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 September 30, 2004

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.

      Number of Shares of Common Stock,
      Without Par Value, Outstanding at September 30, 2004:                175,373,802

Table of Contents

EXPLANATORY NOTE

This Amendment No. 1 to The Goodyear Tire & Rubber Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2004 (the “Form 10-Q/A”) includes unaudited, restated consolidated financial statements as of September 30, 2004 and for the three and nine month periods ended September 30, 2004 and 2003, and a restated consolidated balance sheet as of December 31, 2003. The accompanying restated consolidated financial statements, including the notes thereto, have been revised to reflect the restatement adjustments.

     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, 2004 (the “2004 Form 10-K”) filed on March 16, 2005, its consolidated balance sheet as of December 31, 2003, and consolidated statements of income, cash flows, and shareholders’ equity (deficit) for the years ended December 31, 2003 and 2002. Quarterly financial information for 2004 and 2003 was also affected by the restatement as well as 2002 and prior periods. Note 2 to the consolidated financial statements included in the 2004 Form 10-K shows the impact of the restatement adjustments on periods prior to 2002. The restated amounts for the three and nine months ended September 30, 2004 and the comparable interim periods in 2003 are presented in this Form 10-Q/A. The restated amounts for the first and second quarters of 2004 and the comparable interim periods in 2003 are presented in the Company’s Quarterly Reports on Form 10-Q/A for the quarterly periods ended March 31, 2004 and June 30, 2004.

     Refer to Note 1A, “Restatement,” in this Form 10-Q/A for further information on the restatement impact for the three and nine months ended September 30, 2004 and 2003. Refer also to Note 2, “Restatement” in the Company’s 2004 Form 10-K, for additional discussion on the nature of the restatement adjustments, the impact of the restatement adjustments on net income (loss) and the cumulative impact of the adjustments on the Consolidated Statement of Income and Consolidated Balance Sheet for each annual period.

     This Form 10-Q/A amends and restates Items 1, 2 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 Form 10-Q/A for prior periods and prior period comparisons reflect the balances and amounts on a restated basis, as applicable.

     Except as otherwise described in Item 4 of Part I and “Forward-Looking Information – Safe Harbor Statement,” this Form 10-Q/A has not been updated for changes in events, estimates or other developments subsequent to November 9, 2004, the date of the original filing of the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2004. For a discussion of subsequent events and developments as well as revisions to prior estimates, please refer to the Company’s filings with the Securities and Exchange Commission subsequent to November 9, 2004.

PART I. FINANCIAL INFORMATION

ITEM 1. RESTATED FINANCIAL STATEMENTS.

THE GOODYEAR TIRE & RUBBER COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

The accompanying notes are an integral part of these consolidated financial statements.

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

The accompanying notes are an integral part of these consolidated financial statements .

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

The accompanying notes are an integral part of these consolidated financial statements.

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

The accompanying notes are an integral part of these consolidated financial statements.

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

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

NOTE 1. ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited, restated 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 consolidated financial position, results of operations and cash flows for the periods presented. The preparation of 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 consolidated financial 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, 2004 (the “2004 10-K”). Refer to Note 1A, Restatement, for further discussion.

     Operating results for the three and nine months ended September 30, 2004 are not necessarily indicative of the results expected in subsequent quarters or for the year ending December 31, 2004.

Consolidation of Variable Interest Entities

In January 2003, the Financial Accounting Standards Board (the “FASB”) issued Interpretation No. 46, “Consolidation of Variable Interest Entities – an Interpretation of ARB No. 51,” as amended by FASB Interpretation No. 46 (revised December 2003) (collectively, “FIN 46”). FIN 46 requires companies to consolidate, at fair value, the assets, liabilities and results of operations of variable interest entities (VIEs) in which the equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties or in which they hold a controlling financial interest through means other than the majority ownership of voting equity. Controlling financial interests typically are present when a company either 1) has the direct or indirect ability to make decisions about the VIE’s activities, 2) holds an obligation to absorb expected losses of a VIE, or 3) is entitled to receive the expected residual returns of a VIE. FIN 46 became effective immediately for all VIEs created after January 31, 2003, and required certain disclosures in financial statements issued after January 31, 2003, about the nature, purpose, size and activities of all VIEs covered by its provisions, and their maximum exposure to loss. FIN 46 also required companies to consolidate VIEs created before February 1, 2003, in financial statements for periods ending after June 15, 2003. During 2003, the FASB delayed the required implementation date of FIN 46 for entities that are not special purpose entities (SPEs) until the first reporting period ending after March 15, 2004.

     The Company applied the provisions of FIN 46, effective July 1, 2003, to those VIEs representing lease-financing arrangements with SPEs. The Company is a party to lease agreements with several unrelated SPEs that are VIEs as defined by FIN 46. The agreements are related to certain North American distribution facilities and certain corporate aircraft. The assets, liabilities and results of operations of these SPEs were consolidated in the third quarter of 2003.

The Company had evaluated the impact of FIN 46 for entities that are not SPEs and deferred, until the first quarter of 2004, the application of FIN 46 to two previously unconsolidated investments; South Pacific Tyres (SPT), a tire manufacturer, marketer and exporter of tires in Australia and New Zealand, and T&WA, a wheel mounting operation in the United States which ships to original equipment manufacturers. The Company consolidated these investments effective January 1, 2004. This consolidation was treated as a non-cash transaction on the Consolidated Statements of Cash Flows with the exception of approximately $24 million of cash and cash equivalents from SPT and T&WA which is included in other assets and liabilities in the operating activities section of the statement. The consolidation of SPT and T&WA resulted in an increase in total assets of approximately $371 million (as restated) and total liabilities of approximately $373 million (as restated). Net sales for both SPT and T&WA of approximately $315 million and $896 million were included in Goodyear’s total consolidated net sales for the third quarter and first nine months of 2004, respectively. Income before income taxes for both SPT and T&WA was approximately $6 million (as restated) for the first nine months of 2004. In connection with the consolidation of SPT and T&WA during the first quarter of 2004,

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

Goodyear recorded approximately $5 million of goodwill. This increase in goodwill was partially offset by approximately $2 million of translation adjustments.

Goodyear and certain of its subsidiaries guarantee certain debt obligations of SPT and T&WA. Goodyear, Goodyear Australia PTY Limited, a wholly-owned subsidiary of Goodyear, and certain subsidiaries of Goodyear Australia Limited PTY guarantee SPT’s obligations under credit facilities in the amount of $74.0 million. The guarantees are unsecured. The SPT credit facilities are secured by certain subsidiaries of SPT. As of September 30, 2004, the carrying amount of the secured assets of these certain subsidiaries was $213.5 million, consisting primarily of accounts receivable, inventory and fixed assets. Goodyear guarantees an industrial revenue bond obligation of T&WA in the amount of $6.7 million. The guarantee is unsecured.

Restricted Cash

Restricted cash includes insurance proceeds related to Entran II litigation as well as cash deposited in support of trade agreements and performance bonds, and historically has included cash deposited in support of borrowings incurred by subsidiaries. Refer to Note 7, Commitments and Contingent Liabilities, for further information about Entran II claims. At September 30, 2004, cash balances totaling $85.6 million were subject to such restrictions, compared to $23.9 million at December 31, 2003.

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 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. Refer to Note 4.

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 2004 presentation.

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

NOTE 1A. RESTATEMENT

The consolidated financial statements have been restated in order to reflect certain adjustments to Goodyear’s financial statements for 2004 as previously reported in Goodyear’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2004 filed on November 9, 2004. The restatement also affects the three and nine month periods ended September 30, 2003. All amounts are before tax unless otherwise noted.

     Refer to Note 2, “Restatement” and “Supplementary Data” in the 2004 Form 10-K for further discussion of this restatement including the adjustments recorded in annual and quarterly periods other than the third quarter and first nine months of 2004 and 2003. Accordingly, this footnote discusses the restatement adjustments included in the 2004 and 2003 Forms 10-K related only to the three and nine months ended September 30, 2004 and 2003.

Restatements Included in 2003 Form 10-K

The Company had 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 statement of operations, cash flows and shareholders’ equity (deficit) 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 had 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. These adjustments increased the previously reported net loss by $12.3 million and $24.9 million for the three and nine month periods ended September 30, 2003, respectively.

     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 of 2003 and subsequently identified additional adjustments that needed to be recorded. Based on an assessment of the impact of the adjustments, management and the Audit Committee decided to restate the Company’s previously issued consolidated financial statements in the Form 10-Q for the quarter ended September 30, 2003 and for prior periods. Following the identification of these adjustments, PricewaterhouseCoopers LLP (PwC) advised the Company in October 2003 that the failure to identify certain issues that had affected several years financial statements related to the monitoring and review of general ledger accounts collectively resulted in a material weakness in internal controls that required strengthening of procedures for account reconciliations.

     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 including the understatement of workers’ compensation liability and 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 of our financial statements for 2003 and prior years 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 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.

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

     The restatement 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 increasing income by $4.9 million and $0.4 million in the three and nine months ended September 30, 2003, respectively. These adjustments resulted from the overseas special accounting investigation and the understatement of the Company’s liability for workers’ compensation payments.

     Adjustments increasing income by a total of $6.6 million and $4.5 million in the three and nine months ended September 30, 2003, respectively, were included in the restatement as a result of the special accounting investigation overseas. 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. An adjustment was made to defer income of $0.1 million beyond the first quarter of 2003 that was improperly recognized in the first quarter of 2003.

     The workers’ compensation adjustments reduced income by $1.7 million and $4.1 million in the three and nine months ended September 30, 2003, 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.

     A summary of the accounting irregularities adjustments that affected the three and nine months ended September 30, 2003 follows:

Account Reconciliations. This category includes adjustments decreasing income by $10.5 million and $17.3 million in the three and nine months ended September 30, 2003, respectively, resulting from the failure to either reconcile accounts or resolve certain reconciliation issues in a timely manner. 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.

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

     The following categories represent a majority of the account reconciliation adjustments included in the restatement.

     In addition, net adjustments totaling $28.9 million were recorded in OCI through September 30, 2003. An adjustment was made to record an $18.0 million increase 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 made to record a $6.8 million increase to currency translation, with an offsetting credit to long-term assets. This adjustment affected the period from January 1, 2003 to September 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. Adjustments increasing income by $0.4 million and $0.9 million are included in the three and nine months ended September 30, 2003, respectively, for out-of-period adjustments.

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. Discount rate adjustments decreased income by $4.3 million and $13.0 million in the three and nine months ended September 30, 2003, respectively. 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. These adjustments similarly impacted OCI at September 30, 2003.

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

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 capitalized in inventory. Chemical Products segment adjustments decreased income by $1.1 million and increased income by $0.6 million in the three and nine months ended September 30, 2003, respectively.

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

Restatements Included in 2004 Form 10-K

     On November 5, 2004, the Company announced that it would file an amended 2003 Form 10-K to include summarized financial information related to certain investments in affiliates. The Company also announced a restatement of its previously reported financial statements. On December 30, 2004, the Company announced that it was working to resolve an accounting issue concerning an Australian affiliate, South Pacific Tyres (“SPT”), and that the resolution of this matter could have an impact on its previously reported financial results. Although the primary focus of this effort was to resolve the accounting treatment for a 10-year supply agreement between the Company and SPT, the Company also noted the possibility that other items having an impact on SPT’s prior period financial statements could arise in the course of the review. On February 25, 2005, the Company announced that it would restate its 2004 third quarter Form 10-Q for additional adjustments identified subsequent to its filing on November 9, 2004. The 2004 Form 10-K filed on March 16, 2005 reflected the resolution of the SPT accounting matters and included a restatement of the Company’s previously reported financial information on Form 10-Q for the quarterly periods ending March 31, 2004, June 30, 2004 and September 30, 2004. These adjustments increased net income by $2.0 million and $5.5 million for the three and nine month periods ended September 30, 2004, respectively. These adjustments increased the previously reported net loss by $2.1 million and $12.7 million for the three and nine month periods ended September 30, 2003, respectively.

The adjustments included in the restatements are described as follows:

SPT. These adjustments increased income by $1.2 million and $0.6 million in the three and nine months ended September 30, 2004, respectively. SPT adjustments decreased income by $0.4 million and $2.8 million in the three and nine months ended September 30, 2003, respectively. The adjustments resulted primarily from the recognition of a contractual obligation related to a supply agreement that was entered into in 2000 with the Company’s 50% owned affiliate in Australia, SPT, an impairment of certain property, plant and equipment, the timing of the recognition of certain rationalization charges and other adjustments identified in conjunction with a restatement of SPT’s historical U.S. GAAP financial results.

General and Product Liability. The Company identified adjustments related to general and product liability – discontinued products that decreased income by $0.4 million and increased income by $2.2 million in the three and nine months ended September 30, 2004, respectively. These adjustments were the result of a valuation firm’s review of additional historical defense cost data.

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

Account Reconciliations. The Company identified adjustments related to account reconciliation items in 2004 that increased income by $0.6 million and $2.5 million in the three and nine months ended September 30, 2004, respectively. Account reconciliation adjustments decreased income by $1.0 million and $5.9 million in the three and nine months ended September 30, 2003, respectively. These adjustments were primarily comprised of expenses related to the write-off of goodwill associated with certain retail stores previously sold in France, the write-off of certain deferred charges, a clerical error in recording adjustments to our workers’ compensation reserve as part of our restatement as of December 31, 2003, and the reconciliation of an intra-company account. Also included in the adjustments were an offsetting charge and credit of $2.7 million identified in 2004 that related to a leased tire asset account. Since it was not possible to allocate these offsetting $2.7 million adjustments to the applicable periods, the Company recorded both adjustments in the first quarter of 2004. The Company also reassessed its estimate of the discount rate used in determining net periodic pension cost and benefit obligations for two minor pension plans, and recorded an expense related to these two plans.

     Other restatement adjustments included expenses resulting from the incorrect calculation of depreciation on certain fixed assets, account reconciliations at a subsidiary in Europe, and the failure to record expenses related to bank credit facilities. Adjustments were also identified that increased income for an overstatement of accounts payable. Other less significant adjustments were also reflected in the restatement.

     Additionally, the Company identified an error related to intercompany transactions arising from a programming and systems interface change with a computer program. This error caused sales and cost of goods sold in North American Tire to be understated by equal amounts. The restatement reflects an increase in sales and costs of goods sold during the first quarter of 2004 of $10.4 million each. There was no effect on income before taxes or net income.

     The Company also identified a misclassification of deferred income tax assets and liabilities on its Consolidated Balance Sheet at December 31, 2003. The Company had recorded certain deferred tax assets and liabilities on a gross basis rather than netting short-term deferred tax assets with short-term deferred tax liabilities and long-term deferred tax assets with long-term deferred tax liabilities. The misclassification overstated total assets and total liabilities by $356.7 million beginning at December 31, 2003. This had no impact on shareholders’ equity (deficit), net income, or cash flows.

     The Company also identified an adjustment to OCI totaling $5.6 million, primarily related to the revaluation of various foreign currency-denominated goodwill accounts and certain other accounts. This revaluation error resulted in goodwill and minority equity being understated and shareholders’ equity (deficit) being overstated by approximately $35 million, $27 million and $8 million, respectively, at September 30, 2004 and $40 million, $31 million and $9 million, respectively, at December 31, 2003. The U.S. dollar value of these accounts increased since the time the goodwill was initially recorded, due primarily to the recent strengthening of the Euro.

Tax Adjustments. The Company identified an additional adjustment related to its net deferred tax valuation allowance that reduced net income by $0.6 million and $1.8 million in the three and nine months ended September 30, 2004 and 2003, respectively. The remaining tax adjustments related to the correction of errors in the computation of deferred tax assets and liabilities. Tax adjustments increased net income by $1.0 million and decreased net income by $0.3 million in the three and nine months ended September 30, 2004, respectively and decreased net income by $0.6 million and $4.2 million in the three and nine months ended September 30, 2003, respectively.

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

     The following table sets forth the effects of the restatement adjustments for both “Restatements Included in 2003 Form 10-K” and “Restatements Included in 2004 Form 10-K”, as discussed above, on the Consolidated Statements of Income for the three months ended September 30, 2004 and 2003.

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

Increase (decrease) in income (loss)

          For 2003, as reported in the 2003 Form 10-K filed on May 19, 2004.

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

     The following table sets forth the effects of the restatement adjustments for both “Restatements Included in 2003 Form 10-K” and “Restatements Included in 2004 Form 10-K”, as discussed above, on the Consolidated Statements of Income for the nine months ended September 30, 2004 and 2003.

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 CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

The following table sets forth the effects of the restatement adjustments discussed above on the Consolidated Statement of Income for the three months ended September 30, 2004.

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

The following table sets forth the effects of the restatement adjustments discussed above on the Consolidated Statement of Income for the nine months ended September 30, 2004.

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

The following table sets forth the effects of the restatement adjustments discussed above on the Consolidated Statement of Income for the three months ended September 30, 2003.

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

The following table sets forth the effects of the restatement adjustments discussed above on the Consolidated Statement of Income for the nine months ended September 30, 2003.

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

The following table sets forth the effects of the restatement adjustments discussed above on the Consolidated Balance Sheet at September 30, 2004.

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

NOTE 2. COSTS ASSOCIATED WITH RATIONALIZATION PROGRAMS

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.

     The following table shows the reconciliation of the liability balance between periods:

     2004 rationalizations consist primarily of administrative associate reductions, a manufacturing consolidation in the European Union Tire segment, warehouse, manufacturing and sales and marketing associate reductions in the Engineered Products segment and manufacturing, sales and research and development associate reductions in the Chemical Products segment. Approximately 1,100 associates will be released under programs initiated in 2004 (approximately 600 from plans initiated during the third quarter of 2004), of which approximately 375 were exited during the first nine months of 2004 (approximately 170 in the third quarter of 2004).

     During the third quarter of 2004, net charges of $28.8 million ($30.4 million after tax or $0.17 per share) were recorded, which included reversals of $15.4 million ($12.6 million after tax or $0.07 per share) for reserves from rationalization actions no longer needed for their originally intended purposes, and new charges of $44.2 million ($42.9 million after tax or $0.24 per share). Included in the $44.2 million of new charges are $2.5 million of expenses, consisting of $0.4 million of associate-related costs and $2.0 million of other than associate-related costs incurred in the third quarter of 2004 related to plans initiated in 2003, and $0.1 million of associate-related costs for a plan initiated in 2000. The $41.7 million of new charges for plans initiated in 2004 consisted of $31.1 million in non-cash pension curtailments and postretirement benefit costs, $7.9 million related to future cash outflows, primarily for associate severance costs, and $2.7 million of other exit costs.

     For the first nine months of 2004, net charges of $62.6 million ($59.4 million after-tax or $0.34 per share) were recorded, which included reversals of $15.8 million ($12.8 million after-tax or $0.07 per share) for reserves from rationalization actions no longer needed for their originally intended purpose, and new charges of $78.4 million ($72.3 million after tax or $0.41 per share). Included in the $78.4 million of new charges are $12.2 million of expenses, consisting of $2.4 million of associate-related costs and $8.7 million of other than associate-related costs incurred during the first nine months of 2004 related to plans initiated in 2003 and $1.1 million of associated-related costs for a plan initiated in 2000. The $66.2 million of new charges for plans initiated in 2004 consisted of $29.3 million related to future cash outflows, primarily for associate severance costs, $32.0 million in non-cash charges, primarily for pension curtailments and postretirement benefit costs, and $4.9 million in other exit costs.

     In the third quarter of 2004, $37.9 was incurred primarily for non-cash pension curtailments, postretirement benefit costs, and severance payments, while $6.5 million was incurred for non-cancelable lease costs and other costs. During the first nine months of 2004, $105.2 million was incurred primarily for severance payments, non-cash pension curtailments, and postretirement benefit costs, and $18.2 million was incurred for non-cancelable lease costs and other

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

costs. The majority of the remaining $83.7 million (as restated) accrual balance at September 30, 2004 for all programs is expected to be utilized within the next twelve months.

     Accelerated depreciation charges were recorded for fixed assets that will be taken out of service in connection with certain rationalization plans initiated in 2003 and 2004 in the European Union Tire, Latin American Tire, and Engineered Products Segments. During the third quarter of 2004, $1.1 million was recorded as Costs of Goods Sold and $1.1 million was recorded as Selling, Administrative and General Expense for accelerated depreciation charges. For the first nine months of 2004, $5.6 million was recorded as Cost of Goods sold and $1.5 million was recorded as Selling, Administrative and General expense for accelerated depreciation charges.

The following table summarizes, by segment, the total charges expected to be recorded and the total charges recorded in 2004, related to the new plans initiated in 2004:

     The additional restructuring costs not yet recorded are expected to be recorded primarily during the fourth quarter of 2004.

     During the full year 2003, net charges of $291.5 million ($267.1 million after tax or $1.52 per share) were recorded, which included reversals of approximately $16 million (approximately $14 million after tax or $0.08 per share) related to all plans for reserves from rationalization actions no longer needed for their originally intended purposes and new charges of $307.2 million ($281.4 million after tax or $1.60 per share). The 2003 rationalization actions consisted of manufacturing, research and development, administrative and retail consolidations in North America, Europe and Latin America. Of the $307.2 million of new charges, $174.8 million related to future cash outflows, primarily associate severance costs, and $132.4 million related primarily to non-cash special termination benefits and pension and retiree benefit curtailments. Approximately 4,400 associates will be released under the programs initiated in 2003, of which approximately 2,700 were exited in 2003 and approximately 900 were exited during the first nine months of 2004. The reversals are primarily the result of lower than initially estimated associate-related payments of approximately $12 million, favorable sublease contract signings in the European Union of approximately $3 million and lower contract termination costs in the United States of approximately $1 million. These reversals do not represent a change in the plan as originally approved by management. Of the $307.2 million of new charges recorded in 2003, $56.3 million, and $134.2 million, were recorded during the third quarter and the first nine months of 2003, respectively.

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

     The following table summarizes, by segment, the total charges expected to be recorded, the new charges recorded in 2004, the total charges recorded to date and the total amounts reversed to date, related to plans initiated in 2003:

     The additional restructuring costs not yet recorded are expected to be recorded primarily during the next twelve months.

NOTE 3. OTHER (INCOME) AND EXPENSE

Other (Income) and Expense for the third quarter of 2004 included a loss of $0.7 million (as restated) ($0.6 million (as restated) after tax or $0.00 per share (as restated)) and a gain of $2.4 million ($1.7 million after tax or $0.01 per share) on the sale of assets in the North American Tire Segment and the European Union Tire Segment. Other (Income) and Expense for the third quarter of 2003 included a loss of $6.8 million (as restated) ($6.7 million (as restated) after tax or $0.04 per share) on the sale of assets in the Engineered Products Segment (“EPD”) and European Union Tire Segment and a gain of $0.9 million (as restated) ($0.7 million (as restated) after tax or $0.01 per share (as restated)) on the sale of assets in the European Union Tire Segment. Other (Income) and Expense for the first nine months of 2004 included a gain of $9.3 million (as restated) ($6.8 million (as restated) after tax or $0.04 per share) on the sale of assets in North American Tire, European Union Tire and Engineered Products and a loss of $3.1 million (as restated) ($2.5 million (as restated) after tax or $0.02 per share (as restated)) on the sale of corporate assets and assets in North American Tire and European Union Tire segments. Other (Income) and Expense in the first nine months of 2003 included a loss of $25.8 million (as restated) ($16.6 million (as restated) after tax or $0.10 per share (as restated)) on the sale of 20,833,000 shares of Sumitomo Rubber Industries, Ltd. and the sale of assets in EPD and European Union Tire and a gain of $5.5 million (as restated) ($4.5 million (as restated) after tax of $0.03 per share (as restated)) resulting from the sale of land in the Asia/Pacific Tire Segment and the sale of assets in the European Union Tire Segment.

     Financing fees and financial instruments included $4.2 million and $17.1 million (as restated), of deferred costs written off, in the three and nine month periods ended September 2004, respectively, in connection with the Company’s refinancing activities during 2004. Additionally, during the third quarter of 2004 the Company incurred higher amortization of financing fees of approximately $6.0 million related to higher debt levels. Refer to Note 5, Financing Arrangements, for further information on the Company’s 2004 refinancing activities.

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

     General & product liability–discontinued products includes charges for claims against Goodyear related to asbestos personal injury claims and for anticipated liabilities related to Entran II claims. Of the $8.1 million (as restated) of expense, net of probable insurance recoveries, recorded in the third quarter of 2004, $5.5 million related to Entran II claims ($105.5 million of expense and $100.0 million of probable insurance recoveries) and $2.6 million (as restated) related to asbestos claims. Of the $25.3 million (as restated) of expense, net of probable insurance recoveries, recorded in the first nine months of 2004, $15.4 million related to Entran II claims ($115.4 million in expense and $100.0 million in probable insurance recoveries) and $9.9 million (as restated) related to asbestos claims ($12.8 million (as restated) in expense and $2.9 million (as restated) in probable insurance recoveries). Substantially all of the $62.5 million net charge for general & product liability-discontinued products in the third quarter of 2003 is related to Entran II claims. Goodyear recorded net charges for general & product liability-discontinued products totaling $72.5 million in the nine months ended September 30, 2003, which included recognition of a receivable of approximately $105 million, primarily from Goodyear’s excess insurance carriers. Refer to Note 7, Commitments and Contingent Liabilities, for further discussion.

     Other (Income) and Expense in the first nine months of 2004 includes $11.7 million ($11.6 million after tax or $0.07 per share) of expense for insurance fire loss deductibles related to fires at Company facilities in Germany, France and Thailand. During the nine months, approximately $23 million in insurance recoveries were received to cover expenses related to the fire losses in Germany. At September 30, 2004, Goodyear recorded an insurance receivable of approximately $27 million to recover additional expenses incurred associated with the fire losses in Germany. Subsequent to September 30, 2004, Goodyear received approximately $4 million in insurance recoveries. At September 30, 2004 Goodyear did not record any insurance recoveries associated with the fixed assets destroyed. Additional insurance recoveries in future periods will be accounted for pursuant to FASB Statement No. 5, “Accounting for Contingencies”.

     Miscellaneous expense included $6.1 million of expense related to the adoption of FIN 46 in both the third quarter and the nine months of 2003. In addition, $2.2 million (as restated) and $2.7 million (as restated) of expense related to the potential sale of the Chemical Products segment in the third quarter and nine months of 2003, respectively. The Company subsequently determined to retain the business.

NOTE 4. EARNINGS PER SHARE

Basic earnings per share have been computed based on the average number of common shares outstanding.

     We have adopted the provisions of Emerging Issues Task Force Issue No. 04-08, “The Effect of Contingently Convertible Debt on Diluted Earnings per Share”. This pronouncement requires shares, issuable under contingent conversion provisions in debt agreements, to be included in the calculation of diluted earnings per share regardless of whether the provisions of the contingent features had been met. The provisions of Issue No. 04-08 are effective for reporting periods ending after December 15, 2004. Retroactive restatement of diluted earnings per share is required.

     There are contingent conversion features included in our $350 million 4% Convertible Senior Notes due 2034, issued on July 2, 2004. Accordingly, average shares outstanding – diluted in 2004 included approximately 29.1 million contingently issuable shares in the third quarter. Net income per share – diluted in 2004 included an earnings adjustment representing avoided after-tax interest expense of $3.5 million in the third quarter resulting from the assumed conversion of the Notes. Diluted earnings per share in 2004 was reduced by approximately $0.02 in the third quarter as a result of the adoption of this standard.

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

The following table presents the number of incremental weighted-average shares used in computing diluted per share amounts:

     In 2004 and 2003, approximately 28 million and 27 million, respectively, of stock options, restricted stock and performance grants with exercise prices that were greater than the average market price of the Company’s common shares were excluded from average shares outstanding – diluted, as inclusion would have been anti-dilutive. In addition, approximately 2 million of stock options, restricted stock and performance grants with exercise prices that were less than the average market price of the Company’s common shares were excluded from average shares outstanding – diluted for the nine month period ended September 30, 2004 (less than one thousand shares for the three and nine month periods ended September 30, 2003), as the Company was in a net loss position and, thus inclusion would also have been anti-dilutive.

     The following table presents the computation of adjusted net income used in computing net income (loss) per share – diluted. The computation assumes that after-tax interest costs incurred on the 4% Convertible Senior Notes due 2034 would have been avoided had the Notes been converted when issued on July 2, 2004: