-----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, TPx8p7Rji3sJDgtwUlh5hxpWMm7vNcxleTuFF2q7wf/7vSKwgGaF1Bx0xoqrSzFT ngzgvWAhahSaffQrgV0gPQ== 0000024491-97-000024.txt : 19971110 0000024491-97-000024.hdr.sgml : 19971110 ACCESSION NUMBER: 0000024491-97-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971107 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: SEC FILE NUMBER: 001-04329 FILM NUMBER: 97710518 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 September 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 October 31, 1997: 78,758,908 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)
September 30, 1997 December 31, (Unaudited) 1996 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 15,091 $ 19,459 Accounts receivable, less allowances of $6,053 ($3,700 in 1996) 345,019 267,149 Inventories at lower of cost (last-in, first-out) or market: Finished goods 139,334 87,105 Work in process 20,623 13,419 Raw materials and supplies 30,391 41,094 ---------- ---------- 190,348 141,618 Prepaid expenses and deferred income taxes 16,838 15,399 ---------- ---------- Total current assets 567,296 443,625 Property, plant and equipment - net 846,659 792,419 Other assets 80,842 36,965 ---------- ---------- $ 1,494,797 $ 1,273,009 LIABILITIES AND STOCKHOLDERS' EQUITY ========== ========== Current liabilities: Notes payable $ 20,487 $ 32,000 Accounts payable 85,521 81,571 Accrued liabilities 102,824 65,727 Income taxes 8,049 3,116 Current portion of debt 4,861 5,081 ---------- ---------- Total current liabilities 221,742 187,495 Long-term debt 223,839 69,489 Postretirement benefits other than pensions 143,602 139,070 Other long-term liabilities 40,985 37,575 Deferred income taxes 63,391 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; 83,745,518 shares issued (83,672,372 in 1996) 83,746 83,672 Capital in excess of par value 2,783 2,027 Retained earnings 822,122 754,481 Cumulative currency translation adjustment 272 - Minimum pension liability (7,434) (7,434) ---------- ---------- 901,489 832,746 Less: Common shares in treasury at cost (5,000,000 in 1997; 2,305,500 in 1996) (100,251) (46,134) ---------- ---------- Total stockholders' equity 801,238 786,612 ---------- ---------- $ 1,494,797 $ 1,273,009 ========== ========== See accompanying notes.
2 COOPER TIRE & RUBBER COMPANY CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED) (Dollar amounts in thousands; per-share amounts in dollars)
1997 1996 -------- -------- Revenues: Net sales $480,572 $423,172 Other income 394 189 ------- ------- 480,966 423,361 Costs and expenses: Cost of products sold 400,477 359,077 Selling, general and administrative 26,971 20,731 Interest 4,624 580 ------- ------- 432,072 380,388 ------- ------- Income before income taxes 48,894 42,973 Provision for income taxes 17,770 16,060 ------- ------- Net income $ 31,124 $ 26,913 ======= ======= Net income per share $.40 $.32 === === Weighted average number of shares outstanding (000's) 78,738 83,576 ====== ====== Dividends per share $.085 $.075 ==== ==== See accompanying notes.
3 COOPER TIRE & RUBBER COMPANY CONSOLIDATED STATEMENTS OF INCOME NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED) (Dollar amounts in thousands; per-share amounts in dollars)
1997 1996 -------- -------- Revenues: Net sales $1,324,097 $1,203,068 Other income 852 711 --------- --------- 1,324,949 1,203,779 Costs and expenses: Cost of products sold 1,095,998 1,021,976 Selling, general and administrative 78,055 60,600 Interest 11,276 589 --------- --------- 1,185,329 1,083,165 --------- --------- Income before income taxes 139,620 120,614 Provision for income taxes 51,840 45,430 --------- --------- Net income $ 87,780 $ 75,184 ========= ========= Net income per share $1.11 $.90 ==== === Weighted average number of shares outstanding (000's) 79,250 83,638 ====== ====== Dividends per share $.255 $.225 ==== ==== See accompanying notes.
4 COOPER TIRE & RUBBER COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED) (Dollar amounts in thousands; per-share amounts in dollars)
1997 1996 -------- -------- Operating activities: Net income $ 87,780 $ 75,184 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 68,470 56,352 Deferred income taxes 4,368 9,043 Changes in operating assets and liabilities: Accounts receivable (39,828) (61,582) Inventories and prepaid expenses (19,148) 3,489 Accounts payable and accrued liabilities 14,886 24,058 Postretirement benefits other than pensions 5,482 5,568 Other (14,118) (8,298) ------- ------- Net cash provided by operating activities 107,892 103,814 Investing activities: Acquisition of business, net of cash acquired (94,593) - Property, plant and equipment (72,529) (159,675) Other (291) 157 ------- ------- Net cash used in investing activities (167,413) (159,518) Financing activities: Issuance of debt 360,000 116,000 Payment on debt (231,776) (46,366) Purchase of treasury stock (54,117) (11,215) Payment of dividends (20,140) (18,826) Issuance of common stock 829 105 ------- ------- Net cash provided by financing activities 54,796 39,698 Effect of exchange rate changes on cash and cash equivalents 357 - ------- ------- Changes in cash and cash equivalents (4,368) (16,006) Cash and cash equivalents at beginning of year 19,459 23,187 ------- ------- Cash and cash equivalents at end of period $ 15,091 $ 7,181 ======= ======= Cash payments for interest $ 11,143 $ 3,879 ======= ======= Cash payments for income taxes $ 46,378 $ 45,138 ======= ======= See accompanying notes.
5 COOPER TIRE & RUBBER COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The consolidated financial statements at September 30, 1997 and for the three-month and nine-month periods ended September 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 nine-month periods ended September 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 changed 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 13.6% for the third quarter and 10.1% for the first nine 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 nine-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 higher in both the third quarter and nine months of 1997 as compared to the corresponding 1996 periods due to higher amounts of cash invested. Cost of products sold, as a percent of net sales, was lower in both the quarter and nine-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 and a more favorable product mix. Decreases in raw material costs were offset by price concessions. Cooper-Avon's margins were negatively impacted by reductions in tire pricing required to meet competitive market conditions in Europe. Selling, general and administrative expenses were higher for both the three- month and nine-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 5.6% and 4.9% for the 1997 and 1996 quarters and 5.9% and 5.0% for the nine 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. Income before income taxes for the quarter increased 13.8% from one year ago and for the year-to-date increased 15.8%. 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. The financial position of the Company at September 30, 1997 continues to be strong. Working capital of $346 million is up $90 million since year-end and up $105 million from September 30, 1996, reflecting the acquisition and lower commercial paper borrowings. The current ratio of 2.6 is up from 2.0 at September 30, 1996 and 2.4 at December 31, 1996. Long-term debt as a percent of total capitalization increased to 21.8% at the end of the quarter compared to 4.8% one year ago reflecting both the issuance of debt and repurchase of the Company's stock. On October 2, the Company retired the $18 million balance of 9% senior notes due in 2001. The cash flows generated by operating activities during the first nine months of 1997 are higher than for the nine-month period one year ago primarily due to improved operating results. 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 6(a). Exhibits. (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 II. Item 6(a). (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/ E. B. White ----------------- E. B. White Corporate Controller (Principal Accounting Officer) November 7, 1997 ----------------- (Date) 10 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S BALANCE SHEET AND STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1997 JAN-1-1997 SEP-30-1997 9,644 5,447 351,072 6,053 190,348 567,296 1,363,116 516,457 1,494,797 221,742 223,839 0 0 78,746 722,492 1,494,797 1,324,097 1,324,949 1,095,998 1,095,998 77,155 900 11,276 139,620 51,840 87,780 0 0 0 87,780 1.11 1.11
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