AKRON, Ohio, Aug. 22 /PRNewswire-FirstCall/ -- The Goodyear Tire & Rubber
Company (NYSE: GT) announced today that the Voluntary Employees' Beneficiary
Association trust (VEBA) proposed by it and the United Steelworkers union has
been approved by U.S. District Court Judge John R. Adams.
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Under the terms of the settlement agreement, Goodyear will now make a $1
billion cash contribution to the VEBA, which will provide healthcare benefits
to the company's current and future USW retirees. The one-time contribution
will be made initially from existing cash reserves and available credit lines.
'Gaining court approval for the VEBA is a win-win for Goodyear and for our
current and future USW retirees,' said Goodyear Chairman Robert J. Keegan.
'This agreement both protects retiree benefits for years to come and removes a
significant legacy obligation from our North American business.'
Goodyear's obligations for providing USW retiree healthcare will be
transferred to the VEBA. Creation of the VEBA will result in annual legacy
cost savings of approximately $100 million a year and an approximate $130
million annual improvement in cash flow for the company compared to 2007.
Once the required legal process is complete, Goodyear will eliminate
approximately $1.2 billion of liabilities for current and future
post-employment healthcare benefits from its balance sheet. The company
expects no significant gain or loss at settlement.
It is anticipated that the legal process will be complete by the end of
the third quarter of 2008 provided no appeals are filed. Additionally,
savings attributable to the agreement are expected to begin impacting
Goodyear's results in the fourth quarter of 2008.
The VEBA settlement reflects the terms of the agreement made between
Goodyear and the USW during their 2006 contract negotiations.
Goodyear is one of the world's largest tire companies. Fortune magazine
named Goodyear the World's Most Admired Motor Vehicle Parts Company in its
2008 list of the World's Most Admired Companies. The publication ranked
Goodyear No. 1 in innovation, people management, use of assets and global
orientation. The company is also listed on Forbes magazine's list of the Most
Respected Companies in America and its list of the Most Trustworthy Companies
in America and CRO magazine's ranking of the 100 Best Corporate Citizens.
Goodyear employs about 70,000 people and manufactures its products in more
than 60 facilities in 25 countries around the world. For more information
about Goodyear, go to www.goodyear.com/corporate.
Certain information contained in this press release may constitute
forward-looking statements for purposes of the safe harbor provisions of The
Private Securities Litigation Reform Act of 1995. There are a variety of
factors, many of which are beyond our control, which affect our operations,
performance, business strategy and results and could cause our actual results
and experience to differ materially from the assumptions, expectations and
objectives expressed in any forward-looking statements. These factors
include, but are not limited to: actions and initiatives taken by both current
and potential competitors; increases in the prices paid for raw materials and
energy; our ability to realize anticipated savings and operational benefits
from our cost reduction initiatives, including the VEBA, or to implement
successfully other strategic initiatives; potential adverse consequences of
litigation involving the company; pension plan funding obligations; as well as
the effects of more general factors such as changes in general market or
economic conditions or in legislation, regulation or public policy.
Additional factors are discussed in our filings with the Securities and
Exchange Commission, including our annual report on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K. In addition, any
forward-looking statements represent our estimates only as of today and should
not be relied upon as representing our estimates as of any subsequent date.
While we may elect to update forward-looking statements at some point in the
future, we specifically disclaim any obligation to do so, even if our
estimates change.
SOURCE The Goodyear Tire & Rubber Company
