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, 1995
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, 1995: 83,650,172
1
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
COOPER TIRE & RUBBER COMPANY
CONDENSED BALANCE SHEETS
(Dollar amounts in thousands; per-share amounts in dollars)
September 30, December 31,
1995 1994
(Unaudited) (Audited)
------------- ------------
ASSETS
Current assets:
Cash, including short-term investments of
$23,700 ($83,000 in 1994) $ 29,362 $ 103,285
Accounts receivable, less allowances
of $4,214 ($3,600 in 1994) 282,308 221,237
Inventories at lower of cost (last-in,
first-out) or market:
Finished goods 89,064 69,098
Work in process 12,780 10,341
Raw materials and supplies 37,003 37,084
---------- ----------
138,847 116,523
Prepaid expenses and deferred taxes 13,637 13,666
---------- ----------
Total current assets 464,154 454,711
Property, plant and equipment - net 628,597 549,601
Other assets 37,612 35,419
---------- ----------
$ 1,130,363 $ 1,039,731
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 92,267 $ 83,864
Accrued liabilities 66,504 56,583
Income taxes 5,527 6,049
Current portion of debt 5,025 5,112
---------- ----------
Total current liabilities 169,323 151,608
Long-term debt 33,246 33,614
Postretirement benefits other than pensions 131,424 127,347
Other long-term liabilities 35,569 35,348
Deferred income taxes 35,913 29,737
Stockholders' equity:
Preferred stock, $1 par value; 5,000,000 shares
authorized; none issued - -
Common stock, $1 par value; 300,000,000 shares
authorized; 83,650,172 shares outstanding
(83,634,072 in 1994) 83,650 83,634
Capital in excess of par value 1,836 1,656
Retained earnings 639,402 576,787
---------- ----------
Total stockholders' equity 724,888 662,077
---------- ----------
$ 1,130,363 $ 1,039,731
========== ==========
<FN>
See accompanying notes.
2
COOPER TIRE & RUBBER COMPANY
CONDENSED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
(Dollar amounts in thousands; per-share amounts in dollars)
1995 1994
-------- --------
Revenues:
Net sales $375,004 $383,456
Other income 708 461
------- -------
375,712 383,917
Costs and expenses:
Cost of products sold 313,499 307,369
Selling, general and administrative 19,041 18,315
Interest and debt expense (66) 599
------- -------
332,474 326,283
------- -------
Income before income taxes 43,238 57,634
Provision for income taxes 16,190 22,180
------- -------
Net income $ 27,048 $ 35,454
======= =======
Net income per share $.32 $.42
=== ===
Weighted average number of
shares outstanding (000's) 83,648 83,627
====== ======
Dividends per share $.075 $.060
==== ====
<FN>
See accompanying notes.
3
COOPER TIRE & RUBBER COMPANY
CONDENSED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
(Dollar amounts in thousands; per-share amounts in dollars)
1995 1994
---------- ----------
Revenues:
Net sales $1,111,723 $1,041,927
Other income 3,385 1,092
--------- ---------
1,115,108 1,043,019
Costs and expenses:
Cost of products sold 931,220 842,661
Selling, general and administrative 56,024 53,252
Interest and debt expense 808 2,037
--------- ---------
988,052 897,950
--------- ---------
Income before income taxes 127,056 145,069
Provision for income taxes 48,130 55,650
--------- ---------
Net income $ 78,926 $ 89,419
========= =========
Net income per share $.94 $1.07
=== ====
Weighted average number of
shares outstanding (000's) 83,643 83,620
====== ======
Dividends per share $.195 $.170
==== ====
<FN>
See accompanying notes.
4
COOPER TIRE & RUBBER COMPANY
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
(Dollar amounts in thousands; per-share amounts in dollars)
1995 1994
-------- --------
Operating activities:
Net income $ 78,926 $ 89,419
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 47,712 42,109
Deferred taxes 5,919 5,044
Postretirement benefits other than
pensions 4,602 7,411
Increase in accounts receivable (61,071) (78,234)
Decrease (increase) in inventories and
prepaid expenses (22,295) 1,535
Increase in accounts payable and
accrued liabilities 18,324 38,926
Increase (decrease) in other long-term
liabilities and other (2,433) 1,531
------- -------
Net cash provided by operating
activities 69,684 107,741
Investing activities:
Additions to property, plant and
equipment (127,560) (58,350)
Other 523 432
------- -------
Net cash used in investing
activities (127,037) (57,918)
Financing activities:
Issuance of debt - 13,000
Payments on debt (455) (18,153)
Issuance of common stock 196 438
Dividends paid (16,311) (14,217)
------- -------
Net cash used in financing
activities (16,570) (18,932)
------- -------
Increase (decrease) in cash and
short-term investments (73,923) 30,891
Cash and short-term investments at
beginning of year 103,285 25,799
------- -------
Cash and short-term investments at
end of period $ 29,362 $ 56,690
======= =======
Cash payments for interest $ 1,919 $ 3,776
======= =======
Cash payments for income taxes $ 42,733 $ 51,061
======= =======
<FN>
See accompanying notes.
5
COOPER TIRE & RUBBER COMPANY
NOTES TO FINANCIAL STATEMENTS
1. The financial statements at September 30, 1995 and for the three-month
and nine-month periods ended September 30, 1995 and 1994 are unaudited
and include all adjustments, consisting only of normal recurring
accruals, which the Company considers necessary for a fair presentation
of 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, 1994.
2. The results of operations for the three-month and nine-month periods
ended September 30, 1995 are not necessarily indicative of those to be
expected for the year ending December 31, 1995.
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 material 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 decreased 2.2% for the third quarter of 1995 compared to 1994.
For the first nine months of 1995, net sales increased 6.7% from the
corresponding period in 1994 as sales of both tires and engineered products
increased. Other income was higher in the third quarter and for the nine
months of 1995 compared to the corresponding 1994 periods due to increased
amounts of interest income.
Cost of products sold, as a percent of net sales, was higher in both the
third quarter and nine-month periods of 1995 as compared to the
corresponding periods in 1994. This deterioration during the quarter
resulted from intense competition in the replacement tire market and
continued high raw material costs. More favorable plant operations earlier
in the year and some tire price increases contributed to offset this trend
for the nine-month period of 1995 compared to the corresponding 1994 period.
Selling, general and administrative expenses, as a percent of net sales,
were slightly higher at 5.1% for the 1995 quarter compared to 4.8% in 1994
and slightly lower for the nine-month period of 1995 at 5.0% compared to
5.1% in 1994. Interest and debt expense for the quarter and nine-month
periods reflects lower debt levels and higher amounts of capitalized
interest.
Income before income taxes decreased 25.0% for the quarter and 12.4% for
the nine-month period from the corresponding periods in 1994. The quarter
was adversely impacted by a slowing of demand and intense competition in
the replacement tire market as well as continued high raw material costs.
The nine-month period reflects increases in sales and some tire price
increases which were offset by higher raw material costs. Lower effective
income tax rates for the quarter and nine-months of 1995 reflect a
reduction in the estimated state income tax rate retroactive to January 1,
1995.
The financial position of the Company at September 30, 1995 continues to be
excellent. Working capital of $294.8 million is down slightly from
year-end 1994 and up $20.7 million from September 30, 1994. The current
ratio at 2.7 is down from 3.0 at December 31, 1994 and is unchanged from
September 30, 1994.
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, 1995 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, 1995
----------------
(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, 1995, and the related statements of income for
the three-month and nine-month periods ended September 30, 1995 and 1994
and the statements of cash flows for the nine-month periods ended September
30, 1995 and 1994. 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, 1994, 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, 1995, 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, 1994, 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 11, 1995
11
Part II
Exhibit (15)
November 7, 1995
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 12, 1995, July 17, 1995, and
October 11, 1995 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, 1995, June 30, 1995, and September 30, 1995.
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