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AKRON, Ohio, July 6, 2012 – Pension stabilization legislation approved by the United States Congress and signed today by President Barack Obama will help offset historically low interest rates and enable companies to invest in growing their businesses and creating jobs, The Goodyear Tire & Rubber Company said today.
“We are pleased that Congress saw that a pension plan’s ability to pay benefits to retirees over multiple decades is unrelated to the federal government’s actions to keep interest rates historically low,” said Richard J. Kramer, chairman and chief executive officer.
The Federal Reserve’s policy of low interest rates resulted in a dramatic and unforeseen increase in pension liabilities and as a result company pension contributions were inflated, the company said. The legislation passed as part of the Moving Ahead for Progress in the 21st Century Act temporarily lessens this artificial funding distortion and ensures defined benefit pension plans are viable and secure for years to come.
Goodyear said the legislation would reduce its minimum required pension contributions by approximately $375 million to $425 million over the next five years, with the greatest benefit coming in 2013 and 2014. The impact on the company’s 2012 pension expense will not be significant, and it continues to expect to record pension expense of $275 million to $325 million for the year.
Goodyear is one of the world’s largest tire companies. It employs about 72,000 people and manufactures its products in 53 facilities in 22 countries around the world. Its two Innovation Centers in Akron, Ohio and Colmar-Berg, Luxembourg strive to develop state-of-the-art products and services that set the technology and performance standard for the industry. For more information about Goodyear and its products, 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, that 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: our ability to realize anticipated savings and operational benefits from our cost reduction initiatives or to implement successfully other strategic initiatives; increases in the prices paid for raw materials and energy; pension plan funding obligations; actions and initiatives taken by both current and potential competitors; deteriorating economic conditions or an inability to access capital markets; work stoppages, financial difficulties or supply disruptions at our suppliers or customers; the adequacy of our capital expenditures; a labor strike, work stoppage or other similar event; our failure to comply with a material covenant in our debt obligations; potential adverse consequences of litigation involving the company; as well as the effects of more general factors such as changes in general market, economic or political 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.