ITEM 1. Not applicable. | ||||||||
ITEM 2. Not applicable. | ||||||||
ITEM 3. Not applicable. | ||||||||
ITEM 4. FINANCIAL STATEMENTS OF THE PLAN | ||||||||
EXHIBITS. | ||||||||
SIGNATURES | ||||||||
EX-23.1 |
GOODYEAR DUNLOP TIRES NORTH AMERICA, LTD. Plan Administrator of THE GOODYEAR DUNLOP TIRES NORTH AMERICA, LTD., EMPLOYEE SAVINGS PLAN FOR BARGAINING UNIT EMPLOYEES |
||||
June 27, 2008 | ||||
By: | /s/ Mary Kasprzak | |||
Mary Kasprzak, Assistant Treasurer |
Page | ||
Report of Independent Registered Public Accounting Firm |
2 | |
Financial Statements: |
||
Statements of Net Assets Available for Benefits at December
31, 2007 and 2006 |
3 | |
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2007 |
3 | |
Notes to Financial Statements |
4-14 | |
Supplemental Information |
||
Schedule H, Line 4i-Schedule of Assets (Held at End of Year) |
Schedule I |
Note: | Certain schedules required by the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because of the absence of the conditions under which they are required. |
- 2 -
December 31, | December 31, | |||||||
(Dollars in thousands) | 2007 | 2006 | ||||||
Plans Interest in Commingled Trust, at fair value |
$ | 55,306 | $ | 52,148 | ||||
Participants Loans |
2,894 | 2,521 | ||||||
Net Assets Available for Benefits, at fair value |
58,200 | 54,669 | ||||||
Adjustment from Fair Value to Contract Value for Stable
Value Investment |
74 | 231 | ||||||
Net Assets Available for Benefits |
$ | 58,274 | $ | 54,900 | ||||
Year Ended | ||||
December 31, | ||||
(Dollars in Thousands) | 2007 | |||
Contributions: |
||||
Employee |
$ | 3,177 | ||
Deductions: |
||||
Benefits Paid to Participants or Their Beneficiaries |
(4,855 | ) | ||
Investment Income: |
||||
Interest From Participant Loans |
211 | |||
Net Gain from Plans Investment in Commingled Trust |
4,841 | |||
Total Investment Income |
5,052 | |||
Net Increase in Net Assets Available for Benefits During the Year |
3,374 | |||
Net Assets Available for Benefits at Beginning of Year |
54,900 | |||
Net Assets Available for Benefits at End of Year |
$ | 58,274 | ||
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1. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: | |
Basis of Accounting | ||
The accounts of the Goodyear Dunlop Tires North America, Ltd. Employee Savings Plan for Bargaining Unit Employees (the Plan) are maintained on the accrual basis of accounting and in accordance with The Northern Trust Company (the Trustee) Trust Agreement, effective January 2, 2003. | ||
Plan Year | ||
The Plan Year is a Calendar year. | ||
Trust Assets | ||
Certain savings plans sponsored by Goodyear Dunlop Tires North America, Ltd. (the Company) maintain their assets in a master trust entitled Goodyear Dunlop Tires North America, Ltd. Retirement Savings Plan Trust (the Commingled Trust) administered by The Trustee. The Company sponsored two savings plans at December 31, 2007 and 2006 that participated in the Commingled Trust. The Plans undivided interest in the Commingled Trust is presented in the accompanying financial statements in accordance with the allocation made by the Trustee. | ||
Recordkeeper | ||
JP Morgan Retirement Plan Services, is the recordkeeper of the Plan. | ||
Asset Valuation and Income Recognition | ||
The majority of the assets of the Plan are valued at fair market value. The fair value of the Plans interest in the Commingled Trust is based on the beginning of the year value in the trust plus actual contributions and allocated investment income less actual distributions and allocated administrative expenses. Investments in the Goodyear Stock Fund are valued at the last reported sales price on the last business day of the Plan year. If no sales were reported on that date, the shares are valued at the last bid price. Investments in mutual funds are valued at the net asset value of shares held by the Commingled Trust at year end. Investments in commingled funds are valued at fair value, as determined by the fund manager. Investments in the self directed account are valued at fair value, based on the underlying investments in the account. Participant loans are valued at their outstanding balances, which approximate fair value. Investment income and administrative expenses relating to the Commingled Trust are allocated on a daily basis to the Plan based on the Plans value in each applicable fund within the Commingled Trust. |
- 4 -
As described in Financial Accounting Standards Board Staff Position, FSP AAG INV-1 and SOP 94-4-1, Reporting of Fully Benefit-Responsive Investment Contracts Held by Certain Investment Companies Subject to the AICPA Investment Company Guide and Defined-Contribution Health and Welfare and Pension Plans (the FSP), investment contracts held by a defined-contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the plan. As required by the FSP, the Statements of Net Assets Available for Benefits presents the fair value of the investment contracts held in the Stable Value Fund of the Commingled Trust as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis. | ||
Purchases of securities are recorded on the trade date. Interest income is recorded on the accrual basis. Dividend income is recorded on the ex-dividend date. | ||
Concentration of Credit Risk | ||
The Stable Value Fund of the Commingled Trust invests part of the fund in investment contracts of financial institutions with strong credit ratings and has established guidelines relative to diversification and maturities that maintain safety and liquidity (See Note 7). | ||
The Goodyear Stock Fund invests primarily in the Common Stock of The Goodyear Tire & Rubber Company (Goodyear). Significant changes in the price of Goodyear Stock can result in significant changes in the Net Assets Available for Benefits. | ||
Use of Estimates | ||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the basic financial statements and related notes to financial statements. Changes in such estimates may affect amounts reported in future years. | ||
Risk and Uncertainties | ||
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risk. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants account balances and the amounts reported in the Statements of Net Assets Available for Benefits. |
- 5 -
Reclassification | ||
Certain amounts in the 2006 financial statements have been reclassified to conform to the 2007 financial statement presentation. | ||
New Accounting Standard | ||
In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements. This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. SFAS No. 157 applies to fair value measurements already required or permitted by existing standards. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007. | ||
Plan management is currently evaluating the impact the adoption of SFAS No. 157 will have on the Plans financial statements. | ||
2. | GENERAL DESCRIPTION AND OPERATION OF THE PLAN: | |
The Plan is a defined contribution plan covering all eligible hourly employees of the Company. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). | ||
Eligibility | ||
All employees who are members of a bargaining unit, which had adopted the Plan, are eligible to participate in the Plan as of the first enrollment date after completing three months of continuous service with the Company. Employees hired after December 22, 2006 in a job classification other than technical maintenance, are not eligible to participate in the Plan. | ||
Vesting | ||
Employee contributions are fully vested. Employer contributions become vested after the participant has completed three years of continuous service with the Company. | ||
Contributions | ||
Eligible employees may elect to contribute any whole percent from 1% to 50% of earnings, including wages, bonuses, commissions, overtime and vacation pay into the Plan. In addition, the Plan permits catch-up contributions by participants who have attained age 50 by December 31 of each year subject to certain limitations under the Internal Revenue Code. |
- 6 -
Participating employees may elect to have their contributions invested in any of the funds available for employees at the time of their contributions. The Company calculates and deducts employee contributions from gross earnings each pay period based on the percent elected by the employee. Employees may change their contribution percent any time. The change will become effective as soon as administratively possible after the participant elects a change. Employees may transfer amounts attributable to employee contributions from one fund to the other on a daily basis. Employees may suspend their contributions at any time effective immediately. | ||
The Plan has been established under section 401 of the Internal Revenue Code. Therefore, employee contributions, except for Roth 401(k) contributions, are not subject to Federal withholding tax, but are taxable when they are withdrawn from the Plan. | ||
Effective January 1, 2007, the Plan was amended such that each new participant will automatically be enrolled at a default employee contribution rate of 3%, unless the employee elects otherwise. All participants, effective April 1, 2007, are entitled to elect employee contributions to be on a pre-tax basis or as a Roth 401(k) contribution. | ||
The Board of Directors of the Company determines the matching percent used as the employer contributions for each year. For 2007, Employer Matching Contributions were suspended. Any participant who has a vested interest in the Goodyear Stock Fund attributable to Matching Employer Contributions (or a Beneficiary with respect to any such participant) may elect at any time to transfer all or a portion of the vested interest to another investment fund. | ||
Participant Accounts | ||
A variety of funds have been established for each participant in the Plan. All accounts are valued daily by the Trustee. | ||
Interest and dividends (in non Goodyear Stocks) are automatically reinvested in each participants respective accounts and reflected in the unit value of the fund which affects the value of the participants accounts. | ||
Under the Employee Stock Ownership Plan (ESOP), participants may elect to receive cash dividends on the Goodyear stock held in their employer match account. Such election results in a distribution to the participant. For the year ended December 31, 2007 there were no dividends paid on the Goodyear stock held. |
- 7 -
Plan Withdrawals and Distributions | ||
Participants may take in-service distributions of vested amounts from their accounts if they: |
| Attain the age of 591/2, or | ||
| Qualify for a financial hardship. |
The Internal Revenue Service (IRS) issued guidelines governing financial hardship. Under the IRS guidelines, withdrawals are permitted for severe financial hardship. Contributions to the Plan are suspended for 6 months subsequent to a financial hardship withdrawal. | ||
Participant vested amounts are payable upon retirement, death or other termination of employment. | ||
All withdrawals and distributions are valued as of the end of the month they are processed, and may be subject to Federal income tax upon receipt. Any non-vested Company contributions are forfeited and applied to reduce future Plan expenses and contributions by the Company. As of December 31, 2007 and 2006, the Plan had no forfeiture credits. | ||
Participant Loans | ||
Eligible employees may borrow money from their participant accounts. The minimum amount to be borrowed is $1,000. The maximum amount to be borrowed is the lesser of $50,000 reduced by the highest outstanding balance of any loan during the preceding twelve month period, or 50% of the participants vested account balance. Participants may have up to two loans outstanding at any time. The interest rate charged will be a fixed rate that will be established at the time of the loan application based on prime plus one (8.25% and 9.25% at December 31, 2007 and 2006, respectively). | ||
Loan repayments, with interest, are made through payroll deductions. If a loan is not repaid when due, the loan balance is treated as a taxable distribution from the Plan. | ||
Rollovers | ||
Employees, Plan participants, or former Plan participants may transfer eligible cash distributions from any other employer sponsored plan qualified under Section 401 of the Internal Revenue Code into the Plan by a direct transfer from such other plan. | ||
Expenses | ||
Expenses of administering the Plan were paid partly by the Company and partly by the Commingled Trust. The payment of Trustees fees and brokerage commissions associated with the the Goodyear Stock Fund are paid by the Company. Expenses related to the asset management of the investment funds, and recordkeeping services are paid from such Funds which reduce the investment return reported and credited to participant accounts. |
- 8 -
The JPMorgan Personal Asset Manager Program is available to all participants. This program provides personalized portfolio management for participants who wish to delegate investment decisions about fund choices within the Plan to a professional manager. Participation in the program is paid solely by those participants electing to enroll. The expense reduces the investment return reported and credited to participant accounts. | ||
Termination Provisions | ||
The Company anticipates and believes that the Plan will continue without interruption, but reserves the right to discontinue the Plan. In the event of termination, the obligation of the Company to make further contributions ceases. All participants accounts would then be fully vested with respect to Company contributions. | ||
3. | RELATED PARTY TRANSACTIONS: | |
The Trustee serves as the fund manager of the Daily S&P 500 Index Stock Equity Fund. JP Morgan Investment Management, Inc. serves as the fund manager of the Large Capitalization Value Fund and the International Equity Fund. | ||
The Goodyear Stock Fund is designed primarily for investment in common stock of Goodyear, except for short-term investments needed for Plan operations. During 2007, the price per share of Goodyear common stock on The New York Stock Exchange composite transactions ranged from $21.40 to $36.90. The closing price per share of Goodyear common stock on The New York Stock Exchange was $28.22 at December 31, 2007 ($20.99 at December 29, 2006). The common stock of Goodyear and a Short-Term Investments Fund are the current investments of this fund. The portion of this fund related to employer contributions is within an ESOP. | ||
4. | TAX STATUS OF PLAN: | |
The Internal Revenue Service has determined and informed the Company by a letter dated October 6, 2005 that the Plan is qualified and the trust established for the Plan is exempt from Federal Income Tax under the appropriate Sections of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the Company and the Plans tax counsel believe the Plan is currently designed and being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, no provision for income taxes has been included in the Plans financial statements. |
- 9 -
5. | RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500: | |
The following is a reconciliation of net assets available for benefits per the financial statements at December 31, 2007 and 2006 to the Form 5500: |
December 31, | December 31, | |||||||
(Dollars in Thousands) | 2007 | 2006 | ||||||
Net Assets Available for Benefits per the Financial
Statements |
$ | 58,274 | $ | 54,900 | ||||
Amounts allocated to withdrawing participants |
(1 | ) | (42 | ) | ||||
Adjustment from Contract Value to Fair Value for
Stable Value Investment |
(74 | ) | (231 | ) | ||||
Net Assets Available for Benefits per the Form 5500 |
$ | 58,199 | $ | 54,627 | ||||
The following is a reconciliation of benefits paid to participants per the financial statements for the year ended December 31, 2007 to the Form 5500: |
Year Ended | ||||
December 31, | ||||
(Dollars in Thousands) | 2007 | |||
Benefits paid per the financial statements |
$ | 4,855 | ||
Add: Amounts allocated to withdrawing participants at December 31, 2007 |
1 | |||
Less: Amounts allocated to withdrawing participants at December 31, 2006 |
(42 | ) | ||
Benefits paid per the Form 5500 |
$ | 4,814 | ||
Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to the Plan year end, but not yet paid as of that date. |
- 10 -
The following is a reconciliation of net gain from the Plans investment in the Commingled Trust per the financial statements for the year ended December 31, 2007 to the Form 5500: |
Year Ended | ||||
December 31, | ||||
(Dollars in Thousands) | 2007 | |||
Net Gain from Plans Investment in Commingled Trust per the Financial
Statements |
$ | 4,841 | ||
Impact of
Reflecting fully benefit-responsive Investment Contracts Value at Fair Value |
157 | |||
Net Gain from Plans Investment in Commingled Trust per the Form 5500 |
$ | 4,998 | ||
Fully benefit-responsive investment contracts are recorded at fair value on the Form 5500. | ||
6. | FINANCIAL DATA OF THE COMMINGLED TRUST: | |
All of the Plans investments except for the participant loans are in the Commingled Trust, which was established for the investment of assets of the Plan. Each Participating plan has an undivided interest in the Commingled Trust. At December 31, 2007 and 2006, the Plans interest in the net assets of the Commingled Trust was approximately 69% and 67%, respectively. The Commingled Trust assets are held by the Trustee. | ||
The financial data of the Commingled Trust is as follows: |
- 11 -
December 31, | December 31, | |||||||
(Dollars in thousands) | 2007 | 2006 | ||||||
Investments: |
||||||||
Common Collective Trusts |
||||||||
JP Morgan Value Opportunities Fund |
$ | 5,122 | $ | 5,801 | ||||
NTGI-QM
Daily S&P 500 Equity Index Fund |
15,290 | 14,728 | ||||||
JPMCB EAFE Plus Fund |
7,108 | 5,926 | ||||||
Invesco Stable Value Trust (see Note 7) |
14,713 | 14,420 | ||||||
Mutual Funds |
||||||||
Western Asset Core Plus Bond Fund, Inst. Class Fund |
2,537 | 2,222 | ||||||
Vanguard Target Total Retirement Income Fund |
409 | 192 | ||||||
Vanguard Target Retirement 2005 Fund |
521 | 806 | ||||||
Vanguard Target Retirement 2015 Fund |
426 | 364 | ||||||
Vanguard Target Retirement 2025 Fund |
7,468 | 7,561 | ||||||
Vanguard Target Retirement 2035 Fund |
591 | 221 | ||||||
Vanguard Target Retirement 2045 Fund |
786 | 583 | ||||||
Wellington Management Growth Fund (American
Century Ultra Institutional Class Fund at December 31,
2006) |
13,334 | 12,861 | ||||||
Artisan Small Capitalization Growth Fund |
1,601 | 1,621 | ||||||
RS Partners Small Capitalization Value Fund |
1,030 | 1,755 | ||||||
Short Term Investment Fund (STIF) |
53 | 139 | ||||||
Self-Directed Account |
||||||||
Charles Schwab Various Mutual Funds |
6,110 | 6,420 | ||||||
Common Stock |
||||||||
The Goodyear Tire & Rubber Company |
3,267 | 2,366 | ||||||
Total Investments |
80,366 | 77,986 | ||||||
Receivables: |
||||||||
Accrued Interest and Dividends |
65 | 70 | ||||||
Total Assets |
80,431 | 78,056 | ||||||
Liabilities: |
||||||||
Administrative Expenses Payable |
(100 | ) | (62 | ) | ||||
Total Liabilities |
(100 | ) | (62 | ) | ||||
Net Assets Available for Benefits, at fair value |
$ | 80,331 | $ | 77,994 | ||||
- 12 -
Net investment income for the Commingled Trust is as follows: |
December 31, | ||||
(Dollars in thousands) | 2007 | |||
Interest and Dividends |
$ | 1,126 | ||
Net Appreciation in Fair Value of Investments: |
||||
Common Collective Trusts |
1,044 | |||
Mutual Funds |
3,234 | |||
Self-Directed Mutual Funds |
645 | |||
Common Stock |
743 | |||
5,666 | ||||
Administrative Expenses |
(286 | ) | ||
Net investment income |
$ | 6,506 | ||
7. | INVESTMENT CONTRACTS: | |
The Commingled Trust invests in the Invesco Stable Value Trust (Stable Value Fund) which is a collective trust that has entered into benefit-responsive guaranteed investment contracts and wrapper contracts with various insurance companies. The insurance companies maintain the contributions in general accounts. The accounts are credited with earnings on the underlying investments and charged for participant withdrawals and administrative expenses. | ||
As described in Note 1, because the guaranteed investment contracts held by the Commingled Trust are fully benefit-responsive, contract value is the relevant measurement attribute for that portion of the net assets available for benefits attributable to the guaranteed investment contracts. Contract value, as reported to the Commingled Trust by the manager of the Stable Value Trust, represents contributions made under the contract, plus earnings, less participant withdrawals and administrative expenses. Participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value. | ||
There are no reserves against contract value for credit risk of the contract issuers or otherwise. The crediting interest rate is based on a formula agreed upon with the issuers. | ||
The Stable Value Fund has purchased wrapper contracts from the insurance companies. The wrapper contracts amortize the realized and unrealized gains and losses on the underlying fixed income investments, typically over the duration of the investments, through adjustments to the future interest crediting rate (which is the rate earned by participants in the fund for underlying investments). The issuers of the wrapper contracts provide assurance that the adjustments to the interest crediting rate do not result in a future interest crediting rate that is less than zero. |
- 13 -
Certain events limit the ability of the Plan to transact at contract value with the issuer. These events include termination of the Plan, a material adverse change to the provisions of the Plan, if the Commingled Trust elects to withdraw from a wrapper contract in order to switch to a different investment provider, or if the terms of a successor plan (in the event of the spin-off or sale of a division) do not meet the wrapper contract issuers underwriting criteria for issuance of a clone wrapper contract. The events, described above that could result in the payment of benefits at market value rather than contract value, are not probable of occurring in the foreseeable future. | ||
The wrapper contracts do not permit the issuers to terminate the contracts unless the Plan loses it qualified status, has incurred material breaches of responsibilities, or material and adverse changes occur to the provisions of the Plan. |
Year Ended | ||||
December 31, | ||||
2007 | ||||
Average yields: |
||||
Based on actual earnings |
5.3 | % | ||
Based on interest rate credited to participants |
4.3 | % |
- 14 -
Goodyear Dunlop Tires North America, Ltd. | Schedule I | |
Employee Savings Plan for Bargaining Unit Employees | ||
Schedule H, Line 4i Schedule of Assets (Held at End of Year) | ||
December 31, 2007 | ||
Employer Identification Number: 34-0253240 | ||
Plan # 010 |
(c) Description of investment | ||||||||||||||||
(a) | (b) Identity of issue, borrower | Including maturity date, rate of interest, | ||||||||||||||
lessor or similar party | collateral par, or maturity value | (d) Cost | (e) Current Value | |||||||||||||
Participant Loans | 5.0% - 10.5 | % | $ | | $ | 2,893,634 |