0000024491-95-000010.txt : 19950811 0000024491-95-000010.hdr.sgml : 19950811 ACCESSION NUMBER: 0000024491-95-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950810 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COOPER TIRE & RUBBER CO CENTRAL INDEX KEY: 0000024491 STANDARD INDUSTRIAL CLASSIFICATION: TIRES AND INNER TUBES [3011] IRS NUMBER: 344297750 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04329 FILM NUMBER: 95560560 BUSINESS ADDRESS: STREET 1: LIMA & WESTERN AVENUES CITY: FINDLAY STATE: OH ZIP: 45840 BUSINESS PHONE: 4194231321 10-Q 1 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 June 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 July 31, 1995: 83,647,672 1 Part I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS COOPER TIRE & RUBBER COMPANY BALANCE SHEETS (Dollar amounts in thousands; per-share amounts in dollars)
June 30, December 31, 1995 1994 (Unaudited) (Audited) ----------- ------------ ASSETS Current assets: Cash, including short-term investments of $48,200 ($83,000 in 1994) $ 52,367 $ 103,285 Accounts receivable, less allowances of $4,001 ($3,600 in 1994) 266,955 221,237 Inventories at lower of cost (last-in, first-out) or market: Finished goods 89,906 69,098 Work in process 11,086 10,341 Raw materials and supplies 35,145 37,084 ---------- ---------- 136,137 116,523 Prepaid expenses and deferred taxes 14,322 13,666 ---------- ---------- Total current assets 469,781 454,711 Property, plant and equipment - net 586,328 549,601 Other assets 34,761 35,419 ---------- ---------- $ 1,090,870 $ 1,039,731 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 90,391 $ 83,864 Accrued liabilities 59,134 56,583 Income taxes 979 6,049 Current portion of debt 5,014 5,112 ---------- ---------- Total current liabilities 155,518 151,608 Long-term debt 33,370 33,614 Postretirement benefits other than pensions 129,911 127,347 Other long-term liabilities 35,027 35,348 Deferred income taxes 32,985 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; 83,645,872 shares outstanding (83,634,072 in 1994) 83,646 83,634 Capital in excess of par value 1,786 1,656 Retained earnings 618,627 576,787 ---------- ---------- Total stockholders' equity 704,059 662,077 ---------- ---------- $ 1,090,870 $ 1,039,731 ========== ========== See accompanying notes.
2 COOPER TIRE & RUBBER COMPANY STATEMENTS OF INCOME THREE MONTHS ENDED JUNE 30, 1995 AND 1994 (UNAUDITED) (Dollar amounts in thousands; per-share amounts in dollars)
1995 1994 -------- -------- Revenues: Net sales $371,366 $329,339 Other income 1,164 416 ------- ------- 372,530 329,755 Costs and expenses: Cost of products sold 313,790 267,648 Selling, general and administrative 18,745 16,692 Interest and debt expense 304 716 ------- ------- 332,839 285,056 Income before income taxes 39,691 44,699 Provision for income taxes 15,030 17,240 ------- ------- Net income $ 24,661 $ 27,459 ======= ======= Net income per share $.29 $.33 === === Weighted average number of shares outstanding (000's) 83,643 83,625 ====== ====== Dividends per share $.06 $.055 === ==== See accompanying notes.
3 COOPER TIRE & RUBBER COMPANY STATEMENTS OF INCOME SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (UNAUDITED) (Dollar amounts in thousands; per-share amounts in dollars)
1995 1994 -------- -------- Revenues: Net sales $736,719 $658,471 Other income 2,677 631 ------- ------- 739,396 659,102 Costs and expenses: Cost of products sold 617,721 535,292 Selling, general and administrative 36,983 34,937 Interest and debt expense 874 1,438 ------- ------- 655,578 571,667 Income before income taxes 83,818 87,435 Provision for income taxes 31,940 33,470 ------- ------- Net income $ 51,878 $ 53,965 ======= ======= Net income per share $.62 $.65 === === Weighted average number of shares outstanding (000's) 83,641 83,617 ====== ====== Dividends per share $.12 $.11 === === See accompanying notes.
4 COOPER TIRE & RUBBER COMPANY STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 1995 AND 1994 (UNAUDITED) (Dollar amounts in thousands; per-share amounts in dollars)
1995 1994 ---- ---- Operating activities: Net income $ 51,878 $53,965 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 31,957 27,830 Postretirement benefits other than pensions 2,889 5,245 Deferred taxes 2,879 4,585 Increase in accounts receivable (45,718) (45,202) Increase in inventories and prepaid expenses (20,270) (11,238) Increase in accounts payable and accrued liabilities 9,078 17,466 Decrease in other long-term liabilities and other (4,884) (2,030) ------ ------ Net cash provided by operating activities 27,809 50,621 Investing activities: Additions to property, plant and equipment (69,505) (38,599) Other 1,015 77 ------ ------ Net cash used in investing activities (68,490) (38,522) Financing activities: Issuance of debt - 13,000 Payments on debt (341) (13,370) Issuance of common stock 142 402 Dividends paid (10,038) (9,198) ------ ------ Net cash used in financing activities (10,237) (9,166) ------ ------ Increase (decrease) in cash and short-term investments (50,918) 2,933 Cash and short-term investments at beginning of year 103,285 25,799 ------- ------ Cash and short-term investments at end of period $ 52,367 $28,732 ======= ====== Cash payments for interest $ 1,745 $ 2,013 ======= ====== Cash payments for income taxes $ 34,131 $32,962 ======= ====== See accompanying notes.
5 COOPER TIRE & RUBBER COMPANY NOTES TO FINANCIAL STATEMENTS 1. The financial statements at June 30, 1995 and for the three-month and six-month periods ended June 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 six-month period ended June 30, 1995 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 12.8% for the second quarter of 1995 and 11.9% for the first six months of 1995 as compared to the corresponding periods in 1994. Sales of both tire and engineered products were higher than for the three-month and six-month periods one year ago. Other income was higher in the second quarter and for the six months of 1995 compared to the corresponding 1994 periods due to increased investments of cash reserves. Cost of products sold, as a percent of net sales, was higher in the second quarter and six-month periods of 1995 compared to the corresponding periods in 1994. This deterioration resulted from continued increases in the cost of raw materials which were partially offset by favorable operating levels and some tire price increases. Selling, general and administrative expenses were $2 million higher for the three-month and six-month periods compared to one year ago. As a percent of net sales, selling, general and administrative expenses were unchanged for the quarter and lower than for the six-month period of 1994. Interest and debt expense was lower than for the corresponding 1994 periods reflecting lower debt levels and higher amounts of capitalized interest. Income before income taxes decreased 11.2% for the quarter and 4.1% for the six-month period from the corresponding periods in 1994. The impact of increases in sales, favorable operating levels and price increases were offset by higher raw material costs. The lower effective income tax rates for the quarter and six-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 June 30, 1995 is excellent. Working capital of $314.3 million is up $11.2 million since year end and up $63.4 million from June 30, 1994. The current ratio at 3.0 is unchanged from December 31, 1994 and compares favorably to the current ratio of 2.8 at June 30, 1994. Accounts receivable are up $45.7 million from year-end 1994 reflecting higher sales. Inventories are up $19.6 million from year-end primarily reflecting increases in finished goods inventories. 7 PART II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders (a) The Company's Annual Meeting of Stockholders was held on May 2, 1995. (b) All of the nominees for directors, as listed below under (c) and on page 2 of the Company's Proxy Statement dated March 21, 1995, were elected. The following directors have terms of office which continued after the meeting: Delmont A. Davis Ivan W. Gorr Edsel D. Dunford Joseph M. Magliochetti John Fahl Patrick W. Rooney Dennis J. Gormley Leon F. Winbigler (c) A description of the only matter voted upon at that meeting, the election of directors, is contained on pages 1 and 2 of the Company's Proxy Statement dated March 21, 1995, which pages are incorporated herein by reference. The number of votes cast by common stock holders with respect to such matter is as follows: Term Affirmative Withheld Broker Expiration Votes Votes Abstentions Non-votes ---------- ----------- -------- ----------- --------- Allan H. Meltzer 1998 69,398,110 893,829 0 0 J. Alec Reinhardt 1998 69,428,025 863,914 0 0 Item 6(a). Exhibits (15) Letter regarding unaudited interim financial information (27) Financial Data Shedule 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 August 10, 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) August 10, 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 June 30, 1995, and the related statements of income for the three-month and six-month periods ended June 30, 1995 and 1994 and the statements of cash flows for the six-month periods ended June 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 July 17, 1995 11 Part II Exhibit (15) August 10, 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 and July 17, 1995 relating to the unaudited interim financial statements of Cooper Tire & Rubber Company which are included in its Forms 10-Q for the quarters ended March 31, 1995 and June 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 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S BALANCE SHEET AND STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1995 JUN-30-1995 4,167 48,200 270,956 4,001 136,137 469,781 948,738 362,410 1,090,870 155,518 33,370 83,646 0 0 620,413 1,090,870 736,719 739,396 617,721 617,721 36,583 400 874 83,818 31,940 51,878 0 0 0 51,878 .62 .62