Business Segments

12 Months Ended

Dec. 31, 2019

The Company has four segments under ASC 280, "Segments":


•	North America, composed of the Company’s operations in the United States and Canada;


•	Latin America, composed of the Company’s operations in Mexico, Central America and South America;


•	Europe; and


•	Asia.

North America and Latin America meet the criteria for aggregation in accordance with ASC 280, as they are similar in their production and distribution processes and exhibit similar economic characteristics. The aggregated North America and Latin America segments are presented as “Americas Tire Operations” in the segment disclosure. The Americas Tire Operations segment manufactures and markets passenger car and light truck tires, primarily for sale in the U.S. replacement market. The segment also has a joint venture manufacturing operation in Mexico, COOCSA, which supplies passenger car and light truck tires to the Mexican, North American, Central American and South American markets. On January 24, 2020, the Company acquired the remaining 42 percent noncontrolling ownership interest in COOCSA, making COOCSA a wholly-owned subsidiary. The segment also markets and distributes racing, TBR and motorcycle tires. The racing and motorcycle tires are manufactured by the Company’s European segment and by others. TBR tires are sourced from GRT and through off-take agreements with PCT, through mid-2021, and Sailun Vietnam, through December 31, 2020. On April 5, 2019, Cooper Vietnam and Sailun Vietnam established a joint venture in Vietnam, ACTR, which will produce and sell TBR tires. The new joint venture is expected to begin commercially producing tires in 2020.

Major distribution channels and customers include independent tire dealers, wholesale distributors, regional and national retail tire chains, large retail chains that sell tires as well as other automotive products, mass merchandisers and digital channels. The segment does not currently sell its products directly to end users, except through three Company-owned retail stores. The segment sells a limited number of tires to OEMs.

Both the Europe and Asia segments have been determined to be individually immaterial, as they do not meet the quantitative requirements for segment disclosure under ASC 280. In accordance with ASC 280, information about operating segments that are not reportable shall be combined and disclosed in an all other category separate from other reconciling items. As a result, these two segments have been combined in the segment operating results discussion. The results of the combined Europe and Asia segments are presented as “International Tire Operations.” The European operations include manufacturing operations in the U.K. and Serbia. The U.K. entity manufactures and markets motorcycle and racing tires and tire retread material for domestic and global markets. The Serbian entity manufactures passenger car and light truck tires primarily for the European markets and for export to the North American segment. The Asian operations are located in the PRC and Vietnam. Cooper Kunshan Tire manufactures passenger car and light truck tires both for the Chinese domestic market and for export to markets outside of the PRC. GRT, a joint venture manufacturing facility located in the PRC, serves as a global source of TBR tire production for the Company. The segment also procures certain TBR tires under off-take agreements with PCT, through mid-2021, and Sailun Vietnam, through December 31, 2020. On April 5, 2019, Cooper Vietnam and Sailun Vietnam established a joint venture in Vietnam, ACTR, which will produce and sell TBR tires in addition to the off-take agreement. The new joint venture is expected to begin commercially producing tires in 2020. The segment sells a majority of its tires in the replacement market, with a portion also sold to OEMs.

On January 17, 2019, Cooper Tire Europe, a wholly owned subsidiary of the Company, committed to a plan to cease light vehicle tire production at its Melksham, U.K. facility. The phasing out of light vehicle tire production was substantially completed in the third quarter of 2019. Approximately 300 roles were eliminated at the site. Cooper Tire Europe now obtains light vehicle tires to meet customer needs from other production sites within the Company’s global production network. Approximately 400 roles remain in Melksham to support the functions that continue there, including motorsports and motorcycle tire production, a materials business, Cooper Tire Europe headquarters, sales and marketing, and the Europe Technical Center.

The following table details segment financial information:



	Twelve Months Ended December 31,
	2019			2018			2017
Net sales:
Americas Tire
External customers	$	2,315,497		$	2,330,457		$	2,376,808
Intercompany	38,229			32,189			39,970
	2,353,726			2,362,646			2,416,778
International Tire
External customers	437,143			477,621			477,848
Intercompany	96,860			163,355			141,021
	534,003			640,976			618,869
Eliminations	(135,090		)	(195,560		)	(180,991		)
Consolidated net sales	2,752,639			2,808,062			2,854,656
Operating profit (loss):
Americas Tire	237,753			229,500			355,059
International Tire	(13,390		)	(14,044		)	15,168
Unallocated corporate charges	(49,968		)	(51,564		)	(59,153		)
Eliminations	60			1,353			(1,827		)
Consolidated operating profit	174,455			165,245			309,247

Interest expense	(31,189		)	(32,181		)	(32,048		)
Interest income	9,458			10,216			7,362
Other pension and postretirement benefit expense	(41,567		)	(27,806		)	(37,523		)
Other non-operating expense	(1,485		)	(1,416		)	(3,113		)
Income before income taxes	$	109,672		$	114,058		243,925
Depreciation and amortization expense:
Americas Tire	44,551			57,265			91,324
International Tire	31,654			34,564			33,303
Corporate	71,849			55,332			15,601
Consolidated depreciation and amortization expense	148,054			147,161			140,228
Segment assets:
Americas Tire	1,543,779			1,513,534			1,552,855
International Tire	739,076			662,226			700,690
Corporate and other	519,483			458,445			454,380
Consolidated assets	2,802,338			2,634,205			2,707,925
Expenditures for long-lived assets:
Americas Tire	111,819			112,444			109,175
International Tire	62,334			71,667			89,008
Corporate	28,569			9,188			(997		)
Consolidated expenditures for long-lived assets	202,722			193,299			197,186

Geographic information for long-lived assets follows:



	As of December 31,
	2019		2018		2017
Net sales
United States	$	2,175,599	$	2,196,424	$	2,240,882
Rest of world	577,040		611,638		613,774
Consolidated net sales	2,752,639		2,808,062		2,854,656
Long-lived assets ^(a)
United States	683,769		595,768		568,215
PRC	239,889		232,339		218,044
Rest of world	204,336		173,814		180,488
Consolidated long-lived assets	1,127,994		1,001,921		966,747

^(a) - Beginning in 2019, the company includes Right of Use Assets in the Long-lived assets for each segment.

The following customers of the Americas Tire Operations segment contributed ten percent or more of the Company’s total consolidated net sales in 2019, 2018 or 2017. Net sales and percentage of consolidated Company sales for these customers in 2019, 2018 and 2017 were as follows:



	2019				2018				2017
Customer	Net Sales		Consolidated Net Sales		Net Sales		Consolidated Net Sales		Net Sales		Consolidated Net Sales
American Tire Distributors, Inc.	$	311,559	11	%	$	310,070	11	%	$	252,395	9	%
TBC/Treadways	$	214,138	8	%	$	231,896	8	%	$	304,840	11	%