-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WhlyGNQQDOE0QSlpqZo2NsXahJVmQWtVcaoOmCrQDlmPcJBhM2Z3hjmSmXuZ0Tn7 TA7WLPmhw65aOW57uju15g== 0000024491-97-000021.txt : 19970813 0000024491-97-000021.hdr.sgml : 19970813 ACCESSION NUMBER: 0000024491-97-000021 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970812 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: 97656751 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, 1997 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, 1997: 78,731,668 1 Part I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS COOPER TIRE & RUBBER COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Dollar amounts in thousands; per-share amounts in dollars)
June 30, December 31, 1997 1996 (Unaudited) (Note 1) ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 20,030 $ 19,459 Accounts receivable, less allowances of $5,573 ($3,700 in 1996) 351,066 267,149 Inventories at lower of cost (last-in, first-out) or market: Finished goods 155,948 87,105 Work in process 18,100 13,419 Raw materials and supplies 31,405 41,094 --------- --------- 205,453 141,618 Prepaid expenses and deferred income taxes 17,175 15,399 --------- --------- Total current assets 593,724 443,625 Property, plant and equipment - net 849,792 792,419 Other assets 72,170 36,965 --------- --------- $1,515,686 $1,273,009 LIABILITIES AND STOCKHOLDERS' EQUITY ========= ========= Current liabilities: Notes payable $ 78,472 $ 32,000 Accounts payable 87,034 81,571 Accrued liabilities 93,603 65,727 Income taxes 3,950 3,116 Current portion of debt 4,997 5,081 --------- --------- Total current liabilities 268,056 187,495 Long-term debt 223,857 69,489 Postretirement benefits other than pensions 142,053 139,070 Other long-term liabilities 40,331 37,575 Deferred income taxes 63,542 52,768 Stockholders' equity: Preferred stock, $1 par value; 5,000,000 shares authorized; none issued - - Common stock, $1 par value; 300,000,000 shares authorized; 83,730,468 shares issued (83,672,372 in 1996) 83,730 83,672 Capital in excess of par value 2,542 2,027 Retained earnings 797,680 754,481 Cumulative currency translation adjustment 1,580 - Minimum pension liability (7,434) (7,434) --------- --------- 878,098 832,746 Less: Common shares in treasury at cost (5,000,000 in 1997; 2,305,500 in 1996) (100,251) (46,134) --------- --------- Total stockholders' equity 777,847 786,612 --------- --------- $1,515,686 $1,273,009 ========= ========= See accompanying notes.
2 COOPER TIRE & RUBBER COMPANY CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED) (Dollar amounts in thousands; per-share amounts in dollars)
1997 1996 -------- -------- Revenues: Net sales $463,993 $398,858 Other income 204 246 ------- ------- 464,197 399,104 Costs and expenses: Cost of products sold 380,910 338,566 Selling, general and administrative 29,272 20,021 Interest 4,961 5 Foreign currency gains (1,302) - ------- ------- 413,841 358,592 ------- ------- Income before income taxes 50,356 40,512 Provision for income taxes 18,850 15,350 ------- ------- Net income $ 31,506 $ 25,162 ======= ======= Net income per share $.40 $.30 === === Weighted average number of shares outstanding (000's) 78,712 83,672 ====== ====== Dividends per share $.085 $.075 ==== ==== See accompanying notes.
3 COOPER TIRE & RUBBER COMPANY CONSOLIDATED STATEMENTS OF INCOME SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED) (Dollar amounts in thousands; per-share amounts in dollars)
1997 1996 -------- -------- Revenues: Net sales $843,525 $779,896 Other income 458 522 ------- ------- 843,983 780,418 Costs and expenses: Cost of products sold 696,823 662,899 Selling, general and administrative 51,084 39,869 Interest 6,652 9 Foreign currency gains (1,302) - ------- ------- 753,257 702,777 ------- ------- Income before income taxes 90,726 77,641 Provision for income taxes 34,070 29,370 ------- ------- Net income $ 56,656 $ 48,271 ======= ======= Net income per share $.71 $.58 === === Weighted average number of shares outstanding (000's) 79,506 83,669 ====== ====== Dividends per share $.17 $.15 ==== ==== See accompanying notes.
4 COOPER TIRE & RUBBER COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 1997 AND 1996 (UNAUDITED) (Dollar amounts in thousands; per-share amounts in dollars)
1997 1996 -------- -------- Operating activities: Net income $ 56,656 $ 48,271 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 44,532 36,256 Deferred income taxes 4,823 6,267 Foreign currency gains (1,426) - Changes in operating assets and liabilities: Accounts receivable (44,515) (37,097) Inventories and prepaid expenses (33,612) (19,980) Accounts payable and accrued liabilities 6,190 3,370 Postretirement benefits other than pensions 3,583 4,110 Other (10,409) (7,914) ------- ------- Net cash provided by operating activities 25,822 33,283 Investing activities: Acquisition of business, net of cash acquired (94,593) - Property, plant and equipment (49,927) (119,032) Other 10 133 ------- ------- Net cash used in investing activities (144,510) (118,899) Financing activities: Issuance of debt 360,000 104,000 Payment on debt (174,124) (16,239) Purchase of treasury shares (54,117) - Payment of dividends (13,457) (12,550) Issuance of common stock 573 105 ------- ------- Net cash provided by financing activities 118,875 75,316 Effect of exchange rate changes on cash and cash equivalents 384 - ------- ------- Changes in cash and cash equivalents 571 (10,300) Cash and cash equivalents at beginning of year 19,459 23,187 ------- ------- Cash and cash equivalents at end of period $ 20,030 $ 12,887 ======= ======= Cash payments for interest $ 3,328 $ 2,913 ======= ======= Cash payments for income taxes $ 32,251 $ 33,973 ======= ======= See accompanying notes.
5 COOPER TIRE & RUBBER COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The consolidated financial statements at June 30, 1997 and for the three-month and six-month periods ended June 30, 1997 and 1996 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 unaudited consolidated 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, 1996. 2. The results of operations for the three-month and six-month periods ended June 30, 1997 are not necessarily indicative of those to be expected for the year ending December 31, 1997. 3. In February, 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share," which changes the method currently used to compute earnings per share and requires restatement of all prior periods. The effect of adopting this Standard is not expected to have a significant effect on the Company's reported net income per share. In June, 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income," and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," which require the disclosure of total comprehensive income and change the method for determining and reporting business segment information. The Company's components of comprehensive income have historically been for the impact of pension accounting and foreign currency. The FASB's approach to determine business segments will cause the Company to report certain financial information at segment levels. These Standards are required to be adopted for fiscal years beginning after December 31, 1997. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Net sales increased 16.3% for the second quarter and 8.2% for the first six months of 1997 when compared to the corresponding periods of 1996. Sales of both tires and engineered products were higher than for the three-month and six-month periods one year ago. The Company's acquisition of Avon Tyres Limited of Melksham, England, now known as Cooper-Avon Tyres Limited, was completed late in the first quarter of 1997 and contributed to the increases. Other income was lower in both the second quarter and six months of 1997 as compared to the corresponding 1996 periods due to lower amounts of interest income. Cost of products sold, as a percent of net sales, was lower in both the quarter and six-month periods of 1997 as compared with the corresponding periods in 1996. This margin improvement resulted primarily from more favorable plant operating levels and efficiencies. Cooper-Avon's margins also contributed to the improvement. Decreases in raw material costs were offset by price concessions. Selling, general and administrative expenses were higher for both the three-month and six-month periods of 1997 compared to one year ago. These increases reflect expanded advertising programs and the inclusion of Cooper-Avon expenses. As a percent of net sales, selling, general and administrative expenses were 6.3% and 5.0% for the 1997 and 1996 quarters and 6.1% and 5.1% for the six months of 1997 and 1996, respectively. Interest expense was higher than for the corresponding periods of 1996 reflecting higher borrowing levels and lower amounts of capitalized interest. Foreign currency gains contributed $1.3 million to income before income taxes. These gains result primarily from the favorable relationship during the quarter between the British pound sterling and the United States dollar. Income before income taxes for the quarter increased 24.3% from one year ago and 16.9% for the year-to-date. The 1997 periods reflect improvements in production efficiencies with reductions in raw material costs offset by a continuation of intense price competition in the replacement tire market. In March, the Company completed the repurchase of 5 million shares of its stock authorized by the Board of Directors in July 1996. To finance the acquisition of Avon Tyres Limited and initial stock repurchase, the Company issued $200 million of long-term public debt due in 2027 with an interest rate of 7.625%. In May, the Board of Directors authorized the repurchase of up to an additional 5 million shares of the Company's common stock. The Company intends, given certain market conditions, to repurchase additional shares but has not yet acquired any portion of the shares approved in May. Working capital of $326 million is up $70 million since year-end and up $87 million from June 30, 1996, primarily reflecting the acquisition. The current ratio of 2.2 is up from 2.0 at June 30, 1996 and is down slightly from the 2.4 at December 31, 1996. Long term debt as a percent of total capitalization increased to 22.3% at the end of the quarter compared to 3.5% one year ago reflecting both the issuance of debt and repurchase of the Company's stock. The financial position of the Company at June 30, 1997 continues to be strong. The cash flows generated by operating activities during the first six months of 1997 are lower than for the six-month period one year ago primarily due to increases in accounts receivable and inventories. Investing activities reflect the acquisition, net of cash acquired, and lower expenditures for property, plant and equipment. The Company expects that available cash and existing lines of credit will be sufficient to meet normal operating requirements over the near term. 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 6, 1997. (b) All of the nominees for directors, as listed below under (c) and on page 2 of the Company's Proxy Statement dated March 25, 1997, were elected. The following directors have terms of office which continued after the meeting: Arthur H. Aronson Dennis J. Gormley Edsel D. Dunford Allan H. Meltzer John Fahl J. Alec Reinhardt Deborah M. Fretz (c) A description of the 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 25, 1997, which pages are incorporated herein by reference. The number of votes cast by common stock holders with respect to each matter is as follows: Election of directors Term Affirmative Withheld Broker Expiration Votes Votes Abstentions Non-votes ---------- ----------- -------- ----------- --------- John F. Meier 2000 69,204,453 1,782,362 0 0 Patrick W. Rooney 2000 69,073,041 1,913,774 0 0 John H. Shuey 2000 69,193,490 1,793,325 0 0 Item 6(a). Exhibits. (27) Financial Data Schedule (99) Press release regarding purchase of Company common stock Item 6(b). Reports on Form 8-K. No Form 8-K has been filed. 8 INDEX TO EXHIBITS DESCRIPTION Part II. Item 6(a). (27) Financial Data Schedule (99) Press release dated May 6, 1997 regarding purchase of Company common stock. 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/ E. B. White ----------------- E. B. White Corporate Controller (Principal Accounting Officer) August 12, 1997 --------------- (Date) 10 Part II Exhibit (99) COOPER TIRE & RUBBER COMPANY NEWS RELEASE Public Relations Findlay, Ohio 45840 Phone: (419) 423-1321 - ------------------------------------------------------------------------------ COMPANY CONTACT: J. ALEC REINHARDT FOR IMMEDIATE RELEASE May 6, 1997 REGULAR DIVIDEND DECLARED, STOCK PURCHASE AUTHORIZED ---------------------------------------------------- FINDLAY, OHIO -- The board of directors of Cooper Tire & Rubber Company declared a regular quarterly dividend of 8.5 cents per share on common stock, payable June 30, 1997 to stockholders of record June 3, 1997. In other action, the board authorized the purchase of up to five million shares of its common stock from time to time in the open market or otherwise. The company currently has 78,678,772 common shares outstanding. The board of directors did not establish a timetable for the purchase program. These purchases shall occur at such times as the company may elect. The shares purchased will be used for general corporate purposes. In announcing the stock purchase program, Cooper Tire chairman Patrick W. Rooney stated, "The current stock price, we believe, undervalues the company and presents the company an opportunity to reduce the number of outstanding shares. The purchases will be made with normal cash flows from operations and debt. The repurchase should not impinge on our planned capital investments in strategic plant and equipment." 11 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, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1997 JAN-1-1997 JUN-30-1997 20,030 0 356,639 5,573 205,453 593,724 1,342,311 492,519 1,515,686 268,056 223,857 0 0 78,730 699,117 1,515,686 843,525 843,983 696,823 696,823 49,182 600 6,652 90,726 34,070 56,656 0 0 0 56,656 .71 .71
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