AKRON, OH — The Goodyear Tire & Rubber Co. reported record third quarter sales of $5.1 billion, up 3 percent from last year, offsetting lower volumes with higher prices and a richer product mix.

Improved pricing and product mix in all five business units drove revenue per tire up 7 percent over the 2006 quarter. Lower volumes reflect the strategic decision to exit certain segments of the private label tire business in North America, along with weak markets.

"Our outstanding third quarter is evidence of the success we are seeing in marketing our premium product lines while remaining focused on improving our cost structure," said Robert Keegan, chairman and chief executive officer. "Despite market challenges, our results are among the best ever achieved by Goodyear.

The company achieved a gross margin of 20 percent in the quarter, up from 17.4 percent a year ago, he said.

"North American Tire delivered dramatic earnings improvement despite lower volumes. This reflects its new product success, strong marketing initiatives and cost savings efforts,” Keegan said.

Each of the five business units achieved double digit or better percentage growth in segment operating income for the quarter. The company’s three emerging markets businesses increased sales 15 percent and segment operating income 24 percent over last year. Keegan said the company made further progress during the third quarter on its plan to achieve $1.8 billion to $2 billion in gross cost savings by the end of 2009.

"We have now achieved nearly $900 million in savings and remain on track to reach our four-year goal,” he said.

Third quarter 2007 income from continuing operations was $159 million (67 cents per share). This compares to a third quarter 2006 loss from continuing operations of $76 million (43 cents per share). Segment operating income benefited from improved pricing and product mix of $179 million in the third quarter of 2007, which more than offset increased raw material costs of $23 million.

Favorable foreign currency translation positively impacted sales by $232 million and segment operating income by $33 million in the quarter. The 2007 third quarter was also impacted by after-tax rationalization and accelerated depreciation costs of $6 million (2 cents per share), tax expense related primarily to a tax law change of $12 million (5 cents per share) and a gain on asset sales of $10 million (4 cents per share).

The third quarter of 2006 included $132 million (75 cents per share) in after-tax rationalization and accelerated depreciation costs. Goodyear had third quarter 2007 net income of $668 million ($2.75 per share), which includes discontinued operations of $509 million ($2.08 per share). Included in discontinued operations was an after-tax gain of $517 million ($2.12 per share) on the sale of the company’s Engineered Products business. In the third quarter of 2006, the company had a net loss of $48 million (27 cents per share). All per share amounts are diluted.

Business Segments

Total segment operating income from continuing operations was $382 million in the third quarter of 2007, an all-time high and up 35 percent from the 2006 period.

Asia Pacific Tire, Latin American Tire, European Union Tire, and Eastern Europe, Middle East and Africa Tire achieved record sales.

All five business units had higher segment operating income compared to last year, with Asia Pacific Tire and Eastern Europe, Middle East and Africa Tire setting records for any quarter. Segment operating income for European Union Tire and Latin American Tire set third quarter records.

North American Tire third quarter sales were down 6 percent compared to the 2006 period, primarily due to lower volume resulting from the company’s exit from certain segments of the private label tire business as well as weak original equipment and replacement markets. This was partially offset by market share gains in Goodyear brand tires and improved pricing and product mix.

Third quarter segment operating income is the highest since the third quarter of 2001. It was up 247 percent compared to the 2006 quarter due to improved pricing and product mix of $60 million, which more than offset increased raw material costs of $8 million.

European Union Tire third quarter sales increased 9 percent over last year as a result of improved pricing and product mix and a favorable impact from currency translation of $108 million, which more than offset lower volume.

Segment operating income for the third quarter increased 11 percent compared to 2006 as pricing and product mix improvements of $55 million more than offset $13 million in higher raw material costs. Also impacting results were favorable foreign currency translation of $7 million, increased conversion costs and lower unit volume.

Eastern Europe, Middle East and Africa Tire third quarter sales were up 13 percent compared to 2006. This resulted from improved pricing and product mix and a favorable impact from currency translation of $37 million that more than offset lower unit volume.

Segment operating income improved 12 percent for the third quarter due to improved pricing and product mix of $31 million that more than offset less than $2 million in higher raw material costs. Also impacting results were favorable foreign currency translation of $5 million as well as higher conversion costs, partially the result of a strike in South Africa, and lower volume.

Latin American Tire sales increased 20 percent from the third quarter of 2006 due to higher unit volume, improved pricing and product mix and a favorable impact from currency translation of $40 million.

Third quarter 2007 segment operating income increased 29 percent from last year due to higher unit volume and improved pricing and product mix of $20 million, which more than offset higher raw material costs of $5 million. Results also benefited from favorable currency translation of $18 million. Higher conversion costs were a partial offset.

Asia Pacific Tire third quarter sales were 12 percent higher than the 2006 period primarily due to improved pricing and product mix and a favorable impact from currency translation of $40 million, which offset lower volume.

Segment operating income increased 46 percent in the 2007 third quarter, primarily due to improved pricing and product mix of $13 million, reduced raw material costs of $4 million and $3 million of favorable foreign currency translation. Higher SAG costs were a partial offset.