UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
Commission File No. 1-4329
COOPER TIRE & RUBBER COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 34-4297750
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Lima and Western Avenues, Findlay, Ohio 45840
(Address of principal executive offices)
(Zip code)
(419) 423-1321
(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.
Yes (X) No ( )
Number of shares of common stock of registrant outstanding
at October 31, 1994: 83,630,872
1
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
COOPER TIRE & RUBBER COMPANY
BALANCE SHEETS
September 30, December 31,
1994 1993
(Unaudited) (Audited)
------------ ------------
ASSETS
Current assets:
Cash, including short-term investments
of $45,000,000 ($15,000,000 in 1993) $ 56,690,586 $ 25,798,746
Accounts receivable, less allowances
of $4,021,000 ($3,100,000 in 1993) 260,436,764 182,203,436
Inventories at lower of cost (last-in,
first-out) or market:
Finished goods 71,398,756 81,066,480
Work in process 9,587,618 10,381,354
Raw materials and supplies 27,976,519 19,663,017
------------- -----------
108,962,893 111,110,851
Prepaid expenses and deferred taxes 13,517,140 12,904,058
------------- -----------
Total current assets 439,607,383 332,017,091
Property, plant and equipment - net 543,436,574 527,949,046
Other assets 30,405,874 29,618,164
------------- -----------
$1,013,449,831 $889,584,301
============= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 87,891,553 $ 65,685,355
Accrued liabilities 66,783,291 50,063,327
Income taxes 5,611,496 6,066,283
Current portion of debt 5,189,000 5,345,000
------------- -----------
Total current liabilities 165,475,340 127,159,965
Long-term debt 33,732,560 38,729,367
Postretirement benefits other than pensions 125,476,578 118,542,360
Other long-term liabilities 37,999,507 36,015,019
Deferred income taxes 24,940,000 18,952,000
Stockholders' equity:
Preferred stock, $1 par value; 5,000,000 shares
authorized; none issued - -
Common stock, $1 par value; 300,000,000 shares
authorized; 83,628,772 shares outstanding
(83,581,768 in 1993) 83,628,772 83,581,768
Capital in excess of par value 1,605,651 1,215,181
Retained earnings 540,591,423 465,388,641
------------- -----------
Total stockholders' equity 625,825,846 550,185,590
------------- -----------
$1,013,449,831 $889,584,301
============= ===========
<FN>
See accompanying notes.
2
COOPER TIRE & RUBBER COMPANY
STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
1994 1993
------------ ------------
Revenues:
Net sales $383,455,854 $326,106,738
Other income 461,645 61,239
----------- -----------
383,917,499 326,167,977
Costs and expenses:
Cost of products sold 307,369,204 268,998,994
Selling, general and administrative 18,315,352 15,462,465
Interest and debt expense 599,656 700,932
----------- -----------
326,284,212 285,162,391
Income before income taxes 57,633,287 41,005,586
Provision for income taxes 22,180,000 15,850,000
----------- -----------
Net income $ 35,453,287 $ 25,155,586
=========== ===========
Net income per share $.42 $.30
=== ===
Average shares outstanding 83,627,222 83,554,410
========== ==========
Dividends per share $.060 $.055
==== ====
<FN>
See accompanying notes.
3
COOPER TIRE & RUBBER COMPANY
STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
1994 1993
------------ ------------
Revenues:
Net sales $1,041,926,607 $898,772,651
Other income 1,092,720 456,170
------------- -----------
1,043,019,327 899,228,821
Costs and expenses:
Cost of products sold 842,661,067 730,420,846
Selling, general and administrative 53,252,526 47,710,631
Interest and debt expense 2,037,118 1,501,974
------------- -----------
897,950,711 779,633,451
Income before income taxes 145,068,616 119,595,370
Provision for income taxes 55,650,000 45,220,000
------------- -----------
Net income $ 89,418,616 $ 74,375,370
============= ===========
Net income per share $1.07 $.89
==== ===
Average shares outstanding 83,620,422 83,544,043
========== ==========
Dividends per share $.170 $.145
==== ====
<FN>
See accompanying notes.
4
COOPER TIRE & RUBBER COMPANY
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND 1993
(UNAUDITED)
1994 1993
---- ----
Operating activities:
Net income $ 89,418,616 $ 74,375,370
Adjustments to reconcile net income
to net cash provided by
operating activities:
Postretirement benefits other than
pensions 7,411,218 6,871,727
Depreciation and amortization 42,108,649 35,638,203
Deferred taxes 5,044,000 4,214,000
Increase in accounts receivable (78,233,328) (39,101,627)
Decrease (increase) in inventories
and prepaid expenses 1,534,876 (37,842,864)
Increase in accounts payable and
accrued liabilities 38,926,162 16,616,413
Increase in other long-term
liabilities and other 1,531,072 2,656,721
----------- -----------
Net cash provided by operating
activities 107,741,265 63,427,943
Investing activities:
Additions to property, plant and
equipment (58,349,914) (96,494,734)
Other 431,656 3,201,938
----------- -----------
Net cash used in investing
activities (57,918,258) (93,292,796)
Financing activities:
Issuance of debt 13,000,000 24,000,000
Payments on debt (18,152,807) (21,581,520)
Issuance of common stock 437,474 455,131
Dividends paid (14,215,834) (12,114,503)
----------- -----------
Net cash used in
financing activities (18,931,167) (9,240,892)
----------- -----------
Increase (decrease) in cash and
short-term investments 30,891,840 (39,105,745)
Cash and short-term investments at
beginning of year 25,798,746 55,111,255
----------- -----------
Cash and short-term investments at
end of period $ 56,690,586 $ 16,005,510
=========== ===========
Cash payments for interest $ 3,775,667 $ 2,600,464
=========== ===========
Cash payments for income taxes $ 51,060,787 $ 42,887,106
=========== ===========
<FN>
See accompanying notes.
5
COOPER TIRE & RUBBER COMPANY
NOTES TO FINANCIAL STATEMENTS
1. The financial statements at September 30, 1994 and for the three-month
and nine-month periods ended September 30, 1994 and 1993 are unaudited
and include all adjustments, consisting only of normal recurring
accruals, which the Company considers necessary for a fair presentation
of its financial position and operating results. The condensed
unaudited financial statements have been prepared in accordance with
Article 10 of Regulation S-X and, therefore, do not contain all
information and footnotes normally contained in annual financial
statements; accordingly, they should be read in conjunction with the
Financial Statements and notes thereto appearing in the Annual Report
on Form 10-K of the Company for the year ended December 31, 1993.
2. Certain amounts for 1993 have been restated to conform with 1994
presentations.
3. The results of operations for the nine-month period ended September 30,
1994 are not necessarily indicative of those to be expected for the
full year.
REVIEW BY INDEPENDENT AUDITORS
The condensed financial statements included in this filing on Form 10-Q
have been reviewed by the Company's independent auditors, Ernst & Young
LLP, and their report thereon is attached hereto as Part I - Exhibit 1.
All adjustments or additional disclosures proposed by the Company's
independent auditors have been reflected in the data presented.
6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Net sales increased 17.6% for the third quarter of 1994 and 15.9% for the
first nine months of 1994 as compared to the corresponding periods in 1993.
Sales of both tires and engineered products were higher than for the
three-month and nine-month periods one year ago. Compared to the
corresponding 1993 periods, other income was higher in the third quarter
due to higher levels of investments and higher for the nine-months of 1994
due to higher levels of investments and the sale of a minor product line.
Cost of products sold, as a percent of net sales, was lower in the third
quarter and nine-month periods of 1994 as compared to the corresponding
periods in 1993. This improvement occurred, in spite of increased raw
material costs, due to more favorable product mix, higher product pricing
and higher operating levels.
Selling, general and administrative expenses, as a percent of net sales,
are comparable to the prior year amounts. Interest and debt expense in the
third quarter was lower than in the prior year due to reduced debt levels
offset by lower amounts of capitalized interest. The increase in interest
and debt expense for the nine-month period results from lower amounts of
capitalized interest partially offset by reduced debt levels.
Income before income taxes increased 40.5% for the quarter and 21.3% for
the nine-month period from the corresponding periods in 1993. Higher
sales, higher operating levels, and improved margins were responsible for
the changes in income for the quarter and the year-to-date. The increase
in the effective tax rate for the nine-month period reflects changes
enacted in the Omnibus Budget Reconciliation Act of 1993.
The financial position of the Company at September 30, 1994 is excellent.
Working capital of $274.1 million is up $69.3 million since year-end 1993
and up $86.4 million from September 30, 1993. The current ratio at 2.7 is
higher than 2.1 at September 30, 1993 and is up slightly from 2.6 at
December 31, 1993.
Accounts receivable are up $78.2 million from year-end, reflecting higher
sales and the seasonal nature of credit terms, and are up $40.1 million
from the balance one year ago reflecting higher sales.
Long-term debt at September 30, 1994 reflects the payment of scheduled debt
maturities.
7
Part II. OTHER INFORMATION
Item 6(a). Exhibits.
(15) Letter regarding unaudited interim financial information
(27) Financial Data Schedule
Item 6(b). Reports on Form 8-K.
No Form 8-K has been filed.
8
INDEX TO EXHIBITS
DESCRIPTION
Part I. Exhibit 1.
Independent Accountants' Review Report.
Part II. Item 6(a).
(15) Letter from Ernst & Young LLP, independent accountants, dated
November 7, 1994 regarding unaudited interim financial information.
(27) Financial Data Schedule.
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
COOPER TIRE & RUBBER COMPANY
/S/ J. Alec Reinhardt
---------------------
J. Alec Reinhardt
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
/S/ J. A. Faisant
-----------------
J. A. Faisant
Vice President and
Corporate Controller
(Principal Accounting Officer)
November 7, 1994
----------------
(Date)
10
Part I
Exhibit 1
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Board of Directors
Cooper Tire & Rubber Company
We have reviewed the accompanying balance sheet of Cooper Tire & Rubber
Company as of September 30, 1994, and the related statements of income for
the three-month and nine-month periods ended September 30, 1994 and 1993
and the statements of cash flows for the nine-month periods ended September
30, 1994 and 1993. These financial statements are the responsibility of
the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data, and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, which will be performed for the full year with the objective of
expressing an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of Cooper Tire & Rubber Company as of December
31, 1993, and the related statements of income, stockholders' equity, and
cash flows for the year then ended (not presented herein) and in our report
dated February 14, 1994, we expressed an unqualified opinion on those
financial statements. In our opinion, the information set forth in the
accompanying balance sheet as of December 31, 1993, is fairly stated, in
all material respects, in relation to the balance sheet from which it has
been derived.
/S/ Ernst & Young LLP
---------------------
ERNST & YOUNG LLP
Toledo, Ohio
October 12, 1994
11
Part II
Exhibit (15)
November 7, 1994
Securities and Exchange Commission
Washington, D.C. 20549
We are aware of the incorporation by reference in the Registration
Statements (Form S-3 No. 33-44159 and Form S-8 Nos. 2-58577, 2-77400,
33-5483, 33-35071, 33-47979, 33-47980, 33-47981, 33-47982, 33-52499 and
33-52505) of Cooper Tire & Rubber Company for the registration of its
common stock of our reports dated April 13, 1994, July 13, 1994, and
October 12, 1994 relating to the unaudited interim financial statements of
Cooper Tire & Rubber Company which are included in its Form 10-Q for the
quarters ended March 31, 1994, June 30, 1994, and September 30, 1994.
Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not a
part of the registration statements prepared or certified by accountants
within the meaning of Section 7 or 11 of the Securities Act of 1933.
Very truly yours,
/S/ Ernst & Young LLP
---------------------
ERNST & YOUNG LLP
Toledo, Ohio
12