Goodyear posts profits, but keeps it eye on debt

By Jeff Pines

Washington, Aug. 5 - Goodyear Tire & Rubber Co. reported a net income of $25.1 million for the second quarter, but is keeping its eye on its debt level and unfunded pension costs. For the second quarter of 2003, it reported a net loss of $53 million.

All seven of the Akron, Ohio-based company's business units posted an operating profit.

Robert Keegan, Goodyear's chairman, president and chief executive officer, said on a conference call Thursday that he does not believe the rate of growth the company achieved in the first half of the year is sustainable - though he does believe the second half will have solid growth.

Price increases sticking in every market helped the company with its performance. The North American market will get another price increase on Sept. 1.

Another plus is the worldwide growth in the commercial truck market, Keegan said.

The popularity of some of its new products surprised the company's leadership.

"Frankly, we underestimated the overwhelmingly positive reception for these products by the dealer and the end user," Keegan said.

Goodyear has previously announced it is refinancing its $680 million revolver with a new $500 million secured credit facility maturing in 2007. The company expects the deal to close this month.

The company also will consider potential asset sales and will ultimately seek increased equity funding to improve its credit profile.

Year over year, Goodyear had more liquidity on June 30 than it did on June 30, 2003. Its liquidity at June 30 was $2.2 billion. This figure does not include the sale of $350 million of convertibles on July 2. That figure will show up on the third quarter results.

Chief financial officer Richard Kramer attributed the improved liquidity to conservative financial management, the awareness of $1.6 billion of maturities due within the next 12 months and the need to fund its pension plan.

In order to maintain the company's positive performance, Keegan believes it is critical for the company to continue to show year-over-year growth.

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