Goodyear Tire & Rubber Reinstates Dividend, Authorizes Buyback

Goodyear Tire & Rubber Reinstates Dividend, Authorizes Buyback

At an investor meeting in New York today, The Goodyear Tire & Rubber Companyannounced its board of directors had approved a share repurchase plan of $100 million and the reinstatement of its quarterly dividend beginning in the fourth quarter of this year.

The company last paid a dividend on its common stock in December 2002. It was $0.12 per share then; the new dividend will be $0.05 per share.

Chairman and CEO Richard Kramer noted in the company press release that the company is committed to value creation for its shareholders while also ensuring it has a flexible financial position which will allow it to execute its strategic plan.

In addition, the company stated its "ongoing success and confidence in its strategies allow it to provide immediate returns through the common stock dividend and share repurchase program."

The dividend payment that will be paid to investors on Dec. 1 will mark Goodyear's first since 2002. The announced quarterly dividend is $0.05 per share, representing an annual dividend yield rate of 0.9% based on the share price as of yesterday's close. The repurchase plan will be primarily used to offset any potential share dilution caused by equity compensation programs to its employees.

Goodyear suspended its dividend on Feb. 4, 2003, "in order to conserve cash," as issues related to its debt put the company in a difficult financial position. As a result of its financial restructuring, the company was prohibited from paying dividends on common stock as a result of certain credit agreements.

Kramer said that as a result of "the disciplined execution of our strategy and building on the growing momentum in our business, the plans we are announcing today put us on a path to achieve consistent earnings growth and value creation." As a result of the announcement, Goodyear stock was up almost 3.5% following the market open, but at the time of writing was up 1.5%.


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