SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q/A

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2003

Commission File Number: 1-1927

THE GOODYEAR TIRE & RUBBER COMPANY

(330) 796-2121
(Registrant’s Telephone Number, Including Area Code)

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date.

EXPLANATORY NOTE

This Amendment No. 1 to The Goodyear Tire & Rubber Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003 (the “Form 10-Q/A”) includes unaudited restated consolidated financial statements as of June 30, 2003 and for the three and six month periods ended June 30, 2003 and 2002, and an audited restated consolidated balance sheet as of December 31, 2002. The accompanying restated consolidated financial statements, including the notes thereto, have been revised to reflect the restatement.

     The Goodyear Tire & Rubber Company (the “Company”) has restated, by means of its Annual Report on Form 10-K for the year ended December 31, 2003 (the “2003 Form 10-K”) filed on May 19, 2004, its consolidated balance sheet as of December 31, 2002, and consolidated statements of operations, cash flows, comprehensive income and shareholders’ equity for the years ended December 31, 2002 and 2001. The restatement also affected periods prior to 2001. Note 2 to the financial statements included in the 2003 Form 10-K shows the impact of the restatement adjustments to retained earnings as of January 1, 2001, to reflect the impact of the restatement on periods prior to 2001. For information on the impact of the restatement on the years 2000 and 1999, reference is made to “Item 6. Selected Financial Data” in the Company’s 2003 Form 10-K. In addition, the restatement impacts the first three quarters of 2003. The restated amounts for the first and third quarters of 2003 and the comparable interim periods in 2002 are presented in the Company’s Quarterly Reports on Form 10-Q/A for the quarterly periods ended March 31, 2003 and September 30, 2003.

     Refer to Note 1A, “Restatement,” for further information on the restatement impact for the second quarter and six months ended June 30, 2003.

     For further discussion, see “Item 8. Financial Statements — Note 2. Restatement” in the Company’s 2003 Form 10-K, which discloses the nature of the restatement adjustments and shows the impact of the restatement adjustments on net loss and the cumulative impact of the adjustments on the Consolidated Statement of Operations and Consolidated Balance Sheet for each annual period on a restated basis.

     This Form 10-Q/A amends and restates Items 1, 2, 3 and 4 of Part I and Item 6 of Part II of the original Form 10-Q as well as the information set forth under “Forward-Looking Information — Safe Harbor Statement,” and no other information included in the original Form 10-Q is amended hereby.

     All referenced amounts in this Amendment No. 1 to the Company’s Quarterly Report on Form 10-Q/A for prior periods and prior period comparisons reflect the balances and amounts on a restated basis.

     This Form 10-Q/A has not been updated for changes in events, estimates or other developments subsequent to July 30, 2003, the date of filing of the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2003. For a discussion of these subsequent events and developments as well as revisions to prior estimates please refer to the Company’s 2003 Form 10-K filed on May 19, 2004.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. RESTATED FINANCIAL STATEMENTS.

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
(Unaudited)

The accompanying notes are an integral part of this financial statement.

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Unaudited)

The accompanying notes are an integral part of this financial statement.

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(Unaudited)

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)

The accompanying notes are an integral part of this financial statement.

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

The accompanying notes are an integral part of this financial statement.

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

All per share amounts in these Notes to Financial Statements are diluted unless otherwise indicated.

NOTE 1. ACCOUNTING POLICIES

Adjustments

The accompanying unaudited consolidated financial statements have been prepared in accordance with Form 10-Q instructions and in the opinion of management contain all adjustments (including normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows for the periods presented. 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 financial statements and accompanying notes. These restated interim statements should be read in conjunction with the consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003 (the “2003 10-K”).

Restricted Cash

The Company will from time to time maintain balances on deposit at various financial institutions primarily as collateral for borrowings incurred by various subsidiaries. The availability of these balances is restricted to the extent of the borrowings. At June 30, 2003, cash balances totaling $32.4 million were subject to such restrictions.

Rationalizations

The Company adopted Statement of Financial Accounting Standards No. 146 (SFAS 146), “Accounting for Costs Associated with Exit or Disposal Activities,” effective for all exit or disposal activities initiated after December 31, 2002. SFAS 146 requires, among other things, that liabilities for costs associated with exit or disposal activities be recognized when the liabilities are incurred, rather than when an entity commits to an exit plan. SFAS 146 changes the timing of liability and expense recognition related to exit or disposal activities, but not the ultimate amount of such expenses. Refer to Note 2.

Stock-Based Compensation

The Company uses the intrinsic value method to measure compensation cost for stock-based compensation. Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company’s common stock at the date of the grant over the amount an employee must pay to acquire the stock. Compensation cost for stock appreciation rights and performance units is recorded based on the quoted market price of the Company’s stock at the end of the reporting period.

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

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

Reclassification

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

NOTE 1A. RESTATEMENT

The financial statements have been restated in order to reflect certain adjustments to Goodyear’s financial statements for 2003 as previously reported in Goodyear’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003 (the “Form 10-Q”). The restatement also affects the three- and six-month periods ended June 30, 2002. The adjustments increased the net loss by $12.6 million for the six-month period ended June 30, 2003. For the six-month period ended June 30, 2002, the net loss was unchanged by the restatement adjustments. The adjustments reduced the net loss by $20.6 million for the quarter ended June 30, 2003 and decreased the net income by $4.2 million for the quarter ended June 30, 2002. The restated financial information has been prepared by management and reflects all adjustments known to management.

     The Company has restated, by means of its Annual Report on Form 10-K for the year ended December 31, 2003, filed on May 19, 2004, its consolidated balance sheet as of December 31, 2002, and consolidated statements of operations, cash flows, and shareholders’ equity for the years ended December 31, 2002 and 2001. The restatement also affected periods prior to 2001. In addition, the Company’s 2003 and 2002 quarterly financial information has been restated to reflect adjustments to the Company’s previously reported financial information on Form 10-Q for the quarters ended March 31, 2003; June 30, 2003; and September 30, 2003. Form 10-Q/As have been filed for the quarterly periods ended March 31, 2003 and September 30, 2003. Refer to Note 2, “Restatement,” and supplementary data in the 2003 10-K for further discussion of the restatement including the adjustments recorded in annual and quarterly periods other than the second quarters of 2003 and 2002. Accordingly, this footnote discusses the restatement adjustments related only to the second quarters and six months of 2003 and 2002.

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

     The restatements initially arose out of an intensified effort to reconcile certain general ledger accounts in the second and third quarters of 2003. As a result of the Company’s efforts to reconcile these accounts, the Company identified various adjustments that were recorded in the second quarter and needed to be recorded in the third quarter of 2003 arising out of account reconciliations. Based on an assessment of the impact of the adjustments, management and the Audit Committee decided to restate the Company’s previously issued financial statements. Following the identification of these adjustments, PricewaterhouseCoopers LLP (“PwC”) advised the Company in October 2003 that the failure to identify or monitor certain conditions with respect to certain general ledger accounts collectively resulted in a material weakness in internal controls that required strengthening.

     In December 2003, the Company discovered accounting irregularities in its European Union Tire business segment. The Audit Committee initiated a special investigation of these irregularities, and this investigation was subsequently expanded to other overseas locations. The investigations identified accounting irregularities primarily related to earnings management whereby accrual accounts were improperly adjusted between periods or expenses were improperly deferred. In the first and second quarters of 2004, the Company identified other adjustments. Some of these adjustments resulted from accounting irregularities resulting in the understatement of workers’ compensation liability and related to the valuation of real estate received in payment of trade accounts receivable in Chile. The Audit Committee also initiated an investigation into these adjustments. As a result of these investigations, management and the Audit Committee decided that a further restatement was necessary.

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

     The Form 10-K for the year ended December 31, 2003 also included changes to the timing of certain previously recognized adjustments not arising from account reconciliations as well as other adjustments identified during the restatement process.

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

Accounting Irregularities. This category includes adjustments reducing income (increasing loss) before tax by a total of $4.5 million and $6.5 million in the six-month periods ended June 30, 2003 and 2002, respectively. Adjustments increasing the loss in the quarter ended June 30, 2003 and reducing income in the quarter ended June 30, 2002 before tax of $2.9 million and $4.3 million, respectively, were recorded. These adjustments resulted from the overseas special accounting investigation, the

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

understatement of the Company’s liability for workers’ compensation payments, and certain adjustments in Chile, including the correction of the valuation of real estate received in payment for trade accounts receivable.

     Adjustments reducing income by a total of $2.1 million and $4.4 million before tax in the six months ended June 30, 2003 and 2002, respectively, were included in the restatement as a result of the special accounting investigation overseas. For the quarters ended June 30, 2003 and 2002, income was reduced by $0.9 million and $3.4 million before tax, respectively. The majority of the adjustments addressed accrual accounts that were improperly adjusted between periods or expenses that were improperly deferred. These adjustments primarily related to accounts receivable, fixed assets, accounts payable-trade and other long term liability accounts that were improperly adjusted.

     The workers’ compensation adjustments reduced income $2.4 million and $3.3 million before tax in the six months ended June 30, 2003 and 2002, respectively. For the three months ended June 30, 2003 and 2002, income was reduced by $2.0 million and $1.6 million before tax, respectively. These adjustments resulted from an understatement of the Company’s potential liability for estimated payments relating to workers’ compensation claims by employees. In the first quarter of 2004, it was noted that claims arising from one of the Company’s United States tire manufacturing plants were under-reserved. As a result, the Company, with the assistance of the outside administrator, reviewed approximately 85% of the open claims handled by this administrator at this plant as well as other facilities and determined that reserves needed to be increased to accurately value the claims. The under-reserving resulted in part from improper efforts to reduce, or restrict the amount of increase in, the reserves for certain workers’ compensation claims leading to claims data in the Company’s workers’ compensation claims database that did not reflect the probable ultimate exposure to the Company.

     In 2000, the Company received approximately 13 acres of land in Santiago, Chile, in payment for trade accounts receivable from one of its Chilean customers. At the time, the Company recorded the land based upon an inappropriate appraisal. In the first quarter of 2004, the Company had an additional appraisal performed that appropriately valued the land at a much lower value. The Audit Committee requested an investigation into the matter, and as a result, the Company recorded an adjustment to reduce the valuation of the land. The Company also identified other adjustments in Chile whereby accrual accounts were improperly adjusted between periods or expenses were improperly deferred. Adjustments increasing income by $1.2 million before tax were recorded related to these accounts in the six months ended June 30, 2002, including $0.7 million in the second quarter of 2002.

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

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

Account Reconciliations. This category includes before tax adjustments reducing income by $6.8 million and increasing income by $12.3 million in the six months ended June 30, 2003 and 2002, respectively, resulting from the failure to either reconcile accounts or resolve certain reconciliation issues in a timely manner. For the quarters ended June 30, 2003 and 2002, before tax income was increased by $20.9 million and $2.9 million, respectively. The most significant adjustments in this category relate to certain reconciliations for accounts receivable, inventories, fixed assets, intercompany accounts, prepaid expenses and accounts payable-trade. Certain of these adjustments were associated with the integration of a new enterprise resource planning system (ERP) into the Company’s accounting processes beginning in 1999.

     The following categories represent a majority of the account reconciliation adjustments included in the restatement (all amounts are before tax unless otherwise noted):

     In addition, net adjustments totaling $6.3 million were recorded in Other Comprehensive Income ("OCI") through June 30, 2003. An adjustment was made to record an $18 million charge to deferred derivative losses, with an offsetting credit to liabilities. This adjustment was associated with three interest rate swaps and a cross-currency contract for the period March 2001 through March 2003. An adjustment was also made to record a $6.5 million charge to currency translation, with an offsetting credit to long-term assets. This

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

adjustment affected the period from January 1, 2003 to June 30, 2003. These adjustments were identified in conjunction with the completion of account reconciliations.

Out-of-Period Adjustments. This category includes adjustments previously identified but deemed to be immaterial and recorded in the period the Company identified the error or in a subsequent period. Adjustments in this category change the timing of income and expense items that were previously recognized. Income of $0.5 million and $8.6 million before tax is included in the six months ended June 30, 2003 and 2002, respectively, for out-of-period adjustments. For the quarters ended June 30, 2003 and 2002, out-of-period adjustments reducing income by $0.2 million and increasing income by $5.8 million, respectively, were recorded.

Discount Rate Adjustments. In preparing the 2003 annual financial statements, the Company reassessed the estimate of the discount rate used in determining the net periodic benefit cost and benefit obligations of the Company’s domestic pension, workers’ compensation and other postretirement benefit plans. Consistent with that effort and the restatement process, the Company determined that it would be appropriate to make similar reassessments for discount rates for all periods presented. As a result, the discount rate was revised to 6.75%, 7.25% and 7.50% from 7.25%, 7.75% and 8.00% for 2003, 2002 and 2001, respectively. Income before tax was decreased by $8.7 million and $7.8 million in the six months ended June 30, 2003 and 2002, respectively. For the quarters ended June 30, 2003 and 2002, discount rate adjustments reducing income by $4.4 million and $4.1 million, respectively, were recorded. This change also resulted in a charge to deferred pension costs in OCI totaling $150.1 million for the years ended December 31, 2002 and 2001. Additionally, in 2002, the Company had established a valuation allowance against its net Federal and state deferred tax assets. Accordingly, this restatement includes a charge to income tax expense of $81.2 million to provide a valuation allowance against the tax benefit included in the adjustment to OCI in 2001, and a charge to OCI of $10.8 million to provide a valuation allowance against the tax benefit included in the adjustment to OCI in 2002. Likewise, these adjustments impacted OCI at June 30, 2003.

Chemical Products Segment. This category primarily includes adjustments identified as a result of a stand-alone audit conducted in 2003 of a portion of the Chemical Products business segment. The most significant adjustments in this category relate to the timing of the recognition of manufacturing variances to reflect the actual cost of inventories, the fair value adjustment of a hedge for natural gas, and the correction of intercompany profit elimination in inventory to eliminate selling and administrative expenses in inventory. Income of $1.7 million and $1.3 million before tax is included in the six months ended June 30, 2003 and 2002, respectively, for Chemical Products segment adjustments. Expense of $0.7 million and $1.0 million before tax is included in the quarters ended June 30, 2003 and 2002, respectively, for Chemical Products segment adjustments.

Tax Adjustments. Adjustments related to the correction of errors in the computation of deferred tax assets and liabilities.

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

Effect of restatement adjustments on Goodyear’s previously issued financial statements

Increase (decrease) in Income (loss)

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

The following tables set forth the effects of the restatement adjustments discussed above on the Consolidated Statement of Operations for the three- and six-month periods ended June 30, 2003 and 2002.

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

The following table sets forth the effects of the restatement adjustments discussed above on the Consolidated Balance Sheet at June 30, 2003.

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

NOTE 2. RATIONALIZATIONS

To maintain global competitiveness, Goodyear has implemented rationalization actions over the past several years for the purpose of reducing excess capacity, eliminating redundancies and reducing costs.

2003 Program

Goodyear recorded a net rationalization charge totaling $76.1 million (as restated) ($69.2 million after tax or $0.39 per share (as restated)) during the first and second quarters of 2003, which included reversals of $1.8 million (as restated) ($1.4 million after tax or $0.01 per share (as restated)) for reserves from rationalization actions no longer needed for their originally intended purposes and new charges of $77.9 million (as restated) ($70.6 million after tax or $0.40 per share (as restated)). The second quarter net rationalization charge of $15.4 million (as restated) ($11.5 million after tax or $0.06 per share (as restated)) included new charges of $17.2 million (as restated) ($12.9 million after tax or $0.07 per share (as restated)) and reversals of $1.8 million (as restated) ($1.4 million after tax or $0.01 per share (as restated)). The 2003 rationalization actions consist of research and development, retail, manufacturing and administrative consolidations in North America, Europe and Latin America. Of the $77.9 million (as restated) charge, $56.8 million (as restated) related to future cash outflows, primarily associate severance costs, and the remainder primarily represented non-cash pension curtailment charges. All of the $17.2 million (as restated) second quarter charge related to future cash outflows. Goodyear plans to complete these actions during the first half of 2004.

     Under the above programs, Goodyear provided for the release of approximately 1,300 research and development, retail, manufacturing and administrative associates in Europe, the United States and Latin America. During the first half of 2003, $44.3 million (as restated) was incurred in associate-related costs, including $20.0 million (as restated) during the second quarter of 2003.

     Other than associate-related costs were for outplacement services and moving expenses. Goodyear incurred $1.1 million (as restated) of other than associate-related costs during the first half of 2003, including $0.8 million (as restated) during the second quarter of 2003.

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

     The following table summarizes, by segment, the total amounts recorded in the six-month period ended June 30, 2003, and the total costs incurred in the three- and six-month periods ended June 30, 2003:

The amounts recorded above include all costs expected to be incurred in connection with these activities with the exception of European Union Tire, which will incur approximately $1 million of additional restructuring costs in the second half of 2003.

2002 Program

Goodyear recorded a net rationalization charge totaling $10.4 million (as restated) ($12.1 million after tax or $0.07 per share (as restated)) in 2002, which included reversals of $16.1 million (as restated) ($12.7 million after tax or $0.07 per share (as restated)) for reserves from rationalization actions no longer needed for their originally intended purposes and new charges of $26.5 million ($23.0 million after tax or $0.14 per share). The 2002 rationalization actions consisted of a manufacturing facility consolidation in Europe, the closure of a mold manufacturing facility and a plant consolidation in the United States, and administrative consolidations. Goodyear plans to complete these actions during 2003.

     Under the above programs, Goodyear provided for the release of approximately 1,000 manufacturing and administrative associates in Europe and the United States. During the first half of 2003, approximately 450 associates were released, including approximately 270 associates in the second quarter of 2003. Goodyear incurred $13.2 million of associate-related costs in the first half of 2003, including $3.1 million during the second quarter of 2003.

     Rationalization costs, other than associate-related costs, totaled $7.0 million (as restated). These costs were primarily for the writeoff of equipment taken out of service in the Engineered Products and North American Tire Segments and noncancellable lease costs. Goodyear incurred $1.9 million of other than associate-related costs during the first half of 2003, including $0.4 million during the second quarter of 2003, primarily for ongoing noncancellable lease costs.

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

Fourth Quarter 2001 Program

Goodyear recorded a net rationalization charge totaling $136.2 million (as restated) ($107.5 million after tax or $0.65 per share (as restated)) in the fourth quarter of 2001. These actions were in response to continued competitive market conditions and worldwide economic uncertainty. Goodyear plans to complete these actions during the fourth quarter of 2003 with the exception of ongoing noncancellable lease payments. Reversals of prior year reserves no longer needed for their originally intended purposes totaling $4.1 million were recorded during 2001.

     Under the above programs, Goodyear provided for the release of approximately 2,200 associates around the world, primarily production and administrative associates. During the first half of 2003, approximately 70 associates were released, including approximately 10 associates in the second quarter of 2003. Goodyear incurred $2.9 million of associate-related costs in the first half of 2003, including $1.1 million during the second quarter of 2003. The reversal of $0.1 million is primarily the result of lower than initially estimated associate-related payments.

     Rationalization costs, other than associate-related costs, totaling $83.1 million (as restated) were recorded. These costs were primarily for the writeoff of $41.6 million (as restated) of tire production equipment taken out of service, principally related to the closure of a tire manufacturing facility in the Asia Tire Segment, and noncancellable lease costs. Goodyear incurred $1.6 million of other than associate-related costs during the first half of 2003, including $0.9 million during the second quarter of 2003, primarily for noncancellable lease costs. The reversals of $1.6 million are primarily the result of lower than initially estimated lease cancellation fees in the European Union.

NOTE 3. OTHER (INCOME) AND EXPENSE

Other (Income) and Expense for the first six months of 2003 included a loss of $17.6 million ($8.9 million after tax or $0.05 per share) on the sale of 20,833,000 shares of

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

Sumitomo Rubber Industries, Ltd. (“SRI”) and a gain of $4.6 million (as restated) ($3.8 million after tax or $0.02 per share (as restated)) resulting from the sale of land in the Asia Tire Segment and the sale of assets in the European Union Tire Segment. Other (Income) and Expense for the second quarter of 2003 included a loss of $17.8 million (as restated) ($9.0 million after tax or $0.05 per share (as restated)) on the sale of the SRI shares and the sale of assets in the European Union Tire Segment and a gain of $3.4 million (as restated) ($2.8 million after tax or $0.02 per share (as restated)) on the sale of land in the Asia Tire Segment and the sale of assets in the European Union Tire Segment. Other (Income) and Expense in 2002 included a gain of $1.1 million (as restated) ($0.8 million after tax or $0.00 per share (as restated)) on the sale of assets in the European Union Tire Segment.

     Financing fees and financial instruments increased due to the costs incurred in connection with the restructuring and refinancing of the Company’s bank credit and receivables securitization facilities. Refer to Note 7, Financing Arrangements, for further information about the restructuring and refinancing.

     General & product liability–discontinued products includes charges for claims against Goodyear related to asbestos personal injury claims and for other products no longer manufactured by the Company. Goodyear reclassified such charges from Selling, Administrative and General Expense (SAG) to Other (Income) and Expense during the second quarter of 2003, due to the non-operational nature of these claims. Charges for general and product liabilities related to ongoing operations continue to be recorded as SAG. Goodyear recorded charges for General & product liability-discontinued products totaling $92.7 million (as restated) for the second quarter of 2003 and $113.6 million (as restated) for the first six months of 2003. These charges primarily related to a proposed settlement for Entran II claims and asbestos personal injury claims. Also during the second quarter of 2003, Goodyear recorded a receivable of $101.8 million, primarily from its excess liability insurance carriers related to General & product liability-discontinued products. This receivable reflects, in part, coverage of General & product liability-discontinued products for which Goodyear incurred charges prior to the second quarter of 2003. Refer to Note 8, Commitments and Contingent Liabilities, for further information about general and product liabilities.

NOTE 4. PER SHARE OF COMMON STOCK

Basic earnings per share has been computed based on the average number of common shares outstanding. The following table presents the number of incremental weighted average shares used in computing diluted per share amounts:

For all periods presented, average shares outstanding-diluted excludes the effect of stock options with exercise prices that were greater than the average market price of the Company’s common shares, as the effect would have been antidilutive. Had the Company recognized net income for the six month period ended June 30, 2002, average shares outstanding-diluted would have been increased by 1.7 million shares of potential common stock associated with stock options.

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

NOTE 5. ACCOUNTS RECEIVABLE

Prior to April 1, 2003, Goodyear maintained a program for the continuous sale of substantially all of its domestic trade accounts receivable to Wingfoot A/R LLC, a wholly-owned limited liability subsidiary company that was a bankruptcy-remote special purpose entity. The results of operations and financial position of Wingfoot A/R LLC were not included in the consolidated financial statements of Goodyear as provided by Statement of Financial Accounting Standards No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” This program was terminated on April 1, 2003. Accordingly, accounts receivable sold under this program are now recognized on Goodyear’s Consolidated Balance Sheet, and the related subordinated note receivable and investment in the equity of Wingfoot A/R LLC were derecognized. Goodyear’s consolidated debt increased by $577.5 million and Wingfoot A/R LLC transferred cash to Goodyear totaling $32.2 million. This cash represented collections of accounts receivable which had not yet been reinvested in additional Goodyear receivables prior to the termination of the program.

     The following table presents certain cash flows related to this program:

International subsidiaries of Goodyear have established accounts receivable continuous sales programs whereunder these subsidiaries may receive proceeds from the sale of certain of their receivables to affiliates of certain banks. These subsidiaries retained servicing responsibilities. At June 30, 2003, the value in U.S. dollars of which these international subsidiaries may borrow is approximately $169.6 million. The following table presents certain cash flows related to these programs:

In addition, various other international subsidiaries of Goodyear sold certain of their trade receivables at June 30, 2003 and December 31, 2002. The total amount of financing provided from all domestic and international agreements worldwide was $296.8 million at June 30, 2003, compared to $916.1 million at December 31, 2002. Included in the $296.8 million at June 30, 2003 were receivable financing programs totaling $127.2 million that did not utilize a special purpose entity.

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

NOTE 6. INVESTMENTS

On April 8, 2003, the Company sold 20,833,000 shares of SRI for approximately $83 million. Goodyear had acquired a 10% ownership of SRI as part of the 1999 global alliance between the two companies. Goodyear now holds approximately 1.5% of SRI’s outstanding shares.

     On April 18, 2003, the Company transferred its 80% ownership of Sava Tires Joint Venture Holding d.o.o. (“Sava Tire”), a tire manufacturing subsidiary in Slovenia, to Goodyear Dunlop Tires Europe B.V. (“GDTE”) for $282.3 million. Goodyear owns 75% of GDTE. As a result of this transaction, Goodyear now indirectly owns 60% of Sava Tire.

     On April 28, 2003, the Company purchased Arkansas Best Corporation’s 19% ownership interest in Wingfoot Commercial Tire Systems, LLC, a joint venture company formed by Goodyear and Arkansas Best Corporation to sell and service commercial truck tires, provide retread services and conduct related business, for approximately $71 million.

NOTE 7. FINANCING ARRANGEMENTS

Goodyear had credit arrangements of $5.83 billion available at June 30, 2003, of which $442.1 million were unused.

Short Term Debt and Financing Arrangements

At June 30, 2003, Goodyear had short term committed and uncommitted credit arrangements totaling $405.0 million, of which $275.6 million were unused. These arrangements are available to the Company or certain of its international subsidiaries through various domestic and international banks at quoted market interest rates. There are no commitment fees associated with these arrangements. The Company has $30 million of cash on deposit to support $27 million of short term committed credit.

     Goodyear had outstanding debt obligations, which by their terms are due within one year, amounting to $171.8 million (as restated) at June 30, 2003, compared to $653.2 million at December 31, 2002. Current maturities of long term debt represented $42.4 million (as restated) of this total, with a weighted average interest rate of 5.74% at June 30, 2003 ($369.8 million and 7.83% at December 31, 2002, respectively). The remaining $129.4 million was short term debt of international subsidiaries, with a weighted average interest rate of 6.38% at June 30, 2003 ($283.4 million and 5.31% at December 31, 2002, respectively).

Long Term Debt and Financing Arrangements

At June 30, 2003, Goodyear had long term credit arrangements totaling $5.43 billion, of which $166.5 million were unused.

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THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)

     The following table presents long term debt at June 30, 2003 and December 31, 2002: