EXHIBIT 99.2
COOPER TIRE & RUBBER COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
The unaudited pro forma condensed consolidated financial statements set forth
below for Cooper Tire & Rubber Company give effect to the sale of its automotive
business to an entity formed by The Cypress Group LLC and Goldman Sachs Capital
Partners, as if such sale had been completed on January 1, 2001 for income
statement purposes and September 30, 2004 for balance sheet purposes, subject to
the assumptions in the accompanying notes to the pro forma financial statements.
As of September 30, 2004, the Company had reported the automotive business as a
discontinued operation, in accordance with Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets."
The pro forma adjustments included herein are based on available information and
certain assumptions that management believes are reasonable and are described in
the accompanying notes to the pro forma financial statements. The unaudited pro
forma condensed consolidated financial statements do not represent what the
Company's financial position or results of operations would have been had the
sale of the automotive business occurred on such dates or project the Company's
financial position or results of operations at or for any future date or period.
The unaudited pro forma condensed consolidated financial statements should be
read in conjunction with the historical financial statements of the Company.
See the Notes to the Unaudited Pro Forma Condensed Consolidated Financial
Statements for a discussion of the basis of the presentation included in these
financial statements.
COOPER TIRE & RUBBER COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLAR AMOUNTS IN THOUSANDS)
SEPTEMBER 30, 2004
-------------------------------------------------
AS PRO FORMA PRO FORMA
REPORTED ADJUSTMENTS ADJUSTED
----------- ----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 24,932 $ 1,172,000 $ 1,196,932
Accounts receivable, less allowances of $5,699 340,683 340,683
Inventories at lower of cost (last-in, first-out) or market:
Finished goods 170,049 170,049
Work in process 14,813 14,813
Raw materials and supplies 53,368 53,368
----------- -----------
238,230 238,230
Prepaid expenses, income taxes refundable and
deferred income taxes 53,303 53,303
Assets of discontinued operations 1,414,058 (1,408,329) 5,729
----------- ----------- -----------
Total current assets 2,071,206 (236,329) 1,834,877
Property, plant and equipment:
Land and land improvements 35,022 35,022
Buildings 266,811 266,811
Machinery and equipment 1,244,556 1,244,556
Molds, cores and rings 191,232 191,232
----------- -----------
1,737,621 1,737,621
Less accumulated depreciation and amortization 1,041,157 1,041,157
----------- -----------
Net property, plant and equipment 696,464 696,464
Goodwill 45,224 45,224
Intangibles, net of accumulated amortization of $14,289 34,879 34,879
Other assets 109,082 109,082
----------- ----------- -----------
$ 2,956,855 $ (236,329) $ 2,720,526
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 161 $ 161
Accounts payable 158,937 158,937
Accrued liabilities 183,148 $ 19,000 202,148
Income taxes (88) 10,000 9,912
Liabilities of discontinued operations 371,571 (369,171) 2,400
----------- ----------- -----------
Total current liabilities 713,729 (340,171) 373,558
Long-term debt 775,592 775,592
Postretirement benefits other than pensions 154,195 154,195
Other long-term liabilities 202,783 7,000 209,783
Deferred income taxes 15,969 15,969
Stockholders' equity:
Preferred stock, $1 par value; 5,000,000 shares
authorized; none issued -- --
Common stock, $1 par value; 300,000,000 shares
authorized; 86,320,097 shares issued 86,320 86,320
Capital in excess of par value 38,838 38,838
Retained earnings 1,271,665 93,310 1,364,975
Cumulative other comprehensive loss (105,224) 3,532 (101,692)
----------- ----------- -----------
1,291,599 96,842 1,388,441
Less: 11,303,900 common shares in treasury at cost (197,012) (197,012)
----------- ----------- -----------
Total stockholders' equity 1,094,587 96,842 1,191,429
----------- ----------- -----------
$ 2,956,855 $ (236,329) $ 2,720,526
=========== =========== ===========
See accompanying notes.
COOPER TIRE & RUBBER COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
NINE MONTHS ENDED SEPTEMBER 30, 2004
---------------------------------------------------------------
AS PRO FORMA PRO FORMA
REPORTED ADJUSTMENTS ADJUSTED
--------------- ------------- ---------------
Net sales $ 1,540,642 $ -- $ 1,540,642
Cost of products sold 1,361,318 -- 1,361,318
--------------- ------------- ---------------
Gross profit 179,324 -- 179,324
Selling, general and administrative 125,622 -- 125,622
Adjustment to class action warranty (11,273) -- (11,273)
Restructuring 9,111 -- 9,111
--------------- ------------- ---------------
Operating profit 55,864 -- 55,864
Interest expense 20,959 -- 20,959
Other - net (311) -- (311)
--------------- ------------- ---------------
Income before income taxes 35,216 -- 35,216
Provision for income taxes 10,987 -- 10,987
--------------- ------------- ---------------
Income from continuing operations 24,229 -- 24,229
Income from discontinued operations,
net of income taxes 43,919 (48,204) (4,285)
--------------- ------------- ---------------
Net income $ 68,148 $ (48,204) $ 19,944
=============== ============= ===============
Basic earnings per share:
Income from continuing operations $ 0.33 $ -- $ 0.33
Income from discontinued operations 0.59 (0.65) (0.06)
--------------- ------------- ---------------
Net income $ 0.92 $ (0.65) $ 0.27
=============== ============= ===============
Diluted earnings per share:
Income from continuing operations $ 0.32 $ -- $ 0.32
Income from discontinued operations 0.58 (0.64) (0.06)
--------------- ------------- ---------------
Net income $ 0.90 $ (0.64) $ 0.26
=============== ============= ===============
See accompanying notes.
COOPER TIRE & RUBBER COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
YEAR ENDED DECEMBER 31, 2003
-------------------------------------------------------------------
AS PRO FORMA PRO FORMA
REPORTED ADJUSTMENTS ADJUSTED
--------------- --------------- ---------------
Net sales $ 3,514,399 $ (1,662,216) $ 1,852,183
Cost of products sold 3,078,761 (1,437,240) 1,641,521
--------------- --------------- ---------------
Gross profit 435,638 (224,976) 210,662
Selling, general and administrative 247,416 (101,340) 146,076
Adjustment to class action warranty (3,900) -- (3,900)
Restructuring 14,992 (12,802) 2,190
--------------- --------------- ---------------
Operating profit 177,130 (110,834) 66,296
Interest expense 67,936 (39,052) 28,884
Other - net (4,916) 3,608 (1,308)
--------------- --------------- ---------------
Income before income taxes 114,110 (75,390) 38,720
Provision for income taxes 40,274 (27,358) 12,916
--------------- --------------- ---------------
Net income $ 73,836 $ (48,032) $ 25,804
=============== =============== ===============
Basic earnings per share $ 1.00 $ (0.65) $ 0.35
=============== =============== ===============
Diluted earnings per share $ 1.00 $ (0.65) $ 0.35
=============== =============== ===============
See accompanying notes.
COOPER TIRE & RUBBER COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
YEAR ENDED DECEMBER 31, 2002
-------------------------------------------------------------------
AS PRO FORMA PRO FORMA
REPORTED ADJUSTMENTS ADJUSTED
--------------- --------------- ---------------
Net sales $ 3,329,957 $ (1,585,953) $ 1,744,004
Cost of products sold 2,839,757 (1,354,419) 1,485,338
--------------- --------------- ---------------
Gross profit 490,200 (231,534) 258,666
Selling, general and administrative 237,239 (95,463) 141,776
Restructuring 4,565 (4,394) 171
--------------- --------------- ---------------
Operating profit 248,396 (131,677) 116,719
Interest expense 75,587 (46,230) 29,357
Other - net (4,388) 2,898 (1,490)
--------------- --------------- ---------------
Income before income taxes 177,197 (88,345) 88,852
Provision for income taxes 65,352 (33,481) 31,871
--------------- --------------- ---------------
Net income $ 111,845 $ (54,864) $ 56,981
=============== =============== ===============
Basic earnings per share $ 1.53 $ (0.75) $ 0.78
=============== =============== ===============
Diluted earnings per share $ 1.51 $ (0.74) $ 0.77
=============== =============== ===============
See accompanying notes.
COOPER TIRE & RUBBER COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
YEAR ENDED DECEMBER 31, 2001
-------------------------------------------------------------------
AS PRO FORMA PRO FORMA
REPORTED ADJUSTMENTS ADJUSTED
--------------- --------------- ---------------
Net sales $ 3,154,702 $ (1,477,409) $ 1,677,293
Cost of products sold 2,724,692 (1,314,300) 1,410,392
--------------- --------------- ---------------
Gross profit 430,010 (163,109) 266,901
Selling, general and administrative 227,229 (90,399) 136,830
Class action costs 72,194 -- 72,194
Amortization of goodwill 15,705 (14,098) 1,607
Restructuring 8,648 (7,045) 1,603
--------------- --------------- ---------------
Operating profit 106,234 (51,567) 54,667
Interest expense 90,695 (48,454) 42,241
Other - net (13,619) 5,871 (7,748)
--------------- --------------- ---------------
Income before income taxes 29,158 (8,984) 20,174
Provision for income taxes 10,992 (3,931) 7,061
--------------- --------------- ---------------
Net income $ 18,166 $ (5,053) $ 13,113
=============== =============== ===============
Basic earnings per share $ 0.25 $ (0.07) $ 0.18
=============== =============== ===============
Diluted earnings per share $ 0.25 $ (0.07) $ 0.18
=============== =============== ===============
See accompanying notes.
COOPER TIRE & RUBBER COMPANY
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(Dollar amounts in thousands except per-share amounts)
Pro forma adjustments to the Company's unaudited pro forma condensed
consolidated balance sheet as of September 30, 2004 are intended to provide a
view of the order of magnitude of the impact on the Company of the recently
completed sale. The pro forma balance sheet is not intended to represent the
final actual result of the sale but uses a number of estimates and the most
recent quarter end balance sheet to enable timely disclosure. The actual impact
will be determined based on final proceeds and the net assets of the sold
companies as of December 23, 2004. The final impact may differ considerably from
the approximations provided in this filing. Following are comments on the more
significant pro forma September 30, 2004 balance sheet adjustments:
1. The pro forma adjustment to cash represents the proceeds received at
closing of approximately $1,172 million. Post closing adjustments for final
cash, debt and working capital amounts are expected to be resolved in the
first quarter of 2005 and final payments or refunds are not presently
estimable.
2. Pro forma adjustments to accrued liabilities of continuing operations
reflect preliminary estimates of sale related fees and expenses.
3. The pro forma adjustment to accrued income taxes is also a preliminary
estimate based on the methodology described above. Final income taxes
related to the gain on the sale will be determined by reference to the
actual tax basis in the respective shares of stock sold as of December 23,
2004 and the final proceeds allocated to each sold entity.
4. The pro forma adjustment to retained earnings reflects the gain on the sale
computed using the estimates described above and the September 30, 2004 net
assets of the automotive business which was sold. The actual after tax gain
will be determined based on final proceeds and the actual net assets prior
to closing on December 23, 2004. Accordingly, it will differ from the
amount included in this filing.
The Company's Unaudited Pro Forma Condensed Consolidated Statements of Income
for the nine months ended September 30, 2004 and twelve months ended December
31, 2003, 2002 and 2001 contain pro forma adjustments which represent the
results of operations of the divested automotive business. Those results have
been adjusted for the reallocation to continuing operations of general corporate
overhead previously allocated to the automotive business. The Company has used
the permitted allocation method for interest expense on corporate debt, which is
based on the relation of net assets to be discontinued to the sum of total
assets of the consolidated Company plus corporate debt. This adjustment has been
added to the interest on debt held directly by the automotive business. Actual
interest expense for continuing operations will be the result of Company
decisions during 2005 regarding the repurchase of debt and may differ from the
estimation process used to allocate historical interest expense in the
statements of income.