# GOODYEAR TIRE & RUBBER CO /OH/ (GT) FY 2024 MD&A Verbatim Item 7 Management's Discussion and Analysis from GOODYEAR TIRE & RUBBER CO /OH/'s 10-K for fiscal year 2024. SEC filing source: https://www.sec.gov/Archives/edgar/data/42582/000095017025020763/gt-20241231.htm Accession: 0000950170-25-020763 Filing date: 2025-02-14 Report date: 2024-12-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Company profile: /company/GT/ All MD&A years: /company/GT/mda/ Previous year: /company/GT/mda/fy2023/ (FY 2023) Next year: /company/GT/mda/fy2025/ (FY 2025) ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. All per share amounts are diluted and refer to Goodyear net income. OVERVIEW The Goodyear Tire & Rubber Company is one of the world’s leading manufacturers of tires, with one of the most recognizable brand names in the world and operations in most regions of the world. We have a broad global footprint with 53 manufacturing facilities in 20 countries, including the United States. We operate our business through three operating segments representing our regional tire businesses: Americas; EMEA; and Asia Pacific. This management's discussion and analysis provides comparisons of material changes in the consolidated financial statements for the years ended December 31, 2024 and 2023. For a comparison of the years ended December 31, 2023 and 2022, refer to Management's Discussion and Analysis of Financial Condition and Results of Operations included in our annual report on Form 10-K for the year ended December 31, 2023. Goodyear Forward On November 15, 2023, we announced a transformation plan, Goodyear Forward, that is intended to optimize our portfolio of products, deliver segment operating margin expansion and reduce our leverage in order to drive sustainable, long-term shareholder value creation. Optimization of our portfolio consisted of a strategic review of three major asset groups: our chemical operations which produces synthetic rubber and other chemical products in our Americas segment, the Dunlop brand for which we own rights in certain markets throughout the world, but is primarily used in our EMEA segment, and our global OTR tire business. Our plans for margin expansion include brand optimization and tiering to capitalize on premium tire pricing and volume and a reduction of our overall exposure related to lower-tiered products either through margin expansion or product line rationalization, resulting in an expected annual run-rate benefit of approximately $200 million by the end of 2025. Our plans for margin expansion also include a reduction of our cost structure by approximately $1.3 billion by the end of 2025, including actions related to our manufacturing footprint, plant optimization, further improvement of our purchasing leverage, reduction of Selling, Administrative and General expenses (“SAG”) and improvements in our supply chain planning and logistics. We anticipate the accumulated benefit of these actions will improve our segment operating margin to approximately 10% by the end of 2025. During the year ended December 31, 2024, the Goodyear Forward plan provided $480 million in benefits to segment operating income. On January 7, 2025, we entered into the Dunlop Purchase Agreement with SRI relating to the sale of the Dunlop brand in Europe, North America and Oceania for consumer, commercial and other specialty tires, together with certain associated intellectual property and other intangible assets, for a purchase price of $526 million. SRI will also pay us an up-front transition support fee of $105 million for our support in transitioning the Dunlop brand, related intellectual property and Dunlop customers to SRI. SRI will also acquire our existing Dunlop tire inventory. The Dunlop Purchase Agreement also contemplates entering into a number of ancillary agreements, including (a) a transition license agreement, pursuant to which we will continue to manufacture, sell and distribute Dunlop-branded consumer tires in Europe for an initial period from the closing of the transaction until December 31, 2025, which may be extended to December 31, 2026, and during which we will pay SRI a royalty on such Dunlop sales but will otherwise retain all profits therefrom; (b) a transition offtake agreement, pursuant to which we will sell to SRI certain Dunlop-branded consumer tire products for a period of up to five years, commencing after termination or expiration of the transition license agreement, subject to the terms and conditions set forth therein; and (c) we will license back the Dunlop brand from SRI for commercial tires in Europe on a long-term basis, subject to a royalty on sales. The transaction is subject to customary closing conditions, including the receipt of required regulatory approvals. On February 3, 2025, we completed the sale of our OTR tire business to Yokohama pursuant to the terms of the OTR Purchase Agreement. Pursuant to the OTR Purchase Agreement, Yokohama acquired the Company’s OTR business for a purchase price of $905 million in cash, subject to certain adjustments set forth in the OTR Purchase Agreement. In conjunction with the sale of the OTR business, we entered into several ancillary agreements, including a product supply agreement, pursuant to which we will supply to Yokohama certain OTR tires for an initial period of up to 5 years, subject to the terms and conditions set forth therein, including an exit and asset relocation plan to be mutually agreed upon by the parties pursuant to which, beginning no earlier than the 2nd anniversary of closing of the transaction, the production of those OTR tires will transition to Yokohama’s facilities. Results of Operations Our results for 2024 include a 3.9% decrease in tire unit shipments compared to 2023 due to lower global replacement tire volume, partially offset by growth in OE. In 2024, we experienced approximately $220 million of inflationary cost pressures. Net sales were $18,878 million in 2024, compared to $20,066 million in 2023. Net sales decreased in 2024 due to lower tire volume in Americas and EMEA, global declines in price and product mix and the negative impact of changes in foreign 27 Table of Contents exchange rates globally, driven by the strengthening of the U.S. dollar. These decreases were partially offset by the negative impact on sales in 2023 caused by a severe storm in the U.S. that significantly damaged our tire manufacturing facility and adjacent warehouse in Tupelo, Mississippi (the "Tupelo storm") and an increase in sales in other tire-related businesses, primarily due to Fleet Solutions in EMEA and higher third-party chemical sales in Americas. Goodyear net income in 2024 was $70 million, or $0.24 per share, compared to a net loss of $689 million, or $2.42 per share, in 2023. The change in Goodyear net income (loss) was primarily due to lower rationalization charges, higher segment operating income, lower impairment charges and lower other expense. These increases were partially offset by higher U.S. and Foreign Tax Expense. Our total segment operating income for 2024 was $1,318 million, compared to $968 million in 2023. The $350 million increase was primarily due to benefits from the Goodyear Forward plan of $480 million, lower raw material costs of $289 million, a benefit of $92 million from insurance proceeds for business interruptions and property damage resulting from storm damage events in prior years, $55 million related to the 2023 negative impact of the Tupelo storm, a benefit from insurance recoveries of $50 million related to a fire in the third quarter of 2023 that significantly damaged and caused a temporary shutdown of our tire manufacturing facility in Debica, Poland ("Debica"), partially offset by the continued impact of the fire on Debica fixed costs incurred during ramp-up of $20 million, lower transportation costs of $35 million, a favorable tax item in Brazil of $8 million and a decrease in SAG of $28 million. These decreases were partially offset by increased conversion costs of $318 million, driven by inflation, declines in price and product mix of $203 million, primarily in Americas and EMEA and lower tire volume of $185 million, primarily in Americas and EMEA. Refer to "Results of Operations — Segment Information" for additional information. Liquidity At December 31, 2024, we had $810 million of Cash and Cash Equivalents as well as $3,555 million of unused availability under our various credit agreements, compared to $902 million and $4,247 million, respectively, at December 31, 2023. The decrease in cash and cash equivalents of $92 million was primarily due to capital expenditures of $1,188 million, partially offset by cash provided by operating activities of $698 million, net borrowings of $264 million, cash proceeds from asset sales of $115 million and insurance recoveries for damaged property, plant and equipment of $62 million. Cash provided by operating activities reflects the net income for the period of $60 million, which includes non-cash charges for depreciation and amortization of $1,049 million, a non-cash impairment charge of $125 million, non-cash rationalization charges of $86 million, a non-cash gain on asset sales of $93 million, primarily related to the sale of a distribution center in Germany, and a non-cash gain on insurance recoveries of $75 million. Operating activities also include rationalization payments of $198 million, cash used for working capital of $82 million and pension contributions and direct payments of $69 million. Net cash provided by financing activities was $225 million, primarily due to net borrowings of $264 million. Refer to "Liquidity and Capital Resources" for additional information. Outlook In the first quarter of 2025, we expect our unit volume will decline, driven by relatively high third-party channel inventories related to pre-buy of low-end imported consumer replacement products in the U.S. and lower consumer and commercial OE production globally. We expect our global tire unit volume in the first quarter of 2025 to be lower compared to the first quarter of 2024 by approximately 2% to 3%. We also expect unabsorbed overhead to be approximately $25 million higher in the first quarter of 2025 compared to the first quarter of 2024 due to lower production in the fourth quarter of 2024. As we continue to make progress on our Goodyear Forward transformation plan, we expect first quarter benefits from the program of approximately $200 million and full year benefits of approximately $750 million in segment operating income in 2025. The expected impact of the sale of the OTR tire business on our segment operating income, inclusive of stranded costs, is approximately $20 million and $80 million for the first quarter and full year of 2025, respectively. We expect approximately $175 million of raw material headwinds in the first quarter of 2025 compared to the first quarter of 2024. These headwinds are expected to be partially offset by approximately $65 million of favorable price and product mix driven by previously implemented pricing actions and customer contracts indexed to changes in raw materials. Natural and synthetic rubber prices and other commodity prices historically have been volatile, and our raw material costs could change based on future cost fluctuations and changes in foreign exchange rates. We continue to focus on price and product mix, to substitute lower cost materials where possible, to work to identify additional substitution opportunities, to reduce the amount of material required in each tire, and to pursue alternative raw materials to minimize the impact of higher raw material costs. We expect non-raw material inflation and other costs, net of other expected cost improvements, to be approximately $75 million higher in the first quarter of 2025 when compared with the first quarter of 2024. We continue to focus on actions to offset costs other than raw materials through cost savings initiatives, including initiatives related to the Goodyear Forward plan, rationalization actions and improvements in price and product mix. 28 Table of Contents For the full year of 2025, we expect working capital to be a $100 million to $150 million source of operating cash flows. We anticipate our capital expenditures to be approximately $950 million. We anticipate our cash flows will include rationalization payments of approximately $400 million, as we continue to implement elements of our Goodyear Forward plan to improve our cost structure. Refer to "Item 1A. Risk Factors" for a discussion of the factors that may impact our business, results of operations, financial condition or liquidity and "Forward-Looking Information — Safe Harbor Statement" for a discussion of our use of forward-looking statements. 29 Table of Contents RESULTS OF OPERATIONS — CONSOLIDATED Goodyear net income in 2024 was $70 million, or $0.24 per share, compared to a net loss of $689 million, or $2.42 per share, in 2023. The change in Goodyear net income (loss) was primarily due to lower rationalization charges, higher segment operating income, lower impairment charges and lower other expense. These increases were partially offset by higher U.S. and Foreign Tax Expense. Net Sales Net sales in 2024 of $18,878 million decreased $1,188 million, or 5.9%, compared to $20,066 million in 2023, due to lower tire volume of $900 million, primarily in Americas and EMEA, global declines in price and product mix of $349 million and the negative impact of changes in foreign exchange rates globally of $192 million, driven by the strengthening of the U.S. dollar, partially offset by the unfavorable impact of the Tupelo storm on sales in 2023 of $110 million and an increase in sales in other tire-related businesses of $91 million, primarily due to Fleet Solutions in EMEA and higher third-party chemical sales in Americas. Goodyear worldwide tire unit net sales were $15,993 million and $17,288 million in 2024 and 2023, respectively. Consumer and commercial net sales were $12,303 million and $3,247 million in 2024, respectively. Consumer and commercial net sales were $12,894 million and $3,731 million in 2023, respectively. The following table presents our tire unit sales for the periods indicated: [[GREPCENT_TABLE]] [["","","Year Ended December 31,"],["(In millions of tires)","","2024","","","2023","","","% Change"],["Replacement Units"],["United States","","","52.8","","","","58.1","","","","(9.1",")%"],["International","","","67.9","","","","72.1","","","","(5.8",")%"],["Total","","","120.7","","","","130.2","","","","(7.3",")%"],["OE Units"],["United States","","","9.6","","","","9.4","","","","2.1","%"],["International","","","36.3","","","","33.7","","","","7.7","%"],["Total","","","45.9","","","","43.1","","","","6.3","%"],["Goodyear worldwide tire units","","","166.6","","","","173.3","","","","(3.9",")%"]] [[/GREPCENT_TABLE]] The decrease in worldwide tire unit sales of 6.7 million units, or 3.9%, compared to 2023, included a decrease of 9.5 million replacement tire units, or 7.3%, reflecting decreases in each region. OE tire units increased by 2.8 million units, or 6.3%, reflecting an increase in EV fitments in Asia Pacific. Consumer and commercial unit sales in 2024 were 154.0 million and 10.9 million, respectively. Consumer and commercial unit sales in 2023 were 159.4 million and 12.1 million, respectively. Cost of Goods Sold Cost of Goods Sold ("CGS") was $15,176 million in 2024, decreasing $1,381 million, or 8.3%, from $16,557 million in 2023. CGS was 80.4% of sales in 2024 compared to 82.5% of sales in 2023. CGS in 2024 decreased primarily due to lower tire volume of $715 million, savings related to the Goodyear Forward plan of $335 million, lower raw material costs of $289 million, foreign currency translation of $154 million, driven by the strengthening of the U.S. dollar, lower costs related to product mix of $146 million globally, a benefit of $92 million ($69 million after-tax and minority) from insurance proceeds for property damage and business interruptions resulting from storm damage events in Americas in prior years, a benefit of $26 million ($17 million after-tax and minority) from insurance recoveries related to the fire at our Debica, Poland tire manufacturing facility, net of fixed costs incurred during the ramp-up of the facility, and a favorable $8 million ($6 million after-tax and minority) tax item in Brazil. These decreases were partially offset by higher conversion costs of $318 million, driven by inflation and the effect of lower tire production on fixed cost absorption, an increase in accelerated depreciation and asset write-offs of $70 million, primarily related to the announced plant closures in Asia Pacific and EMEA, higher costs in other tire-related business of $64 million, driven by Fleet Solutions in EMEA and higher third-party chemical sales in Americas, and a $3 million ($3 million after-tax and minority) charge related to a flood in South Africa. CGS in 2024 and 2023 included pension expense of $15 million. CGS in 2023 also included the favorable impact of a successful legal claim of $3 million ($3 million after-tax and minority) related to a 2005 warehouse fire in Spain. Selling, Administrative and General Expense SAG was $2,782 million in 2024, decreasing $32 million, or 1.1%, from $2,814 million in 2023. SAG was 14.7% of sales in 2024 compared to 14.0% of sales in 2023. SAG decreased primarily due to lower wages and benefits of $92 million driven by Goodyear Forward savings and lower incentive compensation, lower advertising costs of $26 million and lower foreign currency translation of $22 million. These decreases were partially offset by higher asset write-offs, accelerated depreciation and accelerated lease costs of $40 million. SAG in 2024 also included costs related to the Goodyear Forward plan of $105 30 Table of Contents million ($80 million after-tax and minority) compared to $35 million ($26 million after-tax and minority) in 2023, primarily consisting of advisory, legal and consulting fees incurred to support development and execution of the plan, including costs associated with planned asset sales. SAG in 2024 and 2023 included pension expense of $11 million. SAG in 2024 included incremental savings from rationalization plans of $46 million compared to $50 million in 2023. CGS and SAG in 2024 included $146 million ($126 million after-tax and minority) of asset write-offs, accelerated depreciation and accelerated lease charges, primarily related to plant closures in Asia Pacific and EMEA, closure of a development center in the U.S. and the exit of our retail operations in Australia and New Zealand. CGS and SAG in 2023 included $46 million ($42 million after-tax and minority) of accelerated depreciation and asset write-offs and $10 million ($10 million after-tax and minority) of recoveries of previously written-off accounts receivable and other assets related to our exited business in Russia, which related to rationalization activities. Rationalizations We recorded net rationalization charges of $86 million ($72 million after-tax and minority) in 2024. Net rationalization charges include $52 million related to the proposed plan to close our tire manufacturing facilities in Fulda and Fürstenwalde, Germany, $15 million related to the workforce reorganization plan in EMEA, $15 million related to the opening of a shared service center in Costa Rica, the exit of certain Commercial Tire and Service Center locations and global SAG, $12 million related to the closure of our tire manufacturing facility in Malaysia, $11 million related to the closure of our tire manufacturing facility in Melksham, United Kingdom, $4 million related to the closure of certain retail and warehouse locations in Americas, $3 million related to the permanent closure of our Gadsden, Alabama tire manufacturing facility, $3 million related to the global rationalization and workforce reorganization plan and $3 million related to the plan to streamline our EMEA distribution network. These charges were partially offset by reversals of $45 million, primarily related to voluntary attrition in our workforce reorganization plan in EMEA. We recorded net rationalization charges of $502 million ($436 million after-tax and minority) in 2023. Net rationalization charges include $250 million related to the proposed plan to close Fulda and Fürstenwalde, $166 million for the proposed rationalization and workforce reorganization plan in EMEA, $21 million for the plan to improve profitability in our Australia and New Zealand operations, and $18 million related to the plan to streamline our EMEA distribution network. Upon completion of new plans initiated in 2024, we estimate that annual segment operating income will improve by approximately $70 million (approximately $40 million SAG and approximately $30 million CGS). The savings realized in 2024 from rationalization plans totaled approximately $60 million (primarily SAG). For further information, refer to Note to the Consolidated Financial Statements No. 3, Costs Associated with Rationalization Programs. Goodwill and Intangible Asset Impairment During 2024, we recorded a non-cash impairment charge of $125 million ($94 million after-tax and minority) primarily related to our lower tier indefinite-lived intangible assets related to the acquisition of Cooper Tire as a result of increased competition from lower tier imports in the market. During 2023, we recorded a non-cash impairment charge of $230 million ($216 million after-tax and minority) to write off all of the goodwill of our EMEA reporting unit. For further information, refer to "Critical Accounting Policies - Goodwill and Intangible Assets" and Notes to the Consolidated Financial Statements No. 11, Goodwill and Intangible Assets, in this Form 10-K. Interest Expense Interest expense was $522 million in 2024, decreasing $10 million from $532 million in 2023. The decrease was primarily due to an increase in capitalized interest of $9 million. Other (Income) Expense Other (Income) Expense was $32 million and $108 million of expense in 2024 and 2023, respectively. The $76 million decrease in expense was primarily due to a $78 million net decrease in foreign currency exchange losses driven by fluctuations in the Argentine peso and the Turkish lira, a net decrease in non-service related pension and other postretirement benefits cost of $49 million primarily due to settlement credits of $3 million ($2 million after-tax and minority) in 2024 compared to pension settlement charges of $40 million ($30 million after-tax and minority) in 2023. Additionally, the change in Other (Income) Expense reflects net gains on asset and other sales of $85 million ($60 million after-tax and minority), primarily related to the sale of distribution centers in EMEA and Americas, compared to a net gain on asset and other sales of $94 million ($69 million after-tax and minority) in 2023, primarily related to a sale and leaseback transaction in Americas. Other (Income) Expense in 2024 had lower interest income of $30 million compared to 2023 and lower royalty income of $9 million compared to 2023. 31 Table of Contents Other (Income) Expense in 2024 also includes transaction costs of $19 million ($14 million after-tax and minority) related to the anticipated sale of the OTR business and a favorable $2 million ($1 million after-tax and minority) tax item in Brazil. Other (Income) Expense in 2023 included $31 million ($24 million after-tax and minority) of expense in 2023 for non-indemnified costs for product liability claims related to products manufactured by a formerly consolidated joint venture entity, $11 million ($8 million after-tax and minority) of income related to a favorable court decision setting aside a previous unfavorable verdict on intellectual property-related legal claims and $5 million ($5 million after-tax and minority) of income for the write-off of accumulated foreign currency translation related to our exited business in Russia. For further information, refer to Note to the Consolidated Financial Statements No. 5, Other (Income) Expense. Income Taxes Income tax expense in 2024 was $95 million on income before income taxes of $155 million. In 2024, income tax expense includes a net discrete tax benefit totaling $2 million ($2 million after minority interest). Income tax expense in 2023 was $10 million on a loss before income taxes of $677 million. In 2023, income tax expense includes net discrete tax benefits totaling $9 million ($10 million after minority interest), primarily related to additional prior year withholding tax creditable in the U.S. as a result of a tax law change. The difference between our effective tax rate and the U.S. statutory rate of 21% for both 2024 and 2023 primarily relates to losses in certain foreign jurisdictions in which no tax benefits are recorded, income in certain foreign jurisdictions taxed at rates higher than the U.S. statutory rate, and the discrete items described above. The Organisation for Economic Co-operation and Development ("OECD") have published the Pillar Two model rules which adopt a global corporate minimum tax of 15% for multinational enterprises with average revenue in excess of €750 million. Certain jurisdictions in which we operate enacted legislation consistent with one or more of the OECD Pillar Two model rules effective in 2024. The model rules include minimum domestic top-up taxes, income inclusion rules and undertaxed profit rules, all aimed to ensure that multinational corporations pay a minimum effective corporate tax rate of 15% in each jurisdiction in which they operate. The Pillar Two model rules did not materially impact our annual effective tax rate in 2024. However, we are continuing to evaluate the Pillar Two model rules and related legislation and their potential impact on future periods. At December 31, 2024 and December 31, 2023, we had approximately $1.3 billion and $1.2 billion of U.S. federal, state and local net deferred tax assets, respectively, inclusive of valuation allowances totaling $26 million and $22 million, respectively, in each period, primarily for state tax loss carryforwards with limited lives. As of December 31, 2024, approximately $1.1 billion of these U.S. net deferred tax assets had unlimited lives and approximately $200 million had limited lives, including $24 million of foreign tax credits, and the majority do not start to expire until 2030. As of December 31, 2023, approximately $1.0 billion of these U.S. net deferred tax assets had unlimited lives and approximately $200 million had limited lives, including $22 million of foreign tax credits, and the majority do not start to expire until 2030. In the U.S., we have a cumulative loss for the three-year period ended December 31, 2024 primarily driven by non-recurring items such as rationalization charges, pension curtailments and settlements, one-time costs associated with the Goodyear Forward plan, and intangible asset impairments. In assessing our ability to utilize our net deferred tax assets, we primarily considered objectively verifiable information, including the improvement of our U.S. operating results during 2024 as a result of lower raw material and transportation costs and benefits from the Goodyear Forward plan compared to 2023 as well as non-deductible interest and future royalty income from foreign subsidiaries. In addition, we considered our current forecasts of future profitability in assessing our ability to realize our deferred tax assets as well as the impact of tax planning strategies. These forecasts include the impact of recent trends and various macroeconomic factors such as the impact of raw material, transportation, labor and energy costs on our profitability. Our tax planning strategies include accelerating income on cross border transactions, including sales of inventory or raw materials to our subsidiaries, reducing U.S. interest expense by, for example, reducing intercompany loans through repatriating current year earnings of foreign subsidiaries, repatriation of certain foreign royalty income, and other financing transactions, all of which would increase our domestic profitability. We believe our improvement in U.S. operating results for the year ended December 31, 2024 compared to the year ended December 31, 2023, as well as forecasts of future profitability, provide us sufficient positive evidence to conclude that it is more likely than not that, at December 31, 2024, our U.S. net deferred tax assets will be fully utilized. However, macroeconomic factors such as raw material, transportation, potential tariff, labor and energy costs possess a high degree of volatility and can significantly impact our profitability. In addition, certain tax provisions, such as the annual interest expense limitation under Section 163(j) of the Internal Revenue Code of 1986, if amended, could impact our analysis of the realizability of our U.S. deferred tax assets. If our U.S. operating results significantly decline in the future, we may need to record a valuation allowance which could adversely impact our operating results. As such, we will closely monitor our U.S. operations as well as any tax law changes to assess the realizability of our U.S. deferred tax assets. 32 Table of Contents At December 31, 2024 and December 31, 2023, we also had approximately $1.5 billion of foreign net deferred tax assets and related valuation allowances of approximately $1.2 billion. Our losses in various foreign taxing jurisdictions in recent periods represented sufficient negative evidence to require us to maintain a full valuation allowance against certain of these net foreign deferred tax assets. Most notably, in Luxembourg, we maintain a valuation allowance of approximately $1.0 billion on all of our net deferred tax assets. Each reporting period, we assess available positive and negative evidence and estimate if sufficient future taxable income will be generated to utilize these existing deferred tax assets. We do not believe that sufficient positive evidence required to release valuation allowances on our foreign deferred tax assets having a significant impact on our financial position or results of operations will exist within the next twelve months. For further information regarding income taxes and the realizability of our deferred tax assets, refer to "Critical Accounting Policies" and Note to the Consolidated Financial Statements No. 6, Income Taxes. Minority Shareholders’ Net Income (Loss) Minority shareholders’ net loss was $10 million in 2024, primarily due to the closure of our Malaysia tire manufacturing facility, compared to net income of $2 million in 2023. 33 Table of Contents RESULTS OF OPERATIONS — SEGMENT INFORMATION Segment information reflects our strategic business units ("SBUs"), which are organized to meet customer requirements and global competition and are segmented on a regional basis. Results of operations are measured based on net sales to unaffiliated customers and segment operating income. Each segment exports tires to other segments. The financial results of each segment exclude sales of tires exported to other segments, but include operating income derived from such transactions. Segment operating income is computed as follows: Net Sales less CGS (excluding asset write-off and accelerated depreciation charges) and SAG (including certain allocated corporate administrative expenses). Segment operating income also includes certain royalties and equity in earnings of most affiliates. Segment operating income does not include net rationalization charges, asset sales, goodwill and other asset impairment charges and certain other items. Total segment operating income in 2024 was $1,318 million, an increase of $350 million, or 36.2%, from $968 million in 2023. Total segment operating margin (segment operating income divided by segment sales) in 2024 was 7.0% compared to 4.8% in 2023. Management believes that total segment operating income is useful because it represents the aggregate value of income created by our SBUs and excludes items not directly related to the SBUs for performance evaluation purposes. Total segment operating income is the sum of the individual SBUs’ segment operating income. Refer to Note to the Consolidated Financial Statements No. 8, Business Segments, for further information and for a reconciliation of total segment operating income to Income (Loss) before Income Taxes. Americas [[GREPCENT_TABLE]] [["","","Year Ended December 31,"],["(In millions)","","2024","","","2023","","","2022"],["Tire Units","","","81.6","","","","87.3","","","","95.0"],["Net Sales","","$","11,033","","","$","11,993","","","$","12,766"],["Operating Income","","","933","","","","749","","","","1,094"],["Operating Margin","","","8.5","%","","","6.2","%","","","8.6","%"]] [[/GREPCENT_TABLE]] Americas unit sales in 2024 decreased 5.7 million units, or 6.6%, to 81.6 million units. Replacement tire volume decreased 6.6 million units, or 9.0%, primarily due to a decrease in our consumer business, driven by increased competitiveness in the U.S. from the lower tier market and the transitory impact from distribution changes in Latin America. OE tire volume increased 0.9 million units, or 5.9%, primarily due to our consumer business in the U.S. and Brazil. Net sales in 2024 were $11,033 million, decreasing $960 million, or 8.0%, from $11,993 million in 2023. The decrease in net sales was primarily due to lower tire volume of $821 million and unfavorable price and product mix of $303 million. These decreases were partially offset by $110 million of sales lost during 2023 due to the Tupelo storm, increased sales in other tire-related businesses of $64 million, primarily due to retail and chemical, and a $52 million benefit related to the Goodyear Forward plan. Operating income in 2024 was $933 million, increasing $184 million, or 24.6%, from $749 million in 2023. The increase in operating income was due to a $315 million benefit related to the Goodyear Forward plan, lower raw material costs of $174 million, a benefit of $92 million from insurance proceeds for business interruptions and property damage resulting from storm damage events in prior years, lower transportation and imported tire costs of $85 million, $55 million related to the 2023 negative impact of the Tupelo storm, lower SAG of $39 million, and increased earnings in other tire-related businesses of $38 million, primarily due to retail and chemical. These increases were partially offset by unfavorable price and product mix of $259 million, higher conversion costs of $179 million, driven by inflation and the effect of lower tire production on fixed cost absorption, and lower tire volume of $172 million. Operating income for 2024 includes incremental savings from rationalization plans of $42 million. Operating income in 2024 excluded an intangible asset impairment of $125 million, net rationalization charges of $23 million, asset write-offs, accelerated depreciation and accelerated lease costs of $14 million, and net gains on asset sales of $13 million. Operating income in 2023 excluded net gains on asset sales of $104 million, primarily related to sale and leaseback transactions, net rationalization charges of $19 million, and accelerated depreciation and asset write-offs of $19 million. Americas results are highly dependent upon the United States, which accounted for 84% of Americas net sales in 2024 and 83% in 2023. Results of operations in the United States are expected to continue to have a significant impact on Americas future performance. 34 Table of Contents Europe, Middle East and Africa [[GREPCENT_TABLE]] [["","","Year Ended December 31,"],["(In millions)","","2024","","","2023","","","2022"],["Tire Units","","","48.9","","","","49.9","","","","55.1"],["Net Sales","","$","5,425","","","$","5,606","","","$","5,645"],["Operating Income","","","108","","","","17","","","","61"],["Operating Margin","","","2.0","%","","","0.3","%","","","1.1","%"]] [[/GREPCENT_TABLE]] Europe, Middle East and Africa unit sales in 2024 decreased 1.0 million units, or 2.0%, to 48.9 million units. Replacement tire volume decreased 0.8 million units, or 2.1%, primarily in our consumer business, reflecting the impacts of competitiveness from the lower tier market, and lower tire volume, particularly in Turkey. OE tire volume decreased 0.2 million units, or 1.6%, primarily in our commercial business, driven by lower vehicle production. Net sales in 2024 were $5,425 million, decreasing $181 million, or 3.2%, from $5,606 million in 2023. The decrease in net sales was primarily driven by the negative impact of changes in foreign exchange rates of $101 million, driven by a weaker Turkish lira, partially offset by a stronger euro, Polish zloty and British pound, lower tire volume of $86 million, and unfavorable price and product mix of $19 million. These decreases were partially offset by higher sales in other tire-related businesses of $24 million, primarily due to growth in Fleet Solutions. Operating income in 2024 was $108 million, increasing $91 million, or 535.3%, from $17 million in 2023. The increase in operating income was primarily due to lower raw material costs of $132 million and benefits related to the Goodyear Forward plan of $121 million. These improvements were partially offset by higher conversion costs of $147 million, driven by the effect of decreased tire production on fixed cost absorption and inflation, and lower tire volume of $15 million. Operating income in 2024 includes incremental SAG and CGS savings from rationalization plans of $10 million and $8 million, respectively. Operating income in 2024 excluded a $79 million gain on asset sales, accelerated depreciation and accelerated lease charges of $68 million, and net rationalization charges of $36 million. Operating income in 2023 excluded net rationalization charges of $409 million, a non-cash goodwill impairment charge of $230 million, accelerated depreciation of $27 million and recoveries of previously written-off accounts receivable and other assets of $10 million in Russia. EMEA’s results are highly dependent upon Germany, which accounted for 17% and 15% of EMEA’s net sales in both 2024 and 2023, respectively. Results of operations in Germany are expected to continue to have a significant impact on EMEA’s future performance. 35 Table of Contents Asia Pacific [[GREPCENT_TABLE]] [["","","Year Ended December 31,"],["(In millions)","","2024","","","2023","","","2022"],["Tire Units","","","36.1","","","","36.1","","","","34.4"],["Net Sales","","$","2,420","","","$","2,467","","","$","2,394"],["Operating Income","","","277","","","","202","","","","121"],["Operating Margin","","","11.4","%","","","8.2","%","","","5.1","%"]] [[/GREPCENT_TABLE]] Asia Pacific unit sales were flat in 2024. OE tire volume increased 2.1 million units, or 13.2%, primarily due to an increase in consumer EV fitments in China. Replacement tire volume decreased 2.1 million units, or 10.4%, due to the impact of the Australia transformation and softness in consumer replacement in most of our markets. Net sales in 2024 were $2,420 million, decreasing $47 million, or 1.9%, from $2,467 million in 2023. The decrease in net sales was primarily driven by the negative impact of changes in foreign exchange rates of $30 million due to the strengthening of the U.S. dollar and unfavorable price and product mix of $27 million driven by the Australia transformation, partially offset by higher sales in other tire-related businesses of $3 million. Operating income in 2024 was $277 million, increasing $75 million, or 37.1%, from $202 million in 2023. The increase in operating income was primarily due to favorable price and product mix of $51 million and a benefit related to the Goodyear Forward plan of $44 million. These increases were partially offset by higher raw material costs of $17 million and unfavorable foreign currency translation of $4 million. Operating income in 2024 excluded asset write-offs, accelerated depreciation and accelerated lease charges of $44 million, net rationalization charges of $13 million, and net gains on asset sales of $1 million. Operating income in 2023 excluded net rationalization charges of $25 million. Asia Pacific’s results are highly dependent upon China, Australia and India. China accounted for 38% and 33% of Asia Pacific’s net sales in 2024 and 2023, respectively. India accounted for 17% of Asia Pacific’s net sales for both 2024 and 2023. Australia accounted for 17% and 21% of Asia Pacific’s net sales in 2024 and 2023, respectively. Results of operations in China and India are expected to have a significant impact on Asia Pacific's future performance. 36 Table of Contents LIQUIDITY AND CAPITAL RESOURCES Overview Our primary sources of liquidity are cash generated from our operating and financing activities. Our cash flows from operating activities are driven primarily by our operating results and changes in our working capital requirements and our cash flows from financing activities are dependent upon our ability to access credit or other capital. At December 31, 2024, we had $810 million of Cash and Cash Equivalents, compared to $902 million at December 31, 2023. The decrease in cash and cash equivalents of $92 million was primarily due to capital expenditures of $1,188 million, partially offset by cash provided by operating activities of $698 million, net borrowings of $264 million, cash proceeds from asset sales of $115 million and insurance recoveries for damaged property, plant and equipment of $62 million. Cash provided by operating activities reflects net income for the period of $60 million, which includes non-cash charges for depreciation and amortization of $1,049 million, a non-cash impairment charge of $125 million, non-cash rationalization charges of $86 million, a non-cash gain on asset sales of $93 million, primarily related to the sale of a distribution center in Germany, and a non-cash gain on insurance recoveries of $75 million. Operating activities also include rationalization payments of $198 million, cash used for working capital of $82 million and pension contributions and direct payments of $69 million. At December 31, 2024 and 2023, we had $3,555 million and $4,247 million, respectively, of unused availability under our various credit agreements. The table below provides unused availability by our significant credit facilities as of December 31: [[GREPCENT_TABLE]] [["(In millions)","","2024","","","2023"],["First lien revolving credit facility","","$","2,049","","","$","2,241"],["European revolving credit facility","","","832","","","","884"],["Chinese credit facilities","","","500","","","","657"],["Mexican credit facility","","","\u2014","","","","116"],["Other foreign and domestic debt","","","174","","","","349"],["","","$","3,555","","","$","4,247"]] [[/GREPCENT_TABLE]] We expect our 2025 cash flow needs to include capital expenditures of approximately $950 million. We also expect interest expense to be $450 million to $475 million; rationalization payments to be approximately $400 million; income tax payments to be approximately $200 million, excluding one-time items; and contributions to our funded pension plans to be $25 million to $50 million. We expect working capital to be a source of cash of $100 million to $150 million as compared to 2024. We actively monitor our liquidity and intend to operate our business in a way that allows us to address our cash flow needs with our existing cash and available credit if they cannot be funded by cash generated from operating or other financing activities. We believe that our liquidity position is adequate to fund our operating and investing needs and debt maturities for the next twelve months and to provide us with the ability to respond to further changes in the business environment. Our ability to service debt and operational requirements is also dependent, in part, on the ability of our subsidiaries to make distributions of cash to various other entities in our consolidated group, whether in the form of dividends, loans or otherwise. In certain countries where we operate, such as China, South Africa, Serbia and Argentina, transfers of funds into or out of such countries by way of dividends, loans, advances or payments to third-party or affiliated suppliers are generally or periodically subject to certain requirements, such as obtaining approval from the foreign government and/or currency exchange board before net assets can be transferred out of the country. In addition, certain of our credit agreements and other debt instruments limit the ability of foreign subsidiaries to make distributions of cash. Thus, we would have to repay and/or amend these credit agreements and other debt instruments in order to use this cash to service our consolidated debt. Because of the inherent uncertainty of satisfactorily meeting these requirements or limitations, we do not consider the net assets of our subsidiaries, including our Chinese, South African, Serbian and Argentinian subsidiaries, which are subject to such requirements or limitations to be integral to our liquidity or our ability to service our debt and operational requirements. At December 31, 2024, approximately $790 million of net assets, including approximately $182 million of cash and cash equivalents, were subject to such requirements. The requirements we must comply with to transfer funds out of China, South Africa, Serbia and Argentina have not adversely impacted our ability to make transfers out of those countries. Cash Position At December 31, 2024, significant concentrations of cash and cash equivalents held by our international subsidiaries included the following amounts: • $242 million or 30% in Asia Pacific, primarily China, Australia and India ($244 million or 27% at December 31, 2023), • $199 million or 25% in Americas, primarily Brazil, Chile and Mexico ($237 million or 26% at December 31, 2023), and 37 Table of Contents • $193 million or 24% in EMEA, primarily Turkey and Ukraine ($297 million or 33% at December 31, 2023). We have deposited our cash and cash equivalents and entered into various credit agreements and derivative contracts with financial institutions that we considered to be substantial and creditworthy at the time of such transactions. We seek to control our exposure to these financial institutions by diversifying our deposits, credit agreements and derivative contracts across multiple financial institutions, by setting deposit and counterparty credit limits based on long term credit ratings and other indicators of credit risk such as credit default swap spreads and default probabilities, and by monitoring the financial strength of these financial institutions on a regular basis. We also enter into master netting agreements with counterparties when possible. By controlling and monitoring exposure to financial institutions in this manner, we believe that we effectively manage the risk of loss due to nonperformance by a financial institution. However, we cannot provide assurance that we will not experience losses or delays in accessing our deposits or lines of credit due to the nonperformance of a financial institution. Our inability to access our cash deposits or make draws on our lines of credit, or the inability of a counterparty to fulfill its contractual obligations to us, could have a material adverse effect on our liquidity, financial condition or results of operations in the period in which it occurs. Operating Activities Net cash provided by operating activities was $698 million in 2024, decreasing $334 million compared to net cash provided by operating activities of $1,032 million in 2023. The decrease in cash provided by operating activities reflects a net increase in cash used for working capital of $381 million, year-over-year changes in balance sheet accounts for Other Current Liabilities and Other Assets and Liabilities totaling $171 million and an increase in rationalization payments of $99 million, partially offset by higher earnings in our SBUs of $350 million. The net increase in cash used for working capital reflects an increase in cash used for Inventory of $1,030 million, partially offset by a decrease in cash used by Accounts Payable - Trade of $463 million and an increase in cash provided by Accounts Receivable of $186 million. Investing Activities Net cash used for investing activities was $1,005 million in 2024, compared to $1,035 million in 2023. The $30 million decrease in cash used for investing activities primarily relates to an increase in proceeds from asset dispositions of $99 million, insurance recoveries of $62 million for the replacement of equipment damaged in the Debica fire and building damage in Tupelo and a net decrease in loans to TireHub of $56 million, partially offset by a decrease in proceeds from sale and leaseback transactions of $83 million. In addition, capital expenditures were $1,188 million in 2024, increasing $138 million, compared to $1,050 million in 2023. Beyond expenditures required to sustain our facilities, capital expenditures in 2024 and 2023 primarily related to the modernization and expansion of tire manufacturing facilities around the world. Financing Activities Net cash provided by financing activities was $225 million in 2024, compared to cash used for financing activities of $333 million in 2023. The $558 million increase in cash provided by financing activities reflects higher net borrowings due to lower cash flows from operations. Credit Sources In aggregate, we had total credit arrangements of $11,223 million available at December 31, 2024, of which $3,555 million were unused, compared to $11,743 million available at December 31, 2023, of which $4,247 million were unused. At December 31, 2024, we had long term credit arrangements totaling $10,352 million, of which $3,263 million were unused, compared to $10,983 million and $3,867 million, respectively, at December 31, 2023. At December 31, 2024, we had short term committed and uncommitted credit arrangements totaling $871 million, of which $292 million were unused, compared to $760 million and $380 million, respectively, at December 31, 2023. The continued availability of the short term uncommitted arrangements is at the discretion of the relevant lender and may be terminated at any time. Outstanding Notes At December 31, 2024, we had $5,240 million of outstanding notes, compared to $5,571 million at December 31, 2023. $2.75 Billion Amended and Restated First Lien Revolving Credit Facility due 2026 Our first lien revolving credit facility matures on June 8, 2026 and is available in the form of loans or letters of credit. Up to $800 million in letters of credit and $50 million of swingline loans are available for issuance under the facility. Subject to the consent of the lenders whose commitments are to be increased, we may request that the facility be increased by up to $250 million. Based on our current liquidity, amounts drawn under this facility bear interest at SOFR plus 125 basis points. Undrawn amounts under the facility are subject to an annual commitment fee of 25 basis points. 38 Table of Contents Availability under the facility is subject to a borrowing base, which is based on (i) eligible accounts receivable and inventory of The Goodyear Tire & Rubber Company and certain of its U.S. and Canadian subsidiaries, (ii) the value of our principal trademarks in an amount not to exceed $400 million, (iii) the value of eligible machinery and equipment, and (iv) certain cash in an amount not to exceed $275 million. To the extent that our eligible accounts receivable, inventory and other components of the borrowing base decline in value, our borrowing base will decrease and the availability under the facility may decrease below $2.75 billion. As of December 31, 2024, our borrowing base was above the facility's stated amount of $2.75 billion. At December 31, 2024, we had $700 million of borrowings and $1 million of letters of credit issued under the revolving credit facility. At December 31, 2023, we had $385 million of borrowings and $1 million of letters of credit issued under the revolving credit facility. €800 Million Amended and Restated Senior Secured European Revolving Credit Facility due 2028 The European revolving credit facility matures on January 14, 2028 and consists of (i) a €180 million German tranche that is available only to Goodyear Germany GmbH and (ii) a €620 million all-borrower tranche that is available to Goodyear Europe B.V. ("GEBV"), Goodyear Germany and Goodyear Operations S.A. Up to €175 million of swingline loans and €75 million in letters of credit are available for issuance under the all-borrower tranche. Subject to the consent of the lenders whose commitments are to be increased, we may request that the facility be increased by up to €200 million. Amounts drawn under this facility will bear interest at SOFR plus 150 basis points for loans denominated in U.S. dollars, EURIBOR plus 150 basis points for loans denominated in euros, and SONIA plus 150 basis points for loans denominated in pounds sterling. Undrawn amounts under the facility are subject to an annual commitment fee of 25 basis points. At December 31, 2024 and 2023, we had no borrowings and no letters of credit outstanding under the European revolving credit facility. Each of our first lien revolving credit facility and our European revolving credit facility have customary representations and warranties including, as a condition to borrowing, that all such representations and warranties are true and correct, in all material respects, on the date of the borrowing, including representations as to no material adverse change in our business or financial condition since December 31, 2020 under the first lien facility and December 31, 2021 under the European facility. Accounts Receivable Securitization Facilities (On-Balance Sheet) GEBV and certain other of our European subsidiaries are parties to a pan-European accounts receivable securitization facility that expires in 2027. The terms of the facility provide the flexibility to designate annually the maximum amount of funding available under the facility in an amount of not less than €30 million and not more than €450 million. For the period from October 19, 2023 through October 16, 2024, the designated maximum amount of the facility was €300 million. For the period from October 17, 2024 through October 16, 2025, the designated maximum amount of the facility will remain €300 million. The facility involves an ongoing daily sale of substantially all of the trade accounts receivable of certain GEBV subsidiaries. These subsidiaries retain servicing responsibilities. Utilization under this facility is based on eligible receivable balances. The funding commitments under the facility will expire upon the earliest to occur of: (a) October 19, 2027, (b) the non-renewal and expiration (without substitution) of all of the back-up liquidity commitments, (c) the early termination of the facility according to its terms (generally upon an Early Amortisation Event (as defined in the facility), which includes, among other things, events similar to the events of default under our first lien revolving credit facility; certain tax law changes; or certain changes to law, regulation or accounting standards), or (d) our request for early termination of the facility. The facility’s current back-up liquidity commitments will expire on October 16, 2025. At December 31, 2024, the amounts available and utilized under this program totaled $227 million (€218 million). At December 31, 2023, the amounts available and utilized under this program totaled $244 million (€221 million). The program does not qualify for sale accounting, and accordingly, these amounts are included in Long Term Debt and Finance Leases. Accounts Receivable Factoring Facilities (Off-Balance Sheet) We have sold certain of our trade receivables under off-balance sheet programs. For these programs, we have concluded that there is generally no risk of loss to us from non-payment of the sold receivables. At December 31, 2024, the gross amount of receivables sold was $773 million, compared to $693 million at December 31, 2023. Letters of Credit At December 31, 2024, we had $211 million in letters of credit issued under bilateral letter of credit agreements and other foreign credit facilities. Supplier Financing 39 Table of Contents We have entered into payment processing agreements with several financial institutions. Under these agreements, the financial institutions act as our paying agents with respect to accounts payable due to our suppliers. These agreements also allow our suppliers to sell their receivables to the financial institutions at the sole discretion of both the supplier and the financial institution on terms that are negotiated between them. We are not always notified when our suppliers sell receivables under these programs. Our obligations to our suppliers, including the amounts due and scheduled payment dates, are not impacted by our suppliers' decisions to sell their receivables under these programs. Agreements for such supplier financing programs totaled up to $775 million and $892 million at December 31, 2024 and 2023, respectively. The amounts confirmed to the financial institutions were $604 million and $580 million at December 31, 2024 and December 31, 2023, respectively, and are included in Accounts Payable — Trade in our Consolidated Balance Sheets. All activity related to these obligations is presented within operating activities on the Consolidated Statements of Cash Flows. Further Information For a further description of the terms of our outstanding notes, first lien revolving credit facility, European revolving credit facility and pan-European accounts receivable securitization facility, refer to Note to the Consolidated Financial Statements No. 15, Financing Arrangements and Derivative Financial Instruments. Covenant Compliance Our first lien revolving credit facility and some of the indentures governing our notes contain certain covenants that, among other things, limit our ability to incur additional debt or issue redeemable preferred stock, pay dividends, repurchase shares or make certain other restricted payments or investments, incur liens, sell assets, incur restrictions on the ability of our subsidiaries to pay dividends or to make other payments to us, enter into affiliate transactions, engage in sale and leaseback transactions, and consolidate, merge, sell or otherwise dispose of all or substantially all of our assets. These covenants are subject to significant exceptions and qualifications. Our first lien revolving credit facility and the indentures governing our notes also have customary defaults, including cross-defaults to material indebtedness of Goodyear and its subsidiaries. We have an additional financial covenant in our first lien revolving credit facility that is currently not applicable. We become subject to that financial covenant when the aggregate amount of our Parent Company (The Goodyear Tire & Rubber Company) and guarantor subsidiaries cash and cash equivalents (“Available Cash”) plus our availability under our first lien revolving credit facility is less than $275 million. If this were to occur, our ratio of EBITDA to Consolidated Interest Expense may not be less than 2.0 to 1.0 for the most recent period of four consecutive fiscal quarters. As of December 31, 2024, our unused availability under this facility of $2,049 million plus our Available Cash of $168 million totaled $2,217 million, which is in excess of $275 million. In addition, our European revolving credit facility contains non-financial covenants similar to the non-financial covenants in our first lien revolving credit facility that are described above, similar non-financial covenants specifically applicable to GEBV and its subsidiaries, and a financial covenant applicable only to GEBV and its subsidiaries. This financial covenant provides that we are not permitted to allow GEBV’s ratio of Consolidated Net GEBV Indebtedness to Consolidated GEBV EBITDA for a period of four consecutive fiscal quarters to be greater than 3.0 to 1.0 at the end of any fiscal quarter. Consolidated Net GEBV Indebtedness is determined net of the sum of cash and cash equivalents in excess of $100 million held by GEBV and its subsidiaries, cash and cash equivalents in excess of $150 million held by the Parent Company and its U.S. subsidiaries, and availability under our first lien revolving credit facility if the ratio of EBITDA to Consolidated Interest Expense described above is not applicable and the conditions to borrowing under the first lien revolving credit facility are met. Consolidated Net GEBV Indebtedness also excludes loans from other consolidated Goodyear entities. This financial covenant is also included in our pan-European accounts receivable securitization facility. At December 31, 2024, we were in compliance with this financial covenant. Our credit facilities also state that we may only incur additional debt or make restricted payments that are not otherwise expressly permitted if, after giving effect to the debt incurrence or the restricted payment, our ratio of EBITDA to Consolidated Interest Expense for the prior four fiscal quarters would exceed 2.0 to 1.0. Certain of our senior note indentures have substantially similar limitations on incurring debt and making restricted payments. Our credit facilities and indentures also permit the incurrence of additional debt through other provisions in those agreements without regard to our ability to satisfy the ratio-based incurrence test described above. We believe that these other provisions provide us with sufficient flexibility to incur additional debt necessary to meet our operating, investing and financing needs without regard to our ability to satisfy the ratio-based incurrence test. Covenants could change based upon a refinancing or amendment of an existing facility, or additional covenants may be added in connection with the incurrence of new debt. As of December 31, 2024, we were in compliance with the currently applicable material covenants imposed by our principal credit facilities and indentures. 40 Table of Contents The terms “Available Cash,” “EBITDA,” “Consolidated Interest Expense,” “Consolidated Net GEBV Indebtedness” and “Consolidated GEBV EBITDA” have the meanings given them in the respective credit facilities. Potential Future Financings On July 22, 2024, we entered into a commitment letter (the “Commitment Letter”) to provide us a 364-day senior unsecured committed credit facility in an aggregate principal amount not to exceed $500 million (the “Committed Credit Facility”). If drawn, borrowings under the Committed Credit Facility would be required to be used solely to redeem our remaining outstanding 9.5% Senior Notes due 2025 (the “9.5% Notes”). On February 3, 2025, following the closing of the sale of our OTR tire business to Yokohama, the commitments under the Commitment Letter for the Committed Credit Facility were reduced to zero and the Commitment Letter was terminated in accordance with its terms. On February 4, 2025, we called for redemption in full of the 9.5% Notes on February 19, 2025 (the “Redemption Date”) at a redemption price equal to 100% of the principal amount being redeemed plus accrued and unpaid interest to the Redemption Date. In addition to the financing activities described above, we may seek to undertake additional financing actions which could include restructuring bank debt or capital markets transactions, possibly including the issuance of additional debt or equity. Given the inherent uncertainty of market conditions, access to the capital markets cannot be assured. Our future liquidity requirements may make it necessary for us to incur additional debt. However, a substantial portion of our assets are already subject to liens securing our indebtedness. As a result, we are limited in our ability to pledge our remaining assets as security for additional secured indebtedness. In addition, no assurance can be given as to our ability to raise additional unsecured debt. Dividends and Common Stock Repurchase Program Under our primary credit facilities and some of our note indentures, we are permitted to pay dividends on and repurchase our capital stock (which constitute restricted payments) as long as no default will have occurred and be continuing, additional indebtedness can be incurred under the credit facilities or indentures following the payment, and certain financial tests are satisfied. No cash dividends were paid on our common stock in 2024, 2023 or 2022. We may repurchase shares delivered to us by employees as payment for the exercise price of stock options and the withholding taxes due upon the exercise of stock options or the vesting or payment of stock awards. During 2024, 2023 and 2022, we did not repurchase any shares from our employees. The restrictions imposed by our credit facilities and indentures are not expected to affect our ability to pay dividends or repurchase our capital stock in the future. Asset Dispositions Historically, the restrictions on asset sales and sale and leaseback transactions imposed by our material indebtedness have not affected our ability to divest non-core businesses or assets. Although it is not a condition to closing, the sale of the Dunlop brand will require a waiver or an amendment of our European revolving credit facility. We may undertake additional asset sales and sale and leaseback transactions in the future. The restrictions imposed by our material indebtedness may require us to seek further waivers or amendments of covenants or alternative sources of financing to proceed with future transactions. We cannot assure you that such waivers, amendments or alternative financing could be obtained, or if obtained, would be on terms acceptable to us. Supplemental Guarantor Financial Information Certain of our subsidiaries, which are listed on Exhibit 22.1 to this Annual Report on Form 10-K and are generally holding or operating companies, have guaranteed our obligations under the $500 million outstanding principal amount of 9.5% senior notes due 2025, the $900 million outstanding principal amount of 5% senior notes due 2026, the $700 million outstanding principal amount of 4.875% senior notes due 2027, the $850 million outstanding principal amount of 5% senior notes due 2029, the $550 million outstanding principal amount of 5.25% senior notes due April 2031, the $600 million outstanding principal amount of 5.25% senior notes due July 2031 and the $450 million outstanding principal amount of 5.625% senior notes due 2033 (collectively, the “Notes”). The Notes have been issued by The Goodyear Tire & Rubber Company (the “Parent Company”) and are its senior unsecured obligations. The Notes rank equally in right of payment with all of our existing and future senior unsecured obligations and senior to any of our future subordinated indebtedness. The Notes are effectively subordinated to our existing and future secured indebtedness to the extent of the assets securing that indebtedness. The Notes are fully and unconditionally guaranteed on a joint and several basis by each of our wholly-owned U.S. and Canadian subsidiaries that also guarantee our obligations under our first lien revolving credit facility (such guarantees, the “Guarantees”; and, such guaranteeing subsidiaries, the “Subsidiary Guarantors”). The Guarantees are senior unsecured obligations of the Subsidiary Guarantors and rank equally in right of 41 Table of Contents payment with all existing and future senior unsecured obligations of our Subsidiary Guarantors. The Guarantees are effectively subordinated to existing and future secured indebtedness of the Subsidiary Guarantors to the extent of the assets securing that indebtedness. The Notes are structurally subordinated to all of the existing and future debt and other liabilities, including trade payables, of our subsidiaries that do not guarantee the Notes (the “Non-Guarantor Subsidiaries”). The Non-Guarantor Subsidiaries will have no obligation, contingent or otherwise, to pay amounts due under the Notes or to make funds available to pay those amounts. Certain Non-Guarantor Subsidiaries are limited in their ability to remit funds to us by means of dividends, advances or loans due to required foreign government and/or currency exchange board approvals or limitations in credit agreements or other debt instruments of those subsidiaries. The Subsidiary Guarantors, as primary obligors and not merely as sureties, jointly and severally irrevocably and unconditionally guarantee on a senior unsecured basis the performance and full and punctual payment when due of all obligations of the Parent Company under the Notes and the related indentures, whether for payment of principal of or interest on the Notes, expenses, indemnification or otherwise. The Guarantees of the Subsidiary Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions. Although the Guarantees provide the holders of Notes with a direct unsecured claim against the assets of the Subsidiary Guarantors, under U.S. federal bankruptcy law and comparable provisions of U.S. state fraudulent transfer laws, in certain circumstances a court could cancel a Guarantee and order the return of any payments made thereunder to the Subsidiary Guarantor or to a fund for the benefit of its creditors. A court might take these actions if it found, among other things, that when the Subsidiary Guarantors incurred the debt evidenced by their Guarantee (i) they received less than reasonably equivalent value or fair consideration for the incurrence of the debt and (ii) any one of the following conditions was satisfied: • the Subsidiary Guarantor was insolvent or rendered insolvent by reason of the incurrence; • the Subsidiary Guarantor was engaged in a business or transaction for which its remaining assets constituted unreasonably small capital; or • the Subsidiary Guarantor intended to incur, or believed (or reasonably should have believed) that it would incur, debts beyond its ability to pay as those debts matured. In applying the above factors, a court would likely find that a Subsidiary Guarantor did not receive fair consideration or reasonably equivalent value for its Guarantee, except to the extent that it benefited directly or indirectly from the issuance of the Notes. The determination of whether a guarantor was or was not rendered “insolvent” when it entered into its guarantee will vary depending on the law of the jurisdiction being applied. Generally, an entity would be considered insolvent if the sum of its debts (including contingent or unliquidated debts) is greater than all of its assets at a fair valuation or if the present fair salable value of its assets is less than the amount that will be required to pay its probable liability on its existing debts, including contingent or unliquidated debts, as they mature. Under Canadian federal bankruptcy and insolvency laws and comparable provincial laws on preferences, fraudulent conveyances or other challengeable or voidable transactions, the Guarantees could be challenged as a preference, fraudulent conveyance, transfer at undervalue or other challengeable or voidable transaction. The test to be applied varies among the different pieces of legislation, but as a general matter these types of challenges may arise in circumstances where: • such action was intended to defeat, hinder, delay, defraud or prejudice creditors or others; • such action was taken within a specified period of time prior to the commencement of proceedings under Canadian bankruptcy, insolvency or restructuring legislation in respect of a Subsidiary Guarantor, the consideration received by the Subsidiary Guarantor was conspicuously less than the fair market value of the consideration given, and the Subsidiary Guarantor was insolvent or rendered insolvent by such action and (in some circumstances, or) such action was intended to defraud, defeat or delay a creditor; • such action was taken within a specified period of time prior to the commencement of proceedings under Canadian bankruptcy, insolvency or restructuring legislation in respect of a Subsidiary Guarantor and such action was taken, or is deemed to have been taken, with a view to giving a creditor a preference over other creditors or, in some circumstances, had the effect of giving a creditor a preference over other creditors; or • a Subsidiary Guarantor is found to have acted in a manner that was oppressive, unfairly prejudicial to or unfairly disregarded the interests of any shareholder, creditor, director, officer or other interested party. In addition, in certain insolvency proceedings a Canadian court may subordinate claims in respect of the Guarantees to other claims against a Subsidiary Guarantor under the principle of equitable subordination if the court determines that (1) the holder 42 Table of Contents of Notes engaged in some type of inequitable or improper conduct, (2) the inequitable or improper conduct resulted in injury to other creditors or conferred an unfair advantage upon the holder of Notes and (3) equitable subordination is not inconsistent with the provisions of the relevant solvency statute. If a court canceled a Guarantee, the holders of Notes would no longer have a claim against that Subsidiary Guarantor or its assets. Each Guarantee is limited, by its terms, to an amount not to exceed the maximum amount that can be guaranteed by the applicable Subsidiary Guarantor without rendering the Guarantee, as it relates to that Subsidiary Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. Each Subsidiary Guarantor is a consolidated subsidiary of the Parent Company at the date of the balance sheet presented. The following tables present summarized financial information for the Parent Company and the Subsidiary Guarantors on a combined basis after elimination of (i) intercompany transactions and balances among the Parent Company and the Subsidiary Guarantors and (ii) equity in earnings from and investments in any Non-Guarantor Subsidiary. [[GREPCENT_TABLE]] [["","","Summarized Balance Sheet"],["(In millions)","","December 31, 2024"],["Total Current Assets(1)","","$","5,621"],["Total Non-Current Assets","","","8,606"],["Total Current Liabilities","","$","3,420"],["Total Non-Current Liabilities","","","7,932"]] [[/GREPCENT_TABLE]] (1) Includes receivables due from Non-Guarantor Subsidiaries of $1,824 million as of December 31, 2024. [[GREPCENT_TABLE]] [["","","Summarized Statement of Operations"],["(In millions)","","Year Ended December 31, 2024"],["Net Sales","","$","10,402"],["Cost of Goods Sold","","","8,427"],["Selling, Administrative and General Expense","","","1,495"],["Intangible Asset Impairment","","","125"],["Rationalizations","","","27"],["Interest Expense","","","482"],["Other (Income) Expense","","","(169",")"],["Income before Income Taxes(2)","","$","15"],["Net Income","","$","26"],["Goodyear Net Income","","$","26"]] [[/GREPCENT_TABLE]] (2) Includes income from intercompany transactions with Non-Guarantor Subsidiaries of $659 million for the year ended December 31, 2024, primarily from royalties, dividends, interest and intercompany product sales. 43 Table of Contents COMMITMENTS AND CONTINGENT LIABILITIES Contractual Obligations The following table presents our contractual obligations and commitments to make future payments as of December 31, 2024: [[GREPCENT_TABLE]] [["(In millions)","","Total","","","2025","","","2026","","","2027","","","2028","","","2029","","","Beyond 2029"],["Debt Obligations(1)","","$","7,545","","","$","1,395","","","$","1,905","","","$","1,130","","","$","662","","","$","852","","","$","1,601"],["Finance Lease Obligations(2)","","","261","","","","8","","","","8","","","","7","","","","7","","","","9","","","","222"],["Interest Payments(3)","","","1,664","","","","349","","","","258","","","","206","","","","167","","","","148","","","","536"],["Operating Lease Obligations(4)","","","1,297","","","","261","","","","223","","","","184","","","","138","","","","107","","","","384"],["Pension Benefits(5)","","","350","","","","95","","","","65","","","","60","","","","60","","","","70","","","NA"],["Other Postretirement Benefits(6)","","","192","","","","22","","","","21","","","","20","","","","19","","","","19","","","","91"],["Workers\u2019 Compensation(7)","","","199","","","","31","","","","24","","","","15","","","","11","","","","9","","","","109"],["Binding Commitments(8)","","","2,569","","","","1,501","","","","506","","","","253","","","","232","","","","20","","","","57"],["Uncertain Income Tax Positions(9)","","","25","","","","4","","","","9","","","","4","","","","3","","","","3","","","","2"],["","","$","14,102","","","$","3,666","","","$","3,019","","","$","1,879","","","$","1,299","","","$","1,237","","","$","3,002"]] [[/GREPCENT_TABLE]] (1) Debt obligations include Notes Payable and Overdrafts, and excludes the impact of deferred financing fees, unamortized discounts, and a fair value step-up related to the Cooper Tire acquisition. (2) The minimum lease payments for finance lease obligations are $727 million. (3) These amounts represent future interest payments related to our existing debt obligations and finance leases based on fixed and variable interest rates specified in the associated debt and lease agreements. The amounts provided relate only to existing debt obligations and do not assume the refinancing or replacement of such debt or future changes in variable interest rates. (4) Operating lease obligations have not been reduced by minimum sublease rentals of $7 million, $4 million, $3 million, $2 million, $1 million and $1 million in each of the periods above, respectively, for a total of $18 million. Payments, net of minimum sublease rentals, total $1,279 million. The present value of the net operating lease payments, including sublease rentals, is $989 million. The operating leases relate to, among other things, real estate, vehicles, data processing equipment and miscellaneous other assets. No asset is leased from any related party. (5) The obligation related to pension benefits is actuarially determined and is reflective of obligations as of December 31, 2024. Although subject to change, the amounts set forth in the table represent the mid-point of the range of our expected contributions for funded U.S. and non-U.S. pension plans, plus expected cash funding of direct participant payments to our U.S. and non-U.S. pension plans. We made significant contributions to fully fund our U.S. pension plans in 2013 and 2014. We have no minimum funding requirements for our funded U.S. pension plans under the Employee Retirement Income Security Act of 1974 ("ERISA") or the provisions of our USW collective bargaining agreement, including a provision which requires us to maintain an annual ERISA funded status for the Goodyear U.S. hourly pension plan of at least 97%. Future U.S. pension contributions will be affected by our ability to offset changes in future interest rates with returns from our asset portfolios and any changes to ERISA. For further information on the U.S. pension investment strategy, refer to Note to the Consolidated Financial Statements No. 17, Pension, Other Postretirement Benefits and Savings Plans. Future non-U.S. contributions are affected by factors such as: • future interest rate levels, • the amount and timing of asset returns, and • how contributions in excess of the minimum requirements could impact the amount and timing of future contributions. (6) The payments presented above are expected payments for the next 10 years. The payments for other postretirement benefits reflect the estimated benefit payments of the plans using the provisions currently in effect. Under the relevant summary plan descriptions or plan documents, we have the right to modify or terminate the plans. The obligation related to other postretirement benefits is actuarially determined on an annual basis. (7) The payments for workers’ compensation obligations are based upon recent historical payment patterns on claims. The present value of anticipated claims payments for workers’ compensation is $158 million. (8) Binding commitments are for raw materials, capital expenditures, utilities, and various other types of contracts. The obligations to purchase raw materials include supply contracts at both fixed and variable prices. Those with variable prices are based on index rates for those commodities at December 31, 2024. 44 Table of Contents (9) These amounts primarily represent expected payments with interest for uncertain income tax positions as of December 31, 2024. We have reflected them in the period in which we believe they will be ultimately settled based upon our experience with these matters. Additional other long term liabilities include items such as general and product liabilities, environmental liabilities and miscellaneous other long term liabilities. These other liabilities are not contractual obligations by nature. We cannot, with any degree of reliability, determine the years in which these liabilities might ultimately be settled. Accordingly, these other long term liabilities are not included in the above table. In addition, pursuant to certain long term agreements, we will purchase varying amounts of certain raw materials and finished goods at agreed upon base prices that may be subject to periodic adjustments for changes in raw material costs and market price adjustments, or in quantities that may be subject to periodic adjustments for changes in our or our suppliers' production levels. These contingent contractual obligations, the amounts of which cannot be estimated, are not included in the table above. We do not engage in the trading of commodity contracts or any related derivative contracts. We generally purchase raw materials and energy through short term, intermediate and long term supply contracts at fixed prices or at formula prices related to market prices or negotiated prices. We may, however, from time to time, enter into contracts to hedge our energy costs. We have an agreement to provide a revolving loan commitment to TireHub, LLC. During the first quarter of 2024, the revolving loan commitment increased from $100 million to $130 million. At December 31, 2024, $119 million was drawn on this commitment, which includes $2 million of interest. Off-Balance Sheet Arrangements An off-balance sheet arrangement is any transaction, agreement or other contractual arrangement involving an unconsolidated entity under which a company has: • made guarantees, • retained or held a contingent interest in transferred assets, • undertaken an obligation under certain derivative instruments, or • undertaken any obligation arising out of a material variable interest in an unconsolidated entity that provides financing, liquidity, market risk or credit risk support to the company, or that engages in leasing, hedging or research and development arrangements with the company. We have entered into certain arrangements under which we have provided guarantees that are off-balance sheet arrangements. Those guarantees totaled $29 million at December 31, 2024. For further information about our guarantees, refer to Note to the Consolidated Financial Statements No. 19, Commitments and Contingent Liabilities. 45 Table of Contents CRITICAL ACCOUNTING POLICIES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and related notes to the financial statements. On an ongoing basis, management reviews its estimates based on currently available information. Changes in facts and circumstances may alter such estimates and affect our results of operations and financial position in future periods. Our critical accounting policies relate to: • goodwill and intangible assets, • general and product liability and other litigation, • workers’ compensation, • deferred tax asset valuation allowances and uncertain income tax positions, and • pensions and other postretirement benefits. Goodwill and Intangible Assets. Goodwill and indefinite-lived intangible assets are tested for impairment annually or more frequently if an indicator of impairment is present. Intangible assets with finite lives are amortized over their useful lives and are reviewed for impairment whenever events or circumstances warrant such review. Goodwill and intangible assets are written down to fair value if considered impaired. Goodwill and Intangible Assets totaled $756 million and $805 million, respectively, at December 31, 2024, compared to $781 million and $969 million, respectively, at December 31, 2023. At December 31, 2024, the goodwill associated with reporting units in our Americas and Asia Pacific segments was $715 million and $41 million. Goodwill and intangible assets with indefinite useful lives are not amortized but are assessed for impairment annually on October 31st with the option to perform a qualitative assessment to determine whether further impairment testing is necessary or to perform a quantitative assessment by comparing the fair value of the reporting unit or indefinite-lived intangible asset to its carrying value. In addition to the annual assessment, impairment evaluation is considered during interim periods when events occur or circumstances change that would more likely than not reduce the fair value of the asset below its carrying value. During our annual impairment assessment and in subsequent interim periods, we review events that occur or circumstances that change, including the macroeconomic environment, our business performance and our market capitalization, to determine if a quantitative impairment assessment is necessary. We review our business performance and the macroeconomic environment against our recent expectations and evaluate book value compared to market capitalization, including fluctuations in our stock price, to determine if this could be an indicator of potential impairment. Consideration is given as to whether a fluctuation in our stock price is a result of current market conditions, due to a transitory event or an event that is expected to continue to affect us, or is consistent with our historical stock price volatility. We also consider these factors compared to the results of our most recent quantitative goodwill impairment assessment. Under the qualitative assessment, we assess whether it is more likely than not (defined as a likelihood of more than 50%) that the fair value of our goodwill or indefinite-lived intangible assets is less than the respective carrying values. If it is more likely than not that an impairment exists, then a quantitative impairment assessment is performed. If under the quantitative assessment the fair value is less than the carrying value, an impairment loss will be recorded for the difference between the carrying value and the fair value. Under the quantitative assessment, we estimate the fair value of goodwill using the discounted cash flows of a reporting unit. For indefinite-lived intangible assets we estimate the fair value using discounted cash flows following a relief-from-royalty method utilizing a market-based royalty rate. Forecasts of future cash flows are based on our best estimate of projected revenue and projected operating margin, based primarily on sales and production volume, pricing, raw material costs, market share, industry outlook, general economic conditions, and certain strategic actions we plan to implement. Cash flows are discounted using our weighted average cost of capital. During the third quarter of 2024, we experienced a decline in our market capitalization as a result of a decrease in our stock price. Our stock price has a history of volatility, however, given the decrease was sustained throughout the quarter, we viewed this event as a triggering event and performed a quantitative analysis of the fair value of the North America reporting unit in our Americas segment as of September 30, 2024 which resulted in an estimated fair value that exceeded its carrying value, including goodwill. As part of our annual impairment analysis as of October 31, 2024, we completed a quantitative impairment analysis of our North America and Asia Pacific reporting units to determine if their fair values were less than their carrying amounts. Based on the quantitative test, the North America reporting unit had an estimated fair value that exceeded its carrying value, including goodwill, by approximately 11% and the Asia Pacific reporting unit substantially exceeded its carrying value. 46 Table of Contents The following table highlights the sensitivities of the North America reporting unit's goodwill as of October 31, 2024: [[GREPCENT_TABLE]] [["","","North America Reporting Unit Goodwill"],["Assumption:"],["Approximate percentage by which the fair value exceeds the carrying value based on annual impairment test","","","11","%"],["Approximate percentage by which the fair value exceeds the carrying value if the discount rate were to increase by 0.5%","","","6","%"],["Approximate percentage by which the fair value exceeds the carrying value if the projected operating margin were to decrease by 0.5%","","","10","%"],["Approximate percentage by which the fair value exceeds the carrying value if the projected revenue were to decrease by 0.5%","","","10","%"]] [[/GREPCENT_TABLE]] We determined the estimated fair value for the reporting units based on discounted cash flow projections. The most critical assumptions used in the calculation of the fair value of each reporting unit are the projected revenue, projected operating margin and discount rate. Our forecast of future cash flows is based on our best estimate of projected revenue and projected operating margin, based primarily on pricing, raw material costs, market share, industry outlook, general economic conditions and strategic actions to improve our operating margin. The fair value of the reporting unit’s goodwill is sensitive to differences between estimated and actual cash flows, including changes in the projected revenue, projected operating margin and discount rate used to evaluate the fair value of the reporting unit. Although we believe our estimate of fair value is reasonable, if a reporting unit’s future financial performance falls below our expectations, there are adverse revisions to significant assumptions, or our market capitalization declines further or does not improve from the strategic actions we are implementing, this could be indicative that the fair values of each of our reporting units has declined below their carrying values, and therefore we may need to record a material, non-cash goodwill impairment charge in a future period. In the third quarter of 2024, we experienced a decline in volumes primarily in our lower tier indefinite-lived intangible assets related to the acquisition of Cooper Tire as a result of increased competition from lower tier imports in the market. We viewed this event as a triggering event and performed a quantitative analysis of the fair value of our indefinite-lived intangible assets related to the acquisition of Cooper Tire as of September 30, 2024. Based on the results of the quantitative impairment assessments, the fair value of the intangible assets was less than the carrying value, resulting in a non-cash impairment charge of $125 million during the third quarter of 2024. As part of our annual impairment analysis as of October 31, 2024, we completed a quantitative impairment analysis of our indefinite-lived intangible assets to determine if their fair values were less than their carrying amounts. Based on the results of the quantitative impairment assessments, the Company determined that no impairment was required as the estimated fair values of our indefinite-lived intangible assets exceeded or approximated their respective carrying values. We identified $435 million of indefinite-lived intangible assets related to the Cooper Tire acquisition for which the estimated fair values approximated their respective carrying values. We determined the fair value of the indefinite-lived intangible assets using the relief-from-royalty method, which calculates the cost savings associated with owning rather than licensing the assets. The most critical assumptions used in the calculation of the fair value are projected revenue, discount rate and royalty rate. The fair value of the indefinite-lived intangible assets is sensitive to differences between estimated and actual revenue, including changes in the discount rate and royalty rate used to evaluate the fair value of these assets. Although we believe our estimate of fair value is reasonable, the indefinite-lived intangible asset performance is dependent on our ability to execute our business plan. If our future financial performance falls below our expectations, or there are adverse revisions to significant assumptions, including projected revenues, discount rates or royalty rates, this could be indicative that the fair values of these indefinite-lived intangible assets has declined below their carrying values, and therefore we may need to record a material, non-cash impairment charge in a future period. We assessed the period from October 31, 2024 to December 31, 2024 and determined there were no factors that caused us to change our conclusions. For further information on goodwill and intangible assets, refer to Note to the Consolidated Financial Statements No. 11, Goodwill and Intangible Assets. General and Product Liability and Other Litigation. We have recorded liabilities for both asserted and unasserted claims totaling $406 million and $438 million, including related legal fees expected to be incurred, for potential product liability and other tort claims, including asbestos claims, at December 31, 2024 and December 31, 2023, respectively. General and product liability and other litigation liabilities are recorded based on management’s assessment that a loss arising from these matters is probable. If the loss can be reasonably estimated, we record the amount of the estimated loss. If the loss is estimated within a range and no point within the range is more probable than another, we record the minimum amount in the range. As additional 47 Table of Contents information becomes available, any potential liability related to these matters is assessed and the estimates are revised, if necessary. Loss ranges are based upon the specific facts of each claim or class of claims and are determined after review by counsel. Court rulings on our cases or similar cases may impact our assessment of the probability and our estimate of the loss, which may have an impact on our reported results of operations, financial position and liquidity. We record receivables for insurance recoveries related to our litigation claims when it is probable that we will receive reimbursement from the insurer. Specifically, we are a defendant in numerous lawsuits alleging various asbestos-related personal injuries purported to result from alleged exposure to asbestos in certain products previously manufactured by us or present in certain of our facilities. Typically, these lawsuits have been brought against multiple defendants in federal and state courts. We periodically, and at least annually, update, using actuarial analyses, our existing reserves for pending claims, including a reasonable estimate of the liability associated with unasserted asbestos claims, and estimate our receivables from probable insurance recoveries. In determining the estimate of our asbestos liability, we evaluated claims over the next ten-year period. Due to the difficulties in making these estimates, analysis based on new data and/or changed circumstances arising in the future may result in an increase in the recorded obligation, and that increase may be significant. We had recorded gross liabilities for both asserted and unasserted asbestos claims, inclusive of defense costs, totaling $115 million and $120 million, respectively, at December 31, 2024 and December 31, 2023. We maintain certain primary and excess insurance coverage under coverage-in-place agreements, and also have additional excess liability insurance with respect to asbestos liabilities. We record a receivable with respect to such policies when we determine that recovery is probable and we can reasonably estimate the amount of a particular recovery. This determination is based on consultation with our outside legal counsel and takes into consideration agreements with certain of our insurance carriers, the financial viability and legal obligations of our insurance carriers, and other relevant factors. As of December 31, 2024 and December 31, 2023, we recorded a receivable related to asbestos claims of $63 million and $66 million, respectively, and we expect that approximately 55% of asbestos claim related losses would be recoverable through insurance through the period covered by the estimated liability. Of this amount, $11 million and $10 million was included in Current Assets as part of Accounts Receivable at December 31, 2024 and December 31, 2023, respectively. The recorded receivable consists of an amount we expect to collect under coverage-in-place agreements with certain primary and excess insurance carriers as well as an amount we believe is probable of recovery from certain of our other excess insurance carriers. Although we believe these amounts are collectible under primary and certain excess policies today, future disputes with insurers could result in significant charges to operations. Workers’ Compensation. We have recorded liabilities, on a discounted basis, of $158 million and $167 million for anticipated costs related to U.S. workers’ compensation claims at December 31, 2024 and December 31, 2023, respectively. The costs include an estimate of expected settlements on pending claims, defense costs and a provision for claims incurred but not reported. These estimates are based on our assessment of potential liability using an analysis of available information with respect to pending claims, historical experience and current cost trends. The amount of our ultimate liability in respect of these matters may differ from these estimates. We periodically, and at least annually, update our loss development factors based on actuarial analyses. The liability is discounted using the risk-free rate of return. For further information on general and product liability and other litigation and workers’ compensation, refer to Note to the Consolidated Financial Statements No. 19, Commitments and Contingent Liabilities. Deferred Tax Asset Valuation Allowances and Uncertain Income Tax Positions. At December 31, 2024 and December 31, 2023, our valuation allowances on certain of our U.S. federal, state and local net deferred tax assets totaled $26 million and $22 million, respectively, and our valuation allowances on our foreign net deferred tax assets totaled approximately $1.2 billion. We record a reduction to the carrying amounts of deferred tax assets by recording a valuation allowance if, based on the available evidence, it is more likely than not such assets will not be realized. The valuation of deferred tax assets requires judgment in assessing future profitability by year, including the impact of tax planning strategies, relative to the expiration dates, if any, of the assets. We consider both positive and negative evidence when measuring the need for a valuation allowance. The weight given to the evidence is commensurate with the extent to which it may be objectively verified. Current and cumulative financial reporting results are a source of objectively verifiable information. We give operating results during the most recent three-year period a significant weight in our analysis. We perform scheduling exercises to determine if sufficient taxable income of the appropriate character exists in the periods required in order to realize our deferred tax assets with limited lives (such as tax loss carryforwards and tax credits) prior to their expiration. We also consider prudent tax planning strategies (including an assessment of their feasibility) to accelerate taxable income if required to utilize expiring deferred tax assets. A valuation allowance is not required to the extent that, in our judgment, positive evidence exists with a magnitude and duration sufficient to result in a conclusion that it is more likely than not that our deferred tax assets will be realized. 48 Table of Contents At December 31, 2024 and December 31, 2023, we had approximately $1.3 billion and $1.2 billion of U.S. federal, state and local net deferred tax assets, respectively, inclusive of valuation allowances totaling $26 million and $22 million, respectively, in each period, primarily for state tax loss carryforwards with limited lives. As of December 31, 2024, approximately $1.1 billion of these U.S. net deferred tax assets had unlimited lives and approximately $200 million had limited lives, including $24 million of foreign tax credits, and the majority do not start to expire until 2030. As of December 31, 2023, approximately $1.0 billion of these U.S. net deferred tax assets had unlimited lives and approximately $200 million had limited lives, including $22 million of foreign tax credits, and the majority do not start to expire until 2030. In the U.S., we have a cumulative loss for the three-year period ended December 31, 2024 primarily driven by non-recurring items such as rationalization charges, pension curtailments and settlements, one-time costs associated with the Goodyear Forward plan, and intangible asset impairments. In assessing our ability to utilize our net deferred tax assets, we primarily considered objectively verifiable information, including the improvement of our U.S. operating results during 2024 as a result of lower raw material and transportation costs and benefits from the Goodyear Forward plan compared to 2023 as well as non-deductible interest and future royalty income from foreign subsidiaries. In addition, we considered our current forecasts of future profitability in assessing our ability to realize our deferred tax assets as well as the impact of tax planning strategies. These forecasts include the impact of recent trends and various macroeconomic factors such as the impact of raw material, transportation, labor and energy costs on our profitability. Our tax planning strategies include accelerating income on cross border transactions, including sales of inventory or raw materials to our subsidiaries, reducing U.S. interest expense by, for example, reducing intercompany loans through repatriating current year earnings of foreign subsidiaries, repatriation of certain foreign royalty income, and other financing transactions, all of which would increase our domestic profitability. We believe our improvement in U.S. operating results for the year ended December 31, 2024 compared to the year ended December 31, 2023, as well as forecasts of future profitability, provide us sufficient positive evidence to conclude that it is more likely than not that, at December 31, 2024, our U.S. net deferred tax assets will be fully utilized. However, macroeconomic factors such as raw material, transportation, potential tariff, labor and energy costs possess a high degree of volatility and can significantly impact our profitability. In addition, certain tax provisions, such as the annual interest expense limitation under Section 163(j) of the Internal Revenue Code of 1986, if amended, could impact our analysis of the realizability of our U.S. deferred tax assets. If our U.S. operating results significantly decline in the future, we may need to record a valuation allowance which could adversely impact our operating results. As such, we will closely monitor our U.S. operations as well as any tax law changes to assess the realizability of our U.S. deferred tax assets. At December 31, 2024 and December 31, 2023, we also had approximately $1.5 billion of foreign net deferred tax assets and related valuation allowances of approximately $1.2 billion. Our losses in various foreign taxing jurisdictions in recent periods represented sufficient negative evidence to require us to maintain a full valuation allowance against certain of these net foreign deferred tax assets. Most notably, in Luxembourg, we maintain a valuation allowance of approximately $1.0 billion on all of our net deferred tax assets. Each reporting period, we assess available positive and negative evidence and estimate if sufficient future taxable income will be generated to utilize these existing deferred tax assets. We do not believe that sufficient positive evidence required to release valuation allowances on our foreign deferred tax assets having a significant impact on our financial position or results of operations will exist within the next twelve months. We recognize the effects of changes in tax rates and laws on deferred tax balances in the period in which legislation is enacted. We remeasure existing deferred tax assets and liabilities considering the tax rates at which they will be realized. We also consider the effects of enacted tax laws in our analysis of the need for valuation allowances. The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations, including those for transfer pricing. We recognize liabilities for anticipated tax audit issues based on our estimate of whether, and the extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is unnecessary, we reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary. We also recognize income tax benefits to the extent that it is more likely than not that our positions will be sustained when challenged by the taxing authorities. We derecognize income tax benefits when, based on new information, we determine that it is no longer more likely than not that our position will be sustained. To the extent we prevail in matters for which liabilities have been established, or determine we need to derecognize tax benefits recorded in prior periods, our results of operations and effective tax rate in a given period could be materially affected. An unfavorable tax settlement would require use of our cash, and lead to recognition of expense to the extent the settlement amount exceeds recorded liabilities, resulting in an increase in our effective tax rate in the period of resolution. To reduce our risk of an unfavorable transfer price settlement, we apply consistent transfer pricing policies and practices globally, support pricing with economic studies and seek advance pricing agreements and joint audits to the extent possible. A favorable tax settlement would be recognized as a reduction of expense to the extent the settlement amount is lower than recorded liabilities and, in the case of an income tax settlement, would result in a reduction in our effective tax rate in the period of resolution. We report interest and penalties related to uncertain income tax positions as income tax expense. 49 Table of Contents For additional information regarding uncertain income tax positions and tax valuation allowances, refer to Note to the Consolidated Financial Statements No. 6, Income Taxes. Pensions and Other Postretirement Benefits. We have recorded liabilities for pensions of $138 million and $181 million and other postretirement benefits of $232 million and $287 million, respectively, at December 31, 2024 and December 31, 2023. Our recorded liabilities and net periodic costs for pensions and other postretirement benefits are based on a number of assumptions, including: • life expectancies, • retirement rates, • discount rates, • long term rates of return on plan assets, • inflation rates, • future health care costs, and • maximum company-covered benefit costs. Certain of these assumptions are determined with the assistance of independent actuaries. Assumptions about life expectancies, retirement rates, future compensation levels and future health care costs are based on past experience and anticipated future trends. The discount rate for our U.S. plans is based on a yield curve derived from a portfolio of corporate bonds from issuers rated AA or higher by established rating agencies as of December 31 and is reviewed annually. Our expected benefit payment cash flows are discounted based on spot rates developed from the yield curve. The mortality assumption for our U.S. plans is based on actual historical experience or published actuarial tables, an assumed long term rate of future improvement based on published actuarial tables, and current government regulations related to lump sum payment factors. The long term rate of return on U.S. plan assets is based on estimates of future long term rates of return similar to the target allocation of substantially all fixed income securities. Actual U.S. pension fund asset allocations are reviewed on a monthly basis and the pension fund is rebalanced to target ranges on an as-needed basis. These assumptions are reviewed regularly and revised when appropriate. Changes in one or more of them may affect the amount of our recorded liabilities and net periodic costs for these benefits. Other assumptions involving demographic factors such as retirement age and turnover are evaluated periodically and are updated to reflect our experience and expectations for the future. If actual experience differs from expectations, our financial position, results of operations and liquidity in future periods may be affected. The weighted average discount rate used in estimating the total liability for our U.S. pension and other postretirement benefit plans was 5.55% and 5.62%, respectively, at December 31, 2024, compared to 5.12% and 5.16%, respectively, at December 31, 2023. The increase in the discount rate at December 31, 2024 was due primarily to higher yields on highly rated corporate bonds. Interest cost included in our U.S. net periodic pension cost was $174 million in 2024, compared to $195 million in 2023. Interest cost included in our global net periodic other postretirement benefits cost was $15 million in 2024, compared to $16 million in 2023. The following table presents the sensitivity of our U.S. projected pension benefit obligation and accumulated other postretirement benefits obligation to the indicated increase/decrease in the discount rate: [[GREPCENT_TABLE]] [["","","","","+ / \u2212 Change at December 31, 2024"],["(Dollars in millions)","","Change","","PBO/ABO","","","Annual Expense"],["Assumption:"],["Pensions","","+/- 0.5%","","$","133","","","$","1"],["Other Postretirement Benefits","","+/- 0.5%","","","6","","","","1"]] [[/GREPCENT_TABLE]] Changes in general interest rates and corporate (AA or better) credit spreads impact our discount rate and thereby our U.S. pension benefit obligation. Our U.S. pension plans are invested in a portfolio of substantially all fixed income securities designed to offset the impact of future discount rate movements on liabilities for these plans. If corporate (AA or better) interest rates increase or decrease in parallel (i.e., across all maturities), the investment portfolio described above is designed to mitigate a substantial portion of the expected change in our U.S. pension benefit obligation. For example, if corporate (AA or better) interest rates increased or decreased by 0.5%, the investment portfolio described above would be expected to mitigate approximately 95% of the expected change in our U.S. pension benefit obligation. At December 31, 2024, our net actuarial loss included in Accumulated Other Comprehensive Loss ("AOCL") related to global pension plans was $2,182 million, $1,690 million of which related to our U.S. pension plans. The net actuarial loss included in AOCL related to our U.S. pension plans continues to decrease and is primarily due to declines in U.S. discount rates and plan asset losses that occurred prior to the funding and investment de-risking actions we undertook in 2013 and 2014, which were 50 Table of Contents designed to mitigate further actuarial losses of a similar nature. For purposes of determining our 2024 U.S. pension total benefits cost, we recognized $94 million of the net actuarial losses in 2024. We will recognize approximately $100 million of net actuarial losses in 2025 U.S. net periodic pension cost. If our future experience is consistent with our assumptions as of December 31, 2024, actuarial loss recognition over the next few years will remain at an amount near that to be recognized in 2025 before it begins to gradually decline. In addition, if annual lump sum payments from a pension plan exceed annual service and interest cost for that plan, accelerated recognition of net actuarial losses will be required through a settlement in total benefits cost. The actual rate of return on our U.S. pension fund was 1.70%, 7.90% and (17.00)% in 2024, 2023 and 2022, respectively, as compared to the expected rate of 5.95%, 6.27% and 4.23% in 2024, 2023 and 2022, respectively. We use the fair value of our pension assets in the calculation of pension expense for all of our U.S. pension plans. The weighted average amortization period for our U.S. pension plans is approximately 14 years. Service cost of pension plans was recorded in CGS, as part of the cost of inventory sold during the period, or SAG in our Consolidated Statements of Operations, based on the specific roles (i.e., manufacturing vs. non-manufacturing) of employee groups covered by each of our pension plans. In 2024, 2023 and 2022, the amount of service cost included in CGS and SAG is approximately equal. Non-service related net periodic pension costs were recorded in Other (Income) Expense. Globally, we expect our 2025 net periodic pension cost to be $100 million to $120 million, including approximately $20 million of service cost, compared to $125 million in 2024, which included $26 million of service cost. The net actuarial gain of $86 million included in AOCL for our global other postretirement benefit plans as of December 31, 2024 is a result of past increases in discount rates. For purposes of determining 2024 global net periodic other postretirement benefits cost, we recognized $9 million of net actuarial gains in 2024. We will recognize approximately $8 million of net actuarial gains in 2025. If our future experience is consistent with our assumptions as of December 31, 2024, actuarial gain recognition over the next few years will remain at an amount near that to be recognized in 2025. For further information on pensions and other postretirement benefits, refer to Note to the Consolidated Financial Statements No. 17, Pension, Other Postretirement Benefits and Savings Plans. 51 Table of Contents FORWARD-LOOKING INFORMATION — SAFE HARBOR STATEMENT Certain information in this Annual Report on Form 10-K (other than historical data and information) may constitute forward-looking statements regarding events and trends that may affect our future operating results and financial position. The words “estimate,” “expect,” “intend” and “project,” as well as other words or expressions of similar meaning, are intended to identify forward-looking statements. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. Such statements are based on current expectations and assumptions, are inherently uncertain, are subject to risks and should be viewed with caution. Actual results and experience may differ materially from the forward-looking statements as a result of many factors, including: • if we do not successfully implement the Goodyear Forward plan and our other strategic initiatives, including the sales of our OTR tire business, the Dunlop brand and our chemical businesses, our operating results, financial condition and liquidity may be materially adversely affected; • we may not be able to consummate the sale of the Dunlop brand on a timely basis or at all, including failure to obtain the required regulatory approvals or to satisfy other conditions to closing; • we face significant global competition and our market share could decline; • raw material cost increases may materially adversely affect our operating results and financial condition; • we have experienced inflationary cost pressures, including with respect to wages, benefits and energy costs, that may materially adversely affect our operating results and financial condition; • delays or disruptions in our supply chain or in the provision of services, including utilities, to us could result in increased costs or disruptions in our operations; • a prolonged economic downturn or economic uncertainty could adversely affect our business and results of operations; • deteriorating economic conditions in any of our major markets, or an inability to access capital markets or third-party financing when necessary, may materially adversely affect our operating results, financial condition and liquidity; • if we experience a labor strike, work stoppage, labor shortage or other similar event at the Company or its joint ventures, our business, results of operations, financial condition and liquidity could be materially adversely affected; • financial difficulties, work stoppages, labor shortages, supply disruptions or economic conditions affecting our major OE customers, dealers or suppliers could harm our business; • our capital expenditures may not be adequate to maintain our competitive position and may not be implemented in a timely or cost-effective manner; • changes to tariffs, trade agreements or trade restrictions may materially adversely affect our operating results; • our international operations have certain risks that may materially adversely affect our operating results, financial condition and liquidity; • we have foreign currency translation and transaction risks that may materially adversely affect our operating results, financial condition and liquidity; • our long-term ability to meet our obligations, to repay maturing indebtedness or to implement strategic initiatives may be dependent on our ability to access capital markets in the future and to improve our operating results; • we have a substantial amount of debt, which could restrict our growth, place us at a competitive disadvantage or otherwise materially adversely affect our financial health; • any failure to be in compliance with any material provision or covenant of our debt instruments, or a material reduction in the borrowing base under our first lien revolving credit facility, could have a material adverse effect on our liquidity and operations; • our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly; • we have substantial fixed costs and, as a result, our operating income fluctuates disproportionately with changes in our net sales; 52 Table of Contents • we may incur significant costs in connection with our contingent liabilities and tax matters; • our reserves for contingent liabilities and our recorded insurance assets are subject to various uncertainties, the outcome of which may result in our actual costs being significantly higher than the amounts recorded; • environmental issues, including climate change, or legal, regulatory or market measures to address environmental issues, may negatively affect our business and operations and cause us to incur significant costs; • we are subject to extensive government regulations that may materially adversely affect our operating results; • we may be adversely affected by any disruption in, or failure of, our information technology systems due to computer viruses, unauthorized access, cyber-attack, natural disasters or other similar disruptions; • we may not be able to protect our intellectual property rights adequately; • if we are unable to attract and retain key personnel, our business could be materially adversely affected; and • we may be impacted by economic and supply disruptions associated with events beyond our control, such as war, including the current conflicts between Russia and Ukraine and in the Middle East, acts of terror, political unrest, public health concerns, labor disputes or natural disasters. It is not possible to foresee or identify all such factors. We will not revise or update any forward-looking statement or disclose any facts, events or circumstances that occur after the date hereof that may affect the accuracy of any forward-looking statement. 53 Table of Contents