: — net losses 35.2 32.0 26.2

— prior service cost 44.5 17.0 19.4Net periodic postretirement cost 292.5 247.1 252.0

Curtailments/settlements 12.5 23.6 —Special termination benefits 0.3 20.0 —

Total postretirement cost $ 305.3 $ 290.7 $ 252.0



The change in benefit obligation and plan assets for 2004 and 2003 and the amounts recognized in our Consolidated Balance Sheet atDecember 31, 2004 and 2003 are as follows:

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Pension Plans Other Benefits2004 2003 2004 2003

(In millions)Change in benefit obligation:

Beginning balance $ (6,883.5) $ (6,070.2) $ (3,078.6) $ (2,723.1)Newly adopted plans (87.0) — (0.5) —Service cost — benefits earned (85.8) (122.6) (24.7) (24.1)Interest cost (421.0) (399.8) (188.1) (174.0)Plan amendments 1.1 (112.4) 4.0 (275.8)Actuarial loss (532.2) (348.9) (165.4) (88.9)Employee contributions (19.2) (18.8) (8.8) (6.6)Curtailments/settlements (1.6) 16.3 0.5 (15.0)Special termination benefits (4.3) (42.9) (0.3) (21.3)Foreign currency translation (171.7) (257.6) (14.0) (22.9)Benefit payments 484.9 473.4 257.6 273.1

Ending balance (7,720.3) (6,883.5) (3,218.3) (3,078.6)Change in plan assets:

Beginning balance $ 4,129.1 $ 3,602.4 $ — $ —Newly adopted plans 84.4 — — —Actual return on plan assets 478.7 707.4 — —Company contributions 264.6 115.7 — —Employee contributions 19.2 18.8 — —Foreign currency translation 107.2 158.2 — —Benefit payments (484.9) (473.4) — —

Ending balance $ 4,598.3 $ 4,129.1 $ — $ —Funded status (3,122.0) (2,754.4) (3,218.3) (3,078.6)

Unrecognized prior service cost 418.1 503.4 420.1 480.9Unrecognized net loss 2,548.5 2,194.1 895.4 763.1Unrecognized net obligation at transition 2.8 3.9 — —

Net amount recognized $ (152.6) $ (53.0) $ (1,902.8) $ (1,834.6)



Amounts recognized in the Consolidated Balance Sheet consist of:

The increase (decrease) in minimum pension liability adjustment (net of tax) included in OCI follows:

The following table presents significant weighted-average assumptions used to determine benefit obligations at December 31:

The following table presents significant weighted-average assumptions used to determine net periodic pension/benefit cost for the years endedDecember 31:

For 2004, an assumed long-term rate of return of 8.5% was used for the U.S. pension plans. In developing this rate, we evaluated thecompound annualized returns of our U.S. pension fund over periods of 15 years or more (through December 31, 2003). In addition, weevaluated input from our pension fund consultant on asset class return expectations and long-term inflation. For our international locations, aweighted-average assumed long-

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(In millions)Prepaid benefit cost — current $ 41.0 $ 86.4 $ — $ —

— long term 374.2 345.1 — —Accrued benefit cost — current (85.2) (110.8) (303.1) (287.4)

— long term (3,219.6) (2,830.8) (1,599.7) (1,547.2)Intangible asset 429.7 512.4 — —Deferred income taxes 305.0 273.0 — —Minority shareholders’ equity 173.3 126.5 — —Accumulated other comprehensive income (OCI) 1,829.0 1,545.2 — —

Net amount recognized $ (152.6) $ (53.0) $ (1,902.8) $ (1,834.6)

Pension Plans Other BenefitsRestated

2004 2003 2002 2004 2003 2002(In millions)Increase (decrease) in minimum pension liability adjustment

included in OCI $ 283.8 $ (128.3) $ 1,283.6 N/A N/A N/A


Discount rate: — U.S. 5.75% 6.25% 5.75% 6.25%— International 5.41 5.93 6.91 7.22

Rate of compensation increase: — U.S. 4.04 4.00 4.00 4.00— International 3.48 3.43 4.67 4.47

Pension Plans Other Benefits2004 2003 2002 2004 2003 2002

Discount rate: — U.S. 6.25% 6.75% 7.25% 6.25% 6.75% 7.25%— International 5.93 6.20 6.50 7.22 7.48 7.50

Expected long term return on plan assets: — U.S. 8.50 8.50 9.50 — — —— International 8.03 8.03 8.50 — — —

Rate of compensation increase: — U.S. 4.00 4.00 4.00 4.00 4.00 4.00— International 3.43 3.50 3.50 4.47 4.80 4.50



term rate of return of 7.95% was used. Input from local pension fund consultants concerning asset class return expectations and long-terminflation form the basis of this assumption.

The following table presents estimated future benefit payments from the plans as of December 31, 2004:

The payments shown above for other benefits are gross of expected subsidy reimbursements under the Medicare Act. The subsidy is expectedto be approximately $14 million in 2006 and approximately $1 million annually thereafter.

The accumulated benefit obligation for all defined benefit pension plans was $7,448 million and $6,606 million at December 31, 2004 and2003, respectively.

For pension plans that are not fully-funded:

Certain international subsidiaries maintain unfunded pension plans consistent with local practices and requirements. At December 31, 2004,these plans accounted for $232.7 million of our accumulated pension benefit obligation, $247.4 million of our projected pension benefitobligation and $42.5 million of our minimum pension liability adjustment ($208.3 million, $215.9 million and $22.0 million, respectively, atDecember 31, 2003).

Our pension plan weighted-average asset allocation at December 31, by asset category, follows:

At December 31, 2004, we did not directly hold any of our Common Stock. At December 31, 2003, equity securities included $35.6 million(0.9% of total plan assets) of our Common Stock.

Our pension investment policy recognizes the long-term nature of pension liabilities, the benefits of diversification across asset classes andthe effects of inflation. The diversified portfolio is designed to maximize returns consistent with levels of liquidity and investment risk that areprudent and reasonable. All assets are managed externally according to guidelines we have established individually with investment managers.The manager guidelines prohibit the use of any type of investment derivative without our prior approval. Portfolio risk is controlled by havingmanagers comply with guidelines, establishing the maximum size of any single holding in their portfolios and by using managers with differentinvestment styles. We periodically undertake

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Pension Plans Other Benefits(In millions)

2005 $ 419.3 $ 303.92006 437.5 320.72007 455.0 273.72008 469.9 266.52009 496.3 260.32010-2014 2,789.2 1,199.4

2004 2003(In millions)Projected benefit obligation $ 7,559.2 $ 6,768.7Accumulated benefit obligation 7,303.2 6,507.6Fair value of plan assets 4,431.6 4,020.5

2004 2003

Equity securities 64% 69%Debt securities 34 30Cash and short term securities 2 1

Total 100% 100%




asset and liability modeling studies to determine the appropriateness of the investments. The portfolio includes holdings of domestic,international, and private equities, global high quality and high yield fixed income securities, and short-term interest bearing deposits. Thetarget asset allocation of the U.S. pension fund is 70% equities and 30% fixed income.

We expect to contribute approximately $470 million to $505 million to our funded major U.S. and international pension plans in 2005.

Assumed health care cost trend rates at December 31 follow:

A 1% change in the assumed health care cost trend would have increased (decreased) the accumulated postretirement benefit obligation atDecember 31, 2004 and the aggregate service and interest cost for the year then ended as follows:

Savings Plans

Substantially all domestic employees are eligible to participate in a savings plan. The main Hourly Bargaining Plans provided for matchingcontributions, through April 20, 2003, (up to a maximum of 6% of the employee’s annual pay or, if less, $12,000) at the rate of 50%. Wesuspended the matching contributions for all participants in the main Salaried Plan effective January 1, 2003. Effective January 1, 2005, allsalaried new hires in the U.S. will be eligible for a company-funded contribution into the Salaried Plan. This contribution will be 5% of theircompensation up to an IRS determined compensation limit. Expenses recognized for Goodyear domestic contributions were $4.1 million,$9.8 million and $41.9 million for 2004, 2003 and 2002, respectively.

In addition, defined contribution pension plans are available for certain foreign employees. Expenses recognized for our contributions tothese plans were $13.7 million, $5.2 million and $3.8 million in 2004, 2003 and 2002, respectively. Expenses in 2004 increased from 2003 dueprimarily to the consolidation of SPT. Refer to Note 8.

The components of Income (Loss) before Income Taxes, adjusted for Minority Interest in Net Income (Loss) of Subsidiaries, follow:

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2004 2003

Health care cost trend rate assumed for the next year 12.0% 12.5%Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 5.0 5.0Year that the rate reaches the ultimate trend rate 2013 2013

1% Increase 1% Decrease(In millions)Accumulated postretirement benefit obligation $ 35.9 $ (31.0)Aggregate service and interest cost 2.8 (2.4)

Note 14. Income Taxes

2004 2003 2002(In millions)

U.S. $ (328.8) $ (1,047.8) $ (426.0)Foreign 651.5 357.5 407.0

322.7 (690.3) (19.0)Minority Interest in Net Income (Loss) of Subsidiaries 57.8 32.8 55.6

$ 380.5 $ (657.5) $ 36.6



A reconciliation of income taxes at the U.S. statutory rate to income taxes provided follows:

The components of the provision (benefit) for income taxes by taxing jurisdiction follow:

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Note 14. Income Taxes (continued)

2004 2003 2002(In millions)

U.S. Federal income tax at the statutory rate of 35% $ 133.2 $ (230.1) $ 12.8Adjustment for foreign income taxed at different rates (12.1) (0.3) (18.7)Valuation allowance for U.S. tax assets — — 1,217.7U.S. loss with no tax benefit 97.6 358.9 —State income taxes, net of Federal benefit (1.2) (4.2) (4.4)Foreign operating loss with no tax benefit provided 45.3 35.9 5.5Settlement of prior years’ liabilities (46.3) (44.2) (36.4)Provision for repatriation of foreign earnings (4.9) 7.7 50.2Other (3.7) (6.6) 1.2United States and Foreign Taxes on Income (Loss) $ 207.9 $ 117.1 $ 1,227.9

2004 2003 2002(In millions)

Current:Federal $ (59.7) $ (49.2) $ (46.6)Foreign income and withholding taxes 273.3 180.4 150.9State (1.2) (4.2) (7.6)

212.4 127.0 96.7Deferred:

Federal (1.0) (7.5) 1,027.2Foreign (3.5) (2.4) (14.4)State — — 118.4

(4.5) (9.9) 1,131.2United States and Foreign Taxes on Income (Loss) $ 207.9 $ 117.1 $ 1,227.9



Temporary differences and carryforwards giving rise to deferred tax assets and liabilities at December 31 follow:

In the fourth quarter of 2002, we recorded a non-cash charge of $1.22 billion (as restated), ($6.95 per share (as restated) in the fourth quarter or$7.29 per share (as restated) on a year-to-date basis), to establish a valuation allowance against net Federal and state deferred tax assets. Inaddition, a valuation allowance of $352.9 million was established against tax benefits related to our minimum pension liability adjustment thatwere recorded in OCI in 2002. We intend to maintain a valuation allowance until sufficient positive evidence exists to support realization of theFederal and state deferred tax assets.

At December 31, 2004, we had $325.6 million of tax assets for net operating loss and tax credit carryforwards related to certaininternational subsidiaries, some of which are subject to expiration beginning in 2005. A valuation allowance totaling $287.6 million has beenrecorded against these and other deferred tax assets where recovery of the asset or carryforward is uncertain. In addition, we had $131.7 millionof Federal and state tax assets for net operating loss and tax credit carryforwards, some of which are subject to expiration beginning in 2005. Afull valuation allowance has also been recorded against these deferred tax assets as recovery is uncertain.

We determined in 2002 that earnings of certain international subsidiaries would no longer be permanently reinvested in working capital.Accordingly, we recorded a provision of $50.2 million in 2002 for the incremental taxes incurred or to be incurred upon inclusion of suchearnings in Federal taxable income. No provision for Federal income tax or foreign withholding tax on undistributed earnings of internationalsubsidiaries of $1.70 billion is required because the amount has been or will be reinvested in properties and plants and working capital. It is notpracticable to calculate the deferred taxes associated with the remittance of these investments.

The American Job Creation Act of 2004 was signed into law in October 2004 and replaces an export incentive with a deduction fromdomestic manufacturing income. As we are both an exporter and a domestic manufacturer and in a U.S. tax loss position, this change shouldnot have a material impact on our income tax

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Postretirement benefits and pensions $ 1,234.8 $ 1,163.9Tax credit and operating loss carryforwards 457.3 448.9Capitalized expenditures for tax reporting 258.5 324.7Accrued expenses deductible as paid 276.7 250.7Alternative minimum tax credit carryforwards 62.0 68.2Vacation and sick pay 52.1 39.0Rationalizations and other provisions 16.8 25.9Other 105.0 51.1

2,463.2 2,372.4Valuation allowance (2,072.0) (2,041.9)Total deferred tax assets 391.2 330.5Tax on undistributed subsidiary earnings (18.4) (22.9)Total deferred tax liabilities:

— property basis differences (481.8) (446.4)Total deferred tax assets (liabilities) $ (109.0) $ (138.8)



provision. It also provides for a special one-time tax deduction of 85% of certain foreign earnings that are repatriated no later than 2005. Wehave started an evaluation of the effects of the repatriation provision. We do not anticipate that the repatriation of foreign earnings under theAct would provide an overall tax benefit to us. However, we do not expect to be able to complete this evaluation until our 2005 tax position hasbeen more precisely determined and the U.S. Congress or the U.S. Treasury Department provide additional guidance on certain of the Act’sprovisions. Any repatriation of earnings under the Act is not expected to have a material impact on our results of operations, financial positionor liquidity.

Net cash payments for income taxes were $201.3 million, $73.0 million and $125.9 million in 2004, 2003 and 2002, respectively.

Interest expense includes interest and amortization of debt discounts, less amounts capitalized as follows:

Cash payments for interest were $356.5 million, $282.5 million (as restated) and $259.7 million (as restated) in 2004, 2003 and 2002,respectively.

Research and development expenditures were $378.2 million, $351.0 million (as restated) and $386.5 million (as restated) in 2004, 2003 and2002, respectively, and were expensed as incurred.

Advertising costs, including costs for our cooperative advertising programs with dealers and franchisees, were $383.5 million, $331.3 millionand $281.4 million in 2004, 2003 and 2002, respectively.

Segment information reflects our strategic business units (SBUs), which are organized to meet customer requirements and global competition.

The Tire business is comprised of five regional SBUs. Engineered Products and Chemical Products are each managed on a global basis.Segment information is reported on the basis used for reporting to our Chairman of the Board, Chief Executive Officer and President.

Each of the five regional tire business segments is involved in the development, manufacture, distribution and sale of tires. Certain of thetire business segments also provide related products and services, which include retreads, automotive repair services and merchandisepurchased for resale.

North American Tire provides original equipment and replacement tires for autos, motorcycles, trucks, farm, aircraft and constructionapplications in the United States, Canada and export markets. North American Tire also provides related products and services including treadrubber, tubes, retreaded tires, automotive repair services and merchandise purchased for resale. North American Tire information in 2004includes T&WA, which was consolidated effective January 1, 2004 pursuant to FIN 46. Refer to Note 8.

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Note 15. Interest Expense

Restated2004 2003 2002

(In millions)Interest expense before capitalization $ 375.5 $ 304.3 $ 249.9Capitalized interest (6.7) (8.0) (7.2)

$ 368.8 $ 296.3 $ 242.7

Note 16. Research and Development

Note 17. Advertising Costs

Note 18. Business Segments



European Union Tire provides original equipment and replacement tires for autos, motorcycles, trucks, farm and construction applicationsin Western Europe and export markets. European Union Tire also retreads truck and aircraft tires.

Eastern Europe, Middle East and Africa Tire provides original equipment and replacement tires for autos, trucks, farm, bicycle,construction and mining applications in Eastern Europe, the Middle East, Africa and export markets.

Latin American Tire provides original equipment and replacement tires for autos, trucks, tractors, aircraft and construction applications inCentral and South America, Mexico and export markets. Latin American Tire also manufactures materials for tire retreading.

Asia/ Pacific Tire provides original equipment and replacement tires for autos, trucks, farm, aircraft and construction applications in Asia,the Pacific and export markets. Asia/ Pacific Tire also retreads aircraft tires. Asia/ Pacific Tire information in 2004 includes SPT, which wasconsolidated effective January 1, 2004 pursuant to FIN 46. Refer to Note 8.

Engineered Products develops, manufactures and sells belts, hoses, molded products, airsprings, tank tracks and other products for originalequipment and replacement transportation applications and industrial markets worldwide.

Chemical Products develops, manufactures and sells synthetic rubber and rubber latices, synthetic resins, and other organic chemicalproducts for internal and external customers worldwide. Chemical Products also engages in natural rubber purchasing operations and, through2004, plantation operations.

As part of our continuing effort to divest non-core businesses, in November 2004 we entered into an agreement to sell our natural rubberplantations in Indonesia for approximately $65 million, pending government approvals. Other (Income) and Expense in 2004 included a loss of$14.5 million ($15.6 million after tax) on the write-down of these assets, due primarily to the devaluation of the Indonesian rupiah versus theU.S. dollar over the years we held the investment. At December 31, 2004, the plantations were classified as held for sale and accordingly, theassets and liabilities were reclassified on the Consolidated Balance Sheet. Assets held for sale were included in Prepaid expenses and othercurrent assets and totaled $33.6 million. Liabilities held for sale were included in Other current liabilities and totaled $16.3 million.

Effective January 1, 2005, we integrated our Chemical Products business segment into our North American Tire business segment. Theintegration will not affect net income. During 2004, $818.6 million, or 53.4%, of Chemical Products’ sales and 75.2% of its segment operatingincome resulted from intercompany transactions. Beginning with the first quarter of 2005, our total segment sales will no longer reflect theseintercompany sales. In addition, the segment operating income previously attributable to Chemical Products’ intercompany transactions will nolonger be included in the total segment operating income that we report.

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Note 18. Business Segments (continued)



The following table presents segment sales and operating income, and the reconciliation of segment operating income to Income (Loss) beforeIncome Taxes:

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Restated2004 2003 2002

(In millions)Net Sales

North American Tire $ 7,854.6 $ 6,745.6 $ 6,703.0European Union Tire 4,476.2 3,921.5 3,319.4Eastern Europe, Middle East and Africa Tire 1,279.0 1,073.4 807.1Latin American Tire 1,245.4 1,041.0 947.7Asia/ Pacific Tire 1,312.0 581.8 531.3

Total Tires 16,167.2 13,363.3 12,308.5Engineered Products 1,470.3 1,203.7 1,126.3Chemical Products 1,532.6 1,220.8 940.2

Total Segment Sales 19,170.1 15,787.8 14,375.0Inter-SBU Sales (818.6) (687.2) (545.5)Other 18.9 21.5 26.5

$ 18,370.4 $ 15,122.1 $ 13,856.0



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Restated2004 2003 2002

(In millions)Segment Operating Income

North American Tire $ 31.5 $ (130.9) $ (58.1)European Union Tire 252.7 129.8 101.1Eastern Europe, Middle East and Africa Tire 193.8 146.6 93.2Latin American Tire 251.2 148.6 107.6Asia/ Pacific Tire 61.1 49.9 43.7

Total Tires 790.3 344.0 287.5Engineered Products 113.2 46.8 39.0Chemical Products 177.0 120.2 88.2

Total Segment Operating Income 1,080.5 511.0 414.7Rationalizations and asset sales (59.8) (316.6) 22.5Accelerated depreciation, asset impairment and asset write-offs (10.4) (132.8) —Interest expense (368.8) (296.3) (242.7)Foreign currency exchange (23.4) (40.7) 8.7Minority interest in net (income) loss of subsidiaries (57.8) (32.8) (55.6)Inter-SBU income (132.8) (87.7) (54.7)Financing fees and financial instruments (116.5) (99.4) (48.4)Equity in earnings (losses) of corporate affiliates 1.0 (18.3) (15.7)General and product liability — discontinued products (52.7) (138.1) (33.8)Expenses for fire loss deductibles (11.7) — —Professional fees associated with the restatement (30.2) (6.3) —Professional fees associated with Sarbanes-Oxley (18.2) (0.1) —Expenses for environmental remediation at non-operating sites (11.7) — (8.3)Environmental insurance settlement 156.6 — —Other (21.4) (32.2) (5.7)

Income (Loss) before Income Taxes $ 322.7 $ (690.3) $ (19.0)



The following table presents segment assets at December 31:

Results of operations in the Tire and Engineered Products segments were measured based on net sales to unaffiliated customers and segmentoperating income. Results of operations of Chemical Products were measured based on net sales (including sales to other SBUs) and segmentoperating income. Segment operating income included transfers to other SBUs. Segment operating income was computed as follows: Net Salesless CGS (excluding accelerated depreciation charges, asset impairment charges and asset writeoffs) and SAG (including certain allocatedcorporate administrative expenses). Segment operating income also included equity in (earnings) losses of most unconsolidated affiliates.Equity in (earnings) loss of certain unconsolidated affiliates, including SPT (in 2003 and 2002) and Rubbernetwork.com, was not included insegment operating income. Segment operating income did not include rationalization charges (credits) and certain other items. Inter-SBU salesby Chemical Products were at a formulated price or market. Purchases from Chemical Products were included in the purchasing SBU’ssegment operating income at Chemical Products cost. Segment assets included those assets under the management of the SBU.

Effective January 1, 2004, we consolidated our investment in South Pacific Tyres into Asia/ Pacific Tire and our investment in Tire &Wheels Assemblies into North American Tire pursuant to the provisions of FIN 46. For 2003, results of operations of SPT and T&WA werenot reported in segment results, but were reflected in our Consolidated Statement of Income using the equity method.

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Restated2004 2003

(In millions)Assets

North American Tire $ 5,091.4 $ 5,939.3European Union Tire 4,264.0 4,001.9Eastern Europe, Middle East and Africa Tire 1,315.1 1,102.7Latin American Tire 845.6 710.0Asia/ Pacific Tire 1,153.8 669.5

Total Tires 12,669.9 12,423.4Engineered Products 764.7 680.5Chemical Products 650.3 632.4

Total Segment Assets 14,084.9 13,736.3Corporate 2,448.4 964.8

$ 16,533.3 $ 14,701.1



The following table presents segment investments in and advances to affiliates at December 31:

The following table presents 100% of the sales and operating income (loss) of SPT for 2003 and 2002:

SPT operating income (loss) did not include net rationalization charges (credits) of approximately $8.7 million in 2003 and $3.2 million in2002. SPT debt totaled $255.2 million at December 31, 2003, of which $72.0 million was payable to Goodyear. Refer to Note 23.

The following table presents geographic information. Net sales by country were determined based on the location of the selling subsidiary.Long-lived assets consisted primarily of properties and plants, deferred charges and other miscellaneous assets. Management did not considerthe net sales or long-lived assets of individual countries outside the United States to be significant to the consolidated financial statements.

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Restated2004 2003

(In millions)Investments in and Advances to Affiliates

North American Tire $ 13.8 $ 57.8European Union Tire 2.3 13.2Eastern Europe, Middle East and Africa 3.1 2.3Asia/ Pacific Tire 15.3 11.2

Total Segment Investments in and Advances to Affiliates 34.5 84.5Corporate 0.4 99.7

$ 34.9 $ 184.2

2003 2002(In millions)Net Sales $ 640.3 $ 523.4Operating Income (Loss) 8.4 (0.5)

Restated2004 2003 2002

(In millions)Net Sales

United States $ 8,477.0 $ 7,212.3 $ 7,144.3International 9,893.4 7,909.8 6,711.7

$ 18,370.4 $ 15,122.1 $ 13,856.0

Long-Lived AssetsUnited States $ 3,046.5 $ 3,148.2International 3,524.5 3,225.7

$ 6,571.0 $ 6,373.9



Portions of the items described in Note 3, Rationalizations, and Note 4, Other (Income) and Expense, were not charged (credited) to the SBUsfor performance evaluation purposes but were attributable to the SBUs as follows:

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Restated2004 2003 2002

(In millions)Rationalizations

North American Tire $ 3.5 $ 191.9 $ (1.9)European Union Tire 23.1 54.3 (0.4)Eastern Europe, Middle East and Africa Tire 3.6 (0.1) (0.4)Latin American Tire (1.7) 10.0 —Asia/ Pacific Tire — — (1.7)

Total Tires 28.5 256.1 (4.4)Engineered Products 22.8 29.4 4.6Chemical Products 4.9 — —

Total Segment Rationalizations 56.2 285.5 0.2Corporate (0.6) 6.0 5.3

$ 55.6 $ 291.5 $ 5.5

Other (Income) and ExpenseNorth American Tire $ (1.3) $ 3.8 $ 4.1European Union Tire (6.2) 1.5 (13.7)Eastern Europe, Middle East and Africa Tire 0.1 — —Latin American Tire — (2.0) (13.7)Asia/ Pacific Tire — (2.1) —

Total Tires (7.4) 1.2 (23.3)Engineered Products (2.5) 6.3 (0.6)Chemical Products 14.5 — —

Total Segment Other (Income) and Expense 4.6 7.5 (23.9)Corporate 3.6 255.9 80.7

$ 8.2 $ 263.4 $ 56.8



The following table presents segment capital expenditures, depreciation and amortization:

The components of Accumulated Other Comprehensive Income (Loss) follow:

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Restated2004 2003 2003

(In millions)Capital Expenditures

North American Tire $ 156.0 $ 131.0 $ 229.2European Union Tire 111.6 84.5 84.8Eastern Europe, Middle East and Africa Tire 56.4 31.7 20.2Latin American Tire 64.6 35.3 19.3Asia/ Pacific Tire 66.6 48.7 30.2


Total Segment Capital Expenditures 498.5 361.0 426.3Corporate 20.1 14.4 31.8

$ 518.6 $ 375.4 $ 458.1

Restated

Depreciation and AmortizationNorth American Tire $ 272.0 $ 279.9 $ 275.0European Union Tire 129.7 120.4 119.6Eastern Europe, Middle East and Africa Tire 45.8 44.1 44.2Latin American Tire 24.3 19.6 23.4Asia/ Pacific Tire 51.6 30.9 29.5


Total Segment Depreciation and Amortization 587.6 567.8 559.8Corporate 41.1 123.8 45.5

$ 628.7 $ 691.6 $ 605.3

Note 19. Accumulated Other Comprehensive Income (Loss)

Restated2004 2003

(In millions)Foreign currency translation adjustment $ (758.3) $ (1,011.5)Minimum pension liability adjustment (1,829.0) (1,545.2)Unrealized investment gain (loss) 17.0 3.6Deferred derivative gain (loss) 5.8 0.3

$ (2,564.5) $ (2,552.8)



At December 31, 2004, we had binding commitments for raw materials and investments in land, buildings and equipment of $755.9 millionand off-balance-sheet financial guarantees written and other commitments totaling $18.2 million.

Warranty

At December 31, 2004 and 2003, we had recorded, in Other current liabilities, $15.6 million and $12.4 million, respectively, for potentialclaims under warranties offered by us. Tire replacement under most of the warranties we offer is on a prorated basis. Warranty reserves arebased on past claims experience, sales history and other considerations. The amount of our ultimate liability in respect of these matters maydiffer from these estimates.

The following table presents changes in the warranty reserve during 2004 and 2003:

Environmental Matters

We had recorded liabilities totaling $39.5 million at December 31, 2004 and $32.6 million (as restated) at December 31, 2003 for anticipatedcosts related to various environmental matters, primarily the remediation of numerous waste disposal sites and certain properties sold by us. Ofthese amounts, $8.5 million and $7.5 million (as restated) were included in Other current liabilities at December 31, 2004 and December 31,2003, respectively. The costs include:

These costs will be paid over several years. The amount of our ultimate liability in respect of these matters may be affected by severaluncertainties, primarily the ultimate cost of required remediation and the extent to which other responsible parties contribute. During 2004, wereached a settlement with certain insurance companies under which we will receive approximately $159 million in installments during 2005and 2006 in exchange for our releasing the insurers from certain past, present and future environmental claims. A significant portion of thecosts incurred by us related to these claims had been recorded in prior years.

Workers’ Compensation

We had recorded liabilities, on a discounted basis, totaling $230.7 million and $195.7 million (as restated) for anticipated costs related toworkers’ compensation at December 31, 2004 and December 31, 2003, respectively. Of these amounts, $99.3 million and $112.6 million (asrestated) were included in Current Liabilities as part of Compensation and benefits at December 31, 2004 and December 31, 2003,respectively. The costs include an estimate of expected settlements on pending claims, defense costs and a provision for claims incurred but notreported. These estimates are based on our assessment of potential liability using an

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Note 20. Commitments and Contingent Liabilities

2004 2003(In millions)Balance at January 1 $ 12.4 $ 11.0

Payments made during the period (20.6) (17.0)Expense recorded during the period 23.8 18.4

Balance at December 31 $ 15.6 $ 12.4

• legal and consulting fees,

• site studies,

• the design and implementation of remediation plans, and

• post-remediation monitoring and related activities.



analysis of available information with respect to pending claims, historical experience, and current cost trends. The amount of our ultimateliability in respect of these matters may differ from these estimates. We periodically update our loss development factors based on actuarialanalyses. The increase in the liability from 2003 to 2004 was due primarily to an increase in reserves for existing claims, reflecting revisedestimates of our ultimate liability in these cases, and updated actuarial assumptions related to unasserted claims. At December 31, 2004, theliability was discounted using the risk-free rate of return.

General and Product Liability and Other Litigation

We had recorded liabilities totaling $549.4 million at December 31, 2004 and $495.3 million (as restated) at December 31, 2003 for potentialproduct liability and other tort claims, including related legal fees expected to be incurred. Of these amounts, $114.5 million and$147.4 million (as restated) were included in Other current liabilities at December 31, 2004 and 2003, respectively. The amounts recorded wereestimated based on an assessment of potential liability using an analysis of available information with respect to pending claims, historicalexperience and, where available, recent and current trends. We had recorded insurance receivables for potential product liability and other tortclaims of $116.9 million at December 31, 2004 and $210.2 million (as restated) at December 31, 2003. Of these amounts, $14.2 million and$91.5 million (as restated) were included in Current Assets as part of Accounts and notes receivable at December 31, 2004 and December 31,2003, respectively.

Asbestos. We are a defendant in numerous lawsuits alleging various asbestos-related personal injuries purported to result from allegedexposure to asbestos in certain rubber encapsulated products or aircraft braking systems manufactured by us in the past, or to asbestos incertain of our facilities. Typically, these lawsuits have been brought against multiple defendants in state and Federal courts. To date, we havedisposed of approximately 26,600 cases by defending and obtaining the dismissal thereof or by entering into a settlement. The sum of ouraccrued asbestos-related liability and gross payments to date, including legal costs, totaled $226.3 million through December 31, 2004,compared to $211.7 million (as restated) at December 31, 2003.

A summary of approximate asbestos claims activity in recent years follows. Because claims are often filed and disposed of by dismissal orsettlement in large numbers, the amount and timing of settlements and the number of open claims during a particular period can fluctuatesignificantly from period to period.

Beginning with the preparation of our 2003 financial statements, we engaged an independent asbestos valuation firm to:

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Note 20. Commitments and Contingent Liabilities (continued)

2004 2003 2002(Dollars in millions)Pending claims, beginning of year 118,000 99,700 64,200New claims filed during the year 12,700 26,700 38,900Claims settled/dismissed during the year (3,400) (8,400) (3,400)Pending claims, end of year 127,300 118,000 99,700

Payments (1) $ 29.9 $ 29.6 $ 18.8

(1) Represents amount spent by Goodyear and its insurers on asbestos litigation defense and claim resolution.

• review our existing reserves for pending claims,



Prior to the fourth quarter of 2003, our estimate for asbestos liability was based upon a review of the various characteristics of the pendingclaims by an experienced asbestos counsel. In addition, at that time we did not have an accrual for unasserted claims, as sufficient informationwas deemed to be not available to reliably estimate such an obligation prior to the fourth quarter of 2003. The valuation firm further confirmedthis conclusion. The available information was deemed to be sufficient to begin reliably estimating an accrual for unasserted claims as ofDecember 31, 2003.

After reviewing our recent settlement history by jurisdiction, law firm, disease type and alleged date of first exposure, the valuation firmcited two primary reasons for us to refine our valuation assumptions. First, in calculating our estimated liability, the valuation firm determinedthat we had previously assumed that we would resolve more claims in the foreseeable future than is likely based on our historical record andnationwide trends. As a result, we now assume that a smaller percentage of pending claims will be resolved within the predictable future.Second, the valuation firm determined that it was not possible to estimate a liability for as many non-malignancy claims as we had done in thepast. As a result, our current estimated liability includes fewer liabilities associated with non-malignancy claims than were included prior toDecember 2003.

We had recorded liabilities for both asserted and unasserted claims, inclusive of defense costs, totaling $119.3 million at December 31,2004 and $134.7 million (as restated) at December 31, 2003. The recorded liability represents our estimated liability through 2008, whichrepresents the period over which the liability can be reasonably estimated. Due to the difficulties in making these estimates, analysis based onnew data and/or changed circumstances arising in the future could result in an increase in the recorded obligation in an amount that cannot bereasonably estimated, and that increase could be significant. The portion of the liability associated with unasserted asbestos claims was$37.9 million at December 31, 2004 and $54.4 million (as restated) at December 31, 2003. At December 31, 2004, our liability with respect toasserted claims and related defense costs was $81.4 million, compared to $80.3 million (as restated) at December 31, 2003.

We maintain primary insurance coverage under coverage-in-place agreements as well as excess liability insurance with respect to asbestosliabilities. We record a receivable with respect to such policies when we determine that recovery is probable and we can reasonably estimatethe amount of a particular recovery.

Prior to 2003, we did not record a receivable for expected recoveries from excess carriers in respect of asbestos related matters. We haveinstituted coverage actions against certain of these excess carriers. After consultation with our outside legal counsel and giving consideration torelevant factors including the ongoing legal proceedings with certain of our excess coverage insurance carriers, their financial viability, theirlegal obligations and other pertinent facts, we determined an amount we expect is probable of recovery from such carriers. Accordingly, werecorded a receivable during 2003, which represents an estimate of recovery from our excess coverage insurance carriers relating to potentialasbestos related liabilities.

The valuation firm also reviewed our method of valuing receivables recorded for probable insurance recoveries. Based upon the modelemployed by the valuation firm, as of December 31, 2004, (i) we had recorded a receivable related to asbestos claims of $107.8 million,compared to $121.3 million (as restated) at December 31, 2003, and (ii) we expect that approximately 90% of asbestos claim related losseswould be recoverable up to our accessible policy limits through the period covered by the estimated liability. The receivable recorded consistsof an amount we expect to collect under coverage-in-place agreements with certain primary carriers as well as an amount we believe isprobable of recovery from certain of our excess

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• determine whether or not we could make a reasonable estimate of the liability associated with unasserted asbestos claims, and

• review our method of determining our receivables from probable insurance recoveries.




coverage insurance carriers. Of this amount, $9.4 million and $11.8 million (as restated) was included in Current Assets as part of Accountsand notes receivable at December 31, 2004 and 2003, respectively.

We believe that at December 31, 2004, we had at least $260 million in aggregate limits of excess level policies potentially applicable toindemnity payments for asbestos products claims in addition to limits of available primary insurance policies. Some of these excess policiesprovide for payment of defense costs in addition to indemnity limits. A portion of the availability of the excess level policies is included in the$107.8 million insurance receivable recorded at December 31, 2004. We also had approximately $23 million in aggregate limits for productsclaims as well as coverage for premise claims on a per occurrence basis and defense costs available with its primary insurance carriers throughcoverage-in-place agreements at December 31, 2004.

We believe that our reserve for asbestos claims, and the insurance asset recorded in respect of these claims, reflects reasonable andprobable estimates of these amounts, subject to the exclusion of claims for which it is not feasible to make reasonable estimates. The estimateof the assets and liabilities related to pending and expected future asbestos claims and insurance recoveries is subject to numerousuncertainties, including, but not limited to, changes in:

As a result, with respect to both asserted and unasserted claims, it is reasonably possible that we may incur a material amount of cost inexcess of the current reserve, however such amount cannot be reasonably estimated. Coverage under insurance policies is subject to varyingcharacteristics of asbestos claims including, but not limited to, the type of claim (premise vs. product exposure), alleged date of first exposureto our products or premises and disease alleged. Depending upon the nature of these characteristics, as well as the resolution of certain legalissues, some portion of the insurance may not be accessible by us.

Heatway (Entran II). On June 4, 2004, we entered into an amended settlement agreement that was intended to address the claims arising outof a number of Federal, state and Canadian actions filed against us involving a rubber hose product, Entran II. We supplied Entran II from 1989to 1993 to Chiles Power Supply, Inc. (d/b/a Heatway Systems), a designer and seller of hydronic radiant heating systems in the United States.Heating systems using Entran II are typically attached or embedded in either indoor flooring or outdoor pavement, and use Entran II hose as aconduit to circulate warm fluid as a source of heat. We had recorded liabilities related to Entran II claims totaling $307.2 million atDecember 31, 2004 and $246.1 million at December 31, 2003.

On October 19, 2004, the amended settlement received court approval. As a result, we will make annual cash contributions to a settlementfund of $60 million, $40 million, $15 million, $15 million and $20 million in 2004, 2005, 2006, 2007 and 2008, respectively. In addition tothese annual payments, we contributed approximately $170 million received from insurance contributions to a settlement fund pursuant to theterms of the settlement agreement. We do not expect to receive any additional insurance reimbursements for Entran II related matters. InNovember 2004, we made our first annual cash contribution, approximately $60 million, to the settlement fund.

Approximately 57 sites have been opted out of the amended settlement. There are three state court actions filed against us involvingapproximately 17 of these sites and additional actions may be filed against us in the future. Although any liability resulting from the opt outswill not be covered by the amended settlement,

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• the litigation environment,

• federal and state law governing the compensation of asbestos claimants,

• our approach to defending and resolving claims, and

• the level of payments made to claimants from other sources, including other defendants.



we will be entitled to assert a proxy claim against the settlement fund for the payment such claimant would have been entitled to under theamended settlement.

In addition to the sites that have been opted out of the amended settlement, any liability related to five actions in which we have receivedadverse judgments also will not be covered by the amended settlement. With respect to two of these matters, however, we will be entitled toassert a proxy claim against the settlement fund for amounts (if any) paid to plaintiffs in these actions. Our recorded liabilities related to thesefive claims totaled $48.5 million at December 31, 2004.

The ultimate cost of disposing of Entran II claims is dependent upon a number of factors, including our ability to resolve claims not subjectto the amended settlement (including the cases in which we have received adverse judgments) and whether or not claimants opting out of theamendment settlement pursue claims against us in the future.

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

Tax Matters

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognizeliabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional taxes will be due. If weultimately determine that payment of these amounts is unnecessary, we reverse the liability and recognize a tax benefit during the period inwhich we determine that the liability is no longer necessary. We also recognize tax benefits to the extent that it is probable that our positionswill be sustained when challenged by the taxing authorities. As of December 31, 2004 we had not recognized tax benefits of approximately$180 million relating to the reorganization of legal entities in 2001. Pursuant to the reorganization, our tax payments have been reduced byapproximately $67 million through December 31, 2004. Should the ultimate outcome be unfavorable, we would be required to make a cashpayment for all tax reductions claimed as of that date.

Guarantees

We are a party to various agreements under which we have undertaken obligations resulting from the issuance of certain guarantees.Guarantees have been issued on behalf of our affiliates or our customers. Normally there is no separate premium received by us asconsideration for the issuance of guarantees. Our performance under these guarantees would normally be triggered by the occurrence of one ormore events as provided in the specific agreements. Collateral and recourse provisions available to us under these agreements were notsignificant.

Customer Financing. In the normal course of business, we will from time to time issue guarantees to financial institutions on behalf of ourcustomers. We normally issue these guarantees in connection with the

143




arrangement of financing by the customer. We generally do not require collateral in connection with the issuance of these guarantees. In theevent of non-payment by a customer, we would be obligated to make payment to the financial institution, and would typically have recourse tothe assets of that customer. At December 31, 2004, we had guarantees outstanding under which the maximum potential amount of paymentstotaled $7.5 million, and which expire at various times through 2012. We cannot estimate the extent to which the customers’ assets, in theaggregate, would be adequate to recover the maximum amount of potential payments. There were no recorded liabilities associated with theseguarantees on the Consolidated Balance Sheet at December 31, 2004 or 2003.

Affiliate Financing. We will from time to time issue guarantees to financial institutions on behalf of certain of our affiliates, which areaccounted for using the equity method. The financing arrangements of the affiliates may be for either working capital or capital expenditures.We generally do not require collateral in connection with the issuance of these guarantees. In the event of non-payment by an affiliate, we areobligated to make payment to the financial institution, and will typically have recourse to the assets of that affiliate. At December 31, 2004, wehad guarantees outstanding under which the maximum potential amount of payments totaled $9.8 million, and which expire at various timesthrough 2007. We are unable to estimate the extent to which the affiliates’ assets would be adequate to recover the maximum amount ofpotential payments with that affiliate.

Employee Guarantees. We will from time to time issue guarantees to financial institutions or other companies on behalf of certain employeesor associates that are relocated to international operations. At December 31, 2004, we had guarantees outstanding under which the maximumpotential amount of payments totaled $0.9 million.

Indemnifications. At December 31, 2004, we were a party to various agreements under which we had assumed obligations to indemnify thecounterparties from certain potential claims and losses. These agreements typically involve standard commercial activities undertaken by us inthe normal course of business; the sale of our assets; the formation of joint venture businesses to which we have contributed assets in exchangefor ownership interests; and other financial transactions. Indemnifications provided by us pursuant to these agreements relate to various mattersincluding, among other things, environmental, tax and shareholder matters; intellectual property rights; government regulations andemployment-related matters; and dealer, supplier and other commercial matters.

Certain indemnifications expire from time to time, and certain other indemnifications are not subject to an expiration date. In addition, ourpotential liability under certain indemnifications is subject to maximum caps, while other indemnifications are not subject to caps. Although wehave been subject to indemnification claims in the past, we cannot reasonably estimate the number, type and size of indemnification claims thatmay arise in the future. Due to these and other uncertainties associated with the indemnifications, our maximum exposure to loss under theseagreements cannot be estimated.

We have determined that there are no guarantees other than liabilities for which amounts are already recorded or reserved in our financialstatements under which it is probable that we have incurred a liability.

On February 3, 2004, the Company’s Board of Directors approved an amendment to the Rights Agreement to change the final expiration dateof the Rights Agreement from July 26, 2006 to June 1, 2004. As a result, the preferred stock purchase rights granted under the RightsAgreement expired at the close of business on June 1, 2004.

144


Note 21. Preferred Stock Purchase Rights Plan



At December 31, 2004, we had $1.97 billion in cash and cash equivalents, of which $1.02 billion was held in the United States and$415.6 million was in accounts of GDTE. The remaining amounts were held in our other non-U.S. operations. Our ability to move cash andcash equivalents among our various operating locations is subject to the operating needs of the operating locations as well as restrictionsimposed by local laws and applicable credit facility agreements. At December 31, 2004, approximately $219.9 million of cash was held inlocations where significant tax or legal impediments would make it difficult or costly to execute monetary transfers. Unused availability underour various credit agreements totaled approximately $1.12 billion at December 31, 2004. Based upon our projected operating results, we expectthat cash flow from operations, together with amounts available under our primary credit facilities and other sources of liquidity, will beadequate to meet our anticipated liquidity requirements through December 31, 2005 (including working capital, debt service, pension fundingand capital expenditures).

The aggregate amount of long-term debt maturing in calendar years 2005 and 2006 is approximately $1.01 billion and $1.92 billion,respectively. Included in the amount for 2005 is $400.0 million related to our primary European credit facilities maturing on April 30, 2005 andour €400 million 6.375% Euro Notes due June 2005 (equivalent to approximately $542 million at December 31, 2004). In March 2006,$1.45 billion related to our asset-based facilities matures, and the $250 million 65/8% Senior Notes are due in December 2006. On February 23,2005 we announced that we intend to refinance approximately $3.3 billion of our credit facilities. These include:


These transactions are subject to market conditions and the execution of definitive documentation and are expected to close in April 2005.We expect to record pretax charges of approximately $40 million for the write-off of unamortized costs related to the replaced facilities, andthe costs of refinancing could be significant. Failure to refinance the European credit facilities or asset-based facilities before they mature couldhave a material adverse affect on our liquidity. In order to ensure that our future liquidity requirements are addressed, we plan to seekadditional financing in the capital markets. Because of our debt ratings, operating performance over the past few years and other factors, accessto the capital markets cannot be assured.

Our ongoing ability to access the capital markets is also dependent on the degree of success we have implementing our North AmericanTire turnaround strategy. Successful implementation of the turnaround strategy is also crucial to ensuring that we have sufficient cash flowfrom operations to meet our obligations. While we made progress in implementing the turnaround strategy in 2004, there is no assurance thatour progress will continue, or that we will be able to sustain any future progress to a degree sufficient to maintain access to capital markets andmeet liquidity requirements. As a result, failure to complete the turnaround

145

Note 22. Future Liquidity Requirements

• a $1.3 billion asset-based credit facility, due March 31, 2006,

• a $650 million asset-based term loan, due March 31, 2006,

• a $680 million deposit funded credit facility, due September 30, 2007, and







strategy successfully could have a material adverse effect on our financial position, results of operations and liquidity.

Future liquidity requirements also may make it necessary for us to incur additional debt. However, a substantial portion of our assets isalready subject to liens securing our indebtedness. As a result, we are limited in our ability to pledge our remaining assets as security foradditional secured indebtedness. In addition, unless we sustain or improve our financial performance, our ability to raise unsecured debt maybe limited.

In addition to maturing debt, we are required to make contributions to our domestic defined benefit pension plans. These contributions arerequired under the minimum funding requirements of the Employee Retirement Income Security Act (“ERISA”). Although subject to change,we expect to be required by ERISA to make contributions to our domestic pension plans of approximately $400 million to $425 million in2005. At the end of 2005, the current interest rate relief measures used for pension funding calculations expire. If current measures areextended, we estimate that required contributions in 2006 will be in the range of $600 million to $650 million. If new legislation is not enacted,the interest rate used for 2006 and beyond will be based upon a 30-year U.S. Treasury bond rate, as calculated and published by theU.S. government as a proxy for the rate that could be attained if 30-year Treasury bonds were currently being issued. Using an estimate ofthese rates would result in estimated required contributions during 2006 in the range of $725 million to $775 million. The assumptions used todevelop these estimates are described in the Commitments and Contingencies in Item 7, Management’s Discussion and Analysis of FinancialCondition and Results of Operations, of our Form 10-K for the year ended December 31, 2004. We are not able to reasonably estimate ourfuture required contributions beyond 2006. Nevertheless, we expect that the amount of contributions required in years beyond 2006 will besubstantial. In 2005, in addition to required domestic plan contributions, we expect to contribute approximately $70 million to our fundedinternational pension plans.

Our postretirement benefit plans will require amounts to cover benefit payments in the future. Benefit payments are expected to beapproximately $304 million in 2005, $321 million in 2006 and $274 million in 2007. These estimates are based upon the plan provisionscurrently in effect. Ultimate payments are expected to be $2.6 billion as calculated on December 31, 2004. The majority of these paymentswould be made more than five years hence. The estimated payments do not include an estimated reduction in our obligations totalingapproximately $475 million to $525 million resulting from the provisions of the Medicare Prescription Drug, Improvement and ModernizationAct of 2003.

Pursuant to an agreement entered into in 2001, Ansell Ltd. (Ansell), our joint venture partner in South Pacific Tyres (SPT), has the right,during the period beginning August 2005 and ending one year later, to require Goodyear to purchase Ansell’s 50% interest in SPT. Thepurchase price is a formula price based on the earnings of SPT, subject to various adjustments. If Ansell does not exercise its right, we mayrequire Ansell to sell its interest to us during the 180 days following the expiration of Ansell’s right at a price established using the sameformula.

We are subject to various legal proceedings, including those described in Note 20. In the event we wish to appeal any future adversejudgment in any proceeding, we would be required to post an appeal bond with the relevant court. If we do not have sufficient availabilityunder our U.S. deposit-funded credit facility to issue a letter of credit to support an appeal bond, we may be required to (i) pay downborrowings under the facility in order to increase the amount available for issuing letters of credit, or (ii) deposit cash collateral in order to staythe enforcement of the judgment pending an appeal. A significant deposit of cash collateral may have a material adverse effect on our liquidity.

146

Note 22. Future Liquidity Requirements (continued)



A substantial portion of our borrowings is at variable rates of interest and exposes us to interest rate risk. If interest rates rise, our debtservice obligations would increase. An unanticipated significant rise in interest rates could have a material adverse effect on our liquidity infuture periods.

At December 31, 2004, we had a number of investments in entities that engaged in the manufacture, distribution and sale of tires and tirerelated products and services. In addition, we had an investment in a rubber purchasing consortium, Rubbernetwork.com (RNC). EffectiveJanuary 1, 2004, South Pacific Tyres (SPT) and Tire & Wheels Assemblies, Inc. (T&WA) were consolidated pursuant to FIN 46. Refer toNote 8. The other investments continued to be accounted for under the equity method.

Investments in and Advances to Affiliates at December 31, 2004 and 2003 included balances related to the affiliates in the following table,among others. Balances related to SPT and T&WA were included only at December 31, 2003.

Our percentage ownership of the investees indicated below follows:

Investments in and advances to the unconsolidated affiliates presented above totaled $28.9 million and $167.9 million (as restated) atDecember 31, 2004 and 2003, respectively. Our aggregate investments in and advances to unconsolidated affiliates were $34.9 million and$184.2 million (as restated) at December 31, 2004 and 2003, respectively. The balances at December 31, 2003 included SPT and T&WA.

Summarized financial information related to the unconsolidated affiliates in the table above is presented below.

147

Note 22. Future Liquidity Requirements (continued)

Note 23. Investments in Unconsolidated Affiliates

Investment Ownership

Dunlop Goodyear Kabushiki Kaisha 25.0%Nippon Goodyear Kabushiki Kaisha 25.0AOT, Inc. 50.0Coast Tire & Auto Service (2002) Ltd 49.0Fountain Tire Limited 49.0RNC 27.8SPT 50.0T&WA 40.0

AllRNC Other Total

(In millions)2004Statement of Income Information:

Net sales $ 13.7 $ 981.6 $ 995.3Gross profit 0.7 235.6 236.3Net income (loss) (1.0) 27.8 26.8

Financial Position Information:Current assets 7.1 357.4 364.5Noncurrent assets 0.5 37.6 38.1Current liabilities 3.2 283.3 286.5Noncurrent liabilities 12.1 25.3 37.4



On February 28, 2005, we announced that we had entered into an agreement to sell the assets of our North American farm tire business to TitanInternational, Inc., for approximately $100 million, pending government, regulatory and union approvals. In connection with the transaction,we expect to record approximately $35 to $65 million of non-cash pension and retiree medical costs in the quarter in which the transactioncloses. Additional charges also may be incurred in connection with the closing of the transaction. The assets to be sold include inventories andour manufacturing plant, property and equipment in Freeport, Illinois.

Effective January 1, 2005, we integrated our Chemical Products business segment into our North American Tire business segment. Theintegration will not affect net income. During 2004, $818.6 million, or 53.4%, of Chemical Products’ sales and 75.2% of its segment operatingincome resulted from intercompany transactions. Beginning with the first quarter of 2005, our total segment sales will no longer reflect theseintercompany sales. In addition, the segment operating income previously attributable to Chemical Products’ intercompany transactions will nolonger be included in the total segment operating income that we report.

On January 21, 2005, final regulations were issued under the Medicare Prescription Drug, Improvement and Modernization Act. Based onthe clarifications provided in the final regulations, our net periodic postretirement cost is expected to be lower by approximately $50 million in2005, and the accumulated postretirement benefit obligation is expected to be reduced by approximately $475 million to $525 million during2005. Refer to Note 13.

148

Note 23. Investments in Unconsolidated Affiliates (continued)

AllSPT RNC Other Total

2003Statement of Income Information:

Net sales $ 640.3 $ 9.0 $ 1,302.4 $ 1,951.7Gross profit (loss) 183.6 (6.5) 267.4 444.5Net income (loss) (19.5) (29.7) 12.9 (36.3)

Financial Position Information:Current assets 287.8 10.1 354.3 652.2Noncurrent assets 194.9 0.8 111.7 307.4Current liabilities 321.5 12.8 314.7 649.0Noncurrent liabilities 97.6 10.5 88.9 197.0

2002Statement of Income Information:

Net sales $ 523.4 $ 9.0 $ 1,056.1 $ 1,588.5Gross profit (loss) 137.2 (6.9) 208.0 338.3Net income (loss) (14.5) (15.3) 6.8 (23.0)

Note 24. Subsequent Events


Supplementary Data(Unaudited)

Quarterly Data and Market Price Information

149

QuarterRestated

(In millions, except per share amounts) First Second Third Fourth Year

2004Net Sales $ 4,301.9 $ 4,519.4 $ 4,714.2 $ 4,834.9 $ 18,370.4Gross Profit 825.1 927.6 946.9 961.6 3,661.2Net Income (Loss) $ (78.1) $ 29.8 $ 38.5 $ 124.6 $ 114.8

Net Income (Loss) Per Share — Basic $ (0.45) $ 0.17 $ 0.22 $ 0.71 $ 0.65

— Diluted $ (0.45) $ 0.17 $ 0.20 $ 0.62 $ 0.63

Average Shares Outstanding — Basic 175.3 175.3 175.4 175.5 175.4— Diluted 175.3 176.8 206.9 207.8 192.3Price Range of Common Stock:* High $ 11.97 $ 10.45 $ 12.00 $ 15.01 $ 15.01Low 7.06 7.66 8.70 9.15 7.06Selected Balance Sheet Items at Quarter-End:

Total Assets $ 15,167.6 $ 15,000.4 $ 15,777.5 $ 16,533.3Total Debt 5,401.4 5,316.8 5,660.5 5,679.6Shareholders’ Equity (Deficit) (144.2) (167.3) (47.8) 72.8

Quarter As Originally ReportedFirst Second Third

(In millions, except per share amounts) (A) (B) (C)

2004Net Sales $ 4,290.9 $ 4,508.9 $ 4,713.7Gross Profit 825.2 926.1 947.1Net Income (Loss) $ (76.9) $ 25.1 $ 36.5

Net Income (Loss) Per Share — Basic $ (0.44) $ 0.14 $ 0.21

— Diluted $ (0.44) $ 0.14 $ 0.21

Average Shares Outstanding — Basic 175.3 175.3 175.4— Diluted 175.3 176.8 177.9Price Range of Common Stock:* High $ 11.97 $ 10.45 $ 12.00Low 7.06 7.66 9.09Selected Balance Sheet Items at Quarter-End:

Total Assets $ 15,421.3 $ 15,261.8 $ 15,675.0Total Debt 5,341.4 5,257.1 5,603.8Shareholders’ Equity (Deficit) (121.5) (147.5) (38.4)

(A) As reported in 2004 Form 10-Q filed on June 18, 2004.

(B) As reported in 2004 Form 10-Q filed on August 5, 2004.

(C) As reported in 2004 Form 10-Q filed on November 9, 2004.

* New York Stock Exchange — Composite Transactions

Effect of restatement adjustments on Goodyear’s previously issued financial statements

Net income per share — diluted as restated in the third and fourth quarters of 2004 reflected the dilutive impact of the assumed conversion ofour $350 million Convertible Senior Notes into shares of our Common Stock. The Notes were issued on July 2, 2004. Net income per share —diluted in 2004 included a pro forma earnings adjustment representing avoided after-tax interest expense of $3.5 million in each of the thirdand fourth quarters. Average shares outstanding — diluted included 29.1 million shares in each of the third and fourth quarters, and14.5 million shares in the full year, resulting from the assumed conversion. Refer to Note 12.

The first quarter of 2004 included net after-tax gains of $2.1 million from asset sales and net favorable tax adjustments of $1.9 million. Thefirst quarter also included net after-tax charges of $20.5 million for rationalizations, $11.6 million for insurance fire loss deductibles,$9.2 million for general and product liability-discontinued products and $4.1 million for accelerated depreciation.

The second quarter of 2004 included net favorable tax adjustments of $4.9 million and net after-tax gains $1.1 million from asset sales. Thesecond quarter also included net after-tax charges of $8.5 million for rationalizations, $8.1 million for general and product liability-discontinued products and $0.5 million for accelerated depreciation.

The third quarter of 2004 included net favorable tax adjustments of $43.6 million and net after-tax gains of $1.1 million from asset sales.The third quarter also included net after-tax charges of $30.3 million for rationalizations, $8.1 million for general and product liability-discontinued products and $1.9 million for accelerated depreciation.

150

(Unaudited)2004 Quarter Ended

(In millions, except per share amounts) March 31 June 30 September 30 Total

Net income (loss) as originally reported(A) $ (76.9) $ 25.1 $ 36.5 $ (15.3)Adjustments (pretax):

SPT 0.6 (1.2) 1.2 0.6General and Product Liability (1.5) 4.1 (0.4) 2.2Account Reconciliations 0.8 1.1 0.6 2.5

Total adjustments (pretax) (0.1) 4.0 1.4 5.3Tax effect of restatement adjustments (0.5) 1.4 (0.4) 0.5Tax adjustments (0.6) (0.7) 1.0 (0.3)

Total taxes (1.1) 0.7 0.6 0.2Total net adjustments (1.2) 4.7 2.0 5.5Net income (loss) as restated $ (78.1) $ 29.8 $ 38.5 $ (9.8)

Per Share of Common Stock:Net income (loss) — Basic as originally reported $ (0.44) $ 0.14 $ 0.21Effect of net adjustments (0.01) 0.03 0.01Net income (loss) — Basic as restated $ (0.45) $ 0.17 $ 0.22

Net income (loss) — Diluted as originally reported $ (0.44) $ 0.14 $ 0.21Effect of net adjustments (0.01) 0.03 0.01Effect of Convertible Senior Notes — — (0.02)Net income (loss) — Diluted as restated $ (0.45) $ 0.17 $ 0.20

(A) As reported in 2004 Forms 10-Q filed on June 18, August 5 and November 9, 2004, respectively.

The fourth quarter of 2004 included net favorable tax adjustments of $9.7 million and net after-tax gains of $156.6 million from anenvironmental insurance settlement, $19.3 million from a favorable lawsuit settlement with certain suppliers and $7.3 million from netreversals of rationalization charges. The fourth quarter also included net after-tax charges of $27.4 million for general and product liability-discontinued products, $11.8 million from asset sales (including a loss on the write-down of the assets of our natural rubber plantations inIndonesia) and $2.9 million for accelerated depreciation.


151

QuarterRestated


2003Net Sales $ 3,546.5 $ 3,754.1 $ 3,906.7 $ 3,914.8 $ 15,122.1Gross Profit 583.4 712.5 711.1 616.1 2,623.1Net Loss $ (200.5) $ (59.6) $ (120.3) $ (427.0) $ (807.4)

Net Loss Per Share — Basic $ (1.14) $ (0.34) $ (0.69) $ (2.44) $ (4.61)

— Diluted $ (1.14) $ (0.34) $ (0.69) $ (2.44) $ (4.61)


Total Assets $ 13,227.8 $ 14,639.0 $ 14,586.0 $ 14,701.1Total Debt 3,830.1 5,026.1 4,944.8 5,086.0Shareholders’ Equity (Deficit) 90.1 171.8 63.5 (32.2)

QuarterAs Previously Reported (A)


2003Net Sales $ 3,545.8 $ 3,753.3 $ 3,906.1 $ 3,913.8 $ 15,119.0Gross Profit 583.0 714.5 711.7 614.5 2,623.7Net Income (Loss) $ (196.5) $ (53.0) $ (118.2) $ (434.4) $ (802.1)

Net Income (Loss) Per Share — Basic $ (1.12) $ (0.30) $ (0.67) $ (2.49) $ (4.58)

— Diluted $ (1.12) $ (0.30) $ (0.67) $ (2.49) $ (4.58)


Total Assets $ 13,246.5 $ 14,636.0 $ 14,575.9 $ 15,005.5Total Debt 3,829.1 5,025.1 4,943.8 5,077.4Shareholders’ Equity (Deficit) 126.1 207.9 96.0 (13.1)




152

Quarter As Originally Reported(In millions, except per share amounts) First (A) Second (B) Third (C)

2003Net Sales $ 3,545.5 $ 3,758.2 $ 3,906.0Gross Profit 621.1 707.2 719.4Net Loss $ (163.3) $ (73.6) $ (105.9)


— Diluted $ (0.93) $ (0.42) $ (0.60)

Average Shares Outstanding — Basic 175.3 175.3 175.3— Diluted 175.3 175.3 175.3Price Range of Common Stock:* High $ 7.33 $ 7.35 $ 8.19Low 3.35 4.55 4.49Selected Balance Sheet Items at Quarter-End:

Total Assets $ 13,367.9 $ 14,740.7 $ 14,597.6Total Debt 3,826.7 5,022.7 4,941.5Shareholders’ Equity 562.0 611.2 429.3

(A) As reported in 2003 Form 10-Q filed on April 30, 2003.

(B) As reported in 2003 Form 10-Q filed on July 30, 2003.

(C) As reported in 2003 Form 10-Q filed on November 19, 2003.


Effect of restatement adjustments on Goodyear’s previously issued 2003 quarterly financial statements

Increase (decrease) in Income (loss)

The first quarter of 2003 included net after-tax charges of $57.9 million for rationalizations, $19.1 million for general and product liability-discontinued products and $7.5 million for accelerated depreciation. The first quarter also included net favorable tax adjustments of$1.2 million and a net after-tax gain of $0.2 million from asset sales.

153

Quarter Ended(In millions, except per share amounts) March 31 June 30 September 30 December 31 Total

Net loss as originally reported(A) $ (163.3) $ (73.6) $ (105.9) $ (434.4)(B) $ (777.2)Adjustments (pretax):

Accounting Irregularities (1.6) (2.9) 4.9 — $ 0.4Account Reconciliations (27.7) 20.9 (10.5) — (17.3)Out-of-Period 0.7 (0.2) 0.4 — 0.9Discount Rate Adjustments (4.3) (4.4) (4.3) — (13.0)Chemical Products Segment 2.4 (0.7) (1.1) — 0.6

Total adjustments (pretax) (30.5) 12.7 (10.6) — (28.4)Tax effect of restatement adjustments (2.7) 3.7 (1.7) — (0.7)Tax adjustments — 4.2 — — 4.2

Total taxes (2.7) 7.9 (1.7) — 3.5Total net adjustments (33.2) 20.6 (12.3) — (24.9)Net loss as previously reported(B) $ (196.5) $ (53.0) $ (118.2) $ (434.4) $ (802.1)

SPT (0.4) (2.0) (0.4) 0.5 (2.3)General and Product Liability — — — 7.3 7.3Account Reconciliations (2.9) (2.0) (1.0) 0.5 (5.4)

Total adjustments (pretax) (3.3) (4.0) (1.4) 8.3 (0.4)Tax effect of restatement adjustments (0.1) 0.4 (0.1) (0.3) (0.1)Tax adjustments (0.6) (3.0) (0.6) (0.6) (4.8)

Total taxes (0.7) (2.6) (0.7) (0.9) (4.9)Total net adjustments (4.0) (6.6) (2.1) 7.4 (5.3)Net loss as restated $ (200.5) $ (59.6) $ (120.3) $ (427.0) $ (807.4)

Per Share of Common Stock:Net loss — Basic as originally reported(A) $ (0.93) $ (0.42) $ (0.60) $ (2.49)(B) $ (4.44)Effect of net adjustments (0.19) 0.12 (0.07) — (0.14)Net loss — Basic as previously reported(B) $ (1.12) $ (0.30) $ (0.67) $ (2.49) $ (4.58)Effect of net adjustments (0.02) (0.04) (0.02) 0.05 (0.03)Net loss — Basic as restated $ (1.14) $ (0.34) $ (0.69) $ (2.44) $ (4.61)

Net loss — Diluted as originally reported(A) $ (0.93) $ (0.42) $ (0.60) $ (2.49)(B) $ (4.44)Effect of net adjustments (0.19) 0.12 (0.07) — (0.14)Net loss — Diluted as previously reported(B) $ (1.12) $ (0.30) $ (0.67) $ (2.49) $ (4.58)Effect of net adjustments (0.02) (0.04) (0.02) 0.05 (0.03)Net loss — Diluted as restated $ (1.14) $ (0.34) $ (0.69) $ (2.44) $ (4.61)

(A) As reported in 2003 Forms 10-Q filed on April 30, July 30 and November 19, 2003, respectively.


The second quarter of 2003 (as previously reported) included net charges for restatement adjustments totaling $25.6 million before tax($31.3 million after tax). These adjustments related primarily to Interplant, Engineered Products and Tax adjustments, and have been restatedto prior periods. Several factors relating to Goodyear’s enterprise resource planning systems implementation resulted in Engineered Products’inability to locate or recreate account reconciliations for prior periods in the amount of $19.0 million before tax ($18.6 million after tax). As aresult, Engineered Products was unable to allocate the amount to applicable periods and accordingly, recorded this adjustment in the firstquarter of 2003.

The second quarter of 2003 included net favorable tax adjustments of $12.8 million and a net after-tax gain of $9.1 million resulting fromgeneral and product liability-discontinued products. The second quarter also included net after-tax charges of $13.0 million for rationalizations,$6.4 million from asset sales and $0.5 million for accelerated depreciation.

The third quarter of 2003 included net after-tax charges of $62.5 million for general and product liability-discontinued products,$46.3 million for rationalizations (including $1.5 million at SPT), $5.9 million from asset sales and $0.5 million for accelerated depreciation.The third quarter also included net favorable tax adjustments of $35.8 million.

The fourth quarter of 2003 included net after-tax charges of $154.2 million for rationalizations (including $1.1 million at SPT),$122.9 million for accelerated depreciation, asset write-offs and impairments, $63.6 million (as restated) for general and product liability-discontinued products, $9.5 million related to a labor litigation judgment against Goodyear in Europe and $4.2 million (as restated) from assetsales. The fourth quarter also included net unfavorable tax adjustments of $0.2 million.

154

None.

This Annual Report on Form 10-K reflects adjustments made pursuant to the restatements included in the 2003 Form 10-K as well as therestatements announced in November 2004 and February 2005. Please refer to the Note to the Financial Statements No. 2, Restatement, in thisForm 10-K for a detailed description of these restatements as well as their impact on the Company’s prior period financial statements.

These restatements arose initially out of an intensified effort to reconcile certain general ledger accounts, which were out-of-balance largely asa result of problems associated with the implementation of enterprise resource planning software, and following the receipt of a managementletter dated March 11, 2003, from the Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”), inwhich PwC noted the need for increased attention to the account reconciliation process.

As a result of Goodyear’s efforts to reconcile these accounts, the Company initially recorded adjustments that reduced net income for thequarter ended June 30, 2003 by $31.3 million. The Company subsequently determined in the third quarter of 2003 that it needed to makeadditional adjustments arising out of account reconciliations. Based on an assessment of the impact of the adjustments to the expected 2003results, management and the Audit Committee decided to restate the Company’s previously issued financial statements. PwC, in October 2003,advised the Company that the failure to identify certain issues that had affected several years financial statements related to the monitoring andreview of general ledger accounts collectively resulted in a material weakness in internal controls that required strengthening of procedures foraccount reconciliation, and internal reporting and monitoring of these matters. The restatement, which was contained in the Company’s Reporton Form 8-K filed concurrently with its Form 10-Q for the quarter ended September 30, 2003, resulted in a decrease in cumulative net incomethrough June 30, 2003 of $84.7 million. The restatement also included changes to the timing of certain previously recognized adjustments notarising from account reconciliations as well as other adjustments identified during the restatement process.

On December 10, 2003, the Company announced that it was delaying the filing of its 2002 Form 10-K/ A containing restated financialstatements in order to permit the Audit Committee to conduct an internal investigation into potential improper accounting issues in itsEuropean Union business segment. The investigation subsequently expanded to other locations of the Company’s overseas operations. Theinvestigation identified accounting irregularities primarily related to earnings management whereby accrual accounts were adjusted or expenseswere improperly deferred in order to increase the segments’ operating income.

Additionally, in the first and second quarters of 2004, the Company identified other matters requiring adjustment. Some of theseadjustments resulted from an improper understatement of workers’ compensation liability and improper accounting related to the valuation ofreal estate received in payment of trade accounts receivable. The Audit Committee also initiated an investigation into these adjustments. As aresult of these investigations, management and the Audit Committee decided that a further restatement of the financial information contained inthe Form 8-K discussed above was necessary. This further restatement was reflected in the 2003 Form 10-K filed on May 19, 2004. Theadjustments identified through May 19, 2004 reduced previously reported net income through September 30, 2003 by a total of $280.8 million,including the effect of the adjustments described above.

In May 2004, PwC advised the Company that the circumstances it previously identified to the Company as collectively resulting in a materialweakness had each individually become a material weakness. PwC advised

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURE.

ITEM 9A. CONTROLS AND PROCEDURES.

Overview


May 2004 Material Weaknesses

the Company that this determination was due to the number of previously undetected errors that were attributable to the material weaknesspreviously identified. A significant portion of these errors were detected by the Company. PwC further identified an additional materialweakness resulting from intentional overrides of internal controls by those in authority, particularly related to the European Union Tiresegment and workers’ compensation liability in the United States. These material weaknesses, if unaddressed, could result in material errors inthe Company’s financial statements. In addition, PwC advised the Company that it had identified as reportable conditions the Company’s needto enhance certain finance personnel’s knowledge of U.S. GAAP and internal controls and the need to enhance controls related to theestablishment of bank accounts. PwC also identified a number of other internal control weaknesses/business recommendations.

On November 5, 2004, the Company announced that it would file an amendment to its 2003 Form 10-K which would include financialinformation related to certain of the Company’s investments in affiliates, and a restatement of the Company’s prior period financial statementsto record certain additional out-of-period adjustments identified and recorded in the first and second quarters of 2004.

The Company also identified a misclassification of balance sheet deferred tax accounts in the course of preparing its third quarter Form 10-Q. The Company recorded certain deferred tax assets and liabilities on a gross basis beginning in the December 31, 2003 balance sheet, ratherthan netting short-term deferred tax assets with short-term deferred tax liabilities and long-term deferred tax assets with long-term deferred taxliabilities. This misclassification resulted in an overstatement of total assets and total liabilities by approximately $357 million. There was noeffect on shareholders equity, net income or cash flow previously reported by the Company.

Following the filing of its third quarter Form 10-Q on November 9, 2004, which reflected a restatement for all known adjustments up tothat point in time, Goodyear identified additional out-of-period adjustments affecting the third quarter of 2004 and earlier periods. In addition,on December 30, 2004, the Company announced that it was working to resolve an accounting issue concerning its Australian affiliate, SouthPacific Tyres (“SPT”), and that the resolution of the matter could have an impact on the Company’s previously reported financial results.Although the primary focus of this effort was to resolve the accounting treatment of a 10-year supply agreement between the Company andSPT, the Company also noted the possibility that other items having an impact on SPT’s prior period financial statements could arise in thecourse of the review. This Form 10-K reflects a resolution of the SPT accounting issues.

For a description of the impact of these restatement adjustments on prior periods please refer to “Restatements Included in 2004 Form 10-K” in the Note to the Financial Statements No. 2, Restatement, in this Form 10-K.

Beginning with the year ended December 31, 2004, Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”) requires the Company’ssenior management to provide an annual report on internal controls over financial reporting. This report must contain (i) a statement ofmanagement’s responsibility for establishing and maintaining adequate internal controls over financial reporting for the company, (ii) astatement identifying the framework used by management to conduct the required evaluation of the effectiveness of internal controls overfinancial reporting, (iii) management’s assessment of the effectiveness of internal controls over financial reporting as of the end of the mostrecent fiscal year, including a statement as to whether or not the Company’s internal controls over financial reporting are effective, and (iv) astatement that the Company’s independent auditors have issued an attestation report on management’s assessment of internal controls overfinancial reporting. In seeking to achieve compliance with Section 404 within the prescribed period, management formed an internal controlsteering committee, engaged outside consultants and adopted a detailed program to assess the adequacy of internal controls over financialreporting, create or supplement documentation of controls over financial reporting, remediate control weaknesses that may be

156

Restatements Included in this 2004 Form 10-K

Compliance with Sarbanes-Oxley Section 404

identified, validate through testing that the controls are functioning as documented and implement a continuous reporting and improvementprocess for internal controls over financial reporting.

Management’s report on internal controls over financial reporting as of December 31, 2004, pursuant to Section 404, is included in thisForm 10-K. In our report, management concludes that the previously identified material weakness relating to account reconciliations remainsand identifies an additional material weakness relating to segregation of duties at the application control level in enterprise resource planningsystems. Remedial efforts related to these material weaknesses, as well as the material weaknesses and reportable conditions identified in May2004 are described in detail below.

The Company has dedicated substantial resources to the review of its internal control processes and procedures. As a result of that review, theCompany has determined that it would strengthen its internal controls by (i) making personnel and organizational changes, (ii) improvingcommunications and reporting, (iii) improving monitoring controls, (iv) increasing oversight to reduce opportunities for intentional overridesof control procedures, and (v) simplifying and improving financial processes and procedures. Certain measures to strengthen internal controlswere implemented prior to January 1, 2004. During that time period the Company:

The implementation of other remedial measures was completed between January 1, 2004 and May 19, 2004, the date on which theCompany’s 2003 Form 10-K was filed. During the January 1 — May 19, 2004 time period the Company:

157

Remediation of Internal Control Weaknesses

• Established a requirement at the corporate level that each manager responsible for an account certify, on a monthly basis, that suchaccount has been accurately reconciled;

• Directed its Internal Audit Department to commence targeted reviews of selected account reconciliations;

• Established a requirement that the finance director of each operating unit that maintains a general ledger or sub-ledger confirm on aquarterly basis that all balance sheet accounts for which he or she has responsibility have been reconciled accurately and on a timelybasis;

• Restructured reporting relationships within the finance function such that the finance directors of all seven strategic business units reportdirectly to the Chief Financial Officer and the controllers of these business units report to the Corporate Controller; and

• Changed compensation structures for business unit finance directors so that compensation is no longer directly tied to financialperformance of the business unit.

• Took disciplinary actions (ranging from reprimand to termination) against numerous employees;

• Increased staffing (including the use of temporary personnel) in various aspects of the Company’s finance and internal audit functions;

• Increased management oversight by creating a new Disclosure Committee comprised of senior managers with responsibility forresponding to issues raised during the financial reporting process;

• Addressed the intentional overrides of internal controls in the European Union Tire business unit by streamlining that organization toeliminate a level of management and financial reporting;

• Conducted enhanced training on the certification process whereby senior finance management explained each matter to be certified witheach of the seven strategic business units and their local management teams;

• Visited various overseas locations and reviewed and confirmed the accuracy of selected account reconciliations, analyzed reportedresults, reviewed items identified by prior audits to ensure corrective actions were in place and reviewed the certification process withlocal management;

A number of other initiatives to strengthen the Company’s internal controls were initiated in 2004 and have continued since then. Theseinclude:

Considering the remedial actions described in detail above and the results of the Company’s testing of our internal controls over financialreporting as of December 31, 2004, management has made the following conclusions with respect to the four material weaknesses and tworeportable conditions identified in May 2004:

158

• Commissioned a review of a significant portion of open workers’ compensation claims, including a certification by the outsideadministrator to ensure that such claims were being properly valued; and

• Revised procedures with respect to opening bank accounts to ensure appropriate oversight by the Treasury Department.

• Expanding the personnel, upgrading the talent, and increasing the responsibilities of the Internal Audit Department;

• Increasing finance staff and upgrading the technical capabilities of individuals within the finance function through the hiring ofcredentialed accountants from outside of the Company;

• Developing new and enhanced monitoring controls, including monthly reports to the corporate assistant controller on the status ofaccount reconciliations with explanations for any unreconciled accounts, reporting tools for identified post-closing adjustments, out-of-period adjustments and significant legal contingencies, and a global accounting issues database for the real-time reporting of significantaccounting issues;

• Creating a Remediation Project Management Office responsible for the design and implementation of the Company’s long-termremediation plan;

• Establishing a communications program to improve inter-department and cross-functional communications, maintain awareness of thefinancial statement certification process, accounting and finance issues in general and to encourage associates to raise issues for reviewand/or resolution;

• Reviewing accounting policies and procedures, and where appropriate making modifications;

• Adopting an account reconciliation policy that includes assignment of all accounts to specific associates, monthly deadlines forcompleting reconciliation, and review of the reconciliation of each account by management on a monthly or quarterly basis depending onthe nature of the account;

• Conducting training sessions on the account reconciliation policy and procedures for personnel based in Akron and other locations;

• Holding of conferences for finance personnel at various locations around the world. Subjects covered included remediation of identifiedinternal control issues including account reconciliations, Sarbanes-Oxley compliance, application of U.S. GAAP and Companyaccounting policies, establishment of a proper “tone at the top” and the importance of inter-departmental dialogue; and

• Improving communication of Company ethical policies through discussion at conferences and meetings, communication on the Companyintranet, wider dissemination of the Company’s business conduct manual and recertification and acknowledgment of the businessconduct manual by non-union associates. In addition, General Managers worldwide discussed the Business Conduct program with theiremployees in the third quarter of 2004.

Remediation of May 2004 Material Weaknesses and Reportable Conditions

• As indicated in management’s report on internal control over financial reporting included in this Form 10-K, we have concluded thataccount reconciliations continue to represent a material weakness;

• Although monitoring controls were considered to represent a material weakness in our internal control structure in 2003, as ofDecember 31, 2004, management has concluded that remedial actions have

The level of our finance team’s knowledge of U.S. GAAP and internal controls was cited as a reportable condition in May 2004. Due toremedial actions taken in 2004, as of December 31, 2004, management has concluded that this matter now represents a significant deficiency.The second reportable condition related to our internal controls surrounding the establishment of bank accounts. As a result of controlprocedures implemented, management has concluded that this reportable condition has been fully remediated and no longer represents aninternal control deficiency.

Despite the significant progress that has been achieved in remediating previously-identified material weaknesses, reportable conditions andother internal control deficiencies, management is committed to continue to implement the remedial actions discussed above, as appropriate, aswell as undertake additional actions in 2005 to remediate its two current material weaknesses.

Although management has determined that account reconciliations continue to be a material weakness, it believes that it has madesignificant progress in addressing this matter. Management believes that the number of out-of-period adjustments arising from accountreconciliations in 2004 was due in part to its efforts to improve controls in this area, including enhanced monitoring controls, training inaccount reconciliation procedures and new personnel performing and/or reviewing account reconciliations.

Subsequent to December 31, 2004, in order to address the segregation of duties material weakness described in Management’s Report onInternal Control Over Financial Reporting, the Company has implemented mitigating controls with regard to specifically-identified conflictswithin order-to-cash and purchase-to-pay business processes until the application systems can be modified to prevent this risk. The Company’sreview of the transactions in 2004 that could have been affected by this deficiency in our Segregation of Duties did not identify any fraudulenttransactions. In addition to this specific action, the Company is in the process of remediating certain application-specific access control issuesthat inherently create Segregation of Duties issues as well as ensuring that appropriate management performs a quarterly review and approvalof potential segregation of duties conflicts. Finally, we plan on conducting quarterly testing of mitigating controls where conflicts are not ableto be eliminated and implementing better Segregation of Duties analysis tools.

Other significant remedial actions underway or planned to commence in 2005 not specifically related to the two remaining materialweaknesses include:

159

been implemented and are operating effectively to reduce the significance of this matter to a significant deficiency;

• Communication and reporting was the third material weakness cited by our auditors in May 2004. Management has now concluded thatappropriate remedial actions have been instituted to reduce the significance of this matter to an internal control deficiency; and

• With respect to the fourth material weakness, management’s oversight to reduce opportunities for intentional overrides of internalcontrols, management has concluded that this material weakness has been fully remediated and no longer is considered to represent aninternal control deficiency.

Current Material Weaknesses

• Development of formalized procedures to be implemented in 2005 for conducting monthly financial statement variance analyses bylocation and establishing tolerance limits for such variances;

• Changing the compensation structure for regional, country-level and plant-level controllers to reduce the weight given to business unitperformance and increase the weight given to qualitative factors such as Section 404 compliance, financial statement integrity andmaintaining appropriate monitoring controls;

• Continuing to upgrade the talent of our finance staff by implementing an on-going U.S. GAAP training program, consisting of providingappropriate technical resources to our global team and training on the use of such resources, conducting a series of training sessions forour finance associates, and distribution of a quarterly publication highlighting changes in accounting and reporting standards,

The Company will continue to evaluate the effectiveness of its controls and procedures on an ongoing basis and will implement further actionas it deems necessary in its continuing efforts to strengthen the control process. While the Company believes that its remedial measures havesubstantially improved the Company’s control processes and procedures, there is no assurance that the continuing implementation of thesemeasures will succeed in making the Company’s internal control over financial reporting effective. One factor that may affect management’sassessment of the effectiveness of the Company’s internal control over financial reporting is the level of the Company’s net income or loss infuture periods. To the extent the Company has near break-even net income, there may be a greater likelihood that a control deficiency wouldresult in a material misstatement of the annual or interim financial statements.

In connection with the preparation of this Form 10-K, the Company’s senior management, with the participation of the Company’s ChiefExecutive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controlsand procedures as of December 31, 2004. Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officerconcluded that the Company’s disclosure controls were ineffective, as of December 31, 2004 to provide reasonable assurance that informationthe Company must disclose in reports with the SEC is properly recorded, processed and summarized and then reported as required. Thisconclusion is based primarily on the fact that the Company’s internal control over financial reporting was ineffective as of such date. Throughthe date of the filing of this Form 10-K, the Company has adopted additional remedial measures described above to address the deficiencies inits disclosure controls that existed on December 31, 2004 and has taken additional measures to verify the information in its financialstatements. The Company believes that, as a result of these remedial and other measures, this Form 10-K properly reports all informationrequired to be included in such report. It should be noted that no system of controls can provide complete assurance of achieving its objectives,and future events may impact the effectiveness of a system of controls.

Other than as described above, there have been no changes in the Company’s internal control over financial reporting during the periodcovered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financialreporting.

ITEM 9B. OTHER INFORMATION.

None.

160

Company accounting policies and relevant current topics of interest. In addition, we will also continue to hire qualified externalcandidates to supplement the technical knowledge of our existing staff; and

• Continuing efforts to simplify financial processes and information technology systems.

Disclosure Controls and Procedures

Changes in Internal Control over Financial Reporting

PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information under the headings “Election of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance,” and theinformation under the subheading “Corporate Governance Principles and Board Matters — The Audit Committee,” in the Company’s 2005Proxy Statement is incorporated herein by reference. For information regarding Goodyear’s executive officers, reference is made to Part I, atpages 20 through 23, inclusive, of this Annual Report.

Code of Business Conduct and Code of Ethics

Goodyear has adopted a code of business conduct and ethics for directors, officers and employees, known as the Business Conduct Manual.Goodyear also has adopted a conflict of interest policy applicable to directors and executive officers. Both of these documents are available onGoodyear’s website at http://www.goodyear.com/investor/governance.html. Shareholders may request a free copy of these documents from:

The Goodyear Tire & Rubber CompanyAttention: Investor Relations1144 East Market StreetAkron, Ohio 44316-0001 (330) 796-3751

Goodyear’s Code of Ethics for its Chief Executive Officer and its Senior Financial Officers (the “Code of Ethics”) is also posted onGoodyear’s website. Amendments to and waivers from the Code of Ethics will be disclosed on the website.

Corporate Governance Guidelines – Certain Committee Charters

Goodyear has adopted Corporate Governance Guidelines as well as charters for each of its Audit, Compensation and Nominating and BoardGovernance Committees. These documents are available on Goodyear’s website at http://www.goodyear.com/investor/governance.html.Shareholders may request a free copy of any of these documents from the address and phone numbers set forth above under “Code of BusinessConduct and Code of Ethics.”

ITEM 11. EXECUTIVE COMPENSATION.

The information under the heading “Executive Officer Compensation” and under the heading “Directors’ Compensation” in the Company’s2005 Proxy Statement is incorporated herein by reference.

The information under the headings “Equity Compensation Plan Information,” “Beneficial Ownership of Common Stock” and “BeneficialOwnership of Directors and Management” in the Company’s 2005 Proxy Statement is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information under the heading “Executive Officer Compensation” in the Company’s 2005 Proxy Statement is incorporated herein byreference.

The information under the heading “Principal Accountant Fees and Services” in the Company’s 2005 Proxy Statement is incorporated hereinby reference.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERS.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”), has recently advised the AuditCommittee of the Company’s Board of Directors that certain expatriate cash handling services related to tax withholding performed for aCompany subsidiary by a PwC affiliate in China have raised questions regarding PwC’s independence with respect to its performance of auditservices. These services are not permitted under the auditor independence rules. The services were provided in 2002, 2003 and 2004 and thefees were insignificant. PwC has informed the Company and the Audit Committee that it has concluded that its impartiality and objectivitywere unaffected by the provision of the services and that the services performed have not impaired PwC’s independence with respect toperformance of its audit services. The Company and the Audit Committee will continue to monitor and assess the independence of PwC on anongoing basis.

PART IV.

LIST OF DOCUMENTS FILED AS PART OF THIS REPORT:

162

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

1. Financial Statements: See the Index to Consolidated Financial Statements on page 69 of this Annual Report.

2. Financial Statement Schedules: See the Index to Financial Statement Schedules attached to this Annual Report at page FS-1. TheFinancial Statement Schedules at pages FS-2 through FS-67, inclusive, are incorporated into and made a part of this Annual Report.

3. Exhibits required to be filed by Item 601 of Regulation S-K: See the Index of Exhibits attached to this Annual Report at pages X-1through X-6, which is incorporated into and made a part of this Annual Report.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused thisAnnual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the followingpersons on behalf of the registrant and in the capacities and on the dates indicated.

163

THE GOODYEAR TIRE & RUBBER COMPANY(Registrant)

Date: March 16, 2005 By /s/ ROBERT J. KEEGAN

Robert J. Keegan, Chairman of the Board,Chief Executive Officer and President

Date: March 16, 2005 /s/ ROBERT J. KEEGAN

Robert J. Keegan, Chairman of the Board,Chief Executive Officer,President and Director

(Principal Executive Officer)

Date: March 16, 2005 /s/ RICHARD J. KRAMER

Richard J. Kramer, Executive Vice President(Principal Financial Officer)

Date: March 16, 2005 /s/ THOMAS A. CONNELL

Thomas A. Connell, Vice President and Controller(Principal Accounting Officer)

Date: March 16, 2005 SUSAN E. ARNOLD, DirectorJAMES C. BOLAND, DirectorJOHN G. BREEN, DirectorGARY D. FORSEE, DirectorWILLIAM J. HUDSON JR., DirectorSTEVEN A. MINTER, DirectorDENISE M. MORRISON, DirectorRODNEY O’NEAL, DirectorSHIRLEY D. PETERSON, DirectorTHOMAS H. WEIDEMEYER, Director

By /s/ RICHARD J. KRAMER

Richard J. Kramer, Signing asAttorney-in-Fact for the Directors

whose names appear opposite

FINANCIAL STATEMENT SCHEDULESITEMS 8 AND 15(a)(2) OF FORM 10-K

FOR CORPORATIONSANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, 2004

INDEX TO FINANCIAL STATEMENT SCHEDULES

Financial Statement Schedules:

All other schedules are omitted because they are not applicable or the required information is shown in the financial statements or notesthereto.

Financial statements relating to 50 percent or less owned companies other than SPT, the investments in which are accounted for by theequity method, have been omitted as permitted because these companies would not constitute a significant subsidiary.

FS-1

Schedule No. Page Number

Condensed Financial Information of Registrant I FS-2Valuation and Qualifying Accounts II FS-8Other Financial Statements:Financial Statements of South Pacific Tyres (SPT) FS-10

SCHEDULE I — CONDENSED FINANCIAL INFORMATION OF REGISTRANT

THE GOODYEAR TIRE & RUBBER COMPANYPARENT COMPANY STATEMENT OF INCOME


FS-2


(In millions, except per share amounts) 2004 2003 2002

Net Sales $ 8,746.1 $ 7,816.2 $ 7,613.1Cost of Goods Sold 7,758.3 7,225.4 6,726.4Selling, Administrative and General Expense 1,165.4 1,071.4 1,077.8Rationalizations 40.6 74.7 10.4Interest Expense 326.4 252.3 210.3Other (Income) and Expense (200.9) (17.4) 71.4Foreign Currency Exchange 2.3 14.7 (1.2)Equity in (Earnings) Losses of Affiliates (2.0) 8.2 10.1Loss before Income Taxes and Equity in (Earnings) Losses of Subsidiaries (344.0) (813.1) (492.1)United States and Foreign Taxes on Income (Loss) (53.3) (38.2) 1,108.6Equity in (Earnings) Losses of Subsidiaries (405.5) 32.5 (353.8)Net Income (Loss) $ 114.8 $ (807.4) $ (1,246.9)

Net Income (Loss) Per Share — Basic $ 0.65 $ (4.61) $ (7.47)

Average Shares Outstanding 175.4 175.3 167.0Net Income (Loss) Per Share — Diluted $ 0.63 $ (4.61) $ (7.47)

Average Shares Outstanding 192.3 175.3 167.0


PARENT COMPANY BALANCE SHEET


FS-3



AssetsCurrent Assets:

Cash and cash equivalents $ 1,004.2 $ 584.7Restricted cash 137.0 17.7Accounts and notes receivable, less allowance — $32.0 ($36.8 in 2003) 1,209.1 941.3Inventories:

Raw materials 220.8 187.5Work in process 64.2 47.8Finished products 877.4 941.5

1,162.4 1,176.8Prepaid expenses and other current assets 89.6 134.7

Total Current Assets 3,602.3 2,855.2Long Term Accounts and Notes Receivable 240.7 271.3Investments in and Advances to Affiliates 4.2 57.9Other Assets 61.9 49.6Intangible Assets 100.7 102.3Prepaid and Deferred Pension Costs 432.1 506.1Deferred Charges 159.9 160.4Investments in Subsidiaries 3,944.3 3,644.0Properties and Plants, less accumulated depreciation — $4,445.6 ($4,311.0 in 2003) 2,088.8 2,201.7

Total Assets $ 10,634.9 $ 9,848.5


Accounts payable-trade $ 529.1 $ 426.4Intercompany current accounts 501.9 679.5Compensation and benefits 647.8 641.6Other current liabilities 276.6 340.0United States and foreign taxes 62.7 96.5Long term debt and capital leases due within one year 562.5 70.2

Total Current Liabilities 2,580.6 2,254.2Long Term Debt and Capital Leases 4,009.8 4,060.3Compensation and Benefits 3,336.3 3,116.7Deferred and Other Noncurrent Income Taxes 65.8 42.8Other Long Term Liabilities 569.6 406.7

Total Liabilities 10,562.1 9,880.7Commitments and Contingent LiabilitiesShareholders’ Equity (Deficit)

Preferred Stock, no par value: Authorized, 50.0 shares, unissued — —Common Stock, no par value:

Authorized, 300.0 shares; Outstanding shares, 175.6 (175.3 in 2003) 175.6 175.3Capital Surplus 1,391.8 1,390.2Retained Earnings 1,069.9 955.1Accumulated Other Comprehensive Income (Loss) (2,564.5) (2,552.8)

Total Shareholders’ Equity (Deficit) 72.8 (32.2)Total Liabilities and Shareholders’ Equity $ 10,634.9 $ 9,848.5


PARENT COMPANY STATEMENT OF SHAREHOLDERS’ EQUITY (DEFICIT)

(A) As reported in Form 10-K filed on May 19, 2004.


FS-4

AccumulatedOther

Common Stock Comprehensive TotalCapital Retained Income Shareholders’

Shares Amount Surplus Earnings (Loss) Equity(Dollars in millions, except per share)

Balance at December 31, 2001 as originally restated(A) 163,165,698 $ 163.2 $1,245.4 $ 3,089.3 $ (1,870.1) $ 2,627.8(after deducting 32,512,970 treasury shares)

Effect of restatement on periods ending on or beforeDecember 31, 2001 (0.1) (30.9) (31.0)

Balance at December 31, 2001 (as restated) 163,165,698 163.2 1,245.4 3,089.2 (1,901.0) 2,596.8Comprehensive income (loss):

Net loss (1,246.9)Foreign currency translation (net of tax benefit of $0) 74.4Minimum pension liability (net of tax of $42.4) (1,283.6)Unrealized investment gain (net of tax of $0) 7.3Deferred derivative gain (net of tax of $0) 60.6

Reclassification adjustment for amounts recognized inincome (net of tax of $0) (64.5)

Total comprehensive loss (2,452.7)Cash dividends — $0.48 per share (79.8) (79.8)Common stock issued from treasury:

Domestic pension funding 11,300,000 11.3 126.6 137.9Common stock issued for acquisitions 693,740 0.7 15.2 15.9Stock compensation plans 147,995 0.1 2.9 3.0

Balance at December 31, 2002 (as restated) 175,307,433 175.3 1,390.1 1,762.5 (3,106.8) 221.1(after deducting 20,371,235 treasury shares) Comprehensive

income (loss):Net loss (807.4)Foreign currency translation (net of tax benefit of $0) 393.7Minimum pension liability (net of tax of $2.2) 128.3Unrealized investment gain (net of tax of $0) 4.1

Reclassification adjustment for amounts recognized inincome (net of tax of $8.7) 8.8

Deferred derivative gain (net of tax of $0) 46.3Reclassification adjustment for amounts recognized in

income (net of tax of $1.9) (27.2)Total comprehensive loss (253.4)

Common stock issued from treasury:Stock compensation plans 18,996 0.1 0.1

Balance at December 31, 2003 (as restated) 175,326,429 175.3 1,390.2 955.1 (2,552.8) (32.2)(after deducting 20,352,239 treasury shares)Comprehensive income (loss):

Net income 114.8Foreign currency translation (net of tax benefit of $0) 253.2Minimum pension liability (net of tax of $34.2) (283.8)Unrealized investment gain (net of tax of $0) 13.4Deferred derivative gain (net of tax of $0) 29.6

Reclassification adjustment for amounts recognized inincome (net of tax of $(3.5)) (24.1)

Total comprehensive income 103.1Common stock issued from treasury:

Stock compensation plans 293,210 0.3 1.6 1.9Balance at December 31, 2004 175,619,639 $ 175.6 $1,391.8 $ 1,069.9 $ (2,564.5) $ 72.8

(after deducting 20,059,029 treasury shares)


PARENT COMPANY STATEMENT OF CASH FLOWS


FS-5


(Dollars in millions)Cash Flows from Operating Activities:

Net Income (Loss) $ 114.8 $ (807.4) $ (1,246.9)Adjustments to reconcile net loss to cash flows from operating activities:

Depreciation and amortization 291.1 372.2 289.0Amortization of debt issue costs 86.1 50.3 17.9Deferred tax provision (7.6) (1.7) 1,160.7Rationalizations 31.4 29.2 2.4Asset sales (30.4) (104.5) 68.5Insurance settlement gain (156.6) — —Minority interest and equity earnings (6.1) — 10.6Net cash flows from sale of accounts receivable — (826.2) 55.9Pension contributions (124.9) (26.8) (150.6)Changes in operating assets and liabilities, net of asset acquisitions and

dispositions:Accounts and notes receivable (171.7) 10.0 (73.6)Inventories 14.4 27.6 13.8Accounts payable-trade (118.6) 89.6 (118.1)Prepaid expenses and other current assets 73.5 208.8 (129.9)Deferred charges (34.2) 2.1 114.8Long term compensation and benefits 344.5 (106.3) 903.2Accumulated other comprehensive income — deferred pension gain (loss) (283.9) 191.0 (1,265.9)Other long term liabilities 151.5 216.6 (82.9)Other assets and liabilities (55.3) (42.7) 259.5Total adjustments 3.2 89.2 1,075.3

Total cash flows from operating activities 118.0 (718.2) (171.6)Cash Flows from Investing Activities:

Capital expenditures (153.2) (158.9) (247.1)Asset dispositions 105.9 367.8 104.4Asset acquisitions (51.4) (71.2) (15.9)Capital contributions to subsidiaries (9.4) (30.7) (43.1)Capital redemptions from subsidiaries 5.8 43.6 280.4Other transactions 35.9 (0.5) (31.5)

Total cash flows from investing activities (66.4) 150.1 47.2Cash Flows from Financing Activities:

Short term debt incurred 43.7 8.3 —Short term debt paid — — (3.6)Long term debt incurred 1,675.3 2,379.7 0.5Long term debt paid (1,247.0) (1,510.2) (45.8)Common stock issued 1.8 0.2 18.7Debt issuance costs (51.4) (104.1) —Increase in restricted cash (54.5) (17.7) —Dividends paid to Goodyear shareholders — — (79.8)Other transactions — 27.9 —

Total cash flows from financing activities 367.9 784.1 (110.0)Net Change in Cash and Cash Equivalents 419.5 216.0 (234.4)Cash and Cash Equivalents at Beginning of the Period 584.7 368.7 603.1Cash and Cash Equivalents at End of the Period $ 1,004.2 $ 584.7 $ 368.7


NOTES TO PARENT COMPANY FINANCIAL STATEMENTS

LONG TERM DEBT AND FINANCING ARRANGEMENTS

At December 31, 2004, the Parent Company was a party to various long-term financing facilities. Under the terms of these facilities, the ParentCompany pledged a significant portion of its assets as collateral. The collateral included the capital stock of certain subsidiaries, first-prioritysecurity interests in certain property, plant and equipment and other tangible and intangible assets, and second-priority security interests inaccounts receivable, inventory and cash. In addition, the facilities contain certain covenants that, among other things, limit the ParentCompany’s ability to secure additional indebtedness, make investments, and sell assets beyond specified limits. The facilities prohibit theParent Company from paying dividends on its common stock and limit the amount of capital expenditures the Parent Company, together withits consolidated subsidiaries, may make. The facilities also contain certain financial covenants including the maintenance of a minimumconsolidated net worth, a ratio of consolidated EBITDA to consolidated interest expense, and a ratio of consolidated senior securedindebtedness to consolidated EBITDA (as such terms are defined in the respective facility agreements). Repayment of the facilities is requiredwith a defined percentage of the proceeds from certain asset sales and debt or equity issuances. For further information, refer to the Note to theConsolidated Financial Statements No. 11, Financing Arrangements and Derivative Financial Instruments.

The annual aggregate maturities of long-term debt and capital leases for the five years subsequent to 2004 are presented below. Maturitiesof debt supported by the availability of revolving credit agreements have been reported on the basis that the commitments to lend under theseagreements will be terminated effective at the end of their current terms.

COMMITMENTS AND CONTINGENT LIABILITIES

At December 31, 2004, the Parent Company had off-balance-sheet financial guarantees written and other commitments totaling $9.8 million.

At December 31, 2004, the Parent Company had recorded costs related to a wide variety of contingencies. These contingencies included,among other things, environmental matters, workers’ compensation, general and product liability and other matters. For further information,refer to the Note to the Consolidated Financial Statements No. 20, Commitments and Contingent Liabilities.

DIVIDENDS

The Parent Company used the equity method of accounting for investments in consolidated subsidiaries during 2004, 2003 and 2002.

The following table presents dividends received during 2004, 2003 and 2002:

FS-6

2005 2006 2007 2008 2009(In millions)

Debt incurred under or supported by revolving credit agreements $ — $ — $ — $ — $ —Other 0.6 1,812.0 0.3 0.1 —

$ 0.6 $ 1,812.0 $ 0.3 $ 0.1 $ —

2004 2003 2002(In millions)

Consolidated subsidiaries $ 155.1 $ 219.0 $ 113.150% or less-owned persons 0.5 2.5 1.8

$ 155.6 $ 221.5 $ 114.9


NOTES TO PARENT COMPANY FINANCIAL STATEMENTS — Continued

Dividends received from consolidated subsidiaries included stock dividends of $14.7 million, $152.1 million and $31.9 million in 2004, 2003and 2002, respectively.

SUPPLEMENTAL CASH FLOW INFORMATION

The Parent Company made cash payments for interest in 2004, 2002 and 2001 of $308.1 million, $234.8 million and $221.2 million,respectively. The Parent Company made net cash payments (receipts) for income taxes in 2004, 2003 and 2002 of $(10.0) million, $(43.9)million and $16.7 million, respectively.

INTERCOMPANY TRANSACTIONS

The following amounts included in the Parent Company Statement of Income have been eliminated in the preparation of the consolidatedfinancial statements:

FS-7

2004 2003 2002(In millions)

Sales $ 1,506.2 $ 1,307.3 $ 1,255.1Cost of goods sold 1,501.4 1,304.1 1,251.8Interest expense 15.2 10.6 5.2Other (income) and expense (386.3) (440.8) (190.0)Loss before income taxes $ 375.9 $ 433.4 $ 188.1

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS


Note:(a) Accounts and notes receivable charged off.

FS-8

Additions(In millions) Balance Translation

at Charged Charged Acquired Deductions adjustment Balancebeginning (credited) (credited) by from during at end of

Description of period to income to OCI purchase reserves period period

2004Allowance for doubtful accounts $ 128.9 $ 50.1 $ — $ — $ (42.0)(a) $ 7.4 $ 144.4Valuation allowance – deferred tax assets 2,041.9 (41.1) 57.3 — — 13.9 2,072.0

2003Allowance for doubtful accounts $ 102.1 $ 55.1 $ — $ — $ (39.9)(a) $ 11.6 $ 128.9Valuation allowance – deferred tax assets 1,811.7 307.9 (66.6) — (11.1) — 2,041.9

2002Allowance for doubtful accounts $ 88.1 $ 39.1 $ — $ — $ (29.1)(a) $ 4.0 $ 102.1Valuation allowance – deferred tax assets 258.4 1,245.1 352.9 — (44.7) — 1,811.7

Report of Independent Registered Public Accounting Firm

The PartnersSouth Pacific Tyres:

We have audited the accompanying consolidated statement of financial position of South Pacific Tyres (the Partnership) as of June 30,2004, 2003 and 2002 and the related consolidated statements of financial performance, partners’ equity and cash flows for each of the years inthe three-year-period ended June 30, 2004. These consolidated financial statements are the responsibility of the Partnerships’ management. Ourresponsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of thePartnership as of June 30, 2004, 2003 and 2002, and the results of its operations and its cash flows for each of the years in the three-year periodended June 30, 2004 in conformity with generally accepted accounting principles in Australia.

Accounting principles generally accepted in Australia vary in certain significant respects from accounting principles generally accepted inthe United States. Information relating to the nature and effect of such differences as it relates to Partnership is presented in Notes 31 to 33 tothe consolidated financial statements. The application of accounting principles generally accepted in the United States would have affectedconsolidated financial performance for each of the years in the three-year period ended June 30, 2004 and the determination of partners’ equityas of June 30, 2004, 2003 and 2002, to the extent summarized in Notes 31 to 33 to the consolidated financial statements.

As discussed in Note 31 to the consolidated financial statements, the Partnership has restated its description of significant differencesbetween generally accepted accounting principles in Australia and generally accepted accounting principles in the United States and theireffects on financial performance and partners’ equity for each of the years in the two-year period ended June 30, 2003.

Dated in Melbourne, AustraliaOctober 13, 2004,except for notes 31, 32 and 33which are as of March 16, 2005

FS-9

/s/ KPMG

SOUTH PACIFIC TYRES AND CONTROLLED ENTITIES

Statement of Financial PerformanceFor the Year Ended 30th June 2004

See accompanying notes to financial statements.

FS-10

2004 2003 2002Notes $ $ $

Revenue from sale of goods 3 763,609,409 737,027,575 769,790,943Revenue from rendering services 3 55,127,229 56,569,421 59,595,043Other revenues from ordinary activities 3 6,503,245 6,407,910 7,615,697Total revenue from ordinary activities 825,239,883 800,004,906 837,001,683Cost of goods sold 591,739,184 587,501,675 647,665,319Selling, Administrative and General Expenses 218,086,061 219,985,037 225,688,548Significant items 4(a) 11,790,923 9,752,650 93,108,359Borrowing costs 4(b) 21,937,942 17,834,103 13,660,548Other expenses from ordinary activities 297,389 287,389 485,062Expenses from ordinary activities 843,851,499 835,360,854 980,607,836Loss from ordinary activities before related income tax expense (18,611,616) (35,355,948) (143,606,153)Income tax expense/(benefit) relating to ordinary activities 6(a) 3,869,684 4,207,837 (13,579,453)Loss from ordinary activities after related income tax expense (22,481,300) (39,563,785) (130,026,700)Net loss attributable to outside equity interests 21 — — (470)Net Loss after income tax attributable to the consolidated entity (22,481,300) (39,563,785) (130,027,170)


Statement of Financial PositionAs at 30th June 2004


FS-11

2004 2003 2002Notes $ $ $

CURRENT ASSETSCash assets 7 56,435,875 15,229,939 37,100,672Receivables 8 130,174,880 137,441,630 141,657,657Inventories 9 147,411,193 162,032,137 160,741,965Prepayments 10 3,219,753 3,323,269 2,258,575

TOTAL CURRENT ASSETS 337,241,701 318,026,975 341,758,869NON-CURRENT ASSETSReceivables 8 1,651,270 9,546,303 30,384,952Property, plant and equipment 12 197,823,676 218,425,028 202,827,093Intangible assets 13 4,498,952 4,916,874 5,204,262Deferred tax assets 6(c) 14,516,753 18,231,572 22,441,327

TOTAL NON-CURRENT ASSETS 218,490,651 251,119,777 260,857,634TOTAL ASSETS 555,732,352 569,146,752 602,616,503

CURRENT LIABILITIESPayables 14 144,028,406 159,953,830 161,782,718Interest bearing liabilities 15 188,484,663 171,413,834 142,395,212Current tax liabilities 6(b) 290,809 135,944 58,887Provisions 16 54,318,272 53,365,690 102,837,858

TOTAL CURRENT LIABILITIES 387,122,150 384,869,298 407,074,675NON-CURRENT LIABILITIESPayables 14 704,179 7,986,959 28,491,815Interest bearing liabilities 15 125,707,508 111,097,444 61,095,014Provisions 16 6,357,177 6,883,413 7,978,203

TOTAL NON-CURRENT LIABILITIES 132,768,864 125,967,816 97,565,032TOTAL LIABILITIES 519,891,014 510,837,114 504,639,707

PARTNERS’ EQUITYContributed equity 18 317,688,138 317,675,138 317,675,138Reserves 19 12,374,551 12,570,229 12,570,229Accumulated losses 20 (294,221,351) (271,935,729) (232,268,571)

TOTAL PARTNERS’ EQUITY 35,841,338 58,309,638 97,976,796Outside equity interest 21 — — —

TOTAL PARTNERS’ EQUITY 35,841,338 58,309,638 97,976,796TOTAL LIABILITIES AND PARTNERS’ EQUITY 555,732,352 569,146,752 602,616,503


Statement of Partners’ Equity


FS-12

Outside TotalContributed Equity Accumulated Partners’

Equity Interest Losses Reserves Equity

Balance at June 30, 2001 317,675,137 485,688 (98,587,215) 9,220,023 228,793,633Net loss (130,027,170) (130,027,170)Foreign currency translation (303,980) (303,980)Foreign Currency Translation

Reserve — disposal (3,645,848) 3,645,848Asset Revaluation Reserve — disposal (8,338) 8,338Outside equity interest reduction (485,688) (485,688)Additional contributed equity 1 1

Balance at June 30, 2002 317,675,138 — (232,268,571) 12,570,229 97,976,796Net loss (39,563,785) (39,563,785)Initial adoption of AASB1028 (103,373) (103,373)

Balance at June 30, 2003 317,675,138 — (271,935,729) 12,570,229 58,309,638Net loss (22,481,300) (22,481,300)Asset Revaluation Reserve — disposal 195,678 (195,678)

Additional contributed equity 13,000 13,000Balance at June 30, 2004 317,688,138 — (294,221,351) 12,374,551 35,841,338


Statement of Cash FlowsFor the Year Ended 30th June 2004


FS-13

2004 2003 2002$ $ $

Inflows Inflows InflowsNotes (Outflows) (Outflows) (Outflows)

Cash flows from operating activitiesCash receipts in the course of operations 941,655,101 836,176,622 856,792,111Cash payments in the course of operations (908,776,962) (882,305,840) (870,905,731)Interest received 1,160,246 1,935,297 3,689,606Borrowing costs paid (13,589,472) (12,737,555) (13,368,875)Income taxes (paid)/refunded 6(b) — 79,774 (112,184)

Net cash provided by/(used in) operating activities 30(c) 20,448,913 (56,851,702) (23,905,073)Cash flows from investing activities

Proceeds on disposal of controlled entities — — 1,983,805Proceeds on disposal of property, plant and equipment 5,342,999 4,472,613 2,919,839Payments for businesses, (net of cash acquired) 30(b) — — (1,246,831)Payments for property, plant and equipment (16,279,869) (48,512,695) (14,750,236)

Net cash used in investing activities (10,936,870) (44,040,082) (11,093,423)Cash flows from financing activities

Proceeds from partner contributions 13,000 — —Proceeds from borrowings 49,782,954 79,333,371 136,589,773Repayment of borrowings (18,195,000) — (79,935,051)Dividends paid — — (2,146)

Net cash provided by financing activities 31,600,954 79,333,371 56,652,576Net increase/(decrease) in cash held 41,112,997 (21,558,413) 21,654,080Cash at the beginning of the financial year 14,539,451 36,097,864 14,170,702Effects of exchange rate fluctuations on the balances of cash

held in foreign currencies — — 273,082Cash at the end of the financial year 30(a) 55,652,448 14,539,451 36,097,864


NOTES TO THE FINANCIAL STATEMENTSFor the Year Ended 30th June 2004

General

The principal activities of the consolidated entity during the period were:

There were no significant changes in the nature of the principal activities of the consolidated entity during the year.

The significant policies which have been adopted in the preparation of this financial report are:

In accordance with Section 11 of the Partnership Agreement, South Pacific Tyres (“the consolidated entity”) is required to prepare afinancial report as if it were a public company under the provisions of the Corporations Act 2001.

In the opinion of the directors, the consolidated entity is not a reporting entity. The financial report of the consolidated entity has beendrawn up as a special purpose financial report for distribution to the partners and for the purpose of fulfilling the requirements of theCorporations Act 2001.

The financial reports has been prepared in accordance with the Corporations Act 2001, the recognition and measurements aspects of allapplicable accounting standards and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views) that have amaterial effect.

The financial report has been prepared on the accrual basis of accounting as defined in AASB1001, Accounting Policies, using historicalcost convention and going concern assumption. Except where stated, it does not take into account changing money values or current valuationsof non-current assets.

These accounting policies have been consistently applied by each entity in the consolidated entity and, except where there is a change inaccounting policy, are consistent with those of the previous year.

The financial statements of controlled entities are included from the date control commences until the date control ceases.

Outside interests in the equity and results of the entities that are controlled by the consolidated entity are shown as a separate item in theconsolidated financial statements.

Unrealised gains and losses and inter-entity balances resulting from transactions with or between controlled entities are eliminated in fullon consolidation.

Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST) payable to thetaxation authority.

FS-14

Note 1. Statement of Significant Accounting Policies

• Manufacture of tyres for vehicles

• Wholesaling and retailing of vehicle and aircraft tyres in Australia

(a) Basis of Preparation

(b) Principles of Consolidation

Controlled Entities

Transactions Eliminated on Consolidation

(c) Revenue Recognition — Note 3


NOTES TO THE FINANCIAL STATEMENTS — (Continued)

Revenue from the sale of goods is recognised (net of returns, discounts and allowances) when control of the goods passes to the customer.

Revenue from rendering services is recognised when the service has been completed.

Interest revenue is recognised as it accrues, taking into account the effective yield on the financial asset.

The gross proceeds of non-current asset sales are included as revenue at the date control of the asset passes to the buyer, usually when anunconditional contract of sale is signed.

The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the time of disposal and the netproceeds on disposal (including incidental costs).

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GSTincurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost ofacquisition of the asset or as part of an item of the expense.

Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or current liability in the statement offinancial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing andfinancing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

Foreign currency transactions are translated to Australian currency at the rates of exchange ruling at the dates of the transactions. Amountsreceivable and payable in foreign currencies at reporting date are translated at the rates of exchange ruling on that date.

Exchange differences relating to amounts payable and receivable in foreign currencies are brought to account as exchange gains or losses inthe statement of financial performance in the financial year in which the exchange rates change.

The assets and liabilities of foreign operations that are self-sustaining are translated at the rates of exchange ruling at reporting date. Equityitems are translated at historical rates. The statements of financial performance are translated at a weighted average rate for the year. Exchangedifferences arising on translation

FS-15

Note 1. Statement of Significant Accounting Policies (Continued)

Sale of Goods

Rendering of Services

Interest Revenue

Sale of Non-Current Assets

(d) Goods and Services Tax

(e) Foreign Currency

Transactions

Translation of Controlled Foreign Entities



are taken directly to the foreign currency translation reserve until the disposal, or partial disposal, of the operations.

The balance of the foreign currency translation reserve relating to a foreign operation that is disposed of, or partially disposed of, istransferred to retained profits in the year of disposal.

The consolidated entity is exposed to changes in interest rates, foreign exchange rates and commodity prices from its activities. Theconsolidated entity uses the following derivative financial instruments to hedge these risks: interest rate swaps and forward foreign exchangecontracts. Derivative financial instruments are not held for speculative purposes.

Transactions are designated as a hedge of the anticipated specific purchase or sale of goods or services, purchase of qualifying assets, or ananticipated interest transaction, only when they are expected to reduce exposure to the risks being hedged, are designated prospectively so thatit is clear when an anticipated transaction has or has not occurred and it is probable the anticipated transaction will occur as designated. Gainsor losses on the hedge arising up to the date of the anticipated transaction, together with any costs or gains arising at the time of entering intothe hedge, are deferred and included in the measurement of the anticipated transaction when the transaction has occurred as designated. Anygains or losses on the hedge transaction after that date are included in the statement of financial performance.

The net amounts receivable or payable under open swaps and forward rate agreements and the associated deferred gains or losses are notrecorded in the statement of financial position until the hedge transaction occurs. When recognised the net receivables or payables are thenrevalued using the foreign currency and interest rates current at reporting date. Refer to Note 22.

When the anticipated transaction is no longer expected to occur as designated, the deferred gains or losses relating to the hedged transactionare recognised immediately in the statement of financial performance.

Where a hedge transaction is terminated early and the anticipated transaction is still expected to occur as designated, the deferred gains orlosses that arose on the hedge prior to its termination continue to be deferred and are included in the measurement of the purchase or sale orinterest transaction when it occurs. Where a hedge transaction is terminated early because the anticipated transaction is no longer expected tooccur as designated, deferred gains or losses that arose on the hedge prior to its termination are included in the statement of financialperformance for the period.

Where a hedge is redesignated as a hedge of another transaction, gains or losses arising on the hedge prior to its redesignation are onlydeferred where the original anticipated transaction is still expected to occur as designated. When the original anticipated transaction is nolonger expected to occur as designated, any gains or losses relating to the hedge instrument are included in the statement of financialperformance for the period.

Gains or losses that arise prior to and upon the maturity of transactions entered into under hedge rollover strategies are deferred andincluded in the measurement of the hedged anticipated transaction if the transaction is still expected to occur as designated. If the anticipatedtransaction is no longer expected to occur as designated, the gains or losses are recognised immediately in the statement of financialperformance.

FS-16


(f) Derivatives

Hedges

Anticipated Transactions



All other hedge transactions are initially recorded at the relevant rate at the date of the transaction. Hedges outstanding at reporting date arevalued at the rates ruling on that date and any gains or losses are brought to account in the statement of financial performance.

Cost or gains arising at the time of entering into the hedge are deferred and amortised over the life of the hedge.

Borrowing costs include interest, amortisation of discounts or premiums relating to borrowings and amortisation of ancillary costs incurredin connection with arrangement of borrowings.

Interest payments in respect of financial instruments classified as liabilities are included in borrowing costs.

Where interest rates are hedged or swapped, the borrowing costs are recognised net of any effect of the hedge or the swap.

Borrowing costs are expensed as incurred unless they relate to qualifying assets. Qualifying assets are assets which take more than12 months to get ready for their intended use or sale. In these circumstances, borrowing costs are capitalised to the cost of the asset. Wherefunds are borrowed specifically for the acquisition, construction or production of a qualifying asset, the amount of borrowing costs capitalisedis those incurred in relation to that borrowing, net of any interest earned on those borrowings. Where funds are borrowed generally, borrowingcosts are capitalised using a weighted average capitalisation rate.

Income tax is only provided for in the financial statements in respect of the corporate entities forming part of the consolidated entity ofSouth Pacific Tyres.

The controlled entities adopt the income statement liability method of tax effect accounting.

Income tax expense is calculated on operating profit adjusted for permanent differences between taxable and accounting income. The taxeffect of timing differences, which arise from the items being brought to account in different periods for income tax and accounting purposes,is carried forward in the statement of financial position as a future income tax benefit or a provision for deferred income tax.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond reasonable doubt. Future income taxbenefits relating to tax losses are only brought to account when their realisation is virtually certain. The tax effects of capital losses are notrecorded unless realisation is virtually certain.

Acquired businesses are accounted for on the basis of the cost method. Fair values are assigned at the date of acquisition to all theidentifiable underlying assets acquired and to the liabilities assumed. Specific assessment is undertaken at the date of acquisition of anyadditional costs to be incurred.

FS-17


Other Hedges

(g) Borrowing Costs

(h) Taxation — Note 6

Consolidated Entity

Controlled Entities

(i) Accounting for Acquisitions



Goodwill, representing the excess of the purchase consideration plus incidental costs over the fair value of the identifiable net assetsacquired on the acquisition of the business, is amortised to the statement of financial performance using the following criteria:

The unamortised balance of goodwill is reviewed at least annually. Where the balance exceeds the value of expected future benefits, thedifference is charged to the statement of financial performance.

For the purposes of this review process, goodwill is allocated to cash generating units (which equates to the consolidated entity’s reportablebusiness units) upon acquisition. Acquired businesses can readily be allocated to one of the business units on the basis of product manufacturedand/or marketed.

All assets acquired, including property, plant and equipment and intangibles other than goodwill, are initially recorded at their cost ofacquisition at the date of acquisition, being the fair value of the consideration provided plus incidental costs directly attributable to theacquisition. Acquired in-process research and development is only recognised as a separate asset when future benefits are expected beyond anyreasonable doubt to be recoverable.

Where settlement of any part of cash consideration is deferred, the amounts payable are recorded at their present value, discounted at therate applicable to the consolidated entity if a similar borrowing were obtained from an independent financier under comparable terms andconditions. The unwinding of the discount is treated as interest expense.

The costs of assets constructed or internally generated by the consolidated entity, other than goodwill, include the cost of materials anddirect labour. Directly attributable overheads and other incidental costs are also capitalised to the asset. Borrowing costs are capitalised toqualifying assets as set out in Note 1(g).

Expenditure, including that on internally generated assets other than research and development costs, is only recognised as an assets whenthe entity controls future economic benefits as a result of the costs incurred that are probable and can be measured reliably. Costs attributable tofeasibility and alternative approach assessments are expensed as incurred.

Costs incurred on assets subsequent to initial acquisition are capitalised when it is probable that future economic benefits in excess of theoriginally assessed performance of the asset will flow to the consolidated entity in future years, otherwise, expensed as incurred.

FS-18


Goodwill Acquired Write-Off Period

Up to $1.25m Written off over 5 years in equal instalments, but at a rate of not lessthan $250,000 pa

Over $1.25m Written off over 20 years on a straight line basis, but at a rate of notless than $250,000 pa

Acquisitions of Assets

Subsequent Additional Costs



Research and development expenditure is expensed as incurred.

The preparation of the financial report requires the making of estimates and assumptions that affect the recognised amounts of assets,liabilities, revenues and expenses and the disclosure of contingent liabilities. The estimates and associated assumptions are based on historicalexperience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of makingthe judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ fromthese estimates.

The estimates and underlying assumptions are viewed on an ongoing basis. Revisions to accounting estimates are recognised in the periodin which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affectsboth current and future periods.

(k) Receivables — Note 8

The collectibility of debts is assessed at reporting date and specific provision is made for any doubtful accounts.

Trade debtors to be settled within agreed terms are carried at amounts due.

Raw materials and stores, work in progress and finished goods are carried at the lower of cost allocated and net realisable value.

Cost includes direct materials, direct labour, other direct variable costs and allocated production overheads necessary to bring inventories totheir present location and condition, based on normal operating capacity of the production facilities.

The cost of manufacturing inventories and work-in-progress are assigned on a first-in, first-out basis. Costs arising from exceptionalwastage are expensed as incurred.

Net realisable value is determined on the basis of each inventory line’s normal selling pattern. Expenses of marketing, selling anddistribution to customers are estimated and are deducted to establish net realisable value.

Investments in controlled entities are carried in the financial statements of the consolidated entity at the lower of cost and recoverableamount.

FS-19


Research and Development Costs

(j) Use and Revisions of Accounting Estimates

Trade Debtors

(l) Inventories — Note 9

Manufacturing Activities

Net Realisable Value

(m) Investments — Note 11



Leases under which the company assumes substantially all the risks and benefits of ownership are classified as finance leases. Other leasesare classified as operating leases.

Payments made under operating leases are expensed on a straight line basis over the term of the lease, except where an alternative basis ismore representative of the pattern of benefits to be derived from the leased property. Also refer to Note 23.

The carrying amount of non-current assets valued on the cost basis are reviewed to determine whether they are in excess of theirrecoverable amount at reporting date. If the carrying amount of a non-current asset exceeds its recoverable amount, the asset is written down tothe lower amount. The write-down is expensed in the reporting period in which it occurs.

Where a group of assets working together supports the generation of cash inflows, recoverable amount is assessed in relation to that groupof assets. In assessing recoverable amounts of non-current assets, the relevant cash flows have not been discounted to their present value.

The components of major assets that have materially different useful lives, are effectively accounted for as separate assets, and areseparately depreciated.

All non-current assets have limited useful lives and are depreciated/ amortised using the straight line method over their estimated usefullives.

Assets are depreciated or amortised from the date of acquisition or, in respect of internally constructed assets, from the time an asset iscompleted and held ready for use.

Depreciation and amortisation rates and methods are reviewed annually for appropriateness. When changes are made, adjustments arereflected prospectively in current and future periods only. Depreciation and amortisation are expensed, except to the extent that they areincluded in the carrying amount of another asset as an allocation of production overheads.

The depreciation/ amortisation rates used for each class of asset are as follows:

FS-20


(n) Leased Assets

Operating Leases

(o) Recoverable Amount of Non-Current Assets Valued on Cost Basis

(p) Depreciation and Amortisation

Complex Assets

Useful Lives

2004 2003 2002

Freehold buildings 2.50% 2.50% 2.50%Leasehold buildings and improvements 2.5%-40% 2.5%-40% 2.5%-40%Plant and equipment 6.7%-33.33% 6.7%-33.33% 6.7%-33.33%Leased plant and equipment 10%-20% 10%-20% 10%-20%



Liabilities are recognised for amounts to be paid in the future for goods or services received. Trade accounts payable are settled withinagreed terms.

Bank loans are recognised at their principal amount, subject to set-off arrangements. Interest expense is accrued at the contracted rate.

Debentures, bills of exchange and notes payable are recognised when issued and the net proceeds received, with the premium or discounton issue amortised over the period of maturity. Interest expense is recognised on an effective yield basis.

Liabilities for employee benefits for wages, salaries, annual leave and sick leave expected to be settled within 12 months of the year-endrepresent present obligations resulting from employees’ services provided up to the reporting date, calculated at undiscounted amounts basedon remuneration wage and salary rates that the consolidated entity expects to pay as at reporting date including related on-costs. Related on-costs have been included in trade creditors.

The provision for employee benefits to long service leave represents the present value of the estimated future cash outflows to be maderesulting from employees’ services provided to reporting date.

The provision is calculated using the expected future increases in wage and salary rates including related on-costs and expected settlementdates based on turnover history and is discounted using the rates attaching to national government bonds at reporting date which most closelymatch the terms of maturity of the related liabilities. The unwinding of the discount is treated as long service leave expense.

The partnership and its controlled entities contribute to various defined benefit and accumulation superannuation plans. Contributions arerecognised as an expense as they are made. Further information is set out in Note 26.

A provision is recognised when there is a legal, equitable or constructive obligation as a result of a past event and it is probable that a futuresacrifice of economic benefits will be required to settle the obligation, the timing or amount of which is uncertain.

If the effect is material, a provision is determined by discounting the expected future cash flows (adjusted for expected future risks)required to settle the obligation at a pre tax rate that reflects current market assessments of the time value of money and the risks specific to theliability. The unwinding of the discount is treated as part of the expense related to the particular provision.

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(q) Payables — Note 14

(r) Interest Bearing Liabilities — Note 15

(s) Employee Benefits

Wages, Salaries, Annual Leave, Sick Leave and Non-Monetary Benefits

Long Service Leave

Superannuation Plan

(t) Provisions



A provision for restructuring including termination benefits is only recognised when a detailed plan has been approved and therestructuring has either commenced or been publicly announced. Costs relating to ongoing activities are not provided for. The liability fortermination benefits are included in the provision for Rationalisation and restructure (Note 16).

Provision is made for non-cancellable operating lease rentals payable on surplus leased premises when it is determined that no substantivefuture benefit will be obtained from its occupancy and sub-lease rentals are less.

The estimate is calculated based of discounted net future cash flows, using the interest rate implicit in the lease or an estimate thereof.

Under AGAAP, Advertising is generally expensed as the service is performed. Costs incurred under the consolidated entity’s cooperativeadvertising program with dealers and franchisees are recorded as reductions of sales as related revenues are recognised.

The consolidated entity expenses environmental expenditures related to existing conditions resulting from past or current operations andfrom which no current or future benefit is discernible. South Pacific Tyres determines its liability on a site by site basis and records a liability atthe time when it is probable and can be reasonably estimated.

The consolidated entity have applied the revised AASB 1028 “Employee Benefits” for the first time from 1 July 2002.

The liability for wages and salaries, annual leave and sick leave is now calculated using the remuneration rates the consolidated entityexpects to pay as at each reporting date, not wage and salary rates current at reporting date.

The initial adjustments to the consolidated financial report as at 1 July 2002 as a result of this change are:

As a result of this change in accounting policy, employee benefits expense increased by $139,957 and the income tax expense decreased by$2,222 for the year to 30 June 2003.

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Restructuring and Rationalisation

Surplus Leased Premises

(u) Advertising

(v) Environmental Remediation

Note 2. Change in Accounting Policy

Employee Benefits

• $103,373 increase in provision for employee benefits

• $103,373 decrease in opening retained profits



(a) Individually significant expenses/(revenues) included in profit from ordinary activities before income tax expense

(b) Profit from ordinary activities before income tax expense has been arrived at after charging/ (crediting) the following items:

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Note 3. Revenue from Ordinary Activities

2004 2003 2002$ $ $

Sale of goods revenue from ordinary activities 763,609,409 737,027,575 769,790,943Rendering of services revenue from ordinary activities 55,127,229 56,569,421 59,595,043Other revenue from ordinary activitiesInterest:

Associated entities 27,693 814,052 1,828,580Other parties 1,132,553 1,121,245 1,861,026

Revenues from outside ordinary activitiesGross proceeds from sale of non-current assets 5,342,999 4,472,613 3,926,091

Total other revenue 6,503,245 6,407,910 7,615,697Total revenue from ordinary activities 825,239,883 800,004,906 837,001,683

Note 4. Profit from Ordinary Activities Before Income Tax Expense

2004 2003 2002$ $ $

Closure of Footscray & Thomastown tyre factories 9,458,682 3,927,911 94,900,000Closure of BA Hamill — (1,769,227) 2,900,000Retail store restructure programme — 928,524 1,924,813Reverse Radial truck factory plant & equipment storage and removal provision (1,967,197) — —Closure of radial truck tyre factory — — (3,516,017)Norhead dispute settlement — 2,565,442 1,500,000Retreading plant closures 513,743 — —Somerton factory plant & equipment stocktake loss 4,036,631 — —Write down of Thomastown/Footscray properties to recoverable amount 2,219,064 — —Activity alignment — — (4,600,437)Superannuation shortfall defecit/(gain) accrual (2,470,000) 4,100,000 —

11,790,923 9,752,650 93,108,359

2004 2003 2002$ $ $

Cost of goods sold 591,739,184 587,501,675 647,665,319Write-down of Property, Plant & Equipment to recoverable amount 2,219,064 — —



Relates to Footscray and Thomastown tyre plants. Fair value determined by registered valuer, Knight Frank, in 2004.

(b) Profit from ordinary activities before income tax has been arrived at after charging/(crediting) the following items: (continued)

FS-24

Note 4. Profit from Ordinary Activities Before Income Tax Expense (Continued)

2004 2003 2002$ $ $

Depreciation of:Buildings 251,849 175,527 104,319Plant and equipment 21,894,326 19,469,383 26,628,428

22,146,175 19,644,910 26,732,747Amortisation of:

Leasehold land and buildings 1,158,908 1,076,008 1,315,525Goodwill 297,389 287,389 485,062

1,456,297 1,363,397 1,800,587Total depreciation and amortisation 23,602,472 21,008,307 28,533,334

Borrowing costsAssociated entities 8,904,264 5,816,482 3,164,641Bank loans and overdrafts 13,033,678 12,017,621 10,495,907

Total borrowing costs 21,937,942 17,834,103 13,660,548

2004 2003 2002$ $ $

Research and development expenditureExpensed as incurred 1,573,420 2,849,443 1,938,620

Net bad and doubtful debts expense including movements in provisionfor doubtful debts 624,867 619,922 1,487,774

Net expense for movements in provision for:Employee entitlements 23,330,487 18,361,047 83,347,032Rationalisation and restructuring costs 2,162,833 2,565,442 91,183,546Rebates and allowances 27,265,039 19,542,569 19,979,619

Net foreign exchange (gain)/loss:Borrowings 165,022 (8,205) (13,907)

Net loss on disposal/writedown of non-current assets:Property, plant and equipment 6,134,607 7,721,228 13,327,002Investments — — 625,815

Operating lease rental expenseMinimum lease payments 30,522,660 30,138,477 31,589,141



FS-25

Note 5. Auditors’ Remuneration

2004 2003 2002$ $ $

Audit servicesAuditors of the company — KPMG Australia 312,437 330,000 388,622

For other servicesAuditors of the company — KPMG Australia 3,901 — 2,550

Note 6. Taxation

(a) Income Tax Expense

2004 2003 2002$ $ $

Prima facie income tax expense/(benefit) calculated at 30% (2003:30%) (2002: 30%) on the profit/(loss) from ordinary activities (5,583,485) (10,606,784) (43,081,846)

Increase in income tax expense due to:Depreciation on buildings 68,953 65,465 61,316Amortisation of goodwill 89,217 86,217 145,519Thin Capitalisation 1,033,514 401,549 —Entertainment 322,092 213,606 196,069Sundry items 412,945 84,401 219,335

Decrease in income tax expense due to:Effects of lower/ higher rates of tax on overseas income — — 157Tax at standard rate on consolidated entity profits attributed to partners (7,679,125) (13,350,470) (29,039,039)

Income tax expense/(benefit) on operating profit/(loss) beforeindividually significant income tax items 4,022,361 3,594,924 (13,420,725)

Add: Income tax under/(over) provided in prior year (152,677) 612,913 (158,728)

Income tax expense/(benefit) attributable to operating profit 3,869,684 4,207,837 (13,579,453)Income tax expense/(benefit) attributable to operating profit is made up

of:Current income tax provision 4,633,950 2,057,845 (11,560,219)Under/(over) provision in prior year (152,677) 612,913 (158,728)Future income tax benefit (611,589) 1,537,079 (1,860,506)

3,869,684 4,207,837 (13,579,453)



Future Income Tax Benefit

Future income tax benefit comprises the estimated future benefit at the applicable rate of 30% (2003: 30%) (2002: 30%) on the followingitems:

The tax effect of temporary differences that give rise to significant portions of the future income tax benefit are presented below:

An amount of $48,389,177 of taxable income must be earned to allow for the realisation of the deferred tax assets in the foreseeable future.The combined taxable income of Tyre Marketers (Australia) Limited and SACRT Trading Pty Ltd in 2004 was $16,687,301 (2003 $6,919,370)and (2002 $36,556,061 loss). In the opinion of the directors of the consolidated entity, it is virtually certain that the results of future operationswill generate sufficient taxable income to realise the deferred tax assets.

The consolidated entity has unrecognised capital tax losses of $21,271,173 in 2004 (2003 $22,081,014) and (2002 $22,817,537).

FS-26

Note 6. Taxation (Continued)

(b) Current Tax Liabilities

2004 2003 2002$ $ $

Provision for current income taxMovements during the year:Balance at the beginning of year 135,944 58,887 167,096Income tax (paid)/received — 79,774 (112,184)Under/(over) provision in prior year 539 635,755 (72,516)Current year’s income tax expense/(benefit) on operating loss 4,633,949 2,057,845 (11,560,219)Disposal of controlled entity — — 78,048Tax loss transferred to FITB (4,479,623) (2,696,317) 11,558,662

290,809 135,944 58,887

(c) Deferred Tax Assets

2004 2003 2002$ $ $

Accumulated non-allowable provisions 5,761,608 4,979,376 6,499,991Accumulated tax losses 8,755,145 13,252,196 15,941,336

14,516,753 18,231,572 22,441,327

Trading stock adjustments 166,306 36,887 30,409Depreciation on property, plant and equipment (1,586,941) (2,018,708) (2,132,392)Provisions 6,892,310 6,931,368 8,533,692Accruals 237,699 160,408 251,990Accumulated tax losses 8,755,145 13,252,196 15,941,336Other 52,234 (130,579) (183,708)

14,516,753 18,231,572 22,441,327



As a consequence of the substantive enactment of the Tax Consolidation legislation and since the consolidated entity had not notified theAustralian Tax Office at the date of signing this report of the implementation date for the tax consolidation, the consolidated entity has appliedUIG39 “Effects of Proposed Tax Consolidation Legislation on Deferred Tax Balances”. There was no impact on the consolidated entity’sfuture income tax benefits, as at 30 June 2004.

Other debtor amounts generally arise from transactions outside the usual operating activity of the consolidated entity.

FS-27

Note 6. Taxation (Continued)

Note 7. Cash Assets

2004 2003 2002$ $ $

Cash 56,435,875 5,629,939 8,400,672Bank short term deposits, maturing daily and paying interest at a weighted

average interest rate of 4.7% (2003: 4.5%) (2002: 4.7%) — 9,600,000 28,700,00056,435,875 15,229,939 37,100,672

Note 8. Receivables

2004 2003 2002$ $ $

CurrentGross debtors 127,149,457 132,004,740 138,762,403Less: Provision for doubtful trade debtors (1,730,468) (2,655,040) (3,050,317)

125,418,989 129,349,700 135,712,086Other debtors 4,755,891 8,091,930 5,945,571

130,174,880 137,441,630 141,657,657Non-currentOther debtors 1,651,270 9,546,303 30,384,952

131,826,150 146,987,933 172,042,609



FS-28

Note 9. Inventories

2004 2003 2002$ $ $

CurrentRaw materials and stores at cost 8,406,434 11,548,888 10,302,933Less: Provision for stock obsolescence (56,185) (462,697) (490,527)Raw materials and stores at net realisable value 8,350,249 11,086,191 9,812,406Work in progress at cost 5,024,033 7,779,196 4,950,537Less: Provision for stock obsolescence — — (70,301)Work in progress at net realisable value 5,024,033 7,779,196 4,880,236Finished goods at cost 132,113,591 138,819,804 142,658,001Less: Provision for stock obsolescence (853,652) (889,531) (1,816,842)Finished goods at net realisable value 131,259,939 137,930,273 140,841,159Other stocks at cost 3,215,229 6,519,272 6,390,959Less: Provision for stock obsolescence (438,257) (1,282,795) (1,182,795)Other stocks at net realisable value 2,776,972 5,236,477 5,208,164

147,411,193 162,032,137 160,741,965

Note 10. Other Current Assets

2004 2003 2002$ $ $

Prepayments 3,219,753 3,323,269 2,258,575

Note 11. Other Financial Assets

2004 2003 2002$ $ $

Non-currentInvestments in controlled entitiesUnlisted shares at cost — — —

— — —



Assets held for sale relate to Footscray tyre plant closed in December 2001 and Thomastown tyre plant closed in July 2002.

Reconciliations

Reconciliations of the carrying amounts for each class of property, plant and equipment are set out below:

Freehold land

FS-29

Note 12. Property, Plant and Equipment

2004 2003 2002$ $ $

Freehold landAt cost 2,508,947 3,350,000 3,350,000

2,508,947 3,350,000 3,350,000Freehold buildingsAt cost 10,769,845 11,886,348 11,841,455Accumulated depreciation (1,275,597) (1,184,367) (1,008,840)

9,494,248 10,701,981 10,832,615Leasehold land and buildingsAt cost 34,438,146 57,165,525 57,096,991Accumulated amortisation (6,779,839) (7,366,006) (6,667,761)

27,658,307 49,799,519 50,429,230Held for sale at recoverable amount 19,104,877 — —

46,763,184 49,799,519 50,429,230Plant and equipmentAt cost 346,754,924 357,168,327 369,419,397Accumulated depreciation (211,578,026) (227,312,706) (242,149,279)

135,176,898 129,855,621 127,270,118Held for sale at recoverable amount 145,123 — —

135,322,021 129,855,621 127,270,118Buildings and plant under constructionAt cost 3,735,276 24,717,907 10,945,130

Total property, plant and equipment net book value 197,823,676 218,425,028 202,827,093

2004 2003 2002$ $ $

Carrying amount at the beginning of year 3,350,000 3,350,000 3,350,000Disposals (841,053) — —Carrying amount at the end of year 2,508,947 3,350,000 3,350,000



FS-30

Note 12. Property, Plant and Equipment (Continued)

2004 2003 2002$ $ $

BuildingsCarrying amount at the beginning of year 10,701,981 10,832,615 11,539,044Currency conversion — — (101,481)Additions — — 11,706Transfer from capital works in progress 12,543 44,893 30,818Disposal of businesses/subsidiary (net) — — (543,153)Disposals (968,427) — —Depreciation (251,849) (175,527) (104,319)Carrying amount at the end of year 9,494,248 10,701,981 10,832,615Leasehold land and buildingsCarrying amount at the beginning of year 49,799,519 50,429,230 51,725,245Transfer from capital works in progress 344,534 458,306 39,515Disposals (2,221,960) (12,009) (20,005)Depreciation (1,158,909) (1,076,008) (1,315,525)Carrying amount at the end of year 46,763,184 49,799,519 50,429,230Plant and equipmentCarrying amount at the beginning of year 129,855,621 127,270,118 151,296,771Currency conversion — — (31,013)Acquired businesses/ subsidiaries — — 458,033Additions 189,115 11,306 188,971Transfer from capital works in progress 36,562,647 34,225,413 15,784,417Disposals (9,391,035) (12,181,833) (13,639,725)Disposal of businesses/subsidiary (net) — — (158,909)Depreciation (21,894,327) (19,469,383) (26,628,427)Carrying amount at the end of year 135,322,021 129,855,621 127,270,118Capital works in progressCarrying amount at the beginning of year 24,717,907 10,945,130 14,837,434Acquired businesses/ subsidiaries — — 458,033Additions 16,090,754 48,501,389 14,549,558Transfer to property, plant and equipment (36,919,723) (34,728,612) (16,312,783)Other disposals (153,662) — (2,587,112)Carrying amount at the end of year 3,735,276 24,717,907 10,945,130



The consolidated entity estimates that the annual amortisation expense related to intangible assets will be $287,388 during each of the next5 years and the weighted average remaining amortisation period is approximately 14 years.

Note 15. Interest Bearing Liabilities

FS-31

Note 13. Intangibles

2004 2003 2002$ $ $

Goodwill — at cost 5,847,772 7,268,104 7,768,104Accumulated amortisation (1,348,820) (2,351,230) (2,563,842)

4,498,952 4,916,874 5,204,262

Note 14. Payables

2004 2003 2002$ $ $

CurrentTrade creditors 108,050,790 115,985,030 117,076,110Accrued liabilities 35,797,893 41,841,676 43,903,827Other creditors 179,723 2,127,124 802,781

Total Current 144,028,406 159,953,830 161,782,718Non-currentTrade creditors 704,179 752,291 871,199Other creditors — 7,234,668 27,620,616

Total Non Current 704,179 7,986,959 28,491,815Total Payables 144,732,585 167,940,789 190,274,533

2004 2003 2002$ $ $

CurrentBank overdrafts — secured 783,427 — —Bank overdrafts — unsecured — 690,488 1,002,808Bank loans — secured 77,638,119 — —Bank loans — unsecured — 95,833,119 65,897,645Goodyear Australia Pty Ltd loans 35,033,668 — —Securitisation 75,029,449 74,890,227 75,494,759

Total Current 188,484,663 171,413,834 142,395,212Non-currentPartner Loan — Pacific Dunlop Tyres Pty Ltd 62,853,754 55,548,722 30,547,507Partner Loan — Goodyear Tyres Pty Ltd 62,853,754 55,548,722 30,547,507

Total Non Current 125,707,508 111,097,444 61,095,014Total Interest bearing liabilities 314,192,171 282,511,278 203,490,226



Partner Loans — Pacific Dunlop Tyres Pty Ltd & Goodyear Tyres Pty Ltd

On October 19, 2001, the partners in South Pacific Tyres (SPT) signed an agreement setting forth a plan to restructure certain operations ofthe consolidated entity, details of which are set forth in two agreements — the Australian Deed and the Co-ordination Deed (the“Agreements.”) The Agreements require the partners to advance (in one or more tranches) up to $56.3 million to the consolidated entity. As ofJune 30, 2003, the amounts due to each partner (including principal and interest) were $55.5 million compared to $30.5 million at June 30,2003. Interest on the outstanding portion of the loan which is compounded and calculated at 90 day intervals based on the 90 day bank bill rateplus a margin of 0.6% per annum.

Also included in the Agreements, is a put and call option giving the partners the right to acquire from the other partner, that partner’sinterest in the partnership. The earliest date this provision can be exercised is August 15, 2005 (the “put option date”) by Pacific Dunlop TyresPty Ltd (“PDL.”) Beginning with the put option date, PDL has twelve months during which they may exercise their put option. At the end ofthis twelve month period, Goodyear Tyres Pty Ltd will have the right to exercise their call option during the subsequent twelve month period.

The loans mature at the earlier of:

Bank Loans

Pacific Dunlop Tyres Pty Ltd and Goodyear Tyres Pty Ltd (together comprising the SPT partnership in Australia) along with SPT’sAustralian controlled entities, are borrowers under bank facilities (the “Facilities”) provided by a group of banks referred to as the “Lenders.”

At June 30, 2004, the Facilities provided for borrowings of up to $79.7 million of which, $2.4 million was unused. In August 2003, theunsecured bank facilities were renewed for one year and restructured to reduce their size and to provide security to the Lenders by way of afixed and floating charge over certain assets. Secured bank loans and overdrafts rank ahead in priority order of other interest bearing liabilities.Also in August 2004, a guarantee was provided by The Goodyear Tire & Rubber Company (U.S.).

Interest on the facilities is calculated using the bank bill rate in effect at the time of borrowing plus a margin of up to 1.8% depending onthe type of advance. The borrowers must also pay a fee equal to 3.00% per annum on the facility limit regardless of utilization.

In addition to providing cash advances, the Facilities may be used for other purposes including borrowings relating to trade finance (such asbid/performance bonds and shipping guarantees), performance and financial guarantees, leasing, business credit cards, and payroll electronicpayment requirements.

Accounts Receivable Financing

During November 2001, the consolidated entity entered into an agreement with a major financial institution in relation to the securitisationof trade receivables. Under this arrangement, eligible receivables are transferred to a SPT Trust Special Purpose Vehicle (SPV) in return forcash and a “subordinated loan amount.” The SPV is managed by one of the bank facility lenders. Interest on the facility is calculated using theone month bank bill rate (determined each monthly settlement date) plus a margin. This facility must be renewed on November 2nd 2006.

FS-32

Note 15. Interest Bearing Liabilities (Continued)

• PDL exercising the put option (no earlier than August 2005);

• the tenth anniversary of the Agreements (October 2011); and

• the dissolution of the partnership (not expected.)



Financing arrangements

The consolidated entity has access to the following lines of credit:

Interest on bank overdrafts is charged at prevailing market rates. The effective interest rates for all overdrafts as at 30 June 2004 is 8.6%(2003: 8.6%) (2002: 8.6%).

All bank loans are denominated in Australian dollars. The bank loans amount in current liabilities comprises the portion of the consolidatedentity’s bank loan payable within one year. The effective interest rate on bank loans is 8.65% (2003: 8.34%) (2002: 6.56%).

The effective interest rate on trade bills is 8.15% (2003: 5.66%) (2002: 5.32%).

At 30 June 2002 the consolidated entity had committed lines of bank loans of $105,500,000 up to 1 December 2002.

At 30 June 2002 $42,000,000 of the lines were undrawn. An annual commitment fee of 0.5% to 0.9% was paid.

FS-33

Note 15. Interest Bearing Liabilities (Continued)

2004 2003 2002$ $ $

Total facilities available:Bank overdrafts 2,000,000 6,500,000 6,500,000Bank loans 71,650,000 90,000,000 105,500,000Trade bills 6,000,000 6,000,000 6,000,000

79,650,000 102,500,000 118,000,000

Facilities utilised at balance date:Bank overdrafts 743,773 574,845 1,012,585Bank loans 71,650,000 90,000,000 63,500,000Trade bills 4,859,813 5,589,308 2,247,952

77,253,586 96,164,153 66,760,537

Facilities not utilised at balance date:Bank overdrafts 1,256,227 5,925,155 5,487,415Bank loans — — 42,000,000Trade bills 1,140,187 410,692 3,752,048

2,396,414 6,335,847 51,239,463



Reconciliations

Reconciliations of the carrying amounts of each class of provision, except for employee benefits are set out below.

To maintain competitiveness, the consolidated entity has implemented rationalisation actions over the past several years for the purpose ofreducing excess capacity, improving productivity and reducing costs. The net amounts of rationalisation charges to the Statement of FinancialPerformance were as follows:

Rationalisation and Restructuring

In fiscal year 2000 and 2001, a rationalisation program was undertaken by the consolidated entity to close the tyre plants in Thomastownand Footscray, the MRT plant in Somerton and the BA Hamill engineering workshop for the purpose of reducing excess capacity, improvingproductivity and reducing costs. Rationalisation expense for this plan was $50.6 million, $91.2 million, $2.6 million, and $2.2 million in 2001,2002, 2003 and 2004 respectively and was charged to significant items in the statement of financial performance.

The number of people planned to be terminated at the MRT site at Somerton was 525. The actual number of people terminated was 519, allof whom were manufacturing related employees. The number of people planned to be terminated at the Thomastown, Footscray and BAHamill sites was 868. The actual number of people terminated was 871, 799 of whom were manufacturing and 72 of whom wereadministrative. At 30th June 2004 there was a plan to close two tyre retreading plants at North Albury and Tamworth in July 2004. Theplanned number of people terminating is 6 people.

Net Charges in 2004 of $2.2 million consisted of $3.6 million for environmental remediation of the Thomastown and Footscray tyre plants,$0.5 million for retreading plant closures and $(1.9) million reversal of provision made for storage, dismantling and packaging of plant andequipment at the MRT Plant at

FS-34

Note 16. Provisions

2004 2003 2002$ $ $

CurrentEmployee entitlements 33,143,515 30,803,805 35,447,716Rationalisation and restructuring 13,995,281 16,981,066 60,411,626Rebates 7,179,476 5,580,819 6,978,516

54,318,272 53,365,690 102,837,858

Non-currentEmployee entitlements 6,357,177 6,883,413 7,978,203

6,357,177 6,883,413 7,978,203

2004 2003 2002$ $ $

Carrying amount at beginning of year 16,981,066 60,411,626 14,084,483Provisions made during the year 2,162,833 2,565,442 91,183,546Provision utilised by loss on disposal/scrappings of assets — (8,475,000) (13,100,000)Payments made during the period (5,148,618) (37,521,002) (31,756,403)Carrying amount at end of year 13,995,281 16,981,066 60,411,626



Somerton. In 2004, $5.1 million was incurred which comprised $3.6 million for settlement of contractual dispute with customer (Norhead) and$1.5 million for environmental remediation at Thomastown & Footscray.

Net Charges in 2003 of $2.6 million related to settlement of contractual dispute with customer (Norhead). In 2003, $37.5 million wasincurred which comprised $35.4 million of associate redundancy payments for employees at the Thomastown, Footscray and BA Hamill sites,$0.5 million for environmental remediation at Thomastown and Footscray, $0.5 million for settlement of contractual dispute with customer(Norhead) and $1.1 million for storage, dismantling and packaging costs of equipment at the MRT Plant at Somerton.

Net Charges in 2002 of $91.2 million consisted $66.3 million for associate redundancy payments for associates at the Thomastown,Footscray and BA Hamill sites, $9.9 million for environmental remediation at the Thomastown and Footscray tyre plants, $21.6 million forplant and equipment write off at the Thomastown, Footscray and BA Hamill sites, $1.5 million for settlement of contractual dispute withcustomer (Norhead), $(1.5) million reversal of provision made for preparation of the land and buildings at the MRT site at Somerton for sale,$(4.0) million reversal of provision made for activity alignment redundancy plan and $(2.6) million reversal of provision of redundancy forclosure of the MRT Plant at Somerton.

In 2002, $31.8 million was incurred which comprised $9.3 million of associate redundancy payments for employees at the Thomastown,Footscray and BA Hamill sites, $0.2 million for the activity alignment redundancy plan, $0.4 million for associate redundancy payments at theMRT Plant at Somerton, $1.6 million for business interruption expenditure and $0.3 million for storage, dismantling and packaging of plantand equipment at the MRT Plant at Somerton.

The provision at 30th June 2004 was $13,995,281, which included $1,996,622 for the future costs of storage, dismantling and packaging ofplant & equipment at the MRT plant in Somerton, $11,484,916 for environmental remediation and $513,743 for the closure of the NorthAlbury and Tamworth Retreading plants.

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Note 16. Provisions (Continued)

2004 2003 2002$ $ $

RebatesCarrying amount at beginning of year 5,580,819 6,978,516 6,236,155Provisions made during the year 27,265,039 19,542,569 19,979,619Payments made during the period (25,666,382) (20,940,266) (19,237,258)Carrying amount at end of year 7,179,476 5,580,819 6,978,516

Number of employees 3,063 3,133 3,730



The Australian dollar equivalents of unhedged amounts payable or receivable in foreign currencies, calculated at year-end exchange rates,are as follows:

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Note 17. Amounts Payable/ Receivable in Foreign Currencies

2004 2003 2002$ $ $

United States dollarsAmounts payable:Current 779,816 872,599 1,382,011Japanese YenAmounts payable:Current — — 1,432,379Euro dollarAmounts payable:Current 764,127 435,439 195,889Total 1,543,943 1,308,038 3,010,279

Note 18. Contributed Equity

2004 2003 2002$ $ $

Goodyear Tyres Pty LtdContributed equity at the beginning of year 158,837,569 158,837,569 158,837,569Additional contributed equity 13,000 — —Contributed equity at the end of year 158,850,569 158,837,569 158,837,569Pacific Dunlop Tyres Pty LtdContributed equity at the beginning of year 158,837,569 158,837,569 158,837,569Contributed equity at the end of year 158,837,569 158,837,569 158,837,569

317,688,138 317,675,138 317,675,138



Nature and Purpose of Reserves

Asset revaluation

The asset revaluation reserve includes the net revaluation increments and decrements arising from the revaluation of non-current assetsmeasured at fair value in accordance with AASB1041.

Foreign currency reserve

The foreign currency translation reserve records the foreign currency differences arising from the translation of self-sustaining foreignoperations, the translation of transactions that hedge the Entity’s net investment in a foreign operation or the translation of foreign currencymonetary items forming part of the net investment in a self-sustaining operation. Refer to accounting policy Note 1(e).

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Note 19. Reserves

2004 2003 2002$ $ $

Asset revaluation 12,374,551 12,570,229 12,570,22912,374,551 12,570,229 12,570,229

Movements during the yearAsset revaluation reserveBalance at the beginning of year 12,570,229 12,570,229 12,561,891Transferred to retained profits (195,678) — 8,338Balance at the end of year 12,374,551 12,570,229 12,570,229

Foreign currency translation reserveBalance at the beginning of year — — (3,341,868)Translation adjustment on assets and liabilities held in foreign currencies — — (303,980)Transferred to retained profits — — 3,645,848Balance at the end of year — — —



The consolidated entity’s ability to pay dividends is restricted by credit facility agreements.

(a) Interest Rate Risk

The consolidated entity enters into interest rate swaps to manage cash flow risks associated with the floating interest rates on borrowings.

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Note 20. Accumulated Losses

2004 2003 2002$ $ $

Goodyear Tyres Pty LtdAccumulated losses at the beginning of year (136,469,457) (116,635,878) (49,795,200)Net loss attributable to partners (11,240,650) (19,781,893) (65,013,585)Amounts transferred from reserves 97,839 — (1,827,093)Net effect of initial adoption of Revised AASB 1028 “Employee

Benefits” — (51,686) —Accumulated losses at the end of year (147,612,268) (136,469,457) (116,635,878)Pacific Dunlop Tyres Pty LtdAccumulated losses at the beginning of year (135,466,272) (115,632,693) (48,792,015)Net loss attributable to partners (11,240,650) (19,781,892) (65,013,585)Amounts transferred from reserves 97,839 — (1,827,093)Net effect of initial adoption of Revised AASB 1028 “Employee

Benefits” — (51,687) —Accumulated losses at the end of year (146,609,083) (135,466,272) (115,632,693)

(294,221,351) (271,935,729) (232,268,571)

Note 21. Outside Equity Interest

2004 2003 2002$ $ $

Outside equity interest in controlled entities comprise:Interest in retained profits at the beginning of the financial year after adjusting

for outside equity interests in entities — — 1,034,550Interest in operating profit after income tax — — 470Interest in dividends provided for or paid — — (2,146)Disposal of Interest in Retained Profits — — (1,032,874)Interest in retained profits at the end of the financial year — — —Interest in share capital — — —Interest in reserves — — —Total outside equity interest — — —

Note 22. Additional Financial Instruments Disclosure



Interest rate swaps and forward rate agreements

Interest rate swaps allow the consolidated entity to swap floating rate borrowings into fixed rates. Maturities of swap contracts areprincipally between one to five years.

Each contract involves quarterly payment or receipt of the net amount of interest. At 30 June 2004 the fixed rates were 5.9% (2003: 5.7% to5.9%) (2002: 5.5% to 5.9%) and floating rates were at bank bill rates plus the consolidated entity’s credit margin. The weighted averageeffective floating interest rate at 30 June 2004 was 5.9% (2003: 5.8%) (2002: 5.7%).

Interest rate risk exposures

The consolidated entity’s exposure to interest rate risk and the effective weighted average interest rate for classes of financial assets andfinancial liabilities is set out below:

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Note 22. Additional Financial Instruments Disclosure (continued)

Fixed interest maturity in:Weightedaverage More Non-interest Floating 1 year or Over 1 year than interest

Note rate interest rate less to 5 years 5 years bearing Total

2004Financial assetsCash 7 4.74% 56,343,803 92,072 56,435,875Receivables 8 — 131,826,150 131,826,150

56,343,803 131,918,222 188,262,025Financial liabilitiesBank overdrafts and loans 15 8.65% 73,561,733 73,561,733Securitisation 15 5.60% 75,029,449 75,029,449Partner Loans 15 6.31% 160,741,176 160,741,176Trade bills 15 8.15% 4,859,813 4,859,813Accounts payable 14 144,732,585 144,732,585Employee entitlements 16 0.00% 33,143,515 3,378,237 2,978,940 39,500,692

314,192,171 33,143,515 3,378,237 2,978,940 144,732,585 498,425,448Interest rate swaps (20,000,000) 20,000,0002003Financial assetsCash 7 4.51% 15,133,917 96,022 15,229,939Receivables 8 — 146,987,933 146,987,933

15,133,917 147,083,955 162,217,872Financial liabilitiesBank overdrafts and loans 15 8.27% 90,934,299 90,934,299Securitisation 15 4.88% 74,890,227 74,890,227Partner Loans 15 5.35% 111,097,444 111,097,444Trade bills 15 5.66% 5,589,308 5,589,308Accounts payable 14 167,940,789 167,940,789Employee entitlements 16 1.30% 30,803,805 3,177,964 3,705,449 37,687,218

282,511,278 30,803,805 3,177,964 3,705,449 167,940,789 488,139,285Interest rate swaps (50,000,000) 30,000,000 20,000,000



The consolidated entity enters into forward foreign exchange contracts to hedge foreign currency purchases expected in each month withinthe following six months within Board approval limits. The amount of anticipated future purchases and sales are forecast in light of currentconditions in foreign markets, commitments from customers and experience.

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Fixed interest maturity in:Weightedaverage More Non-interest Floating 1 year or Over 1 year than interest

Note rate interest rate less to 5 years 5 years bearing Total

2002Financial assetsCash 7 4.70% 37,092,372 8,300 37,100,672Receivables 8 — 172,042,609 172,042,609

37,092,372 — — — 172,050,909 209,143,281Financial liabilitiesBank overdrafts and loans 15 6.59% 64,652,501 64,652,501Securitisation 15 5.06% 75,494,759 75,494,759Partner Loans 15 5.46% 61,095,014 61,095,014Trade bills 15 5.32% 2,247,952 2,247,952Accounts payable 14 190,274,533 190,274,533Employee entitlements 16 2.00% 35,447,716 4,278,361 3,699,842 43,425,919

203,490,226 35,447,716 4,278,361 3,699,842 190,274,533 437,190,678Interest rate swaps (50,000,000) 20,000,000 30,000,000

(b) Foreign exchange risk



The following table sets out the gross value to be received under foreign currency contracts, the weighted average contracted exchangerates and the settlement periods of outstanding contracts for the consolidated entity.

As these contracts are hedging anticipated purchases, any unrealised gains and losses on the contracts, together with the costs of thecontracts, will be deferred and then recognised in the financial statements at the time the underlying transaction occurs as designated. The grossdeferred gains and losses on hedges of anticipated foreign current purchases are:

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Average rate2004 2003 2002

2004 2003 2002 $ $ $Buy US DollarsNot later than one year 0.7029 0.63 0.56 17,860,867 26,558,702 43,978Later than one year but not later than two years — — —Later than two year but not later than three years — — —

17,860,867 26,558,702 43,978Sell US DollarsNot later than one year 0.7155 0.64 — 1,623,900 814,196 —Later than one year but not later than two years — — —Later than two year but not later than three years — — —

1,623,900 814,196 —Buy EURO dollarsNot later than one year 0.59 0.55 0.60 5,693,338 9,937,775 1,096,037Later than one year but not later than two years — — —Later than two year but not later than three years — — —

5,693,338 9,937,775 1,096,037Sell EURO dollarsNot later than one year 0.61 0.55 — 18,245 179,783 —Later than one year but not later than two years — — —Later than two year but not later than three years — — —

18,245 179,783 —Buy Japanese yenNot later than one year 79.33 70.57 67.3 1,560,868 2,101,635 223,131Later than one year but not later than two years — — —Later than two year but not later than three years — — —

1,560,868 2,101,635 223,131Sell Japanese yenNot later than one year 76.45 73.94 — 133,059 56,934 —Later than one year but not later than two years — — —Later than two year but not later than three years — — —

133,059 56,934 —Buy English poundNot later than one year — 0.39 0.37 — 77,119 71,779Later than one year but not later than two years — — —Later than two year but not later than three years — — —

— 77,119 71,779

2004 2003 2002Gains Losses Gains Losses Gains Losses

$ $ $ $ $ $

Not later than one year 778,676 80,710 44,231 2,021,565 54,818 —Later than one year but not later than two years — — — — — —Later than two year but not later than three years — — — — — —



When the underlying transaction has occurred as designated, the effect of the hedge has been recognised in the financial statements.

(c) Commodity Price Risk

The consolidated entity does not enter into futures contracts to hedge (or hedge a proportion of) commodity purchase prices on anticipatedspecific purchase commitments of natural rubber.

(d) Credit Risk Exposures

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.

The credit risk on financial assets, excluding investments, of the consolidated entity which have been recognised on the statement offinancial position, is the carrying amount, net of any provision for doubtful debts.

The consolidated entity minimises concentrations of credit risk by undertaking transactions with a large number of customers andcounterparties in various countries.

The consolidated entity is not materially exposed to any individual overseas country or individual customer. Concentrations of credit riskon trade debtors and term debtors due from customers are the motor vehicle and transport industries.

Unrecognised Financial Instruments

Credit risk on derivative contracts which have not been recognised on the statement of financial position is minimised as counterparties arerecognised financial intermediaries with acceptable credit ratings determined by a recognised ratings agency.

Interest rate swaps and foreign exchange contracts are subject to credit risk in relation to the relevant counterparties, which are principallylarge banks.

As all futures contracts are transacted through a recognised futures exchange, credit risk associated with these contracts is minimal.

(e) Net Fair Values of Financial Assets and Liabilities

Net fair values of financial assets and liabilities are determined by the consolidated entity on the following basis:

Recognised Financial Instruments

The carrying amounts of bank term deposits, trade debtors, other debtors, bank overdrafts, accounts payable, bank loans and employeeentitlements approximate net fair value.


The valuation of financial instruments not recognised on the statement of financial position detailed in this note reflects the estimatedamounts which the consolidated entity expects to pay or receive to terminate

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Valuation approach




the contracts (net of transaction costs) or replace the contracts at their current market rates as at reporting date. This is based on independentmarket quotations and determined using standard valuation techniques.

Net Fair Values


The carrying amounts and net fair values of financial assets and financial liabilities as at the reporting date are as follows:


The net fair values of the unmatured derivatives designated as hedges at balance date totalled:

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2004 2003 2002Carrying Net fair Carrying Net fair Carrying Net fairamount value amount value amount value

$ $ $ $ $ $

Financial assetsCash assets 56,435,875 56,435,875 15,229,939 15,229,939 37,100,672 37,100,672Receivables 131,826,150 131,826,150 146,987,933 146,987,933 172,042,609 172,042,609Financial liabilitiesPayables 144,732,585 144,732,585 167,940,789 167,940,789 190,274,533 190,274,533Bank overdrafts and loans 73,561,733 73,561,733 90,934,299 90,934,299 64,652,501 64,652,501Securitisation 75,029,449 75,029,449 74,890,227 74,890,227 75,494,759 75,494,759Partner Loans 160,741,176 160,741,176 111,097,444 111,097,444 61,095,014 61,095,014Trade bills 4,859,813 4,859,813 5,589,308 5,589,308 2,247,952 2,247,952Employee entitlements 39,572,002 39,572,002 37,687,218 37,687,218 43,425,919 43,425,919

2004 2003 2002$ $ $

Forward foreign exchange contracts gains/(losses) 697,966 (1,977,334) 54,818



The consolidated entity leases property under non-cancellable operating leases expiring from one to ten years.

Leases generally provide the consolidated entity with a right of renewal at which time all terms are renegotiated.

Assets Pledged and Cash Restrictions

Assets pledged to financial institutions as at 30 June 2004 ($175,571,699), 2003 ($nil) and 2002 ($nil). Agreements with financialinstitutions place certain restrictions on the use of cash balances. These restrictions do not affect the daily operations of the consolidated entityand will not have a material adverse affect on its operations.

There were no material contingent liabilities as at 30 June 2004, 30 June 2003 and 30 June 2002.

The consolidated entity from time to time has dealings with Ansell Limited Group Companies and Goodyear Tire & Rubber Co. GroupCompanies.

Under the partnership agreement, the consolidated entity leases certain properties from Ansell Limited and Goodyear Australia Limited (awholly owned subsidiary of Goodyear Tire & Rubber Co.) on a basis of equitable rentals between the partners.

The amounts of these transactions are detailed below:

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Note 23. Commitments

2004 2003 2002$ $ $

Capital expenditure commitmentsPlant

Contracted but not provided for and payable within one year 951,935 3,311,414 4,505,841951,935 3,311,414 4,505,841

Lease commitmentsOperating lease expense commitments

Future operating lease commitments not provided for in the financialstatements and payable:

Within one year 29,992,274 23,865,262 25,799,409One year or later and no later than five years 60,779,467 47,292,290 48,518,490Later than 5 years 6,720,240 15,992,314 10,596,215

97,491,981 87,149,866 84,914,114

Note 24. Contingent Liabilities

Note 25. Related Party Transactions

2004 2003 2002Lease Payments $ $ $

Ansell Limited Group Companies 217,885 217,885 217,885Goodyear Tire & Rubber Co. Group Companies 75,273 75,273 75,273



During the financial year the consolidated entity received loans from the partners that are subject to interest at market rates compoundingquarterly as detailed in Note 15.

On 29/12/2000, the consolidated entity entered into supply agreements whereby Goodyear will be (subject to certain conditions) thesupplier of certain tyres for a period of twelve years commencing 01/01/2001. The consolidated entity has received $25.0m plus interest inconsideration for this supply.

On 20/12/2000, the consolidated entity received a loan of $25.0m from Ansell Limited on which interest is charged quarterly in arrears.

Interest brought to account by the consolidated entity in relation to these loans during the year:

All other dealings with the above parties are on normal commercial terms and involve the purchase and/or supply of materials from/to bothparties and the provision of forward exchange cover and commodity hedging by Ansell Limited Group Companies.

The amounts of these transactions are detailed below:

Details of interest received/paid to related parties are set out in Notes 3 & 4.

The amounts included in receivables and payables in relation to the consolidated entity are set out in the notes to the financial statementsand the amounts relating to the other parties are:

The consolidated entity has had since 1987 a significant Research and Development arrangement with Goodyear Tire and Rubber Limited.A fee is payable as a percentage of sales of locally produced tyres. The amount of costs incurred for this contract was, for the year ended 30June 2004 $3,528,348 (June 2003 $4,928,422) and (June 2002 $10,856,910).

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Note 25. Related Party Transactions (Continued)

2004 2003 2002$ $ $

Interest expense — — 1,750,000Interest revenue — — 1,750,000

2004 2003 2002$ $ $

Sale of goods and servicesAnsell Limited Group Companies — — 37,791Goodyear Tire & Rubber Co. Group Companies 7,044,157 1,357,021 4,396,011Purchase of goods and servicesAnsell Limited Group Companies — 4,092 1,252,256Goodyear Tire & Rubber Co. Group Companies 115,062,875 118,165,909 107,439,259

2004 2003 2002$ $ $

Current receivablesGoodyear Tire & Rubber Co. Group Companies 588,874 182,079 526,745Current payablesAnsell Limited Group Companies — — 81,767Goodyear Tire & Rubber Co. Group Companies 20,921,867 21,072,760 23,663,413



The names of each person holding the position of director of the consolidated entity during the year were:

Employer plans

Up until April 1st 2004 the consolidated entity participated in the Pacific Dunlop Superannuation Fund for employees.

Effective 1 April 2004 members were transferred out of the Pacific Dunlop Superannuation Fund to Equipsuper (an independentsuperannuation fund). The transfer of assets from the Pacific Dunlop Superannuation Fund to Equipsuper has not yet been completed.

Plan net assets, accrued benefits and vested benefits have been calculated at 30 June 2002, being the date of the most recent financialstatements of the plan. Accrued benefits are based on an actuarial valuation undertaken at 30 June 2002.

The consolidated entity has accrued a superannuation expense of $1,630,000 to meet expected fund deficiency as at 30 June 2004.

The liabilities of the superannuation fund are covered by the assets in the fund or by specific provisions created by the consolidated entity.

The consolidated entity is obliged to contribute to the superannuation fund as a consequence of Legislation or Trust Deed. Legalenforceability is dependent on the terms of the Legislation and the Trust Deed.

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Note 25. Related Party Transactions (Continued)

Mr. Richard Kramer Dr Edward Tweddell Mr. Robert W. TiekenMr. Hugh D. Pace Mr. Herbert J. Elliott Mr. Clark E. SprangMs. Janell Lopus Mr. Douglas Tough Mr. Harry BoonMr. Harold Smith Mr. David Graham

Note 26. Superannuation Commitments

2002$

Net Assets 148,178,000Accrued benefits 148,802,000Deficiency (624,000)Vested benefits 146,578,000Country AustraliaBenefit type Defined benefit/AccumulationBasis of contribution Balance of cost/Defined contributionDate of last actuarial valuation 6/30/2002Actuary Mercer Human Resource Consulting Pty Ltd



Definitions

Industry/union plans

The consolidated entity participates in industry and union plans on behalf of certain employees. These plans, which are reviewedperiodically, operate on an accumulation basis and provide lump sum benefits for members on resignation, retirement or death.

The consolidated entity has a legally enforceable obligation to contribute at varying rates to the plans.

The principal activity of the group during the year was the manufacture and sale of motor vehicle and aircraft tyres in Australia.

Details of controlled entities, including the extent that each contributed to the period’s result are given below:

This financial report has been prepared in accordance with Australian accounting standards and other financial reporting requirements(Australian GAAP). The differences between Australian GAAP and IFRS identified to date as potentially having a significant effect on theconsolidated entity’s financial performance and financial position are summarised below. The summary should not be taken as an exhaustivelist of all the differences between Australian GAAP and IFRS. No attempt has been made to identify all disclosure, presentation orclassification differences that would affect the manner in which transactions or events are presented.

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Note 26. Superannuation Commitments (Continued)

Balance of cost The consolidated entity’s contribution is assessed by the Actuary after taking intoaccount the member’s contribution and the value of assets.

Defined contribution The consolidated entity’s contribution is set out in the appropriate fund rules,usually as a fixed percentage of salary.

Note 27. Segment Reporting

Note 28. Particulars Relating to Controlled Entities

Contribution to the ConsolidatedBeneficial Profit After Tax Inclusive of AbnormalInterest Book Value of Items and After Deducting the AmountHeld by Consolidated Entity’s Investment Attributable to Outside Equity Interest

Place of Consolidated Class ofName of Company Incorporation Entity Share 2004 2003 2002 2004 2003 2002

South Pacific Tyres (28,982,129) (44,501,568) (96,796,795)Tyre Marketers (Australia) Limited Vic 100% Ordinary 21,496,245 21,496,245 21,496,245 8,559,276 4,952,958 (33,840,907)Sacrt Trading Pty Ltd Vic 100% Ordinary 491,696 158,826 365,417South Pacific Tyres (PNG) Pty. Ltd. PNG 80% Ordinary — — 27,119Dunlop PNG Pty. Ltd. PNG 80% Ordinary — — (25,244)Consolidation adjustments (2,550,143) (174,001) 243,240

21,496,245 21,496,245 21,496,245 (22,481,300) (39,563,785) (130,027,170)

Note 29. Events Subsequent to Balance Date



The consolidated entity has not quantified the effects of the differences discussed below. Accordingly there can be no assurances that theconsolidated financial performance and financial position as disclosed in this financial report would not be significantly different if determinedin accordance with IFRS.

Regulatory bodies that promulgate Australian GAAP and IFRS have significant ongoing projects that could affect the differences betweenAustralian GAAP and IFRS described below and the impact of these differences relative to the consolidated entity’s financial reports in thefuture. The potential impacts on the consolidated entity’s financial performance and financial position of the adoption of IFRS, includingsystem upgrades and other implementation costs which may be incurred, have not been quantified as at the transition date of 1 July 2004 due tothe short timeframe between finalisation of the IFRS standards and the date of preparing this report. The impact of future years will depend onthe particular circumstances prevailing in those years.

The board has established a formal project, monitored by a steering committee, to achieve transition to IFRS reporting. The company’simplementation project consists of three phases as described below.

Except for certain training that has been given to operational staff, the company has not yet commenced the implementation phase.However, the company expects this phase to be substantially complete by 30 June 2005.

The key potential implications of the conversion to IFRS on the consolidated entity are as follows:

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Note 29. Events Subsequent to Balance Date (Continued)

• Assessment and planning phase

• Design phase

• Implementation phase

• financial instruments must be recognised in the statement of financial position and all derivatives and most financial assets must becarried at fair value

• income tax will be calculated based on the “balance sheet” approach, which may result in more deferred tax assets and liabilities and, astax effects follow the underlying transaction, some tax effects will be recognised in equity

• surpluses and deficits in the defined benefit superannuation plans sponsored by the entities within the consolidated entity will berecognised in the statement of financial position and the statement of financial performance

• revaluation increments and decrements relating to revalued property, plant and equipment and intangible assets will be recognised on anindividual asset basis, not a class of asset basis

• intangible assets:

— internally generated intangible assets will not be recognised

— intangible assets can only be revalued if there is an active market

• goodwill and intangible assets with indefinite useful lives will be tested for impairment annually and will not be amortised

• impairment of assets will be determined on a discounted basis, with strict tests for determining whether goodwill and cash generatingoperations have been impaired

• changes in accounting policies will be recognised by restating comparatives rather than making current year adjustments with notedisclosure of prior year effects.



Other than as noted above, there has not arisen in the interval between the end of the financial year and the date of this report any item,transaction or event of a material nature likely, in the opinion of the directors of the consolidated entity, to affect significantly the operations, orthe state of affairs of the consolidated entity in subsequent financial years.

For the purposes of the statement of cash flows, cash includes cash on hand and at bank and investments in money market instruments netof outstanding bank overdrafts. Cash as at the end of the financial year as shown in the statement of cash flows is reconciled to the relateditems in the statement of financial position as follows:

During the 2004 and 2003 financial years the consolidated entity purchased no businesses.

During the 2002 year the consolidated entity purchased 100% of businesses of which the details are as follows:

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Note 29. Events Subsequent to Balance Date (Continued)

Note 30. Notes to the Statements of Cash Flows

(a) Reconciliation of Cash

2004 2003 2002$ $ $

Cash assets 56,435,875 5,629,939 8,400,672Cash on deposit — 9,600,000 28,700,000Bank overdrafts (783,427) (690,488) (1,002,808)

55,652,448 14,539,451 36,097,864

(b) Acquisition/Disposal of Businesses and Entities

Acquisitions of Businesses

2004 2003 2002$ $ $

Net assets acquired/disposedProperty, plant and equipment — — 458,033Inventories — — 298,112Receivables — — 268,685Creditors — — —

— — 1,024,830Goodwill — — 222,001Consideration

Cash paid/(received) — — 1,246,831

Outflow/(inflow) of cashCash consideration — — 1,246,831



During the 2002 year, the consolidated entity disposed of all of its 80% share of South Pacific Tyres PNG Ltd. Details of the disposal is asfollows:

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Note 30. Notes to the Statements of Cash Flows (Continued)

Disposal of Entities

2004 2003 2002$ $ $

Consideration (Cash) — — 1,983,805Net assets of entity disposed of

Property, plant and equipment — — 702,062Inventories — — 2,174,162Receivables — — 1,096,993Other assets — — 60,964Prepayments — — 82,822Creditors — — (952,514)Other liabilities and provisions — — (146,852)Outside equity — — (408,017)

— — 2,609,620Profit/(loss) on disposal — — (625,815)



The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Australia(AGAAP), which differ in certain significant respects with accounting principles generally accepted in the United States (US GAAP). Pursuantto certain rules and regulations of the US Securities and Exchange Commission (SEC), financial statements to be included in filings with theSEC that are prepared on a basis of accounting other than US GAAP are required to provide a description of the significant differences andtheir effects on net income and equity in arriving at such amounts in accordance with US GAAP.

Subsequent to the issuance of the Company’s consolidated financial statements as of June 30, 2003 and 2002 and for each of the years inthe three-year period ended June 30, 2003, it was determined that

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Note 30. Notes to the Statements of Cash Flows (Continued)

(c) Reconciliation of Profit/(Loss) From Ordinary Activities After Income Tax to Net Cash Provided by Operating Activities

2004 2003 2002$ $ $

Loss from ordinary activities after income tax (22,481,300) (39,563,785) (130,026,700)Add /(less) items classified as investing/financing activities:

(Profit)/loss on sale of non-current assets 6,134,607 7,721,228 13,327,002(Profit)/loss on sale of controlled entities — — 625,815

Add /(less) non-cash items:Amortisation 1,456,297 1,363,397 1,800,587Depreciation 22,146,175 19,644,910 26,732,747Write-down of Property, Plant & Equipment 2,219,064 — —Amounts set aside to provisions (924,572) 40,073,781 134,902,663(Decrease)/increase in income taxes payable 154,865 77,057 (180,144)Decrease/(increase) in future income tax benefit 3,714,819 4,209,755 (13,605,285)Write-off bad trade debts 1,549,439 1,015,199 1,386,762

Net cash provided by operating activities before change in assetsand liabilities 13,969,394 34,541,542 34,963,447

Change in assets and liabilities adjusted for effects of purchaseand disposal of controlled entities during the financial year:(Increase)/decrease in receivables 14,536,916 3,494,488 (13,406,489)(Increase)/decrease in inventories 14,620,947 (1,290,172) 4,628,518(Increase)/decrease in prepayments 103,514 (1,064,694) 180,180(Decrease)/increase in accounts payable (23,186,218) (22,333,744) 20,283,451(Decrease)/increase in provisions 404,360 (70,199,122) (70,029,855)(Decrease)/increase in reserves — — (524,325)

6,479,519 (91,393,244) (58,868,520)Net cash provided by/(used in) operating activities 20,448,913 (56,851,702) (23,905,073)

Note 31. Summary of Significant Differences Between Generally Accepted Accounting Principles in Australia and GenerallyAccepted Accounting Principles in the United States — RESTATED



information previously provided with respect to material differences and the effects of such differences on the determination of net loss andpartners’ equity in accordance with US GAAP was inaccurate and incomplete. Those previously issued consolidated financial statementsindicated (i) a reduction of $10.6 million and $10.7 million as of June 30, 2003 and 2002, respectively, in arriving at partners’ equity pursuantto US GAAP would be required to eliminate the effects of an asset revaluation reserve recognized in partners’ equity under AGAAP; (ii) adecrease in depreciation expense of $125,000 would be required in arriving at net loss pursuant to US GAAP for each of the years in the three-year period ended June 30, 2003 to reflect the elimination of the asset revaluation reserve described above and; (iii) that there were no furtheradjustments of a material nature that would be required to be included in the determination of net loss and partners’ equity pursuant toUS GAAP.

Accordingly, the information set out in notes 32 and 33 provides, as at June 30th 2004, 2003 and 2002 and for each of the years in thethree-year period ended June 30, 2004 a description of the material differences and their effects in reconciling net loss and partners’ equity asreported under AGAAP in the accompanying consolidated financial statements to such amounts pursuant to US GAAP. As indicated above,information as of, and for each of the years in the two-year period ended June 30th 2003 have been presented on a restated basis substantiallyin their entirety. In addition, the Company has supplementally included disclosures required pursuant to US GAAP that have not otherwisebeen provided in the consolidated financial statements prepared under AGAAP.

(a) Property, Plant and Equipment

As permitted by AGAAP, certain property, plant and equipment has been revalued by South Pacific Tyres at various times in prior financialperiods. Revaluation increments have increased the carrying value of the assets and accordingly the depreciation charges are different fromthose which would be required on a historical cost basis pursuant to US GAAP. As a result, a reconciliation adjustment is required to eliminatethis effect for US GAAP.

Additionally, US GAAP has specific criteria in regard to assets designated as ‘held for sale’ versus ‘ held for use’. Accordingly, certainimpairment charges taken under AGAAP may result in reversal under US GAAP, but with ongoing accelerated depreciation charges.Furthermore, certain assets written down to ‘fair value’ under AGAAP may continue to be further depreciated under US GAAP requirements ifthe ‘held for sale’ classification criteria are not fully satisfied.

The annual depreciation and impairment charges under US GAAP are lower than the amounts reflected in the AGAAP consolidatedfinancial statements for the years ended 2002 and 2004 for certain assets. This results in a higher net income for US GAAP purposes of$430,414 for the year ended June 2002 and $128,000 for the year ended June 2004. For the year ended June 2003, and having regard to certainaccelerated depreciation charges under US GAAP, depreciation expense would be higher than the amount reflected in the AGAAPconsolidated financial statements. Consequently, US GAAP net income for the year ended June 2003 would be lower by $157,714. The abovepolicy also causes differences in reported gains and losses on the sale of property, plant and equipment. Gains and losses for AGAAP are basedon consideration less revalued amounts net of accumulated depreciation and amortisation. For US GAAP purposes gains and losses aredetermined having regard to depreciated historical cost, and net revaluation reserves applicable to assets sold are reported in Income. The effectof this is to decrease US GAAP net income by $8,338 in the year ended 30 June 2002.

FS-52

Note 31. Summary of Significant Differences Between Generally Accepted Accounting Principles in Australia and GenerallyAccepted Accounting Principles in the United States — RESTATED (Continued)

Note 32. Major Differences Between Australian GAAP and US GAAP



In the year ended 30 June 2004 the effect is to increase net income by $195,678.

For US GAAP purposes the Company follows the Financial Accounting Standards Board (FASB) Statement of Financial AccountingStandard (SFAS) No. 144 “Accounting for the Impairment or Disposal of Long-lived Assets”. SFAS No. 144 superseded SFAS No. 121“Accounting for the Impairment of Long-lived Assets and for Long-lived Assets to be Disposed of” and was adopted by the Company effective1 July 2002. SFAS No. 144 retains the requirements of SFAS No. 121 to (a) recognise an impairment loss if the carrying amount of a long-lived asset is not recoverable from its undiscounted cash flows and (b) measure an impairment loss as the difference between the carryingamount and fair value of the asset less estimated costs to sell and expands specific criteria relative to the classification and accounting for suchassets.

SFAS No. 144 also requires that long lived assets to be abandoned, exchanged for a similar productive asset, or distributed to owners in aspin-off be considered held and used until the asset is disposed of, exchanged or distributed.

(b) Minority Interests

Outside Equity interests are included as part of total Equity under AGAAP. The reconciliation to US GAAP in Note 33 has excluded thesefrom Partners’ Equity in 2002 consistent with US GAAP treatment. The entity in which the outside equity interest existed was sold in the yearended 30 June 2002.

(c) Provisions

The term “provisions” is used in AGAAP to designate accrued expenses with no definitive payment date. Classification between currentand non-current is generally based on management assessments, as subject to audit.

(d) Pension Plans

The consolidated entity sponsors contributory and non-contributory accumulation and defined benefit pension plans covering substantiallyall employees. The defined benefit plans generally provide benefits based on salary in the period prior to retirement. All defined benefit plansare funded based on actuarial determination, and contribution levels are revised, on a regular basis so as to ensure that the plans arefundamentally maintained on a fully funded basis. Actuarial calculations have been carried out for the defined benefit funds and the materialprovisions of the plans are as detailed in Note 26. The majority of assets of the funds are invested in pooled superannuation trusts in the case ofthe Australian funds and equity securities for other major funds. Limited disclosure in respect of pension plans is presently required byAGAAP. Under AGAAP the actual contributions to the various pension plans are recorded as an expense in the Statement of FinancialPerformance in the period they are paid or accrued. The disclosure requirements of Statement of Financial Accounting Standards No. 87(SFAS No. 87) and No. 132 (SFAS No. 132 as revised) have been included in Note 33 to these consolidated financial statements. Theconsolidated entity reports pension plans aggregated where allowed by SFAS No. 87. Additionally, an adjustment is made to recognise themeasurement principles of SFAS No. 87 and related standards in determining net income and shareholders’ equity under US GAAP.

(e) Statement of Cash Flows

Net profit (loss) determined under AGAAP differs in certain respects from the amount determined in accordance with US GAAP.

FS-53

Note 32. Major Differences Between Australian GAAP and US GAAP (Continued)



A reconciliation of net profit (loss) according to US GAAP to Cash Flows From Operating Activities under US GAAP is provided.

There are no material differences between net cash provided by (used in) financing and investing activities determined in accordance withAGAAP and such amounts determined in accordance with US GAAP.

Under AGAAP, cash is defined as cash on hand and deposits repayable on demand, less overdrafts repayable on demand.

Under US GAAP, cash and cash equivalents are defined as cash and investments with original maturities of three months or less, and donot include bank overdrafts or restricted deposits. Cash and cash equivalents as of June 30, 2004, 2003 and 2002 would have been$56,435,875, $15,229,939 and $37,100,672 respectively, under US GAAP.

(f) Income Taxes

Under AGAAP, deferred tax assets (future income tax benefits) attributable to temporary differences are only brought to account whentheir realisation is assured beyond reasonable doubt. Future income tax benefits related to tax losses are only brought to account when theirrealisation is virtually certain. At each respective reporting date the value of gross tax losses for which future tax benefits have been brought toaccount under AGAAP totalled $29,183,817 in June 2004, (2003 $44,173,986) and (2002 $53,137,787). These losses have no expiry date.Refer Note 6(c). According to US GAAP deferred tax assets are only brought to account when their realisation is more likely that not. AsUS GAAP represents a lower threshold for assessing the realizability of deferred tax assets as compared to AGAAP, there is no material effectin arriving at net profit (loss) under US GAAP.

The SPT operations are conducted through the Partnership (non taxable entity), and by its subsidiary — TMA. As TMA is a stand-alonetaxable entity certain US GAAP adjustments related to TMA are subject to tax effects. The majority of the US GAAP adjustments are inrespect of the Partnership, the results of which are taxed in the hands of the Partners. Accordingly, a substantial number of the adjustmentshave no tax effect in the SPT consolidated financial statement reconciliation.

The consolidated entity has (gross) capital tax losses of $21,271,173 in 2004 (2003 $22,081,014) and (2002 $22,817,537). These losseshave no expiry date. Total capital losses are offset by a valuation allowance. The adequacy of the valuation allowance is regularly assessed.The valuation allowance in respect of the capital losses decreased by $242,952 and $220,957 for the years ended 30 June 2004 and 2003,respectively.

Analysis of Pre tax profit/ (loss):

FS-54


Restated2004 2003 2002

Australian operations (18,611,616) (35,355,948) (143,606,153)Foreign operations — — —Total (18,611,616) (35,355,948) (143,606,153)



Temporary differences and carryforwards giving rise to deferred tax assets and liabilities at 30 June, follows:

As the amount of current deferred tax items are not material in nature, all deferred tax assets have been presented as non current in theStatement of Financial Position.

(g) Accounting for Goodwill

Shares in controlled entities are valued on acquisition at the holding company’s cost. Any difference between the fair value of net assetsacquired and cost is recognised as goodwill. Under AGAAP, goodwill is amortised on a straight line basis over varying periods not exceeding20 years.

In accounting for business combinations, the Company follows SFAS No. 141, “Business Combinations”, and SFAS No. 142, “Goodwilland Intangible Assets”. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations completed after30 June 2002 which is consistent with AGAAP. SFAS No. 141 also specifies the types of acquired intangible assets that are required to berecognised and reported separately from goodwill and those acquired intangible assets that are required to be included in goodwill.

SFAS No. 142 requires that goodwill no longer be amortised, but instead tested for impairment at least annually. This requirement creates adifference between the amortisation required under AGAAP and US GAAP. SFAS No. 142 also requires recognised intangible assets to beamortised over their respective estimated useful lives and reviewed for impairment in accordance with SFAS No. 144, “Accounting for theImpairment or Disposal of Long-lived Assets”. SFAS No. 142 also permits indefinite useful lives to be assigned to recognised intangibles. Anyrecognised intangible assets determined to have an indefinite useful life will not be amortised, but instead tested for impairment in accordancewith the SFAS No. 142 until its life is determined to no longer be indefinite.

The Company has determined it has one reporting unit consistent with its single operating segment.

FS-55


Restated2004 2003 2002

Trading stock adjustments 166,306 36,887 30,409Provisions 6,892,310 6,931,368 8,533,692Accruals 237,699 160,408 251,990Accumulated tax losses 8,755,145 13,252,196 15,941,336Accumulated capital losses 6,381,352 6,624,304 6,845,261Other 52,234 — —

22,485,046 27,005,163 31,602,688

Less Valuation allowance (6,381,352) (6,624,304) (6,845,261)Total deferred assets 16,103,694 20,380,859 24,757,427Total deferred liabilitiesProperty, plant and equipment (1,586,941) (2,018,708) (2,132,392)Other — (130,579) (183,708)Total deferred liabilities (1,586,941) (2,149,287) (2,316,100)Total net deferred tax assets 14,516,753 18,231,572 22,441,327



SFAS No. 142 requires goodwill and other intangible assets to be tested for impairment at the reporting unit level. A reporting unit is thesame as, or one level below, an operating segment as defined by SFAS No. 131 “Disclosure about Segments of an Enterprise and RelatedInformation”. Accordingly, goodwill and intangible assets with indefinite useful lives are tested for impairment annually or when events orcircumstances indicate that impairment may have occurred. Any material diminution in value is charged to the Statement of FinancialPerformance for US GAAP purposes. For US GAAP purposes no goodwill amortisation has been charged against income since 1 July 2002,the effective date of SFAS No. 142. Goodwill amortisation of $287,389 under AGAAP in 2004 and 2003 has been added back to income in theStatement of Financial Performance for US GAAP purposes.

Goodwill attributable to sold businesses is brought to account in determining the gain or loss on sale.

(h) Derivatives Not Designated as Hedges

Derivatives not designated as hedges primarily consist of interest rate swaps and forward exchange contracts which, while mitigatingeconomic risks to which the economic entity is exposed , do not qualify for hedge accounting under US GAAP pursuant to SFAS 133,“Accounting for Derivative Instruments and Hedging Activities” as they relate to hedging of anticipated transactions. These amounts areadjusted in determining net profit (loss) according to US GAAP.

The fair value of the interest rate swaps as at June 2003 was an unrealized loss of $517,350. The fair value at June 2004 was an unrealizedloss of $62,176. The effect of the necessary reconciling adjustment is an increase in the US GAAP loss for June 2003 of $517,350 and adecrease in the loss of $455,174 for the year ended June 2004.

The nature of South Pacific Tyres’ business activities necessarily involves the management of various financial and market risks, includingthose related to changes in interest rates, currency exchange rates and commodity prices. South Pacific Tyres uses derivative financialinstruments to mitigate or eliminate certain of those risks, as a component of its risk management strategy. The Company does not usederivative instruments for trading purposes.

Under AGAAP, derivative financial instruments may have hedge accounting treatment applied if the hedging derivatives are effective inreducing the exposure being hedged and are designated as a hedge at the inception of the contract. Hedging derivatives are accounted for in amanner consistent with the accounting treatment of the hedged items.

For US GAAP purposes, the Company follows SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” asamended, which became effective for South Pacific Tyres on 1 July 2000. Under SFAS No. 133, as amended, all derivative instruments arerecognised in the Statement of Financial Position at their fair values and changes in fair value are recognised immediately in earnings, unlessthe derivatives qualify as hedges of future cash flows or of investments in foreign operations. For derivatives qualifying as hedges of futurecash flows, the effective portion of changes in fair value is recorded temporarily in equity, then recognised in earnings along with the relatedeffects of the hedged items. Any ineffective portion of hedges is reported in net profit (loss) as it occurs.

Under US GAAP, all derivatives are recognised on the Statement of Financial Position at their fair value. On the date the derivative isentered into South Pacific Tyres designates the derivative as either a hedge of the fair value of a recognised asset or liability or firmcommitment (fair value hedge) or of the variability of cash flows to be paid or received related to a recognised asset, liability or forecastedtransaction (cash flow hedge).

FS-56


(i) Derivative Instruments and Hedging Activities



There is no material impact on net profit/(loss) as a result of these differences as the fair value of the derivative instruments at the balance sheetdate is offset by the foreign currency translation of the hedged receivables and payables recorded at the forward rate for AGAAP to the spotrate at balance date. Any net difference arising relates to the forward points spread between the spot rate and the forward rate at the balancesheet date which is not material. No US GAAP adjustment has been recognized as a consequence.

In December 2000, Goodyear contracted to pay SPT an amount of $28,500,000 in relation to a 10-year supply agreement commencing in2003. The amount was to be paid on 1 January 2003. As there were no onerous conditions upon SPT as a result of the contract, and because thereceipt of the contribution did not result in a change in the relative interests of the partners in the partnership, the present value of the sum wasrecognised as revenue under AGAAP in December 2000. SPT further recognised interest income on the determined present value on an accrualbasis. Under US GAAP, SPT has recognised the amount of $25,000,000 not as revenue, but as a capital contribution. The capital contributionhas been recognised in the period ended 30 June 2002, being the period in which the cash was actually received from Goodyear.

In December 2001, SPT recognized a liability to remediate its Footscray and Thomastown idled manufacturing facilities to prepare themfor sale. The expenditure of $9,900,000 was authorized by the SPT Board of Directors and, under AGAAP, was recorded based on thatapproval. As a result of further development of the disposal plan, and not withstanding that the plan would not be completed within twelvemonths, $3,600,000 of additional expenditure was authorised in April 2004 and an additional liability was recorded under AGAAP.

The expenditure is to cover environmental remediation, demolition and project management. This liability is included in the provision forRationalisation and Restructure in the AGAAP consolidated balance sheet. Refer Note 16. In addition to the actual cash outlays of $508,113charged against the provision in the year ended 30th June 2003 a further $1,506,970 was expended and charged against this provision in theyear ended 30th June 2004.

Under US GAAP, environmental liabilities are not recognised until a company has a legal or constructive obligation to remediate.Accordingly, because there is no such obligation to remediate, for US GAAP purposes only the actual cash outlays described above arerecognised as expense when they were incurred.

Accordingly, the net loss determined under US GAAP was decreased by $2,093,000 as a result of the reversal of the provision increase of$3,600,000 and the expensing of the actual cash outlays charged against the provision in 2004 of $1,506,970.

In December 2001 and as referred to in (i) above, South Pacific Tyres committed to the closedown of its Footscray and Thomastownmanufacturing facilities and to prepare them for sale. Because, as a result of this decision, the plants were no longer to generate operating cashflows, the asset carrying values at the time were considered for impairment.

Under US GAAP, in accordance with the provisions of SFAS 121 and SFAS 144, a one time impairment charge of $7,800,000 was takenagainst property, plant and equipment in 2002 to write down the net book value of these facilities to the estimated fair values attributable to theunremediated sites. In 2004 following

FS-57


(j) Supply Agreement

(k) Provision for Environmental Remediation/ Impairment

(i) Remediation

(ii) Asset Impairment



the further development of the plans for remediation and sale of the plants, and due to the plants not qualifying for “held for sale” classificationunder US GAAP, a further evaluation of impairment of the sites was undertaken. Based on the valuations obtained, a further impairmentcharge of $2,034,000 was required due to the reduction in the values of the unremediated sites.

The further impairment charge of $2,034,000 significantly offsets the reversal of the excess Environmental remediation charge of$2,093,000 set out in (i) above. The net impact of these items is to decrease the 2004 loss determined in accordance with US GAAP by$59,030. Accordingly, the cumulative net increase in US GAAP equity at June 2004 for these items is $1,650,917.

In December 2000 South Pacific Tyres recognized under AGAAP, a $6 million provision for redundancy costs for headcount reduction.The provision was based on an external consultant’s assessment of the required headcount reduction to achieve certain identified overheadefficiencies. The project was called “Activity Alignment”. The plan was not completed and $4,046,953 was reversed in the year ended 30 June2002 under AGAAP. The $6 million provision at June 2001 did not meet US GAAP recognition criteria and as a result, US GAAP net incomein that period is higher by the unspent amount of $4,046,953. In the year ended 30 June 2002 when the unspent amount was reversed forAGAAP, the net income for US GAAP is $4,046,953 less.

In September 2001 the SPT Board of Directors authorized the closure of operations at its Footscray and Thomastown manufacturingfacilities. A provision was recognized in December 2001 under AGAAP for the eventual write-off of plant and equipment. The Thomastownfacility was to remain partly in operation until July 2002. Under US GAAP the plant and equipment relating to this partial operation wassubject to accelerated depreciation for seven months in accordance with SFAS 121, rather than immediate write off. At June 2002 one month’sdepreciation in the amount of $285,714 was still to be brought to account having the effect of decreasing US GAAP losses in the year endedJune 2002 and increasing US GAAP losses in the year ended June 2003.

The Retail/Corporate restructuring provisions (see Note 4) arose in a tax paying entity, Tyre Marketers (Australia) Ltd (TMA). Theprovision was therefore tax effected at TMA’s effective rate of 30%. Accordingly, US GAAP adjustments relating to TMA have been taxeffected.

In June 2002 South Pacific Tyres released $1,577,315 of the rationalisation provision to net profit (loss) on the basis that production levelsand operating capacity of the tyre plant were significantly reduced as a consequence of the restructuring activities at Somerton. While AGAAPallows for costs associated with effecting restructuring activities to be charged as a component of a restructuring provision, it was notconsidered appropriate under US GAAP. The specific cost cannot be provided for under US GAAP as they are considered future operatingcosts. This has the effect of increasing the net loss according to US GAAP in the year ended June 2002 by $1,577,316 and decreasing net lossaccording to US GAAP by the same amount in the year ended June 2003.

FS-58


(l) Activity Alignment

(m) Manufacturing Plant — Accelerated Depreciation

(n) Tyre Marketers Tax Adjustment

(o) Business Interruption



Under AGAAP, advertising is generally expensed as the service is performed. Under US GAAP, advertising is expensed as incurredalthough there are exceptions to this, related to co-operative advertising programs and advertising related materials. Costs incurred under SouthPacific Tyres’ co-operative advertising program with dealers and franchisees are initially deferred and then recorded as reductions of sales asrelated revenues are recognized under AGAAP. No direct response advertising is reported as an asset. The effect of this difference is that underUS GAAP, Partners’ equity is lower by $840,000 after tax compared to that under AGAAP as such amounts are expensed as incurred underUS GAAP. This difference relates to all periods presented as the Yellow Pages advertising cost has remained consistent.

In June 2002 South Pacific Tyres sold its interest in South Pacific Tyres PNG Pty Ltd. Under AGAAP the accumulated foreign currencytranslation reserve of $3,645,848 was transferred to retained earnings. Under US GAAP the accumulated foreign currency translation reserveincluded as a component of accumulated other comprehensive income for US GAAP, is reported as part of the gain or loss on sale for theperiod during which the sale occurs. Consequently the net loss according to US GAAP for the year ended June 2002 is greater than the lossaccording to AGAAP purposes by $3,645,848. However, there is no effect on partners’ equity under US GAAP.

From November 2001 South Pacific Tyres has maintained a program for the continuous sale of substantially all its domestic trade accountsreceivable to the South Pacific Tyres Trust, a bankruptcy remote qualifying special purpose vehicle (QSPV). The QSPV is consolidated forAGAAP, as well as US GAAP, because the program did not meet all the criteria for off balance sheet treatment in accordance with SFAS 140“Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”. Accordingly there is no difference betweenAGAAP and US GAAP treatment of the Securitisation Program.

The amount of the receivables securitised at June 2004 was $115,149,129 (June 2003 $112,899,035) and (June 2002 $114,957,253).

The amount of interest paid by South Pacific Tyres to the QSPV for the year ended June 2004 was $3,941,622 (June 2003 $3,543,248) and(June 2002 $2,068,668). South Pacific Tyres retains the responsibility for servicing the receivables. As receivables are collected the cashproceeds are used to purchase additional receivables. The amount of service fees paid by the QSPV to South Pacific Tyres was approximately$120,000 for the year ended June 2004, $120,000 for the year ended 2003 and $80,000 for the year ended 2002.

South Pacific Tyres and its controlled entities offer warranties on the sale of certain of its products as required under the Australian TradePractices Act. For AGAAP, warranty expense is charged as incurred. For US GAAP, a provision for warranties has been recognised based onpast claims experience, sales history and other considerations. The effect of this difference is that under US GAAP, Partners’ equity is lower by$3,204,000 as compared to such amount pursuant to AGAAP.

Due to the consistency in the Company’s operations, sales generated, customer base, warranty offerings and historical cost experience therehas not been a material change in amount of accrued obligation at the balance sheet date since 2000.

FS-59


(p) Advertising

(q) Foreign Currency Translation Reserve

(r) Securitisation

(s) Warranties



In fiscal 2001 South Pacific Tyres decided to close its medium truck radial tyre plant at Somerton. $1,500,000 was recorded as an accruedobligation under AGAAP for the costs associated with the separation and ultimate sale of the land and buildings. In October 2001 the SouthPacific Tyres Board reconsidered its decision and changed the classification of the site to “held for use” and reversed the provision. Since theAGAAP provision represented “costs to sell” and the land and buildings were not considered to be impaired under the “held for use” criteriapursuant to SFAS 121, the provision was reversed for US GAAP purposes. As a result, net profit according to US GAAP was increased by$1,500,000 in the year ended 30 June 2001 and reduced by the same amount for US GAAP in the year ended 30 June 2002.

The consolidated entity has applied the revised AASB 1028 “Employee Benefits” for the first time from 1 July 2002. The liability forwages and salaries, annual leave and sick leave is now calculated using the remuneration rates the consolidated entity expects to pay as at eachreporting date, not wage and salary rates current at reporting date.

Under AGAAP the initial adjustment of $103,373 to the consolidated financial report as at 1 July 2002 as a result of this change wascharged directly to retained earnings. Under US GAAP, this has been accounted for as a reduction of net income of $103,373 in the year ended30 June 2003.

Under AGAAP, interest revenue and proceeds from the sale of non current assets are recorded as other revenues from ordinary activitiesand the book basis of the assets and businesses sold is included in expenses. Under US GAAP, interest revenue is classified as other incomeand the difference between the sale proceeds and the book basis of the assets and business sold would be presented as a gain or loss andincluded in the determination of net profit (loss). Accordingly, revenue for the years 2004, 2003 and 2002 under US GAAP would have been$818,736,638, $793,596,996 and $829,385,986, respectively.

Statement of Financial Performance

FS-60


(t) MRT Factory — Costs to Sell Land and Buildings

(u) Change in Accounting Policy — Employee Benefits

(v) Revenue Recognition

Note 33. Reconciliation to United States Generally Accepted Accounting Principles (US GAAP)

Restated2004 2003 2002

$ $ $

Net profit/(loss) of the consolidated entity perAustralian GAAP (22,481,300) (39,563,785) (130,026,700)

Less interest of outside equity holders 32(b) — — 470Net profit/(loss) attributable to the consolidated entity (22,481,300) (39,563,785) (130,027,170)

Adjustments required to accord with US GAAP:Add/(deduct) 977,171 1,473,930 (5,123,240)

Net profit/(loss) according to US GAAP (21,504,129) (38,089,855) (135,150,410)



Statement of Comprehensive Income/(Loss)

Reconciliation of Net Profit and Loss According to US GAAP to Net Cash Provided by Operating Activities Determined UnderUS GAAP.

FS-61

Note 33. Reconciliation to United States Generally Accepted Accounting Principles (US GAAP) (Continued)

Restated2004 2003 2002

$ $ $

Net profit/(loss) according to US GAAP (21,504,129) (38,089,855) (135,150,410)Foreign currency translation reserve (net of nil tax) — — 3,341,868Comprehensive Income (Loss) (21,504,129) (38,089,855) (131,808,542)

Restated2004 2003 2002

$ $ $

Net Cash Provided by Operating Activities according to US GAAP 20,448,913 (56,851,702) (23,905,073)Write-down of Property, Plant & Equipment (4,253,064) — (7,800,000)Depreciation (22,018,175) (19,802,624) (26,302,333)Amortisation (1,168,908) (1,076,008) (1,800,587)Amounts set aside to provisions 4,524,572 (38,496,466) (130,626,931)Write-off bad trade debts (1,549,439) (1,015,199) (1,386,762)Gain/(loss) on sale of investments, properties, plant and equipment (6,134,607) (7,721,228) (13,952,817)Outside equity interest in (profit)/loss for the year — — (470)Change in assets and liabilities net of effects of purchase and disposal

of controlled entities during the financial year:Increase/(decrease) in receivables (14,536,916) (3,494,488) 13,406,489Increase/(decrease) in inventories (14,620,947) 1,290,172 (4,628,518)Increase/(decrease) in prepayments (103,514) 1,064,694 (180,180)(Increase)/decrease in accounts payable 23,846,392 22,848,394 (16,683,451)(Increase)/decrease in provisions (1,911,330) 69,587,636 68,529,855Increase/(decrease) in reserves 195,678 — (3,129,861)(Increase)/decrease in income taxes payable (154,865) (77,057) 180,144Increase/(decrease) in future income tax benefit (4,067,919) (4,345,979) 13,130,085

Net profit/(loss) according to US GAAP (21,504,129) (38,089,855) (135,150,410)



Adjustments to reflect US GAAP:

FS-62


Restated2004 2003 2002

$ $ $

Add/(Deduct):Supply Agreement 32(j) — — —Manufacturing plant accelerated depreciation 32(m) — (285,714) 285,714Depreciation difference Thomastown /Footscray 32(a) (170,000) (170,000) —Fixed Asset Revaluation depreciation difference 32(a) 298,000 298,000 144,700Fixed Asset Disposal Difference 32(a) 195,678 — (8,338)FAS87 Pension 32(d) 205,000 1,032,000 3,600,000Environmental remediation 32(k) 59,030 (508,113) 9,900,000Impairment 32(k) — — (7,800,000)Advertising 32(p) — — —Activity Alignment 32(l) — — (4,046,953)Business Interruption 32(o) — 1,577,315 (1,577,315)MRT Factory — Costs to Sell 32(t) — — (1,500,000)Goodwill Amortisation 32(g) 287,389 287,389 —Interest Rate Swaps 32(h) 455,174 (517,350) —Disposal of PNG — Translation Reserve 32(q) — — (3,645,848)Initial Adoption of Revised AASB1028 32(u) — (103,373) —Income tax (expense)/benefit 32(n) (353,100) (136,224) (475,200)Total Adjustments 977,171 1,473,930 (5,123,240)

Partners’ equity according to AGAAP 35,841,338 58,309,638 97,976,796Deduct outside equity interests 32(b) — — —Partners’ equity attributable to the Partners 35,841,338 58,309,638 97,976,796



Adjustments required to reflect US GAAP:

FS-63


Restated2004 2003 2002

$ $ $

Add/(Deduct):Asset Revaluation Reserve 32(a) (12,374,551) (12,570,229) (12,570,229)Supply Agreement 32(j) — — —Manufacturing plant accelerated depreciation 32(m) — — 285,714Depreciation difference Thomastown/Footscray 32(a) (340,000) (170,000) —Fixed Asset Revaluation depreciation difference 32(a) 885,400 587,400 289,400FAS87 Pension 32(d) (363,000) (568,000) (1,600,000)Environmental remediation/ Impairment 32(k) 1,650,917 1,591,887 2,100,000Advertising 32(p) (1,200,000) (1,200,000) (1,200,000)Warranty 32(s) (3,204,000) (3,204,000) (3,204,000)Activity Alignment 32(l) — — —Business Interruption 32(o) — — (1,577,315)MRT Factory — Costs to Sell 32(t) — — —Goodwill Amortisation 32(g) 574,778 287,389 —Interest Rate Swaps 32(h) (62,176) (517,350) —Income tax (expense)/benefit 32(n) 81,876 434,976 571,200Total Adjustments (14,350,756) (15,327,927) (16,905,230)

Partners’ equity according to US GAAP 21,490,582 42,981,711 81,071,566



The expected long term rate of return on pension assets is based on a strategic asset allocation. The real rate of return (net of inflation) isexpected to average 4.5% over the long term and the long term average rate of inflation is expected to be 2.5%.

FS-64


Australian Fund2004 2003 2002

$ $ $

Pension Plan data supporting Note 26Plan’s funded status at 30 June is summarised as follows:Actuarial present value of accumulated obligations:— Vested 135,209,000 120,700,000 141,100,000— Non Vested — — —Total accumulated benefit obligation 135,209,000 120,700,000 141,100,000Projected benefit obligation 135,957,000 121,887,000 142,532,000Plan assets at fair value 138,236,000 121,360,000 152,709,000Excess/(deficiency) of assets over benefit obligations 2,279,000 (527,000) 10,177,000Unrecognised net gain/(loss) (11,588,000) (11,719,000) 573,000Net Pension (Liability)/Asset 13,867,000 11,192,000 9,604,000NET PENSION COSTDefined Benefit Plans:— Service cost-benefits earned during the year 10,240,000 13,914,000 10,311,000— Interest cost on projected benefit obligation 7,313,000 7,131,000 10,072,000— Expected return on plan assets (8,495,000) (10,092,000) (13,084,000)— Net amortisation and settlement and curtailment (gain)/loss — — —Net Pension Cost of Defined Benefit Plans 9,058,000 10,953,000 7,299,000ASSUMPTIONS (used to determine net pension cost)Weighted average discount rate 6.00% 6.00% 6.00%Rate of increase in compensation level 3.50% 3.50% 3.50%Expected long term rate of return 7.00% 7.00% 7.00%



CONTRIBUTIONS

Employer contributions to the Australian fund during the year ending 30 June 2005 are expected to be $13,580,000.

ADDITIONAL INFORMATIONEstimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

FS-65


30 June 30 June 30 JuneMEASUREMENT DATE 2004 2003 2002CHANGE IN BENEFIT OBLIGATIONProjected Benefit Obligation at beginning of year 121,887,000 142,532,000 179,926,000Service cost 10,240,000 13,914,000 10,311,000Interest cost 7,313,000 7,131,000 10,072,000Member contributions 1,387,000 — —Actuarial (gain) /loss 8,511,000 (14,990,000) (19,177,000)Benefits, administrative expenses and tax paid (13,381,000) (26,700,000) (38,600,000)Projected Benefit Obligation at end of year 135,957,000 121,887,000 142,532,000ASSUMPTIONS (used to determine end of the year benefit

obligations)Weighted average discount rate 5.50% 6.00% 6.00%Rate of increase in compensation level 3.50% 3.50% 3.50%CHANGE IN PLAN ASSETSMarket value of assets at beginning of year 121,360,000 152,709,000 180,630,000Member/Employer Contributions 13,120,000 12,541,000 10,467,000Benefits, administrative expenses and tax paid (13,381,000) (26,700,000) (38,600,000)Actual return on plan assets 17,137,000 (17,190,000) 212,000Market value of assets at end of year 138,236,000 121,360,000 152,709,000

2005 14,936,0002006 15,185,0002007 18,597,0002008 18,080,0002009 18,739,0002010-2014 82,616,000



Plan Assets

The allocation of the Fund’s assets by asset category is as follows:

The primary investment objective of the South Pacific Tyres Fund within Equipsuper is to achieve a rate of return (after tax and investmentexpenses) that exceeds inflation (CPI) increases by at least 4.0% per annum over rolling three year periods.

The South Pacific Tyres partnership (SPT) has maintained Pension Plan benefits for its Australian employees which has comprised bothAccumulation and Defined Benefit Components. Both the Defined Benefit and Accumulation components of the Plan have legally existedwithin a plan sponsored by its Australian partner, Ansell Limited (Ansell).

SPT has maintained notional separation of the plan assets and the benefit obligations for all periods presented. Accordingly theaccompanying financial information is intended to provide relevant disclosures required pursuant to SFAS 87 and SFAS 132 (revised) withrespect to the defined benefit and accumulation components of the SPT plan.

Effective 1 April 2004 legal separation from Ansell was achieved and members were transferred out of the Pacific Dunlop SuperannuationFund to Equipsuper (an independent superannuation fund).

FS-66


Plan assetsTarget June June

Allocation 2004 2003

Asset CategoryEquity securities 64% 64% 73%Debt securities 22% 21% 15%Real estate 9% 9% 10%Other 5% 6% 2%

Restated2004 2003 2002

$ $ $

Partners’ equity in accordance with US GAAP-RollforwardOpening Balance July 1 42,981,711 81,071,566 217,507,945Cumulative effect of restatement adjustments at 1st July 2001 — — (29,627,838)Net Profit (loss) (21,504,129) (38,089,855) (135,150,410)Additional contributed equity — Goodyear Tyres Pty Ltd 13,000 — —Movement in Other Comprehensive Income — — 3,341,869Additional Equity Contribution — Supply Agreement 32(j) — — 25,000,000Closing Balance 21,490,582 42,981,711 81,071,566



Balance Sheet GAAP Adjustment Reconciliation

FS-67


2004 2003 2002$ $ $

Notes AGAAP Adjustment US GAAP AGAAP Adjustment US GAAP AGAAP Adjustment US GAAPSTATEMENT OF FINANCIAL POSITIONCURRENT ASSETSCash assets 56,435,875 56,435,875 15,229,939 15,229,939 37,100,672 37,100,672Receivables 130,174,880 130,174,880 137,441,630 137,441,630 141,657,657 141,657,657Inventories 147,411,193 147,411,193 162,032,137 162,032,137 160,741,965 160,741,965Prepayments 3,219,753 3,219,753 3,323,269 3,323,269 2,258,575 2,258,575TOTAL CURRENT ASSETS 337,241,701 0 337,241,701 318,026,975 0 318,026,975 341,758,869 0 341,758,869NON-CURRENT ASSETSReceivables 1,651,270 1,651,270 9,546,303 9,546,303 30,384,952 30,384,952Property, plant and equipment 32(a), 32(m),

32(k) 197,823,676 (21,663,151) 176,160,525 218,425,028 (19,952,829) 198,472,199 202,827,093 (19,795,115) 183,031,978Intangible assets 32(g) 4,498,952 574,778 5,073,730 4,916,874 287,389 5,204,263 5,204,262 5,204,262Deferred tax assets 32(n) 14,516,753 81,876 14,598,629 18,231,572 434,976 18,666,548 22,441,327 571,200 23,012,527TOTAL NON-CURRENT ASSETS 218,490,651 (21,006,497) 197,484,154 251,119,777 (19,230,464) 231,889,313 260,857,634 (19,223,915) 241,633,719TOTAL ASSETS 555,732,352 (21,006,497) 534,725,855 569,146,752 (19,230,464) 549,916,288 602,616,503 (19,223,915) 583,392,588

CURRENT LIABILITIESPayables 32(p), 32(d),

32(h) 144,028,406 1,625,176 145,653,582 159,953,830 2,285,350 162,239,180 161,782,718 2,800,000 164,582,718Interest bearing liabilities 188,484,663 188,484,663 171,413,834 171,413,834 142,395,212 142,395,212Current tax liabilities 290,809 290,809 135,944 135,944 58,887 58,887

32(k), 32(s),32(I),

Provisions 32(o), 32(t) 54,318,272 (8,280,917) 46,037,355 53,365,690 (6,187,887) 47,177,803 102,837,858 (5,118,685) 97,719,173TOTAL CURRENT LIABILITIES 387,122,150 (6,655,741) 380,466,409 384,869,298 (3,902,537) 380,966,761 407,074,675 (2,318,685) 404,755,990NON-CURRENT LIABILITIESPayables 704,179 704,179 7,986,959 7,986,959 28,491,815 28,491,815Interest bearing liabilities 125,707,508 125,707,508 111,097,444 111,097,444 61,095,014 61,095,014Provisions 6,357,177 6,357,177 6,883,413 6,883,413 7,978,203 7,978,203TOTAL NON-CURRENT LIABILITIES 132,768,864 0 132,768,864 125,967,816 0 125,967,816 97,565,032 0 97,565,032TOTAL LIABILITIES 519,891,014 (6,655,741) 513,235,273 510,837,114 (3,902,537) 506,934,577 504,639,707 (2,318,685) 502,321,022PARTNERS’ EQUITY/ ACCUMULATED

LOSSES 35,841,338 (14,350,756) 21,490,582 58,309,638 (15,327,927) 42,981,711 97,976,796 (16,905,230) 81,071,566TOTAL LIABILITIES AND PARTNERS’

EQUITY 555,732,352 (21,006,497) 534,725,855 569,146,752 (19,230,464) 549,916,288 602,616,503 (19,223,915) 583,392,588


Annual Report on Form 10-K

For Year Ended December 31, 2004

INDEX OF EXHIBITS

X-1

ExhibitTableItem ExhibitNo. Description of Exhibit Number

3 Articles of Incorporation and By-Laws(a) Certificate of Amended Articles of Incorporation of The Goodyear Tire & Rubber Company, dated

December 20, 1954, and Certificate of Amendment to Amended Articles of Incorporation of TheGoodyear Tire & Rubber Company, dated April 6, 1993, and Certificate of Amendment to AmendedArticles of Incorporation of the Company dated June 4, 1996, three documents comprising theCompany’s Articles of Incorporation, as amended through February 28, 2002 (incorporated byreference, filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-3, File No. 333-90786).

(b) Code of Regulations of The Goodyear Tire & Rubber Company, adopted November 22, 1955, andamended April 5, 1965, April 7, 1980, April 6, 1981, April 13, 1987 and May 7, 2003 (incorporated byreference, filed as Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter endedJune 30, 2003, File No. 1-1927).

4 Instruments Defining the Rights of Security Holders, Including Indentures(a) Specimen nondenominational Certificate for shares of the Common Stock, Without Par Value, of the

Company; EquiServe Trust Company, transfer agent and registrar (incorporated by reference, filed asExhibit 4.4 to the Company’s Registration Statement on Form S-3, File No. 333-90786).

(b) Indenture, dated as of March 15, 1996, between the Company and JPMorgan Chase Bank, as Trustee, assupplemented on December 3, 1996, March 11, 1998, and March 17, 1998 (incorporated by reference,filed as Exhibit 4.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,1998, File No. 1-1927).

(c) Indenture, dated as of March 1, 1999, between the Company and JPMorgan Chase Bank, as Trustee, assupplemented on March 14, 2000 in respect of $300,000,000 principal amount of the Company’s 8.50%Notes due 2007 (incorporated by reference, filed as Exhibit 4.1, to the Company’s Quarterly Report onForm 10-Q for the quarter ended March 31, 2000, File No. 1-1927), and as further supplemented onAugust 15, 2001, in respect of the Company’s $650,000,000 principal amount of the Company’s 7.857%Notes due 2011 (incorporated by reference, filed as Exhibit 4.3 to the Company’s Quarterly Report onForm 10-Q for the period ended September 30, 2001, File No. 1-1927).

(d) Term Loan and Revolving Credit Agreement dated as of March 31, 2003 among Goodyear, GoodyearDunlop Tires Europe B.V., Goodyear Dunlop Tires Germany GmbH, Goodyear GmbH & Co. KG,Dunlop GmbH & Co. KG, Goodyear Luxembourg Tires SA, the Lenders named therein and JPMorganChase Bank, as Administrative Agent and Collateral Agent (incorporated by reference, filed asExhibit 4.3 to Goodyear’s Form 10-Q for the quarter ended March 31, 2003, File No. 1-1927).

X-2


(e) First Amendment dated as of February 19, 2004 to the Term Loan and Revolving Credit Agreementdated as of March 31, 2003 among Goodyear, Goodyear Dunlop Tires Europe B.V., Goodyear DunlopTires Germany GmbH, Goodyear GmbH & Co. KG, Dunlop GmbH & Co. KG, Goodyear LuxembourgTires SA, JPMorgan Chase Bank, as Administrative Agent and Collateral Agent, and the lenders partythereto (incorporated by reference, filed as Exhibit 4.5 to Goodyear’s Annual Report on Form 10-K forthe year ended December 31, 2003, File No. 1-1927).

(f) Second Amendment dated as of April 16, 2004 to the Term Loan and Revolving Credit Agreementdated as of March 31, 2003, as amended as of February 19, 2004, among Goodyear, Goodyear DunlopTires Europe B.V., Goodyear Dunlop Tires Germany GmbH, Goodyear GmbH & Co. KG, DunlopGmbH & Co. KG, Goodyear Luxembourg Tires SA, JPMorgan Chase Bank, as Administrative Agentand Collateral Agent, and the lenders party thereto (incorporated by reference, filed as Exhibit 4.6 toGoodyear’s Annual Report on Form 10-K for the year ended December 31, 2003, File No. 1-1927).

(g) Third Amendment dated as of May 18, 2004, to the Term Loan and Revolving Credit Agreement datedas of March 31, 2003, among Goodyear, Goodyear Dunlop Tires Europe B.V., Goodyear Dunlop TiresGermany GmbH, Goodyear GmbH & Co. KG, Dunlop GmbH & Co. KG, Goodyear Luxembourg TiresSA, JPMorgan Chase Bank, as Administrative Agent, and the lenders party thereto (incorporated byreference, filed as Exhibit 4.2 to Goodyear’s Form 10-Q for the quarter ended June 30, 2004, File No. 1-1927).

(h) Fourth Amendment dated as of May 27, 2004, to the Term Loan and Revolving Credit Agreement datedas of March 31, 2003, among Goodyear, Goodyear Dunlop Tires Europe B.V., Goodyear Dunlop TiresGermany GmbH, Goodyear GmbH & Co. KG, Dunlop GmbH & Co. KG, Goodyear Luxembourg TiresSA, JPMorgan Chase Bank, as Administrative Agent, and the lenders party thereto (incorporated byreference, filed as Exhibit 4.3 to Goodyear’s Form 10-Q for the quarter ended June 30, 2004, File No. 1-1927).

(i) General Master Purchase Agreement dated December 10, 2004 between Ester Finance Titrisation, asPurchaser, Eurofactor, as Agent, Calyon, as Joint Lead Arranger and as Calculation Agent, NatexisBanques Populairies, as Joint Lead Arranger, Goodyear Dunlop Tires Finance Europe B.V. and theSellers listed therein.

4.1

(j) Master Subordinated Deposit Agreement dated December 10, 2004 between Eurofactor, as Agent,Calyon, as Calculation Agent, Ester Finance Titrisation, as Purchaser, and Goodyear Dunlop TiresFinance Europe B.V.

4.2

(k) Master Complementary Deposit Agreement dated December 10, 2004 between Eurofactor, as Agent,Calyon, as Calculation Agent, Ester Finance Titrisation, as Purchaser, and Goodyear Dunlop TiresFinance Europe B.V.

4.3

(l) Amended and Restated Term Loan and Revolving Credit Agreement dated as of February 19, 2004among Goodyear, JPMorgan Chase Bank, as Administrative Agent, and the lenders party thereto(incorporated by reference, filed as Exhibit 4.8 to Goodyear’s Annual Report on Form 10-K for the yearended December 31, 2003, File No. 1-1927).

(m) First Amendment dated as of April 16, 2004 to the Amended and Restated Term Loan and RevolvingCredit Agreement dated as of February 19, 2004 among Goodyear, JPMorgan Chase Bank, asAdministrative Agent, and the lenders party thereto (incorporated by reference, filed as Exhibit 4.9 toGoodyear’s Annual Report on Form 10-K for the year ended December 31, 2003, File No. 1-1927).

X-3


(n) Second Amendment dated as of May 27, 2004, to the Amended and Restated Term Loan and RevolvingCredit Agreement dated as of February 19, 2004, among Goodyear, the lenders party thereto, JPMorganChase Bank, as Administrative Agent (incorporated by reference, filed as Exhibit 4.4 to Goodyear’sForm 10-Q for the quarter ended June 30, 2004, File No. 1-1927).

(o) Master Guarantee and Collateral Agreement dated as of March 31, 2003, as Amended and Restated as ofFebruary 20, 2004, among Goodyear, the subsidiaries of Goodyear identified therein, the lenders partythereto and JPMorgan Chase Bank, as Collateral Agent (incorporated by reference, filed as Exhibit 4.10to Goodyear’s Annual Report on Form 10-K for the year ended December 31, 2003, File No. 1-1927).

(p) Indenture dated as of March 12, 2004 among Goodyear, the subsidiary guarantors party thereto andWells Fargo Bank, N.A., as Trustee (incorporated by reference, filed as Exhibit 4.11 to Goodyear’sAnnual Report on Form 10-K for the year ended December 31, 2003, File No. 1-1927).

(q) Note Purchase Agreement dated as of March 12, 2004 among Goodyear, certain subsidiaries ofGoodyear and the investors listed therein (incorporated by reference, filed as Exhibit 4.12 to Goodyear’sAnnual Report on Form 10-K for the year ended December 31, 2003, File No. 1-1927).

(r) Registration Rights Agreement dated as of March 12, 2004 among Goodyear, certain subsidiaries ofGoodyear and the investors listed therein (incorporated by reference, filed as Exhibit 4.13 to Goodyear’sAnnual Report on Form 10-K for the year ended December 31, 2003, File No. 1-1927).

(s) Collateral Agreement dated as of March 12, 2004 among Goodyear, certain subsidiaries of Goodyearand Wilmington Trust Company, as Collateral Agent (incorporated by reference, filed as Exhibit 4.14 toGoodyear’s Annual Report on Form 10-K for the year ended December 31, 2003, File No. 1-1927).

(t) Lien Subordination and Intercreditor Agreement dated as of March 12, 2004 among Goodyear, certainsubsidiaries of Goodyear, JPMorgan Chase Bank and Wilmington Trust Company (incorporated byreference, filed as Exhibit 4.15 to Goodyear’s Annual Report on Form 10-K for the year endedDecember 31, 2003, File No. 1-1927).

(u) Guarantee and Collateral Agreement, dated as of August 17, 2004, among Goodyear, as Borrower, thesubsidiaries of Goodyear identified therein, and JPMorgan Chase Bank, as Collateral Agent(incorporated by reference, filed as Exhibit 4.1 to Goodyear’s Form 10-Q for the quarter endedSeptember 30, 2004, File No. 1-1927).

(v) Deposit-Funded Credit Agreement, dated as of August 17, 2004, among Goodyear, the lenders partythereto, the issuing banks party thereto, JPMorgan Chase Bank, as Administrative Agent, J.P. MorganSecurities Inc., as Joint Lead Arranger and Sole Bookrunner, and BNP Paribas, as Joint Lead Arranger(incorporated by reference, filed as Exhibit 4.2 to Goodyear’s Form 10-Q for the quarter endedSeptember 30, 2004, File No. 1-1927).

(w) Note Purchase Agreement, dated June 28, 2004, among Goodyear and the purchasers listed therein(incorporated by reference, filed as Exhibit 4.3 to Goodyear’s Form 10-Q for the quarter endedSeptember 30, 2004, File No. 1-1927).

(x) Indenture, dated as of July 2, 2004, between Goodyear, as Company, and Wells Fargo Bank, N.A., asTrustee (incorporated by reference, filed as Exhibit 4.4 to Goodyear’s Form 10-Q for the quarter endedSeptember 30, 2004, File No. 1-1927).

(y) Registration Rights Agreement, dated as of July 2, 2004, among Goodyear, Goldman, Sachs & Co.,Deutsche Bank Securities Inc., and J.P. Morgan Securities Inc. (incorporated by reference, filed asExhibit 4.5 to Goodyear’s Form 10-Q for the quarter ended September 30, 2004, File No. 1-1927).

X-4


Information concerning Goodyear’s long-term debt is set forth at Note 11, captioned “FinancingArrangements and Derivative Financial Instruments,” at the sub-caption “Long Term Debt andFinancing Arrangements,” in the Financial Statements set forth at Item 8 of this Annual Report and isincorporated herein by reference. In accordance with Item 601(b)(4)(iii) of Regulation S-K, agreementsand instruments defining the rights of holders of long-term debt of the Company pursuant to which theamount of securities authorized thereunder does not exceed 10% of the consolidated assets of theCompany and its subsidiaries are not filed herewith. The Company hereby agrees to furnish a copy ofany such agreement or instrument to the Securities and Exchange Commission upon request.

10 Material Contracts(a)* 2002 Performance Plan of the Company (incorporated by reference, filed as Exhibit 10.1 to the

Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, File No. 1-1927).(b)* 1997 Performance Incentive Plan of the Company (incorporated by reference, filed as Exhibit 10.1 to

the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1997, File No. 1-1927).(c)* 1989 Goodyear Performance and Equity Incentive Plan (incorporated by reference, filed as Exhibit A to

the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1989, File No. 1-1927).(d)* Performance Recognition Plan of the Company adopted effective January 1, 2001 (incorporated by

reference, filed as Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the year endedDecember 31, 2000, File No. 1-1927).

(e)* Goodyear Supplementary Pension Plan, as restated and amended December 3, 2001 (incorporated byreference, filed as Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the year endedDecember 31, 2001, File No. 1-1927).

(f)* Goodyear Employee Severance Plan, as adopted on February 14, 1989 (incorporated by reference, filedas Exhibit A-II to the Company’s Annual Report on Form 10-K for the year ended December 31, 1988,File No. 1-1927).

(g)* The Goodyear Tire & Rubber Company Stock Option Plan for Hourly Bargaining Unit Employees atDesignated Locations, as amended December 4, 2001 (incorporated by reference, filed as Exhibit 10.2to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001, File No. 1-1927).

(h)* The Goodyear Tire & Rubber Company Deferred Compensation Plan for Executives, amended andrestated as of January 1, 2002 (incorporated by reference, filed as Exhibit 10.3 to the Company’s AnnualReport on Form 10-K for the year ended December 31, 2001, File No. 1-1927).

(i)* First Amendment to The Goodyear Tire & Rubber Company Deferred Compensation Plan forExecutives effective as of December 3, 2002 (incorporated by reference, filed as Exhibit 10.1 to theCompany’s Annual Report on Form 10-K for the year ended December 31, 2002, File No. 1-1927).

(j)* 1994 Restricted Stock Award Plan for Non-Employee Directors of the Company, as adopted effectiveJune 1, 1994 (incorporated by reference, filed as Exhibit B to the Company’s Quarterly Report onForm 10-Q for the quarter ended June 30, 1994, File No. 1-1927).

(k)* Outside Directors’ Equity Participation Plan, as adopted February 2, 1996 and amended February 3,1998 (incorporated by reference, filed as Exhibit 10.3 to the Company’s Annual Report on Form 10-Kfor the year ended December 31, 1997, File No. 1-1927).

X-5


(l)* Executive Performance Plan of The Goodyear Tire & Rubber Company (incorporated by reference,filed as Exhibit 10.1 to Goodyear’s Annual Report on Form 10-K for the year ended December 31,2003).

(m) Umbrella Agreement, dated as of June 14, 1999, between the Company and Sumitomo RubberIndustries, Ltd. (incorporated by reference, filed as Exhibit 10.1 to the Company’s Quarterly Report onForm 10-Q for the quarter ended June 30, 1999, File No. 1-1927).

(n) Amendment No. 1 to the Umbrella Agreement dated as of January 1, 2003, between the Company andSumitomo Rubber Industries, Ltd. (incorporated by reference, filed as Exhibit 10.2 to the Company’sAnnual Report on Form 10-K for the year ended December 31, 2002).

(o) Amendment No. 2 to the Umbrella Agreement dated as of April 7, 2003, between the Company andSumitomo Rubber Industries, Ltd.

10.1

(p) Agreement dated as of March 3, 2003, between Goodyear and Sumitomo Rubber Industries, Ltd.amending certain provisions of the alliance agreements (incorporated by reference, filed as Exhibit 10.1to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003).

(q) Amendment No. 3 to the Umbrella Agreement dated July 15, 2004, between the Company andSumitomo Rubber Industries, Ltd. (incorporated by reference, filed as Exhibit 10.1 to the Company’sQuarterly Report on Form 10-Q for the quarter ended September 30, 2004, File No. 1-1927).

(r) Joint Venture Agreement for Europe, dated as of June 14, 1999 (and amendment No. 1 dated as ofSeptember 1, 1999), among the Company, Goodyear S.A., a French corporation, Goodyear S.A., aLuxembourg corporation, Goodyear Canada Inc., Sumitomo Rubber Industries, Ltd., and SumitomoRubber Europe B.V. (incorporated by reference, filed as Exhibit 10.1 to the Company’s QuarterlyReport on Form 10-Q for the quarter ended September 30, 1999, File No. 1-1927).

(s) Shareholders Agreement for the Europe JVC, dated as of June 14, 1999, among the Company,Goodyear S.A., a French corporation, Goodyear S.A., a Luxembourg corporation, Goodyear CanadaInc., and Sumitomo Rubber Industries, Ltd. (incorporated by reference, filed as Exhibit 10.2 to theCompany’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, File No. 1-1927).

(t) Amendment No. 1 to the Shareholders Agreement for the Europe JVC, dated April 21, 2000, among theCompany, Goodyear S.A., a French corporation, Goodyear S.A., a Luxembourg corporation, GoodyearCanada Inc. and Sumitomo Rubber Industries, Ltd.

10.2

(u) Amendment No. 2 to the Shareholders Agreement for the Europe JVC dated July 15, 2004, among theCompany, Goodyear S.A., a French corporation, Goodyear S.A., a Luxembourg corporation, GoodyearCanada Inc., and Sumitomo Rubber Industries, Ltd. (incorporated by reference, filed as Exhibit 10.2 tothe Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004, File No. 1-1927).

(v)* Letter agreement dated September 11, 2000, between the Company and Robert J. Keegan (incorporatedby reference, filed as Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2000, File No. 1-1927).

(w)* Supplement and amendment to letter agreement between the Company and Robert J. Keegan datedFebruary 3, 2004 (incorporated by reference, filed as Exhibit 10.2 to Goodyear’s Annual Report onForm 10-K for the year ended December 31, 2003, File No. 1-1927).

(x)* Form of Restricted Stock Purchase Agreement. 10.3

X-6


(y)* Stock Option Grant Agreement dated October 3, 2000, between the Company and Robert J. Keegan(incorporated by reference, filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q forthe quarter ended September 30, 2000, File No. 1-1927).

(z)* Form of Performance Equity Grant Agreement (incorporated by reference, filed as Exhibit 10.3 toGoodyear’s Annual Report on Form 10-K for the year ended December 31, 2003, File No. 1-1927).

(aa)* Copy of Hourly and Salaried Employees Stock Option Plan of the Company as amended September 30,2002 (incorporated by reference, filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002, File No. 1-1927).

(bb)* Forms of Stock Option Grant Agreements for options and SARs, Part I, Agreement for Non-QualifiedStock Options, and Part II, Agreement for Non-Qualified Stock Options with tandem StockAppreciation Rights (incorporated by reference, filed as Exhibit 10.4 to Goodyear’s Annual Report onForm 10-K for the year ended December 31, 2003, File No. 1-1927).

(cc)* Form of Grant Agreement for Executive Performance Plan (incorporated by reference, filed asExhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 28, 2005, File No. 1-1927).

(dd)* Letter Agreement dated July 14, 2004, between the Company and Robert W. Tieken (incorporated byreference, filed as Exhibit 10.1 to Goodyear’s Quarterly Report on Form 10-Q for the quarter endedJune 30, 2004, File No. 1-1927).

(ee)* Schedule of Outside Directors’ Annual Compensation. 10.4(ff)* Schedule of Salary and Bonus for Named Executive Officers. 10.5

12 Statement re Computation of Ratios(a) Statement setting forth the Computation of Ratio of Earnings to Fixed Charges. 12

21 Subsidiaries(a) List of subsidiaries of the Company at December 31, 2004. 21.1

23 Consents of Independent Registered Public Accounting Firms(a) Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm. 23.1(b) Consent of KPMG LLP, independent registered public accounting firm. 23.2

24 Powers of Attorney(a) Powers of Attorney of Officers and Directors signing this report. 24.1

31 302 Certifications(a) Certificate of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.1(b) Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2

32 906 Certifications(a) Certificate of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the

Sarbanes-Oxley Act of 2002.32.1

* Indicates management contract or compensatory plan or arrangement.

EXHIBIT 4.1

GOODYEAR

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GENERAL MASTER PURCHASE AGREEMENT IN RELATION TO THE SECURITISATION OF TRADE RECEIVABLES OF CERTAIN EUROPEAN SUBSIDIARIES OF THE GOODYEAR GROUP

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DATED 10 DECEMBER 2004

BETWEEN

ESTER FINANCE TITRISATION as Purchaser

EUROFACTOR as Agent

CALYON as Joint Lead Arranger and as Calculation Agent

NATEXIS BANQUES POPULAIRES as Joint Lead Arranger

GOODYEAR DUNLOP TIRES FINANCE EUROPE B.V. as Centralising Unit

THE SELLERS listed in Schedule 9

AND

GOODYEAR DUNLOP TIRES GERMANY GMBH

[GIDE LOYRETTE NOUEL LOGO]

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ASSOCIATION D’AVOCATS A LA COUR DE PARIS 26, COURS ALBERT 1ER 75008 PARIS TEL. +33 (0)1 40 75 60 00 FAX +33 (0)1 43 59 37 79 E-MAIL [email protected] WWW.GIDE.COM

TABLE OF CONTENTS

<TABLE><S> <C>ARTICLE 1. Definitions......................................................................................... 6ARTICLE 2. Interpretation...................................................................................... 6ARTICLE 3. Purpose of this Agreement........................................................................... 7ARTICLE 4. Term of this Agreement.............................................................................. 10ARTICLE 5. Conditions precedent to the commencement of this Agreement.......................................... 11ARTICLE 6. Current Account..................................................................................... 12ARTICLE 7. Amount of the Purchaser’s Funding................................................................... 15ARTICLE 8. Subordinated Deposit................................................................................ 18ARTICLE 9. Complementary Deposit............................................................................... 18ARTICLE 10. Fees................................................................................................ 19ARTICLE 11. Representations and warranties...................................................................... 20ARTICLE 12. General covenants................................................................................... 23ARTICLE 13. Early amortisation.................................................................................. 35ARTICLE 14. Taxes............................................................................................... 41ARTICLE 15. Changes in circumstances............................................................................ 43ARTICLE 16. Order of priority during the Amortisation Period.................................................... 44ARTICLE 17. Payments............................................................................................ 46ARTICLE 18. Conditions in relation to any purchase of Purchasable Receivables................................... 48ARTICLE 19. Conformity warranties for Purchasable Receivables................................................... 49ARTICLE 20. Identification of the contractual documentation for the Sold Receivables - Access to documents...... 50ARTICLE 21. Collection of Sold Receivables...................................................................... 51ARTICLE 22. Assessment Report and Back-Up Servicer Report....................................................... 56ARTICLE 23. Application of payments and payments of collections................................................. 56ARTICLE 24. Renegotiation....................................................................................... 57ARTICLE 25. Representation mandate.............................................................................. 58ARTICLE 26. Obligations of care................................................................................. 59ARTICLE 27. Commission for and costs of collection.............................................................. 59ARTICLE 28. Deemed Collections.................................................................................. 61ARTICLE 29. Fees and expenses................................................................................... 63ARTICLE 30. Substitution and agency............................................................................. 63ARTICLE 31. Confidentiality..................................................................................... 64</TABLE>

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<TABLE><S> <C>ARTICLE 32. Notices............................................................................................. 65ARTICLE 33. Exercise of rights - Recourse - No petition......................................................... 65ARTICLE 34. Transferability of this Agreement................................................................... 66ARTICLE 35. Amendment to the Transaction Documents.............................................................. 66ARTICLE 36. Indemnities......................................................................................... 67ARTICLE 37. Indivisibility...................................................................................... 69ARTICLE 38. Execution and Evidence.............................................................................. 69ARTICLE 39. Withdrawal of Sellers............................................................................... 69ARTICLE 40. Governing Law - Jurisdiction........................................................................ 70</TABLE>

<TABLE><S> <C>SCHEDULE 1. MASTER DEFINITIONS SCHEDULE........................................................ 74SCHEDULE 2. CONDITIONS PRECEDENT TO THE COMMENCEMENT OF THIS AGREEMENT.........................SCHEDULE 3. FORM OF ASSESSMENT REPORT..........................................................SCHEDULE 4. FORM OF SELLER’S AUDITORS CERTIFICATE..............................................SCHEDULE 5. FORM OF SELLER’S AND CENTRALISING UNIT’S SOLVENCY CERTIFICATE......................SCHEDULE 6. FORM OF THE SELLER’S AND THE CENTRALISING UNIT’S LEGAL COUNSEL OPINION.............SCHEDULE 7. LIST OF ADDRESSEES.................................................................SCHEDULE 8. FORM OF NOTIFICATION OF WITHDRAWAL OF ONE OR MORE SELLER(S)........................SCHEDULE 9. LIST OF SELLERS....................................................................SCHEDULE 10. FORM OF COMFORT LETTER AND PERFORMANCE LETTER......................................SCHEDULE 11. LIST OF CALENDAR DATES OF THE TRANSACTION..........................................SCHEDULE 12. REPORTING DOCUMENT RELATING TO THE SOLD RECEIVABLES (ARTICLE 12.3.3)...............SCHEDULE 13. CONFORMITY WARRANTIES FOR PURCHASABLE RECEIVABLES..................................SCHEDULE 14. LIST OF EXCLUDED DEBTORS...........................................................SCHEDULE 15. FORM OF CALCULATION LETTER.........................................................SCHEDULE 16. FINANCIAL CONVENANTS DEFINITIONS................................................... 102SCHEDULE 17. FORM OF LETTER IN RELATION TO THE LIMITATION OF RECOURSE OF CREDITORS OF ESTER FINANCE TITRISATION REGARDING THE GOODYEAR SECURITSATION TRANSACTION...............</TABLE>

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BETWEEN

1. ESTER FINANCE TITRISATION, a company incorporated under French law andauthorised as a credit institution (etablissement de credit), having itsregistered office at 19 Boulevard des Italiens, 75 002 Paris, France, registeredwith the Trade and Companies Registry of Paris under the number 414 886 226,whose representative is duly authorised for the purpose of this Agreement (the"PURCHASER");

2. EUROFACTOR, a company incorporated under French law and authorised as acredit institution (etablissement de credit), having its registered office atTour d’Asnieres, 4, avenue Laurent Cely, 92608 Asnieres, France, registered withthe Trade and Companies Registry of Nanterre under the number 642 041 560, whoserepresentative is duly authorised for the purpose of this Agreement (the"AGENT");

3. CALYON, a company incorporated under French law and authorised as a creditinstitution (etablissement de credit), having its registered office at 9 quai duPresident Paul Doumer, 92920 Paris La Defense Cedex, France, registered with theTrade and Companies Registry of Nanterre under the number 304 187 701, whoserepresentatives are duly authorised for the purpose of this Agreement ("CALYON","JOINT LEAD ARRANGER" or the "CALCULATION AGENT");

4. NATEXIS BANQUES POPULAIRES, a limited company (societe anonyme) incorporatedunder French law and duly authorised as a credit institution (etablissement decredit), having its registered office at 45, rue Saint Dominique 75007 Paris,France and registered with the Trade and Companies Registry of Paris (Registredu Commerce et des Societes de Paris) under the number 542 044 524, whoserepresentatives are duly authorised for the purpose of this Agreement ("NBP" or"JOINT LEAD ARRANGER");

5. GOODYEAR DUNLOP TIRES FINANCE EUROPE B.V., a company incorporated under Dutchlaw, having its registered office at Deboelelaan 7, 1083 HJ, Amsterdam, TheNetherlands, registered with the Companies Registry of Amsterdam under thenumber 34197964, whose representative is duly authorised for the purpose of thisAgreement (hereafter referred to as the "CENTRALISING UNIT");

6. THE COMPANIES listed in Schedule 9 (each of them as a "SELLER" andcollectively the "SELLERS");

7. GOODYEAR DUNLOP TIRES GERMANY GMBH, a company incorporated under the laws ofthe Federal Republic of Germany, having its registered office at Dunlopstrasse2, 63450 Hanau, Germany, registered with the commercial register of the localcourt in Hanau under number HRB 7163 ("GOODYEAR DUNLOP TIRES GERMANY GMBH").

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WHEREAS:

1. GOODYEAR DUNLOP TIRES France S.A., (the "FRENCH SELLER"), FULDA REIFEN GmbH &Co KG, M-PLUS MULTIMARKENMANAGEMENT GmbH & Co KG, GOODYEAR GmbH & Co KG, DUNLOPGmbH & Co KG (the "GERMAN SELLERS"), GOODYEAR DUNLOP TIRES Italia SPA (the"ITALIAN SELLER") and GOODYEAR DUNLOP TIRES Espana SA (the "SPANISH SELLER") arein the business of manufacturing and/or supplying tyres and activities relatingthereto, and hold receivables over certain customers.

2. In order to provide financing to the Sellers, CALYON has proposed to set up asecuritisation transaction by way of the sale, on an ongoing basis, of tradereceivables resulting from the ordinary business of the Sellers in France,Germany, Italy and Spain (the "SECURITISATION TRANSACTION").

3. Pursuant to the Securitisation Transaction, such trade receivables will bepurchased by the Purchaser from the Sellers twice a month and in accordance withthe receivables purchase agreements governed by the relevant law of thejurisdiction where the relevant Seller is located (the "RECEIVABLES PURCHASEAGREEMENTS").

4. The Purchaser has agreed to acquire certain trade receivables (the"PURCHASABLE RECEIVABLES") held by the Sellers subject to the terms andconditions contained in this Agreement and in the Receivables PurchaseAgreements.

5. The Purchaser shall fund the acquisition of Purchasable Receivables:

(i) partly out of a senior deposit (the "SENIOR DEPOSIT") effected by the Depositor with the Purchaser in accordance with a master senior deposit agreement (the "MASTER SENIOR DEPOSIT AGREEMENT"); and

(ii) partly by way of set-off against any amount due and payable by the Centralising Unit to the Purchaser in connection with (a) a subordinated deposit (the "SUBORDINATED DEPOSIT") to be effected by the Centralising Unit with the Purchaser in accordance with the terms and conditions of a master subordinated deposit agreement (the "MASTER SUBORDINATED DEPOSIT AGREEMENT") and (b) a complementary deposit (the "COMPLEMENTARY DEPOSIT") to be effected by the Centralising Unit with the Purchaser in accordance with the terms and conditions of a master complementary deposit agreement (the "MASTER COMPLEMENTARY DEPOSIT AGREEMENT").

6. The receivable held by the Depositor over the Purchaser in connection withthe repayment of the Senior Deposit shall be assigned to a French fonds communde creances (the "FUND") set up in accordance with Articles L.214-43 to L.214-49of the Monetary and Financial Code (Code monetaire et financier) which shallissue related units to be subscribed by LMA S.A., Elixir Funding Limited and anyother Issuer which participates in the Securitisation Transaction. Each Issuershall fund the subscription of units, by issuing commercial paper (the "NOTES").

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7. The Centralising Unit shall be appointed by the Sellers to act as their agent(mandataire) for the purposes of carrying out certain activities, in accordancewith the provisions of this general master purchase agreement (the "GENERALMASTER PURCHASE AGREEMENT" or the "AGREEMENT").

8. For the purposes of the General Master Purchase Agreement and the relevantReceivables Purchase Agreement, the Purchaser shall appoint the Sellers for therecovery of collections in accordance with a Collection Mandate (the "COLLECTIONMANDATE").

9. Due to the number of Sellers and the different Receivables PurchaseAgreements under which Purchasable Receivables will be purchased by thePurchaser from the Sellers, the parties have agreed to enter into this GeneralMaster Purchase Agreement to set out a Master Definitions Schedule, commonterms, representations and warranties, general covenants and all otherprovisions provided for by this General Master Purchase Agreement that willapply in respect of the Receivables Purchase Agreements.

NOW IT IS HEREBY AGREED AS FOLLOWS:

CHAPTER I - INTERPRETATION

ARTICLE 1. DEFINITIONS

Capitalised terms and expressions used in this Agreement shall have the samemeaning as ascribed to such terms and expressions in the Master DefinitionsSchedule set out in Schedule 1 hereto. The schedules hereto shall form anintegral part of this Agreement.

ARTICLE 2. INTERPRETATION

(i) The titles of the Chapters, the Schedules and the Articles (including theirparagraphs) used herein and the table of contents are for convenience ofreference only, and shall not be used to interpret this Agreement.

(ii) In this Agreement, except if the context calls for another interpretation:

(a) references to "CHAPTERS", "ARTICLES" and "SCHEDULES" shall be construed as references to the chapters, articles and schedules of this Agreement and references to this Agreement include its schedules;

(b) words in the plural shall cover the singular and vice versa;

(c) references to the time of the day shall refer to Paris time, unless otherwise stipulated;

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(d) references to a person shall include its permitted assignees, transferees and successors;

(e) references to a document shall mean such document, as amended, replaced by novation or varied from time to time;

(f) references to a provision of law shall mean such provision as amended or re-enacted.

CHAPTER II - PURPOSE - TERM - CONDITIONS PRECEDENT

ARTICLE 3. PURPOSE OF THIS AGREEMENT

3.1 Pursuant to the terms and conditions of this Agreement, the relevantReceivables Purchase Agreements and, where applicable, the relevant TransferDeeds, the Sellers shall sell Purchasable Receivables to the Purchaser and thePurchaser shall purchase Purchasable Receivables from the Sellers on eachSettlement Date during the Replenishment Period.

3.2 The parties agree that the Purchaser shall fund the acquisition ofPurchasable Receivables as follows:

(i) partly out of a Senior Deposit effected by the Depositor with the Purchaser in accordance with the Master Senior Deposit Agreement, for an amount which shall not exceed the Maximum Amount of the Program, as determined in accordance with Article 7 (Amount of the Purchaser’s Funding);

(ii) partly by way of set-off against any amount due and payable by the Centralising Unit to the Purchaser in connection with (a) a Subordinated Deposit to be effected by the Centralising Unit with the Purchaser in accordance with the provisions of the Master Subordinated Deposit Agreement and (b) a Complementary Deposit to be effected by the Centralising Unit with the Purchaser in accordance with the provisions of the Master Complementary Deposit Agreement, for an amount which shall not exceed the Maximum Amount of the Complementary Deposit.

3.3 The parties hereby acknowledge that the Centralising Unit is acting for thepurposes of this Agreement, in its own name and behalf, but also in the name andon behalf of the Sellers, pursuant to the terms of a mandate (mandat) expresslygranted by each of the Sellers to the Centralising Unit and which theCentralising Unit hereby accepts. By virtue of this mandate, the Sellers appointthe Centralising Unit to act in their name and on their behalf and to performthe following obligations in accordance with the provisions of the TransactionDocuments: (i) receive all Payments due by the Purchaser to the Sellers inrespect of the Sold Receivables, (ii) make any payment due by the Sellers to thePurchaser and the Agent pursuant to the Transaction Documents, such paymentscovering inter alia the amount due in respect of Actual Collections or AdjustedCollections, (iii) enter into the Current Account

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relationship set forth in Article 6, (iv) negotiate with the Purchaser, inparticular upon the occurrence of any of the events set out in Articles 13, 14and 15, (v) deliver to the Purchaser on the Initial Settlement Date and on eachSettlement Date during the Replenishment Period, the Transfer Deeds receivedfrom the Sellers or executed by the Centralising Unit and, on each InformationDate, the List of Purchasable Receivables, (vi) receive or give any notices,mails, or documents provided pursuant to the Transaction Documents, (vii)exercise any rights arising in respect of the Transaction Documents (with theexception of the Master Subordinated Deposit Agreement and the MasterComplementary Deposit Agreement, in respect of which the Centralising Unit actsin its own name and on its own behalf), and (viii) deliver to the Purchaser theAssessment Reports substantially in the form set out in Schedule 3 to thisAgreement.

The Sellers and the Centralising Unit have entered into the IntercompanyArrangements, which provide, among other things, for the allocation of all sumsdue and/or received in connection with the Transaction Documents to which eachSeller and the Centralising Unit is a party. Such Intercompany Arrangementsshall provide inter alia that each Seller has an effective recourse against thedefaulting Seller, the other Sellers and GOODYEAR DUNLOP TIRES EUROPE BV for anypayment that any Seller or the Centralising Unit may be required to make underthe joint and several liability provisions provided for under Article 3.6. TheSellers and the Centralising Unit hereby irrevocably and unconditionallyundertake to refrain from exercising any rights of recourse against thePurchaser, the Agent and/or CALYON in connection with such allocation.

3.4. The parties agree that the Purchaser shall appoint the Sellers to act ascollection agents for the servicing of the Sold Receivables, in accordance withthe provisions of Article 21.

3.5 This Agreement shall apply automatically to any Transfer Deed delivered bythe Centralising Unit, acting in the name and on behalf of a Seller to thePurchaser or any other similar document agreed between a Seller and thePurchaser, pursuant to the relevant Receivables Purchase Agreement.

3.6 Joint and several liability

3.6.1. The parties agree that the obligations of each Seller under thisAgreement shall be several but not joint, and shall be construed as if eachSeller had entered into a separate agreement with the Purchaser.

3.6.2. By way of exception to the foregoing, each Seller, Goodyear Dunlop TiresGermany GmbH and the Centralising Unit shall be jointly and severally liable tothe Purchaser for the payment by a Seller, GOODYEAR DUNLOP TIRES EUROPE BVand/or the Centralising Unit of (i) any sums due under the Transaction Documentsand notably (without limitation) for the transfer of Adjusted Collections on thedue date to the Purchaser, in accordance with the provisions of Article 23, and(ii) any claim for damages against a Seller for breach of its representationsand warranties or for failure to perform its obligations under this Agreementand the other Transaction Documents to which it is a party.

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3.6.3. Notwithstanding any other provision of this Agreement, the parties heretoagree that any claim enforceable under Article 3.6.2 above against any of theGerman Sellers or Goodyear Dunlop Tires Germany GmbH (each a "GERMAN PARTY",together the "GERMAN PARTIES") shall on any date on which payment is requestedpursuant to Article 3.6.2 be limited to the amounts calculated as follows (the"FREE EQUITY AMOUNT"):

(a) in the case of Goodyear Dunlop Tires Germany GmbH, the amount of its Net Assets less its Registered Share Capital as of such date;

(b) in the case of a German Seller, the amount of its respective Net Assets as of such date, provided that such amount shall be reduced to the extent payment thereof would result in the Net Assets of RVM Reifen Vertriebsmanagement GmbH ("RVM") (or any successor general partner of such German Seller) falling short of the Registered Share Capital of RVM as of such date.

For the purpose of this Article 3.6, "NET ASSETS" means, in respect of anyentity as of any date, the result of (a) the sum of the amounts shown under thebalance sheet positions pursuant to Section 266 (2) (A), (B) and (C) of theGerman Commercial Code (Handelsgesetzbuch), with the exception of any loanrepayment claims against any of such entity’s affiliates (other than suchentity’s subsidiaries) (or other, economically equivalent claims, includingrecourse claims against a defaulting Seller under the IntercompanyArrangements), less (b) the sum of the amounts of liabilities shown under thebalance sheet positions pursuant to Section 266 (3) (B), (C) and (D) of theGerman Commercial Code, in each case as determined as of such date; and"REGISTERED SHARE CAPITAL" means, in respect of any entity as of any date, theamount shown under the balance sheet position pursuant to Section 266 (3) (A) Iof the German Commercial Code as determined as of such date.

The calculation of the Free Equity Amount shall be made as of the date of anypayment request pursuant to Article 3.6.2 above.

3.6.4 If, upon a payment request to any German Party under Article 3.6.2 above,such German Party is of the reasonable opinion that the amount requested exceedsthe Free Equity Amount at the time of such request, such German Party shallprovide evidence to the Purchaser that the payment in full of the amountrequested would result:

(a) in the case of Goodyear Dunlop Tires Germany GmbH, in the amount of its Net Assets falling below the amount of its Registered Share Capital;

(b) in the case of the German Sellers, in the amount of the Net Assets of RVM falling below RVM’s Registered Share Capital,

including, without limitation, plausible calculations made by such German Partyand all supporting documents reasonably requested by the Purchaser, and awritten statement from the statutory auditors of Goodyear Dunlop Tires GermanyGmbH (in case of Article 3.6.3 (a)) and RVM (in the case of Article 3.6.3 (b))to the Purchaser to the effect that the amount of the payment requested exceedsthe Free Equity Amount of Goodyear Dunlop Tires Germany GmbH (in case of Article3.6.3 (a)) and/or of RVM (in the case of Article 3.6.3 (b)).

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3.6.5 For the purposes of calculating the Free Equity Amount, loans and othercontractual liabilities incurred in negligent or wilful violation of theprovisions of this Agreement shall be disregarded.

In the event that a payment is requested under Article 3.6.2 above, the relevantGerman Party and/or RVM (in the case of Article 3.6.3 (b)) shall realise, to theextent (i) the Free Equity Amount falls short of the amount so requested, (ii)required to enable the relevant German Party to make the requested payment, and(iii) legally permitted, assets that are shown in the balance sheet with a bookvalue (Buchwert) that is significantly lower than the market value of the assetsat the time of such request if such assets are not necessary for the business ofsuch German Party and/or RVM (in the case of Article 3.6.3 (b))(betriebsnotwendig).

3.6.6 None of the above restrictions on enforcement shall apply if and to theextent such enforcement relates to any obligations of the German Parties otherthan under Article 3.6.2.

3.6.7. The parties expressly agree that the Sellers and the Centralising Unitshall not have any responsibility for any non payment by any Debtor of any sumsdue in respect of the Sold Receivables, except to the extent that the Purchasermay exercise recourse for such non payment against the Subordinated Deposit and,as the case may be, the Complementary Deposit, as provided herein and, for theavoidance of any doubt, to the extent of any Deemed Collections in accordancewith the provisions of Article 28.

ARTICLE 4. TERM OF THIS AGREEMENT

4.1 This Agreement shall commence on the date hereof and end on the ProgramExpiry Date. For the purposes of this Agreement and the Receivables PurchaseAgreements, the parties agree that there shall be two periods:

(i) the Replenishment Period, which commences on the date hereof and ends on the Commitment Expiry Date (excluded); and

(ii) the Amortisation Period, which commences on the Commitment Expiry Date and ends on the Program Expiry Date.

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4.2 The parties expressly agree that, in the event that there are any SoldReceivables outstanding on the Program Expiry Date:

(a) until such time as (i) any sums due under the Master Senior DepositAgreement have been paid, or (ii) the Centralising Unit, acting in the name andon behalf of the Sellers, has repurchased all such Sold Receivables from thePurchaser:

(i) the Centralising Unit shall make a payment to the Purchaser for an amount equal to any collections actually received by the Sellers arising in relation to those Sold Receivables which are outstanding; and

(ii) the Conformity Warranties set out in Article 19 (Conformity Warranties for Purchasable Receivables) and the relevant Seller’s covenants in relation to the Sold Receivables as set out in Articles 12 (General Covenants), 16 (Order of Priority during the Amortisation Period), 21 (Collection of Sold Receivables), 23 (Application of Payments and Payments of collections), 24 (Renegotiation), and 25 (Representation Mandate) shall remain in force ;

(b) thereafter, up to an amount equal to any portion of the ComplementaryDeposit and/or the Subordinated Deposit that was not reimbursed on the ProgramExpiry Date plus any Deferred Purchase Price that remained outstanding on suchdate, any Adjusted Collections shall be refunded to the Centralising Unit.

In any event, the parties expressly agree that, even after the Program ExpiryDate, the provisions set out in Articles 14 (Taxes), 15 (Changes inCircumstances), 29 (Fees and expenses), 31 (Confidentiality), 33 (Exercise ofRights - Recourse- Non Petition), 36 (Indemnities), 40 (Governing law -Jurisdiction) shall remain in force.

4.3. The Centralising Unit, acting in the name and on behalf of the Sellers,may, upon written notice given to the Purchaser at least nine (9) Business Daysbefore a Funded Settlement Date during the Amortisation Period or at any timeafter the Program Expiry Date, offer to repurchase all outstanding SoldReceivables from the Purchaser, at a price equal to the nominal value of suchSold Receivables or such other price as the parties may agree. Such purchaseprice shall be applied towards the payments and in the order specified inArticle 16 and, to the extent applicable, shall be set off against any amountsdue to the Centralising Unit in accordance with said Article 16.

ARTICLE 5. CONDITIONS PRECEDENT TO THE COMMENCEMENT OF THIS AGREEMENT

This Agreement shall not take effect unless and until the Purchaser hasreceived, on the date hereof, all the documents referred to in Schedule 2, andhas determined that the same are satisfactory as to form and substance.

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CHAPTER III - CURRENT ACCOUNT - DEPOSITS

ARTICLE 6. CURRENT ACCOUNT

6.1 Current Account agreement

6.1.1 The Purchaser and the Centralising Unit hereby agree to enter into acurrent account relationship (relation de compte courant) (the "CURRENTACCOUNT").

6.1.2 Any sum due either by (i) the Purchaser to the Centralising Unit, actingin its own name or in the name of the Sellers pursuant to the TransactionDocuments and/or by (ii) the Sellers or the Centralising Unit, acting in its ownname or in the name of the Sellers, to the Purchaser pursuant to the TransactionDocuments shall be recorded respectively as credit or debit on the CurrentAccount. Any mutual debit or credit that does not arise from the TransactionDocuments shall be excluded from the Current Account.

6.2 Automatic Set-off

The parties hereby agree that any debit and credit recorded on the CurrentAccount shall be automatically set-off (compenses).

6.3 Balance

6.3.1 On each Calculation Date, the Agent shall calculate the balance of theCurrent Account, in accordance with the provisions of Article 12.3.1., on thebasis of information it has received pursuant to such Article 12.3.1., and shallforthwith provide the Centralising Unit and the Purchaser with such calculation.

6.3.2 In the case of a debit balance of the Current Account on a CalculationDate, as stated in the Current Account statement communicated in accordance withthe provisions of Article 6.3.1., the Centralising Unit shall pay to thePurchaser’s Account in immediately available funds an amount equal to such debitbalance, on the Funded Settlement Date or on the Intermediary Settlement Date inrelation to which the Current Account statement is drawn up, in accordance withthe provisions of Article 17.5.

6.3.3 In the case of a credit balance of the Current Account on a CalculationDate, as stated in the Current Account statement communicated in accordance withthe provisions of Article 6.3.1., the Purchaser shall pay to the CentralisingUnit’s Account in immediately available funds an amount equal to such creditbalance on the Funded Settlement Date or on the Intermediary Settlement Date inrelation to which the Current Account statement has been drawn up, in accordancewith the provisions of Article 17.5.

6.3.4. Once the payment referred to in Article 6.3.2. or in Article 6.3.3. hasbeen made, the Current Account shall be balanced at zero (0).

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6.4 Entry on Current Account

6.4.1 On the Initial Settlement Date, the Purchaser shall record:

(i) on the debit of the Current Account, an amount equal to the Subordinated Deposit calculated as of the Initial Settlement Date in accordance with Article 8 (Subordinated Deposit);

(ii) on the debit of the Current Account, an amount equal to the Complementary Deposit calculated as of the Initial Settlement Date in accordance with Article 9 (Complementary Deposit);

(iii) on the debit of the Current Account, the amount of the Adjusted Collections calculated in respect of such Initial Settlement Date; and

(iv) on the credit of the Current Account an amount equal to the Initial Purchase Price of the Purchasable Receivables sold on the Initial Settlement Date within the limits provided for by Article 12.3.1.

6.4.2 On each Intermediary Settlement Date during the Replenishment Period, the Purchaser shall enter:

(i) on the debit of the Current Account,

(a) an amount equal to any Increase in the Subordinated Deposit on such date,

(b) an amount equal to any Increase in the Complementary Deposit on such date,

(c) the amount of the Adjusted Collections calculated in respect of such date,

(d) the amount of any payment due with respect to the repurchase of Doubtful Receivables on such date, and

(e) any other sums due by the Centralising Unit acting on its own behalf or on behalf of the Sellers, to the Purchaser pursuant to the Transaction Documents, and not paid otherwise.

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(ii) on the credit of the Current Account,

(a) an amount equal to the Initial Purchase Price of the Purchasable Receivables purchased on such date within the limits set out in Article 12.3.1,

(b) an amount equal to any Reduction of the Subordinated Deposit on such date,

(c) an amount equal to any Reduction of the Complementary Deposit on such date, and

(d) any other sums due by the Purchaser to the Centralising Unit acting on its own behalf or on behalf of the Sellers pursuant to the Transaction Documents, and not paid otherwise.

6.4.3 On each Funded Settlement Date during the Replenishment Period, thePurchaser shall enter:

(i) on the debit of the Current Account,

(a) an amount equal to any Increase in the Subordinated Deposit on such date,

(b) an amount equal to any Increase in the Complementary Deposit on such date,

(c) the amount of the Adjusted Collections calculated in respect of such date,

(d) the amount of any payment due with respect to the repurchase of Doubtful Receivables on such date, and

(e) any other sums due by the Centralising Unit acting on its own behalf or on behalf of the Sellers, to the Purchaser pursuant to the Transaction Documents, and not paid otherwise.

(ii) on the credit of the Current Account,

(a) an amount equal to the Initial Purchase Price of the Sold Receivables purchased on such date within the limits set out in Article 12.3.1,

(b) an amount equal to any Deferred Purchase Price payable on such date,

(c) an amount equal to any Reduction of the Subordinated Deposit on such date;

(d) an amount equal to any Reduction of the Complementary Deposit on such date, and

(e) any other sums due by the Purchaser to the Centralising Unit acting on its own behalf or on behalf of the Sellers pursuant to the Transaction Documents, and not paid otherwise.

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The parties hereby agree that all entries on the Current Account are calculated,for any Settlement Date during the Replenishment Period, on the Calculation Datepreceding such Settlement Date, and that, once entered in the Current Account,such entries shall constitute payments for the purposes of the TransactionDocuments.

6.5. Termination of the Current Account

The current account relationship shall terminate, and the Current Account shallbe closed, on the Commitment Expiry Date.

ARTICLE 7. AMOUNT OF THE PURCHASER’S FUNDING

7.1 Maximum Amount of the Purchaser’s Funding

7.1.1. The Purchaser shall fund Payments (the "PURCHASER’S FUNDING") out of aSenior Deposit, up to a maximum amount (the "MAXIMUM AMOUNT OF THE PURCHASER’SFUNDING") equal to the Maximum Amount of the Program.

The Senior Deposit shall create an indebtedness of the Purchaser to theDepositor in relation to the repayment of such Senior Deposit.

7.1.2. At any time before the Commitment Expiry Date, the Centralising Unit,acting in the name and on behalf of the Sellers, shall have the right to requesta partial reduction of the Maximum Amount of the Program, subject to thirty (30)Business Days prior written notice (or such shorter notice as may be agreed bythe parties) to the Purchaser and as from the date of receipt of such notice bythe Purchaser; provided that, if the Maximum Amount of the Program is reduced tobelow the Minimum Amount of the Program, the Commitment Expiry Date shall bedeemed to have occurred on the effective date of such intended reduction.

Such reduction of the Maximum Amount of the Program shall take effect on thefirst Funded Settlement Date during the Replenishment Period after the noticeperiod referred to in the paragraph above and shall be definitive andirrevocable until the following anniversary date of this Agreement falling aftersuch reduction. On such anniversary date, the Centralising Unit, acting in thename and on behalf of the Sellers, shall have the right to request either adecrease or an increase of the Maximum Amount of the Program, provided that anysuch increase shall be limited to an amount equal to the aggregate amount of allreductions made since the preceding anniversary date of this Agreement pursuantto the preceding paragraph. The Purchaser shall not accept any request toincrease the Maximum Amount of the Program without the prior written consent ofthe Liquidity Banks and the Issuers.

7.1.3. In the event that any Liquidity Agreement is not renewed as a result of aLiquidity Commitment Non Renewal, the Maximum Amount of the Program shall bepartially and automatically reduced by an amount equal to the commitment of therelevant Liquidity Bank.

Such reduction of the Maximum Amount of the Program shall take effect on theFunded Settlement Date following the date upon which an event described abovehas occurred and shall be definitive and irrevocable.

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7.1.4. In the event the Maximum Amount of the Program is reduced in accordancewith the provisions of Articles 7.1.2. or 7.1.3. above, the Maximum Amount ofthe Purchaser’s Funding shall be reduced so that the Maximum Amount of thePurchaser’s Funding is equal to the reduced Maximum Amount of the Program.

7.2 Amount of the Purchaser’s Funding on the Initial Settlement Date

On the Initial Settlement Date, the amount of the Purchaser’s Funding shall beequal to

(i) the lower of the following amounts:

(a) the Outstanding Amount of Eligible Receivables to be purchased by the Purchaser on such date, multiplied by the excess of:

- one (1) less;

- the sum of the Overcollateralisation Rate and the Discount Rate; and

(b) the Maximum Amount of the Purchaser’s Funding;

(ii) less the amount of the Excess Foreseen Collections for such Initial Settlement Date,

rounded down to the nearest whole multiple of EUR 1,800.

7.3 Change in the Purchaser’s Funding

On each Funded Settlement Date during the Replenishment Period other than theInitial Settlement Date, the Purchaser’s Funding shall be adjusted as follows:

(a) if:


x) the Outstanding Amount of Eligible Receivables already purchased and to be purchased by the Purchaser on such date, multiplied by the excess of:

- one (1) less;


(y) the Maximum Amount of the Purchaser’s Funding;

less, except if any Early Amortisation Event defined in the Article 13.3. has occurred before the Assessment Date for such Settlement Date, the amount of the Excess Foreseen Collections for such Settlement Date,

rounded down to the nearest whole multiple of EUR 1,800;

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exceeds

(ii) the amount of the Purchaser’s Funding outstanding on the preceding Funded Settlement Date;

then the Purchaser’s Funding shall be increased by an amount equal to such excess (the "INCREASE IN THE PURCHASER’S FUNDING"); and

(b) if:


(x) the Outstanding Amount of Eligible Receivables already purchased and to be purchased by the Purchaser on such date, multiplied by the excess of:

- one (1) less;


(y) the Maximum Amount of the Purchaser’s Funding;

less, except if any Early Amortisation Event defined in the Article 13.3. has occurred before the Assessment Date for such Settlement Date, the amount of the Excess Foreseen Collections for such Settlement Date,

rounded down to the nearest whole multiple of EUR 1,800;

is lower than

(ii) the amount of the Purchaser’s Funding outstanding on the preceding Funded Settlement Date;

then the Purchaser’s Funding shall be reduced by the amount of such difference (the "REDUCTION IN THE PURCHASER’S FUNDING").

7.4 Amount of the Purchaser’s Funding in the event of a Potential Early Amortisation Event

In the event that a Potential Early Amortisation Event occurs, and as long assuch Potential Early Amortisation Event is continuing, the amount of thePurchaser’s Funding shall be limited to the amount of the Purchaser’s Funding onthe Funded Settlement Date before such Potential Early Amortisation Event hasoccurred.

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ARTICLE 8. SUBORDINATED DEPOSIT

Pursuant to the terms of a Master Subordinated Deposit Agreement entered intobetween the Centralising Unit and the Purchaser on the date hereof, theCentralising Unit shall make a Subordinated Deposit with the Purchaser. The mainprovisions of the Master Subordinated Deposit Agreement are as follows:

8.1 Subordinated Deposit

On the Initial Settlement Date and on each following Settlement Date during theReplenishment Period, the amount of the Subordinated Deposit shall be calculatedby the Agent in accordance with the provisions of schedules 1 and 2 of theMaster Subordinated Deposit Agreement.

The Agent shall calculate the amount of the Subordinated Deposit on eachCalculation Date.

On any Calculation Date, during the Replenishment Period, the Agent shallcalculate the difference between (i) the amount of the Subordinated Deposit tobe made on such Settlement Date, and (ii) the amount of the Subordinated Depositmade on the preceding Settlement Date.

8.2 Pledge of the Subordinated Deposit

The Subordinated Deposit shall be pledged as cash collateral (affecte a titre degage-especes) by the Centralising Unit in favour of the Purchaser, to secure thepayment of (i) any sum due by the Debtors to the Purchaser in respect of theSold Receivables and (ii) any sum due to the Purchaser by any Seller or theCentralising Unit pursuant to the Transaction Documents.

8.3 Repayment of the Subordinated Deposit

The repayment of the Subordinated Deposit shall be carried out in accordancewith the terms and conditions set forth in the Master Subordinated DepositAgreement and Article 16 (Order of Priority during the Amortisation Period).

ARTICLE 9. COMPLEMENTARY DEPOSIT

Pursuant to the terms of a Master Complementary Deposit Agreement entered intobetween the Centralising Unit and the Purchaser on the date hereof, theCentralising Unit shall make a Complementary Deposit with the Purchaser. Themain provisions of the Master Complementary Deposit Agreement are as follows:

9.1 Complementary Deposit

The Centralising Unit shall make a Complementary Deposit with the Purchaser inaccordance with the terms and conditions of the Master Complementary DepositAgreement.

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On the Initial Settlement Date and on each following Settlement Date during theReplenishment Period, the amount of the Complementary Deposit shall becalculated by the Agent in accordance with the provisions of schedule 1 of theMaster Complementary Deposit Agreement.

9.2 Pledge of the Complementary Deposit

The Complementary Deposit shall be pledged as cash collateral (affecte a titrede gage-especes) by the Centralising Unit in favour of the Purchaser, to securethe payment of (i) any sum due by the Debtors to the Purchaser in respect of theSold Receivables and (ii) any sum due to the Purchaser by any Seller or theCentralising Unit pursuant to the Transaction Documents, provided that no partyshall be entitled to receive, as a result of such pledge, any amounts inaddition to those that it is entitled to receive pursuant to Article 16.

9.3 Repayment of the Complementary Deposit

The repayment of the Complementary Deposit shall be carried out in accordancewith the terms and conditions set forth in the Master Complementary DepositAgreement and Article 16 (Order of Priority during the Amortisation Period)hereunder.

CHAPTER IV - FEES

ARTICLE 10. FEES

10.1 On each Funded Settlement Date (except the Initial Settlement Date), theCentralising Unit shall pay to the Agent, the Management Fee which is due tocompensate the Agent for its services under this Agreement.

10.2 Such Management Fee shall be equal to EUR 20,900 per month (V.A.T.excluded), increased by the applicable V.A.T ; provided that if theSecuritisation Transaction is terminated by the Centralising Unit during thefirst two years of the Securitisation Transaction (other than a terminationafter there has been an Early Amortisation Event or a drawing under a LiquidityAgreement or a Liquidity Bank Letter), then the minimum amount of the ManagementFee for the year in which the Securitisation Transaction is terminated shall beequal to EUR 250,000 (V.A.T. excluded), increased by the applicable V.A.T. Asfrom the beginning of the third year until the fifth year of the SecuritisationTransaction, in the event that the Centralising Unit decides to terminate theSecuritisation Transaction and repurchases the Sold Receivables upon suchtermination (other than a termination after there has been an Early AmortisationEvent or a drawing under a Liquidity Agreement or an Liquidity Bank Letter) anddoes not inform the Agent at the latest three months beforehand, theCentralising Unit undertakes to pay an amount upon such termination equal to thelesser of (i) the Management Fee for three months (EUR 62,700) (VAT excluded),increased by the applicable V.A.T, from the date on which the notice oftermination is delivered minus any Management Fee otherwise paid after notice oftermination is delivered and (ii) the Management Fee for the period from suchtermination until the expiration date of the Liquidity Agreements.

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10.3 The Agent shall notify the amount of the Management Fee to the CentralisingUnit, at the latest before 5.00 pm on the Calculation Date immediately precedingany Funded Settlement Date.

10.4 On each Funded Settlement Date, the Centralising Unit shall pay theManagement Fee by crediting the Agent’s Account before 12.00 (noon), for anamount equal to the Management Fee, as determined in accordance with 10.2. Theparties acknowledge that the payment of such Management Fee by the CentralisingUnit to the Agent shall be expressly excluded from the Current Accountmechanism.

10.5 In the event that the Centralising Unit fails to pay such Management Fee ona Funded Settlement Date, the Purchaser shall proceed forthwith with the paymentof such Management Fee, on the Centralising Unit’s behalf to the extent of theAdjusted Collections received. As such, the Purchaser shall be, upon delivery ofa subrogation notice by the Agent, subrogated in the rights of the Agent againstthe Centralising Unit to the extent of the sums paid to the Agent in respect ofthe Management Fee.

CHAPTER V - REPRESENTATIONS AND WARRANTIES - GENERAL COVENANTS

ARTICLE 11. REPRESENTATIONS AND WARRANTIES

11.1 Each Seller, Goodyear Dunlop Tires Germany GmbH and the Centralising Unitrepresents and warrants to the Purchaser at the date hereof as follows:

(i) - in the case of the French Seller, it is a limited company (societe anonyme) duly incorporated and validly existing under French law, or

- in the case of the German Sellers, it is a limited partnership (Gesellschaft mit beschrankter Haftung & Co Kommanditgesellschaft) or (in the case of Goodyear Dunlop Tires Germany GmbH) a limited liability company (Gesellschaft mit beschrankter Haftung), duly established and validly existing under German law, or

- in the case of the Italian Seller, it is a joint stock company (societa per azioni) duly incorporated and validly existing under Italian law, or

- in the case of the Spanish Seller, it is a corporation (sociedad anonima) duly incorporated and validly existing under Spanish law, or

- in the case of the Centralising Unit, it is a limited liability company duly incorporated and validly existing under Dutch law ;

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(ii) it has the capacity (a) to carry on its business, as currently conducted, and to own all of the assets appearing on its balance sheet, except where failure of such capacity would not be reasonably likely to result in a Material Adverse Effect, and (b) to enter into and perform its obligations under the Transaction Documents to which it is a party;

(iii) it does not require any power or authorisation to execute the Transaction Documents to which it is a party or to perform its obligations under the Transaction Documents, that it has not already obtained, unless, in the case of any Governmental Authorisation, the failure to obtain such authorisation would not be reasonably likely to result in a Material Adverse Effect;

(iv) - except to the extent that no Material Adverse Effect would be reasonably likely to result, the execution of the Transaction Documents to which it is a party and the performance of its obligations under the Transaction Documents will not contravene (a) any of the provisions of its articles of association or of any other of its constitutional or organisational documents, (b) any laws or regulations applicable to it, or (c) any contractual obligations, negative pledges, agreements or undertakings to which it is a party or by which it is bound;

- the execution of the Transaction Documents to which it is a party and the performance of its obligations under the Transaction Documents will not contravene (x) if such concept is applicable in the relevant jurisdiction, the corporate interest (interet social) of the Centralising Unit or the relevant Seller and (y) in the case of each of the German Parties, Section 30 and seq. of the German Limited Liability Companies Act (Gesetz betreffend die Gesellschaften mit beschrankter Haftung);

(v) the Transaction Documents to which it is a party constitute its legal, valid and binding obligations and are enforceable against it in accordance with their terms, subject to applicable bankruptcy, insolvency, moratorium and other laws affecting creditors’ right generally;

(vi) all of the documents that it has provided to the Purchaser pursuant to the Transaction Documents are accurate and correct in all material respects as of their respective dates and as of the date of their delivery, and the audited, certified annual accounts were prepared in accordance with the relevant Accounting Principles and give, in all material respects, a true, accurate and fair view (comptes reguliers, sinceres et qui donnent une image fidele) of its results for the relevant fiscal year;

(vii) it carries on its business in compliance with all of the relevant laws and regulations applicable to it, except where failure to do so would not be reasonably likely to have a Material Adverse Effect;

(viii) there are no actions, suits or proceedings pending or, to its knowledge, threatened to be raised or brought against it, which are reasonably likely to result in a Material Adverse Effect, or any material litigation that challenges or seeks to prevent the Securitisation Transaction;

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(ix) except as specifically disclosed in writing to the Purchaser before the date hereof, no event has occurred since the closing date of its last fiscal year that is reasonably likely to adversely and materially affect, impede or prohibit the execution or the performance of its obligations under the Transaction Documents to which it is a party or that is otherwise reasonably likely to have a Material Adverse Affect;

(x) no Early Amortisation Event of the type described in Article 13.3. has occurred and is continuing;

(xi) GOODYEAR DUNLOP TIRES EUROPE BV holds directly or indirectly 100% in the Centralising Unit’s share capital and voting rights and more than 50% in each Seller’s share capital and voting rights and as such exercises effective control over the Centralising Unit and the Sellers within the meaning of Article L.511-7.3 of the French Monetary and Financial Code (Code monetaire et financier);

(xii) it has received on the date hereof a certified true copy or final drafts of the Transaction Documents to be executed on the date hereof and has full knowledge of the same;

(xiii) it has carried out its own legal, tax and accounting analysis as to the consequences of the execution and performance of its obligations under the Transaction Documents, and agrees that the Purchaser, the Joint Lead Arrangers, the Issuers and the Liquidity Banks shall have no liability to any of the Sellers or the Centralising Unit in that respect;

(xiv) it has entered into intercompany arrangements with the Centralising Unit and the other Sellers, pursuant to which it has undertaken (a) to reimburse the Centralising Unit for certain fees, including any amount paid on its behalf and any losses arising under the Transaction Documents, (b) to pay the Centralising Unit a direct and sufficient consideration for the making of the Subordinated Deposit and the Complementary Deposit and compensate the Centralising Unit as is appropriate in respect of all losses incurred by the latter arising from the making of the Subordinated Deposit and the Complementary Deposit, and (c) to ensure that fees and expenses or any other sums due by the Sellers under the Transaction Documents are allocated among the Sellers in accordance with their respective corporate interest, if such concept is applicable in the relevant jurisdiction (the "INTERCOMPANY ARRANGEMENTS");

(xv) it has entered into intercompany arrangements which shall, inter alia, (a) if complied with, ensure due compliance of each of the German Sellers, Goodyear Dunlop Tires Germany GmbH and GOODYEAR DUNLOP TIRES EUROPE BV, GOODYEAR and/or any other shareholder or affiliate of the German Sellers with the relevant applicable corporate capital maintenance provisions, including, without limitation, Section 30 of the German Limited Liability Companies Act (Gesetz betreffend die Gesellschaften mit beschrankter Haftung), and (b) ensure that none of the German Sellers supports, directly or indirectly, the uncollectability of any Sold Receivables purchased by the Purchaser from any other German Seller without any required consideration therefor;

(xvi) no Lien has been created or exists (other than any Liens contemplated by the Transaction Documents) (a) in relation to any Sold Receivables (and related rights) assigned by it prior to their respective assignment to the Purchaser or in respect of the

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Collection Accounts, with the exception of those Liens which arise by operation of applicable laws and regulations, or (b) over the Subordinated Deposit and/or the Complementary Deposit;

(xvii) its obligations under the Transaction Documents rank and will rank at least pari passu with all other present and future unsecured and unsubordinated obligations (with the exception of those preferred by law generally);

(xviii) it is not entitled to claim immunity from suit, execution, attachment or other legal process in any proceeding taken in the jurisdiction of its incorporation in relation to any Transaction Documents;

(xix) it is not subject to Insolvency Proceedings and is not insolvent within the meaning of applicable laws;

(xx) in the case of each German Seller, (a) such German Seller has, to the extent permissible, opted for payment on a monthly basis of self-assessed or assessed VAT, (b) such German Seller having applied for a permanent extension for the filing of monthly returns (Dauerfristverlangerung) has posted a special advance estimated tax payment to the relevant tax office and (c) any such self-assessed or assessed VAT owed by such German Seller in accordance with applicable German VAT laws and regulations, has been paid to the relevant German tax administration when due; and

(xxi) in the case of each German Seller, there is no dispute, action, suit or proceeding pending or, to its knowledge, threatened to be raised or brought against it, except for disputes, actions, suits or proceedings that such German Seller disputes in good faith, by any German tax administration in relation to any VAT tax payment or the calculation of such VAT.

11.2 The above representations and warranties shall be deemed to be repeatedby each Seller and the Centralising Unit, as applicable, on each Settlement Dateduring the Replenishment Period upon the issue or, as the case may be, theexecution of any Transfer Deed. Such representations and warranties shall remainin force until the Program Expiry Date.

ARTICLE 12. GENERAL COVENANTS

The following general covenants shall remain in force from the date hereof untilthe Program Expiry Date.

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12.1 Sellers

12.1.1 Affirmative covenants:

Each Seller undertakes:

(i) to provide the Purchaser without undue delay, on a non consolidated basis, with:

(a) its annual accounts (balance sheet, profit and loss accounts and annexes), as published and certified by its statutory auditors, the report of the board of directors and statutory auditors relating thereto and an extract of the minutes of the shareholders’ annual general meeting approving the said accounts, no later than forty-five (45) calendar days following the holding of its shareholders’ annual general meeting;

(b) all published interim financial information ;

(c) all other information, reports or statements as the Purchaser may at any time reasonably request in so far as is permitted by applicable laws and regulations, and depending on the type of information requested, in accordance with the different procedures applicable to the communication of information under this Agreement;

(ii) to request promptly any authorisation as may become necessary for the performance of its obligations under this Agreement;

(iii) to do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business, except to the extent that failures to keep in effect such rights, licenses, permits, privileges and franchises would not be reasonably likely to result in a Material Adverse Effect;

(iv) upon knowledge by the relevant Seller that (a) an Early Amortisation Event defined in Article 13.3 has occurred, to notify or cause to be notified forthwith the Purchaser and provide a copy of the same to the Joint Lead Arrangers and (b) a Potential Early Amortisation Event has occurred, to notify or cause to be notified forthwith the Purchaser and provide a copy of the same to the Joint Lead Arrangers and, where applicable, of actions which the Seller has taken and/or proposes to take with respect thereto in order to prevent such Potential Early Amortisation Event from becoming an Early Amortisation Event;

(v) to carry on its business in all material aspects in accordance with all applicable laws and regulations, except where failure to do so would not be reasonably likely to have a Material Adverse Effect;

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(vi) upon the Purchaser’s request, which shall be subject to a reasonable prior notice, to arrange forthwith for bi-annual audits to be carried out by the Purchaser or by any other entity appointed by the Purchaser for such purposes, of its receivables and collection procedures. The audits shall be conducted at the expense of and paid by the Centralising Unit, acting in the name and on behalf of the Sellers, it being understood that:

- the main bi-annual audit shall be carried out at the latest two (2) months before the anniversary date of this Agreement;

- prior to the carrying out of the second bi-annual audit, the Agent shall ask the Purchaser, the Liquidity Banks and the Back-Up Servicer whether and the extent to which a second bi-annual audit is necessary;

this second bi-annual audit will not be carried out in the event that the Agent, the Purchaser, the Liquidity Banks and the Back-Up Servicer unanimously confirm in writing that such a second bi-annual audit is unnecessary;

(vii) commencing on the date on which an Auditors Certificate is drawn up in accordance with Article 5 (Conditions precedent to the commencement of this Agreement), to deliver to the Purchaser an Auditors Certificate within six (6) calendar months after the date of delivery of the previous Auditors Certificate in the form set out in Schedule 4;

(viii) to notify forthwith the Purchaser, promptly upon becoming aware, of any material adverse change in relation to any Sold Receivable, and to promptly respond to any reasonable written request of the Purchaser, the Agent, any Back-Up Servicer or any Italian Back-Up Servicer concerning any event in relation to any Sold Receivable which is reasonably likely to endanger the payment of a sum under such Sold Receivable;

(ix) to keep the Purchaser fully informed of the existence and progress of (a) any material litigation relating to a Sold Receivable, (b) any claim or litigation relating to the Sold Receivables before the courts or in arbitration for the purposes of recovering material sums due under such Sold Receivables, (c) any claim or litigation relating to the Sold Receivables before the courts or in arbitration for the purposes of recovering sums due under such Sold Receivable, upon written request of the Purchaser, the Agent, any Back-Up Servicer or any Italian Back-Up Servicer, and (d) any action, suit or proceeding described in Article 11.1. (viii);

(x) to submit to the Purchaser, as soon as practicable, on the Purchaser’s reasonable request and subject to the provisions of Article 20 (Identification of the contractual documentation for the Sold Receivables - Access to documents) and Article 31 (Confidentiality), all documents which enable the latter to verify that the Seller has properly fulfilled its contractual obligations concerning the collection of sums due under the Sold Receivables, to the extent permitted by applicable laws or regulations and in particular, in the case of the Protected Debtors, by the provisions of the Data Protection Trust Agreement;

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(xi) to transfer or cause to be transferred to the Purchaser all Adjusted Collections in accordance with the provisions of Article 23 (Application of payments and payments of collections);

(xii) commencing on the date on which a Solvency Certificate is drawn up in accordance with Article 5 (Conditions precedent to the commencement of this Agreement), to deliver to the Purchaser a Solvency Certificate (on a date which shall be a Settlement Date during the Replenishment Period) on a quarterly basis in accordance with the form set out in Schedule 5;

(xiii) to execute any and all further documents, agreements and instruments, and take all such further actions, as may be reasonably requested by the Purchaser in order to ensure that the sales of Purchasable Receivables to the Purchaser under the Receivables Purchase Agreements constitute valid and perfected sales of such Purchasable Receivables and the security interests created over the Collection Accounts for the benefit of the Purchaser constitute valid and perfected security interests;

(xiv) to inform the Purchaser, as soon as possible and in so far permitted by applicable laws and regulations, of its intention to restructure such Seller leading to GOODYEAR DUNLOP TIRES EUROPE BV ceasing to hold directly or indirectly more than 50% in the voting rights of such Seller;

(xv) to ensure that steps are taken to maintain the performance of the billing and recovery procedures and accountancy methods in relation to the customer account (compte client) of such Seller, with the same degree of skill and care as evidenced during the audits carried out on behalf of the Purchaser or any of their agents during the structuring phase of the Securitisation Transaction;

(xvi) to ensure that any information transmitted by the Centralising Unit or such Seller during the term of this Agreement and pursuant to the Transaction Documents is true and accurate in all material respects;

(xvii) to maintain effective and in full force at all times the Intercompany Arrangements with the Centralising Unit and the other Sellers, and not to change such Intercompany Arrangements in any way that may adversely affect the rights of the Purchaser under the Securitisation Transaction;

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(xviii) to maintain effective and in full force at all times, such internal arrangements between the German Sellers, Goodyear Dunlop Tires Germany GmbH and GOODYEAR DUNLOP TIRES EUROPE BV, GOODYEAR and/or any other shareholder or affiliate of the German Sellers which are necessary to (i) if complied with, ensure due compliance of each of the German Sellers, Goodyear Dunlop Tires Germany GmbH and GOODYEAR DUNLOP TIRES EUROPE BV, GOODYEAR and/or any other shareholder or affiliate of the German Sellers with the relevant applicable corporate capital maintenance provisions, including, without limitation,Section 30 of the German Limited Liability Companies Act (Gesetz betreffend die Gesellschaften mit beschrankter Haftung), and (ii) ensure that none of the German Sellers supports, directly or indirectly, the uncollectability of any Sold Receivables purchased by the Purchaser from any other German Seller without any required consideration therefor;

(xix) to keep any Bill of Exchange relating to a Sold Receivable as custodian of the Purchaser for collection purposes unless the Sellers’ Collection Mandate has been terminated and it has received notification from the Purchaser to deliver such Bill of Exchange to the Purchaser or any third party appointed by the Purchaser;

(xx) (a) in the case of the Spanish Seller, to take such steps and do all things as to notarise before a Spanish Public Notary (x) as of the date hereof, the Spanish law governed Receivables Purchase Agreement, the Transfer Deed delivered pursuant thereto on the Initial Settlement Date (specifying in such Transfer Deed any promissory notes which must be transferred in accordance with this Agreement and the relevant Receivables Purchase Agreement) and the Spanish Collection Account Agreements and (y) on each Settlement Date during the Replenishment Period, any Transfer Deed delivered pursuant to the relevant Receivables Purchase Agreement (specifying in such Transfer Deeds any promissory notes which must be transferred in accordance with this Agreement and the relevant Receivables Purchase Agreement), it being understood at all times that the costs of such notarisation shall be borne by the Spanish Seller;

(b) in the case of the Italian Seller, to take such steps and do all things as to notarise before an Italian Public Notary as of the date hereof, the Italian law governed Collection Account Agreements, it being understood that the costs of such notarisation shall be borne by the Italian Seller;

(xxi) (a) to instruct any Debtor, which has not been already informed, to pay any sum due under a Sold Receivable to the relevant Collection Account(s) and, from the date hereof, to collect any sums due under a Sold Receivable exclusively on the relevant Collection Account(s), and (b) to promptly transfer to the relevant Collection Account(s) any sums paid by a Debtor in a different manner than to the relevant Collection Account(s);

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(xxii) in the case of the Italian Seller, to grant the Italian Stand-By Servicer/Italian Back-Up Servicer a prior irrevocable mandate which has been signed by the Italian Seller authorizing the Italian Back Up Servicer, whenever an Italian Notice of Transfer has to be sent in accordance with this Agreement, to execute the Italian Notice of Transfer, it being provided that the Italian Stand-By Servicer/Italian Back-Up Servicer shall not use such irrevocable mandate for any purpose other than the execution of the Italian Notice of Transfer;

(xxiii) in the case of the Italian Seller, to grant the Italian Stand-By Servicer/Italian Back-Up Servicer a prior irrevocable mandate which has been signed by the Italian Seller authorising the Italian Stand-By Servicer/Italian Back-Up Servicer to send RID collections through the banking network by using the SIA code granted to the Italian Seller, it being provided that the Italian Stand-By Servicer/Italian Back-Up Servicer shall not use such irrevocable mandate for any purpose other than the performance of the back-up servicing activities;

(xiv) in the case of the Italian Seller and if the RID collection system is used in connection with the Italian Debtors, to provide the Italian Stand-By Servicer/Italian Back-Up Servicer with all necessary information required for the purpose of sending RID applications through the banking network (and namely the SIA code granted to the Italian Seller) and ensure or cause to ensure that the List of Italian Purchasable Receivables has been correctly completed with such information;

(xxv) in the case of the Italian Seller and if the RIBA collection system is used in connection with the Italian Debtors, to provide the Italian Stand-By Servicer/Italian Back-Up Servicer with all necessary information required for the purpose of issuing RIBA over Italian Debtors which have agreed to such means of payments and ensure or cause to ensure that the List of Italian Purchasable Receivables has been correctly completed with such information; and

(xxvi) in the case of each German Seller,

(a) (w) to opt or continue to opt at all times for payment of self-assessed or assessed VAT on a monthly basis, (x) having applied for a permanent extension for the filing of monthly returns (Dauerfristverlangerung) post and maintain posted a special advance estimated tax payment to the relevant tax office, (y) to calculate and self-assess VAT on a monthly basis in accordance with German VAT laws and regulations and (z) to pay any VAT when due to the relevant German tax administration on a monthly basis;

(b) to provide the Purchaser on each Information Date with (x) a monthly report detailing the calculation of VAT due in relation to the preceding calendar month in accordance with German VAT laws and regulations, and (y) evidence of the payment of any amounts of VAT when due to the relevant German tax administration, as described in such monthly report;

(c) to submit promptly upon request of the Purchaser a statement and/or evidence in respect of any VAT payment;

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(d) to ensure that, promptly upon request of the Purchaser at any time and in any event semi annually (x) its auditors or any qualified accountants carry out an audit in relation to its VAT assessment procedures and VAT payment in accordance with applicable law and regulations, detailing the calculation and the payment of VAT during the period since the previous audit or (as relevant) during the last six (6) calendar months and (y) the results of such audit are forthwith communicated to the Purchaser, whereby the costs of such audit shall be borne by such German Seller.

12.1.2 Negative covenants

Each Seller undertakes:

(i) (a) not to sell, lease, transfer or dispose of, the whole or a substantial part of its business or assets whether in a single transaction or by a number of transactions. Such prohibitions do not however apply to: (w) disposals in the ordinary course of the business of the Centralising Unit or of any Seller; (x) disposals between the Centralising Unit and any Seller(s) or between any Sellers or within the GOODYEAR Group; (y) disposals for arm’s length consideration on normal commercial terms; or (z) other disposals which are not reasonably likely to materially prejudice the rights of the Purchaser hereunder or adversely and materially affect the collectibility of the Sold Receivables; and

(b) except for any intra-group mergers or reorganisations within the GOODYEAR Group, not to purchase all or part of the assets of any individual, undertaking or company, and not to enter into any merger (fusion), demerger (scission) or proceeding of a similar nature, which is reasonably likely to materially prejudice the rights of the Purchaser hereunder or adversely affects such Seller’s ability to collect the Sold Receivables;

(ii) not to vary any of its collection procedures currently in operation on the date hereof, without the prior written consent of the Purchaser if such a variation is reasonably likely to adversely affect the quality of such collection procedures;

(iii) (a) not to deliver to the Purchaser any document containing information concerning the Sold Receivables which it knows to be inaccurate or incomplete;

(b) not to deliver to the Purchaser any document containing information concerning the Sold Receivables which it, in the exercise of reasonable diligence, should reasonably have known to be inaccurate or incomplete, in any material respect;

(iv) not to use any software for the management of the Sold Receivables unless the software user licence allows it to be used to monitor the Sold Receivables, except in cases that would not be reasonably likely to result in a Material Adverse Effect;

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(v) to abstain from varying the corporate purposes or changing the legal form of such Seller, except to the extent related to any intra-group mergers or reorganisations within the GOODYEAR Group or to the extent that such variation or change would not be reasonably likely to result in a Material Adverse Effect;

(vi) not to endorse, transfer or deliver to any person a Bill of Exchange relating to a Sold Receivable unless such an endorsement, transfer or delivery is made for the benefit of the Purchaser and, upon request of the Purchaser, to endorse, transfer or deliver, to the Purchaser or any third party designated by the Purchaser, acting pursuant to a power of attorney provided by a separate agreement, any and all Bills of Exchange corresponding to Sold Receivables and take all such measures deemed necessary by the Purchaser in order to preserve its rights hereunder; and

(vii) not to create, incur, assume or permit to exist any Liens (other than any Liens contemplated by the Transaction Documents) (a) in relation to any Sold Receivables (and related rights) prior to their respective assignment to the Purchaser or in respect of the Collection Accounts, with the exception of those Liens required by applicable laws and regulations, or (b) over the Subordinated Deposit and/or the Complementary Deposit.

12.2 Centralising Unit

12.2.1 Affirmative covenants

The Centralising Unit undertakes:

(i) to provide the Purchaser without undue delay, on a non consolidated basis, with:

(a) its annual accounts (balance sheet, profit and loss accounts and annexes), as published and certified by its statutory auditors, the related report of the board of directors and statutory auditors, and an extract of the minutes of the shareholders’ annual general meeting approving the said accounts, no later than forty-five calendar days (45) following the holding of its shareholders’ annual general meeting;

(b) all published interim financial information; and

(c) all other information, reports or statements as the Purchaser may at any time reasonably request and depending on the type of information requested, in accordance with the procedures applicable to the communication of information under this Agreement;

(ii) to request promptly any authorisation as may become necessary for the performance of its obligations under the Transaction Documents to which it is a party;

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(iii) to do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct of its business, except to the extent that failure to keep in effect such rights, licenses, permits privileges and franchises would not be reasonably likely to result in a Material Adverse Effect;

(iv) upon knowledge by the Centralising Unit that (a) an Early Amortisation Event has occurred, to notify forthwith the Purchaser of the same and (b) a Potential Early Amortisation Event has occurred, to notify forthwith the Purchaser of the same and, where applicable, of actions which the Centralising Unit has taken and/or proposes to take with respect thereto in order to prevent such Potential Early Amortisation Event from becoming an Early Amortisation Event;

(v) to carry on its business in accordance with all applicable laws and regulations, except where failure to do so would not be reasonably likely to result in a Material Adverse Effect;

(vi) on the first sixth month anniversary of the date hereof following the date on which it has appointed a statutory auditor within the meaning of article 2:393 of the Dutch Civil Code, to deliver to the Purchaser an Auditors Certificate in a form reasonably acceptable to the Purchaser and thereafter to deliver an Auditors Certificate in such form within six month after the date of the delivery of the previous Auditors Certificate;

(vii) commencing on the date on which a Solvency Certificate is drawn up in accordance with Article 5 (Conditions precedent to the commencement of this Agreement), to deliver to the Purchaser (on a date which shall be a Settlement Date during the Replenishment Period), a Solvency Certificate within three (3) calendar months after the date of delivery of the previous Solvency Certificate, in accordance with the form set out in Schedule 5;

(viii) to provide the Agent on each Information Date before 11.00 pm with a copy of the Assessment Report and a List of Purchasable Receivables in the form agreed between the parties to this Agreement;

(ix) to provide on each Settlement Date during the Replenishment Period before 9.00 am, the Transfer Deeds;

(x) to transmit to the Agent and the Purchaser a certificate evidencing compliance with the Financial Covenants at the time of delivery of such financial information described in points (a) and (b) of section 5.01 of the European Credit Facility;

(xi) to inform the Purchaser, as soon as possible, and in so far as is permitted by applicable laws and regulations of any restructuring leading to GOODYEAR DUNLOP TIRES EUROPE B.V. ceasing to hold directly or indirectly 100% in the voting rights of the Centralising Unit;

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(xii) to ensure that any information transmitted by the Centralising Unit or any of the Sellers during the course of the Securitisation Transaction and pursuant to the Transaction Documents is accurate and true in all material respects;

(xiii) to maintain effective and in full force at all times the Intercompany Arrangements with the Centralising Unit and the other Sellers, and not to change such Intercompany Arrangements in any way that may adversely affect the rights of the Purchaser under the Securitisation Transaction.

12.2.2 Negative covenants

The Centralising Unit undertakes:

(i) to abstain from changing its legal form, its corporate existence and varying its corporate purposes, except to the extent that such variation or change would not be reasonably likely to adversely affect the performance of its obligations under the Transaction Documents;

(ii) not to create, incur, assume or permit to exist any Liens in relation to any of its assets, except for Liens provided under the Transaction Documents, or to the extent required by applicable laws or regulations.

12.3 Agent

12.3.1 The Agent hereby agrees with the other parties that it shall, at thelatest on each Calculation Date:

(i) identify a selection in the List of Purchasable Receivables sent by the Centralising Unit, acting in the name and on behalf of the Sellers, on the preceding Information Date, in order to select the Purchasable Receivables which shall be purchased by the Purchaser from the Sellers on the next Settlement Date during the Replenishment Period, so that the Outstanding Amount of Sold Receivables (taking into account the Outstanding Amount of Purchasable Receivables to be purchased on the following Settlement Date during the Replenishment Period) shall not exceed the sum of the Maximum Amount of the Purchaser’s Funding, the amount of the Subordinated Deposit, the Maximum Amount of the Complementary Deposit and the Discount Reserve;

(ii) identify among the Purchasable Receivables selected in accordance with point (i) above, Eligible Receivables, which shall be selected so that the Outstanding Amount of Eligible Receivables due by Debtors of the same Group on such date shall not exceed the Maximum Concentration Rate multiplied by the Outstanding Amount of the Eligible Receivables on such date;

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(iii) send to the Centralising Unit, acting in the name and on behalf of the Sellers, before 5.00 pm on such Calculation Date a list containing the Purchasable Receivables (and identifying specifically the Eligible Receivables) to be purchased on the next Settlement Date during the Replenishment Period, along with the Outstanding Amount of Purchasable Receivables and the Outstanding Amount of Eligible Receivables;

(iv) calculate, as of the following Settlement Date:

(a) the balance of the Current Account;

(b) the Discount Amount;

(c) the amount of the Discount Reserve, if such Calculation Date immediately precedes a Settlement Date;

(d) the Outstanding Amount of Sold Receivables and the Outstanding Amount of Eligible Receivables, globally and for each Seller individually;

(e) the amount of the Purchaser’s Funding, including any increase or reduction in the level of such funding if such Calculation Date precedes immediately a Funded Settlement Date;

(f) the amount of the Subordinated Deposit;

(g) the amount of the Complementary Deposit;

(h) as the case may be, the amount of the Foreseen Collections;

(i) the amount of the Adjusted Collections; and

(j) any other amounts agreed between the Agent and the Centralising Unit.

(v) give notice before 5.00 pm on such Calculation Date to the Centralising Unit acting, as the case may be, on its own behalf or on behalf of the Sellers, of the calculations (with supporting details) carried out pursuant to the above paragraph (iv) in order to provide the information needed, as the case may be, for the payment to be made on the following Settlement Date pursuant to Article 6.3, in accordance with the letter described in Schedule 15;

(vi) communicate the calculation of any Increase in the Purchaser’s Funding or any Reduction in the Purchaser’s Funding in accordance with the provisions of Article 7.3 to the Depositor.

The parties agree that, in the event that any party becomes aware of any errorin the calculation carried out by the Agent pursuant to the present Article12.3.1, such party shall forthwith notify the Agent in order to rectify such anerror.

12.3.2. At the latest on each Calculation Date, the Agent shall, at the requestof any Joint Lead Arranger, forthwith transmit a copy of the Assessment Reports,the Lists of Purchasable

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Receivables or any reporting documents relating to the Sold Receivables andprovide the Joint Lead Arrangers with any information relating to the amount ofAdjusted Collections received from the Sellers by the Purchaser on suchCalculation Date.

CALYON shall ensure that the Centralising Unit and the Sellers have furnishedthe information referred to in the paragraph above to the Agent and thePurchaser.

12.3.3 On each Calculation Date before 5.00 pm, the Calculation Agent undertakesto deliver forthwith, to the Centralising Unit acting in the name and on behalfof the Sellers, a document relating to the Sold Receivables, in the formattached hereto as Schedule 12.1, as modified from time to time by the partiesto this Agreement, and to provide a copy of such document to the Joint LeadArrangers.

After each Settlement Date, the Calculation Agent undertakes to deliverforthwith to each Issuer, a report document relating to the Sold Receivables, inthe form attached hereto as Schedule 12.2, as modified from time to time betweenthe Agent, the Purchaser and the Issuers.

For the purposes of the relevant reporting documents, the parties agree thatCALYON shall be responsible for ensuring that such reporting requirements arecarried out.

12.4 Failure to deliver Assessment Report or List of Purchasable Receivables

12.4.1 In the event that the Centralising Unit fails to provide the Agent witha copy of the Assessment Report and/or a List of Purchasable Receivables withinone (1) Business Day after an Information Date, or provides the Agent with acopy of the Assessment Report and/or a List of Purchasable Receivables, that isincomplete in relation to one or several Sellers (with respect to any Seller, a"DELIVERY FAILURE"), the Agent shall carry out the identification and thecalculations referred to in Articles 12.3.1 and 12.3.2 as follows:

- in relation to Sellers for which there is no Delivery Failure, on the basis of the Assessment Report and the List of Purchasable Receivables provided to the Agent on such Information Date; and

- in relation to Sellers for which there is a Delivery Failure, on the basis of the Assessment Report and the List of Purchasable Receivables provided to the Agent on the preceding Information Date;

provided that the Centralising Unit has sent to the Agent a single consolidatedAssessment Report and a single List of Purchasable Receivables. If the Agent hasnot received such single consolidated Assessment Report and such List ofPurchasable Receivables, it shall make its calculations on the basis of thesingle consolidated Assessment Report and single List of Purchasable Receivablesreceived on the previous Information Date.

12.4.2 In the event of any failure to comply with the provisions of Article12.2.1. (viii), the Centralising Unit shall comply with such provisions withrespect to the documents required to be delivered on or before the nextInformation Date.

12.4.3 The Centralising Unit shall provide, on each Information Date, the listof Sold

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Receivables which are Doubtful Receivables and to be retransferred to therelevant Seller in accordance with article 4.2 of the relevant ReceivablesPurchase Agreement.

12.5 Purchaser

Other than as contemplated by the Transaction Documents, the Purchaserundertakes not to (a) sell, transfer or otherwise dispose of any SoldReceivables or (b) create, incur, assume or permit to exist any Liens over anySold Receivables (and related rights), with the exception of those Liensrequired by applicable laws and regulations.

CHAPTER VI - EARLY AMORTISATION

ARTICLE 13. EARLY AMORTISATION

13.1 Early Amortisation Events in relation to the Securitisation Transaction:

The fact that the Purchaser’s Funding falls below the Minimum Amount of theProgram shall constitute an Early Amortisation Event with respect to thisAgreement and the Receivables Purchase Agreements.

13.2 Early Amortisation Event in relation to the Purchaser:

If any event occurs, which is not an event that is due to CALYON or that couldhave been prevented by CALYON, and which, in the Rating Agencies’ opinion,jeopardises the "bankruptcy remote character" of the Purchaser, the Purchasermay terminate its Commitment to purchase Purchasable Receivables from theSellers subject to notice made in writing to the Centralising Unit. In such anevent, the Commitment Expiry Date shall be deemed to have occurred on thethirtieth (30th) calendar day following receipt by the Centralising Unit of thePurchaser’s Termination Notice. Such Purchaser’s Termination Notice shall statethe reasons for the Rating Agencies’ opinion.

13.3 Early Amortisation Events in relation to any Seller or the CentralisingUnit:

Each of the following events shall constitute an Early Amortisation Event withrespect to this Agreement and the Receivables Purchase Agreements:

(i) the Centralising Unit requests the termination of the Replenishment Period ;

(ii) any Seller, the Centralising Unit, GOODYEAR DUNLOP TIRES EUROPE BV, GOODYEAR or any Material Subsidiary has entered into Insolvency Proceedings;

(iii) any failure by a Seller, the Centralising Unit or GOODYEAR DUNLOP TIRES EUROPE BV to make a payment (including any deposit or transfer of Adjusted Collections to the Purchaser) when due under the Transaction Documents:

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(w) which is not remedied within two (2) Business Days, provided that such failure is due to a technical reason which affects the means of payment in the banking system used by such Seller or by the Centralising Unit and is not otherwise covered by clause (y) below;

(x) which is not remedied within four (4) Business Days, where such failure arises in relation to the payment of the Management Fee or the Stand-by Fee;

(y) which is not a scheduled payment under the Transaction Documents and which is not remedied within two (2) Business Days after written notice received from the Purchaser or, if earlier, after a Responsible Officer becoming aware thereof;

(z) which is a scheduled payment (including a payment due pursuant to Article 6.3.2.) and is not otherwise covered by clause (w) or (x) above;

(iv) any restructuring of (a) a Seller leading to GOODYEAR ceasing to hold directly or indirectly more than 50% in the share capital and voting rights of such a Seller, or (b) GOODYEAR DUNLOP TIRES EUROPE BV leading to GOODYEAR ceasing to hold directly or indirectly more than 50% in the share capital and voting rights of GOODYEAR DUNLOP TIRES EUROPE BV, or (c) the Centralising Unit leading to GOODYEAR DUNLOP TIRES EUROPE BV ceasing to hold, directly or indirectly, 100% in the share capital and voting rights of the Centralising Unit;

(v) any default by any Seller, the Centralising Unit or GOODYEAR DUNLOP TIRES EUROPE BV (including any material default in the collection obligations set forth in Articles 21, 24, 25 and 26) other than the defaults referred to in paragraph (iii) above or paragraphs (vi) and (vii) below, in relation to any of their obligations under the Transaction Documents:

- which is not remedied within one (1) Business Day after written notice received from the Purchaser or, if earlier, after a Responsible Officer becoming aware thereof, if such default is in relation to their respective obligations under Article 12.2.1 (viii), and the Centralising Unit does not comply with Article 12.4.2;

- which is not remedied within one (1) Business Day after written notice received from the Purchaser or, if earlier, after a Responsible Officer becoming aware thereof, if such default is in relation to their respective obligations under 12.2.1 (ix);

- which is not remedied within fifteen (15) Business Days after written notice received from the Purchaser or, if earlier, after a Responsible Officer becoming aware, if such default is in relation to their respective obligations under 12.1.1. (iv), (x), (xiii), (xvi), (xxi), and 12.2.1. (iv), (xii);

- which is a default of the obligations arising under 12.1.2 or 12.2.2, which (a) if capable of remedy, is not remedied within fifteen (15) Business Days after written notice received from the Purchaser or, if earlier, after a Responsible Officer becoming aware, or (b) if not capable of remedy, has not been waived

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by the Purchaser within five (5) Business Days after written notice received from the Purchaser or, if earlier, after a Responsible Officer becoming aware;

- which is not remedied within thirty (30) Business Days after written notice received from the Purchaser, or, if earlier, after a Responsible Officer becoming aware;

(vi) any failure by any Seller or the Centralising Unit to deliver an Auditors Certificate, complying with the relevant form attached as Schedule 4, as provided for under Article 12.1.1 (vii) and 12.2.1 (vi), which is not remedied within fifteen (15) Business Days after written notice received from the Purchaser or, if earlier, after a Responsible Officer becoming aware;

(vii) any failure by any Seller or the Centralising Unit to deliver a Solvency Certificate, complying with the relevant form attached as Schedule 5, as provided for under Article 12.1.1 (xii) and 12.2.1 (vii), which is not remedied within ten (10) Business Days after written notice received from the Purchaser or, if earlier, after a Responsible Officer becoming aware;

(viii) any representation and warranty made by any Seller, the Centralising Unit or GOODYEAR DUNLOP TIRES EUROPE BV under the Transaction Documents (other than under Article 19), or any information contained in any document delivered by any Seller or the Centralising Unit or GOODYEAR DUNLOP TIRES EUROPE BV to the Purchaser pursuant thereto, is found to have been inaccurate on the date on which it was made or delivered, if such inaccuracy (a) is not remedied or waived accordingly within thirty (30) days after written notice received from the Purchaser, or, if earlier, after a Responsible Officer becoming aware and (b) is reasonably likely to result in a Material Adverse Effect;

(ix) any Material Indebtedness of GOODYEAR DUNLOP TIRES EUROPE BV, or any of its subsidiaries, or GOODYEAR (a) has not been paid or repaid when due (after giving effect to any applicable grace period) or (b) has become due and payable before its stated date of payment as a result of a declared default and after the expiry of any applicable grace period provided that, in each case, such default has not been waived pursuant to the terms of the relevant agreement;

(x) there is an attachment, freezing or seizure (saisie) order against all or any material part of the property, assets or revenues of the Centralising Unit, any of the Sellers or GOODYEAR DUNLOP TIRES EUROPE BV or in the event that the Centralising Unit, any of the Sellers or GOODYEAR DUNLOP TIRES EUROPE BV has become subject at any time to any court order or other court process having similar effect and such attachment, seizure (saisie), court order or court process remains in effect and is not discharged during a period of forty-five (45) calendar days following the date on which it was served;

(xi) any change of any kind in any Seller’s or Centralising Unit’s articles of association, business or assets, which would be reasonably likely to result in a Material Adverse Effect;

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(xii) the validity of the Transaction Documents or a Transfer Deed issued pursuant to the Receivables Purchase Agreement or any Payment hereunder or thereunder is successfully challenged by any enforcement order issued or judgment obtained as a result of proceedings before any court (including arbitration proceedings);

(xiii) whenever on three (3) successive Funded Settlement Dates, the Overcollateralisation Rate is higher than the Maximum Overcollateralisation Rate;

(xiv) (a) any of the Transaction Documents becomes illegal or, cannot, for any reason whatsoever, be performed pursuant to their respective terms, and such illegality or inability to be performed is reasonably expected to prejudice the rights of the Purchaser in any material respect;

(b) a Transfer Deed becomes illegal or, cannot, for any reason whatsoever, be performed pursuant to its terms, and such illegality or inability to be performed is reasonably expected to prejudice the rights of the Purchaser;

(xv) (a) the ratio of (a) Consolidated Senior Secured Indebtedness to (b) Consolidated EBITDA of Goodyear for the most recent period of four consecutive fiscal quarters for which financial statements have been filed with the United States Securities and Exchange Commission, to be greater than 4.00 to 1.00;

(b) the ratio of (x) Consolidated EBITDA of GOODYEAR to (y) Consolidated Interest Expense of GOODYEAR, for any period of four (4) consecutive fiscal quarters is less than 2.00 to 1.00; or

(c) the ratio of (x) Consolidated Net Indebtedness to (y) Consolidated EBITDA of GOODYEAR DUNLOP TIRES EUROPE BV for the most recent period of four consecutive fiscal quarters for which financial statements have been filed with the United States Securities and Exchange Commission, is greater than 3.00 to 1.00;

(d) for so long as such provision exists under the European Credit Facility, the Consolidated Net Worth of GOODYEAR at the end of any fiscal quarter is less than the amount set forth below for such date:

<TABLE><CAPTION> Fiscal Quarter Ending Minimum Amount--------------------------- --------------<S> <C>On or before March 31, 2006 2,000,000,000thereafter 1,750,000,000</TABLE>

and, in each case, there has been no Applicable Waiver or Amendment on or prior to the 60th calendar day after the occurrence of any such event. In addition, this Agreement shall be automatically amended, with no further actions required by the parties hereto, to reflect the changes made in any Applicable Waiver or Amendment.

Capitalized terms used in this Article 13.3 (xv) and not defined in Schedule 1 have the meanings set forth for such terms in Schedule 16;

(xvi) if all Sellers withdraw from the Agreement in accordance with the provisions of Article 39;

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(xvii) the three-month rolling average of the Delinquency Percentage exceeds 3.5%, and such event is not waived within thirty (30) days after notice received from the Purchaser, or, if earlier, after a Responsible Officer becomes aware thereof;

(xviii) the three-month rolling average of the Default Percentage exceeds 2.5%, and such event is not waived within thirty (30) days after notice received from the Purchaser, or, if earlier, after a Responsible Officer becomes aware thereof; and

(xix) the three-month rolling average of the Dilution Percentage exceeds 10.5%, and such event is not waived within thirty (30) days after notice received from the Purchaser, or, if earlier, after a Responsible Officer becomes aware thereof.

13.4 Consequences of Early Amortisation Events

Except for the Early Amortisation Event described in Article 13.2, the effect ofwhich is set out in such Article, the consequences of the Early AmortisationEvents shall be as follows:

(i) If an Early Amortisation Event referred to in Articles 13.1 or 13.3 occurs and has not been waived, the Purchaser may or, if all the Liquidity Banks (which shall be consulted by the Purchaser upon the occurrence of such an Early Amortisation Event) instruct the Purchaser to do so, shall terminate by notice in writing to the Centralising Unit (the "PURCHASER’S TERMINATION NOTICE"), its Commitment to purchase Purchasable Receivables from the Sellers. Upon knowledge by the Purchaser of the occurrence of an Early Amortisation Event and provided such Early Amortization Event has not been waived and as soon as the Purchaser has determined that such an occurrence shall entail the occurrence of the Commitment Expiry Date, a Purchaser’s Termination Notice may be sent forthwith. In such an event, the Commitment Expiry Date shall be deemed to have occurred on the date of receipt of the Purchaser’s Termination Notice by the Centralising Unit.

However, if upon consultation of the Liquidity Banks in accordance with the above paragraph, such Liquidity Banks cannot agree among themselves as to the termination by the Purchaser of its Commitment, and where the Purchaser has not already decided in its own discretion to terminate its Commitment, the relevant Liquidity Bank (the "TERMINATING LIQUIDITY BANK") may decide to terminate its own commitments under the Liquidity Agreement, upon notice in writing to the Centralising Unit, the Purchaser and the other Liquidity Bank(s) no later than the Information Date preceding the Funded Settlement Date on which such termination is to be effective.

In the event of the termination of its(their) commitment by the Terminating Liquidity Bank(s), the Maximum Amount of the Program shall be partially and automatically reduced by an amount equal to the commitment of such Terminating Liquidity Bank(s). Such reduction of the Maximum Amount of the Program shall take effect on the Funded Settlement Date following the date upon which the termination of its(their) commitment by the Terminating Liquidity Bank(s) has occurred and shall be definitive and irrevocable.

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(ii) By way of further exception to the foregoing, if an Early Amortisation Event set forth in Article 13.3 (iv), (v), (vi), (vii), (x), (xi), (xii), and (xiv) occurs exclusively in relation to certain but not all Sellers, the Purchaser shall give notice thereof to the relevant Seller(s) and the Centralising Unit. The parties hereby agree that upon receipt by the relevant Seller(s) and the Centralising Unit of such notice, the Purchaser shall be entitled to purchase no further Purchasable Receivables from the relevant Seller(s) (the "EXCLUDED SELLER(S)"). The Purchaser’s Commitment shall not otherwise be affected, except that if the aggregate amount of Sold Receivables assigned by the Excluded Seller(s) on the preceding six (6) Settlement Dates represents more than 45% of the aggregate amount of Sold Receivables assigned by all Sellers on such dates, the Commitment Expiry Date shall be deemed to have occurred on the date of receipt of the notice referred to above.

For the avoidance of doubt, if any Potential Early Amortisation Event occurs,the parties agree that such event shall not constitute an Early AmortisationEvent if a suitable agreement between the parties has been reached within thegrace period (if any) provided for the related Early Amortisation Event inArticle 13.3.

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CHAPTER VII - TAXES - CHANGES IN CIRCUMSTANCES

ARTICLE 14. TAXES

14.1. All payments to be made by each Seller, acting as a Seller or as asub-servicer of the Sold Receivables, or the Centralising Unit to the Purchaserunder this Agreement shall be made free, clear of and without deduction for oron account of tax (not being tax imposed on the general income of thePurchaser), unless the Seller or the Centralising Unit is required by mandatoryprovisions of law to make such a payment subject to the deduction or withholdingof tax, in which case the sum to be paid by the Seller or the Centralising Unitin respect of which such deduction or withholding is required to be made shall,to the extent permitted by law, be increased to the extent necessary to ensurethat, after the making of the required deduction or withholding, the Purchaserreceives and retains (free from any liability in respect of any such deductionor withholding) a net sum equal to the sum which it would have received and soretained had no such deduction or withholding been made or required to be made.

In the event that any payment made by the Centralising Unit hereunder is subjectto any withholding or deduction, the Purchaser shall use reasonable efforts torecover any tax credit that it may be entitled to on account of such withholdingor deduction and shall remit to the Centralising Unit any amounts so recovered,up to the amount necessary for the Seller to be (after that payment) in the sameafter-tax position as it would have been if such withholding or deduction hadnot been made, within the limit of the sums so recovered by the Purchaser.

If the increase referred to above is contrary to any applicable law, thePurchaser and the Centralising Unit, acting in the name and on behalf of theSellers, shall work together as soon as possible and in good faith to seek asolution acceptable to the parties.

If no suitable agreement has been reached within thirty (30) calendar daysfollowing the coming into force of such deduction or withholding of tax, theCommitment Expiry Date shall be deemed to have occurred on the thirtieth dayafter such deduction or withholding comes into force. The parties hereby agreethat during the thirty-day period provided in the foregoing sentence, noPurchasable Receivables shall be sold to the Purchaser by the Sellers concernedby such deduction for or on account of tax or by all the Sellers if suchdeduction for or on account of tax relates to the Centralising Unit, on a FundedSettlement Date.

14.2. Each Seller shall bear any value added tax or similar tax (a "VATPAYMENT") to which any transaction contemplated under the SecuritisationTransaction may be subject or give rise towards any party having entered intothe Securitisation Transaction (other than the Sellers and the CentralisingUnit); and each Seller shall fully indemnify the Purchaser or any party havingentered into the Securitisation Transaction (other than the Sellers or theCentralising Unit), from and against any losses or liabilities which any of themmay properly incur or otherwise suffer as a result of any delay in paying oromission to pay such value added tax or similar tax.

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If a Seller makes a VAT Payment and a credit against, relief or remission for,or repayment of taxes is attributable to that VAT Payment (a "VAT CREDIT"), thePurchaser shall use reasonable efforts to obtain the repayment of such VATCredit, and once the Purchaser has obtained the repayment of such VAT Credit,the Purchaser shall transfer such amount to the relevant Seller so that theSeller will be (after that payment) in the same after-tax position as it wouldhave been in had the VAT Payment not been made by the Seller, and within thelimit of the sums actually paid to the Purchaser under the repayment of such VATCredit.

14.3. In the event of any Insolvency Proceedings opened against any GermanSeller, if the insolvency administrator is involved in the enforcement of anypledge over the Collection Account(s) for the benefit of the Purchaser and ifsuch insolvency administrator is entitled to claim a deduction of fees("ENFORCEMENT FEES") from the credit balance recorded on such CollectionAccount(s) at the date of institution of such Insolvency Proceedings, therelevant German Seller and/or the Centralising Unit shall pay to the Purchaserany sums corresponding to such Enforcement Fees.

14.4 In the event that the Purchaser, a Liquidity Bank, the Issuers, theManagement Company, the Custodian, the Fund, the Depositor or the Agent (each a"TAX INDEMNIFIED PARTY") has to bear any new tax or withholding tax or any othertax related charge not yet in force on any sum which it owes and in relation tothe Securitisation Transaction, the Centralising Unit, acting in the name and onbehalf of the Sellers, undertakes to indemnify such Tax Indemnified Party up tothe amount of this new taxation or withholding tax or other tax charge, in thecurrency in which such deduction, withholding or other tax charge must be paid.

In the event that any payment is made by the Centralising Unit to the Purchaserpursuant to this Article 14.4, the Purchaser shall use reasonable efforts torecover any tax credit that it may be entitled to on account of such new tax andshall remit to the Centralising Unit any amounts so recovered up to the amountnecessary for the Seller to be (after that payment) in the same after-taxposition as it would have been if such new tax had not been paid, within thelimit of the sums so recovered by the Purchaser.

14.5 In the event that any Tax Indemnified Party (including, in particular, thePurchaser) has incurred any losses or liability resulting from or in relation toany recourse by the any German tax administration against the Purchaser withrespect to any Sold Receivable, the relevant German Seller shall indemnify suchTax Indemnified Party up to the amount of such losses or liability incurred andin the currency in which such loss or liability has been incurred, provided thatthe recourse by such German tax administration against the Purchaser is based onsection 13c of the German VAT Act or on any related or equivalent provision ofGerman law.

14.6 Nothing in this Article 14 shall be construed so as to oblige the Purchaserto bear costs and expenses of whatever nature or to disclose confidentialinformation relating to, inter alia, the organisation of its activities noraffect in any way its right to organise its tax affairs in a manner which itconsiders most beneficial.

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ARTICLE 15. CHANGES IN CIRCUMSTANCES

15.1 If, as a result of (i) the implementation after the date of thisAgreement of any change in the applicable laws, regulations, accountingstandards or regulatory requirements or any change in the interpretation orapplication of the aforementioned and/or (ii) the implementation after the dateof this Agreement of any applicable directive, request or requirement (whetheror not having the force of law) of any central bank, self-regulatingorganisation, governmental, fiscal, monetary or other authority (including interalia directives, requests, instructions, accounting standards or requirementswhich affect the manner in which any bank is required to maintain equity capital(own funds), taking into account its assets, liabilities, contingent liabilitiesor commitments):

(i) the cost of the Purchaser, a Liquidity Bank, any Issuer, the Management Company, the Custodian, the Fund, the Depositor or the Agent making available, agreeing to make available, maintaining or funding any Payment and/or assuming or maintaining their Commitment or otherwise giving effect to this Agreement shall be increased; and/or

(ii) any sum received or receivable by the Purchaser, a Liquidity Bank, any Issuer, the Management Company, the Custodian, the Fund, the Depositor or the Agent under the Transaction Documents shall be reduced (except for tax imposed on the general income of the Purchaser or default of a Debtor under any Sold Receivables); and/or

(iii) the Purchaser, the Liquidity Bank, any Issuer, the Management Company, the Custodian, the Fund, the Depositor or the Agent shall become liable to make any payment on account of tax (except for tax imposed on its general income), or shall be compelled or obliged to forego any interest or other return, on or calculated by reference to the Commitment or any Payment under this Agreement;

as soon as such event has occurred and provided that such information ispublicly available, the Purchaser, the Liquidity Bank, the Issuer, theManagement Company, the Custodian, the Fund, the Depositor or the Agent shall beentitled to claim from the Centralising Unit, acting as the case may be on itsown behalf or on behalf of the Sellers, an indemnity equal to (a) the increasedcosts referred to in (i) above, and/or (b) the reduction referred to in (ii)above and/or (c) the amount referred to in (iii) above. To this effect, thePurchaser shall give notice to the Centralising Unit, by delivering to thelatter a certificate specifying in sufficient detail the occurrence of thechanges in circumstances and, if possible, the estimated amount and the actualamount and the reason(s) for the indemnity payable under this Article.

15.2 In the event of any dispute as to the amount of such an indemnity, thePurchaser and the Centralising Unit acting in the name and on behalf of theSellers, shall work together as soon as possible and in good faith to seek asolution acceptable to the parties; in the event of a dispute, such indemnityshall nevertheless be paid by the Centralising Unit, acting on its own behalfand on behalf of the Sellers, who shall make the payment of such indemnityforthwith following receipt of the notice sent by the Purchaser.

If no suitable agreement has been reached within thirty (30) calendar daysfollowing the coming into force of such event, the Commitment Expiry Date shallbe deemed to have occurred on the thirtieth day after such an event. The partieshereby agree that during the

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thirty-day period provided in the foregoing sentence, no Purchasable Receivablesshall be sold to the Purchaser on a Settlement Date.

CHAPTER VIII - ORDER OF PRIORITY - PAYMENTS

ARTICLE 16. ORDER OF PRIORITY DURING THE AMORTISATION PERIOD

16.1. On each Settlement Date during the Amortisation Period, the Purchasershall apply the Distributed Amounts, in the following order:

1. to the payment of any of the following sums that are due and payable on such date in accordance with the provisions of the Master Senior Deposit Agreement:

1.1. the Margin due to ESTER FINANCE;

1.2. the Immobilisation Indemnity due pursuant to article 8.1 of the Master Senior Deposit Agreement;

1.3. the Deposit Fee due pursuant to article 8.2 of the Master Senior Deposit Agreement;

until their full payment;

provided that on each Intermediary Settlement Date, the sums referred to in this point 1. to be paid on the next Funded Settlement Date, calculated prorata temporis, shall be excluded from the Distributed Amounts available on such Intermediary Settlement Date and shall be reserved by the Purchaser in order to be paid on such Funded Settlement Date;

2. to the payment of any sum due and payable prior to such date, by the Sellers or the Centralising Unit to the Purchaser under the Transaction Documents and which remains unpaid on such date, until its full repayment;

3. to the payment of any sum due and payable in respect of the Purchaser’s Funding, in accordance with the provisions of the Master Senior Deposit Agreement and, pari passu, in respect of the Complementary Deposit, in accordance with the provisions of the Master Complementary Deposit Agreement, until their full payment;

provided that on each Intermediary Settlement Date, the sums referred to in this point 3., due in respect of the Purchaser’s Funding and to be paid on the next Funded Settlement Date shall be excluded from the Distributed Amounts available on such Intermediary Settlement Date and reserved by the Purchaser in order to be paid on such Funded Settlement Date;

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4. to the payment to the Centralising Unit of any amount equal to the Excess Forseen Collections, outstanding as of the last Settlement Date before being reduced to zero (unless otherwise reimbursed);

5. to the payment of any outstanding Deferred Purchase Price to be made pursuant to the provisions of each Receivables Purchase Agreement;

6. to the repayment of the Subordinated Deposit.

16.2. On each Settlement Date during the Amortisation Period, if any Sellerand/or the Centralising Unit fail(s) to make a payment when due under theTransaction Documents in respect of the Adjusted Collections and, pursuant tothe provisions of Article 21.3, the collection mandate given to the Sellers hasbeen terminated, the Purchaser shall apply the Distributed Amounts, in thefollowing order:

1. to the payment of any sums due and payable on such date in respect of the Purchaser’s Funding, in accordance with the provisions of the Master Senior Deposit Agreement, as follows:

1.1. the Margin due to ESTER FINANCE;

1.2. the Immobilisation Indemnity due pursuant to article 8.1 of the Master Senior Deposit Agreement;

1.3. the Deposit Fee due pursuant to article 8.2 of the Master Senior Deposit Agreement;

until their full payment;

provided that on each Intermediary Settlement Date, the sums referred to in this point 1. to be paid on the next Funded Settlement Date, calculated prorata temporis, shall be excluded from the Distributed Amounts available on such Intermediary Settlement Date and reserved by the Purchaser in order to be paid on such Funded Settlement Date;

2. to the payment of any sum due and payable prior to such date, by the Sellers or the Centralising Unit to the Purchaser under the Transaction Documents and which remains unpaid on such date, until its full repayment;

3. to the payment of any sum due and payable in respect of the Purchaser’s Funding, up to an amount equal to the sum due under the Transaction Documents in respect of the Adjusted Collections and which any Seller and/or the Centralising Unit has failed to pay (the "PRIORITY AMOUNT");

provided that on each Intermediary Settlement Date, the sums referred to in this point 3. to be paid on the next Funded Settlement Date shall be excluded from the Distributed Amounts available on such Intermediary Settlement Date and be reserved by the Purchaser in order to be paid on such Funded Settlement Date;

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4. to the payment of any sum remaining due and payable in respect of the Purchaser’s Funding, in accordance with the provisions of the Master Senior Deposit Agreement and, pari passu, in respect of that portion of the Complementary Deposit that exceeds the Priority Amount, in accordance with the provisions of the Master Complementary Deposit Agreement, until their full payment;

provided that on each Intermediary Settlement Date, the sums referred to in this point 4., due in respect of the Purchaser’s Funding and to be paid on the next Funded Settlement Date shall be excluded from the Distributed Amounts available on such Intermediary Settlement Date and reserved by the Purchaser in order to be paid on such Funded Settlement Date;

5. to the repayment of any residual sum due in respect of the Complementary Deposit;

6. to the payment to the Centralising Unit of any amount equal to the Excess Forseen Collections, outstanding as of the last Settlement Date before being reduced to zero (unless otherwise reimbursed);

7. to the payment of any Deferred Purchase Price to be made pursuant with the provisions of each Receivables Purchase Agreement;

8. to the repayment of the Subordinated Deposit.

ARTICLE 17. PAYMENTS

17.1 For the purpose of the payment of any sum due under this Agreement, theAgent, the Purchaser, each Seller and the Centralising Unit acting, as the casemay be, on its own behalf or on behalf of the Sellers, expressly agree to useexclusively the following bank accounts:

(i) the Purchaser’s Account;

(ii) the Centralising Unit’s Account;

(iii) the Collection Accounts;

(iv) the Purchaser’s Collection Accounts; and

(v) the Agent’s Account.

The parties hereunder acknowledge that such accounts shall be used exclusivelyfor the purposes and in accordance with the terms of this Agreement.

17.2 The Euro is the currency of payment for each and every sum due at any timeunder the Transaction Documents.

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17.3 The Purchaser shall be entitled to set-off (i) any amount due and payableby the Purchaser to the Centralising Unit on its behalf or on behalf of theSellers under the Transaction Documents and (ii) any amount due and payable bythe Centralising Unit on its behalf or on behalf of the Sellers to the Purchaserunder the Transaction Documents.

The Centralising Unit, acting on its behalf or on behalf of the Sellers, shallbe entitled to set-off (i) any amount due and payable by the Purchaser to theCentralising Unit on its behalf or on behalf of the Sellers under theTransaction Documents and (ii) any amount due and payable by the CentralisingUnit on its behalf or on behalf of the Sellers to the Purchaser under theTransaction Documents.

17.4 For the purposes of this Article, any payments falling due on a day whichis not a Business Day shall instead fall due on the following Business Day.

17.5 The Centralising Unit acting, as the case may be, on its own behalf or onbehalf of any Seller, shall give to its bank before 12.00 (noon) on the BusinessDay following each Calculation Date, an irrevocable instruction to transfer(ordre de virement irrevocable), from the Centralising Unit’s Account to thePurchaser’s Account, any amount due to the Purchaser on such Funded SettlementDate or on such Intermediary Settlement Date in accordance with the TransactionDocuments, to be credited with immediately available funds, before 12.00 (noon),on the said Funded Settlement Date or Intermediary Settlement Date.

The Purchaser shall give to its bank one Business Day before each FundedSettlement Date or each Intermediary Settlement Date, before 10.00 am, anirrevocable instruction to transfer (ordre de virement irrevocable), from thePurchaser’s Account to the Centralising Unit’s Account, any amount due, as thecase may be, to the Centralising Unit on such Funded Settlement Date or on suchIntermediary Settlement Date, in accordance with the Transaction Documents, tobe credited with immediately available funds, before 12.00 (noon), on the saidFunded Settlement Date or on the said Intermediary Settlement Date.

17.6 The Centralising Unit acting, as the case may be, on its own behalf or onbehalf of any Seller, shall give to CALYON, acting as holder of the CentralisingUnit’s bank account, at least two (2) Business Days before the InitialSettlement Date, irrevocable orders to pay on the Initial Settlement Date,before any other debit on such Centralising Unit’s bank account and within thelimits of the sums credited on the Centralising Unit’s bank account by thePurchaser on the Initial Settlement Date:

- to CALYON, acting on its own behalf and on behalf of its legal counsel (Gide Loyrette Nouel);

- to NBP, acting on its behalf and on behalf of its legal counsel (Allen & Overy);

- to each Issuers and Liquidity Banks, each acting on their own behalf and on behalf of their legal counsel;

- to the Agent, to Eurofactor AG and to INTESA MEDIOFACTORING S.p.A;

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any structuring, arranger and legal fees, costs and expenses (including anyup-front fees as a result of the putting in place of an Italian Back UpServicer) due to each of the above and to their respective legal counsel.

17.7 Any default by the Centralising Unit acting, as the case may be, on its ownbehalf or on behalf of any Seller, in the fulfilment of its payment obligationsunder this Agreement shall automatically entitle the Purchaser, without havingto give prior notice, to receive interest on any amounts payable and remainingunpaid (excluded), calculated from the date when such payment was due (included)until the date of actual payment, at a rate of EURIBOR 1 month + 2% per annumpayable on the date of actual payment (excluded).

CHAPTER IX - PURCHASE OF PURCHASABLE RECEIVABLES

ARTICLE 18. CONDITIONS IN RELATION TO ANY PURCHASE OF PURCHASABLE RECEIVABLES

18.1 Conditions precedent in relation to any purchase of Purchasable Receivables

The Purchaser shall not be obliged on any Settlement Date during theReplenishment Period, to purchase from any Seller, Purchasable Receivablesunless each of the following conditions have been fulfilled on such SettlementDate:

(i) the representations and warranties made by the Seller and the Centralising Unit referred to in Article 11 (Representations and Warranties) remain valid and accurate on such Settlement Date;

(ii) the Centralising Unit has transmitted the Assessment Report to the Agent and delivered the List of Purchasable Receivables to the Purchaser on the Information Date immediately preceding such Settlement Date;

(iii) the amount of the Subordinated Deposit, the Complementary Deposit and any Increase in the Subordinated Deposit and any Increase in the Complementary Deposit applicable on such Settlement Date, has been recorded on the debit balance of the Current Account;

(iv) the Payment to be made and the Transfer Deeds to be delivered pursuant hereto do not violate any law or regulation in force on such Settlement Date;

(v) such Settlement Date is not later than the Commitment Expiry Date;

(vi) the Purchaser has received to its satisfaction, on or before such Settlement Date, (a) an Auditors Certificate in relation to the Sellers and the Centralising Unit, not older than six (6) calendar months, and (b) a Solvency Certificate in relation to the Centralising

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Unit, to the French Seller, to the German Sellers, to the Italian Seller and to the Spanish Seller, not older than three (3) calendar months;

(vii) no Early Amortisation Event has occurred on such date;

(viii) the selection of the Purchasable Receivables to be purchased from the Sellers by the Purchaser has been carried out in accordance with the selection procedure set forth in Article 12.3.1; and

(ix) the Centralising Unit, acting on behalf of the Sellers, has transferred the Adjusted Collections to the Purchaser, to the extent required by Article 23 (Application of payments and payments of collections).

18.2 Conditions subsequent to any Purchase of Purchasable Receivables on aSettlement Date during the Replenishment Period

In the event that any of the following conditions have not been fulfilled on anySettlement Date during the Replenishment Period, such a failure shall constitutean automatic and immediate termination (condition resolutoire de plein droit) ofthe assignment by the Sellers to the Purchaser of the Sold Receivables sold onsuch Settlement Date :

(i) the Centralising Unit has not credited the Purchaser’s Account for an amount equal to any debit balance of the Current Account in accordance with the provisions of Article 6.3.3. on such date before 12.00 (noon); or

(ii) If such Settlement Date is a Funded Settlement Date, the Depositor has not duly made or increased the Senior Deposit in respect of its commitment to effect a Senior Deposit in accordance with and subject to the terms of the Master Senior Deposit Agreement.

ARTICLE 19. CONFORMITY WARRANTIES FOR PURCHASABLE RECEIVABLES

Each Seller represents and warrants to the Purchaser that, as of the AssessmentDate relating to the Settlement Date on which a Purchasable Receivable shall besold, such Purchasable Receivable (other than a Net Miscellaneous Receivable orwith respect to the Initial Settlement Date a Defaulted Receivable) shall exist,and, to its knowledge, except as specifically identified on the AssessmentReport (it being provided that even if such Purchasable Receivables are soidentified, this shall be without prejudice to the rights of the Purchaser toexercise any recourse against the relevant Seller as provided for under thisAgreement and, in particular, shall not prevent the Purchaser from exercisingany recourse in connection with Article 28) shall conform to the characteristicsspecified in article 7 (Description of Purchasable Receivables) of eachReceivables Purchase Agreement, with the description as it appears on theTransfer Deed and the electronic support relating to such Transfer Deed and withthe characteristics specified in Schedule 13.

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Each Seller and the Purchaser agree that the Conformity Warranties set out inthis Article:

(i) shall be given by each Seller to the Purchaser and shall apply to all of its Purchasable Receivables designated on any Transfer Deed and the related support;

(ii) shall take effect upon the mere transfer by each Seller or the Centralising Unit to the Purchaser of a Transfer Deed and the related supports, in accordance with and subject to the relevant Receivables Purchase Agreement;

(iii) shall be valid for such Purchasable Receivable on the relevant Information Date and shall remain in force until the Purchaser’s Funding has been repaid in full.

ARTICLE 20. IDENTIFICATION OF THE CONTRACTUAL DOCUMENTATION FOR THE SOLDRECEIVABLES - ACCESS TO DOCUMENTS

The Parties irrevocably agree that each purchase of Purchasable Receivablescarried out pursuant to this Agreement and the relevant Receivables PurchaseAgreement shall entitle the Purchaser or any other agent appointed in adiscretionary way by the same, solely in order to protect and/or to enforce itsright in connection with the Securitisation Transaction, to access the originalcopies of the contractual documentation or the computer or paper informationunderlying the Sold Receivables and, the support listing the Sold Receivablesand to make duplicate copies of such documents; provided that (i) the Purchaseror its agent shall have the right to obtain the original copies of suchdocuments to the extent required to enforce their rights under the TransactionDocuments and (ii) in respect of the Protected Debtors, the provisions of thepresent Article shall only apply if the conditions set forth in the DataProtection Trust Agreement are met.

Each Seller irrevocably agrees to allow the Purchaser or any other personappointed by it unrestricted access to the said documents provided that (i) suchSeller has been given two (2) Business Days prior notice thereof, (ii) thePurchaser or any other person, whom the Purchaser appoints undertakes not todisclose any confidential information except where permitted in thecircumstances provided for by Article 31 (Confidentiality) and (iii) in respectof the Protected Debtors, subject to the provisions of the Data Protection TrustAgreement.

The Purchaser or any other person, whom the Purchaser appoints, shall in no waybe obliged to reimburse the Centralising Unit or the Sellers, for any expenseincurred by the Centralising Unit or the Sellers when allowing access to use therelevant documents, nor to compensate the Centralising Unit or the Sellers forany loss which such access or use might cause, other than any loss resultingfrom the gross negligence (faute lourde) or willfull misconduct (dol) of thePurchaser or such other person or the breach by the Purchaser of its materialobligations under the Transaction Documents.

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CHAPTER X - COLLECTION OF SOLD RECEIVABLES

ARTICLE 21. COLLECTION OF SOLD RECEIVABLES

21.1 Seller’s Collection Mandate

The Purchaser hereby appoints each Seller, who accepts, to act as the CollectionAgent for the purposes of the collection of Sold Receivables under a CollectionMandate in accordance with the terms and subject to the conditions of thisAgreement and the relevant Receivables Purchase Agreement. Each Seller herebyirrevocably renounces resigning from its role as Collection Agent for theduration of this Agreement.

In addition, the Purchaser hereby appoints the Sellers, who hereby accept to acton its behalf for the purposes of Articles 24 and 25 or where expressly providedfor in this Agreement or any of the Receivables Purchase Agreements.

21.2 Collection Support

The Purchaser may request the Back-Up Servicer(s) and/or the Italian Back-UpServicer(s) to provide the relevant Sellers with logistic support to carry outthe collection of Sold Receivables with greater efficiency, provided that theBack-Up Servicer(s) and the Italian Back-Up Servicer(s) shall not be obliged toprovide such logistic support. If the Centralising Unit, acting in the name andon behalf of the Sellers, accepts such offer and the relevant Back-UpServicer(s) and/or the Italian Back-Up Servicer(s) accept(s) to provide suchlogistic support, it shall reimburse the Back-Up Servicer(s) and/or the ItalianBack-Up Servicer(s) for any duly documented costs incurred in connection withthe setting up of such logistic support.

21.3 Termination of the Collection Mandate

21.3.1. Solely in the event of:

(i) any Early Amortisation Event under Article 13.3. (xv);

(ii) any failure of any of the Sellers to comply with their respective obligations under Article 12.1.2 (vi), which is not remedied within fifteen (15) Business Days after written notice received from the Purchaser, or, if ealier, after a Responsible Officer becoming aware;

(iii) entry of any Seller, the Centralising Unit, GOODYEAR DUNLOP TIRES EUROPE BV, GOODYEAR or any Material Subsidiary into Insolvency Proceedings;

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(iv) any failure by a Seller or the Centralising Unit or GOODYEAR DUNLOP TIRES EUROPE BV to make a payment (including any deposit or transfer of Adjusted Collections to the Purchaser) when due under the Transaction Documents

(w) which is not remedied within two (2) Business Days, provided that such failure is due to a technical reason which affects the means of payment in the banking system used by such Seller or by the Centralising Unit and is not otherwise covered by clause (y) below;

(x) which is not remedied within four (4) Business Days, where such failure arises in relation to the payment of the Management Fee or the Stand-by Fee;

(y) which is not a scheduled payment under the Transaction Documents and which is not remedied within two (2) Business Days after written notice received from the Purchaser or, if earlier, after a Responsible Officer becoming aware thereof;

(z) which is a scheduled payment (including a payment due pursuant to Article 6.3.2.) and is not otherwise covered by clause (w) or (x) above;

(v) any restructuring of (a) a Seller leading to GOODYEAR ceasing to hold directly or indirectly more than 50% in the share capital and voting rights of such a Seller, or (b) GOODYEAR DUNLOP TIRES EUROPE BV leading to GOODYEAR ceasing to hold directly or indirectly more than 50% in the share capital and voting rights of GOODYEAR DUNLOP TIRES EUROPE BV, or (c) the Centralising Unit leading to GOODYEAR DUNLOP TIRES EUROPE BV ceasing to hold directly or indirectly 100% in the share capital and voting rights of the Centralising Unit;

(vi) any failure by any Seller or the Centralising Unit to deliver an Auditors Certificate, complying with the relevant form attached as Schedule 4, as provided for under Article 12.1.1 (vii) and 12.2.1 (vi), which is not remedied within fifteen (15) Business Days after written notice received from the Purchaser or, if earlier, after a Responsible Officer becoming aware thereof;

(vii) any failure by any Seller or the Centralising Unit to deliver a Solvency Certificate, complying with the relevant form attached as Schedule 5, as provided for under Article 12.1.1 (xii) and 12.2.1 (vii), which is not remedied within ten (10) Business Days after written notice received from the Purchaser or, if earlier, after a Responsible Officer becoming aware thereof;

(viii) any Material Indebtedness of GOODYEAR TIRES EUROPE BV or any of its subsidiaries, or GOODYEAR (a) has not been paid or repaid when due (after giving effect to any applicable grace period) or (b) has become due and payable before its stated date of payment as a result of a declared default and after the expiry of any applicable grace period, provided that, in each case, such default has not been waived pursuant to the terms of the relevant agreement;

(ix) any change of any kind, in any Seller’s or Centralising Unit’s articles of association, business or assets, which would be reasonably likely to result in a Material Adverse Effect;

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(x) any representation and warranty made by any Seller, the Centralising Unit or GOODYEAR DUNLOP TIRES EUROPE BV under the Transaction Documents (other than under Article 19), or any information contained in any document delivered by any Seller or the Centralising Unit or GOODYEAR DUNLOP TIRES EUROPE BV to the Purchaser pursuant thereto, is found to have been inaccurate on the date on which it was made or delivered, if such inaccuracy (a) is not remedied or waived accordingly within thirty (30) days after written notice received from the Purchaser or, if earlier, after a Responsible Officer becoming aware thereof, and (b) is reasonably likely to result in a Material Adverse Effect;

(xi) there is an attachment, freezing or seizure (saisie) order against all or any material part of the property, assets or revenues of the Centralising Unit or any of the Sellers or GOODYEAR DUNLOP TIRES EUROPE BV or in the event that either the Centralising Unit or any of the Sellers or GOODYEAR DUNLOP TIRES EUROPE BV has become subject at any time to any court order or other court process having similar effect and such attachment, seizure (saisie), court order or court process remains in effect and is not discharged during a period of fourty five (45) calendar days following the date on which it was served;

(xii) the validity of the Transaction Documents or a Transfer Deed issued pursuant to the Receivables Purchase Agreement or any Payment hereunder or thereunder is successfully challenged by any enforcement order issued or judgment obtained as a result of proceedings before any court (including arbitration proceedings); or

(xiii) (a) any of the Transaction Documents becomes illegal or, cannot, for any reason whatsoever, be performed pursuant to their respective terms, and such illegality or inability to be performed is reasonably expected to prejudice the rights of the Purchaser in any material respect;

(b) a Transfer Deed becomes illegal or, cannot, for any reason whatsoever, be performed pursuant to its terms, and such illegality or inability to be performed is reasonably expected to prejudice the rights of the Purchaser;

(xiv) any Collection Account Agreement is terminated for whatever reason and such Collection Account Agreement is not replaced by (a) a then existing Collection Account Agreement or (b) an equivalent collection account agreement that has been approved by the Purchaser, the Agent, the Issuers and the Liquidity Banks (such consent not to be unreasonably withheld or delayed);

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the Purchaser may terminate the appointment of each Seller for collection of theSold Receivables by issuing or causing any other entity it has appointed forsuch purpose to issue to this effect:

(i) a letter sent by registered mail with acknowledgement of receipt to each Seller; and

(ii) subsequently and in relation to the Italian Seller, an Italian Notice of Transfer to each of the Debtors, in accordance with the Italian Receivables Purchase Agreement, provided that the cost of delivery of any Italian Notice of Transfer is borne exclusively by the Centralising Unit, acting in the name and on behalf of the Sellers and shall be reasonable and duly documented;

(iii) subsequently and in relation to the other Sellers, a Notice of Transfer to each of the Debtors, in accordance with the relevant Receivables Purchase Agreement, provided that the cost of delivery of a Notice of Transfer is borne exclusively by the Centralising Unit, acting in the name and on behalf of the Sellers and shall be reasonable and duly documented.

The appointment of any Seller for the purpose of the collection of any SoldReceivable shall terminate automatically on the date of receipt by theCentralising Unit, acting in the name and on behalf of the relevant Seller, ofthe letter referred to under (i) above. As of such date, the Seller shallforthwith transfer to the credit of the relevant Purchaser’s Collection Accountany amount received from the relevant Debtors relating to the Sold Receivables,in accordance with the provisions of the Collection Account Agreements.

The termination of the appointment of a Seller as collection agent shall notaffect the obligations of such Seller under this Agreement or the relevantReceivables Purchase Agreement, with the exception of those relating to thecollection of the Sold Receivables. Notwithstanding any other provisions of thisAgreement, neither the Purchaser nor any of its agents shall, at any time otherthan following the termination of the collection mandate of the Sellers pursuantto this Article 21.3.1, contact or communicate with any Debtor in respect of anySold Receivable or the Securitisation Transaction.

21.3.2. In addition, the Purchaser shall be entitled to appoint (i) a (orseveral) Back-Up Servicer(s) for the collection of all or part of the SoldReceivables for which a Notice of Transfer has been delivered to the relevantDebtors in accordance with Article 21.3.1 above, and (ii) an (or several)Italian Back-Up Servicer(s) for the collection of all or part of the ItalianSold Receivables for which an Italian Notice of Transfer has been delivered tothe relevant Debtors in accordance with Article 21.3.1 above.

The Purchaser confirms that, as a condition precedent to its(their)appointment(s), the Back-Up Servicer(s) and the Italian Back-Up Servicer(s) have(or will have) agreed with the Purchaser to comply with the provisions of thisAgreement.

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Each Seller, upon being notified of the exercise of such a right by thePurchaser undertakes:

(i) to take all steps and do all things to enable the Back-Up Servicer(s) and the Italian Back-Up Servicer(s) to take over the Seller’s undertakings as collection agent(s);

(ii) to deliver in accordance with the provisions of Article 20 (Identification of the contractual documentation for the Sold Receivables - Access to documents) and Article 31 (Confidentiality) to the Back-Up Servicer(s) and to the Italian Back-Up Servicer(s) any and all original copies of the contractual documentation or the computer information concerning the Sold Receivables as well as any other document as might be reasonably requested by the Back-Up Servicer(s) and/or the Italian Back-Up Servicer(s) in order to perform its(their) obligations as servicer(s);

(iii) to transfer forthwith to the credit of the relevant Purchaser’s Collection Account, any Actual Collections relating to Sold Receivables it may directly receive from any Debtor;

(iv) to indemnify forthwith the Purchaser, for any reasonable costs and expenses duly evidenced and incurred by the latter in relation to the Notice of Transfer and the Italian Notice of Transfer; and

(v) to indemnify forthwith the Purchaser, for any reasonable costs incurred by the latter due to the appointment of the Back-Up Servicer(s) and/or the Italian Back-Up Servicer(s) to act as collection agent(s), provided that the Back-Up Servicer(s) and the Italian Back-Up Servicer(s) furnishes(furnish) any documents evidencing such costs within the limits set forth in Article 27.3.

The Purchaser shall, immediately upon payment by the Centralising Unit, actingon its own behalf and on behalf of the Sellers, of all amounts owed to thePurchaser, (i) take all steps necessary to terminate any rights it may have withrespect to any Collection Accounts, and (ii) if the Sellers’ collection mandatehas been terminated pursuant to the terms of this Article, revoke any collectionmandate granted to the Back-Up Servicers, to the Italian Back-Up Servicer(s) orany other agent of the Purchaser.

21.3.3. Each of the Sellers hereby irrevocably renounces resigning from its roleunder the collection mandate referred to in this Article 21 for the duration ofthis Agreement. Such collection mandate may only be terminated in thecircumstances and in accordance with the procedures provided for in the presentarticle or, with respect to a particular Seller, if it has ceased to be a partyto this agreement in accordance with the provisions herein, when all SoldReceivables originated by such Seller have been collected, repurchased inaccordance with this Agreement or determined to be uncollectible.

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ARTICLE 22. ASSESSMENT REPORT AND BACK-UP SERVICER REPORT

22.1. As long as a Seller acts as collection agent in respect of any SoldReceivable, such Seller shall draw up or cause to be drawn up, an AssessmentReport in the form set out in Schedule 3, which shall be delivered by theCentralising Unit acting in the name and on behalf of the Sellers to the Agenton each Information Date.

22.2. In the event of the termination of the Collection Mandate, in accordancewith the provisions of Article 21.3, the Purchaser or, as the case may be, theBack-Up Servicers shall draw up a Back-Up Servicer Report on each InformationDate.

ARTICLE 23. APPLICATION OF PAYMENTS AND PAYMENTS OF COLLECTIONS

23.1. Application of Payments

Subject to any applicable laws and to the provisions of the Collection AccountAgreements, any payment received by a Seller from any of its Debtors shall beapplied first to Sold Receivables (before being applied to other obligations ofsuch Debtor), unless the said Debtor has given express instruction otherwise.

23.2. Payment of collections

23.2.1. In so far as a Seller acts as collection agent in respect of any SoldReceivable, the Parties agree that:

(i) during the Replenishment Period, on each Settlement Date, Adjusted Collections shall be recorded and applied in the manner provided for in Article 6;

(ii) during the Replenishment Period, on each Funded Settlement Date, the Cash Collections Advance shall be transferred by the Centralising Unit to the Purchaser’s Account before 12.00 (noon) on such Settlement Date;

(iii) on each Settlement Date during the Amortisation Period, the Centralising Unit shall transfer to the Purchaser’s Account the Adjusted Collections.

If a Seller no longer acts as collection agent in respect of any SoldReceivable, the Parties agree that the relevant Back-Up Servicer or ItalianBack-Up Servicer shall transfer to each relevant Purchaser’s Collection Accountthe Actual Collections made in relation to the Sold Receivables purchased fromsuch Seller. Such Actual Collections shall be applied to the payments in themanner provided for in Article 6 until the Commitment Expiry Date, andthereafter, as provided for in Article 16.

23.2.2 Except as provided for in Article 23.2.1., the Sellers and theCentralising Unit shall not be required to transfer any collections to thePurchaser.

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23.3. Collection Accounts

The Sellers and the Purchaser have agreed to put in place Collection Accounts ineach jurisdiction concerned by the Securitisation Transaction (i.e. France,Germany, Italy and Spain) in order to segregate any cash received by theSellers, when acting in their capacity as collection agent under the foregoingprovisions and the relevant Receivables Purchase Agreement.

A Collection Account Agreement shall be concluded in relation to each CollectionAccount.

Notwithstanding the provisions of Article 23.1 hereof and of the CollectionAccount Agreements, the Purchaser agrees that, in the event that theCentralising Unit provides reasonably satisfactory evidence that a payment madeto any Collection Account does not relate to Sold Receivables or RetransferredReceivables (as defined in the Collection Account Agreements), the Purchasershall promptly authorise the return of such payment to the Centralising Unit,within the limit of the credit balance of the relevant Collection Account.

ARTICLE 24. RENEGOTIATION

24.1 Authorisation to renegotiate in Insolvency Proceedings

Each Seller acting on behalf of the Purchaser may, in the context of InsolvencyProceedings relating to any Debtor (if Insolvency Proceedings apply to suchDebtor), participate in the setting up of a voluntary rescheduling and may makeproposals for that purpose, provided that:

(i) it complies with its obligations under Article 26 (Obligations of care); and

(ii) in the event that the Outstanding Amount of the Sold Receivables subject to such renegotiation exceeds 1,500,000 euro, it has obtained the prior written consent of the Purchaser to renegotiate.

24.2. Renegotiations as to amount and maturity date

The Purchaser agrees that each Seller, acting on behalf of the Purchaser, mayissue Credit Notes, Year End Rebates or Commercial Discounts in accordance withits management procedures and accordingly modify the amount and Maturity Date ofthe Sold Receivables for which such Credit Notes, Year End Rebates or CommercialDiscounts have been issued, provided that the Seller performs its obligationsset forth under Article 28 (Deemed collections).

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24.3. Other renegotiations

Subject to the provisions of Articles 24.1 and 24.2, the Purchaser authoriseseach Seller, acting in the name and on behalf of the Purchaser, to agree to newterms in relation to any Sold Receivable:

(a) if the Purchaser expressly consents in writing;

(b) without prior notification to or consent of the Purchaser, provided that such renegotiation:

(i) complies with its obligations under Article 26 (Obligations of care); and

(ii) does not adversely affect the rights of the Purchaser under such Sold Receivables, including any security interests, privileges and ancillary rights attached thereto; or

(c) without prior notification to or consent of the Purchaser, if such Sold Receivable is a Defaulted Receivable.

ARTICLE 25. REPRESENTATION MANDATE

The Purchaser hereby appoints each Seller as its agent to undertake and toconduct, in the name and on behalf of the Purchaser, all proceedings in court orout of court as are necessary for the collection of the Sold Receivables,including those deeds and formalities required for such proceedings, subject tocompliance with its obligations set out in Article 26 (Obligations of care). Inparticular, each Seller shall freely issue and conduct, in the name and onbehalf of the Purchaser, all writs, pleadings, arguments, enforcementproceedings, interventions by agreement or order, defences, defences to thirdparty proceedings, and appeals, as may be necessary in its opinion to recoverthe sums due under the Sold Receivables.

The Purchaser agrees that it shall intervene in any claims or proceedingsinitiated upon such Seller’s request to assist such Seller in any claims orproceedings initiated by the latter, in the event that such Seller deems itnecessary or whenever required by the applicable statutory or regulatoryprovisions.

Each Seller agrees that it shall intervene in any claim or proceedings initiatedupon the Purchaser’s request to assist the Purchaser in any claims orproceedings initiated by the Purchaser, in the event that the Purchaser deems itnecessary or whenever required by the applicable statutory or regulatoryprovisions, provided that the Purchaser shall not initiate any such claim orproceeding unless (i) the collection mandate of the Sellers has been terminatedpursuant to the provisions of Article 21.3 or (ii) after the Program ExpiryDate, any amount remains due to the Purchaser under any of the TransactionDocuments.

Furthermore, the Purchaser authorises each Seller to issue, as appropriate, asubrogation receipt to any third party in return for any full and irrevocablepayment made by that third party in substitution for any Debtor.

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Any expenses incurred by each Seller in carrying out its mandate shall be borneexclusively by such Seller.

ARTICLE 26. OBLIGATIONS OF CARE

Each Seller undertakes to act in the collection of the sums due under the SoldReceivables in accordance with the standards of a prudent and informedbusinessman, and to be no less diligent than it would be in collecting sums dueunder its own receivables, and in particular:

(i) to apply to the collection of the sums due under the Sold Receivables, procedures that comply in all material respects with all applicable laws and regulations and the contracts underlying the Sold Receivables;

(ii) to take such measures as may reasonably be required to ensure that all security interests, rights, claims, privileges and other benefits (droits accessoires) attached to the Sold Receivables, remain in force and are exercised in a timely fashion;

(iii) to take such steps as are reasonably necessary to oppose any claim challenging the existence, validity, amount or maturity of the Sold Receivables or the security interests, rights, claims, privileges and other benefits attached thereto, if any;

(iv) to take such steps, including without limitation any legal actions such as proceedings in court, as may be reasonably necessary and appropriate for the collection of the sums due under the Sold Receivables; and

(v) to take such steps to cause any attachment, seizure (saisie) or any other enforcement measure levied or applied against any accounts where the sums due pursuant to the collection of Sold Receivables are received, to be released or withdrawn within thirty (30) calendar days.

ARTICLE 27. COMMISSION FOR AND COSTS OF COLLECTION

27.1. The Parties agree that the Sellers to whom such tasks are delegated shallnot receive a commission or remuneration for providing the collection service.

27.2. Each Seller shall bear its own costs incurred in the course of providingthe collection service, without any claim against the Purchaser, forreimbursement. The termination of the mandate granted to the Sellers in Article21 (Collection of Sold Receivables) shall not give to the Sellers any right tocompensation.

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27.3. In the event that a (or several) Back-Up Servicer(s) or Italian Back-UpServicer(s) is(are) appointed to act as agent for the collection of all or partof the Sold Receivables pursuant to the terms of Article 21.3, such Back-UpServicer(s) or Italian Back-Up Servicer(s) shall be entitled to receive from theCentralising Unit, acting on behalf of the Sellers, a fee, in accordance withthe provisions of the General Servicing Agreement and the Italian ServicingAgreement. The parties acknowledge that the payment of such Stand-By Fee shallbe expressly excluded from the Current Account mechanism.

In the event that the Centralising Unit fails to pay the amounts referred tounder Articles 27.2 and 27.3 on any Funded Settlement Date, the Purchaser shallproceed forthwith to the payment of such amounts, on the Centralising Unit’sbehalf. As such, the Purchaser shall be, upon delivery of a subrogation notice(quittance subrogative) by the Back-Up Servicer(s) or the Italian Back-UpServicer(s), subrogated in the rights of the Back-Up Servicer(s) or of ItalianBack-Up Servicer(s) against the Centralising Unit to the extent of the sums paidto the Back-Up Servicer(s) or to the Italian Back-Up Servicer(s).

27.4. Stand-by servicing

27.4.1. As consideration for the preparation and putting in place of the back-upservicer procedure, each of the Stand-By Servicer and the Italian Stand-ByServicer shall be entitled to receive an up-front fee in accordance with theprovisions of the General Servicing Agreement and the Italian ServicingAgreement, which shall be paid on the date hereof by the Centralising Unit. Theparties acknowledge that the payment of such up-front fee shall be expresslyexcluded from the Current Account mechanism.

27.4.2. On each Funded Settlement Date, the Centralising Unit shall pay to eachof the Back-Up Servicers and the Italian Back-Up Servicer a Stand-By Fee whoseaim shall be to compensate the Back-Up Servicer/Italian Back-Up Servicer’sundertaking to act as back-up servicer upon request during the term of theAgreement, in accordance with the provisions of the General Servicing Agreementand the Italian Servicing Agreement. The parties acknowledge that the payment ofsuch Stand-By Fee shall be expressly excluded from the Current Accountmechanism.

27.4.3. In the event that the Purchaser exercices any of its rights to collectsums directly from any Collection Account(s), in accordance with the relevantprovisions of the Collection Account Agreement(s), the Centralising Unit shallpay to the Stand-by Servicer fees in accordance with the provisions of theGeneral Servicing Agreement. The parties acknowledge that the payment of suchfees shall be expressly excluded from the Current Account mechanism.

27.4.4 In the event that the Centralising Unit fails to pay any fees describedin the present Article 27.4 on a Funded Settlement Date, the Purchaser shallproceed forthwith with the payment of such fees, on the Centralising Unit’sbehalf to the extent of the Adjusted Collections received. As such, thePurchaser shall be, upon delivery of a subrogation notice by the (Italian)Back-Up Servicer(s)/(Italian) Stand-By Servicer, subrogated in the rights of the(Italian) Back-Up Servicer(s)/(Italian) Stand-By Servicer against theCentralising Unit to the extent of the sums paid to the (Italian) Back-UpServicer(s)/(Italian) Stand-By Servicer in respect of these fees.

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27.5. Data Protection Trustee

27.5.1. The Centralising Unit, acting on behalf the German Seller, shall pay toeach of the Data Protection Trustee the compensation described in the DataProtection Trustee Agreement. The parties acknowledge that the payment of suchcompensation shall be expressly excluded from the Current Account mechanism.

27.5.2 In the event that the Centralising Unit fails to pay the compensationdescribed in the present Article 27.5, the Purchaser shall proceed with thepayment of such compensation, on the Centralising Unit’s behalf to the extent ofthe Adjusted Collections received. As such, the Purchaser shall be, upondelivery of a subrogation notice by the Data Protection Trustee, subrogated inthe rights of the Data Protection Trustee against the Centralising Unit to theextent of the sums paid to the Data Protection Trustee in respect of thiscompensation.

CHAPTER XI - DEEMED COLLECTIONS

ARTICLE 28. DEEMED COLLECTIONS

28.1. Upon the occurrence of any one of the following events:

(i) the issue of any Credit Notes or Commercial Discounts as referred to in Article 24.2, in relation to any Sold Receivables;

(ii) any contract, which gives rise to a Sold Receivable, has been terminated and the relevant goods have been billed but remain to be delivered by any Seller, in whole or in part, on the termination date of such contract;

(iii) any set-off agreed by any Seller or by operation of law or by a court decision between debts owed to any Debtor and the Sold Receivables against such Debtor;

(iv) any Sold Receivable has been cancelled, in whole or in part;

(v) any Amended Invoice arises;

(vi) the issue of any Credit Note over Snow Tires, in relation to any Sold Receivables; or

(vii) the issue of any Year End Rebates, in relation to any Sold Receivables, unless such Year End Rebates have been cancelled or paid in cash by the relevant Seller;

the relevant Seller shall be deemed to have received the amount it would havecollected if such event had not occurred (the "DEEMED COLLECTION"), providedthat no Deemed Collection shall be due as a result of a Debtor’s failure,independent from and beyond one Seller’s control and from any of (i) through(vii) above, to make payments in respect of Sold Receivables.

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Moreover, given the internal billing procedures of each Seller, it may be thecase that certain Sold Receivables are declared by a Seller as beingextinguished partially or completely, in an Assessment Report and/or in anyelectronic file attached thereto, even though such Sold Receivables have notbeen fully paid by their respective Debtors (the "DEEMED EXTINGUISHEDRECEIVABLES"). Therefore, in order to offset the absence of any payment of cashcollections arising in relation to such Deemed Extinguished Receivables, suchDeemed Extinguished Receivables shall be considered as a Deemed Collection andshall be paid pursuant to Articles 28.2 and 28.3.

28.2. The relevant Sellers, the Centralising Unit and the Agent shall cooperateto determine the amount of Deemed Collections, provided that:

(i) during the Replenishment Period, the amount of Deemed Collections shall be debited from the Current Account through the adjustment of Adjusted Collections (as provided in the definition of such term);

(ii) during the Amortisation Period, the amount of Deemed Collections shall be transferred by the Centralising Unit to the Purchaser’s Account on each Funded Settlement Date and on each Intermediary Settlement Date.

28.3. In the event that any Seller or, as the case may be, the CentralisingUnit, acting in the name and on behalf of the Sellers, fails to pay any DeemedCollections as required pursuant to Article 28.2 (ii), the Purchaser mayautomatically set-off (a) the amount of such Deemed Collections against (b) anyamount due or thereafter to become due to such Seller or, as the case may be, tothe Centralising Unit, under the Transaction Documents. As soon as practicable,the Purchaser shall notify the Centralising Unit after exercise of its right ofset-off.

In the event that, notwithstanding such set-off, Deemed Collections still remainunpaid, the Purchaser shall have recourse against the relevant Seller’s assetsor, as the case may be, against the Centralising Unit’s assets, but only to theextent of the amounts remaining unpaid.

Any unpaid Deemed Collection shall remain outstanding until it has been paid infull in accordance with the present Article 28.3.

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CHAPTER XII - MISCELLANEOUS

ARTICLE 29. FEES AND EXPENSES

The Centralising Unit acting in the name and on behalf of the Sellers shallreimburse the Purchaser, acting for its own account and/or as proxy for (i) anyreasonable and duly documented expenses (including legal fees, costs andexpenses) arising out of any modification, waiver or amendment of theTransaction Documents to which the Centralising Unit and/or the Sellers are aparty and requested by the Centralising Unit, acting in the name and on behalfof the Sellers, or the Rating Agencies, (ii) any reasonable and duly documentedexpenses, claims, damages and liabilities (including legal fees, costs andexpenses) incurred in connection with the preservation and/or enforcement of therights of the Purchaser, the Issuers and the Liquidity Banks under theSecuritisation Transaction or (iii) any reasonable and duly documented expenses(including legal fees, costs and expenses) incurred in connection with therenewal of any Liquidity Agreement and, as the case may be, in connection withthe implementation of an alternative funding described in any Liquidity BankLetter, subject to prior communication by the Purchaser to the Centralising Unitof an estimate of fees in the event that the Centralising Unit requests thisestimate.

ARTICLE 30. SUBSTITUTION AND AGENCY

Each Party shall have the right to be assisted by, to appoint or to substitutefor itself one or more third parties in the performance of certain tasksprovided that:

(i) such Party has given prior written notice to the other Party and, in any case, the Purchaser has notified the Rating Agencies;

(ii) such Party remains liable to the other Party for the proper performance of those tasks and the relevant third party (parties) has (have) expressly renounced any right to any contractual claim against the other Party;

(iii) the relevant third party (parties) undertake(s) to comply with all obligations binding upon such Party under this Agreement;

(iv) the Rating Agencies have confirmed that the contemplated change will not entail a downgrading or withdrawal of the current rating of the Notes issued by the Issuers or that the contemplated change will reduce such downgrading or prevent such withdrawal; and

(v) each other Party has given prior written consent to this appointment and/or substitution, such consent not to be unreasonably withheld.

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ARTICLE 31. CONFIDENTIALITY

Each Party agrees to treat all information of any kind transmitted by any otherParty in connection with the Securitisation Transaction as confidential. TheParties agree not to disclose such information to any other person and to ensurethat their respective personnel similarly respect the confidential nature ofsuch information.

This provision shall not prevent:

(i) either Party from transmitting such information as may be required by its statutory auditors, public organisations or any governmental, regulatory, fiscal, or monetary institution or other authority, in so far as it is obliged to do so by the applicable laws and regulations in force;

(ii) the Purchaser from transmitting such information to any person who will provide or will undertake to provide directly or indirectly funds to the Purchaser or any agent appointed by the Purchaser pursuant to Article 20 (Identification of the contractual documentation for the Sold Receivables - Access to Documents), provided that the Purchaser undertakes that such person shall be bound to treat such information as confidential under the same terms and subject to the same conditions as provided for in the Transaction Documents;

(iii) the Purchaser from using any original or duplicate copy of the contractual documentation or any computer information referred to in Article 20 (Identification of the contractual documentation for the Sold Receivables-Access to documents) of this Agreement in order to take all such measures deemed necessary by the Purchaser to preserve, and/or enforce its rights under the Transaction Documents, including without limitation any legal actions;

(iv) either Party from providing the Rating Agencies with any information they may require;

(v) either Party from transmitting such information as may be in the public domain other than as a result of a breach of this Article or a breach of any other confidentiality obligation;

(vi) subject to GOODYEAR’s prior written consent, CALYON, the Issuers and the Liquidity Banks from using exclusively the following information: the amount involved in the Securitisation Transaction, the countries concerned, the number of Sellers, the structure of the transaction, the identity of the legal counsel involved in the Securitisation Transaction, the closing date of the Securitisation Transaction, the maturity of the Securitisation Transaction and the identity of the parties to the Securitisation Transaction; and

(vii) the Purchaser and CALYON from transmitting such information to any other person involved in the Securitisation Transaction, provided that the Purchaser and the CALYON undertake that such person shall be bound to treat such information as confidential under the same terms and subject to the same conditions as provided for in the Transaction Documents.

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This obligation to preserve confidentiality shall remain valid for ten (10)years from the Program Expiry Date.

ARTICLE 32. NOTICES

32.1. Except as otherwise set forth in the Transaction Documents, all notices,requests or communications which must or may be made pursuant to this Agreementshall be by way of writing, mail or fax.

32.2. All notices, requests or communications to be made and all documents to bedelivered from one Party to the other Party under the Transaction Documentsshall be made and delivered to the addressees referred to in Schedule 7 hereto(and in the case of the Sellers, to the Centralising Unit, acting in the nameand on behalf of the Sellers).

32.3. All notices, requests or communications made and all documents deliveredunder the Transaction Documents shall only take effect upon the date of theirreceipt by its addressee.

32.4. Each of the Parties may at any time modify the addressee of the notices,requests or communications to be made and the documents to be delivered to itunder the Transaction Documents by sending to that effect a letter or fax to theother Party indicating the name of the new addressee.

32.5. The Parties agree that the Centralising Unit shall be responsible forreceiving written notice on behalf of the Sellers, and that any notice given tothe Centralising Unit shall be deemed validly received by all of the Sellersupon receipt by the Centralising Unit.

32.6. The Parties agree that the Purchaser shall be responsible for receivingwritten notice on behalf of the Agent, the Joint Lead Arrangers and theCalculation Agent, and that any notice given to the Purchaser shall be deemedvalidly received by the Agent, the Joint Lead Arrangers and the CalculationAgent upon receipt by the Purchaser.

ARTICLE 33. EXERCISE OF RIGHTS - RECOURSE - NO PETITION

33.1. All rights conferred on the Purchaser by this Agreement or by any otherdocument delivered pursuant to or incidental to this Agreement, including rightsconferred by law, shall be cumulative and may be exercised at any time.

33.2. The fact that a Party does not exercise a right or delays doing so shallin no way be treated as a waiver of that right. The exercise of one right or apartial exercise shall not prevent any Party from exercising such a right in thefuture, or from exercising any other right.

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33.3. Limited Recourse

The parties waive any right that they may have to initiate any proceedingwhatsoever in relation to the contractual liability (responsabilitecontractuelle) of the Purchaser, except in the case of its own gross negligence(faute lourde) or willful misconduct (dol) and agree to limit their claims andrecourse against the Purchaser (including in the event of a breach by thePurchaser of any of its representations and warranties, or any of itsobligations hereunder) to the amount of the Available Funds on the relevantdate.

33.4. Any recourse of the Purchaser against the Sellers, the Centralising Unitor any of their respective Affiliates, directors, officers and employees inrelation to the non payment by any Debtors of any sums due under the SoldReceivables, shall be limited to the amount of the Subordinated Deposit and, tothe extent provided in Article 16, the Complementary Deposit.

33.5 Non Petition

The Parties irrevocably and unconditionally undertake and agree not to instituteany legal proceedings, take other steps or institute other proceedings againstESTER FINANCE, the purpose of which is the appointment of a conciliator or an adhoc agent, or the opening of receivership proceedings or insolvency proceedingsor any other similar proceedings.

ARTICLE 34. TRANSFERABILITY OF THIS AGREEMENT

This Agreement is entered into on the intuitu personae of the parties to thisAgreement. It is agreed that none of the parties may transfer this Agreement, orthe rights and obligations under this Agreement, to any third party whatsoeverwithout the prior written consent of all the other parties.

ARTICLE 35. AMENDMENT TO THE TRANSACTION DOCUMENTS

No amendment to the Transaction Documents may be made without the writtenconsent of each other party thereto and (a) unless the Rating Agencies (i) havebeen informed and provided by CALYON with all necessary details they may requirein respect of such contemplated amendment and (ii) have confirmed that thecontemplated amendment will not entail a downgrading or withdrawal of thecurrent ratings of the Notes issued by the Issuers, or that the contemplatedamendment will reduce such downgrading or prevent such withdrawal, and (b) eachIssuer and each Liquidity Bank has given its prior written consent to suchamendment (such consent not being unreasonably withheld or delayed).

Moreover, the Purchaser shall not accept any amendment to any Collection AccountAgreement to which it is a party without the prior written consent of theIssuers and the Liquidity Banks (such consent not to be unreasonably withheld ordelayed).

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The Purchaser hereby covenants to the Centralising Unit and the Sellers thatnone of the Securitisation Documents, to which the Centralising Unit, theSellers, GOODYEAR DUNLOP TIRES EUROPE BV or GOODYEAR are not party, shall beamended or otherwise modified in a way adverse to the Centralising Unit, theSellers, GOODYEAR DUNLOP TIRES EUROPE BV or GOODYEAR without their prior writtenconsent (such consent or denial thereof not to be unreasonably delayed).

ARTICLE 36. INDEMNITIES

Without limiting any other rights which the Indemnified Parties may have underthe Transaction Documents or any related documents or under applicable law, eachof the Centralising Unit and each Seller hereby agrees to indemnify thePurchaser, the Agent, the Joint Lead Arrangers, the Calculation Agent, theDepositor, the Issuers, the Liquidity Banks, each of their respective affiliatesand each officer, director, employee and agent of any of the foregoing (each an"INDEMNIFIED PARTY") from and against any and all damages, losses, claims,liabilities, costs and expenses (including reasonable attorneys’ fees anddisbursements) (and, in each case, any value added tax thereon) in any wayarising out of the Transaction Documents or any documents related to theSecuritisation Transaction (excluding, however, any of the foregoing (a) to theextent resulting from the gross negligence (faute lourde) or willful misconduct(dol) on the part of such Indemnified Party or the breach by an IndemnifiedParty of material obligations under any Transaction Document or any relateddocument, as finally determined by a court of competent jurisdiction), or (b)constituting recourse for Sold Receivables which are not paid or areuncollectible on account of the insolvency, bankruptcy or inability to pay ofthe applicable obligor) (collectively, "INDEMNIFIED AMOUNTS"), including,without limitation, any and all damages, losses, claims, liabilities, costs andexpenses incurred by or asserted against any Indemnified Party as a result of:

(a) any claims, actions, suits or proceedings commenced by any Debtor or any of its affiliates or any third party in connection with any of the Sold Receivables, the transactions out of which they arose or the goods or services the sale or provision of which gave rise to any Sold Receivables;

(b) reliance on any representation or warranty or statement made or deemed made by or on behalf of any Seller, the Centralising Unit or GOODYEAR DUNLOP TIRES EUROPE BV under or in connection with any Transaction Document or any related agreement or any certificate or report delivered pursuant hereto or thereto that, in either case, shall have been false or incorrect when made or deemed made;

(c) any failure of any Seller, the Centralising Unit or GOODYEAR DUNLOP TIRES EUROPE BV to perform its duties or obligations under this Agreement or the other Transaction Documents;

(d) any governmental investigation, litigation or proceeding related to this Agreement or in respect of any Sold Receivable;

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(e) the failure by any Seller or any of its affiliates to comply with any applicable law with respect to any Sold Receivable (or any contract by which it arose or by which it is evidenced or governed), or the nonconformity of any Sold Receivable (or such contract) with any such applicable law, or any action taken by any of the Sellers or their affiliates or agents in the enforcement or collection of any Sold Receivable;

(f) any failure of the Purchaser to have and maintain ownership of the Sold Receivables, free and clear of any Liens other than those contemplated in the Transaction Documents, or any attempt by any person to avoid, rescind or set aside any sale of Purchasable Receivables by any Seller to the Purchaser as contemplated by the Transaction Documents;

(g) any dispute, claim, offset or defense (other than discharge in bankruptcy or similar defense arising from the Debtor’s insolvency or inability to pay) of any Debtor to the payment of any Sold Receivable;

(h) the failure of any Seller to pay when due any value added taxes or other taxes payable in connection with any of the Receivables or the transactions out of which they arose;

(i) any commingling of collections on Sold Receivables with any other monies of the Seller, the Centralising Unit or any of their Affiliates;

(j) the use by the Sellers or their Affiliates of any monies received by them in payment of the Initial Purchase Price or Deferred Purchase Price of Sold Receivables;

(k) any products liability or environmental claim, or personal injury or property damage claim, or other similar or related claim or action of any sort whatsoever arising out of or in connection with goods, merchandise or services which relates to any Sold Receivables;

(l) a Payment and/or a Transfer Deed ceases to achieve a perfect transfer of Purchasable Receivables as set out in the Receivables Purchase Agreement;

(m) any Conformity Warranty for Sold Receivables made by a Seller under Article 19 (Conformity Warranties for Purchasable Receivables) (without regard to any knowedge therein) is found to have been inaccurate at the date it was made.

The Sellers and the Centralising Unit shall pay on demand to the Purchaser or,at the Purchaser’s direction, to the relevant Indemnified Parties all amountsnecessary to indemnify the Indemnified Parties from and against any and allIndemnified Amounts.

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ARTICLE 37. INDIVISIBILITY

Each party acknowledges that this Agreement, the Master Subordinated DepositAgreement and the Master Complementary Deposit Agreement shall form a single setof contractual rights and obligations and that, if the Master SubordinatedDeposit Agreement, or the Master Complementary Deposit Agreement becomes void orceases to be effective and enforceable for any reason whatsoever, this Agreementshall also become void or cease to be effective and enforceable accordingly. Anypayment already made by the Centralising Unit acting in the name and on behalfof the Sellers or on its own behalf to the Purchaser under this Agreement, theReceivables Purchase Agreements, the Master Subordinated Deposit Agreement andthe Master Complementary Deposit Agreement shall not be affected by such anullity, ineffectiveness or unenforceability.

ARTICLE 38. EXECUTION AND EVIDENCE

38.1. The parties hereby agree that, due to the Assemblact R.C. procedure, whichprevents any substitution or addition of any page, each party shall only (i)initial the first and last page of this Agreement and (ii) sign on the executionpage.

38.2. The parties hereby agree not to register this Agreement with the Frenchtax administration, although if one party elects to do so, it shall carry outsuch a registration at its own expense.

38.3. In accordance with Article 1325 of the French Civil Code, the Sellers,having the same interest in this Agreement, hereby agree that one executed copyof this Agreement, to be kept by the Centralising Unit, shall form title andrepresent the obligation of each Seller as if a separate original copy had beenexecuted by him.

ARTICLE 39. WITHDRAWAL OF SELLERS

39.1. The Centralising Unit acting in the name and on behalf of the Sellers, maynotify the Purchaser and the Joint Lead Arrangers in writing, in the form setout in Schedule 8, of any request for the withdrawal of one or more Sellers fromthe Securitisation Transaction and the Transaction Documents to which it is aparty. Such request for withdrawal shall be examined as soon as possible andshall be subject to the following conditions:

(i) confirmation by the Rating Agencies that such withdrawal shall not entail a deterioration or withdrawal of the current rating of the Notes issued by the Issuers;

(ii) the obtaining of the prior written consent of each Liquidity Bank;

(iii) the conclusion of any amendment to the Transaction Documents, necessary in the Purchaser’s opinion; and

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(iv) the signature by the Seller or Sellers of any document or agreement enabling the relevant Seller to withdraw as a party to this Agreement and the relevant Receivables Purchase Agreement. The parties agree that such Seller or Sellers shall not be bound by any new obligations in respect of this Agreement and the relevant Receivables Purchase Agreement(s), without prejudice to the obligations arising before such Seller(s)’ withdrawal from this Agreement and the relevant Receivables Purchase Agreement(s).

39.2. The withdrawal of any Seller or Sellers shall (i) be requested by theCentralising Unit at least two (2) calendar months before the date contemplatedfor the withdrawal of such Seller(s) and (ii) take effect on the first FundedSettlement Date following the fulfilment of the foregoing conditions precedent.The parties agree that each Joint Lead Arranger shall use its best efforts (dansle cadre d’une obligation de moyens) to respond as soon as possible.

39.3. Any reasonable and duly documented cost (including legal fees) andcommissions incurred by the Purchaser and/or the Joint Lead Arrangers inconnection with the withdrawal of one or more Sellers shall be borne by theCentralising Unit acting in the name and on behalf of the Sellers. The partiesagree that prior to notification by the Centralising Unit to the Purchaser ofthe request for the withdrawal of such Sellers, the Centralising Unit shall beentitled to request the Purchaser to indicate the costs to be borne inconnection with such withdrawal. The Purchaser shall respond within ten (10)calendar days following such request, after which the Centralising Unit shallhave five (5) calendar days to notify the Purchaser of its acceptance or refusalof such costs.

CHAPTER XIII - GOVERNING LAW - JURISDICTION

ARTICLE 40. GOVERNING LAW - JURISDICTION

40.1. This Agreement shall be governed by French law.

40.2. Any dispute as to the validity, interpretation, performance or any othermatter arising out of this Agreement shall be subject to the jurisdiction of thecompetent courts of Paris (Cour d’appel de Paris). The choice of thisjurisdiction is entirely for the benefit of the Purchaser which shall retain theright to bring proceedings in any other competent court.

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Made in Paris,on 10 December 2004, in seven (7) originals.

GOODYEAR DUNLOP TIRES FRANCE S.A.

represented by /s/ Michel Leducq --------------------------------------------duly authorised for the purpose of executing this Agreement

FULDA REIFEN GMBH & CO. KG

represented by /s/ Klaus Romanus ---------------------------------------------duly authorised for the purpose of executing this Agreement

M-PLUS MULTIMARKENMANAGEMENT GMBH & CO. KG

represented by /s/ Klaus Romanus --------------------------------------------duly authorised for the purpose of executing this Agreement

GOODYEAR GMBH & CO. KG


DUNLOP GMBH & CO. KG


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GOODYEAR DUNLOP TIRES ITALIA SPA

represented by /s/ Pierre Alain Nilsson ---------------------------------------------duly authorised for the purpose of executing this Agreement

GOODYEAR DUNLOP TIRES ESPANA S.A.

represented by /s/ Pierre Alain Nilsson ---------------------------------------------duly authorised for the purpose of executing this Agreement

GOODYEAR DUNLOP TIRES FINANCE EUROPE B.V.

represented by /s/ Ronald M. Archer ---------------------------------------------duly authorised for the purpose of executing this Agreement

GOODYEAR DUNLOP TIRES GERMANY GMBH

represented by /s/ Gottfried Hess ---------------------------------------------duly authorised for the purpose of executing this Agreement

EUROFACTOR

represented by /s/ Nathalie Rossen ---------------------------------------------duly authorised for the purpose of executing this Agreement

ESTER FINANCE TITRISATION

represented by /s/ Richard Sinclair ---------------------------------------------duly authorised for the purpose of executing this Agreement

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CALYON

represented by /s/ Richard Sinclair and by /s/ G. Campagne-Simon --------------------- -------------------------------duly authorised for the purpose of executing this Agreement

NBP

represented by/s/ Huy-Hoang Dang and by /s/ R. Graire ------------------ -------------------------------------duly authorised for the purpose of executing this Agreement

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SCHEDULE 1. MASTER DEFINITIONS SCHEDULE

"ACCOUNTING PRINCIPLES" means generally accepted accounting principles (GAAP) inthe United States or any other accounting principles which may be adopted by theCentralising Unit or any of the Sellers and which apply in their relevantjurisdiction.

"ACTUAL COLLECTIONS" means all cash collections actually received by any Sellerin respect of such Sold Receivables.

"ADJUSTED COLLECTIONS" means, in relation to all the Sellers and with respect tothe Sold Receivables:

(a) on the Initial Settlement Date, an amount equal to any Excess Foreseen Collections for such date;

(b) on any Settlement Date, as long as the Sellers act as collection agents in respect of any Sold Receivables and in relation to the Seller(s) acting as collection agents and for which an Assessment Report and a List of Purchasable Receivables have been provided pursuant Article 12.2.1 (viii):

(i) - any File Collections between the Assessment Date relating to the preceding Settlement Date and the Assessment Date relating to such Settlement Date;

- less any amount received on each Purchaser’s Collection Account (net of any debit made on such Purchaser’s Collection Account, corresponding to errors, reverse entries, unpaid amounts and returns in relation to payments already made on the corresponding Collection Account) by the debiting of the Collection Accounts between the Assessment Date relating to the preceding Settlement Date and the Assessment Date relating to such Settlement Date;

- less an amount equal to any Excess Foreseen Collections calculated with respect to the previous Settlement Date;

- increased, if such Settlement Date is a Funded Settlement Date, by an amount equal to any Excess Foreseen Collections received in cash on the Purchaser’s Account on the previous Intermediary Settlement Date;

- increased by an amount equal to any Excess Foreseen Collections for such Settlement Date;

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- less, if such Settlement Date is a Funded Settlement Date, the Cash Collections Advance calculated by the Calculation Agent for such Settlement Date and paid by the Centralising Unit on the Purchaser’s Account; plus

(ii) all Deemed Collections determined to have occurred in accordance with Article 28.2 during the period between the last Assessment Date and the preceding Assessment Date;

(c) on any Settlement Date other than the Initial Settlement Date, as long as the Sellers act as collection agents in respect of any Sold Receivables and in relation to the Seller(s) acting as collection agents, and for which an Assessment Report and a List of Purchasable Receivables have not been provided pursuant Article 12.2.1 (viii):

(i) - any Actual Collections between the Assessment Date relating to the preceding Settlement Date and the Assessment Date relating to such Settlement Date;

- less any amount received on each Purchaser’s Collection Account (net of any debit made on such Purchaser’s Collection Account, corresponding to errors, reverse entries, unpaid amounts and returns in relation to payments already made on the corresponding Collection Account) by the debiting of the Collection Accounts between the Assessment Date relating to the preceding Settlement Date and the Assessment Date relating to such Settlement Date;

- less an amount equal to any Excess Foreseen Collections calculated with respect to the previous Settlement Date;

- increased, if such Settlement Date is a Funded Settlement Date, by an amount equal to any Excess Foreseen Collections received in cash on the Purchaser’s Account on the previous Intermediary Settlement Date;

- increased by an amount equal to any Excess Foreseen Collections for such Settlement Date;

- less, if such Settlement Date is a Funded Settlement Date, the Cash Collections Advance calculated by the Calculation Agent for such Settlement Date and to the extent paid by the Centralising Unit on the Purchaser’s Account; plus

(ii) all Deemed Collections determined to have occurred in accordance with Article 28.2 during the period between the last Assessment Date and the preceding Assessment Date;

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(d) at any time, in the event of the termination of the collection mandate given to any Seller and in relation to the Sellers for which the collection mandate has been terminated and until the Program Expiry Date:

(i) all cash collections received by the Purchaser which have actually been paid by the Debtors or by any other person obliged to make payment in respect of such Sold Receivables; plus

(ii) all Deemed Collections determined to have occurred in accordance with Article 28.2; and

(e) at any time after the Program Expiry Date, all cash collections received by the Purchaser which have actually been paid by the Debtors or by any other person obliged to make payment in respect of such Sold Receivables.

"AFFILIATE" means, in relation to any entity, any other entity, which eitherdirectly or indirectly controls, is controlled by, or is under common controlwith, such an entity:

(i) for the purposes of those entities located within the French jurisdiction, the term "control", shall have the meaning set out in Article L.233.3 of the French Commercial Code (Code de commerce); and

(ii) for the purposes of those entities which are not located in France, the term control, shall mean the relationship between a parent company and a subsidiary as defined in Article 1 of Directive 83/349/EEC.

"AGENT" means EUROFACTOR in its capacity as agent of the transaction.

"AGENT’S ACCOUNT" means the account number 30002/00869/9E/07, opened by theAgent in the books of CALYON.

"AGREEMENT" means this general master purchase agreement, as amended and/orsupplemented from time to time.

"AMENDED INVOICE" means the sums corresponding to any Sold Receivable, which hasbeen the subject of an issued invoice, and which, in order to (i) take intoaccount the commercial practices of the Sellers or (ii) amend any materialerrors appearing on such invoice, has been cancelled and replaced by a newinvoice.

"AMORTISATION PERIOD" means the period of time commencing on the CommitmentExpiry Date and ending on the Program Expiry Date during which no morePurchasable Receivables shall be purchased by the Purchaser in accordance withthe terms and conditions of this Agreement.

"APPLICABLE LENDERS" means the lenders or other providers of funding under theEuropean Credit Facility.

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"APPLICABLE WAIVER OR AMENDMENT" means a waiver concerning, or amendment of, anyof the events set forth in Article 13.3(xv)(a), (b), (c) or (d) (including therelated definitions) and the corresponding provision and definitions of theEuropean Credit Facility that is approved by any combination of the lendersunder the European Credit Facility and the Liquidity Banks representing morethan 50% of the aggregate amount of (i) all loans and unused commitments underthe European Credit Facility plus (ii) commitments pursuant to LiquidityAgreements to provide the outstanding amount of the Purchaser’s Funding, in eachcase as of the date of such approval.

"ASSESSMENT DATE" means each of the dates identified as such in Schedule 11.

"ASSESSMENT REPORT" means the assessment report drawn up on each InformationDate as of the preceding Assessment Date in accordance with Article 22,substantially in the form of Schedule 3 or as modified by mutual agreementbetween the Centralising Unit, the Purchaser, and the Agent.

"AUDITORS CERTIFICATE" means the certificate issued by the Sellers’ statutoryauditors (commissaires aux comptes) and the Centralising Unit’s statutoryauditors for the benefit of the Purchaser, as set out in the form of Schedule 4.

"AVAILABLE FUNDS" means, on any date, and with regard to the SecuritisationTransaction, any sums received by or on behalf of the Purchaser and required tobe held by or on behalf of the Purchaser or paid to the Centralising Unit, theSellers or GOODYEAR DUNLOP TIRES EUROPE BV pursuant to the SecuritisationTransaction after the allocations of funds, and subject to the order ofpriority, provided for under Article 16.

"BACK-UP SERVICER" means EUROFACTOR and/or any entity appointed by the Purchaserto replace or assist the Sellers in the collection and servicing of the SoldReceivables held by any French, German and/or Spanish Debtors.

"BACK-UP SERVICER REPORT" means the assessment report to be drawn up, as thecase may be, by the Back-Up Servicer on each Information Date.

"BILL OF EXCHANGE" means any negotiable instrument in the form of a bill ofexchange (lettre de change, effet de commerce, letra de cambio) or promissorynote (billet a ordre, pagare) or, in the case of any German Seller, any bills ofexchange (gezogene Wechsel) issued by such German Seller (with full liability)and accepted by the relevant debtor and blank-endorsed by such German Seller ata place in Germany or promissory notes (eigene Wechsel) issued and accepted bythe relevant debtor and blank-endorsed by such German Seller at a place inGermany (with full liability), provided that (i) any such bill of exchange hasbeen issued pursuant to the German Bills of Exchange Act (as in effect on therelevant purchase date), and complies with all requirements as to form under theGerman Bills of Exchange Act (formell ordnungsgema(beta)er Wechsel) and is freeof any corrections; (ii) the currency of the Bill of Exchange is Euro; (iii) theBill of Exchange is fully enforceable against the relevant debtor, freelytransferable, and free from any liens or other rights of third parties, or theirItalian equivalent issued by a Seller in connection with any PurchasableReceivables.

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"BUSINESS DAY" means any day other than a Saturday or a Sunday on which banksare open for business in Paris, Madrid, Frankfurt, Rome, London, Jersey and NewYork and which is a TARGET Day.

"CALCULATION AGENT" means CALYON.

"CALCULATION DATE" means each of the dates identified as such in Schedule 11 andon which, in particular, the Agent shall make the calculations specified inArticle 12.3.

"CALYON" means a French limited company (societe anonyme) authorised as a creditinstitution (etablissement de credit) and having its registered office at at 9quai du President Paul Doumer, 92920 Paris La Defense Cedex, France, registeredwith the Companies Registry of Nanterre (Registre du Commerce et des Societes deNanterre) under the number 304 187 701.

"CASH COLLECTIONS ADVANCE" means an amount equal to the aggregate amount of theAssignment Costs (as defined in point 2 of schedule 3 of the French ReceivablesPurchase Agreement, point 2 of schedule 4 of the German Receivables PurchaseAgreement, point 2 of schedule 3 of the Italian Receivables Purchase Agreement,and/or point 2 of schedule 5 of the Spanish Receivables Purchase Agreement).

"CENTRALISING UNIT" means GOODYEAR DUNLOP TIRES FINANCE EUROPE B.V. which shallact on behalf of the Sellers in relation to the implementation of theSecuritisation Transaction.

"CENTRALISING UNIT’S ACCOUNT" means the account number 31489 00010 00218477562 /47 opened by the Centralising Unit in the books of CALYON.

"COLLECTION ACCOUNT" means any collection account opened in any of thejurisdictions concerned by the Securitisation Transaction held by any Sellerand/or the Purchaser and which is governed by and/or subject to the relevantCollection Account Agreement.

"COLLECTION ACCOUNT AGREEMENT" means any of the following agreements and therelated pledge for each jurisdiction in which a Seller party hereto is located,and, in particular,

(a) in relation to France

- two co-ownership bank account agreements (each a "CO-OWNERSHIP BANK ACCOUNT AGREEMENT") (Conventions de Compte Indivis) concluded on 10 December, 2004 between Goodyear Dunlop Tires France S.A., Ester Finance Titrisation, the relevant account bank and Eurofactor governed by French law;

- the co-ownerhip agreement ("CO-OWNERSHIP AGREEMENT") (Convention d’Indivision) concluded on 10 December, 2004 between Goodyear Dunlop Tires France S.A., Ester Finance Titrisation, Calyon and Eurofactor governed by French law;

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- three pledges over the share of the credit balance of the co-owned account (each a "PLEDGE OVER THE SHARE OF THE CREDIT BALANCE OF THE CO-OWNED ACCOUNT") (Nantissement sur la Quote Part du Solde du Compte Indivis) concluded on 10 December, 2004 between Goodyear Dunlop Tires France S.A. and Ester Finance Titrisation governed by French law;

(b) in relation to Germany

- the collection account pledge agreement (the "GOODYEAR COLLECTION ACCOUNT PLEDGE AGREEMENT") concluded on 10 December, 2004 between Goodyear GmbH & Co KG, Ester Finance Titrisation, Eurofactor and Calyon and governed by German law;

- the collection account pledge agreement (the "FULDA COLLECTION ACCOUNT PLEDGE AGREEMENT") concluded on 10 December, 2004 between Fulda Reifen GmbH & Co KG, Ester Finance Titrisation, Eurofactor and Calyon and governed by German law;

- the collection account pledge agreement (the "DUNLOP COLLECTION ACCOUNT PLEDGE AGREEMENT") concluded on 10 December, 2004 between Dunlop GmbH & Co KG, Ester Finance Titrisation, Eurofactor and Calyon and governed by German law;

- the collection account pledge agreement (the "M-PLUS COLLECTION ACCOUNT PLEDGE AGREEMENT") concluded on 10 December, 2004 between M-Plus Multimarkenmanagement GmbH & Co.KG, Ester Finance Titrisation, Eurofactor and Calyon and governed by German law;

- in relation to each German Collection Account Pledge Agreement, a side letter agreement (the "SIDE Letter") concluded between each relevant account bank, Ester Finance Titrisation and the relevant German Seller;

(c) in relation to Italy

- the Mandate Agreement concluded on 10 December, 2004 between Goodyear Dunlop Tires Italia S.p.A, Ester Finance Titrisation and the Agent governed by Italian law;

- each of the three (3) Pledge Agreements over the the Balance of the Collection Account concluded on 10 December, 2004 between Goodyear Dunlop Tires Italia S.p.A, Ester Finance Titrisation and each account bank, governed by Italian law;

(d) in relation to Spain

- the Agreement for the Administration and the Operation of a Current Account with Restricted Availability (the "CURRENT ACCOUNT AGREEMENT") concluded on 10 December, 2004 between Goodyear Dunlop Tires Espana S.A., Ester Finance Titrisation, the account bank, Eurofactor and Calyon governed by Spanish law;

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- the pledge over the share of the balance of the current account and of the current account (the "PLEDGE OVER THE SHARE OF THE BALANCE OF THE CURRENT ACCOUNT AND OF THE CURRENT ACCOUNT") concluded on 10 December, 2004 between Goodyear Dunlop Tires Espana S.A., Ester Finance Titrisation, the account bank and Calyon governed by Spanish law.

"COLLECTION MANDATE" means the mandate granted by the Purchaser to the Sellerspursuant to Article 21.1.

"COMFORT LETTER" means a comfort letter granted by GOODYEAR DUNLOP TIRES EUROPEBV in the form set out in Schedule 10.

"COMMERCIAL DISCOUNT" means, in relation to any Sold Receivable, any decrease inthe face value of such receivable resulting from the granting of a discount forprompt payment, for quantity or as fidelity premium.

"COMMITMENT" means the commitment of the Purchaser to purchase PurchasableReceivables from the Sellers, in accordance with this Agreement and theReceivables Purchase Agreements, subject to the conditions precedent andconditions subsequent set forth hereunder and thereunder.

"COMMITMENT EXPIRY DATE" means the earliest of the following dates:

(i) upon the occurrence of a Liquidity Commitment Non Renewal in relation to all Liquidity Agreements, the expiry of all Liquidity Agreements;

(ii) the Business Day immediately preceding the fifth (5 degrees) anniversary date of the Initial Settlement Date; and

(iii) the date on which the Commitment is terminated in accordance with Articles 7.1.2., 13, 14 and 15.

"COMPLEMENTARY DEPOSIT" means any complementary deposit effected by theCentralising Unit with the Purchaser in accordance with the terms of Article 9and the Master Complementary Deposit Agreement.

"CONFORMITY WARRANTIES" means the warranties given by each Seller to thePurchaser in accordance with Article 19 (Conformity Warranties).

"CREDIT NOTE" means, in relation to any Sold Receivable, any decrease in theface value of such receivable or any cancellation of such receivable granted byany Seller in accordance with its management procedures, other than a CreditNote over Snow Tyres and a credit note resulting from Year End Rebates.

"CREDIT NOTE OVER SNOW TYRES" means, in relation to any Sold Receivable, anydecrease in the face value of such receivable or any cancellation of suchreceivable granted by any Seller (i) in accordance with its managementprocedures and (ii) to a customer subsequent to the taking back by the saidSeller of snow tyres.

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"CURRENT ACCOUNT" means the current account relationship established between theCentralising Unit, acting in the name and on behalf of the Sellers and thePurchaser pursuant to the provisions of Article 6 (Current Account).

"CUSTODIAN" means CALYON, acting in its capacity as Custodian (depositaire) ofthe assets of the Fund within the meaning of Article L.214-48.II of the FrenchMonetary and Financial Code (Code monetaire et financier).

"DATA PROTECTION TRUST AGREEMENT" means the agreement dated the date hereofentered into between the German Sellers, the Agent and the Data ProtectionTrustee.

"DATA PROTECTION TRUSTEE" means EUROFACTOR AG, a stock corporation(Aktiengesellschaft) incorporated under the laws of the Federal Republic ofGermany registered in the commercial registry of the Local Court (Amtsgericht)in Munchen under registration number HRB 138351.

"DEBTOR" means in relation to any sold receivable the person obligated to makepayment of such a receivable.

"DEEMED COLLECTIONS" means any amount that any Seller is deemed to have receivedin the circumstances set out in Article 28 (Deemed Collections), and notably anyDeemed Extinguished Receivables.

"DEEMED EXTINGUISHED RECEIVABLES" has the meaning set forth in Article 28(Deemed Collections).

"DEFAULT PERCENTAGE" means on any Assessment Date preceding an IntermediarySettlement Date, the ratio expressed as a percentage of:

(i) the sum of the Outstanding Amount of Defaulted Receivables and Doubtful Receivables that were neither Defaulted Receivables nor Doubtful Receivables as of the Assessment Date relating to the preceding Intermediary Settlement Date; and

(ii) the Outstanding Amount of the Sold Receivables purchased by the Purchaser between the 6th Intermediary Settlement Date (excluded) before such Intermediary Settlement Date and the 5th Intermediary Settlement Date (included) before such Intermediary Settlement Date.

"DEFAULTED RECEIVABLE" means, on any Calculation Date, any Sold Receivablewhich, as of the preceding Assessment Date, is not a Doubtful Receivabletransferred back to the Sellers and has any of the following characteristics onsuch Calculation Date:

(i) the Sold Receivable remains unpaid by its relevant debtor for more than 90 days after the Maturity Date of such Sold Receivable;

(ii) the Sold Receivable is owed by a Debtor which is subject to Insolvency Proceedings and has not been counted under paragraph (i) above; or

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(iii) the Sold Receivable has been or, under the relevant Seller’s credit and collection policies, would have been written off as uncollectible and has not been counted under paragraphs (i) and (ii) above.

"DEFERRED PURCHASE PRICE" means, (a) for each Funded Settlement Date during theReplenishment Period, the highest of zero and:

- the Discount Reserve for all Sellers calculated as of the previous Intermediary Settlement Date,

- increased by the total Discount Amount for all Sellers relating to the Sold Receivables purchased on such Funded Settlement Date,

- decreased by the Cash Collections Advance payable by the Purchaser (or directly by the Centralising Unit) on such Funded Settlement Date,

- decreased by the total Discount Reserve for all Sellers calculated as of such Funded Settlement Date,

- and increased quarterly by the Interest of Placement Amount, as defined in the Receivables Purchase Agreements, and

(b) as of the Commitment Expiry Date, the Discount Reserve as of the Settlement Date immediately preceding the Commitment Expiry Date, plus any Discount Amount relating to Sold Receivables that were not included in the Deferred Purchase Price payable on the Funded Settlement Date preceding the Commitment Expiry Date;

in accordance with the formula set forth in schedule 3 of the French and GermanReceivables Purchase Agreement, in schedule 3 of the Italian ReceivablesPurchase Agreement, and in schedule 5 of the Spanish Receivables PurchaseAgreement.

"DELINQUENCY PERCENTAGE" means on any Assessment Date preceding an IntermediarySettlement Date, the ratio expressed as a percentage of:

(i) the sum of the Outstanding Amount of Delinquent Receivables and Doubtful Receivables that were neither Delinquent Receivables nor Doubtful Receivables as of the Assessment Date relating to the preceding Intermediary Settlement Date; and

(ii) the Outstanding Amount of the Sold Receivables purchased by the Purchaser between the 5th Intermediary Settlement Date (excluded) before such Intermediary Settlement Date and the 4th Intermediary Settlement Date (included) before such Intermediary Settlement Date.

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"DELINQUENT RECEIVABLE" means, on any Assessment Date, any Sold Receivable whichis not a Doubtful Receivable transferred back to the Sellers and has any of thefollowing characteristics on such Calculation Date:

(i) the Sold Receivable remains unpaid by its relevant Debtor for more than 60 days after the Maturity Date of such Sold Receivable;

(ii) the Sold Receivable is owed by a Debtor which is subject to Insolvency Proceedings and has not been counted under paragraph (i) above; or

(iii) the Sold Receivable has been or, under the relevant Seller’s credit and collection policies, would have been written off as uncollectible and has not been counted under paragraphs (i) and (ii) above.

"DEPOSIT FEE" means the fee due to CALYON, in the conditions set forth inarticle 8 of the Master Senior Deposit Agreement and which shall be paid byESTER FINANCE to CALYON, or any credit institution which replaces the latter forthe purposes of carrying out its functions under the Master Senior DepositAgreement, as a remuneration for its undertaking to make the Senior Deposit on aperiodic basis during the Replenishment Period. It is agreed that the DepositFee shall be paid to CALYON, or any other credit institution which replaces thelatter for the purposes of carrying out its functions under the Master SeniorDeposit Agreement, even after the transfer to the Fund of receivables inrepayment of the Senior Deposit.

"DEPOSITOR" means CALYON acting in its capacity as depositor pursuant to theMaster Senior Deposit Agreement and any successor, transferee or assignee.

"DILUTION PERCENTAGE" means as calculated on any Calculation Date preceding anFunded Settlement Date, the ratio expressed as a percentage of:

(i) the aggregate amount of Credit Notes issued between the Assessment Date (included) preceding the last Intermediary Settlement Date and the Assessment Date (excluded) preceding the preceding Intermediary Settlement Date; and

(ii) the Outstanding Amount of the Sold Receivables purchased by the Purchaser between the 2nd Intermediary Settlement Date (excluded) before the last Assessment Date and the Intermediary Settlement Date (included) preceding such last Assessment Date.

"DISCOUNT AMOUNT" means, on any Settlement Date during the Replenishment Period,in relation to the Sold Receivables, the amount equal to the Discount Rateapplicable on such date multiplied by the Outstanding Amount of PurchasableReceivables to be purchased by the Purchaser on such date.

"DISCOUNT RATE" has the meaning set forth in schedule 2 of the FrenchReceivables Purchase Agreement, schedule 3 of the German Receivables PurchaseAgreement, schedule 2 of the Italian Receivables Purchase Agreement, and/orschedule 4 of the Spanish Receivables Purchase Agreement.

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"DISCOUNT RESERVE" has the meaning set forth in schedule 2 of the FrenchReceivables Purchase Agreement, schedule 3 of the German Receivables PurchaseAgreement, schedule 2 of the Italian Receivables Purchase Agreement, and/orschedule 4 of the Spanish Receivables Purchase Agreement

"DISTRIBUTED AMOUNTS" means, on any Settlement Date during the AmortisationPeriod, the sum of:

- the amount of Adjusted Collections as determined as of such date;

- the amount in the Purchaser’s Account as of the last Assessment Date, within the limit of the sums in the Purchaser’s Account on such Settlement; and

- the amount in each Purchaser’s Collection Account (net of any debit made on such Purchaser’s Collection Account, corresponding to errors, reverse entries, unpaid amounts and returns in relation to payments already made on the corresponding Collection Account) as of the last Assessment Date, within the limit of the sums in each Purchaser’s Collection Account on such Settlement Date.

"DOUBTFUL RECEIVABLE" means any Sold Receivable which is, according to theAccounting Principles, doubtful given the situation of the Debtor or open tochallenge.

"DOWNGRADING EVENT" means, in relation to a Liquidity Bank, the downgrading ofits rating by a Rating Agency under A1 (for Moody’s Investors Services), P1 (forStandard & Poors) or F1 (for Fitch Ratings).

"EARLY AMORTISATION EVENT" means any of the events set out in Article 13 (EarlyAmortisation).

"ELIGIBLE DEBTOR" means a Debtor having the characteristics described in detailin article 8 of each Receivables Purchase Agreement.

"ELIGIBLE RECEIVABLE" means any Sold Receivable which has the followingcharacteristics on the Settlement Date during the Replenishment Period:

(i) the date on which the Sold Receivable is due is not later than 150 days after the Assessment Date preceding such Settlement Date;

(ii) the Sold Receivable has not remained unpaid by the relevant Debtor for more than 72 days after the Maturity Date of such Sold Receivable;

(iii) the debtor of such Sold Receivable has a V.A.T or a CMS identification number indicated in the electronic support attached to the relevant Transfer Deed delivered to the Purchaser in relation to such Sold Receivable and such Sold Receivable is identified on such electronic support in a manner which complies with the electronic exchange procedures agreed between the Agent, the Purchaser, the Centralising Unit and the Sellers;

(iv) the Sold Receivable is not a Net Miscellaneous Receivable.

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"ESTER FINANCE" means ESTER FINANCE TITRISATION S.A., a company incorporatedunder French law and authorised as a credit institution (etablissement decredit), having its registered office at 19, Boulevard des Italiens, 75 002Paris, France, registered with the Companies Registry of Paris under the number414 886 226.

"EURIBOR 1 MONTH" means the reference rate known as the "European Inter-BankOffered Rate" in the form of the rate listed under the aegis of the EuropeanBanking Federation and published at approximately 11.00 am (Brussels time), byTELERATE (page 248 and 249) or REUTERS (page EURIBOR) (or whatever page that maybe substituted therefor) for a one month period.

"EURO" OR "EUR" means the currency of the participating Member States of theEuropean Union in accordance with the definition given under Article 109-L-4 ofthe European Union Treaty and in Council Regulation (EC) n. 974/98 of May 3,1998 on the introduction of the euro.

"EUROFACTOR" means, a company incorporated under French law and authorised as acredit institution (etablissement de credit) having its registered office atTour d’Asnieres, 4 avenue Laurent Cely, 92608 Asnieres, France, registered withthe Trade and Companies Registry of Nanterre under the number 642 041 560.

"EUROPEAN CREDIT FACILITY" means the $650,000,000 Term Loan and Revolving CreditAgreement, dated as of March 31, 2003, among GOODYEAR DUNLOP TIRES EUROPE BV,the other borrowers thereunder, the lenders thereunder, JPMorgan Chase Bank, asadministrative agent, and Deutsche Bank AG, as syndication agent, as amended,refinanced, replaced or otherwise modified from time to time.

"EXCESS FORESEEN COLLECTIONS" means, with respect to a Settlement Date as longas any sums remain due under the Senior Deposit, the excess of (a) the amount ofForeseen Collections for such Settlement Date, over (b) the amount of theComplementary Deposit to be made on such Settlement Date. From the date on whichany sums due under the Senior Deposit have been paid, or in the event an EarlyAmortisation Event described under Article 13.3 has occurred, the amount ofExcess Foreseen Collections shall be equal to zero (0) as from such date orevent.

"EXCLUDED DEBTOR" means any debtor mentioned in the list set forth in Schedule14, as modified by mutual agreement between the Centralising Unit, the Purchaserand the Agent, in accordance with the provisions of Article 35.

"FILE COLLECTIONS" means, with respect to any period, all collections (excludingDeemed Collections) on Sold Receivables which, on the basis of the informationincluded in any Assessment Report and the electronic date file attached thereto,were expected to be received during such period by a Seller as calculated by theAgent on the basis of the Assessment Reports and the electronic support attachedthereto.

"FINANCIAL COVENANTS" means the financial covenants set forth in Article13.3(xv) and the related definitions.

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"FINANCIAL INDEBTEDNESS" means, in relation to any person:

(i) any indebtedness for monies borrowed or raised by that person;

(ii) any indebtedness (actual or contingent) of that person under any guarantee, security, indemnity or other commitment designed to protect any creditor against loss in respect of any Financial Indebtedness of any third party;

(iii) any indebtedness under or in respect of any acceptance credit opened on behalf of that person;

(iv) any indebtedness under any debenture, note, bond, certificate of deposit, cash certificate, bill of exchange, commercial paper or similar instrument on which that person is liable as drawer, acceptor, endorser, issuers or otherwise;

(v) any indebtedness for money owing in respect of any interest rate swap or currency swap, such indebtedness to be measured on a marked-to-market basis at the relevant time and to include, vis-a-vis any particular counterparty, application of the relevant ISDA or FBF netting procedures; and

(vi) any payment obligations under any lease entered into for the purpose of obtaining or raising finance.

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"FORESEEN COLLECTIONS" means, as calculated on each Calculation Date by theAgent on the basis of the electronic data file received from the CentralisingUnit on the preceding Information Date,

(i) - all cash collections paid or expected to be paid as from the last Assessment Date until the Settlement Date following the next Settlement Date by the Debtors under the Sold Receivables (including the Purchasable Receivable to be purchased on the following Settlement Date and excluding Net Miscellaneous Receivables and excluding Defaulted Receivables), on the basis of the contractual maturity date of such Sold Receivables;

- less, within the limit of the cash collections in relation to the Sold Receivables unpaid after their Maturity Date, the amount of Non Allocated Cash and non allocated Credit Notes with a maturity date until the Settlement Date following the next Settlement Date weighted by the ratio of:

(a) unpaid Sold Receivables (minus Net Miscellaneous Receivables minus Defaulted Receivables) after their respective Maturity Date, over

(b) unpaid Sold Receivables after their respective Maturity Date minus Defaulted Receivables;

(ii) weighted by the ratio of:

(a) the Senior Deposit (before computation of Excess Foreseen Collections), the Discount Reserve and the portion of the Subordinated Deposit covering the Senior Deposit (before computation of Excess Foreseen Collections) and the Discount Reserve (computed as follows: Subordinated Deposit multiplied by ((Senior Deposit (before computation of Excess Foreseen Collections) + Discount Reserve) / (Senior Deposit (before computation of Excess Foreseen Collections) + Discount Reserve + Complementary Deposit))); over

(b) the Outstanding Amount of Sold Receivables, as of the next Settlement Date;

(iii) weighted by the ratio of:

(a) the last audited theoretical average days of sales outstanding of accounts receivable of the Sellers, used in the determination of the Subordinated Deposit; over

(b) the last audited actual days of sales outstanding of accounts receivable of the Sellers;

and

(iv) weighted by a risk ratio equal to one (1) on the date hereof, it being provided that such ratio may be reduced upon the request of the Centralising Unit, subject to the prior written consent of the Purchaser, the Issuers and the Liquidity Banks.

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"FORMER SECURITISATION TRANSACTION" means, with respect to a Seller, any pastsecuritisation transaction involving all or part of trade receivables of suchSeller.

"FRENCH SECURITISATION TRANSACTION" means the securitisation transactionarranged by CALYON (succeeding in the rights of CREDIT LYONNAIS) in connectionwith the transfer of all or part of trade receivables of GOODYEAR DUNLOP TIRESFRANCE S.A. to ESTER FINANCE on the basis of the French master receivablespurchase agreement entered into by GOODYEAR DUNLOP TIRES FRANCE S.A., ESTERFINANCE, EUROFACTOR and CALYON (succeeding in the rights of CREDIT LYONNAIS) on20 September 2001, as amended.

"FRENCH SELLER" means GOODYEAR DUNLOP TIRES FRANCE S.A.

"FUND" means FCC Triple P, a fonds commun de creances, set up by the ManagementCompany and CALYON (as depositary) in accordance with the provisions of ArticleL.214-47 of the French Monetary and Financial Code (Code monetaire et financier)for the purposes of the Securitisation Transaction.

"FUNDED SETTLEMENT DATE" means the Initial Settlement Date and each of the datesidentified "Funded Settlement Date" on Schedule 11 falling on or prior to theProgram Expiry Date.

"GAAP" means, in relation to any person, the generally accepted accountingprinciples in the jurisdiction in which such person is organized.

"GENERAL SERVICING AGREEMENT" means the master back-up servicing agreementconcluded on the date hereof between the Purchaser and the Stand-byServicer/Back-Up Servicer which sets forth (i) the duties of the Stand-ByServicer before the termination of the collection mandate given to each Seller,(ii) upon its appointment, the conditions according to which EUROFACTOR shallact as Back-Up Servicer and (iii) the conditions under which EUROFACTOR shallassist the Italian Back-Up Servicer in the performance of certain back-upservicing activities .

"GERMAN SELLER" means each of FULDA REIFEN GmbH & Co. KG, M-PLUSMULTIMARKENMANAGEMENT GmbH & Co. KG, GOODYEAR GmbH & Co. KG and DUNLOP GmbH &Co. KG.

"GOODYEAR" means the parent company of the Goodyear Group, i.e. THE GOODYEARTIRE & RUBBER COMPANY, a company incorporated under the laws of Ohio, having itsregistered office at 1144 East Market Street, Ohio, United States of America.

"GOODYEAR GROUP" means the group of entities comprised of GOODYEAR and itsAffiliates.

"GOODYEAR DUNLOP TIRES EUROPE BV" means the Goodyear Dunlop Tires Europe B.V.,parent company of the French, German, Italian and Spanish Sellers, incorporatedunder the laws of the Netherlands, having its registered office at De Boelelaan7, 1083 HJ, Amsterdam, The Netherlands, and registered with the CompaniesRegistry of Amsterdam under the number 33225215.

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"GOVERNMENTAL AUTHORISATION" means any authorization given by any "GovernmentalAuthority" as such term is defined in the European Credit Facility.

"GROUP" means, in relation to any Debtor, the group of entities comprised ofthis Debtor and its Affiliates.

"IMMOBILISATION INDEMNITY" means any immobilisation indemnity paid by ESTERFINANCE to the Depositor in accordance with the Master Senior Deposit Agreement.

"INCREASE IN THE COMPLEMENTARY DEPOSIT" means, on any Settlement Date during theReplenishment Period, the excess of (a) the amount of the Complementary Depositon such Settlement Date in accordance with the Master Complementary DepositAgreement over (b) the amount of the Complementary Deposit on the precedingSettlement Date.

"INCREASE IN THE SUBORDINATED DEPOSIT" means, on any Settlement Date during theReplenishment Period, the excess of (a) the amount of the Subordinated Depositon such Settlement Date in accordance with the Master Subordinated DepositAgreement over (b) the amount of the Subordinated Deposit on the precedingSettlement Date.

"INFORMATION DATE" means each of the dates identified as such in Schedule 11 andon which the Centralising Unit, acting in the name and on behalf of the Sellers,is required to transmit to the Agent the Assessment Report prepared as of thepreceding Assessment Date, as well as the List of Purchasable Receivables.

"INITIAL PURCHASE PRICE" means, in relation to any Purchasable Receivable to beacquired by the Purchaser in respect of each Seller and on any Settlement Dateduring the Replenishment Period, the Outstanding Amount of PurchasableReceivables less the applicable Discount Amount.

"INITIAL SETTLEMENT DATE" means 21st December, 2004.

"INSOLVENCY PROCEEDINGS" means:

(i) in relation to any person being resident in France or having its principal place of business in France :

- a reference to such person being unable to pay its debt as they fall due (cessation des paiements) or initiating voluntary arrangements with its creditors (reglement amiable) or being subject to insolvency proceedings opened by a competent court (redressement ou liquidation judiciaire), all of which as construed by Articles L.611-1 et seq. of the French Commercial Code (formerly French Law no.84-148 of March 1, 1984) or, as the case may be, by Articles L.620-1 et seq. of the French Commercial Code (formerly French Law n.85-98 of January 25, 1985);

- whenever any auditor of such person has declared an alert procedure (procedure d’alerte) within the meaning of Article 234-1 of the French Commercial Code;

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(ii) in relation to any person being resident in Germany or having its principal place of business in Germany, a reference to such person that is overindebted (uberschuldet), unable to pay its debts as they fall due (zahlungsunfahig) or such status is imminent (drohende Zahlungsunfahigkeit) or is subject to insolvency (including preliminary insolvency proceedings) or dissolution proceedings;

(iii) in relation to any person being resident in Spain or having the center of its interests in Spain, (hereinafter, the "SPANISH RESIDENT"):

- the Spanish Resident files an application with a court to be declared to be subject to creditors’ composition ("concurso") within the meaning of the Spanish law 22/2003, dated July 9, 2003 or subject to any equivalent situation as provided by any law that could complement, replace or amend it;

- a third party applies to a court for a declaration that the Spanish Resident is subject to creditors’ composition ("concurso") within the meaning of the Spanish law 22/2003 and the court accepts to follow the creditors’ composition proceedings, or any other equivalent situation as provided by any other law that could complement, replace or amend them;

- the Spanish Resident is subject to governmental or judicial administration in Spain (intervencion administrativa o administracion judicial);

- any insolvency proceeding, as defined in Council Regulation (EC) No 1346/2000, of 29 May 2000 on Insolvency Proceedings is taken in any jurisdiction regarding the Spanish Resident;

(iv) in relation to any person being resident in Italy or having the center of its interests in Italy, (hereinafter, the "ITALIAN RESIDENT"):

- the Italian Resident is insolvent, being unable to fulfil its obligations regularly, namely in due time and with usual means, pursuant to article 5 of the Italian Bankruptcy Law (insolvenza);

- the Italian Resident is declared bankrupt upon its own application or petition of the creditor/s or petition of the Public Prosecutor or ex officio by the judge when during a civil proceeding the insolvency of the company comes out, pursuant to articles 6 et seq. of the Italian Bankruptcy Law (fallimento);

- the Italian Resident, being insolvent, files an application for arrangement with creditors with the competent judge, proposing an arrangement pursuant to articles 160 et seq. of the Italian Bankruptcy Law (concordato preventivo);

- the Italian Resident, being unable to fulfil its obligations due to a temporary and reversible crisis, files an application with the tribunal in order to have the management of its business and the administration of its assets under the direction of the supervisory judge and the judicial commissioner pursuant to articles 187 et seq. of the Italian Bankruptcy Law (amministrazione controllata);

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- the Italian Resident is under Compulsory administrative liquidation pursuant to articles 194 et seq. of the Italian Bankruptcy Law (liquidazione coatta amministrativa);

- the Italian Resident, being a large undertaking, is under extraordinary administration pursuant to Law 270/1999 (amministrazione straordinaria);

- if and when applicable, the Italian Resident, being eligible for the extraordinary administration and meeting additional requirements set by law, is under reorganization pursuant to Legislative Decree no. 347 of 23 December 2003, as amended by Law Decree no. 119 of 3 May 2004 (ristrutturazione industriale di grandi imprese in stato di insolvenza);

- any of the above insolvency proceeding is taken in any jurisdiction regarding the Italian Resident pursuant to Council Regulation (EC) no. 1346/2000 of 29 May 2000 on insolvency proceedings;

(v) in relation to any person being resident in the Netherlands or having its principal place of business in the Netherlands, (hereinafter, the "DUTCH RESIDENT"), a reference to such person that is subject to any bankruptcy (faillissement), suspension of payments (surseance van betaling) or any other insolvency proceedings listed in Annex A of the Council Regulations (EC) No. 1346/2000 on Insolvency Proceedings or any other insolvency proceedings or analogous proceeding in each case opened by a competent court, including, but not limited to, emergency regulations ("noodregeling") as referred to in the Act on the Supervision Act of the Credit System ("Wet toezicht kredietwezen 1992") on the Supervision of the Insurance System ("Wet toezicht verzekeringsbedrijf 1993").

(vi) in relation to any person being resident in the United States or having its principal place of business in the United States:

(a) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (x) liquidation, reorganization, bankruptcy, moratorium, suspension of payment or other relief in respect of such person or its debts, or of a substantial part of its assets, under any U.S. federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (y) the appointment of a receiver, trustee in bankruptcy, custodian, sequestrator, conservator or similar official for such person or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 90 days or an order or decree approving or ordering any of the foregoing shall be entered;

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(b) such person (v) voluntarily commences any proceeding or file any petition seeking liquidation, reorganization, bankruptcy, moratorium, suspension of payment or other relief under any U.S. federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (w) consents to the institution of, or fails to contest in a timely and appropriate manner, any proceeding or petition described in clause (a) of this section (x) applies for or consents to the appointment of a receiver, trustee in bankruptcy, custodian, sequestrator, conservator or similar official for such person or for a substantial part of its assets, (y) makes a general assignment for the benefit of creditors or (z) takes any action for the purpose of effecting any of the foregoing;

(c) such person admits in writing its inability or fails generally to pay its debts as they become due;

(vii) in relation to Elixir Funding Limited, means a resolution is passed for the winding-up or dissolution of Elixir Funding Limited, or a liquidator is appointed in respect of Elixir Funding Limited or any of its assets, or there is an for a declaration of en desatre in respect of the property of Elixir Funding Limited or for the property of Elixir Funding Limited to be placed under the control of the Courts of Jersey, or Elixir becomes "bankrupt" as defined in the Interpretation (Jersey) Law 1954; or

(viii) in relation to any other person, any similar provision applicable to it.

"INTERCOMPANY ARRANGEMENTS" shall have the meaning set forth in Article 11.1.(xiv).

"INTERMEDIARY SETTLEMENT DATE" means each of the dates identified as an"Intermediary Settlement Date" on Schedule 11 falling on or prior to the ProgramExpiry Date.

"ISSUERS" means :

(i) LMA S.A., a French limited company (societe anonyme) having its registered office at 6-8, rue Menars, 75002 Paris, France, registered with the Company Registry of Paris (Registre du Commerce et des Societes de Paris), under the number 383 275 187; or

(ii) Elixir Funding Limited, a public company incorporated with limited liability under the laws of Jersey, having its registered office at St Paul’s Gate, New Street, Saint Helier, Jersey, Channel islands JE2 34A, registered with the Companies Registry of Jersey under number 71548; or

(iii) any other person who may enter the Securitisation Transaction from time to time in order to subscribe to units issued by the Fund and to finance such subscription by issuing Notes.

"ITALIAN BACK UP SERVICER" means, in relation to the Sold Receivables purchasedfrom the Italian Seller, MEDIOFACTORING.

"ITALIAN NOTICE OF TRANSFER" means any notice issued by the Purchaser or anyentity, acting on behalf of the Purchaser and appointed by the same for suchpurpose, to any Italian Debtor in accordance with a Italian Receivables PurchaseAgreement.

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"ITALIAN SELLER" means GOODYEAR DUNLOP TIRES Italia S.P.A.

"ITALIAN SERVICING AGREEMENT" means the specific back-up servicing agreementconcluded on the date hereof between the Purchaser and the Italian Stand-byServicer/Italian Back-Up Servicer which sets forth (i) the duties of the ItalianStand-by Servicer before the termination of the collection mandate given to theItalian Seller, and (ii) upon its appointment, the conditions according to whichMEDIOFACTORING shall act as Italian Back-Up Servicer .

"ITALIAN STAND-BY SERVICER" means, in relation to the back-up servicingactivities for those Sold Receivables purchased from the Italian Seller,MEDIOFACTORING.

"JOINT-LEAD ARRANGER" means each of CALYON and NBP, acting in its capacity asjoint-lead arranger of the Securitisation Transaction.

"LIENS" means, in respect to any asset, any mortgage, deed of trust, lien,delegation of claims, pledge, hypothecation, encumbrance, charge of securityinterest in, on or of such asset.

"LIQUIDITY AGREEMENT" means (i) any unit purchase agreement (promesse d’achat etde revente de parts) dated the date hereof, as amended and/or supplemented fromtime to time, entered into between an Issuer and a Liquidity Bank pursuant towhich the Liquidity Bank has undertaken to purchase from such Issuer, all orpart of the units of the Fund held by the Issuer, or (ii) any credit facilityagreement dated the date hereof, as amended and/or supplemented from time totime, entered into between an Issuer and a Liquidity Bank pursuant to which theLiquidity Bank has undertaken to make loans to an Issuer secured by such units,or (iii) a swap agreement, repurchase agreement or other financial instrumentdated the date hereof, as amended and/or supplemented from time to time, enteredinto between an Issuer and a Liquidity Bank, pursuant to which the LiquidityBank has undertaken to make certain payments to an Issuer in relation to suchunits.

"LIQUIDITY BANK" means a bank or any other credit institution (etablissement decredit) (or any successor, transferee and assignee thereof), in each case ratedat least A1, P1 and/or F1 by the relevant Rating Agencies at the time when itenters into or renews its commitment under a Liquidity Agreement, that hasundertaken to purchase from an Issuer, all or part of the units of the Fund heldby such Issuer or to make loans to an Issuer secured by such units or otherwiseto make payments to an Issuer in relation to such units.

"LIQUIDITY BANK LETTER" means, in relation to any Liquidity Bank, the letterexecuted by such Liquidity Bank on 10 December 2004 and which relates to thecommitment to provide the Purchaser with an alternative funding, subject to theconditions provided in such letter.

"LIQUIDITY COMMITMENT NON RENEWAL" means, in relation to any Liquidity Bank :

(a) the non renewal of a Liquidity Agreement in any of the following cases:

(i) such Liquidity Agreement is not renewed at its expiry date, and the relevant Liquidity Bank has not been replaced with another bank that is rated at least A1, P1 and/or F1 by the relevant Rating Agencies;

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(ii) (x) as a result of Market Disruption, a drawing is made under such Liquidity Agreement in order to acquire all or part of the units of the Fund, and (y) such drawing remains outstanding until the expiry date of such Liquidity Agreement;

(iii) (x) as a result of a Downgrading Event, a drawing is made under such Liquidity Agreement in order to acquire all or part of the units of the Fund, (y) such drawing remains outstanding until the expiry date of such Liquidity Agreement, and (z) the relevant Liquidity Bank has not been replaced with another bank that is rated at least A1, P1 and/or F1 by the relevant Rating Agencies; or

(iv) (x) a drawing is made under any Liquidity Agreement for any reason other than those listed above, (y) such drawing remains outstanding until the expiry date of such Liquidity Agreement, and (z) the relevant Liquidity Bank has not been replaced with another bank that is rated at least A1, P1 and/or F1 by the relevant Rating Agencies; or

(b) the expiry of the commitment of such Liquidity Bank under the relevant Liquidity Bank Letter.

"LIST OF PURCHASABLE RECEIVABLES" means any list of Purchasable Receivables, oneach Assessment Date, in the form agreed between the parties, to be provided bythe Centralising Unit, acting in the name and on behalf of the Sellers, to thePurchaser.

"MANAGEMENT COMPANY" means ABC Gestion, a limited company (societe anonyme),authorised as a Management Company (Societe de Gestion), in accordance with theprovisions of Article L.247-47 of the Code Monetaire et Financier, having itsregistered office at 19, boulevard des Italiens - 75002 Paris, registered withthe Trade and Companies Registry of Paris under the number 353 716 160.

"MANAGEMENT FEE" means the management fee set out in Article 10 (Fees).

"MARGIN" means the margin which aims to cover any administrative, financial andmanagement costs incurred by ESTER FINANCE, equal to EUR 2,000 per month payableon each Funded Settlement Date.

"MARKET DISRUPTION" means the occurrence of any event leading to any placementagent acting for an Issuer being unable to find investors to purchase whole orpart of the Notes that would otherwise be issued by that Issuer.

"MASTER COMPLEMENTARY DEPOSIT AGREEMENT" means the agreement dated 10 December,2004, as amended and/or supplemented from time to time, entered into between thePurchaser and the Centralising Unit, under which the Centralising Unit shalleffect a Complementary Deposit with the Purchaser.

"MASTER DEFINITIONS SCHEDULE" means this master definitions schedule whichdetermines the meaning of the terms and expressions used in the TransactionDocuments.

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"MASTER SENIOR DEPOSIT AGREEMENT" means the agreement dated 15 December, 2004,as amended and/or supplemented from time to time, entered into between thePurchaser and the Depositor under which the Depositor has agreed to make aSenior Deposit with the Purchaser.

"MASTER SUBORDINATED DEPOSIT AGREEMENT" means the agreement dated 10 December,2004, as amended and/or supplemented from time to time, entered into between thePurchaser and the Centralising Unit, under which the Centralising Unit shalleffect a Subordinated Deposit with the Purchaser.

"MATERIAL ADVERSE EFFECT" means a material adverse change in or effect on (i)the ability of the Sellers and the Centralising Unit, taken as a whole, or ofGOODYEAR DUNLOP TIRES EUROPE BV to perform their obligations under theSecuritisation Documents that are material to the rights or interests of thePurchaser, the Depositor, the Issuers or the Liquidity Banks under theSecuritisation Documents to which they are parties, (ii) the ability of thePurchaser to collect the amounts due under the Purchasable Receivables or therights and interests of the Purchaser in the Sold Receivables, or (iii) therights of or benefits available to the Purchaser, the Depositor, the Issuers orthe Liquidity Banks under the Securitisation Documents that are material to therights or interests of such parties thereunder including as a result of anymaterial adverse change in or effect on the business, operations, properties,assets or financial condition (including as a result of the effects of anycontingent liabilities) of GOODYEAR and its Subsidiaries (including theSellers), taken as a whole.

"MATERIAL INDEBTEDNESS" means Financial Indebtedness of GOODYEAR and any of itssubsidiaries in an aggregate principal amount exceeding USD 25,000,000 (or theequivalent in any other currency or currencies).

"MATURITY DATE" means, in relation to any Purchasable Receivable, the date onwhich such Purchasable Receivable becomes due and payable by the relevantdebtor.

"MATERIAL SUBSIDIARY" means, at any time, each subsidiary of GOODYEAR DUNLOPTIRES EUROPE BV other than subsidiaries that do not represent more than 1% forany such individual subsidiary, or more than 5% in the aggregate for all suchsubsidiaries, of either (a) the total assets of GOODYEAR and its consolidatedsubsidiaries or (b) the revenues of GOODYEAR and its consolidated subsidiariesfor the period of four (4) fiscal quarters most recently ended, in each casedetermined in accordance with GAAP.

"MAXIMUM AMOUNT OF THE COMPLEMENTARY DEPOSIT" means an amount equal to EUR950,000,000 on the date hereof, as this amount may be modified from time to timeby the parties to the Master Complementary Deposit Agreement in accordance withthe terms of the Master Complementary Deposit Agreement.

"MAXIMUM AMOUNT OF THE PROGRAM" means an amount equal to EUR 275,000,000, or anyother amount as determined pursuant to Articles 7.1.2 and 7.1.3. Withoutprejudice to the provisions of Articles 7.1.2 and 7.1.3, it is expressly agreedbetween the Parties that the Maximum Amount of the Program shall be equal to EUR165,000,000 as long as the Issuers shall only be LMA S.A. and Elixir FundingLimited.

"MAXIMUM AMOUNT OF THE PURCHASER’S FUNDING" means the amount set out in Article7.1.

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"MAXIMUM CONCENTRATION RATE" means :

- 10%, in relation to the Debtors of the Renault Group, taken as a whole, as long as such Debtors maintain short-term ratings not lower than A2 / P2 from Moody’s and Standard &Poor’s, and 6% so long as such Debtors maintain short-term ratings lower than A2 / P2 but not lower than A3 / P3 from Moody’s and Standard & Poor’s;

- 10%, in relation to the Debtors of the Peugeot Group, taken as a whole, as long as such Debtors maintain short-term ratings not lower than A2 / P2 from Moody’s and Standard &Poor’s, and 6% so long as such Debtors maintain short-term ratings lower than A2 / P2 but not lower than A3 / P3 from Moody’s and Standard & Poor’s;

- 10%, in relation to the Debtors of the Michelin Group, taken as a whole, as long as such Debtors maintain short-term ratings not lower than A2 / P2 from Moody’s and Standard &Poor’s, and 6% so long as such Debtors maintain short-term ratings lower than A2 / P2 but not lower than A3 / P3 from Moody’s and Standard & Poor’s;

- 2%, in relation to the Debtors of the Massa Pneu Group, taken as a whole ; or

- 4%, in relation to any other Debtor and to any Debtors of a Debtor Group named above which does not maintain the ratings specified above as a condition to a higher Maximum Concentration Rate.

"MAXIMUM OVERCOLLATERALISATION RATE" means, as of the Initial Settlement Dateand on each Funded Settlement Date thereafter, the rate equal to 50 %. Such ratemay be modified provided that there has been an amendment to the MasterSubordinated Deposit Agreement.

"MINIMUM AMOUNT OF THE PROGRAM" means, on the date hereof, the amount of EUR27,500,000, as may be amended from time to time pursuant to the provisions ofthe Agreement.

"MISCELLANEOUS ACCOUNTING CREDIT ENTRIES" means, in relation to any Seller,Miscellaneous Accounting Entries booked on the credit side of the accountreceivables of an Eligible Debtor.

"MISCELLANEOUS ACCOUNTING DEBIT ENTRIES" means, in relation to any Seller,Miscellaneous Accounting Entries booked on the debit side of the accountreceivables of an Eligible Debtor.

"MISCELLANEOUS ACCOUNTING ENTRIES" means, in relation to any Seller, accountingentries other than invoices, credit notes or cash payments that appear on thedebit side or credit side of the account receivables of an Eligible Debtor.

"NET MISCELLANEOUS RECEIVABLE" means, in relation to any Seller, any PurchasableReceivable corresponding to the amount equal to the Miscellaneous AccountingDebit Entries minus Miscellaneous Accounting Credit Entries.

"NON ALLOCATED CASH" means any collection recorded in any Seller’s accountingsystem, which has not yet posted to the payment of a receivable.

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"NOTES" means any US commercial paper, Billets de Tresorerie or any othershort-term notes such as a Euro commercial paper.

"NOTICE OF TRANSFER" means any notice issued by the Purchaser or any entity,acting on behalf of the Purchaser and appointed by the same for such purpose, toany Debtor in accordance with a Receivables Purchase Agreement.

"OUTSTANDING AMOUNT" means, at all times:

(i) in relation to any Purchasable Receivables, the aggregate principal amount remaining due in respect of such Purchasable Receivables;

(ii) in relation to any Eligible Receivables, the aggregate principal amount remaining due in respect of such Eligible Receivables;

(iii) in relation to any Defaulted Receivables, the aggregate principal amount remaining due in respect of such Defaulted Receivables;

(iv) in relation to any Delinquent Receivables, the aggregate principal amount remaining due in respect of such Delinquent Receivables;

(v) in relation to any Sold Receivables, the aggregate principal amount remaining due in respect of such Sold Receivables;

(vi) in relation to any Net Miscellaneous Receivables, the aggregate principal amount remaining due in respect of such Net Miscellaneous Receivables.

The parties acknowledge that the Outstanding Amount of any receivables means thetotal net amount of such receivables (including all taxes less any credit notesissued, set-off, partial payments and other written off debts, as calculated bythe Agent on the basis of the Assessment Reports and the electronic supportsattached thereto).

"OVERCOLLATERALISATION RATE" means, on each Calculation Date preceding theInitial Settlement Date or a Funded Settlement Date during the ReplenishmentPeriod, the rate determined in accordance with the provisions of Schedule 1 ofthe Master Subordinated Deposit Agreement. The Overcollateralisation Rate shallbe calculated by the Agent on each Calculation Date preceding a FundedSettlement Date and shall apply with respect to the two next Settlement Dates.

"PARTIES" means the parties to this Agreement.

"PAYMENT" means any payment to be made by the Purchaser to the CentralisingUnit, in accordance with article 4.1 of the relevant Receivables PurchaseAgreement.

"PERFORMANCE LETTER" means the performance letter granted by GOODYEAR DUNLOPTIRES EUROPE BV in the form set out in Schedule 10.

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"POTENTIAL EARLY AMORTISATION EVENT" means any event or condition which, but forthe giving of any notice or the lapse of any time period or both required for anEarly Amortisation Event to occur under Article 13, would constitute an EarlyAmortisation Event.

"PRIORITY AMOUNT" has the meaning set forth in Article 16.2.

"PROGRAM EXPIRY DATE" means, in relation to any Seller and the CentralisingUnit, the earlier of the following dates:

(i) the Business Day, on or after the Commitment Expiry Date, on which all sums due to the Purchaser under this Agreement and the relevant Receivables Purchase Agreement have been fully paid; or

(ii) the first Funded Settlement Date (included) falling on or after twelve (12) calendar months after the Commitment Expiry Date.

"PROTECTED DEBTOR" means those German Debtors, which are either individualmerchants (kaufleute) or commercial partnerships (Personenhandelsgesellschaften)organised as an Offene Handelsgesellschaft (OHG), Gesellschaft BurgerlichenRechts (GBR) or Kommanditgesellschaft (KG).

"PURCHASABLE RECEIVABLE" means any of the receivables of any Seller that meetthe characteristics set forth in article 7 of the Receivables Purchase Agreementto which such Seller is a party.

"PURCHASER" means ESTER FINANCE.

"PURCHASER’S ACCOUNT" means the account number 30002/869/2739T/78, opened by thePurchaser in the books of CALYON.

"PURCHASER’S COLLECTION ACCOUNT" means any of the bank account opened in thename of the Purchaser, as mentioned in the Collection Account Agreements.

"PURCHASER’S FUNDING" means that portion of the Outstanding Amount of EligibleReceivables which is funded by the Purchaser out of the Senior Deposit, theamount of which is determined in accordance with Article 7 (Amount of thePurchaser’s Funding).

"PURCHASER’S TERMINATION NOTICE" means any notice issued by the Purchaser to theCentralising Unit in the circumstances set out in Article 13.2 or 13.4.

"RATING AGENCIES" means Fitch Ratings, Moody’s Investors Services and Standard &Poors, or any other entity to which such agencies may transfer their creditrating business or with which they may consolidate, amalgamate or merge.

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"RECEIVABLES PURCHASE AGREEMENTS" means the receivables purchase agreementsentered into between the Sellers, the Purchaser and the Agent for the purchaseof the Purchasable Receivables under the Securitisation Transaction and morespecifically:

(i) a Receivables Purchase Agreement governed by French law entered into by the French Seller in respect of their Purchasable Receivables;

(ii) a Receivables Purchase Agreement governed by German law entered into by the German Sellers in respect of their Purchasable Receivables;

(iii) a Receivables Purchase Agreement governed by Italian law entered into by the Italian Seller in respect of its Purchasable Receivables;

(iv) a Receivables Purchase Agreement governed by Spanish law entered into by the Spanish Seller in respect of its Purchasable Receivables.

"REDUCTION OF THE COMPLEMENTARY DEPOSIT" means on any Settlement Date during theReplenishment Period, the excess, if any, of (a) the amount of the ComplementaryDeposit on the preceding Settlement Date over (b) the amount of theComplementary Deposit on such Settlement Date in accordance with the MasterComplementary Deposit Agreement.

"REDUCTION OF THE SUBORDINATED DEPOSIT" means on any Settlement Date during theReplenishment Period, the excess, if any, of (a) the amount of the SubordinatedDeposit on the preceding Settlement Date over (b) the amount of the SubordinatedDeposit on such Settlement Date in accordance with the Master SubordinatedDeposit Agreement.

"REGISTERED SHARE CAPITAL" has the meaning set forth in Article 3.6.3.

"REPLENISHMENT PERIOD" means the period of time commencing on the date hereofand ending on the Commitment Expiry Date during which the Purchaser undertakesto purchase Purchasable Receivables on each Settlement Date.

"RESPONSIBLE OFFICER" means the chief financial officer or treasurer of GOODYEARor the Vice President, Finance or equivalent officer of GOODYEAR DUNLOP TIRESEUROPE BV. On the date hereof, the chief financial officer and the treasurer ofGOODYEAR are, respectively, Richard Kramer and Darren Wells and the VicePresident, Finance of GOODYEAR DUNLOP TIRES EUROPE BV is Ronn Archer. GOODYEARDUNLOP TIRES EUROPE BV and GOODYEAR shall promptly update the name and contactdetails of such Responsible Officer.

"SECURITISATION DOCUMENTS" means the Transaction Documents, the Master SeniorDeposit Agreement, the transfer and servicing agreement to be concluded with theFund, the Fund regulations and any Liquidity Agreements.

"SECURITISATION TRANSACTION" means the securitisation transaction carried outpursuant to the Transaction Documents.

"SELLERS" means, collectively, the French Seller, the German Sellers, theItalian Seller and the Spanish Seller.

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"SENIOR DEPOSIT" means the deposits effected by the Depositor with the Purchaserin accordance with the terms of the Master Senior Deposit Agreement..

"SETTLEMENT DATE" means a Funded Settlement Date or an Intermediary SettlementDate.

"SOLD RECEIVABLES" means, in relation to any Seller, those PurchasableReceivables (i) which have been purchased from such Seller by the Purchaserpursuant to the Receivables Purchase Agreement to which such Seller is a party,and (ii) which have not been repurchased from the Purchaser.

"SOLVENCY CERTIFICATE" means any certificate issued by the Sellers andCentralising Unit, in the form of Schedule 5.

"SPANISH SELLER" means GOODYEAR DUNLOP TIRES Espana SA.

"STAND-BY FEE" means the management fee set out in Article 27.4.

"STAND-BY SERVICER" means EUROFACTOR.

"SUBORDINATED DEPOSIT" means any subordinated deposit effected by theCentralising Unit with the Purchaser in accordance with the terms of Article 8and the Master Subordinated Deposit Agreement.

"SUBORDINATED DEPOSITOR" means the Centralising Unit.

"SUBSIDIARY" means with respect to an entity (the "Parent") at any date, anycorporation, limited liability company, partnership, association or other entitythe accounts of which are consolidated with those of the Parent in the Parent’sconsolidated statements in accordance with GAAP as of such date, as well as anyother corporation, limited liability company, partnership, association or otherentity of which securities or other ownership interests representing more than50% of the equity or more than 50% of the ordinary voting power or, in the caseof a partnership, more than 50% of the general partnership interests are, as ofsuch date, owned, controlled or held by the Parent or one or more subsidiariesof the Parent or by the Parent and one or more subsidiaries of the Parent.

"TARGET DAY" means a day on which the Trans-European Automated Real-Time GrossSettlement Express Transfer (TARGET) System is operating.

"TRANSACTION DOCUMENTS" means this Agreement, the Master Subordinated DepositAgreement, the Master Complementary Deposit Agreement, the Receivables PurchaseAgreements, the Collection Account Agreements, the Comfort Letter and thePerformance Letter.

"TRANSFER DEED" means any bordereau referred to in each Receivables PurchaseAgreement, which shall be issued by the relevant Seller or the CentralisingUnit, acting in the name and on behalf of each Seller, on each Settlement Dateduring the Replenishment Period, in the form of schedule 2 of the relevantReceivables Purchase Agreement.

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"USD" or "US DOLLAR" refers to the lawful currency of the United States ofAmerica.

"VAT CREDIT" has the meaning set forth in Article 14.2.

"YEAR END REBATES" means deferred rebates granted by any Seller at the end ofeach year (or according to any periodicity) to some of its customers accordingto the fulfillment of their purchase commitments. These Year End Rebates maygive rise to Credit Notes issued by the Sellers or to invoices issued by thecustomers over the relevant Sellers.

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SCHEDULE 16. FINANCIAL COVENANTS DEFINITIONS

"CONSOLIDATED EBITDA" of any Person means, for any period, Consolidated NetIncome of such Person for such period plus (a) without duplication and to theextent deducted in determining such Consolidated Net Income, the sum of (i)Consolidated Interest Expense for such period, (ii) income tax expense for suchperiod, (iii) all amounts attributable to depreciation and amortization for suchperiod, (iv) all non-cash non-recurring charges for such period, (v) allRationalization Charges for such period, (vi) other expense for such period,(vii) equity in losses of affiliates for such period, (viii) foreign exchangecurrency losses for such period and (ix) minority interest in net income ofsubsidiaries for such period, minus (b) without duplication, to the extentincluded in determining such Consolidated Net Income (except with respect to(ii) and (iii) below), (i) any non-cash extraordinary gains for such period,(ii) cash expenditures (other than Rationalization Charges) during such periodin respect of items that resulted in non-cash non-recurring charges during anyprior period after the date hereof, (iii) Excess Cash Rationalization Charges,(iv) other income for such period, (v) equity in earnings of affiliates for suchperiod, (vi) foreign exchange currency gains for such period and (vii) minorityinterest in net losses of subsidiaries for such period, all determined on aconsolidated basis in accordance with GAAP.

"CONSOLIDATED INTEREST EXPENSE" of any Person means, for any period the sum of,without duplication, (a) the consolidated interest expense (including imputedinterest expense in respect of Capital Lease Obligations and excluding fees andother origination costs included in interest expense and arising fromIndebtedness incurred at any time) of such Person and its ConsolidatedSubsidiaries for such period, determined in accordance with GAAP but excludingcapitalized interest, (b) all cash dividends paid during such period in respectof Permitted Preferred Stock and (c) all finance expense related toSecuritization Transactions, excluding amortization of origination and otherfees.

"CONSOLIDATED NET INCOME" of any Person means, for any period, the net income orloss of such Person and its Consolidated Subsidiaries for such period determinedin accordance with GAAP.

"CONSOLIDATED NET INDEBTEDNESS" means, at any time, the sum for GOODYEAR DUNLOPTIRES EUROPE BV and its Consolidated Subsidiaries at such time, withoutduplication, of (a) all Indebtedness that is included on GOODYEAR DUNLOP TIRESEUROPE BV’s consolidated balance sheet (excluding any Indebtedness owed toGOODYEAR or any of its Subsidiaries), minus the excess, if any, of the sum forGOODYEAR DUNLOP TIRES EUROPE BV and its Consolidated Subsidiaries of all cashand Permitted Investments, over USD 100,000,000.

"CONSOLIDATED NET WORTH" means, as of the last day of any fiscal quarter, (a)the sum for GOODYEAR of (i) the stated value of outstanding common stock, (ii)capital surplus and (iii) retained earnings, excluding for purposes of suchcalculation the effect of (A) all non-cash non-recurring charges (including the$84,700,000 of charges incurred in connection with

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GOODYEAR’s restatement of its financial statements from 1998 through the secondquarter of 2003, reflected in SEC filings made in the fourth quarter of 2003),and all non-cash Rationalization Charges and (B) all losses and gains on salesof assets other than in the ordinary course of business and all other non-cashnon-recurring gains, in each case in (A) and (B) above after December 31, 2002,minus (b) any portion of the amount computed pursuant to clause (a) of thisdefinition that is attributable to Tire & Wheel Assemblies, Inc.

"CONSOLIDATED SENIOR SECURED INDEBTEDNESS" means, at any time, the sum forGoodyear and its Consolidated Subsidiaries at such time, without duplication, of(a) all Indebtedness that is included on Goodyear’s consolidated balance sheetand is secured by any assets of Goodyear or a Consolidated Subsidiary ofGoodyear, (b) all Capital Lease Obligations, (c) all synthetic lease financings,(d) all Indebtedness of South Pacific Tyres that is secured by any of its assetsor by assets of the Borrower or a Consolidated Subsidiary and (e) allSecuritization Transactions, all determined in accordance with GAAP. Forpurposes of computing Consolidated Senior Secured Indebtedness, the amount ofany synthetic lease financing shall equal the amount that would be capitalizedin respect of such lease if it were a Capital Lease Obligation.

"EXCESS CASH RATIONALIZATION CHARGES" means, for any period, (i) with respect toGOODYEAR, cash expenditures of GOODYEAR and its Consolidated Subsidiaries withrespect to Rationalization Charges recorded on Goodyear’s consolidated incomestatement after March 31, 2003; provided, however, that for such cashexpenditures incurred after September 1, 2003, Excess Cash RationalizationCharges shall only include the aggregate amount of such cash expenditures whichexceed the sum of USD 100,000,000 (or USD 50,000,000 if incurred prior toDecember 31, 2003) plus 25% of the Net Cash Proceeds from the issuance and saleof its Equity Interests or Indebtedness pursuant to Section 6.01(q) of theEuropean Credit Facility and (ii) with respect to GOODYEAR DUNLOP TIRES EUROPEBV, cash expenditures of GOODYEAR DUNLOP TIRES EUROPE BV and its ConsolidatedSubsidiaries with respect to Rationalization Charges recorded on GOODYEAR DUNLOPTIRES EUROPE BV’s consolidated income statement after March 31, 2003; provided,however, that for such cash expenditures incurred after September 1, 2003,Excess Cash Rationalization Charges shall only include the aggregate amount ofsuch cash expenditures which exceed the sum of USD 50,000,000 plus 12.5% of theNet Cash Proceeds from the issuance and sale by GOODYEAR of its Equity Interestsor Indebtedness pursuant to Section 6.01(q) of the European Credit Facility.

"RATIONALIZATION CHARGES" means, for any period, cash and non-cash chargesrelated to rationalization actions designed to reduce capacity, eliminateredundancies and reduce costs.

"CAPITAL LEASE OBLIGATIONS", "CONSOLIDATED SUBSIDIARY", "EQUITY INTERESTS","INDEBTEDNESS", "PERSON", "NET CASH PROCEEDS", "PERMITTED PREFERRED STOCK" and"SECURITIZATION TRANSACTION" have the meanings given to such terms in theEuropean Credit Facility as in effect on the date hereof, and any amendmentsthereto that have been made in connection with any Applicable Waiver orAmendment.

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EXHIBIT 4.2

GOODYEAR

--------------------------------------------------------------------------------

MASTER SUBORDINATED DEPOSIT AGREEMENT

--------------------------------------------------------------------------------

DATED 10 DECEMBER, 2004

Between

EUROFACTOR as Agent

CALYON as Calculation Agent


AND

GOODYEAR DUNLOP TIRES FINANCE EUROPE B.V. as Subordinated Depositor or Centralising Unit


--------------------------------------------------------------------------------

ASSOCIATION D’AVOCATS A LA COUR DE PARIS

26, COURS ALBERT 1ER 75008 PARIS TEL. +33 (0)1 40 75 60 00 FAX +33 (0)1 43 59 37 79 E-MAIL [email protected] WWW.GIDE.COM

TABLE OF CONTENTS

<TABLE><S> <C>ARTICLE 1. Definitions............................................................... 5ARTICLE 2. Interpretation............................................................ 5ARTICLE 3. Purpose of this Agreement................................................. 6ARTICLE 4. Duration of the Agreement................................................. 6ARTICLE 5. Amount of the Subordinated Deposit........................................ 7ARTICLE 6. No interest - no unavailability fee....................................... 8ARTICLE 7. Repayment................................................................. 9ARTICLE 8. Payments.................................................................. 10ARTICLE 9. Representations and warranties............................................ 10ARTICLE 10. Application of the Subordinated Deposit as cash collateral for the benefit of the Purchaser.................................................. 11ARTICLE 11. Fees and expenses......................................................... 12ARTICLE 12. Substitution and agency................................................... 12ARTICLE 13. Confidentiality........................................................... 12ARTICLE 14. Transferability of this Agreement......................................... 13ARTICLE 15. Notices................................................................... 13ARTICLE 16. Exercise of rights........................................................ 13ARTICLE 17. Indivisibility............................................................ 14ARTICLE 18. Partial invalidity........................................................ 14ARTICLE 19. Amendments................................................................ 14ARTICLE 20. Limited recourse - Non petition........................................... 15ARTICLE 21. Governing law - jurisdiction.............................................. 15SCHEDULE 1. CALCULATION OF THE OVERCOLLATERALISATION RATE............................. 17SCHEDULE 2. CALCULATION OF THE SUBORDINATED DEPOSIT................................... 20</TABLE>

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BETWEEN

1. EUROFACTOR, a company incorporated under French law, authorised as a creditinstitution (etablissement de credit) and having its registered office at Tourd’Asnieres, 4, avenue Laurent Cely, 92608 Asnieres, France, registered with theTrade and Companies Registry of Nanterre under the number 642 041 560, whoserepresentative is duly authorised for the purpose of this agreement (the"AGENT");

2. CALYON, a company incorporated under French law and authorised as a creditinstitution (etablissement de credit), having its registered office at 9 quai duPresident Paul Doumer, 92920 Paris La Defense Cedex, France, registered with theTrade and Companies Registry of Nanterre under the number 304 187 701, whoserepresentatives are duly authorised for the purpose of this agreement (the"CALCULATION AGENT");

3. ESTER FINANCE TITRISATION, a limited company with a management andsupervisory board (societe anonyme a directoire et conseil de surveillance)incorporated under French law and authorised as a credit institution(etablissement de credit), having its registered office at 19 Boulevard desItaliens, 75002 Paris, France, registered with the Trade and Companies Registryof Paris under the number 414 886 226, whose representative is duly authorisedfor the purpose of this agreement ("ESTER FINANCE" or the "PURCHASER");

4. GOODYEAR DUNLOP TIRES FINANCE EUROPE B.V., a company incorporated under Dutchlaw, having its registered office at Deboelelaan 7, 1083 HJ, Amsterdam, TheNetherlands, registered with the Trade and Companies Registry of Amsterdam underthe number 34197964, whose representative is duly authorised for the purpose ofthis agreement (hereafter referred to as the "CENTRALISING UNIT" or the"SUBORDINATED DEPOSITOR").

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WHEREAS

GOODYEAR DUNLOP TIRES France S.A., FULDA REIFEN GmbH & Co KG, M-PLUSMULTIMARKENMANAGEMENT GmbH & Co KG, GOODYEAR GmbH & Co KG, DUNLOP GmbH & Co KG,GOODYEAR DUNLOP TIRES Italia SpA and GOODYEAR DUNLOP TIRES Espana SA (the"SELLERS") are in the business of manufacturing and/or supplying tyres andactivities relating thereto, and hold receivables over their respective debtors.

In order to provide financing to the Sellers, CALYON as arranger has proposed toset up a securitisation transaction by way of the sale, on an ongoing basis, oftrade receivables resulting from the usual business of the Sellers in France,Germany, Italy and Spain.

For such purposes, ESTER FINANCE has undertaken to purchase certain tradereceivables held by the Sellers (the "PURCHASABLE RECEIVABLES") by way of atransfer of receivables pursuant to the provisions of the French law governedGeneral Master Purchase Agreement (the "GENERAL MASTER PURCHASE AGREEMENT") andthe receivables purchase agreements (the "RECEIVABLES PURCHASE AGREEMENTS")governed by French, German, Italian and Spanish law depending of the laws of theincorporation of the relevant Seller.

ESTER FINANCE shall fund the acquisition of Purchasable Receivables:

(i) partly out of a senior deposit (the "SENIOR DEPOSIT") effected by the Depositor with the Purchaser in accordance with a master senior deposit agreement (the "MASTER SENIOR DEPOSIT AGREEMENT") and

(ii) partly by way of set-off against any amount due and payable by the Centralising Unit to the Purchaser in connection with (a) a subordinated deposit (the "SUBORDINATED DEPOSIT") to be effected by the Centralising Unit with the Purchaser in accordance with the terms and conditions of the present master subordinated deposit agreement (the "MASTER SUBORDINATED DEPOSIT AGREEMENT") and (b) a complementary deposit (the "COMPLEMENTARY DEPOSIT") to be effected by the Centralising Unit with the Purchaser in accordance with the terms and conditions of a master complementary deposit agreement (the "MASTER COMPLEMENTARY DEPOSIT AGREEMENT").

The Purchaser and the Subordinated Depositor are willing to define the terms andconditions according to which the Subordinated Deposit shall be made by theSubordinated Depositor with the Purchaser and shall be pledged as cashcollateral in favour of the Purchaser and have agreed to enter into thisagreement under the terms and subject to the conditions set forth hereunder.

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Capitalised terms and expressions used in this Master Subordinated DepositAgreement shall have the same meaning as ascribed to such terms and expressionsin the glossary attached as schedule 1 to the General Master Purchase Agreement.


(i) The titles of the Chapters, the Schedules and the Articles (including theirparagraphs) used herein and the table of contents are for convenience ofreference only, and shall not be used to interpret this Master SubordinatedDeposit Agreement.

(ii) In this Master Subordinated Deposit Agreement, except if the context callsfor another interpretation:

(a) references to "CHAPTERS", "ARTICLES" and "SCHEDULES" shall be construed as references to the chapters, articles and schedules of this Master Subordinated Deposit Agreement and references to this Master Subordinated Deposit Agreement include its schedules;




(e) references to a document shall mean this document, as amended, replaced by novation or varied from time to time;

(f) references to "PARTIES" must be interpreted as references to the parties to the present agreement, and to a "PARTY" shall refer to any of the Parties.

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CHAPTER II - PURPOSE - DURATION


3.1 The Subordinated Depositor shall make a Subordinated Deposit with thePurchaser in accordance with the terms of this Master Subordinated DepositAgreement.

3.2 The Subordinated Deposit made by the Subordinated Depositor under thisMaster Subordinated Deposit Agreement shall be applied and pledged as cashcollateral (affecte a titre de gage-especes) in favour of the Purchaser inaccordance with and subject to the provisions of Article 10 below.

All repayments of principal to be made by the Purchaser to the SubordinatedDepositor in respect of the Subordinated Deposit shall be made up to the amountand to the extent of the sums received by the Purchaser in respect of the SoldReceivables in the manner described under Article 7 below. During theAmortisation Period, such repayments under the Subordinated Deposit shall besubject to the order of priority of payments provided for under article 16 ofthe General Master Purchase Agreement and shall, in particular, occur after thefull and definitive repayment of any sum due under the Senior Deposit.

The Subordinated Depositor agrees that, for the purposes of the repayment ofsums due to it under the Subordinated Deposit or otherwise under this Agreementprior to the Program Expiry Date, it will look solely to the amount of the sumsreceived by the Purchaser under the General Master Purchase Agreement until theProgram Expiry Date in respect of the Sold Receivables and that the SubordinatedDepositor shall not, in such capacity, take or pursue any judicial or otherproceedings, or exercise any right or remedy that it might otherwise haveagainst the Purchaser or the Purchaser’s assets save to the extent required forthe recovery of such sums.

ARTICLE 4. DURATION OF THE AGREEMENT

4.1 This Agreement shall enter into force on the date hereof and shall terminateon the Program Expiry Date.

4.2 The Subordinated Deposit shall be repaid in the manner described in Article7 below.

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CHAPTER III - AMOUNT OF THE SUBORDINATED DEPOSIT

ARTICLE 5. AMOUNT OF THE SUBORDINATED DEPOSIT

5.1 Amount of the Subordinated Deposit

On each Calculation Date preceding a Settlement Date during the ReplenishmentPeriod, the amount of the Subordinated Deposit shall be calculated in accordancewith the provisions of Schedule 1 and Schedule 2.

On each Calculation Date, during the Replenishment Period, the Agent shallcalculate the difference between (i) the amount of the Subordinated Deposit onthe following Settlement Date, and (ii) the amount of the Subordinated Depositon the preceding Settlement Date.

During the Amortisation Period until the Program Expiry Date, the amount of theSubordinated Deposit shall be equal to the amount of the Subordinated Deposit asat the last Funded Settlement Date, and shall be repaid, after full repayment ofthe Senior Deposit, in accordance with the provisions of Article 7.

The amount of the Subordinated Deposit shall be calculated by the Agent on eachCalculation Date.

5.2 Calculation and setting up of the Subordinated Deposit

5.2.1 Calculation

(i) At the latest on the Calculation Date preceding the Initial Settlement Date,the Agent shall calculate and notify forthwith the Purchaser and theSubordinated Depositor the amount of the Subordinated Deposit to be made inaccordance with Article 5.1 above on the Initial Settlement Date, together withthe details of such calculation.

(ii) On each Calculation Date thereafter during the Replenishment Period, theAgent shall calculate and notify forthwith the Purchaser and the SubordinatedDepositor of the difference between (i) the amount of the Subordinated Depositon the related Settlement Date, and (ii) the amount of the Subordinated Depositon the preceding Settlement Date, together with the details of such calculation.

If the new amount of the Subordinated Deposit is higher than the amount of theSubordinated Deposit on the preceding Settlement Date, the Subordinated Depositshall be increased by the Euro amount of the difference (the "INCREASE IN THESUBORDINATED DEPOSIT").

If the new amount of the Subordinated Deposit is lower than the amount of theSubordinated Deposit on the preceding Settlement Date, the Subordinated Depositshall be reduced by the Euro amount of the difference (the "REDUCTION OF THESUBORDINATED DEPOSIT").

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For the avoidance of doubt, any reference to the Subordinated Deposit in theTransaction Documents shall be to the Subordinated Deposit as it may beincreased or reduced in accordance with this Article 5.2.1.

5.2.2 Setting up of the Subordinated Deposit

(i) On the Initial Settlement Date, before 9.00 a.m. (Paris time), theSubordinated Depositor shall make a Subordinated Deposit in Euro with thePurchaser. Such Subordinated Deposit shall be made by crediting the CurrentAccount, for the amount calculated in accordance with Article 5.2.1 (i) above,in accordance with and subject to the provisions of article 6.4 of the GeneralMaster Purchase Agreement.

(ii) On each Settlement Date after the Initial Settlement Date, during theReplenishment Period, before 9.00 a.m. (Paris time):

(a) the Subordinated Depositor shall make a deposit in respect of the Subordinated Deposit in Euro with the Purchaser, for an amount corresponding to any Increase in the Subordinated Deposit, as calculated in accordance with Article 5.2.1 (ii) above; or

(b) the Purchaser shall repay a portion of the Subordinated Deposit to the Subordinated Depositor, for an amount corresponding to any Reduction of the Subordinated Deposit, as calculated in accordance with Article 5.2.1 (ii) above, subject to the provisions of Article 7 below.

The payments to be made pursuant to (i) and (ii) above shall be effected inaccordance with and subject to the provisions of article 6.4 of the GeneralMaster Purchase Agreement.

ARTICLE 6. NO INTEREST - NO UNAVAILABILITY FEE

The Purchaser and the Subordinated Depositor hereby expressly agree that theSubordinated Deposit shall not bear interest and that no unavailability feeshall be paid to the Subordinated Depositor in relation to the making of theSubordinated Deposit.

The Subordinated Depositor acknowledges that it has entered into intercompanyarrangements with the Sellers (the "INTERCOMPANY ARRANGEMENTS") pursuant towhich the Subordinated Depositor will receive from each Seller any necessaryconsideration for the making of the Subordinated Deposit and will be indemnifiedin an appropriate manner by each Seller in accordance with its corporateinterest and in respect of the losses incurred by it as a result of theSubordinated Deposit made under this Master Subordinated Deposit Agreement.

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CHAPTER IV - REPAYMENT - PAYMENTS

ARTICLE 7. REPAYMENT

7.1 Principle

The repayment of the Subordinated Deposit, which shall be carried out until theProgram Expiry Date, shall always be subject to (i) the provisions of Article3.2 above and (ii) the order of priority of payments set forth under article 16of the General Master Purchase Agreement and Article 7.2 below, and inparticular shall be subject to the full repayment of any amount due under theSenior Deposit.

7.2 Repayment of the Subordinated Deposit

7.2.1 On each Settlement Date during the Replenishment Period, the Purchasershall repay, if applicable, the Subordinated Deposit to the SubordinatedDepositor, for an amount equal to any Reduction of the Subordinated Deposit inthe manner calculated under Article 5.2.1 above.

7.2.2 On each Settlement Date during the Amortisation Period, and until theProgram Expiry Date, the Purchaser shall repay to the Subordinated Depositor theSubordinated Deposit, to the extent of the amount resulting from the allocationsset out in article 16 of the General Master Purchase Agreement.

The Parties agree that, for the avoidance of doubt, and in accordance with theorder of priority set forth under article 16 of the General Master PurchaseAgreement which the Centralising Unit expressly acknowledges and accepts, theSubordinated Deposit shall not be repaid during the Amortisation Period, interalia, until full repayment of the Senior Deposit.

7.2.3 Such repayment shall be effected by means of the Distributed Amountsreceived by the Purchaser under the Sold Receivables until the Program ExpiryDate and in accordance with the order of priority of payments as described inarticle 16 of the General Master Purchase Agreement.

7.2.4 In the event that, on the Program Expiry Date, the Subordinated Deposithas not been repaid in full in accordance with the provisions of this MasterSubordinated Deposit Agreement, the Purchaser shall be irrevocably released fromany repayment obligations hereunder.

7.3. In the event that during the Amortisation Period, the Centralising Unit,acting in the name and on behalf of the Sellers, repurchases all outstandingSold Receivables from the Purchaser in accordance with article 4.3 of theGeneral Master Purchase Agreement, the purchase price of such Sold Receivablesshall be applied by the Purchaser to the repayment of the Subordinated Depositin the order specified in article 16 of the General Master Purchase Agreement.

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ARTICLE 8. PAYMENTS

8.1 All payments to be made in accordance with this Master Subordinated DepositAgreement shall be made in Euro.

8.2 All repayments of principal and all payments falling due on a day which isnot a Business Day shall instead fall due on the following Business Day.

8.3 At any time, until the Program Expiry Date, subject to article 6 of theGeneral Master Purchase Agreement, the Purchaser shall be entitled to set-off(i) any amount due and payable by the Purchaser to the Subordinated Depositor inrespect of the Subordinated Deposit and (ii) any amount due and payable by theSubordinated Depositor to the Purchaser under this Agreement or any of theTransaction Documents.

CHAPTER V - GENERAL PROVISIONS

ARTICLE 9. REPRESENTATIONS AND WARRANTIES

The Subordinated Depositor hereby represents and warrants to the Purchaser, asfollows:

(i) it is a liability company duly incorporated and validly existing under Dutch law and has the capacity (a) to carry on its business, as currently conducted, and to own all of the assets appearing on its balance sheet, except where not having such capacity would not be reasonably likely to result in a Material Adverse Effect, and (b) to enter into and perform its obligations under this Master Subordinated Deposit Agreement;

(ii) the execution of this Master Subordinated Deposit Agreement does not require any authorisation with respect to the Subordinated Depositor that has not already been obtained and communicated to the Purchaser, unless, in the case of any Governmental Authorisation, the failure to obtain such authorisation would not be reasonably likely to result in a Material Adverse Effect;

(iii) the execution of this Master Subordinated Deposit Agreement and the performance of the obligations under this Master Subordinated Deposit Agreement do not contravene any of the provisions of the Subordinated Depositor’s articles and memorandum of association, agreements or undertakings to which it is a party or by which it is bound, and do not in any manner contravene the statutes and regulations applicable to it, except, in each case, to the extent that no Material Adverse Effect would result from such breach;

(iv) the obligations arising out of this Master Subordinated Deposit Agreement are binding on the Subordinated Depositor and enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, moratorium and other laws affecting creditors’ rights generally;

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(v) in the event that, in accordance with the provisions of this Master Subordinated Deposit Agreement and the General Master Purchase Agreement, the Subordinated Depositor is not repaid in full on the Program Expiry Date, the Subordinated Depositor shall incur any losses out of its own business, and the Purchaser shall not be liable, in any manner whatsoever, in this respect (except, as the case may be, as provided in article 4.2 (b) of the General Master Purchase Agreement); and

(vi) the constitution of the Subordinated Deposit as cash collateral (affectation a titre de gage especes) in favour of the Purchaser, as set forth in Article 10 below, complies with the Subordinated Depositor’s corporate interest and does not exceed its financial capabilities; the Subordinated Depositor has entered into Intercompany Arrangements with the Sellers and GOODYEAR DUNLOP TIRES EUROPE B.V., pursuant to which the Subordinated Depositor shall receive from each Seller any necessary consideration for making the Subordinated Deposit and shall be indemnified as is appropriate by each Seller and GOODYEAR DUNLOP TIRES EUROPE B.V. in respect of the losses incurred by the Subordinated Depositor as a result of the Subordinated Deposit made under this Master Subordinated Deposit Agreement.

CHAPTER VI - CASH COLLATERAL

ARTICLE 10. APPLICATION OF THE SUBORDINATED DEPOSIT AS CASH COLLATERAL FOR THE BENEFIT OF THE PURCHASER

10.1 The Subordinated Depositor hereby irrevocably agrees that the SubordinatedDeposit made under this Agreement shall, by virtue of this Article, be pledgedand consequently applied as cash collateral (affecte a titre de gage-especes) bythe Centralising Unit in favour of the Purchaser until the Program Expiry Date,to secure the payment of (i) any sum due by the Debtors to the Purchaser inrespect of the Sold Receivables and (ii) any sum due to the Purchaser by anySeller or the Centralising Unit pursuant to the Transaction Documents.

The Subordinated Depositor hereby irrevocably agrees that the pledge andapplication of the Subordinated Deposit as cash collateral (affectation du depotsubordonne a titre de gage-especes) in favour of the Purchaser shall transfer tothe Purchaser the ownership of those sums received under the SubordinatedDeposit.

10.2 The cash collateral (gage-especes) shall be deemed created and effective asof the date on which the Subordinated Deposit is made with the Purchaser.

10.3 The obligation of the Purchaser to transfer back to the SubordinatedDepositor the Subordinated Deposit (creance en restitution) shall automaticallybe reduced by any principal amount paid by the Purchaser to the SubordinatedDepositor on account of the Subordinated Deposit in accordance with Article 7above.

10.4 The outstanding amount of the Subordinated Deposit, as of the ProgramExpiry Date shall be applied by the Purchaser against the aggregate of (a) anyremaining sums due to the Purchaser in respect of the Sold Receivables, and (b)any remaining sums due to the

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Purchaser by the Sellers or the Centralising Unit pursuant to the TransactionDocuments, remaining due as of the Program Expiry Date.

The amount so applied shall automatically reduce the obligation of thePurchaser, to transfer back the outstanding amount of the Subordinated Depositto the Subordinated Depositor (creance en restitution).

CHAPTER VII - MISCELLANEOUS


The Subordinated Depositor, in the name and on behalf of the Sellers, shallbear, in particular, any costs and expenses incurred by CALYON as arranger,EUROFACTOR as Agent, and ESTER FINANCE, in accordance with article 29 of GeneralMaster Purchase Agreement.



(i) such Party has given prior written notice of the exercise of that right to the other Parties;

(ii) such Party remains liable to the other Parties for the proper performance of those tasks and that the relevant third party/parties has or have expressly renounced any right to any contractual claim against the other Parties;

(iii) the relevant third party/parties undertake(s) to comply with all obligations binding upon such Party under this Master Subordinated Deposit Agreement; and

(iv) the substitution, assistance or agency shall not entail an increase in the costs incurred by the other Parties.

The Parties acknowledge however that, in order to avoid doubt, this Articleshall not apply to the Subordinated Depositor in respect of the making of theSubordinated Deposit.


For the purposes to this Master Subordinated Deposit Agreement, the Partiesagree to be bound by the provisions relating to confidentiality as provided forby article 31 of the General Master Purchase Agreement.

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Subject to article 12 above, this Master Subordinated Deposit Agreement isconcluded on the intuitu personae of the Parties to this Master SubordinatedDeposit Agreement. Therefore, none of the Parties may transfer this MasterSubordinated Deposit Agreement, or its rights and/or obligations hereunder, toany third party whatsoever, without the prior written consent of the otherParties.

ARTICLE 15. NOTICES

15.1. Except as otherwise set forth in the Transaction Documents, all notices,requests or communications which must or may be made pursuant to this MasterSubordinated Deposit Agreement shall be by way of writing, mail or fax.

15.2. All notices, requests or communications to be made and all documents to bedelivered from one Party to the other Party under the Master SubordinatedDeposit Agreement shall be made and delivered to the addressees referred to inschedule 7 to the General Master Purchase Agreement.

15.3. All notices, requests or communications made and all documents deliveredunder the Master Subordinated Deposit Agreement shall only take effect upon thedate of their receipt by its addressee.

15.4. Each of the Parties may at any time modify the addressee of the notices,requests or communications to be made and the documents to be delivered to itunder the Master Subordinated Deposit Agreement by sending to that effect aletter or fax to the other Party indicating the name of the new addressee.

15.5. The Parties agree that the Centralising Unit shall be responsible forreceiving written notice on behalf of the Sellers, and that any notice given bythe Purchaser to the Sellers and delivered to the Centralising Unit shall bedeemed validly received by all of the Sellers upon receipt by the CentralisingUnit.

ARTICLE 16. EXERCISE OF RIGHTS

16.1 All rights conferred on the Purchaser under this Master SubordinatedDeposit Agreement or by any other document delivered pursuant to or incidentalto this Master Subordinated Deposit Agreement or any Transaction Document,including rights conferred by law, shall be cumulative and may be exercised atany time.

16.2 The fact that the Purchaser or the Subordinated Depositor does not exercisea right or delays in doing so shall in no way be construed as a waiver of thatright. The exercise of any right or a partial exercise shall not prevent thePurchaser or the Subordinated Depositor from exercising such a right again inthe future, or from exercising any other right.

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Each Party acknowledges that the General Master Purchase Agreement, the MasterSubordinated Deposit Agreement and the Master Complementary Deposit Agreementshall form a single set of contractual rights and obligations and that, if theGeneral Master Purchase Agreement, or the Master Complementary Deposit Agreementbecomes void or ceases to be effective and enforceable for any reasonwhatsoever, this Master Subordinated Deposit Agreement shall also become void orcease to be effective and enforceable accordingly. Any payment already made bythe Centralising Unit acting in the name and on behalf of the Sellers or on itsown behalf to the Purchaser under this Master Subordinated Deposit Agreement,the General Master Purchase Agreement, the Receivables Purchase Agreements, theMaster Subordinated Deposit Agreement and the Master Complementary DepositAgreement shall not be affected by such a nullity, ineffectiveness orunenforceability.

ARTICLE 18. PARTIAL INVALIDITY

If one or more provisions of this Master Subordinated Deposit Agreement is orbecomes invalid, illegal or unenforceable in any respect in any jurisdiction orwith respect to any Party, such invalidity, illegality or unenforceability insuch jurisdiction or with respect to such Party or Parties shall not, to thefullest extent permitted by applicable law, render invalid, illegal orunenforceable such provision or provisions in any other jurisdiction or withrespect to any other Party or Parties hereto.

Such invalid, illegal or unenforceable provision shall be replaced by theParties to such contract with a provision which comes as close as reasonablypossible to the intentions of the invalid, illegal or unenforceable provision.Any fees, costs and expenses incurred by the Parties in connection with anyamendment necessary or advisable pursuant to this Article shall be borneexclusively by the Subordinated Depositor.

ARTICLE 19. AMENDMENTS

No amendment to this Master Subordinated Deposit Agreement may be made withoutthe written consent of each other Party thereto and (a) unless the RatingAgencies (i) have been informed and provided by the Arranger with all necessarydetails they may require in respect of such contemplated amendment and (ii) haveconfirmed that the contemplated amendment will not entail a downgrading orwithdrawal of the current ratings of any Notes issued by the Issuers, or thatthe contemplated amendment will reduce a downgrading or withdrawal which wouldotherwise occur, but for such amendment being made, and (b) each Issuer and eachLiquidity Bank has given its prior written consent to such amendment (suchconsent not being unreasonably withheld or delayed).

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ARTICLE 20. LIMITED RECOURSE - NON PETITION

20.1. Limited recourse

Each of the Parties agrees to limit their respective claims and recourse againstESTER FINANCE (including in the event of a breach by ESTER FINANCE of any of itsrepresentations and warranties, or any of its obligations hereunder) to theamount of the Available Funds on the relevant date.

20.2. Non Petition

Each of the Parties irrevocably and unconditionally undertakes and agrees:

(a) not to exercise any rights of contractual or other recourse which it may have against ESTER FINANCE in the event of a breach by ESTER FINANCE of any of its representations and warranties, or any of its obligations under this Master Subordinated Deposit Agreement, except in the event of the gross negligence (faute lourde) or wilful misconduct (dol) on the part of ESTER FINANCE; and

(b) not to institute any legal proceedings, take other steps or institute other proceedings against ESTER FINANCE, the purpose or effect of which is the appointment of a conciliator or an ad hoc agent, or the opening of receivership proceedings or insolvency proceedings (redressement judiciaire or liquidation judiciaire) or any other similar proceedings.


21.1 This Master Subordinated Deposit Agreement shall be governed by French law.

21.2 Any dispute as to the validity, interpretation, performance or any othermatter arising out of this Master Subordinated Deposit Agreement shall besubject to the jurisdiction of the competent courts of Paris (Cour d’appel deParis). The choice of this jurisdiction is entirely for the benefit of thePurchaser which shall retain the right to bring proceedings in any othercompetent court.

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Executed in four (4) originals in Paris on 10 December, 2004.

ESTER FINANCE

/s/ Richard Sinclair ----------------------------------- Name : Richard Sinclair Title : Director General


/s/ Ronald M. Archer ----------------------------------- Name : Ronald M. Archer Title : Vice President-Finance and Chief Financial Officer

EUROFACTOR

/s/ Nathalie Rossen ----------------------------------- Name : Nathalie Rossen Title : Responsible Titrisation

CALYON

/s/ Richard Sinclair /s/ G. Campagne-Simon------------------------------ ----------------------------Name : Richard Sinclair Name : G. Campagne-SimonTitle : Executive Director Title :

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SCHEDULE 1. CALCULATION OF THE OVERCOLLATERALISATION RATE

EUROFACTOR calculates the Overcollateralisation Rate for each Funded SettlementDate applied for such Funded Settlement Date and the next IntermediarySettlement Date during the Replenishment Period as follows:

Criteria such as theoretical DSO, loss horizon and dilution horizon could be updated during the life time of the program, according to any change in the collecting and management procedures of the Sellers as noticed during the follow-up audits.

OVERCOLLATERALISATION RATE (m) (*) = MAXIMUM [30%; Maximum [Loss Reserve (m) + Dilution Reserve (m); Floor Reserve (m)] + YER Reserve (m) + Customer/Supplier Reserve (m)]

(*) As used herein, "m" means, with respect to any Funded Settlement Date, asthe case may be, the Assessment Date related to the preceding IntermediarySettlement Date or the calendar month ending on such Assessment Date and "m-X"means the Xth calendar month preceding such calendar month.

1. LOSS RESERVE

- Theoretical days of sales outstanding(DSO) : 81 days (**)- Defaulted Receivables period : beyond 90 days past due- Stress factor : 2,25- Loss horizon : 5 months and 26 days (***) X months and Y days

LOSS RESERVE (m) = Stress factor * Loss horizon ratio (m) * maximum within the last 12 months of the Loss ratio (m)

Loss horizon ratio (m) = [Y/30 * Turnover (m-X) + Turnover (m-[X-1]) + Turnover (m-[X-2]) + ... + Turnover (m)] / [Outstanding Amount of Sold Receivables as of the end of month m - Outstanding Amount of Defaulted Receivables as of the end of month m - Outstanding Amount of Net Miscellaneous Receivables as of the end of month m]

Turnover (m) = Gross Sold Receivables sold during the relevant period VAT included

Loss ratio (m) = average within the 3 last calendar months of the Defaulted ratio

Defaulted Receivables (m) = Sold Receivables that became Defaulted Receivables during the relevant month

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Defaulted ratio (m) = Defaulted Receivables (m) / Turnover (m-[X+1])

(**) Theoretical DSO corresponds to the average theoretical condition of paymentof invoicing as provided by the Seller at each follow up audit

(***) Loss horizon is equal to theoretical DSO plus the Defaulted Receivablesperiod plus 5 days.

2. DILUTION RESERVE

- Dilution horizon : 1 month (****)- Stress factor (SF) : 2,25

DILUTION RESERVE (m) = [{SF * ED} + {DS - ED}*{DS/ED}] * DHR (m)

Expected Dilution (ED) = average Dilution ratio within the last 12 months

Dilution ratio (m) = Net Credit Notes (m) / Turnover (m-1)

Net credit notes (m) = new Credit Notes issued during the relevant month, based on the reporting template filled monthly by each seller, excluding any Miscellaneous Accounting Credit Entries

Dilution Spike (DS) = Maximum Dilution ratio within the last 12 months

Dilution horizon ratio (DHR) = Turnover (m) / [Outstanding Amount of Sold Receivables as of the end of month m - Outstanding Amount of Defaulted Receivables as of the end of month m - Outstanding Amount of Net Miscellaneous Receivables as of the end of month m]

(****) Dilution horizon is equal to the estimated average amount of time elapsed from the creation of an Eligible Receivable to the issuance of a Credit Note pertaining thereto.

3. FLOOR RESERVE

FLOOR RESERVE (m) = [Concentration factor (m) + Dilution component (m)]

Concentration factor (m) = {Maximum [sum of the SRO on the 5 debtors groups with the largest SRO who are non rated or non investment grade; sum of the SRO of the 3 debtors groups with the largest SRO who are rated A-3; sum of the SRO of the

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2 debtors groups with the largest SRO rated A-2; SRO for debtor group with the largest SRO rated A-1]} / Outstanding Amount of Eligible Receivables as of "m"

SRO = Outstanding Amount of Eligible Receivables, on the relevant Assessment Date

Debtors Group = means a group of debtors for which a parent company owns 50% + 1 of voting rights.

Dilution component (m) = Expected Dilution (m) * Dilution horizon ratio (m)

4. YER RESERVE

YER RESERVE (m) = Maximum Consolidated YER(1) (m) / [Outstanding Amount of Sold Receivables as of the end of month m - Outstanding Amount of Defaulted Receivables as of the end of month m - Outstanding Amount of Net Miscellaneous Receivables as of the end of month m]

(1) Consolidated YER declared in the Assessment Report

5. CUSTOMER / SUPPLIER RESERVE

CUSTOMER / SUPPLIER RESERVE (m) = Customer - Suppliers outstanding(2) (m) / [Outstanding Amount of Sold Receivables as of the end of month m - Outstanding Amount of Defaulted Receivables as of the end of month m - Outstanding Amount of Net Miscellaneous Receivables as of the end of month m]

(2) Customer- Suppliers outstanding such as declared in the Assessment Report

By exception, the Overcollateralisation Rate for the Initial Settlement Datewill be fixed at 30%.

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SCHEDULE 2. CALCULATION OF THE SUBORDINATED DEPOSIT

ON EACH SETTLEMENT DATE DURING THE REPLENISHMENT PERIOD:

SUBORDINATED DEPOSIT = Overcollateralisation Rate, * [Outstanding Amount of Sold Receivables on such Settlement Date (1) - Outstanding Amount of Defaulted Receivables on such Settlement Date (2) - Outstanding Amount of Net Miscellaneous Receivables on such Settlement Date];

+ Outstanding Amount of Defaulted Receivables on such Settlement Date (2)

+ Outstanding Amount of Net Miscellaneous Receivables (3) on such Settlement Date.

(1) Taking into account Purchasable Receivables to be purchased on such Settlement Date.

(2) Excluding any such receivables that, after becoming Doubtful Receivables, have been repurchased.

(3) As long as the Outstanding Amount of Net Miscellaneous Receivables is positive.

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EXHIBIT 4.3

GOODYEAR

--------------------------------------------------------------------------------

MASTER COMPLEMENTARY DEPOSIT AGREEMENT

--------------------------------------------------------------------------------

DATED 10 DECEMBER, 2004

Between

EUROFACTOR as Agent

CALYON as Calculation Agent


AND

GOODYEAR DUNLOP TIRES FINANCE EUROPE B.V. as Complementary Depositor or Centralising Unit


--------------------------------------------------------------------------------

ASSOCIATION D’AVOCATS A LA COUR DE PARIS 26, COURS ALBERT 1ER 75008 PARIS TEL. +33 (0)1 40 75 60 00 FAX +33 (0)1 43 59 37 79 E-MAIL [email protected] WWW.GIDE.COM

TABLE OF CONTENTS<TABLE>

<S> <C>ARTICLE 1. Definitions........................................................................ 5ARTICLE 2. Interpretation..................................................................... 5ARTICLE 3. Purpose of this Agreement.......................................................... 6ARTICLE 4. Duration of the Agreement.......................................................... 6ARTICLE 5. Amount of the Complementary Deposit................................................ 7ARTICLE 6. No interest - Unavailability fee................................................... 8ARTICLE 7. Repayment.......................................................................... 9ARTICLE 8. Payments........................................................................... 10ARTICLE 9. Representations and warranties - undertakings...................................... 10ARTICLE 10. Application of the Complementary Deposit as cash collateral for the benefit of the Purchaser................................................................... 11ARTICLE 11. Fees and expenses.................................................................. 12ARTICLE 12. Substitution and agency............................................................ 12ARTICLE 13. Confidentiality.................................................................... 13ARTICLE 14. Transferability of this Agreement.................................................. 13ARTICLE 15. Notices............................................................................ 13ARTICLE 16. Exercise of rights................................................................. 14ARTICLE 17. Indivisibility..................................................................... 14ARTICLE 18. Partial invalidity................................................................. 14ARTICLE 19. Amendments......................................................................... 15ARTICLE 20. Limited recourse - non petition.................................................... 15ARTICLE 21. Governing law - jurisdiction....................................................... 15Schedule 1. Calculation of the Amount of the Complementary Deposit............................. 17</TABLE>

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BETWEEN

1. EUROFACTOR, a company incorporated under French law, authorised as a creditinstitution (etablissement de credit) and having its registered office at Tourd’Asnieres, 4, avenue Laurent Cely, 92608 Asnieres, France, registered with theTrade and Companies Registry of Nanterre under the number 642 041 560, whoserepresentative is duly authorised for the purpose of this agreement (the"AGENT");

2. CALYON, a company incorporated under French law and authorised as a creditinstitution (etablissement de credit), having its registered office at 9 quai duPresident Paul Doumer, 92920 Paris La Defense Cedex, France, registered with theTrade and Companies Registry of Nanterre under the number 304 187 701, whoserepresentatives are duly authorised for the purpose of this agreement (the"CALCULATION AGENT");

3. ESTER FINANCE TITRISATION, a limited company with a management andsupervisory board (societe anonyme a directoire et conseil de surveillance)incorporated under French law and authorised as a credit institution(etablissement de credit), having its registered office at 19 Boulevard desItaliens, 75002 Paris, France, registered with the Trade and Companies Registryof Paris under the number 414 886 226, whose representative is duly authorisedfor the purpose of this agreement ("ESTER FINANCE" or the "PURCHASER");

4. GOODYEAR DUNLOP TIRES FINANCE EUROPE B.V., a company incorporated under Dutchlaw, having its registered office at Deboelelaan 7, 1083 HJ, Amsterdam, TheNetherlands, registered with the Trade and Companies Registry of Amsterdam,under the number 34197964, whose representative is duly authorised for thepurpose of this agreement (hereafter referred to as the "CENTRALISING UNIT" orthe "COMPLEMENTARY DEPOSITOR").

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WHEREAS

GOODYEAR DUNLOP TIRES France S.A., FULDA REIFEN GmbH & Co KG, M-PLUSMULTIMARKENMANAGEMENT GmbH & Co KG, GOODYEAR GmbH & Co KG, DUNLOP GmbH & Co KG,GOODYEAR DUNLOP TIRES Italia SpA and GOODYEAR DUNLOP TIRES Espana SA (the"SELLERS") are in the business of manufacturing and/or supplying tyres andactivities relating thereto, and hold receivables over their respective debtors.

In order to provide financing to the Sellers, CALYON as arranger has proposed toset up a securitisation transaction by way of the sale, on an ongoing basis, oftrade receivables resulting from the usual business of the Sellers in France,Germany, Italy and Spain.

For such purposes, ESTER FINANCE has undertaken to purchase certain tradereceivables held by the Sellers (the "PURCHASABLE RECEIVABLES") by way of atransfer of receivables pursuant to the provisions of the French law governedGeneral Master Purchase Agreement (the "GENERAL MASTER PURCHASE AGREEMENT") andreceivables purchase agreements (the "RECEIVABLES PURCHASE AGREEMENTS") governedby French, German, Italian and Spanish law depending of the laws of theincorporation of the relevant Seller.

ESTER FINANCE shall fund the acquisition of Purchasable Receivables:

(i) partly out of a senior deposit (the "SENIOR DEPOSIT") effected by the Depositor with the Purchaser in accordance with a master senior deposit agreement (the "MASTER SENIOR DEPOSIT AGREEMENT"); and

(ii) partly by way of set-off against any amount due and payable by the Centralising Unit to the Purchaser in connection with (a) a subordinated deposit (the "SUBORDINATED DEPOSIT") to be effected by the Centralising Unit with the Purchaser in accordance with the terms and conditions of a master subordinated deposit agreement (the "MASTER SUBORDINATED DEPOSIT AGREEMENT") and (b) a complementary deposit (the "COMPLEMENTARY DEPOSIT") to be effected by the Centralising Unit with the Purchaser in accordance with the terms and conditions of the present master complementary deposit agreement (the "MASTER COMPLEMENTARY DEPOSIT AGREEMENT").

The Purchaser and the Complementary Depositor are willing to define the termsand conditions according to which the Complementary Deposit shall be made by theComplementary Depositor with the Purchaser and shall be pledged as cashcollateral in favour of the Purchaser and have agreed to enter into thisagreement under the terms and subject to the conditions set forth hereunder.

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Capitalised terms and expressions used in this Master Complementary DepositAgreement shall have the same meaning as ascribed to such terms and expressionsin the glossary set out in schedule 1 to the General Master Purchase Agreement.


(i) The titles of the Chapters, the Schedules and the Articles (includingtheir paragraphs) used herein and the table of contents are for convenience ofreference only, and shall not be used to interpret this Master ComplementaryDeposit Agreement.

(ii) In this Master Complementary Deposit Agreement, except if the contextcalls for another interpretation:

(a) references to "CHAPTERS", "ARTICLES" and "SCHEDULES" shall be construed as references to the chapters, articles and schedules of this Master Complementary Deposit Agreement and references to this Master Complementary Deposit Agreement include its schedules;




(e) references to a document shall mean this document, as amended, replaced by novation or varied from time to time;

(f) references to "PARTIES" must be interpreted as references to the parties to the present agreement, and to a "PARTY" shall refer to any of the Parties.

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CHAPTER II - AMOUNT - PURPOSE - DURATION


3.1 The Complementary Depositor shall make a Complementary Deposit with thePurchaser in accordance with the terms of this Master Complementary DepositAgreement.

3.2 The Complementary Deposit made by the Complementary Depositor under thisMaster Complementary Deposit Agreement shall be applied and pledged as cashcollateral (affecte a titre de gage-especes) in favour of the Purchaser inaccordance with and subject to the provisions of Article 10.

All repayments of principal to be made by the Purchaser to the ComplementaryDepositor in respect of the Complementary Deposit shall be made up to the amountand to the extent of the sums received by the Purchaser in respect of the SoldReceivables in the manner described in Article 7. During the AmortisationPeriod, such repayments under the Complementary Deposit shall be subject to theorder of priority of payments provided for under article 16 of the GeneralMaster Purchase Agreement.

The Complementary Depositor agrees that, for the purposes of repayment of theComplementary Deposit, it will look solely to the amount of the sums received bythe Purchaser under the General Master Purchase Agreement in respect of the SoldReceivables until the Program Expiry Date and that the Complementary Depositorshall not, in such capacity, otherwise take or pursue any judicial or otherproceedings, or exercise any right or remedy that it might otherwise have,against the Purchaser or the Purchaser’s assets save to the extent required forthe recovery of such sums.

ARTICLE 4. DURATION OF THE AGREEMENT

4.1 This Master Complementary Deposit Agreement shall enter into force on thedate hereof and shall terminate on the Program Expiry Date.

4.2 The Complementary Deposit shall be repaid in the manner described in Article7.

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CHAPTER III - AMOUNT OF THE COMPLEMENTARY DEPOSIT

ARTICLE 5. AMOUNT OF THE COMPLEMENTARY DEPOSIT

5.1 Amount of the Complementary Deposit

The Complementary Depositor shall make a Complementary Deposit with thePurchaser in accordance with the terms and conditions of this MasterComplementary Deposit Agreement.

The amount of the Complementary Deposit shall, at all times during theReplenishment Period, be calculated in accordance with the provisions ofSchedule 1.

During the Amortisation Period, the Complementary Deposit, as calculated as ofthe last Funded Settlement Date of the Replenisment Period, shall be repaiduntil the Program Expiry Date, after full repayment of the Senior Deposit,subject to the order of priority set forth in Article 7.

The amount of the Complementary Deposit shall be calculated by the Agent on eachCalculation Date.

5.2 Calculation and setting up of the Complementary Deposit

5.2.1 Calculation

(i) At the latest on the Calculation Date preceding the Initial Settlement Date,the Agent shall calculate and notify forthwith the Purchaser and theComplementary Depositor the amount of the Complementary Deposit to be made inaccordance with Article 5.1 above on the Initial Settlement Date, together withthe details of such calculation.

(ii) On any subsequent Calculation Date during the Replenishment Period, theAgent shall calculate and notify forthwith the Purchaser and the ComplementaryDepositor (i) the amount of the Complementary Deposit in accordance with Article5.1 above on the related Settlement Date, and (ii) the amount of theComplementary Deposit on the preceding Settlement Date, together with thedetails of such calculation.

If the new amount of the Complementary Deposit is higher than the amount of theComplementary Deposit on the preceding Settlement Date, the ComplementaryDeposit shall be increased by the Euro amount of the difference (the "INCREASEIN THE COMPLEMENTARY DEPOSIT").

If the new amount of the Complementary Deposit is lower than the amount of theComplementary Deposit on the preceding Settlement Date, the ComplementaryDeposit shall be reduced by the Euro amount of the difference (the "REDUCTION OFTHE COMPLEMENTARY DEPOSIT").

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For the avoidance of doubt, any reference to the Complementary Deposit in theTransaction Documents shall be to the Complementary Deposit as it may beincreased or reduced in accordance with this Article 5.2.1.

5.2.2 Setting up of the Complementary Deposit

(i) On the Initial Settlement Date, before 9.00 am (Paris time), theComplementary Deposit shall be made in Euro with the Purchaser by crediting theCurrent Account, for the amount calculated in accordance with Article 5.2.1.

(ii) On each Settlement Date after the Initial Settlement Date, during theReplenishment Period, before 9.00 am (Paris time):

(a) the Complementary Depositor shall make a deposit in respect of the Complementary Deposit in Euro with the Purchaser for an amount corresponding to any Increase in the Complementary Deposit, as calculated in accordance with Article 5.2.1 (ii); or

(b) the Purchaser shall repay a portion of the Complementary Deposit to the Complementary Depositor for an amount corresponding to any Reduction of the Complementary Deposit, as calculated in accordance with Article 5.2.1 (ii), subject to the provisions of Article 7.

The payments to be made pursuant to (i) and (ii) above shall be effected inaccordance with and subject to the provisions of article 6.4 of the GeneralMaster Purchase Agreement.

ARTICLE 6. NO INTEREST - UNAVAILABILITY FEE

The Purchaser and the Complementary Depositor hereby expressly agree that theComplementary Deposit shall not bear interest and that no unavailability feeshall be paid to the Complementary Depositor in relation to the making of theComplementary Deposit.

The Complementary Depositor acknowledges that it has entered into intercompanyarrangements with the Sellers (the "INTERCOMPANY ARRANGEMENTS") pursuant towhich the Complementary Depositor will receive from each Seller any necessaryconsideration for the making of the Complementary Deposit and will beindemnified in an appropriate manner by each Seller in accordance with itscorporate interest and in respect of the losses incurred by it as a result ofthe Complementary Deposit made under this Master Complementary DepositAgreement.

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CHAPTER IV - REPAYMENT - PAYMENTS

ARTICLE 7. REPAYMENT

7.1 Principle

The repayment of the Complementary Deposit, which shall be carried out until theProgram Expiry Date, shall always be subject to (i) the provisions of Article3.2 above and (ii) the order of priority of payments set forth under article 16of the General Master Purchase Agreement and under Article 7.2.

7.2 Repayment of the Complementary Deposit

7.2.1 On each Intermediary Purchase Date or Funded Settlement Date during theReplenishment Period, the Purchaser shall repay, if applicable, theComplementary Deposit to the Complementary Depositor, for an amount equal to anyReduction of the Complementary Deposit as calculated under Article 5.2.1 above.

7.2.2 On each Settlement Date during the Amortisation Period, and until theProgram Expiry Date, the Purchaser shall repay the Complementary Deposit to theComplementary Depositor, for an amount resulting from the allocations set out inarticle 16 of the General Master Purchase Agreement.

Such repayment shall be principally effected by means of the Distributed Amountsreceived by the Purchaser under the Sold Receivables until the Program ExpiryDate and in accordance with the order of priority of payments as described inarticle 16 of the General Master Purchase Agreement.

In the event that, on the Program Expiry Date, the Distributed Amounts do notpermit the repayment in full of any outstanding amount remaining unpaid underthe Senior Deposit and under the Complementary Deposit, then, any outstandingamount remaining unpaid under the Complementary Deposit shall reduce the rightto repayment to the Complementary Depositor of the Complementary Deposit.

7.3. In the event that during the Amortisation Period, the Centralising Unit,acting in the name and on behalf of the Sellers, repurchases all outstandingSold Receivables from the Purchaser in accordance with article 4.3. of theGeneral Master Purchase Agreement, the purchase price of such Sold Receivablesshall be applied by the Purchaser to the repayment of the Complementary Depositin accordance with the order provided for under article 16 of the General MasterPurchase Agreement.

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ARTICLE 8. PAYMENTS

8.1 All payments to be made in accordance with this Master Complementary DepositAgreement shall be made in Euro.

8.2 All repayments of principal and all payments falling due on a day which isnot a Business Day shall instead fall due on the following Business Day.

8.3 At any time, until the Program Expiry Date, subject to article 6 of theGeneral Master Purchase Agreement, the Purchaser shall be entitled to set-off(i) any amount due and payable by the Purchaser to the Complementary Depositorin respect of the Complementary Deposit and (ii) any amount due and payable bythe Complementary Depositor to the Purchaser under this Agreement or any of theTransaction Documents.

CHAPTER V - GENERAL PROVISIONS

ARTICLE 9. REPRESENTATIONS AND WARRANTIES - UNDERTAKINGS

The Complementary Depositor hereby represents and warrants to the Purchaser, asfollows:

(i) it is a liability company duly incorporated and validly existing under Dutch law and has the capacity (a) to carry on its business, as currently conducted, and to own all of the assets appearing on its balance sheet, except where not having such capacity would not be reasonably likely to result in a Material Adverse Effect, and (b) to enter into and perform its obligations under this Master Complementary Deposit Agreement;

(ii) the execution of this Master Complementary Deposit Agreement does not require any authorisation with respect to the Complementary Depositor that has not already been obtained and communicated to the Purchaser, unless in the case of any Governemental Authorisation, the failure to obtain such authorisation would not be reasonably likely to result in a Material Adverse Effect ;

(iii) the execution of this Master Complementary Deposit Agreement and the performance of the obligations under this Master Complementary Deposit Agreement do not contravene any of the provisions of the Complementary Depositor’s articles and memorandum of association, agreements or undertakings to which it is a party or by which it is bound, and do not in any manner contravene the statutes and regulations applicable to it, except in each case, to the extent that no Material Adverse Effect would result from such breach;

(iv) the obligations arising out of this Master Complementary Deposit Agreement are binding on the Complementary Depositor and enforceable in accordance with their respective terms, subject to applicable bankruptcy, insolvency, moratorium and other laws affecting creditors’ rights generally;

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(v) in the event that, in accordance with the provisions of this Master Complementary Deposit Agreement and the General Master Purchase Agreement, the Complementary Deposit is not repaid in full on the Program Expiry Date, the Complementary Depositor shall incur any losses out of its own business, and the Purchaser shall not be liable, in any manner whatsoever, in this respect (except, as the case may be, as provided in article 4.2 (b) of the General Master Purchase Agreement); and

(vi) the constitution of the Complementary Deposit as cash collateral (affectation a titre de gage especes) in favour of the Purchaser, as set forth in Article 10 below, complies with the Complementary Depositor’s corporate interest and does not exceed its financial capabilities ; the Complementary Depositor has entered into Intercompany Arrangements with the Sellers and GOODYEAR DUNLOP TIRES EUROPE B.V., pursuant to which the Complementary Depositor shall receive from each Seller any necessary consideration for making the Complementary Deposit and shall be indemnified as is appropriate by each Seller and GOODYEAR DUNLOP TIRES EUROPE B.V. in respect of any losses incurred by the Complementary Depositor as a result of the Complementary Deposit made under this Master Complementary Deposit Agreement.

CHAPTER VI - CASH COLLATERAL

ARTICLE 10. APPLICATION OF THE COMPLEMENTARY DEPOSIT AS CASH COLLATERAL FOR THE BENEFIT OF THE PURCHASER

10.1 The Complementary Depositor hereby irrevocably agrees that theComplementary Deposit made under this Agreement shall, by virtue of thisArticle, be pledged as cash collateral (affecte a titre de gage-especes) by theCentralising Unit in favour of the Purchaser until the Program Expiry Date, tosecure the payment of (i) any sum due to the Purchaser in respect of the SoldReceivables, and (ii) any sum due to the Purchaser by any Seller or theCentralising Unit pursuant to the Transaction Documents; provided that no partyshall be entitled to receive, as a result of such pledge, any amounts inaddition to those that they are entitled to receive pursuant to Article 16 ofthe General Master Purchase Agreement.

The Complementary Depositor hereby irrevocably agrees that the pledging of theComplementary Deposit as cash collateral (affectation du depot complementaire atitre de gage-especes) in favour of the Purchaser shall transfer to thePurchaser the ownership of the sums received under the Complementary Deposit.

10.2 The cash collateral (gage-especes) shall be deemed created and effective asof the date on which the Complementary Deposit is made with the Purchaser.

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10.3 The obligation of the Purchaser to transfer back to the ComplementaryDepositor the Complementary Deposit (creance en restitution) shall automaticallybe reduced by any principal amount paid by the Purchaser to the ComplementaryDepositor in relation to the Complementary Deposit in accordance with Article 7above.

10.4 The Complementary Depositor acknowledges that in accordance with thesecurity referred to above, during the Amortisation Period, it may not in anycase nor at any moment claim repayment of the Complementary Deposit other thanwithin the limit of the Distributed Amounts received by the Purchaser, which areavailable for the application to the Complementary Depositor, in accordance withArticle 7.

CHAPTER VII - MISCELLANEOUS


The Complementary Depositor, in the name and on behalf of the Sellers, shallbear, in particular, any costs and expenses incurred by CALYON as arranger,EUROFACTOR as Agent, and ESTER FINANCE, in accordance with article 29 of GeneralMaster Purchase Agreement.



(i) such Party has given prior written notice of the exercise of that right to the other Parties;

(ii) such Party remains liable to the other Parties for the proper performance of those tasks and the relevant third party/parties has or have expressly renounced any right to any contractual claim against the other Parties;

(iii) the relevant third party/parties undertake(s) to comply with all obligations binding upon such Party under this Master Complementary Deposit Agreement; and

(iv) the substitution, assistance or agency shall not entail an increase in the costs incurred by the other Parties.

The Parties acknowledge however that, in order to avoid doubt, this Articleshall not apply to the Complementary Depositor in respect of the making of theComplementary Deposit.

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For the purposes to this Master Complementary Deposit Agreement, the Partiesagree to be bound by the provisions relating to confidentiality as provided forunder article 31 (Confidentiality) of the General Master Purchase Agreement.


Subject to Article 12, this Master Complementary Deposit Agreement is concludedon the intuitu personae of the Parties to this Master Complementary DepositAgreement. Therefore, none of the Parties may transfer this Master ComplementaryDeposit Agreement, or its rights and/or obligations hereunder, to any thirdparty whatsoever, without the prior written consent of the other Parties.

ARTICLE 15. NOTICES

15.1. Except as otherwise set forth in the Transaction Documents, all notices,requests or communications which must or may be made pursuant to this MasterComplementary Deposit Agreement shall be by way of writing, mail or fax.

15.2. All notices, requests or communications to be made and all documents to bedelivered from one Party to the other Party under the Master ComplementaryDeposit Agreement shall be made and delivered to the addressees referred to inschedule 7 to the General Master Purchase Agreement.

15.3. All notices, requests or communications made and all documents deliveredunder the Master Complementary Deposit Agreement shall only take effect upon thedate of their receipt by its addressee.

15.4. Each of the Parties may at any time modify the addressee of the notices,requests or communications to be made and the documents to be delivered to itunder the Master Complementary Deposit Agreement by sending to that effect aletter or fax to the other Party indicating the name of the new addressee.

15.5. The Parties agree that the Centralising Unit shall be responsible forreceiving written notice on behalf of the Sellers, and that any notice given bythe Purchaser to the Sellers and delivered to the Centralising Unit shall bedeemed validly received by all of the Sellers upon receipt by the CentralisingUnit.

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ARTICLE 16. EXERCISE OF RIGHTS

16.1 All rights conferred on the Purchaser under this Master ComplementaryDeposit Agreement or by any other document delivered pursuant to or incidentalto this Master Complementary Deposit Agreement or any Transaction Document,including rights conferred by law, shall be cumulative and may be exercised atany time.

16.2 The fact that the Purchaser or the Complementary Depositor does notexercise a right or delays in doing so shall in no way be construed as a waiverof that right. The exercise of any right or a partial exercise of such a rightshall not prevent the Purchaser or the Complementary Depositor from exercisingsuch a right again in the future, or from exercising any other right.


Each Party acknowledges that the General Master Purchase Agreement, the MasterSubordinated Deposit Agreement and the Master Complementary Deposit Agreementshall form a single set of contractual rights and obligations and that, if theGeneral Master Purchase Agreement, or the Master Subordinated Deposit Agreementbecomes void or ceases to be effective and enforceable for any reasonwhatsoever, this Master Complementary Deposit Agreement shall also become voidor cease to be effective and enforceable accordingly. Any payment already madeby the Centralising Unit acting in the name and on behalf of the Sellers or onits own behalf to the Purchaser under this Master Complementary DepositAgreement, the General Master Purchase Agreement, the Receivables PurchaseAgreements and the Master Subordinated Deposit Agreement shall not be affectedby such a nullity, ineffectiveness or unenforceability.

ARTICLE 18. PARTIAL INVALIDITY

If one or more provisions of this Master Complementary Deposit Agreement is orbecomes invalid, illegal or unenforceable in any respect in any jurisdiction orwith respect to any Party, such invalidity, illegality or unenforceability insuch jurisdiction or with respect to such Party or Parties shall not, to theextent permitted by applicable law, render invalid, illegal or unenforceablesuch provision or provisions in any other jurisdiction or with respect to anyother Party or Parties hereto.

Such invalid, illegal or unenforceable provision shall be replaced by theParties to such contract with a provision which reflects in so far as isreasonably possible the intentions of the invalid, illegal or unenforceableprovision. Any fees, costs and expenses incurred by the Parties in connectionwith any amendment necessary or advisable pursuant to this Article shall beborne exclusively by the Complementary Depositor.

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ARTICLE 19. AMENDMENTS

No amendment to this Master Complementary Deposit Agreement may be made withoutthe written consent of each other party hereto and (a) unless the RatingAgencies (i) have been informed and provided by the Arranger with all necessarydetails they may require in respect of such contemplated amendment and (ii) haveconfirmed that the contemplated amendment will not entail a downgrading orwithdrawal of the current ratings of the Notes issued by the Issuers, or thatthe contemplated amendment will reduce such downgrading or prevent suchwithdrawal, and (b) each Issuer and each Liquidity Bank has given its priorwritten consent to such amendment (such consent not being unreasonably withheldor delayed).

ARTICLE 20. LIMITED RECOURSE - NON PETITION

20.1. Limited Recourse

Each of the Parties agrees to limit its claims and recourse against ESTERFINANCE (including in the event of a breach by ESTER FINANCE of any of itsrepresentations and warranties, or any of its obligations hereunder) to theamount of the Available Funds on the relevant date.

20.2. Non Petition

Each of the Parties irrevocably and unconditionally undertakes and agrees:

(a) not to exercise any rights of contractual or other recourse which it may have against ESTER FINANCE in the event of a breach by ESTER FINANCE of any of its representations and warranties, or any of its obligations under this Master Complementary Deposit Agreement, except in the event of the gross negligence (faute lourde) or wilful misconduct (dol) on the part of ESTER FINANCE; and

(b) not to institute any legal proceedings, take other steps or institute other proceedings against ESTER FINANCE, the purpose or effect of which is the appointment of a conciliator or an ad hoc agent, or the opening of receivership proceedings or insolvency proceedings (redressement judiciaire or liquidation judiciaire) or any other similar proceedings.


21.1 This Master Complementary Deposit Agreement shall be governed by Frenchlaw.

21.2 Any dispute as to the validity, interpretation, performance or any othermatter arising out of this Master Complementary Deposit Agreement shall besubject to the jurisdiction of the competent courts of Paris (Cour d’appel deParis). The choice of this jurisdiction is entirely for the benefit of thePurchaser which shall retain the right to bring proceedings in any othercompetent court.

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Made in Paris,On 10 December, 2004, in four (4) originals.

ESTER FINANCE

/s/ Richard Sinclair --------------------------------- Name : Richard Sinclair Title : Director General


/s/ Ronald M. Archer --------------------------------- Name : Ronald M. Archer Title : Vice President-Finance and Chief Financial Officer

EUROFACTOR

/s/ Nathalie Rossen --------------------------------- Name : Nathalie Rossen Title :

CALYON

/s/ Richard Sinclair /s/ G. Campagne-Simon------------------------------ --------------------------Name : Richard Sinclair Name :Title : Executive Director Title :

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SCHEDULE 1. CALCULATION OF THE AMOUNT OF THE COMPLEMENTARY DEPOSIT

1. DURING THE REPLENISHMENT PERIOD, UNLESS AN EARLY AMORTISATION EVENT DESCRIBEDIN ARTICLE 13.3. OF THE GENERAL MASTER PURCHASE AGREEMENT HAS OCCURRED AND APROCEDURE OF SEPARATION OF FLOWS UNDER THE COLLECTION ACCOUNT AGREEMENTS HASBEEN IMPLEMENTED

1.1. AMOUNT OF THE COMPLEMENTARY DEPOSIT ON THE INITIAL SETTLEMENT DATE

COMPLEMENTARY DEPOSIT = Initial Purchase Price of Purchasable Receivables;

- Subordinated Deposit;

- Senior Deposit;

- Adjusted Collections calculated as of such date.

1.2. AMOUNT OF THE COMPLEMENTARY DEPOSIT ON EACH FUNDED SETTLEMENT DATE

COMPLEMENTARY DEPOSIT = Complementary Deposit as of the preceding Settlement Date

+ Initial Purchase Price of Purchasable Receivables to be purchased on such Settlement Date;

- Adjusted Collections calculated as of such Settlement Date;

- Amount of the Subordinated Deposit on such Settlement Date minus the amount of the Subordinated Deposit on the preceding Settlement Date;

- Amount of the Senior Deposit on such Settlement Date minus the amount of the Senior Deposit on the preceding Settlement Date;

+ Deferred Purchase Price calculated as of such Settlement Date.

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1.3. AMOUNT OF THE COMPLEMENTARY DEPOSIT ON EACH INTERMEDIARY SETTLEMENT DATE




- Amount of the Subordinated Deposit on such Settlement Date minus the amount of the Subordinated Deposit on the preceding Settlement Date;

+ Excess Foreseen Collections to be received in cash on the Purchaser’s Account for such Settlement Date.

2. DURING THE REPLENISHMENT PERIOD, IF AN EARLY AMORTISATION EVENT DESCRIBED INARTICLE 13.3. OF THE GENERAL MASTER PURCHASE AGREEMENT HAS OCCURRED AND APROCEDURE OF SEPARATION OF FLOWS UNDER THE COLLECTION ACCOUNT AGREEMENTS HASBEEN IMPLEMENTED

2.1. AMOUNT OF THE COMPLEMENTARY DEPOSIT ON A FUNDED SETTLEMENT DATE




- amount of the Subordinated Deposit on such Settlement Date minus the amount of the Subordinated Deposit on the preceding Settlement Date;

- amount of the Senior Deposit on such Settlement Date minus the amount of the Senior Deposit on the preceding Settlement Date;

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- any amount received on the Purchaser’s Collection Accounts within the period between the Assessment Date preceding such Settlement Date and the preceding Assessment Date;

+ Deferred Purchase Price calculated as of such Settlement Date.

2.2. AMOUNT OF THE COMPLEMENTARY DEPOSIT ON AN INTERMEDIARY SETTLEMENT DATE




- amount of the Subordinated Deposit on such Settlement Date minus the amount of the Subordinated Deposit on the preceding Settlement Date;

- any amount received on the Purchaser’s Collection Accounts within the period between the Assessment Date preceding such Settlement Date and the preceding Assessment Date.

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EXHIBIT 10.1

AMENDMENT NO. 2 TO UMBRELLA AGREEMENT

This Amendment No. 2 to the Umbrella Agreement dated as of June 14, 1999("UMBRELLA AGREEMENT") is dated as of April 7, 2003 ("AMENDMENT NO. 2") and isby and between The Goodyear Tire & Rubber Company, a company organized andexisting under the laws of the State of Ohio of the United States of America("GOODYEAR") and Sumitomo Rubber Industries, Ltd., a company organized andexisting under the laws of Japan ("SRI").

WITNESSETH:

WHEREAS, the parties have agreed that notwithstanding the provisions ofArticle 10.02 of the Umbrella Agreement, Goodyear shall be permitted to sellsome or all of its shares of Common Stock in SRI on the terms hereinaftermentioned.

WHEREAS, the parties have agreed that, notwithstanding such provisions,Goodyear shall be permitted, following any such sale, to purchase shares ofCommon Stock in SRI.

WHEREAS, the parties have agreed to make a number of consequentialamendments to the Umbrella Agreement to allow such sales and purchases of sharesof Common Stock in SRI by Goodyear, and to govern their relationship followingany such sales.

NOW, THEREFORE, IT IS AGREED AS FOLLOWS:

1. AMENDMENT OF MAINTENANCE OF CROSS INVESTMENTS

1.1 The parties hereby amend Article 10.02 of the Umbrella Agreement so as to delete the existing Article 10.02(a) in its entirety and to restate such Article as follows:

"10.02 Maintenance of Cross Investments. (a) Subject to the provisions of clauses (a)(i) to (a)(vii) and paragraphs (b) and (c) of this Article 10.02 and so long as no Global Exit shall have occurred, Goodyear shall not purchase, sell, or dispose of or otherwise transfer (whether for cash or other consideration) its interest (including any beneficial interest as defined under the 1934 Act), in any shares of SRI Common Stock or other voting securities of SRI without the prior written consent of SRI and SRI shall not purchase, sell, or dispose of or otherwise transfer (whether for cash or other consideration) its interest in any shares of Goodyear Common Stock or

1

other voting securities of Goodyear without the prior written consent of Goodyear; provided that:

(i) Goodyear may agree to sell, in one or more transactions or instalments, its interest (including any beneficial interest as defined under the 1934 Act), in any shares of SRI Common Stock provided that any such sales are completed between 31 March 2003 and 30 June 2003 (inclusive);

(ii) following any sale by Goodyear of any interest in any shares of SRI Common Stock pursuant to clause (a)(i) above, Goodyear may in the period up to and including 30 June 2008 purchase (by such method as may be agreed between the parties from time to time), in one or more transactions or instalments, such number of shares of SRI Common Stock as is necessary to restore Goodyear’s percentage interest in SRI’s total issued and outstanding shares of Common Stock (from time to time) from the percentage interest following such sale or sales (the "POST-SALE PERCENTAGE") to ten percent (10%) (the "ORIGINAL PERCENTAGE");

(iii) if, by purchases made pursuant to clause (a)(ii) above, Goodyear restores its percentage interest in SRI’s total issued and outstanding shares of Common Stock to the Original Percentage, Goodyear may from time to time thereafter purchase such shares of SRI’s Common Stock as is necessary to maintain Goodyear’s percentage interest in SRI’s total issued and outstanding shares of Common Stock at the Original Percentage. If Goodyear makes a purchase pursuant to this clause (a)(iii) it shall promptly give written notice thereof to SRI;

(iv) notwithstanding any restriction imposed by the confidentiality agreement between Goodyear and SRI dated 19 January 2003 (the "CONFIDENTIALITY AGREEMENT"), following any sale by Goodyear of any interest in any shares of SRI Common Stock pursuant to clause (a)(i) above, upon 14 calendar days prior written notice, SRI may (subject to clause (a)(v) below) sell its interest (including any beneficial interest as defined under the 1934 Act), in one or more transactions or installments, in any shares of Goodyear Common Stock until the earlier of 30 June 2008 or such date as Goodyear restores its percentage interest in SRI’s total issued and outstanding shares of Common Stock to the Original Percentage. If SRI makes a sale pursuant to this clause (a)(iv) it shall promptly give written notice thereof to Goodyear;

(v) SRI may only sell its interest in shares of Goodyear Common Stock pursuant to clause (a)(iv) above to the extent such interest to be sold does not reduce SRI’s percentage interest in Goodyear’s total issued and outstanding shares of

2

Common Stock as existed immediately following conversion of the Goodyear Note by more than the fraction given by the following calculation:

10 minus Post Sale Percentage / 10

(vi) notwithstanding any restriction imposed by the Confidentiality Agreement, following any sale by SRI of any interest in any shares of Goodyear Common Stock pursuant to clause (a)(iv) above, SRI may in the period up to and including 30 June 2008 purchase (by such method as may be agreed between the parties from time to time), in one or more transactions or instalments, such number of shares of Goodyear Common Stock as is necessary to restore SRI’s percentage interest in Goodyear’s total issued and outstanding shares of Common Stock (from time to time) to the same percentage interest as existed immediately following conversion of the Goodyear Note. If, by purchases made pursuant to clause (a)(ii) above, Goodyear restores its percentage interest in SRI’s total issued and outstanding shares of Common Stock to the Original Percentage on a date before 30 June 2008, SRI will endeavour to restore its percentage interest in Goodyear’s total issued and outstanding shares of Common Stock (from time to time) to the same percentage interest as existed immediately following conversion of the Goodyear Note as soon as reasonably practicable after such date; and

(vii) notwithstanding any restriction imposed by the Confidentiality Agreement, SRI may from time to time purchase such shares of Goodyear’s Common Stock as is necessary to maintain SRI’s percentage interest in Goodyear’s total issued and outstanding shares of Common Stock as existed immediately following the conversion of the Goodyear Note. If SRI makes a purchase pursuant to this clause (a)(vii) it shall promptly give written notice thereof to Goodyear."

1.2 The parties hereby amend Article 10.02 of the Umbrella Agreement so as to delete Article 10.02(c) in its entirety and to restate such Article as follows:

"(c) In the event SRI issues additional shares of its Common Stock and if, as a result of such issuance, Goodyear’s percentage interest in SRI Common Stock is reduced, Goodyear shall be entitled to purchase, on the open market or in negotiated private transactions, such additional shares as shall allow it to obtain such number of shares of SRI Common Stock as would increase its percentage shareholding in SRI to the Original Percentage. SRI shall furnish to Goodyear (i) within 45 days of the close of

3

each calendar quarter, notice of the total number of issued and outstanding shares of SRI Common Stock and (ii) promptly following recommendation by the SRI Board of Directors of a date on which a dividend on SRI Common Stock will be paid, but not later than fourteen (14) days preceding such dividend payment date, notice of such dividend payment date and of the total number of shares of SRI Common Stock (x) issued and outstanding on the date of such recommendation and (y), unless prohibited by law, projected to be issued and outstanding on the forthcoming dividend payment date. In the event that Goodyear notifies SRI that Goodyear is unable to purchase on the open market or in negotiated private transactions, such additional shares as shall allow it to maintain its shareholding at the Original Percentage, then SRI shall, to the extent permitted by applicable law, at SRI’s election, either:

(i) issue to Goodyear at the then current market price such additional shares as shall allow Goodyear to maintain its shareholding at the Original Percentage; or

(ii) use its best efforts (but without the incurrence of unreasonable cost or liability) to arrange for Goodyear to purchase at the then current market price from a third party such additional shares as shall allow Goodyear to maintain its shareholding at the Original Percentage; or

(iii) use its best efforts (but without the incurrence of unreasonable cost or liability) to take such other measures, as shall allow Goodyear to maintain its shareholding at the Original Percentage.

In addition, SRI shall promptly (and in any event within five working days) upon a request from Goodyear, furnish Goodyear with the total number of issued and outstanding shares of SRI Common Stock on the date of such request.

The foregoing provisions of this Article 10.02(c) shall only apply:

(A) before the date of the first sale (if any) by Goodyear of any interest in any shares of SRI Common Stock pursuant to clause (a)(i) above; and

(B) after such time (being no later than 30 June 2008) as Goodyear’s percentage interest in any shares of SRI Common Stock (from time to time) is restored to the Original Percentage pursuant to purchases made in accordance with clause (a)(ii) above."

4

2. AMENDMENT TO GOODYEAR’S RIGHT TO NOMINATE SRI DIRECTOR

2.1 The parties hereby amend Article 10.03 of the Umbrella Agreement so as to add, at the end of Article 10.03(a), the following:

"If the Alliance is terminated at any time pursuant to a Global Exit Right, Goodyear shall procure that the director appointed pursuant to this Article 10.03(a) shall resign from the SRI Board of Directors (without compensation)."

2.2 The parties hereby amend Article 10.03 of the Umbrella Agreement so as to delete Article 10.03(d) in its entirety and to restate such Article as follows:

"(d) Following any sale by Goodyear of any interest in any shares of SRI Common Stock pursuant to clause (a)(i) of Article 10.02 (as a consequence of which Goodyear will own less than ten percent (10%) of the total issued and outstanding shares of SRI Common Stock), SRI may, until the earlier of 30 June 2008 and such time as Goodyear restores its shareholding to ten percent (10%) of the total issued and outstanding shares of SRI Common Stock (from time to time), at its sole discretion, invite a Goodyear executive (or another person reasonably satisfactory to SRI) as Goodyear may nominate to stand for election to its Board of Directors (and SRI shall use its reasonable efforts (but without the incurrence of unreasonable cost or liability) to ensure such person will be elected to its Board of Directors (or any successor governing board)). Following such person’s appointment to the Board of Directors paragraphs (b) and (c) of this Article 10.03 shall apply in relation to such director.

If, at any time on or before 30 June 2008, Goodyear restores its shareholding to ten percent (10%) of the total issued and outstanding shares of SRI Common Stock (from time to time), this Article 10.03(d) shall cease to have effect and the director appointed pursuant to this Article 10.03(d) shall be deemed to have been appointed pursuant to Article 10.03(a), which shall continue to apply thereafter.

If, by 30 June 2008, Goodyear has not restored its shareholding to ten percent (10%) of the total issued and outstanding shares of SRI Common Stock (from time to time), or, if the Alliance is terminated at any time pursuant to a Global Exit Right, Goodyear shall procure that the director appointed pursuant to this Article 10.03(d) shall resign from the SRI Board of Directors (without compensation) and Article 10.03(a) shall cease to apply."

2.3 The parties hereby amend Article 10.03 of the Umbrella Agreement so as to add, at the end of Article 10.03(e), the following:

"The foregoing provisions of this Article 10.03(e) shall not apply from the date of the first sale (if any) by Goodyear of any interest in any shares of SRI Common Stock pursuant to clause (a)(i) of Article 10.02 until such time (if any) as Goodyear’s

5

percentage interest in any shares of SRI Common Stock (from time to time) is restored to the Original Percentage pursuant to purchases made in accordance with clause (a)(ii) of Article 10.02."

3. GENERAL

3.1 The parties hereby amend the Umbrella Agreement to give effect to the provisions of this Amendment No. 2 but in all other respects the other terms and conditions of the Umbrella Agreement shall continue without change.

3.2 The parties hereby acknowledge that expressions used in this Amendment No. 2 will have the same meanings as are ascribed thereto in the Umbrella Agreement unless otherwise specifically defined herein.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2to the Umbrella Agreement to be duly executed as of the day and year first abovewritten in this Amendment No. 2.


By: /s/ Clark E. Sprang ----------------------------------------- Clark E. Sprang Title: Senior Vice President Business Development and Integration

Attest: /s/ Anthony E. Miller ------------------------------------- Anthony E. Miller Assistant Secretary

SUMITOMO RUBBER INDUSTRIES, LTD.

By: /s/ Ryochi Sawada ----------------------------------------- Ryochi Sawada Title: Representative Director and Executive Director

Attest: /s/ Makoto Teshima ------------------------------------- Makoto Teshima General Manager Legal Department

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EXHIBIT 10.2

April 21, 2000

Sumitomo Rubber Industries, Ltd6-9, 3-ChomeWakinohama-cho, Chuo-KuKobe 651Japan

Attention: Naoto Saito, Chairman

Re: Shareholders Agreement for the Europe JVC dated as of June 14, 1999 by andamong The Goodyear Tire & Rubber Company ("Goodyear"), Goodyear S.A., aLuxembourg corporation, Goodyear S.A., a French corporation, Goodyear CanadaInc. and Sumitomo Rubber Industries, Ltd. (the "European ShareholdersAgreement") and this Amendment No.1.

Dear Saito-san:

Goodyear hereby requests that the other parties to the European ShareholdersAgreement hereby agree to adopt this Amendment No. 1 to such agreement so as toallow the Birmingham factory site of Goodyear Dunlop Tires Europe B.V. ("GDTE")and/or Affiliates controlled by it to be closed, discontinued and/or disposed ofnotwithstanding any provision of Article 9.10 of the European ShareholdersAgreement limiting such action during the two (2) years after the operationalstart-up date (September 1, 1999) of GDTE. The undersigned, as parties to theEuropean Shareholders Agreement and/or shareholders of GDTE also herebyauthorize and confirm that such a closure, discontinuance and/or disposal of theBirmingham factory site is authorized for the purpose of Article 3.6 (xiv)and/or (xv) of the European Shareholders Agreement.

The parties agree that the European Shareholders Agreement shall be amended togive effect of the foregoing but in all other respects the other terms andconditions of the European Shareholders Agreement shall continue without change.All expressions used in this Amendment No. 1 shall have the same meanings as areascribed to them in the European Shareholders Agreement unless otherwisespecifically defined herein.

If you are in agreement with the foregoing, please so indicate by signing thisletter and the accompanying duplicate copies, one copy of which is for yourfiles.


By: /s/ Samir Gibara ------------------------------- Samir Gibara Title: Chairman of the Board, Chief Executive Officer and President

Confirmed and agreed to byall the undersigned as of thedate first above written

SUMITOMO RUBBER INDUSTRIES, LTD.

By: /s/ Naoto Saito ------------------------------ Naoto SaitoTitle: Chairman

GOODYEAR S.A.,a Luxembourg corporation

By: /s/ Samir Gibara ------------------------------ Samir GibaraTitle: Attorney-in-fact

GOODYEAR S.A.,a French corporation

By: /s/ Samir Gibara ------------------------------ Samir GibaraTitle: Attorney-in-fact

GOODYEAR CANADA INC.

By: /s/ Samir Gibara ------------------------------ Samir GibaraTitle: Attorney-in fact

EXHIBIT 10.3

RESTRICTED STOCK PURCHASE AGREEMENT

THIS AGREEMENT is made and entered into this __day of ___________,between The Goodyear Tire & Rubber Company, an Ohio corporation, with itsprincipal office at 1144 East Market Street, Akron, Ohio 44316-0001 (hereinafterreferred to as the "Company"), and __________________________ residing at_________ (hereinafter referred to as "Executive").

WITNESSETH: THAT

WHEREAS, Executive became an employee of the Company on ____________and was elected __________ of the Company by the Board of Directors of theCompany effective _______________; and

WHEREAS, the Compensation Committee of the Board of Directors of theCompany deemed it in the best interest of the Company and in furtherance of thepurposes of the 2002 Performance Plan of The Goodyear Tire & Rubber Company (the"Plan") to award restricted shares of the Common Stock, without par value, ofthe Company (the "Common Stock") to Executive pursuant to the Plan on andsubject to the terms, conditions and restrictions set forth herein; and

WHEREAS, in accordance with action duly taken by the CompensationCommittee of the Board of Directors and by the Board of Directors, the followingsets forth the terms, conditions and restrictions of the award.

NOW, THEREFORE, in consideration of the premises and the mutualcovenants and agreements herein contained, the parties hereby agree as follows:

SECTION 1. AWARD; PURCHASE AND SALE OF SHARES.

The Company awards pursuant to the Plan and agrees to sell toExecutive, and Executive agrees to subscribe for and purchase from the Company,on and subject to the terms and conditions set forth in this Agreement,_________ shares of the Common Stock (the "Shares") at a purchase price of onecent ($.01) per share. The aggregate purchase price of _____________ for theShares shall be paid by Executive by check, payable to the order of the Company,or by such other method as may be acceptable to the Company. The purchase andsale shall be consummated at the principal offices of the Company at such timeas shall be agreed upon by the Company and Executive, but in no event later_____________. Upon receipt of the purchase price, the Company will cause acertificate or certificates for the Shares to be issued to Executive as theregistered owner thereof. Upon the purchase and issuance of the Shares,Executive will be entitled to receive dividends and exercise voting rights.Executive agrees that the Shares shall be subject to the restrictions ontransfer set forth in Section 2 of this Agreement and to the Purchase Option setforth in Section 3 of this Agreement. Executive hereby agrees that the Companyshall retain, at its

principal offices, possession of the certificate or certificates representingthe Shares, duly endorsed in blank by Executive or with duly executed stockpower(s) attached, all in a form suitable for the transfer of the Shares.

SECTION 2. RESTRICTIONS ON TRANSFER.

Executive shall not have the right or power to, and shall not, sell,assign, transfer, pledge, hypothecate, or otherwise dispose of, by operation oflaw or otherwise, any of the Shares, or any interest therein, so long as and tothe extent that the Shares are subject to the Purchase Option of the Companyprovided for at Section 3 of this Agreement.

SECTION 3. COMPANY PURCHASE OPTION.

A. The Company shall have the right and option to purchase all of theShares from Executive for one cent ($.01) per share (the "Option Price"), ifExecutive ceases to be employed by the Company for any reason (the "PurchaseOption"), except as expressly provided in Subsection B of this Section 3. Exceptas otherwise provided in Subsection C of this Section 3, the Purchase Option ofthe Company will expire on _____________ if Executive has been continuouslyemployed from the date of this Agreement through ________________.

B. In the event Executive ceases to be an employee of the Company atany time subsequent to _____________ by reason of his death or total disability(as defined in the Company’s Long Term Disability Benefits for SalariedEmployees Plan (the "LTDB Plan")), the Purchase Option shall thereupon terminatein respect of that number of the Shares which is equal to the product of (i)_____, multiplied by (ii) a fraction the numerator of which is the number offull calendar months elapsed during the period beginning on _______________ andending on the date of the death or total disability (as defined in the LTDBPlan) of Executive, and the denominator of which is 36.

C. In the event that on or before __________ the Company determinesthat it would not be able to deduct for Federal Income Tax purposes the entirevalue of the Shares (less the purchase price paid by Executive by reason of theprovisions of Section 162(m) of the Internal Revenue Code of 1986, as amended(the "Internal Revenue Code"), or any successor statute, in the ____ tax year ofthe Company, then the restrictions on transfer set forth in Section 2 of thisAgreement shall continue and the Purchase Option of the Company shall beautomatically extended until such date as the value of such Shares would bedeductible by the Company for Federal Income Tax purposes. The Purchase Optionof the Company shall be extended pursuant to this Subsection C only to theextent, and only in respect of that number of the Shares, necessary in order toassure the deductibility by the Company for Federal Income Tax purposes of thevalue of the Shares (net of the purchase price paid by Executive).

D. Notwithstanding anything herein to the contrary, in the event that aChange in Control (as defined at Section 13 of the Plan) shall occur at any timeafter ________________, the Purchase Option of the Company shall automaticallyterminate in respect of all of the Shares on the date on which such Change inControl occurs.

E. The Company may exercise the Purchase Option by delivering ormailing to Executive, or to his estate at his address, written notice ofexercise within 60 days after the termination of ("Executive’s") employment withthe Company, which notice shall specify the number of Shares to be purchased.The Company shall thereafter tender to Executive or his estate the option pricein respect of that number of Shares being purchased within 90 days after("Executive’s") termination of employment with the Company. If and to the extentthe Purchase Option is not exercised within the aforesaid 60-day period, or thepurchase is not completed within the aforesaid 90-day period, as the case maybe, the Purchase Option of the Company shall automatically expire.

F. After the time when any of the Shares are required to be transferredto the Company pursuant to Subsection A of this Agreement, the Company shall notpay any dividend to Executive on account of those Shares, or permit Executive toexercise any of the privileges or rights of a shareholder with respect to thoseShares, but shall, insofar as permitted by law, treat the Company as the ownerof the Shares.

SECTION 4. EFFECT OF PROHIBITED TRANSFER.

The Company shall not be required (a) to transfer on its books any ofthe Shares that shall have been, or are purported or represented to have been,sold or transferred in violation of any of the provisions of this Agreement; or(b) to treat as owner of such Shares or to pay dividends to any transferee towhom any such Shares shall have been, or are purported or represented to havebeen, so sold or transferred.

SECTION 5. RESTRICTIVE LEGEND.

All certificates representing the Shares shall have affixed thereto alegend in substantially the following form, in addition to any other legendsthat may be required under Federal or state securities laws:

The shares of stock represented by this certificate are subject to restrictions on transfer and conditions of forfeiture set forth in the Restricted Stock Purchase Agreement, dated ______________, between the Company and Executive, which agreement is on file with, and available for inspection without charge at the office of, the Secretary of the Company at 1144 East Market Street, Akron, Ohio 44316-0001.

SECTION 6. CERTAIN RESALE LIMITATIONS.

A. The Shares have been registered under the Securities Act forissuance pursuant to the Plan. Executive acknowledges that in the event he shallbe deemed to be an "affiliate" of the Company (within the meaning of that termas used in Rule 144 promulgated under the Securities Act of 1933), a sale of allor a portion of the Shares will be subject to certain provisions of said Rule144 under the Securities Act.

B. Executive agrees that he will not sell, transfer, or otherwisedispose of any of the Shares except in conformance with all applicableprovisions of the Securities Act and that the Company shall have no obligationto cause the registration of the Shares for resale by Executive if he is an"affiliate".

C. A legend substantially in the following form will be placed on thecertificate or certificates representing the Shares:

The shares represented by this certificate may not be sold, transferred, or otherwise disposed of in the absence of an effective registration statement under that Act or an opinion of counsel satisfactory to the Company to the effect that registration is not required.

SECTION 7. ADJUSTMENTS.

If from time to time during the period the Shares are subject to therestrictions on transfer set forth in this Agreement or the Purchase Option ofthe Company is in effect in whole or in part there is any stock split-up, stockdividend, stock distribution, or other reclassification of the Common Stock ofthe Company, or any merger, consolidation, or sale of substantially all of theassets of the Company, any and all new, substitute, or additional securities towhich Executive is entitled by reason of his ownership of the Shares shall besubject immediately to the award (and be included as "Shares" therein), therestrictions on the transfer of the Shares set forth in this Agreement, thePurchase Option of the Company, and the other provisions of this Agreement inthe same manner and to the same extent as the Shares. The Purchase Option of theCompany and the Option Price and the other terms of the award shall be adjustedappropriately. If as a result of any adjustment which requires the calculationof the number of Shares, the number so computed is not a whole number, thenumber of Shares shall be the number computed rounded down to the next wholenumber. Any adjustment consistent with the provisions hereof made by theCompensation Committee of the Board of Directors shall be binding on Executive.

SECTION 8. WITHHOLDING TAXES.

A. Executive acknowledges and agrees that the Company has the right todeduct from payments of any kind otherwise due to him any federal, state, orlocal taxes of any kind required by law to be withheld with respect to theShares.

B. If Executive elects in accordance with Section 83(b) of the InternalRevenue Code to recognize ordinary income in respect of the Shares in 2004, theCompany will require, at the time of that election, that Executive make anadditional payment to the Company for withholding taxes, the amount of whichshall be based on the difference, if any, between the purchase price of theShares and the fair market value of the Shares as of the date of the purchase ofthe Shares by Executive.

SECTION 9. SEVERABILITY.

The invalidity or unenforceability of any provision of this Agreementshall not affect the validity or enforceability of any other provision of thisAgreement, and each other provision of this Agreement shall be severable andenforceable to the extent permitted by law.

SECTION 10. WAIVER.

Any provision contained in this Agreement may be waived, eithergenerally or in any particular instance, by the Board of Directors of theCompany.

SECTION 11. BINDING EFFECT.

This Agreement shall be binding upon, and inure to the benefit of, theCompany and Executive and their respective heirs, executors, administrators,legal representatives, successors and assigns.

SECTION 12. NO RIGHTS TO EMPLOYMENT.

Nothing contained in this Agreement shall be construed as givingExecutive any right to be retained, in any position, as an employee of theCompany.

SECTION 13. NOTICE.

Any notice required or permitted hereunder shall be deemed served ifpersonally delivered, delivered by courier service or mailed by registered orcertified mail, postage

prepaid, and properly addressed to the respective party to whom such noticerelates, at the addresses set forth in this Agreement or at such differentaddresses as shall be specified by a notice given in the manner herein provided.

SECTION 14. ENTIRE AGREEMENT.

This Agreement constitutes the entire agreement between the parties andsupersedes all prior agreements and understandings, whether oral or written,pertaining to the Shares or otherwise relating to the subject matter of thisAgreement.

SECTION 15. AMENDMENT.

This Agreement may be amended or modified only by a written instrumentexecuted by both the Company and Executive.

SECTION 16. GOVERNING LAW.

This Agreement shall be construed, interpreted and enforced inaccordance with the laws of the State of Ohio.

IN WITNESS WHEREOF, the parties have executed this Agreement on thedate first above written.


By: -------------------------------------- Chairman of the Board, President and Chief Executive Officer

Attest: ---------------------------------- Secretary

---------------------------------- Name

EXHIBIT 10.4

SCHEDULE OF OUTSIDE DIRECTORS’ ANNUAL COMPENSATION (EFFECTIVE JANUARY 1, 2004)

Component

Board Retainer

Presiding Director $125,000 ($31,250 per calendar quarter)

All Other Directors $70,000 ($17,500 per calendar quarter)

Committee Chair Retainer

Audit Committee Chair $15,000 ($3,750 per calendar quarter)

Other Committee Chairs $5,000 ($1,250 per calendar quarter)

ODEPP Stock Unit Accruals* $70,000

Meeting Fees (Board or Committee)**

Attended Meeting $1,700

Telephonic Meeting $1,000

*Under the Outside Directors Equity Participation Plan (the "Plan"), on thefirst business day of each calendar quarter each director will have $17,500accrued to his or her plan account. Amounts accrued are converted into unitsequivalent in value to shares of Common Stock at the fair market value on theaccrual date. Each director may also choose to have 25%, 50%, 75% or 100% of hisor her retainer and meeting fees deferred and converted into share equivalentsunder the Plan.

**Meeting fees only apply for total meetings attended in excess of 24 per year.

EXHIBIT 10.5

SCHEDULE OF 2005 SALARY AND TARGET BONUS FOR NAMED EXECUTIVE OFFICERS (AS DEFINED IN ITEM 402(A)(3) OF REGULATION S-K)

Effective May 1, 2005, the annual salary compensation for each of the NamedExecutive Officers is:

Robert J. Keegan, Chairman of the Board, Chief Executive Officer and President, $1,100,000;

Jonathan D. Rich, President, North American Tire, $445,200;

C. Thomas Harvie, Senior Vice President, General Counsel and Secretary, $446,100;

Richard J. Kramer, Executive Vice President and Chief Financial Officer, $461,100; and

Michael J. Roney, President, European Union Tire, $418,100.

Target bonuses for 2005 under the Company’s Performance Recognition Plan foreach of the Named Executive Officers are:

Mr. Keegan, $1,500,000;

Mr. Rich, $385,000;

Mr. Harvie, $290,000;

Mr. Kramer, $330,000; and

Mr. Roney $361,000.

Payment of 2005 bonuses will be made from a payment pool, the size ofwhich will depend on the extent to which the specific financial performancetargets established by the Committee are met. The target aggregate payment poolfor 2005 is $27.8 million. Earnings before interest and taxes less financecharges ("EBIT") and operating cash flow are the financial performance measuresunder the Performance Recognition Plan for fiscal year 2005. Funding of the 2005payment pool will be based 50% on each performance measure and could range fromzero to 200% of the target amount depending on the level of operating cash flowand EBIT achieved. In addition, payouts for each of the Named Executive Officersmay be adjusted based on individual performance.

Exhibit 12

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIESCOMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES


Restated

2004 2003 2002 2001 2000(Dollars in millions)

EARNINGSIncome (loss) before income taxes $ 322.7 $ (690.3) $ (19.0) $ (339.0) $ 69.9

Add:Amortization of previously capitalized interest 11.3 10.7 10.2 9.9 9.8Minority interest in net income of consolidated subsidiaries with fixed

charges 62.6 36.3 57.1 28.0 45.5Proportionate share of fixed charges of investees accounted for by the

equity method 0.3 7.2 4.7 4.1 5.8Proportionate share of net loss of investees accounted for by the equity

method 1.1 21.2 17.1 42.8 28.6

Total additions 75.3 75.4 89.1 84.8 89.7

Deduct:Capitalized interest 6.7 8.0 7.2 1.7 11.9Minority interest in net loss of consolidated subsidiaries 6.4 14.9 5.3 15.0 8.3Undistributed proportionate share of net income of investees accounted

for by the equity method 6.1 3.9 1.7 0.3 2.9

Total deductions 19.2 26.8 14.2 17.0 23.1TOTAL EARNINGS $ 378.8 $ (641.7) $ 55.9 $ (271.2) $ 136.5

FIXED CHARGESInterest expense $ 368.8 $ 296.3 $ 242.7 $ 298.0 $ 282.9Capitalized interest 6.7 8.0 7.2 1.7 11.9Amortization of debt discount, premium or expense 61.0 43.7 8.8 6.0 1.5Interest portion of rental expense(1) 91.7 88.4 76.7 74.1 73.5Proportionate share of fixed charges of investees accounted for by the

equity method 0.3 7.2 4.7 4.1 5.8

TOTAL FIXED CHARGES $ 528.5 $ 443.6 $ 340.1 $ 383.9 $ 375.6

TOTAL EARNINGS BEFORE FIXED CHARGES $ 907.3 $ (198.1) $ 396.0 $ 112.7 $ 512.1

RATIO OF EARNINGS TO FIXED CHARGES 1.72 * 1.16 ** 1.36

* Earnings for the year ended December 31, 2003 were inadequate to cover fixed charges. The coverage deficiency was $641.7 million.

** Earnings for the year ended December 31, 2001 were inadequate to cover fixed charges. The coverage deficiency was $271.2 million.

(1) Interest portion of rental expense is estimated to equal 1/3 of such expense, which is considered a reasonable approximation of the interestfactor.

EXHIBIT 21.1

SUBSIDIARIES OF THE REGISTRANT(1)(2)(3)(4)

The subsidiary companies of The Goodyear Tire & Rubber Company at December 31, 2004, and the places of incorporation ororganization thereof, are:

1

Place ofIncorporation

Name of Subsidiary or Organization

UNITED STATESAllied Tire Sales, Inc. FloridaBelt Concepts of America, Inc. DelawareCeleron Corporation DelawareCosmoflex, Inc. DelawareDapper Tire Co., Inc. CaliforniaDivested Atomic Corporation DelawareDivested Companies Holding Company DelawareDivested Litchfield Park Properties, Inc. Arizona*Goodyear Dunlop Tires North America, Ltd. OhioGoodyear Farms, Inc. ArizonaGoodyear International Corporation DelawareThe Goodyear Rubber Plantations Company OhioGoodyear-SRI Global Purchasing Company OhioGoodyear-SRI Global Technology LLC OhioGoodyear Western Hemisphere Corporation DelawareThe Kelly-Springfield Tire Corporation DelawareLaurelwood Properties Inc. DelawareRetreading L Inc. DelawareRetreading L, Inc. of Oregon Oregon*Utica Converters Inc. DelawareWheel Assemblies Inc. DelawareWingfoot Commercial Tire Systems LLC OhioWingfoot Corporation DelawareWingfoot Ventures Eight Inc. DelawareWingfoot Ventures Four Inc. DelawareWingfoot Ventures Thirteen Inc. Delaware

INTERNATIONALAbacom (Pty.) Ltd. BotswanaCompania Anonima Goodyear de Venezuela VenezuelaCompania Goodyear del Peru, S.A. PeruCompania Goodyear, S.A. de C.V. MexicoCorporacion Industrial Mercurio S.A. de C.V. Mexico*Dackia Partners AB Sweden*Dunlop Airsprings France*Dunlop GmbH & Co. KG Germany

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*Dunlop Grund und Service Verwaltungs GmbH Germany*Dunlop Tyres Limited England*Dunlop Versicherungsservice GmbH Germany*Fit Remoulds (Ireland) Limited Ireland*Fulda Reifen GmbH & Co. KG Germany*GD Furstenwalde Vermogensverwaltungs GmbH Germany*GHS Goodyear Handelssysteme GmbH GermanyGoodyear Australia Pty Limited AustraliaGoodyear Aviation Japan, Ltd. JapanGoodyear Belting Pty Limited AustraliaGoodyear Brokers Limited BermudaGoodyear Canada Inc. CanadaGoodyear Chemical Products SAS France*Goodyear Dalian Tire Company Ltd. ChinaGoodyear de Chile S.A.I.C. ChileGoodyear de Colombia S.A. ColombiaGoodyear do Brasil Productos de Borracha Ltda Brazil*Goodyear Dunlop Financial Service GmbH Germany*Goodyear Dunlop Tires Austria GmbH Austria*Goodyear Dunlop Tires Baltic A.S. Estonia*Goodyear Dunlop Tires Belgium N.V. Belgium*Goodyear Dunlop Tires Czech s.r.o. Czech Republic*Goodyear Dunlop Tires Danmark A/ S Denmark*Goodyear Dunlop Tires Espana S.A. Spain*Goodyear Dunlop Tires Europe B.V. Netherlands*Goodyear Dunlop Tires Finance Europe B.V. Netherlands*Goodyear Dunlop Tires Finland OY Finland*Goodyear Dunlop Tires France France*Goodyear Dunlop Tires Germany GmbH Germany*Goodyear Dunlop Tires Hellas S.A.I.C. Greece*Goodyear Dunlop Tires Ireland Limited Ireland*Goodyear Dunlop Tires Italia SRL Italy*Goodyear Dunlop Tires Hungary Trading Ltd. Hungary*Goodyear Dunlop Tires Nederland B.V. Netherlands*Goodyear Dunlop Tires Norge A/ S Norway*Goodyear Dunlop Tires Polska Sp z.o.o. Poland*Goodyear Dunlop Tires Portugal, Unipessoal, Lda. Portugal*Goodyear Dunlop Tires Romania Srl Romania*Goodyear Dunlop Tires Slovakia s.r.o. Slovakia*Goodyear Dunlop Tires Slovenia d.o.o. Slovenia*Goodyear Dunlop Tires Suisse S.A. Switzerland*Goodyear Dunlop Tires Sverige A.B. Sweden

3



*Goodyear Dunlop Tyres UK Ltd. EnglandGoodyear Earthmover Pty Ltd AustraliaGoodyear Engineered Products Europe d.o.o. SloveniaGoodyear Finance Holding S.A. LuxembourgGoodyear France Aviation Products S.A. France*Goodyear GmbH & Co. KG GermanyGoodyear India Limited IndiaGoodyear Industrial Rubber Products Ltd. England*Goodyear Italiana S.p.A. ItalyGoodyear Jamaica Limited JamaicaGoodyear Korea Company KoreaGoodyear Lastikleri Turk Anonim Sirketi Turkey*Goodyear Luxembourg Tires S.A. LuxembourgGoodyear Malaysia Berhad MalaysiaGoodyear Marketing & Sales Snd. Bhd. MalaysiaGoodyear Maroc S.A. MoroccoGoodyear Middle East FZE DubaiGoodyear Nederland B.V. NetherlandsGoodyear New Zealand, Ltd. New ZealandGoodyear Orient Company (Private) Limited SingaporeGoodyear Philippines, Inc. PhilippinesGoodyear Productos Industriales S. De R.L. De C.V. MexicoGoodyear Productos Industriales, C.A. VenezuelaGoodyear Qingdao Engineered Elastomers Company Ltd. ChinaGoodyear Russia LLC RussiaGoodyear Sales Company Limited TaiwanGoodyear S.A. FranceGoodyear S.A. LuxembourgGoodyear Servicios Comerciales S. De R.L. De C.V. MexicoGoodyear Servicios Y Asistencia Tecnica S. De R.L. De C.V. MexicoGoodyear Singapore Pte Limited SingaporeGoodyear Solid Woven Belting (Pty) Limited South AfricaGoodyear South Africa (Proprietary) Limited South AfricaGoodyear South Asia Tyres Private Limited IndiaGoodyear SRI Global Purchasing Yugen Kaisha & Co. Ltd JapanGoodyear Taiwan Limited TaiwanGoodyear (Thailand) Public Company Limited ThailandGoodyear Tyres Pty Ltd AustraliaGoodyear Tyre and Rubber Holdings (Pty.) Ltd South AfricaGoodyear Wingfoot KK JapanGran Industria de Neumaticos Centroamericana, S.A. GuatemalaHi-Q Automotive (Pty.) Ltd. South Africa*KDIS Distribution France

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Kelly-Springfield Puerto Rico, Inc. Puerto RicoKelly-Springfield Tyre Co. (Australia) Pty. Ltd. AustraliaMagister Limited Mauritius*Multimarkenmanagement GmbH & Co KG GermanyNeumaticos Goodyear S.R.L. ArgentinaNippon Giant Tire Co., Ltd. Japan*Pneu Holding FranceProperty Leasing S.A. LuxembourgP.T. Goodyear Indonesia Tbk IndonesiaP.T. Goodyear Sumatra Plantations IndonesiaRubber & Associated Manufacturing (Pty) Ltd. South AfricaRVM Reifen Vertriebsmanagement GmbH GermanySava Tires, d.o.o. Slovenia*S.A. Vulco Belgium N.V. BelgiumServicios Y Montjes Eagle, S. de R.L. MexicoSouth Pacific Tyres AustraliaSouth Pacific Tyres New Zealand Limited New Zealand*SP Brand Holding GEIE BelgiumThree Way Tyres (Botswana) BotswanaTire Company Debica S.A. PolandTredcor Export Services (Pty) Ltd. South AfricaTredcor Southern Zimbabwe (Pvt.) Limited ZimbabweTredcor (Zambia) Limited ZambiaTrentyre Limited (Mozambique) MozambiqueTrentyre Holdings (Pty) Ltd South AfricaTrentyre (Pty.) Ltd. South AfricaTrentyre North Zimbabwe (Pvt.) Limited ZimbabweTyre Services (Botswana) BotswanaVulco Development France*Vulco France FranceWingfoot de Chihuahua, S. de R.L. de C.V. MexicoWingfoot Insurance Company Limited BermudaWingfoot Luxembourg SARL LuxembourgWingfoot Mold Leasing Company Canada*4 Fleet Group GmbH Germany

(1) Each of the subsidiaries named in the foregoing list conducts its business under its corporate name and, in a few instances, under ashortened form of its corporate name or in combination with a trade name.

(2) Each of the subsidiaries named in the foregoing list is directly or indirectly wholly-owned by Registrant, except that: (i) each of thesubsidiaries listed above marked by an asterisk preceding its name is 75% owned by Registrant; and (ii) in respect of each of thefollowing subsidiaries Registrant owns the indicated percentage of such subsidiary’s equity capital: Goodyear-SRI Global PurchasingCompany, 80%; Goodyear-SRI Global Technology LLC, 51%; Compania Goodyear del Peru, S.A., 78%; Goodyear Aviation Japan Ltd.,85%; Goodyear India Limited, 74%; Goodyear Jamaica Limited, 60%; Goodyear

5

Lastikleri Turk Anonim Sirketi, 74.61%; Goodyear Malaysia Berhad, 51%; Goodyear Maroc S.A., 55%; Goodyear Qingdao EngineeredElastomers Company Ltd., 60%; Goodyear Taiwan Limited, 75.5%; Goodyear Sales Company Limited, 75.5%; Goodyear (Thailand)Public Company Limited, 66.8%; Gran Industria de Neumaticos Centroamericana, S.A., 79%; P.T. Goodyear Indonesia Tbk, 85%;Goodyear Philippines Inc., 88.54%; P.T. Goodyear Sumatra Plantations, 95%; Nippon Giant Tire Co., Ltd., 65%; Goodyear SRI GlobalPurchasing Yugen Kaisha & Co. Ltd, 80%; Goodyear Marketing & Sales Snd. Bhd, 51%; Sava Tires, d.o.o., 75%; South Pacific Tyres,50.01%; South Pacific Tyres New Zealand Limited, 50.01%; Tire Company Debica S.A., 59.87%; Goodyear South Asia Tires PrivateLimited, 99.4%; Vulco Development, 62.2%; Wingfoot Luxembourg SARL, 95%; Trentyre North Zimbabwe (Pvt.) Limited, 51%;Tredcor Southern Zimbabwe (Pvt.) Limited, 60%; Trentyre (Pty.) Ltd., 92%; and Trentyre Limited (Mozambique), 70%.

(3) In accordance with paragraph (ii) of Part 21 of Item 601(b) of Regulation S-K, the names of approximately 50 subsidiaries have beenomitted from the foregoing list.

(4) Except for Wingfoot Corporation, at December 31, 2004, Goodyear did not have any majority owned subsidiaries that were notconsolidated.

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-90786 and 33-8111) and in theRegistration Statements on Form S-8 (Nos. 333-97417, 333-84352, 333-84346, 333-62806, 333-62808, 333-29993, 33-65187, 33-65185, 33-65183, 33-65181, 33-31530, 33-17963, 2-79437 and 2-47905) of The Goodyear Tire & Rubber Company of our report dated March 16, 2005,relating to the consolidated financial statements, financial statement schedules, management’s assessment of the effectiveness of internalcontrol over financial reporting and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLPCleveland, OhioMarch 16, 2005

Exhibit 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The PartnersSouth Pacific Tyres:

We consent to the incorporation by reference in the registration statements (Nos. 333-90786 and 33-8111) on Form S-3 and (Nos. 333-97417,333-84352, 333-84346, 333-62806, 333-62808, 333-29993, 33-65187, 33-65185, 33-65183, 33-65181, 33-31530, 33-17963, 2-79437 and 2-47905) on Form S-8 of The Goodyear Tire & Rubber Company of our report dated October 13, 2004, except for notes 31, 32 and 33 which areas of March 15, 2005, with respect to the consolidated statements of financial position of South Pacific Tyres as of June 30, 2004, 2003 and2002, and the related consolidated statements of financial performance, partners’ equity and cash flows for each of the years in the three-yearperiod ended June 30, 2004, which report appears in the December 31, 2004, Annual report on Form 10-K of The Goodyear Tire & RubberCompany.

Our report refers to the Partnerships’ restatement of its description of significant differences between generally accepted accounting principlesin Australia and generally accepted accounting principles in the United States and their effects on financial performance and partners’ equityfor each of the years in the two-year period ended June 30, 2003.

/s/ KPMG

Melbourne, AustraliaMarch 16, 2005

Exhibit 24.1


POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned directors of THE GOODYEAR TIRE & RUBBER COMPANY, acorporation organized and existing under the laws of the State of Ohio (the “Company”), hereby constitute and appoint RICHARD J.KRAMER, C. THOMAS HARVIE, and THOMAS A. CONNELL, and each of them, their true and lawful attorneys-in-fact and agents, eachone of them with full power and authority to sign the names of the undersigned directors to the Company’s Annual Report to the Securities andExchange Commission on Form 10-K for its fiscal year ended December 31, 2004, and to any and all amendments, supplements and exhibitsthereto and any other instruments filed in connection therewith; provided, however, that said attorneys-in-fact shall not sign the name of anydirector unless and until the Annual Report shall have been duly executed by the officers of the Company then serving as the chief executiveofficer of the Company, the principal financial officer of the Company and the principal accounting officer of the Company; and each of theundersigned hereby ratifies and confirms all that the said attorneys-in-fact and agents, or any one or more of them, shall do or cause to be doneby virtue hereof.

IN WITNESS WHEREOF, the undersigned have subscribed these presents this 9th day of December, 2004.

/s/ Susan E. Arnold /s/ James C. Boland

Susan E. Arnold, Director James C. Boland, Director

/s/ John G. Breen /s/ Gary D. Forsee

John G. Breen, Director Gary D. Forsee, Director

/s/ William J. Hudson, Jr. /s/ Robert J. Keegan

William J. Hudson, Jr., Director Robert J. Keegan, Director

/s/ Steven A. Minter /s/ Rodney O’Neal

Steven A. Minter, Director Rodney O’Neal, Director

/s/ Shirley D. Peterson /s/ Thomas H. Weidemeyer

Shirley D. Peterson, Director Thomas H. Weidemeyer, Director


POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of THE GOODYEAR TIRE & RUBBER COMPANY, acorporation organized and existing under the laws of the State of Ohio (the “Company”), hereby constitutes and appoints RICHARD J.KRAMER, C. THOMAS HARVIE, and THOMAS A. CONNELL, and each of them, her true and lawful attorneys-in-fact and agents, eachone of them with full power and authority to sign the name of the undersigned director to the Company’s Annual Report to the Securities andExchange Commission on Form 10-K for its fiscal year ended December 31, 2004, and to any and all amendments, supplements and exhibitsthereto and any other instruments filed in connection therewith; provided, however, that said attorneys-in-fact shall not sign the name of thedirector unless and until the Annual Report shall have been duly executed by the officers of the Company then serving as the chief executiveofficer of the Company, the principal financial officer of the Company and the principal accounting officer of the Company; and theundersigned hereby ratifies and confirms all that the said attorneys-in-fact and agents, or any one or more of them, shall do or cause to be doneby virtue hereof.

IN WITNESS WHEREOF, the undersigned has subscribed these presents this 23rd day of February, 2005.

/s/ Denise M. Morrison

Denise M. Morrison, Director

EXHIBIT 31.1

CERTIFICATION

I, Robert J. Keegan, certify that:

1. I have reviewed this annual report on Form 10-K of The Goodyear Tire & Rubber Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periodcovered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalentfunctions):

Date: March 16, 2005

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statementsfor external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’smost recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant’s internal control over financial reporting; and

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’sinternal control over financial reporting.

/s/ ROBERT J. KEEGAN

Robert J. KeeganPresident and Chief Executive Officer

(Principal Executive Officer)

EXHIBIT 31.2

CERTIFICATION

I, Richard J. Kramer, certify that:

1. I have reviewed this annual report on Form 10-K of The Goodyear Tire & Rubber Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary tomake the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the periodcovered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalentfunctions):

Date: March 16, 2005

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statementsfor external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’smost recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant’s internal control over financial reporting; and

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’sinternal control over financial reporting.

/s/ RICHARD J. KRAMER

Richard J. KramerExecutive Vice President and Chief

Financial Officer(Principal Financial Officer)

EXHIBIT 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of Title 18, United StatesCode), each of the undersigned officers of The Goodyear Tire & Rubber Company, an Ohio corporation (the “Company”), hereby certifieswith respect to the Annual Report on Form 10-K of the Company for the year ended December 31, 2004 as filed with the Securities andExchange Commission (the “10-K Report”) that to his knowledge:

(1) the 10-K Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the 10-K Report fairly presents, in all material respects, the financial condition and results of operations ofthe Company.

Dated: March 16, 2005 /s/ ROBERT J. KEEGAN

Robert J. Keegan,President and Chief Executive Officer

ofThe Goodyear Tire & Rubber Company

Dated: March 16, 2005 /s/ RICHARD J. KRAMER

Richard J. Kramer,Executive Vice President and Chief Financial Officer

ofThe Goodyear Tire & Rubber Company

goodyear 10k reports 2004

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