-----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, Fah7Tq0BvhE0VSjEKBKneX8P6EAYKXvl8fz4rlXuDvGV4kWgWfihCR2VTTAGOUtL IF2I9uvSqPrTOg154ZxHDg== 0000024491-97-000018.txt : 19970617 0000024491-97-000018.hdr.sgml : 19970617 ACCESSION NUMBER: 0000024491-97-000018 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970616 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-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-04329 FILM NUMBER: 97624693 BUSINESS ADDRESS: STREET 1: LIMA & WESTERN AVENUES CITY: FINDLAY STATE: OH ZIP: 45840 BUSINESS PHONE: 4194231321 10-K/A 1 FORM 10-K/A NO. 1 FOR THE PERIOD ENDING 12/31/96 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A No. 1 (Mark One) (X) Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 1996 or ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _________to________ Commission File Number 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) Registrant's telephone number, including area code: (419) 423-1321 Securities registered pursuant to Section 12(b) of the Act: (Name of each exchange on (Title of each class) which registered) Common Stock, $1 par per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ) Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (X) State the aggregate market value of the voting stock held by non-affiliates of the registrant (computed by reference to the closing price on the Composite Tape for securities listed on the New York Stock Exchange as of March 10, 1997). $1,585,095,440 Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. (Class) (Outstanding at March 10, 1997) Common Stock, $1 par per share 79,254,772 DOCUMENTS INCORPORATED BY REFERENCE List hereunder the following documents if incorporated by reference and the Part of the Form 10-K into which the document is incorporated: Proxy statement dated March 17, 1997 - Part III EXHIBIT INDEX appears on the following two pages INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS (As amended June 16, 1997 to file financial statements and supplemental schedules for the employee benefit plans identified below as exhibits (99)) Page(s) FINANCIAL STATEMENTS: Reference --------- Consolidated Statements of Income for the years ended December 31, 1996, 1995 and 1994 Consolidated Balance Sheets at December 31, 1996 and 1995 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1996, 1995 and 1994 Consolidated Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 Notes to Consolidated Financial Statements Report of Independent Auditors SUPPLEMENTARY INFORMATION: Quarterly Financial Data (Unaudited) FINANCIAL STATEMENT SCHEDULES: II Valuation and qualifying accounts EXHIBITS: (3) Certificate of Incorporation and Bylaws (i) Certificate of Incorporation, as restated and filed with the Secretary of State of Delaware on May 17, 1993, is incorporated herein by reference from Exhibit 3(i) of the Company's Form 10-Q for the quarter ended June 30, 1993 (ii) Bylaws, as amended May 5, 1987, are incorporated herein by reference from Exhibit 19 of the Company's Form 10-Q for the quarter ended June 30, 1987 (4) Rights agreement dated as of May 27, 1988 between the Company and KeyCorp Shareholder Services, Inc., as Rights Agent, is incorporated herein by reference from Exhibit 1 to the Company's Form 8-A dated June 3, 1988. (10) The following related documents are also incorporated by reference: a) 1981 Incentive Stock Option Plan - Form S-8 Registration Statement No. 2-77400, Exhibit 15(a) b) 1986 Incentive Stock Option Plan - Form S-8 Registration Statement No. 33-5483, Exhibit 4(a) c) Thrift and Profit Sharing Plan - Form S-8 Registration Statement No. 2-58577, Post-Effective Amendment No. 6, Exhibit 4 d) Employment Agreements - Form 10-K for fiscal year ended December 31, 1987, Exhibit 10 e) 1991 Stock Option Plan for Non-Employee Directors - Form S-8 Registration Statement No. 33-47980 and Appendix to the Company's Proxy Statement dated March 26, 1991 f) 1996 Stock Option Plan - Form S-8 Registration Statement No. 333-09619 and Appendix to the Company's Proxy Statement dated March 26, 1996 (12) Computation of Ratio of Earnings to Fixed Charges (continued) (13) Annual report to security holders, Form 10-Q or quarterly report to security holders (23) Consent of Independent Auditors (24) Powers of Attorney (27) Financial Data Schedule (99) Undertakings of the Company Financial statements and schedules of the Cooper Tire & Rubber Company Thrift and Profit Sharing Plan for the fiscal year ended December 31, 1996 1-16 Financial statements and schedules of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) for the fiscal year ended December 31, 1996 17-30 Financial statements and schedules of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) for the fiscal year ended December 31, 1996 31-44 Financial statements and schedules of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) for the fiscal year ended December 31, 1996 45-58 Financial statements and schedules of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) for the fiscal year ended December 31, 1996 59-72 Financial statements and schedules of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) for the fiscal year ended December 31, 1996 73-86 Financial statements and schedules of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) for the fiscal year ended December 31, 1996 87-100 All other schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedules, or because the information required is included in the financial statements or the notes thereto. SIGNATURES Registrant has duly caused this Form 10-K/A No. 1 to be signed on its behalf by the undersigned, thereunto duly authorized. COOPER TIRE & RUBBER COMPANY PATRICK W. ROONEY, Chairman of the Board, President, Chief Executive Officer and Director (Principal Executive Officer) J. ALEC REINHARDT, Executive Vice President and Director (Principal Financial Officer) JOHN FAHL, Vice President and Director EILEEN B. WHITE, Corporate Controller (Principal Accounting Officer) ARTHUR H. ARONSON, Director EDSEL D. DUNFORD, Director DEBORAH M. FRETZ, Director DENNIS J. GORMLEY, Director JOHN F. MEIER, Director ALLAN H. MELTZER, Director JOHN H. SHUEY, Director By /s/ Stan C. Kaiman -------------------------------- STAN C. KAIMAN, Attorney-in-fact Date: June 16, 1997 -------------- EXHIBIT (23) CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 2-58577, 33-35071, 33-47979, 33-47981, 33-47982, 33-52499, and 33-52505) of Cooper Tire & Rubber Company pertaining to the Company's Thrift and Profit Sharing Plan, the Pre-Tax Savings Plan (Texarkana), the Pre-Tax Savings Plan (Auburn), the Pre-Tax Savings Plan (Findlay), the Pre-Tax Savings Plan (El Dorado), the Pre-Tax Savings Plan (Bowling Green - Hose) and the Pre-Tax Savings Plan (Bowling Green - Sealing), respectively, of our reports dated May 16, 1997 with respect to the financial statements and schedules of the Cooper Tire & Rubber Company Thrift and Profit Sharing Plan, the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana), the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn), the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay), the Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado), the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose), and the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) included in Amendment No. 1 to the Annual Report (Form 10-K) of Cooper Tire & Rubber Company for the year ended December 31, 1996. /s/ Ernst & Young LLP --------------------- ERNST & YOUNG LLP Toledo, Ohio June 16, 1997 EXHIBIT (99) Cooper Tire & Rubber Company Thrift and Profit Sharing Plan Financial Statements and Schedules Years ended December 31, 1996 and 1995 Contents Report of Independent Auditors 1 Audited Financial Statements Statements of Assets Available for Plan Benefits 2 Statements of Changes in Assets Available for Plan Benefits 3 Notes to Financial Statements 4 Schedules Item 27a - Schedule of Assets Held for Investment Purposes 13 Item 27d - Schedule of Reportable Transactions 14 A schedule of party-in-interest transactions has not been presented because there were no party-in- interest transactions which are prohibited by ERISA Section 406 and for which there is no statutory or administrative exemption. 1 Report of Independent Auditors Thrift and Profit Sharing Plan Committee Cooper Tire & Rubber Company Thrift and Profit Sharing Plan We have audited the accompanying statements of assets available for plan benefits of the Cooper Tire & Rubber Company Thrift and Profit Sharing Plan as of December 31, 1996 and 1995, and the related statements of changes in assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for plan benefits of the Cooper Tire & Rubber Company Thrift and Profit Sharing Plan at December 31, 1996 and 1995, and the changes in its assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules of assets held for investment purposes as of December 31, 1996 and reportable transactions for the year then ended, are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The schedules have been subjected to the auditing procedures applied in our audit of the 1996 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1996 basic financial statements taken as a whole. May 16, 1997 1 2 Cooper Tire & Rubber Company Thrift and Profit Sharing Plan Statements of Assets Available for Plan Benefits
December 31 1996 1995 ------------ ------------ Assets Investments (Notes 4 and 5): Value of interest in Pooled Fund $231,005,924 $275,740,743 Confederation Fund (Note 2) 8,096,483 8,094,103 Cooper Tire & Rubber Company common stock 4,444,382 4,542,032 Washington Mutual Investors Fund 18,464 - Investment Company of America 15,987 - ----------- ----------- 243,581,240 288,376,878 Short-term investment 223,263 98,158 ----------- ----------- 243,804,503 288,475,036 Cash 2,990,614 2,030,755 Employer contribution receivable 3,140,072 3,169,433 ----------- ----------- Assets available for plan benefits $249,935,189 $293,675,224 =========== =========== See accompanying notes.
2 3 Cooper Tire & Rubber Company Thrift and Profit Sharing Plan Statements of Changes in Assets Available for Plan Benefits
Year ended December 31 1996 1995 ---------- ---------- Additions: Cash contributions: Participants $ 10,850,899 $ 11,265,606 Employer (gross amount before reduction for forfeitures) 7,820,247 7,651,176 Less forfeitures arising from withdrawals (180,000) (70,511) ----------- ----------- Net employer contributions 7,640,247 7,580,665 ----------- ----------- 18,491,146 18,846,271 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) (25,873,081) 24,367,750 Net appreciation in fair value of Cooper Tire & Rubber Company common stock (Note 5) 383,377 105,403 Dividends 68,368 30,890 Interest 7,258 4,160 ----------- ----------- (25,414,078) 24,508,203 ----------- ----------- Total additions (6,922,932) 43,354,474 Participants' withdrawals (36,817,103) (45,900,654) ----------- ----------- Decrease in assets available for plan benefits during the year (43,740,035) (2,546,180) Assets available for plan benefits at beginning of year 293,675,224 296,221,404 ----------- ----------- Assets available for plan benefits at end of year $249,935,189 $293,675,224 =========== =========== See accompanying notes.
3 4 Cooper Tire & Rubber Company Thrift and Profit Sharing Plan Notes to Financial Statements December 31, 1996 and 1995 1. Summary of Plan The Cooper Tire & Rubber Company Thrift and Profit Sharing Plan (Plan), is a defined contribution plan administered by a Plan Committee appointed by the plan sponsor, Cooper Tire & Rubber Company (the Company). Participation in the Plan is voluntary and any salaried employee of the Company is eligible to participate in the Plan if he or she has completed one year of continuous credited service. At December 31, 1996, 4,187 participants had designated investment of contributions in one or more investment options of the Plan, which are as follows: 1) Cooper Tire & Rubber Company common stock. 2) Mutual funds managed by the American Funds Group, a subsidiary of Capital Group Incorporated: a) The Investment Company of America Fund - managed to provide long-term growth of capital and income, placing greater emphasis on future dividends than on current income. b) The Washington Mutual Investors Fund - managed to provide current income and opportunity for capital growth through the selection of common stocks. 3) Cash with interest - contributions are placed in investment contracts with a diversified group of insurance companies, banks, and other financial institutions. This option may also include alternative investment contracts which are backed by high quality fixed income assets. All contracts have specific individual terms including interest rate and maturity date. The Plan provides the following: - After-tax dollar (ATD) contributions may be made in one percent multiples of participant's compensation up to sixteen percent. - Pre-tax dollar qualifier (PDQ) contributions may be made in one percent multiples of participant's compensation up to fifteen percent, subject to Internal Revenue Code (IRC) limits on annual contributions to the Plan. - In no event shall the aggregate of a participant's contributions exceed sixteen percent of participant's compensation. - The Company will contribute to the Plan each year from current or accumulated earnings an amount equal to the lesser of: (a) the aggregate of all ATD and PDQ contributions which represent up to six percent of each participant's compensation, less any forfeitures, or (b) an amount equal to fifteen percent of the Company's current year pre-tax earnings, exclusive of any deductions for contributions to the Plan, in excess of ten percent of the stockholders' equity of the Company at the beginning of the year. 4 5 1. Summary of Plan (continued) The Company's Board of Directors, at its discretion, may waive the limitation in (b) and contribute from current or accumulated earnings an amount not to exceed the limitation in (a). Administrative expenses of the Plan are paid by the Company. The Company's contributions are allocated to each participant's account in proportion to his or her ATD contributions and PDQ contributions up to an aggregate of six percent of the participant's compensation for each year. The Company contribution to a participant's account becomes vested after five years of continuous credited service; thereafter, Company contributions become vested when made. In addition, participants will have a fully vested right to the Company's contributions upon termination from the Plan due to retirement, total and permanent disability, or death and shall be eligible to receive the Company's contribution for that year as if he or she had not terminated participation. Earnings attributed to Company contributions allocated to a participant's account and those attributed to a participant's contributions are vested immediately. The Plan provides for total or partial withdrawal of a participant's account. Except for the unvested portion of Company contributions, a participant may withdraw the total of his or her ATD contributions and Company contributions at any time. No amounts may be withdrawn by a participant from PDQ contributions prior to termination of employment or plan termination unless the participant has either attained the age of 59 1/2, becomes totally and permanently disabled, or is able to demonstrate financial hardship. Partial withdrawals may be made twice in any calendar year. However, all withdrawals relating to PDQ contributions are subject to the IRC and regulations thereunder. Investment options for future contributions may be changed daily. Reallocation of balances may be made among the investment options daily. Directions given by participants to the Plan trustee concerning the voting of common stock are confidential. The Company has reserved the right to amend, modify, suspend or terminate the Plan at any time by action of its Board of Directors. Upon termination of the Plan, or upon the complete discontinuance of Company contributions under the Plan, the rights of each participant to the assets then held for his or her account under the Plan shall be nonforfeitable. No material amounts of withdrawals by participants, initiated on or before December 31, 1996 or 1995, were pending. 2. Significant Accounting Policies The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of (1) additions and deductions during the reporting period, and (2) assets and liabilities, as well as disclosure of contingent assets and liabilities, at the date of the financial statements. Actual results could differ from those estimates. 5 6 2. Significant Accounting Policies (continued) Investments The Plan's investments are held by National City Bank as trustee under an agreement which directs the trustee to invest participant contributions based on their investment elections. PDQ contributions and income not yet invested in the options selected by the participant due to the "transaction period" as defined by the Plan, are invested in cash with interest investments. Investments in common stock of Cooper Tire & Rubber Company (Company) are stated at quoted market values as determined on the last business day of the Plan year. Short-term investments are stated at cost which approximates fair value. The Confederation Fund at December 31, 1996 and 1995 is invested in annuity contracts with Confederation Life Insurance Company of Canada (Confederation Life). This insurance company was placed under the control of Canadian and United States governmental regulatory authorities in August, 1994. To protect the interests of the policyholders, the regulators froze the assets of the insurance company. These investments are valued in the financial statements at cost with interest accrued through July 31, 1994. The Company believes this approximates the fair value of the investments at December 31, 1996 and 1995. The Plan of Rehabilitation for Confederation Life became final on November 13, 1996. On March 12, 1997, the Company was notified the Rehabilitator had determined a fair value of the Confederation Life contracts held by the Thrift Plan was equal to 109.26% of the August, 1994 contract value. This adjustment was made by the Trustee effective March 31, 1997. On or about June 2, 1997, the total value of the Confederation Life account will be unfrozen and rolled into the Cash with Interest Fund. Certain investments of the Plan are combined with similar assets of the other defined contribution plans sponsored by the Company. The combined investments (Pooled Fund) are held by National City Bank as trustee and are valued at their fair value as determined by the trustee, except for fully benefit responsive investment contracts which are valued at contract value. At December 31, 1996 and 1995, the contract value of these contracts approximates fair value. Contributions Contributions are recorded when the Company makes payroll deductions for Plan participants, and are invested in any of four investment options at the participant's election. Contributions from the Company are accrued in the period in which they become obligations of the Company and may be in the form of cash, treasury stock or authorized but unissued common stock of the Company. Company contributions are invested in common stock of the Company until the contributions become vested after which they are invested as directed by the participant. The Company contribution to a participant's account becomes vested after five years of continuous credited service; thereafter, Company contributions become vested when made. Forfeitures Forfeitures occur when an employee elects a withdrawal from current year or unvested contributions or is terminated, voluntarily or involuntarily, before being fully vested. Forfeitures are used to reduce the Company obligation. 6 7 3. Income Tax Status The Internal Revenue Service issued a determination letter dated September 9, 1996 advising that the Plan, as amended, meets the requirements of Section 401(a) of the IRC and, therefore, the Trust created pursuant to the Plan qualifies as a tax-exempt Trust under Section 501(a). 4. Value of interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1996 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Armada Government Portfolio Fund $ 3,920,716 $ 2,549,491 $ 131,992 $ 77,455 Cooper Tire & Rubber Company Common Stock 154,672,046 Mutual funds: The Investment Company of America Fund 11,216,964 The Washington Mutual Investors Fund 16,458,231 Cash with Interest Fund: New York Life Insurance Company - 7.65% annuity contract; matures January 4, 2000 6,979,869 John Hancock Mutual Life Insurance Company - 8.27% annuity contract; matures October 31, 1997 6,754,591 Provident Life and Accident Insurance Company - 5.55% annuity contract; matures January 30, 1998 6,235,476 * Provident Life and Accident Insurance Company - 6.17% annuity contract; matures August 15, 2000 4,973,573 Principal Mutual Life Insurance Insurance Company - 4.73% annuity contract; matures July 31, 1997 4,211,797 * Allstate Life Insurance Company - 5.43% annuity contract; matures February 18, 2002 3,124,695 (continued) 7 8 * Allmerica Financial Life Insurance Company - 6.69% contract, matures November 15, 2004 3,054,620 * Caisse Des Depots (CDC) BRIC - 6.15% annuity contract; matures September 25, 2000 2,987,598 * John Hancock Mutual Life Insurance Company - 6.35% annuity contract; matures May 1, 2007 2,500,000 Commonwealth Life Insurance Company - 3.66% annuity contract; matures August 1, 1998 2,449,214 * Peoples Security Life - 5.29% annuity contract BDA-00217TR-3; matures December 17, 2001 2,401,106 * Caisse Des Depots (CDC) BRIC - 5.80% annuity contract; matures May 31, 2000 2,260,633 New York Life Insurance Company - 7.65% annuity contract; matures July 31, 1998 2,010,797 * Peoples Security Life - 6.08% annuity contract BDA-00217TR-1; matures December 15, 1999 1,998,773 * Peoples Security Life - 5.36% annuity contract BDA-00217TR-2; matures September 15, 1998 1,998,062 United of Omaha Life Insurance Company - variable rate annuity contract; matures August 2, 2000 1,995,680 * Peoples Security Life - 5.41% annuity contract BDA-00217TR-4; matures December 15, 1999 1,671,599 * Peoples Security Life - 6.17% annuity contract BDA-00217TR-5; matures August 15, 2001 1,498,125 ----------- ---------- ---------- ---------- Total assets $158,592,762 $61,655,699 $11,348,956 $16,535,686 =========== ========== ========== ==========
(continued) 8 9
December 31, 1995 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Armada Government Portfolio Fund $ 3,336,254 $ 154,498 $ - $1,304,299 Cooper Tire & Rubber Company Common Stock 207,226,787 Mutual funds: The Investment Company of America Fund 6,983,308 The Washington Mutual Investors Fund 8,429,803 Cash with Interest Fund: John Hancock Mutual Life Insurance Company - 8.27% annuity contract; matures October 31, 1997 10,450,587 Prudential Life Insurance Company - 5.48% annuity contract; matures July 31, 1996 9,053,865 Sun Life Insurance Company of Canada (U. S.) - 8.07% annuity contract; matures January 31, 1996 7,101,876 New York Life Insurance Company - 7.65% annuity contract; matures January 4, 2000 6,524,348 *Provident Life and Accident Insurance Company - 6.17% annuity contract; matures August 15, 2000 5,958,643 Provident Life and Accident Insurance Company - 5.55% annuity contract; matures January 30, 1998 5,924,419 Commonwealth Life Insurance Company - 3.66% annuity contract; 50% of balance matures January 31, 1996 and remainder matures July 31, 1998 4,710,320 Principal Mutual Life Insurance Company - 4.73% annuity contract; matures July 31, 1997 4,030,173 *Caisse Des Depots (CDC) BRIC - 6.15% annuity contract; matures September 25, 2000 3,002,945 *Peoples Security Life - 6.08% annuity contract; matures December 15, 1999 2,010,675 (continued) 9 10 United of Omaha Life Insurance Company - variable rate annuity contract; matures August 2, 2000 2,005,766 New York Life Insurance Company - 7.65% annuity contract; matures July 31, 1998 1,879,568 ----------- ---------- --------- --------- Total assets $210,563,041 $62,807,683 $6,983,308 $9,734,102 =========== ========== ========= ========= * Collateralized or synthetic guaranteed investment contract.
The average yield of the Cash with Interest Fund for the years ended December 31, 1996 and 1995 was 6.3% and 6.8%, respectively. The value of the Plan's interest in the Pooled Fund is $231,005,924 at December 31, 1996 and $275,740,743 at December 31, 1995. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1996 1995 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 93.1% 94.8% Cash with Interest Fund 95.6% 96.6% The Investment Company of America Fund 84.6% 87.7% The Washington Mutual Investors Fund 89.9% 91.9% The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1996 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 107,783 $3,754,969 $ 21,998 $ 22,910 Dividends 2,492,409 672,816 1,182,597 Net realized and unrealized gain(loss) (38,694,302) 1,167,742 1,802,447 ----------- --------- --------- --------- Net investment gain(loss) $(36,094,110) $3,754,969 $1,862,556 $3,007,954 ========== ========= ========= =========
(continued) 10 11
Year ended December 31, 1995 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 71,378 $3,862,115 $ 15,634 $ 14,846 Dividends 2,397,313 554,405 649,061 Net realized and unrealized gain 15,994,194 645,921 820,148 ----------- --------- --------- --------- Net investment gain $18,462,885 $3,862,115 $1,215,960 $1,484,055 ========== ========= ========= =========
The Plan's net investment loss from the Pooled Fund is $25,873,081 for the year ended December 31, 1996 and a net investment gain of $24,367,750 for the year ended December 31, 1995. The net investment gain or loss of the Pooled Fund is allocated to each participating plan based on the percentage of that Plan's units in each Pooled Fund category. 5. Investment Options Changes in amounts allocated to each of the Plan's investment options are summarized below:
Mutual Funds ----------------------- The The Common Investment Washington Stock Cash Company of Mutual of the with America Investors Company** Interest Fund Fund Total --------- -------- ---------- ---------- --------- Balance at January 1, 1995 $ 7,225,710 $ 8,094,103 $ - $ - $ 15,319,813 Additions (deductions): Contributions: Participants Employer (gross amount before reduction for forfeitures) 7,651,176 7,651,176 Less forfeitures arising from withdrawals (70,511) (70,511) ----------- ---------- --------- --------- ----------- Net employer contributions 7,580,665 7,580,665 ----------- ---------- --------- --------- ----------- Net appreciation 105,403 105,403 Interest and dividend income 35,050 35,050 ----------- ---------- --------- --------- ----------- Total additions 7,721,118 7,721,118 (continued) 11 12 Transferred to Pooled Fund (7,025,624) (7,025,624) Participants' withdrawals (111,581) (111,581) ----------- ---------- --------- --------- ----------- Balance at December 31, 1995 7,809,623 8,094,103 - - 15,903,726 Additions (deductions): Contributions: Participants Employer (gross amount before reduction for forfeitures) 7,820,247 7,820,247 Less forfeitures arising from withdrawals (180,000) (180,000) ----------- ---------- --------- --------- ----------- Net employer contributions 7,640,247 7,640,247 ----------- ---------- --------- --------- ----------- Net appreciation 383,377 383,377 Interest and dividend income 73,246 2,380 - - 75,626 Transferred from Pooled Fund for distribution - - 15,987 18,464 34,451 ----------- ---------- --------- --------- ----------- Total additions 8,096,870 2,380 15,987 18,464 8,133,701 Transferred to Pooled Fund (7,683,533) - - - (7,683,533) Participant withdrawals (213,633) - - - (213,633) ----------- ---------- --------- --------- ----------- Balance at December 31, 1996 $ 8,009,327 $ 8,096,483 $ 15,987 $ 18,464 $ 16,140,261 =========== ========== ========= ========= =========== **Includes employer contribution receivable and short-term investments designated for investment in common stock of the Company.
12 13 Schedules 14 Cooper Tire & Rubber Company Thrift and Profit Sharing Plan Employer Identification #34-4297750; Plan #005 Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1996
Shares, Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ---------- -------- *Cooper Tire & Rubber Company common stock 225,032 $4,646,337 $4,444,382 Washington Mutal Investors Fund 752 16,296 18,464 Investment Company of America 660 14,050 15,987 --------- --------- $4,676,683 $4,478,833 ========= ========= Confederation Fund: Confederation Life Insurance Company - 6.06% annuity contract; matures July 31, 1997 5,000,000 $5,000,000 $5,000,000 Confederation Life Insurance Company - 6.19% annuity contract; matures January 31, 1998 3,033,286 3,033,286 3,033,286 Short-term investment: *Armada Government Portfolio Fund 63,197 63,197 63,197 --------- --------- Total Confederation Fund $8,096,483 $8,096,483 ========= ========= Short-term investment: *Armada Government Portfolio Fund 223,263 $ 223,263 $ 223,263 ========= ========= * Party-in-interest
13 15 Cooper Tire & Rubber Company Thrift and Profit Sharing Plan Employer Identification #34-4297750; Plan #005 Item 27d - Schedule of Reportable Transactions Year Ended December 31, 1996
Sales ----------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - ---------------------- --------- -------- --------- -------- Armada Government Portfolio Fund $7,699,027 $7,689,260 $7,689,260 $ - Cooper Tire & Rubber Company common stock 7,701,212 - - - Note: The purchase and selling price for each reportable transaction represents its fair value at the time of acquisition or disposition.
14 16 EXHIBIT (99) Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) Financial Statements and Schedules Years ended December 31, 1996 and 1995 Contents Report of Independent Auditors 1 Audited Financial Statements Statements of Assets Available for Plan Benefits 2 Statements of Changes in Assets Available for Plan Benefits 3 Notes to Financial Statements 4 Schedules Item 27a - Schedule of Assets Held for Investment Purposes 11 Item 27d - Schedule of Reportable Transactions 12 A schedule of party-in-interest transactions has not been presented because there were no party-in- interest transactions which are prohibited by ERISA Section 406 and for which there is no statutory or administrative exemption. 17 Report of Independent Auditors Pre-Tax Savings Plan Committee Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) We have audited the accompanying statements of assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) as of December 31, 1996 and 1995, and the related statements of changes in assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) at December 31, 1996 and 1995, and the changes in its assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules of assets held for investment purposes as of December 31, 1996 and reportable transactions for the year then ended, are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The schedules have been subjected to the auditing procedures applied in our audit of the 1996 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1996 basic financial statements taken as a whole. May 16, 1997 1 18 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) Statements of Assets Available for Plan Benefits
December 31 1996 1995 ---------- ---------- Assets Investments: Value of interest in Pooled Fund (Note 4) $8,261,977 $7,954,165 Cooper Tire & Rubber Company common stock 148,622 161,294 --------- --------- 8,410,599 8,115,459 Short-term investment 1,434 430 --------- --------- 8,412,033 8,115,889 Cash 95,515 109,279 Employer contribution receivable 112,596 114,127 --------- --------- Assets available for plan benefits $8,620,144 $8,339,295 ========= ========= See accompanying notes.
2 19 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) Statements of Changes in Assets Available for Plan Benefits
Year ended December 31 1996 1995 ---------- ---------- Additions: Cash contributions: Participants $1,907,977 $2,158,916 Employer 264,020 270,884 --------- --------- 2,171,997 2,429,800 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) (1,110,919) 269,120 Net appreciation in fair value of Cooper Tire & Rubber Company common stock 18,432 4,559 Dividends 1,271 318 Interest 210 90 --------- --------- (1,091,006) 274,087 --------- --------- Total additions 1,080,991 2,703,887 Participants' withdrawals (800,142) (887,828) --------- --------- Increase in assets available for plan benefits during the year 280,849 1,816,059 Assets available for plan benefits at beginning of year 8,339,295 6,523,236 --------- --------- Assets available for plan benefits at end of year $8,620,144 $8,339,295 ========= ========= See accompanying notes.
3 20 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) Notes to Financial Statements December 31, 1996 and 1995 1. Summary of Plan The Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) (Plan), as amended and restated, is a defined contribution plan administered by a Plan Committee appointed by the plan sponsor, Cooper Tire & Rubber Company (the Company). Participation in the Plan is voluntary and any employee of the Company eligible for membership in Local Union #752, United Steelworkers of America AFL-CIO/CLC (Union) is eligible to participate in the Plan if he or she has completed thirty days of continuous credited service. At December 31, 1996, 860 participants had designated investment of contributions in one or more investment options of the Plan, which are as follows: 1) Cooper Tire & Rubber Company common stock. 2) Mutual funds managed by the American Funds Group, a subsidiary of Capital Group Incorporated: a) The Investment Company of America Fund - managed to provide long-term growth of capital and income, placing greater emphasis on future dividends than on current income. b) The Washington Mutual Investors Fund - managed to provide current income and opportunity for capital growth through the selection of common stocks. 3) Cash with interest - contributions are placed in investment contracts with a diversified group of insurance companies, banks, and other financial institutions. This option may also include alternative investment contracts which are backed by high quality fixed income assets. All contracts have specific individual terms including interest rate and maturity date. The Plan provides that Pre-Tax Savings Plan (PSP) contributions may be made in one percent multiples of a participant's compensation up to fifteen percent, subject to Internal Revenue Code (IRC) limits on annual contributions to the Plan. The amount of contribution may be changed every thirty days. The Plan provides that, beginning in 1994, the Company will contribute to the Plan each year from current or accumulated earnings an amount equal to the lesser of: (a) 25% of PSP contributions which represent up to four percent of each participant's compensation, less any forfeitures, or (b) an amount equal to fifteen percent of the Company's current year pre-tax earnings, exclusive of any deductions for contributions to the Plan, in excess of ten percent of the stockholders' equity of the Company at the beginning of the year. 4 21 1. Summary of Plan (continued) The Company's Board of Directors, at its discretion, may waive the limitation in (b) and contribute from current or accumulated earnings an amount not to exceed the limitation in (a). Administrative expenses of the Plan are paid by the Company. Investment options for future contributions may be changed daily. Reallocation of balances may be made among the investment options daily. Directions given by participants to the Plan trustee concerning the voting of common stock are confidential. No amounts may be withdrawn by a participant from PSP contributions prior to termination of employment unless the participant has either attained age 59 1/2, becomes totally and permanently disabled, or is able to demonstrate financial hardship. Hardship withdrawals by participants not yet attaining 59 1/2 years of age are limited to PSP contributions and are subject to the IRC and regulations thereunder. Participants are fully vested in their contributions and earnings thereon. The Plan shall continue until March 5, 1999. Thereafter it shall renew itself for yearly periods unless written notice is given by the Company or the Union that it is desired to terminate or amend the Plan. The Company has reserved the right to amend the Plan at any time if such amendment is necessary to enable the Plan to meet the requirements of the IRC or the requirements of any governmental authority. If the Plan terminates, and a successor plan is not adopted, all assets will be distributed to participants in a lump sum. No material amounts of withdrawals by participants, initiated on or before December 31, 1996 or 1995, were pending. 2. Significant Accounting Policies The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of (1) additions and deductions during the reporting period, and (2) assets and liabilities, as well as disclosure of contingent assets and liabilities, at the date of the financial statements. Actual results could differ from those estimates. Investments The Plan's investments are held by National City Bank as trustee under an agreement which directs the trustee to invest participant contributions based on their investment elections. PSP contributions and income not yet invested in the options selected by the participant due to the "transaction period" as defined by the Plan, are invested in cash with interest investments. Investments in common stock of Cooper Tire & Rubber Company (Company) are stated at quoted market values as determined on the last business day of the Plan year. Short-term investments are stated at cost which approximates fair value. Certain investments of the Plan are combined with similar assets of the other defined contribution plans sponsored by the Company. The combined investments (Pooled Fund) are held by National City Bank as trustee and are valued at their fair value as determined by the trustee, except for fully benefit responsive investment contracts which are valued at contract value. At December 31, 1996 and 1995, the contract value of these contracts approximates fair value. 5 22 2. Significant Accounting Policies (continued) Contributions Contributions are recorded when the Company makes payroll deductions for Plan participants, and are invested in any of four investment options at the participant's election. Contributions from the Company are accrued in the period in which they become obligations of the Company and may be in the form of cash, treasury stock or authorized but unissued common stock of the Company. Company contributions are invested in common stock of the Company until the contributions become vested after which they are invested as directed by the participant. The Company contribution to a participant's account becomes vested after five years of continuous credited service; thereafter, Company contributions become vested when made. Forfeitures Forfeitures occur when an employee elects a withdrawal from current year or unvested contributions or is terminated, voluntarily or involuntarily, before being fully vested. Forfeitures are used to reduce the Company obligation. 3. Income Tax Status The Internal Revenue Service issued a determination letter dated September 9, 1996 advising that the Plan meets the requirements of Section 401(a) of the IRC and, therefore, the Trust created pursuant to the Plan qualifies as a tax-exempt Trust under Section 501(a). 4. Value of interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1996 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Armada Government Portfolio Fund $ 3,920,716 $ 2,549,491 $ 131,992 $ 77,455 Cooper Tire & Rubber Company Common Stock 154,672,046 Mutual funds: The Investment Company of America Fund 11,216,964 The Washington Mutual Investors Fund 16,458,231 (continued) 6 23 Cash with Interest Fund: New York Life Insurance Company - 7.65% annuity contract; matures January 4, 2000 6,979,869 John Hancock Mutual Life Insurance Company - 8.27% annuity contract; matures October 31, 1997 6,754,591 Provident Life and Accident Insurance Company - 5.55% annuity contract; matures January 30, 1998 6,235,476 * Provident Life and Accident Insurance Company - 6.17% annuity contract; matures August 15, 2000 4,973,573 Principal Mutual Life Insurance Insurance Company - 4.73% annuity contract; matures July 31, 1997 4,211,797 * Allstate Life Insurance Company - 5.43% annuity contract; matures February 18, 2002 3,124,695 * Allmerica Financial Life Insurance Company - 6.69% contract, matures November 15, 2004 3,054,620 * Caisse Des Depots (CDC) BRIC - 6.15% annuity contract; matures September 25, 2000 2,987,598 * John Hancock Mutual Life Insurance Company - 6.35% annuity contract; matures May 1, 2007 2,500,000 Commonwealth Life Insurance Company - 3.66% annuity contract; matures August 1, 1998 2,449,214 * Peoples Security Life - 5.29% annuity contract BDA-00217TR-3; matures December 17, 2001 2,401,106 * Caisse Des Depots (CDC) BRIC - 5.80% annuity contract; matures May 31, 2000 2,260,633 New York Life Insurance Company - 7.65% annuity contract; matures July 31, 1998 2,010,797 * Peoples Security Life - 6.08% annuity contract BDA-00217TR-1; matures December 15, 1999 1,998,773 * Peoples Security Life - 5.36% annuity contract BDA-00217TR-2; matures September 15, 1998 1,998,062 (continued) 7 24 United of Omaha Life Insurance Company - variable rate annuity contract; matures August 2, 2000 1,995,680 * Peoples Security Life - 5.41% annuity contract BDA-00217TR-4; matures December 15, 1999 1,671,599 * Peoples Security Life - 6.17% annuity contract BDA-00217TR-5; matures August 15, 2001 1,498,125 ----------- ---------- ---------- ---------- Total assets $158,592,762 $61,655,699 $11,348,956 $16,535,686 =========== ========== ========== ==========
December 31, 1995 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Armada Government Portfolio Fund $ 3,336,254 $ 154,498 $ - $1,304,299 Cooper Tire & Rubber Company Common Stock 207,226,787 Mutual funds: The Investment Company of America Fund 6,983,308 The Washington Mutual Investors Fund 8,429,803 Cash with Interest Fund: John Hancock Mutual Life Insurance Company - 8.27% annuity contract; matures October 31, 1997 10,450,587 Prudential Life Insurance Company - 5.48% annuity contract; matures July 31, 1996 9,053,865 Sun Life Insurance Company of Canada (U. S.) - 8.07% annuity contract; matures January 31, 1996 7,101,876 New York Life Insurance Company - 7.65% annuity contract; matures January 4, 2000 6,524,348 *Provident Life and Accident Insurance Company - 6.17% annuity contract; matures August 15, 2000 5,958,643 Provident Life and Accident Insurance Company - 5.55% annuity contract; matures January 30, 1998 5,924,419 (continued) 8 25 Commonwealth Life Insurance Company - 3.66% annuity contract; 50% of balance matures January 31, 1996 and remainder matures July 31, 1998 4,710,320 Principal Mutual Life Insurance Company - 4.73% annuity contract; matures July 31, 1997 4,030,173 *Caisse Des Depots (CDC) BRIC - 6.15% annuity contract; matures September 25, 2000 3,002,945 *Peoples Security Life - 6.08% annuity contract; matures December 15, 1999 2,010,675 United of Omaha Life Insurance Company - variable rate annuity contract; matures August 2, 2000 2,005,766 New York Life Insurance Company - 7.65% annuity contract; matures July 31, 1998 1,879,568 ----------- ---------- --------- --------- Total assets $210,563,041 $62,807,683 $6,983,308 $9,734,102 =========== ========== ========= ========= * Collateralized or synthetic guaranteed investment contract.
The average yield of the Cash with Interest Fund for the years ended December 31, 1996 and 1995 was 6.3% and 6.8%, respectively. The value of the Plan's interest in the Pooled Fund is $8,261,977 at December 31, 1996 and $7,954,165 at December 31, 1995. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1996 1995 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 3.8% 3.1% Cash with Interest Fund 2.3% 1.9% The Investment Company of America Fund 3.1% 1.0% The Washington Mutual Investors Fund 2.9% 1.7% (continued) 9 26 The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1996 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 107,783 $3,754,969 $ 21,998 $ 22,910 Dividends 2,492,409 672,816 1,182,597 Net realized and unrealized gain(loss) (38,694,302) 1,167,742 1,802,447 ----------- --------- --------- --------- Net investment gain(loss) $(36,094,110) $3,754,969 $1,862,556 $3,007,954 ========== ========= ========= =========
Year ended December 31, 1995 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 71,378 $3,862,115 $ 15,634 $ 14,846 Dividends 2,397,313 554,405 649,061 Net realized and unrealized gain 15,994,194 645,921 820,148 ----------- --------- --------- --------- Net investment gain $18,462,885 $3,862,115 $1,215,960 $1,484,055 ========== ========= ========= =========
The Plan's net investment loss from the Pooled Fund is $1,110,919 for the year ended December 31, 1996 and a net investment gain of $269,120 for the year ended December 31, 1995. The net investment gain or loss of the Pooled Fund is allocated to each participating plan based on the percentage of that Plan's units in each Pooled Fund category. 10 27 Schedules 28 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) Employer Identification #34-4297750; Plan #012 Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1996
Shares, Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ---------- -------- *Cooper Tire & Rubber Company common stock 7,525 $152,550 $148,622 ======= ======= Short-term investment: *Armada Government Portfolio Fund 1,435 $ 1,434 $ 1,434 ======= ======= * Party-in-interest
11 29 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) Employer Identification #34-4297750; Plan #012 Item 27d - Schedule of Reportable Transactions Year Ended December 31, 1996
Sales ----------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - ---------------------- --------- -------- --------- -------- Armada Government Portfolio Fund $266,445 $265,441 $265,441 $ - Cooper Tire & Rubber Company common stock 265,859 - - - Note: The purchase and selling price for each reportable transaction represents its fair value at the time of acquisition or disposition.
12 30 EXHIBIT (99) Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) Financial Statements and Schedules Years ended December 31, 1996 and 1995 Contents Report of Independent Auditors 1 Audited Financial Statements Statements of Assets Available for Plan Benefits 2 Statements of Changes in Assets Available for Plan Benefits 3 Notes to Financial Statements 4 Schedules Item 27a - Schedule of Assets Held for Investment Purposes 11 Item 27d - Schedule of Reportable Transactions 12 A schedule of party-in-interest transactions has not been presented because there were no party-in- interest transactions which are prohibited by ERISA Section 406 and for which there is no statutory or administrative exemption. 31 Report of Independent Auditors Pre-Tax Savings Plan Committee Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) We have audited the accompanying statements of assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) as of December 31, 1996 and 1995, and the related statements of changes in assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) at December 31, 1996 and 1995, and the changes in its assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules of assets held for investment purposes as of December 31, 1996 and reportable transactions for the year then ended, are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The schedules have been subjected to the auditing procedures applied in our audit of the 1996 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1996 basic financial statements taken as a whole. May 16, 1997 1 32 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) Statements of Assets Available for Plan Benefits
December 31 1996 1995 ---------- ---------- Assets Investments: Value of interest in Pooled Fund (Note 4) $849,375 $696,004 Cooper Tire & Rubber Company common stock 28,218 22,630 ------- ------- 877,593 718,634 Short-term investment 732 105 ------- ------- 878,325 718,739 Cash 14,533 13,059 Employer contribution receivable 17,804 15,445 ------- ------- Assets available for plan benefits $910,662 $747,243 ======= ======= See accompanying notes.
2 33 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) Statements of Changes in Assets Available for Plan Benefits
Year ended December 31 1996 1995 ---------- ---------- Additions: Cash contributions: Participants $258,687 $245,285 Employer 46,975 37,444 ------- ------- 305,662 282,729 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) (60,566) 42,824 Net appreciation in fair value of Cooper Tire & Rubber Company common stock 2,504 680 Dividends 198 45 Interest 30 11 ------- ------- (57,834) 43,560 ------- ------- Total additions 247,828 326,289 Participants' withdrawals (84,409) (33,780) ------- ------- Increase in assets available for plan benefits during the year 163,419 292,509 Assets available for plan benefits at beginning of year 747,243 454,734 ------- ------- Assets available for plan benefits at end of year $910,662 $747,243 ======= ======= See accompanying notes.
3 34 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) Notes to Financial Statements December 31, 1996 and 1995 1. Summary of Plan The Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) (Plan), as amended and restated, is a defined contribution plan administered by a Plan Committee appointed by the plan sponsor, Cooper Tire & Rubber Company (the Company). Participation in the Plan is voluntary and any employee of the Company eligible for membership in Local Union #634, United Steelworkers of America AFL-CIO/CLC (Union) is eligible to participate in the Plan if he or she has completed thirty days of continuous credited service. At December 31, 1996, 205 participants had designated investment of contributions in one or more investment options of the Plan, which are as follows: 1) Cooper Tire & Rubber Company common stock. 2) Mutual funds managed by the American Funds Group, a subsidiary of Capital Group Incorporated: a) The Investment Company of America Fund - managed to provide long-term growth of capital and income, placing greater emphasis on future dividends than on current income. b) The Washington Mutual Investors Fund - managed to provide current income and opportunity for capital growth through the selection of common stocks. 3) Cash with interest - contributions are placed in investment contracts with a diversified group of insurance companies, banks, and other financial institutions. This option may also include alternative investment contracts which are backed by high quality fixed income assets. All contracts have specific individual terms including interest rate and maturity date. The Plan provides that Pre-Tax Savings Plan (PSP) contributions may be made in one percent multiples of a participant's compensation up to fifteen percent, subject to Internal Revenue Code (IRC) limits on annual contributions to the Plan. The amount of contribution may be changed every thirty days. The Plan provides that, beginning in 1995, the Company will contribute to the Plan each year from current or accumulated earnings an amount equal to the lesser of: (a) 25% of PSP contributions which represent up to four percent of each participant's compensation, less any forfeitures, or (b) an amount equal to fifteen percent of the Company's current year pre-tax earnings, exclusive of any deductions for contributions to the Plan, in excess of ten percent of the stockholders' equity of the Company at the beginning of the year. 4 35 1. Summary of Plan (continued) The Company's Board of Directors, at its discretion, may waive the limitation in (b) and contribute from current or accumulated earnings an amount not to exceed the limitation in (a). Administrative expenses of the Plan are paid by the Company. Investment options for future contributions may be changed daily. Reallocation of balances may be made among the investment options daily. Directions given by participants to the Plan trustee concerning the voting of common stock are confidential. No amounts may be withdrawn by a participant from PSP contributions prior to termination of employment unless the participant has either attained age 59 1/2, becomes totally and permanently disabled, or is able to demonstrate financial hardship. Hardship withdrawals by participants not yet attaining 59 1/2 years of age are limited to PSP contributions and are subject to the IRC and regulations thereunder. Participants are fully vested in their contributions and earnings thereon. The Plan shall continue until December 5, 1997. Thereafter it shall renew itself for yearly periods unless written notice is given by the Company or the Union that it is desired to terminate or amend the Plan. The Company has reserved the right to amend the Plan at any time if such amendment is necessary to enable the Plan to meet the requirements of the IRC or the requirements of any governmental authority. If the Plan terminates, and a successor plan is not adopted, all assets will be distributed to participants in a lump sum. No material amounts of withdrawals by participants, initiated on or before December 31, 1996 or 1995, were pending. 2. Significant Accounting Policies The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of (1) additions and deductions during the reporting period, and (2) assets and liabilities, as well as disclosure of contingent assets and liabilities, at the date of the financial statements. Actual results could differ from those estimates. Investments The Plan's investments are held by National City Bank as trustee under an agreement which directs the trustee to invest participant contributions based on their investment elections. PSP contributions and income not yet invested in the options selected by the participant due to the "transaction period" as defined by the Plan, are invested in cash with interest investments. Investments in common stock of Cooper Tire & Rubber Company (Company) are stated at quoted market values as determined on the last business day of the Plan year. Short-term investments are stated at cost which approximates fair value. Certain investments of the Plan are combined with similar assets of the other defined contribution plans sponsored by the Company. The combined investments (Pooled Fund) are held by National City Bank as trustee and are valued at their fair value as determined by the trustee, except for fully benefit responsive investment contracts which are valued at contract value. At December 31, 1996 and 1995, the contract value of these contracts approximates fair value. 5 36 2. Significant Accounting Policies (continued) Contributions Contributions are recorded when the Company makes payroll deductions for Plan participants, and are invested in any of four investment options at the participant's election. Contributions from the Company are accrued in the period in which they become obligations of the Company and may be in the form of cash, treasury stock or authorized but unissued common stock of the Company. Company contributions are invested in common stock of the Company until the contributions become vested after which they are invested as directed by the participant. The Company contribution to a participant's account becomes vested after five years of continuous credited service; thereafter, Company contributions become vested when made. Forfeitures Forfeitures occur when an employee elects a withdrawal from current year or unvested contributions or is terminated, voluntarily or involuntarily, before being fully vested. Forfeitures are used to reduce the Company obligation. 3. Income Tax Status The Internal Revenue Service issued a determination letter dated September 9, 1996 advising that the Plan meets the requirements of Section 401(a) of the IRC and, therefore, the Trust created pursuant to the Plan qualifies as a tax-exempt Trust under Section 501(a). 4. Value of interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1996 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Armada Government Portfolio Fund $ 3,920,716 $ 2,549,491 $ 131,992 $ 77,455 Cooper Tire & Rubber Company Common Stock 154,672,046 Mutual funds: The Investment Company of America Fund 11,216,964 The Washington Mutual Investors Fund 16,458,231 (continued) 6 37 Cash with Interest Fund: New York Life Insurance Company - 7.65% annuity contract; matures January 4, 2000 6,979,869 John Hancock Mutual Life Insurance Company - 8.27% annuity contract; matures October 31, 1997 6,754,591 Provident Life and Accident Insurance Company - 5.55% annuity contract; matures January 30, 1998 6,235,476 * Provident Life and Accident Insurance Company - 6.17% annuity contract; matures August 15, 2000 4,973,573 Principal Mutual Life Insurance Insurance Company - 4.73% annuity contract; matures July 31, 1997 4,211,797 * Allstate Life Insurance Company - 5.43% annuity contract; matures February 18, 2002 3,124,695 * Allmerica Financial Life Insurance Company - 6.69% contract, matures November 15, 2004 3,054,620 * Caisse Des Depots (CDC) BRIC - 6.15% annuity contract; matures September 25, 2000 2,987,598 * John Hancock Mutual Life Insurance Company - 6.35% annuity contract; matures May 1, 2007 2,500,000 Commonwealth Life Insurance Company - 3.66% annuity contract; matures August 1, 1998 2,449,214 * Peoples Security Life - 5.29% annuity contract BDA-00217TR-3; matures December 17, 2001 2,401,106 * Caisse Des Depots (CDC) BRIC - 5.80% annuity contract; matures May 31, 2000 2,260,633 New York Life Insurance Company - 7.65% annuity contract; matures July 31, 1998 2,010,797 * Peoples Security Life - 6.08% annuity contract BDA-00217TR-1; matures December 15, 1999 1,998,773 * Peoples Security Life - 5.36% annuity contract BDA-00217TR-2; matures September 15, 1998 1,998,062 (continued) 7 38 United of Omaha Life Insurance Company - variable rate annuity contract; matures August 2, 2000 1,995,680 * Peoples Security Life - 5.41% annuity contract BDA-00217TR-4; matures December 15, 1999 1,671,599 * Peoples Security Life - 6.17% annuity contract BDA-00217TR-5; matures August 15, 2001 1,498,125 ----------- ---------- ---------- ---------- Total assets $158,592,762 $61,655,699 $11,348,956 $16,535,686 =========== ========== ========== ==========
December 31, 1995 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Armada Government Portfolio Fund $ 3,336,254 $ 154,498 $ - $1,304,299 Cooper Tire & Rubber Company Common Stock 207,226,787 Mutual funds: The Investment Company of America Fund 6,983,308 The Washington Mutual Investors Fund 8,429,803 Cash with Interest Fund: John Hancock Mutual Life Insurance Company - 8.27% annuity contract; matures October 31, 1997 10,450,587 Prudential Life Insurance Company - 5.48% annuity contract; matures July 31, 1996 9,053,865 Sun Life Insurance Company of Canada (U. S.) - 8.07% annuity contract; matures January 31, 1996 7,101,876 New York Life Insurance Company - 7.65% annuity contract; matures January 4, 2000 6,524,348 *Provident Life and Accident Insurance Company - 6.17% annuity contract; matures August 15, 2000 5,958,643 Provident Life and Accident Insurance Company - 5.55% annuity contract; matures January 30, 1998 5,924,419 (continued) 8 39 Commonwealth Life Insurance Company - 3.66% annuity contract; 50% of balance matures January 31, 1996 and remainder matures July 31, 1998 4,710,320 Principal Mutual Life Insurance Company - 4.73% annuity contract; matures July 31, 1997 4,030,173 *Caisse Des Depots (CDC) BRIC - 6.15% annuity contract; matures September 25, 2000 3,002,945 *Peoples Security Life - 6.08% annuity contract; matures December 15, 1999 2,010,675 United of Omaha Life Insurance Company - variable rate annuity contract; matures August 2, 2000 2,005,766 New York Life Insurance Company - 7.65% annuity contract; matures July 31, 1998 1,879,568 ----------- ---------- --------- --------- Total assets $210,563,041 $62,807,683 $6,983,308 $9,734,102 =========== ========== ========= ========= * Collateralized or synthetic guaranteed investment contract.
The average yield of the Cash with Interest Fund for the years ended December 31, 1996 and 1995 was 6.3% and 6.8%, respectively. The value of the Plan's interest in the Pooled Fund is $849,375 at December 31, 1996 and $696,004 at December 31, 1995. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1996 1995 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 0.3% 0.2% Cash with Interest Fund 0.3% 0.2% The Investment Company of America Fund 1.0% 1.0% The Washington Mutual Investors Fund 0.4% 0.5% (continued) 9 40 The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1996 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 107,783 $3,754,969 $ 21,998 $ 22,910 Dividends 2,492,409 672,816 1,182,597 Net realized and unrealized gain(loss) (38,694,302) 1,167,742 1,802,447 ----------- --------- --------- --------- Net investment gain(loss) $(36,094,110) $3,754,969 $1,862,556 $3,007,954 ========== ========= ========= =========
Year ended December 31, 1995 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 71,378 $3,862,115 $ 15,634 $ 14,846 Dividends 2,397,313 554,405 649,061 Net realized and unrealized gain 15,994,194 645,921 820,148 ----------- --------- --------- --------- Net investment gain $18,462,885 $3,862,115 $1,215,960 $1,484,055 ========== ========= ========= =========
The Plan's net investment loss from the Pooled Fund is $60,566 for the year ended December 31, 1996 and a net investment gain of $42,824 for the year ended December 31, 1995. The net investment gain or loss of the Pooled Fund is allocated to each participating plan based on the percentage of that Plan's units in each Pooled Fund category. 10 41 Schedules 42 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) Employer Identification #34-4297750; Plan #009 Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1996
Shares, Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ---------- -------- *Cooper Tire & Rubber Company common stock 1,428 $28,657 $28,218 ====== ====== Short-term investment: *Armada Government Portfolio Fund 732 $ 732 $ 732 ====== ====== * Party-in-interest
11 43 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) Employer Identification #34-4297750; Plan #009 Item 27d - Schedule of Reportable Transactions Year Ended December 31, 1996
Sales ----------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - ---------------------- --------- -------- --------- -------- Armada Government Portfolio Fund $45,249 $44,623 $44,623 $ - Cooper Tire & Rubber Company common stock 44,558 - - - Note: The purchase and selling price for each reportable transaction represents its fair value at the time of acquisition or disposition.
12 44 EXHIBIT (99) Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) Financial Statements and Schedules Years ended December 31, 1996 and 1995 Contents Report of Independent Auditors 1 Audited Financial Statements Statements of Assets Available for Plan Benefits 2 Statements of Changes in Assets Available for Plan Benefits 3 Notes to Financial Statements 4 Schedules Item 27a - Schedule of Assets Held for Investment Purposes 11 Item 27d - Schedule of Reportable Transactions 12 A schedule of party-in-interest transactions has not been presented because there were no party-in- interest transactions which are prohibited by ERISA Section 406 and for which there is no statutory or administrative exemption. 45 Report of Independent Auditors Pre-Tax Savings Plan Committee Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) We have audited the accompanying statements of assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) as of December 31, 1996 and 1995, and the related statements of changes in assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) at December 31, 1996 and 1995, and the changes in its assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules of assets held for investment purposes as of December 31, 1996 and reportable transactions for the year then ended, are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The schedules have been subjected to the auditing procedures applied in our audit of the 1996 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1996 basic financial statements taken as a whole. May 16, 1997 1 46 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) Statements of Assets Available for Plan Benefits
December 31 1996 1995 ---------- ---------- Assets Investments: Value of interest in Pooled Fund (Note 4) $6,824,999 $4,983,484 Cooper Tire & Rubber Company common stock 135,844 78,899 --------- --------- 6,960,843 5,062,383 Short-term investment 996 569 --------- --------- 6,961,839 5,062,952 Cash 142,974 84,112 Employer contribution receivable 134,794 172,716 --------- --------- Assets available for plan benefits $7,239,607 $5,319,780 ========= ========= See accompanying notes.
2 47 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) Statements of Changes in Assets Available for Plan Benefits
Year ended December 31 1996 1995 ---------- ---------- Additions: Cash contributions: Participants $2,228,008 $2,048,398 Employer 272,696 249,717 --------- --------- 2,500,704 2,298,115 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) (370,247) 311,788 Net appreciation in fair value of Cooper Tire & Rubber Company common stock 9,210 2,031 Dividends 800 156 Interest 193 44 --------- --------- (360,044) 314,019 --------- --------- Total additions 2,140,660 2,612,134 Participants' withdrawals (220,833) (155,168) --------- --------- Increase in assets available for plan benefits during the year 1,919,827 2,456,966 Assets available for plan benefits at beginning of year 5,319,780 2,862,814 --------- --------- Assets available for plan benefits at end of year $7,239,607 $5,319,780 ========= ========= See accompanying notes.
3 48 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) Notes to Financial Statements December 31, 1996 and 1995 1. Summary of Plan The Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) (Plan), as amended and restated, is a defined contribution plan administered by a Plan Committee appointed by the plan sponsor, Cooper Tire & Rubber Company (the Company). Participation in the Plan is voluntary and any employee of the Company eligible for membership in Local Union #207, United Steelworkers of America AFL-CIO/CLC (Union) is eligible to participate in the Plan if he or she has completed thirty days of continuous credited service. At December 31, 1996, 592 participants had designated investment of contributions in one or more investment options of the Plan, which are as follows: 1) Cooper Tire & Rubber Company common stock. 2) Mutual funds managed by the American Funds Group, a subsidiary of Capital Group Incorporated: a) The Investment Company of America Fund - managed to provide long-term growth of capital and income, placing greater emphasis on future dividends than on current income. b) The Washington Mutual Investors Fund - managed to provide current income and opportunity for capital growth through the selection of common stocks. 3) Cash with interest - contributions are placed in investment contracts with a diversified group of insurance companies, banks, and other financial institutions. This option may also include alternative investment contracts which are backed by high quality fixed income assets. All contracts have specific individual terms including interest rate and maturity date. The Plan provides that Pre-Tax Savings Plan (PSP) contributions may be made in one percent multiples of a participant's compensation up to fifteen percent, subject to Internal Revenue Code (IRC) limits on annual contributions to the Plan. The amount of contribution may be changed every thirty days. The Plan provides that, beginning in 1995, the Company will contribute to the Plan each year from current or accumulated earnings an amount equal to the lesser of: (a) 25% of PSP contributions which represent up to four percent of each participant's compensation, less any forfeitures, or (b) an amount equal to fifteen percent of the Company's current year pre-tax earnings, exclusive of any deductions for contributions to the Plan, in excess of ten percent of the stockholders' equity of the Company at the beginning of the year. 4 49 1. Summary of Plan (continued) The Company's Board of Directors, at its discretion, may waive the limitation in (b) and contribute from current or accumulated earnings an amount not to exceed the limitation in (a). Administrative expenses of the Plan are paid by the Company. Investment options for future contributions may be changed daily. Reallocation of balances may be made among the investment options daily. Directions given by participants to the Plan trustee concerning the voting of common stock are confidential. No amounts may be withdrawn by a participant from PSP contributions prior to termination of employment unless the participant has either attained age 59 1/2, becomes totally and permanently disabled, or is able to demonstrate financial hardship. Hardship withdrawals by participants not yet attaining 59 1/2 years of age are limited to PSP contributions and are subject to the IRC and regulations thereunder. Participants are fully vested in their contributions and earnings thereon. The Plan shall continue until October 31, 1997. Thereafter it shall renew itself for yearly periods unless written notice is given by the Company or the Union that it is desired to terminate or amend the Plan. The Company has reserved the right to amend the Plan at any time if such amendment is necessary to enable the Plan to meet the requirements of the IRC or the requirements of any governmental authority. If the Plan terminates, and a successor plan is not adopted, all assets will be distributed to participants in a lump sum. No material amounts of withdrawals by participants, initiated on or before December 31, 1996 or 1995, were pending. 2. Significant Accounting Policies The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of (1) additions and deductions during the reporting period, and (2) assets and liabilities, as well as disclosure of contingent assets and liabilities, at the date of the financial statements. Actual results could differ from those estimates. Investments The Plan's investments are held by National City Bank as trustee under an agreement which directs the trustee to invest participant contributions based on their investment elections. PSP contributions and income not yet invested in the options selected by the participant due to the "transaction period" as defined by the Plan, are invested in cash with interest investments. Investments in common stock of Cooper Tire & Rubber Company (Company) are stated at quoted market values as determined on the last business day of the Plan year. Short-term investments are stated at cost which approximates fair value. Certain investments of the Plan are combined with similar assets of the other defined contribution plans sponsored by the Company. The combined investments (Pooled Fund) are held by National City Bank as trustee and are valued at their fair value as determined by the trustee, except for fully benefit responsive investment contracts which are valued at contract value. At December 31, 1996 and 1995, the contract value of these contracts approximates fair value. 5 50 2. Significant Accounting Policies (continued) Contributions Contributions are recorded when the Company makes payroll deductions for Plan participants, and are invested in any of four investment options at the participant's election. Contributions from the Company are accrued in the period in which they become obligations of the Company and may be in the form of cash, treasury stock or authorized but unissued common stock of the Company. Company contributions are invested in common stock of the Company until the contributions become vested after which they are invested as directed by the participant. The Company contribution to a participant's account becomes vested after five years of continuous credited service; thereafter, Company contributions become vested when made. Forfeitures Forfeitures occur when an employee elects a withdrawal from current year or unvested contributions or is terminated, voluntarily or involuntarily, before being fully vested. Forfeitures are used to reduce the Company obligation. 3. Income Tax Status The Internal Revenue Service issued a determination letter dated September 9, 1996 advising that the Plan meets the requirements of Section 401(a) of the IRC and, therefore, the Trust created pursuant to the Plan qualifies as a tax-exempt Trust under Section 501(a). 4. Value of interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1996 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Armada Government Portfolio Fund $ 3,920,716 $ 2,549,491 $ 131,992 $ 77,455 Cooper Tire & Rubber Company Common Stock 154,672,046 Mutual funds: The Investment Company of America Fund 11,216,964 The Washington Mutual Investors Fund 16,458,231 (continued) 6 51 Cash with Interest Fund: New York Life Insurance Company - 7.65% annuity contract; matures January 4, 2000 6,979,869 John Hancock Mutual Life Insurance Company - 8.27% annuity contract; matures October 31, 1997 6,754,591 Provident Life and Accident Insurance Company - 5.55% annuity contract; matures January 30, 1998 6,235,476 * Provident Life and Accident Insurance Company - 6.17% annuity contract; matures August 15, 2000 4,973,573 Principal Mutual Life Insurance Insurance Company - 4.73% annuity contract; matures July 31, 1997 4,211,797 * Allstate Life Insurance Company - 5.43% annuity contract; matures February 18, 2002 3,124,695 * Allmerica Financial Life Insurance Company - 6.69% contract, matures November 15, 2004 3,054,620 * Caisse Des Depots (CDC) BRIC - 6.15% annuity contract; matures September 25, 2000 2,987,598 * John Hancock Mutual Life Insurance Company - 6.35% annuity contract; matures May 1, 2007 2,500,000 Commonwealth Life Insurance Company - 3.66% annuity contract; matures August 1, 1998 2,449,214 * Peoples Security Life - 5.29% annuity contract BDA-00217TR-3; matures December 17, 2001 2,401,106 * Caisse Des Depots (CDC) BRIC - 5.80% annuity contract; matures May 31, 2000 2,260,633 New York Life Insurance Company - 7.65% annuity contract; matures July 31, 1998 2,010,797 * Peoples Security Life - 6.08% annuity contract BDA-00217TR-1; matures December 15, 1999 1,998,773 * Peoples Security Life - 5.36% annuity contract BDA-00217TR-2; matures September 15, 1998 1,998,062 (continued) 7 52 United of Omaha Life Insurance Company - variable rate annuity contract; matures August 2, 2000 1,995,680 * Peoples Security Life - 5.41% annuity contract BDA-00217TR-4; matures December 15, 1999 1,671,599 * Peoples Security Life - 6.17% annuity contract BDA-00217TR-5; matures August 15, 2001 1,498,125 ----------- ---------- ---------- ---------- Total assets $158,592,762 $61,655,699 $11,348,956 $16,535,686 =========== ========== ========== ==========
December 31, 1995 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Armada Government Portfolio Fund $ 3,336,254 $ 154,498 $ - $1,304,299 Cooper Tire & Rubber Company Common Stock 207,226,787 Mutual funds: The Investment Company of America Fund 6,983,308 The Washington Mutual Investors Fund 8,429,803 Cash with Interest Fund: John Hancock Mutual Life Insurance Company - 8.27% annuity contract; matures October 31, 1997 10,450,587 Prudential Life Insurance Company - 5.48% annuity contract; matures July 31, 1996 9,053,865 Sun Life Insurance Company of Canada (U. S.) - 8.07% annuity contract; matures January 31, 1996 7,101,876 New York Life Insurance Company - 7.65% annuity contract; matures January 4, 2000 6,524,348 *Provident Life and Accident Insurance Company - 6.17% annuity contract; matures August 15, 2000 5,958,643 Provident Life and Accident Insurance Company - 5.55% annuity contract; matures January 30, 1998 5,924,419 (continued) 8 53 Commonwealth Life Insurance Company - 3.66% annuity contract; 50% of balance matures January 31, 1996 and remainder matures July 31, 1998 4,710,320 Principal Mutual Life Insurance Company - 4.73% annuity contract; matures July 31, 1997 4,030,173 *Caisse Des Depots (CDC) BRIC - 6.15% annuity contract; matures September 25, 2000 3,002,945 *Peoples Security Life - 6.08% annuity contract; matures December 15, 1999 2,010,675 United of Omaha Life Insurance Company - variable rate annuity contract; matures August 2, 2000 2,005,766 New York Life Insurance Company - 7.65% annuity contract; matures July 31, 1998 1,879,568 ----------- ---------- --------- --------- Total assets $210,563,041 $62,807,683 $6,983,308 $9,734,102 =========== ========== ========= ========= * Collateralized or synthetic guaranteed investment contract.
The average yield of the Cash with Interest Fund for the years ended December 31, 1996 and 1995 was 6.3% and 6.8%, respectively. The value of the Plan's interest in the Pooled Fund is $6,824,999 at December 31, 1996 and $4,983,484 at December 31, 1995. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1996 1995 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 2.4% 1.6% Cash with Interest Fund 1.4% 0.9% The Investment Company of America Fund 10.0% 9.2% The Washington Mutual Investors Fund 5.8% 5.1% (continued) 9 54 The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1996 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 107,783 $3,754,969 $ 21,998 $ 22,910 Dividends 2,492,409 672,816 1,182,597 Net realized and unrealized gain(loss) (38,694,302) 1,167,742 1,802,447 ----------- --------- --------- --------- Net investment gain(loss) $(36,094,110) $3,754,969 $1,862,556 $3,007,954 ========== ========= ========= =========
Year ended December 31, 1995 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 71,378 $3,862,115 $ 15,634 $ 14,846 Dividends 2,397,313 554,405 649,061 Net realized and unrealized gain 15,994,194 645,921 820,148 ----------- --------- --------- --------- Net investment gain $18,462,885 $3,862,115 $1,215,960 $1,484,055 ========== ========= ========= =========
The Plan's net investment loss from the Pooled Fund is $370,247 for the year ended December 31, 1996 and a net investment gain of $311,788 for the year ended December 31, 1995. The net investment gain or loss of the Pooled Fund is allocated to each participating plan based on the percentage of that Plan's units in each Pooled Fund category. 10 55 Schedules 56 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) Employer Identification #34-4297750; Plan #014 Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1996
Shares, Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ---------- -------- *Cooper Tire & Rubber Company common stock 6,878 $137,850 $135,844 ======= ======= Short-term investment: *Armada Government Portfolio Fund 996 $ 996 $ 996 ======= ======= * Party-in-interest
11 57 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) Employer Identification #34-4297750; Plan #014 Item 27d - Schedule of Reportable Transactions Year Ended December 31, 1996
Sales ----------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - ---------------------- --------- -------- --------- -------- Armada Government Portfolio Fund $311,227 $310,801 $310,801 $ - Cooper Tire & Rubber Company common stock 311,181 - - - Note: The purchase and selling price for each reportable transaction represents its fair value at the time of acquisition or disposition.
12 58 EXHIBIT (99) Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) Financial Statements and Schedules Years ended December 31, 1996 and 1995 Contents Report of Independent Auditors 1 Audited Financial Statements Statements of Assets Available for Plan Benefits 2 Statements of Changes in Assets Available for Plan Benefits 3 Notes to Financial Statements 4 Schedules Item 27a - Schedule of Assets Held for Investment Purposes 11 Item 27d - Schedule of Reportable Transactions 12 A schedule of party-in-interest transactions has not been presented because there were no party-in- interest transactions which are prohibited by ERISA Section 406 and for which there is no statutory or administrative exemption. 59 Report of Independent Auditors Pre-Tax Savings Plan Committee Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) We have audited the accompanying statements of assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) as of December 31, 1996 and 1995, and the related statements of changes in assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) at December 31, 1996 and 1995, and the changes in its assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules of assets held for investment purposes as of December 31, 1996 and reportable transactions for the year then ended, are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The schedules have been subjected to the auditing procedures applied in our audit of the 1996 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1996 basic financial statements taken as a whole. May 16, 1997 1 60 Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) Statements of Assets Available for Plan Benefits
December 31 1996 1995 ---------- ---------- Assets Investments: Value of interest in Pooled Fund (Note 4) $394,428 $312,717 Cooper Tire & Rubber Company common stock 12,994 11,303 ------- ------- 407,422 324,020 Short-term investment 153 77 ------- ------- 407,575 324,097 Cash 6,515 7,949 Employer contribution receivable 9,295 8,522 ------- ------- Assets available for plan benefits $423,385 $340,568 ======= ======= See accompanying notes.
2 61 Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) Statements of Changes in Assets Available for Plan Benefits
Year ended December 31 1996 1995 ---------- ---------- Additions: Cash contributions: Participants $134,107 $124,673 Employer 22,554 19,534 ------- ------- 156,661 144,207 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) (23,146) 20,793 Net appreciation in fair value of Cooper Tire & Rubber Company common stock 1,263 340 Dividends 96 22 Interest 15 6 ------- ------- (21,772) 21,161 ------- ------- Total additions 134,889 165,368 Participants' withdrawals (52,072) (100,344) ------- ------- Increase in assets available for plan benefits during the year 82,817 65,024 Assets available for plan benefits at beginning of year 340,568 275,544 ------- ------- Assets available for plan benefits at end of year $423,385 $340,568 ======= ======= See accompanying notes.
3 62 Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) Notes to Financial Statements December 31, 1996 and 1995 1. Summary of Plan The Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) (Plan), as amended and restated, is a defined contribution plan administered by a Plan Committee appointed by the plan sponsor, Cooper Tire & Rubber Company (the Company). Participation in the Plan is voluntary and any employee of the Company eligible for membership in Local Union #769, United Steelworkers of America AFL-CIO/CLC (Union) is eligible to participate in the Plan if he or she has completed thirty days of continuous credited service. At December 31, 1996, 115 participants had designated investment of contributions in one or more investment options of the Plan, which are as follows: 1) Cooper Tire & Rubber Company common stock. 2) Mutual funds managed by the American Funds Group, a subsidiary of Capital Group Incorporated: a) The Investment Company of America Fund - managed to provide long-term growth of capital and income, placing greater emphasis on future dividends than on current income. b) The Washington Mutual Investors Fund - managed to provide current income and opportunity for capital growth through the selection of common stocks. 3) Cash with interest - contributions are placed in investment contracts with a diversified group of insurance companies, banks, and other financial institutions. This option may also include alternative investment contracts which are backed by high quality fixed income assets. All contracts have specific individual terms including interest rate and maturity date. The Plan provides that Pre-Tax Savings Plan (PSP) contributions may be made in one percent multiples of a participant's compensation up to fifteen percent, subject to Internal Revenue Code (IRC) limits on annual contributions to the Plan. The amount of contribution may be changed every thirty days. The Plan provides that, beginning in 1995, the Company will contribute to the Plan each year from current or accumulated earnings an amount equal to the lesser of: (a) 25% of PSP contributions which represent up to four percent of each participant's compensation, less any forfeitures, or (b) an amount equal to fifteen percent of the Company's current year pre-tax earnings, exclusive of any deductions for contributions to the Plan, in excess of ten percent of the stockholders' equity of the Company at the beginning of the year. 4 63 1. Summary of Plan (continued) The Company's Board of Directors, at its discretion, may waive the limitation in (b) and contribute from current or accumulated earnings an amount not to exceed the limitation in (a). Administrative expenses of the Plan are paid by the Company. Investment options for future contributions may be changed daily. Reallocation of balances may be made among the investment options daily. Directions given by participants to the Plan trustee concerning the voting of common stock are confidential. No amounts may be withdrawn by a participant from PSP contributions prior to termination of employment unless the participant has either attained age 59 1/2, becomes totally and permanently disabled, or is able to demonstrate financial hardship. Hardship withdrawals by participants not yet attaining 59 1/2 years of age are limited to PSP contributions and are subject to the IRC and regulations thereunder. Participants are fully vested in their contributions and earnings thereon. The Plan shall continue until April 27, 1997. Thereafter it shall renew itself for yearly periods unless written notice is given by the Company or the Union that it is desired to terminate or amend the Plan. The Company has reserved the right to amend the Plan at any time if such amendment is necessary to enable the Plan to meet the requirements of the IRC or the requirements of any governmental authority. If the Plan terminates, and a successor plan is not adopted, all assets will be distributed to participants in a lump sum. No material amounts of withdrawals by participants, initiated on or before December 31, 1996 or 1995, were pending. 2. Significant Accounting Policies The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of (1) additions and deductions during the reporting period, and (2) assets and liabilities, as well as disclosure of contingent assets and liabilities, at the date of the financial statements. Actual results could differ from those estimates. Investments The Plan's investments are held by National City Bank as trustee under an agreement which directs the trustee to invest participant contributions based on their investment elections. PSP contributions and income not yet invested in the options selected by the participant due to the "transaction period" as defined by the Plan, are invested in cash with interest investments. Investments in common stock of Cooper Tire & Rubber Company (Company) are stated at quoted market values as determined on the last business day of the Plan year. Short-term investments are stated at cost which approximates fair value. Certain investments of the Plan are combined with similar assets of the other defined contribution plans sponsored by the Company. The combined investments (Pooled Fund) are held by National City Bank as trustee and are valued at their fair value as determined by the trustee, except for fully benefit responsive investment contracts which are valued at contract value. At December 31, 1996 and 1995, the contract value of these contracts approximates fair value. 5 64 2. Significant Accounting Policies (continued) Contributions Contributions are recorded when the Company makes payroll deductions for Plan participants, and are invested in any of four investment options at the participant's election. Contributions from the Company are accrued in the period in which they become obligations of the Company and may be in the form of cash, treasury stock or authorized but unissued common stock of the Company. Company contributions are invested in common stock of the Company until the contributions become vested after which they are invested as directed by the participant. The Company contribution to a participant's account becomes vested after five years of continuous credited service; thereafter, Company contributions become vested when made. Forfeitures Forfeitures occur when an employee elects a withdrawal from current year or unvested contributions or is terminated, voluntarily or involuntarily, before being fully vested. Forfeitures are used to reduce the Company obligation. 3. Income Tax Status The Internal Revenue Service issued a determination letter dated September 9, 1996 advising that the Plan meets the requirements of Section 401(a) of the IRC and, therefore, the Trust created pursuant to the Plan qualifies as a tax-exempt Trust under Section 501(a). 4. Value of interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1996 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Armada Government Portfolio Fund $ 3,920,716 $ 2,549,491 $ 131,992 $ 77,455 Cooper Tire & Rubber Company Common Stock 154,672,046 Mutual funds: The Investment Company of America Fund 11,216,964 The Washington Mutual Investors Fund 16,458,231 (continued) 6 65 Cash with Interest Fund: New York Life Insurance Company - 7.65% annuity contract; matures January 4, 2000 6,979,869 John Hancock Mutual Life Insurance Company - 8.27% annuity contract; matures October 31, 1997 6,754,591 Provident Life and Accident Insurance Company - 5.55% annuity contract; matures January 30, 1998 6,235,476 * Provident Life and Accident Insurance Company - 6.17% annuity contract; matures August 15, 2000 4,973,573 Principal Mutual Life Insurance Insurance Company - 4.73% annuity contract; matures July 31, 1997 4,211,797 * Allstate Life Insurance Company - 5.43% annuity contract; matures February 18, 2002 3,124,695 * Allmerica Financial Life Insurance Company - 6.69% contract, matures November 15, 2004 3,054,620 * Caisse Des Depots (CDC) BRIC - 6.15% annuity contract; matures September 25, 2000 2,987,598 * John Hancock Mutual Life Insurance Company - 6.35% annuity contract; matures May 1, 2007 2,500,000 Commonwealth Life Insurance Company - 3.66% annuity contract; matures August 1, 1998 2,449,214 * Peoples Security Life - 5.29% annuity contract BDA-00217TR-3; matures December 17, 2001 2,401,106 * Caisse Des Depots (CDC) BRIC - 5.80% annuity contract; matures May 31, 2000 2,260,633 New York Life Insurance Company - 7.65% annuity contract; matures July 31, 1998 2,010,797 * Peoples Security Life - 6.08% annuity contract BDA-00217TR-1; matures December 15, 1999 1,998,773 * Peoples Security Life - 5.36% annuity contract BDA-00217TR-2; matures September 15, 1998 1,998,062 (continued) 7 66 United of Omaha Life Insurance Company - variable rate annuity contract; matures August 2, 2000 1,995,680 * Peoples Security Life - 5.41% annuity contract BDA-00217TR-4; matures December 15, 1999 1,671,599 * Peoples Security Life - 6.17% annuity contract BDA-00217TR-5; matures August 15, 2001 1,498,125 ----------- ---------- ---------- ---------- Total assets $158,592,762 $61,655,699 $11,348,956 $16,535,686 =========== ========== ========== ==========
December 31, 1995 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Armada Government Portfolio Fund $ 3,336,254 $ 154,498 $ - $1,304,299 Cooper Tire & Rubber Company Common Stock 207,226,787 Mutual funds: The Investment Company of America Fund 6,983,308 The Washington Mutual Investors Fund 8,429,803 Cash with Interest Fund: John Hancock Mutual Life Insurance Company - 8.27% annuity contract; matures October 31, 1997 10,450,587 Prudential Life Insurance Company - 5.48% annuity contract; matures July 31, 1996 9,053,865 Sun Life Insurance Company of Canada (U. S.) - 8.07% annuity contract; matures January 31, 1996 7,101,876 New York Life Insurance Company - 7.65% annuity contract; matures January 4, 2000 6,524,348 *Provident Life and Accident Insurance Company - 6.17% annuity contract; matures August 15, 2000 5,958,643 Provident Life and Accident Insurance Company - 5.55% annuity contract; matures January 30, 1998 5,924,419 (continued) 8 67 Commonwealth Life Insurance Company - 3.66% annuity contract; 50% of balance matures January 31, 1996 and remainder matures July 31, 1998 4,710,320 Principal Mutual Life Insurance Company - 4.73% annuity contract; matures July 31, 1997 4,030,173 *Caisse Des Depots (CDC) BRIC - 6.15% annuity contract; matures September 25, 2000 3,002,945 *Peoples Security Life - 6.08% annuity contract; matures December 15, 1999 2,010,675 United of Omaha Life Insurance Company - variable rate annuity contract; matures August 2, 2000 2,005,766 New York Life Insurance Company - 7.65% annuity contract; matures July 31, 1998 1,879,568 ----------- ---------- --------- --------- Total assets $210,563,041 $62,807,683 $6,983,308 $9,734,102 =========== ========== ========= ========= * Collateralized or synthetic guaranteed investment contract.
The average yield of the Cash with Interest Fund for the years ended December 31, 1996 and 1995 was 6.3% and 6.8%, respectively. The value of the Plan's interest in the Pooled Fund is $394,428 at December 31, 1996 and $312,717 at December 31, 1995. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1996 1995 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 0.1% 0.1% Cash with Interest Fund 0.2% 0.2% The Investment Company of America Fund 0.2% 0.3% The Washington Mutual Investors Fund 0.2% 0.2% (continued) 9 68 The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1996 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 107,783 $3,754,969 $ 21,998 $ 22,910 Dividends 2,492,409 672,816 1,182,597 Net realized and unrealized gain(loss) (38,694,302) 1,167,742 1,802,447 ----------- --------- --------- --------- Net investment gain(loss) $(36,094,110) $3,754,969 $1,862,556 $3,007,954 ========== ========= ========= =========
Year ended December 31, 1995 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 71,378 $3,862,115 $ 15,634 $ 14,846 Dividends 2,397,313 554,405 649,061 Net realized and unrealized gain 15,994,194 645,921 820,148 ----------- --------- --------- --------- Net investment gain $18,462,885 $3,862,115 $1,215,960 $1,484,055 ========== ========= ========= =========
The Plan's net investment loss from the Pooled Fund is $23,146 for the year ended December 31, 1996 and a net investment gain of $20,793 for the year ended December 31, 1995. The net investment gain or loss of the Pooled Fund is allocated to each participating plan based on the percentage of that Plan's units in each Pooled Fund category. 10 69 Schedules 70 Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) Employer Identification #34-4297750; Plan #013 Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1996
Shares, Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ---------- -------- *Cooper Tire & Rubber Company common stock 657 $13,211 $12,994 ====== ====== Short-term investment: *Armada Government Portfolio Fund 153 $ 153 $ 153 ====== ====== * Party-in-interest
11 71 Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) Employer Identification #34-4297750; Plan #013 Item 27d - Schedule of Reportable Transactions Year Ended December 31, 1996
Sales ----------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - ---------------------- --------- -------- --------- -------- Armada Government Portfolio Fund $21,856 $21,779 $21,779 $ - Cooper Tire & Rubber Company common stock 21,798 - - - Note: The purchase and selling price for each reportable transaction represents its fair value at the time of acquisition or disposition.
12 72 EXHIBIT (99) Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) Financial Statements and Schedules Years ended December 31, 1996 and 1995 Contents Report of Independent Auditors 1 Audited Financial Statements Statements of Assets Available for Plan Benefits 2 Statements of Changes in Assets Available for Plan Benefits 3 Notes to Financial Statements 4 Schedules Item 27a - Schedule of Assets Held for Investment Purposes 11 Item 27d - Schedule of Reportable Transactions 12 A schedule of party-in-interest transactions has not been presented because there were no party-in- interest transactions which are prohibited by ERISA Section 406 and for which there is no statutory or administrative exemption. 73 Report of Independent Auditors Pre-Tax Savings Plan Committee Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) We have audited the accompanying statements of assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) as of December 31, 1996 and 1995, and the related statements of changes in assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - - Hose) at December 31, 1996 and 1995, and the changes in its assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules of assets held for investment purposes as of December 31, 1996 and reportable transactions for the year then ended, are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The schedules have been subjected to the auditing procedures applied in our audit of the 1996 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1996 basic financial statements taken as a whole. May 16, 1997 1 74 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) Statements of Assets Available for Plan Benefits
December 31 1996 1995 ---------- ---------- Assets Investments: Value of interest in Pooled Fund (Note 4) $467,363 $238,558 Cooper Tire & Rubber Company common stock 26,031 14,135 ------- ------- 493,394 252,693 Short-term investment - 75 ------- ------- 493,394 252,768 Cash 9,336 7,937 Employer contribution receivable 18,769 15,045 ------- ------- Assets available for plan benefits $521,499 $275,750 ======= ======= See accompanying notes.
2 75 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) Statements of Changes in Assets Available for Plan Benefits
Year ended December 31 1996 1995 ---------- ---------- Additions: Cash contributions: Participants $246,085 $159,282 Employer 45,288 28,794 ------- ------- 291,373 188,076 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) (19,262) 15,098 Net appreciation in fair value of Cooper Tire & Rubber Company common stock 1,439 425 Dividends 148 28 Interest 21 8 ------- ------- (17,654) 15,559 ------- ------- Total additions 273,719 203,635 Participants' withdrawals (27,970) (16,045) ------- ------- Increase in assets available for plan benefits during the year 245,749 187,590 Assets available for plan benefits at beginning of year 275,750 88,160 ------- ------- Assets available for plan benefits at end of year $521,499 $275,750 ======= ======= See accompanying notes.
3 76 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) Notes to Financial Statements December 31, 1996 and 1995 1. Summary of Plan The Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) (Plan), as amended and restated, is a defined contribution plan administered by a Plan Committee appointed by the plan sponsor, Cooper Tire & Rubber Company (the Company). Participation in the Plan is voluntary and any employee of the Company eligible for membership in Local Union #1152, United Steelworkers of America AFL-CIO/CLC (Union) is eligible to participate in the Plan if he or she has completed thirty days of continuous credited service. At December 31, 1996, 177 participants had designated investment of contributions in one or more investment options of the Plan, which are as follows: 1) Cooper Tire & Rubber Company common stock. 2) Mutual funds managed by the American Funds Group, a subsidiary of Capital Group Incorporated: a) The Investment Company of America Fund - managed to provide long-term growth of capital and income, placing greater emphasis on future dividends than on current income. b) The Washington Mutual Investors Fund - managed to provide current income and opportunity for capital growth through the selection of common stocks. 3) Cash with interest - contributions are placed in investment contracts with a diversified group of insurance companies, banks, and other financial institutions. This option may also include alternative investment contracts which are backed by high quality fixed income assets. All contracts have specific individual terms including interest rate and maturity date. The Plan provides that Pre-Tax Savings Plan (PSP) contributions may be made in one percent multiples of a participant's compensation up to fifteen percent, subject to Internal Revenue Code (IRC) limits on annual contributions to the Plan. The amount of contribution may be changed every thirty days. The Plan provides that, beginning in 1995, the Company will contribute to the Plan each year from current or accumulated earnings an amount equal to the lesser of: (a) 25% of PSP contributions which represent up to four percent of each participant's compensation, less any forfeitures, or (b) an amount equal to fifteen percent of the Company's current year pre-tax earnings, exclusive of any deductions for contributions to the Plan, in excess of ten percent of the stockholders' equity of the Company at the beginning of the year. 4 77 1. Summary of Plan (continued) The Company's Board of Directors, at its discretion, may waive the limitation in (b) and contribute from current or accumulated earnings an amount not to exceed the limitation in (a). Administrative expenses of the Plan are paid by the Company. Investment options for future contributions may be changed daily. Reallocation of balances may be made among the investment options daily. Directions given by participants to the Plan trustee concerning the voting of common stock are confidential. No amounts may be withdrawn by a participant from PSP contributions prior to termination of employment unless the participant has either attained age 59 1/2, becomes totally and permanently disabled, or is able to demonstrate financial hardship. Hardship withdrawals by participants not yet attaining 59 1/2 years of age are limited to PSP contributions and are subject to the IRC and regulations thereunder. Participants are fully vested in their contributions and earnings thereon. The Plan shall continue until April 30, 1998. Thereafter it shall renew itself for yearly periods unless written notice is given by the Company or the Union that it is desired to terminate or amend the Plan. The Company has reserved the right to amend the Plan at any time if such amendment is necessary to enable the Plan to meet the requirements of the IRC or the requirements of any governmental authority. If the Plan terminates, and a successor plan is not adopted, all assets will be distributed to participants in a lump sum. No material amounts of withdrawals by participants, initiated on or before December 31, 1996 or 1995, were pending. 2. Significant Accounting Policies The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of (1) additions and deductions during the reporting period, and (2) assets and liabilities, as well as disclosure of contingent assets and liabilities, at the date of the financial statements. Actual results could differ from those estimates. Investments The Plan's investments are held by National City Bank as trustee under an agreement which directs the trustee to invest participant contributions based on their investment elections. PSP contributions and income not yet invested in the options selected by the participant due to the "transaction period" as defined by the Plan, are invested in cash with interest investments. Investments in common stock of Cooper Tire & Rubber Company (Company) are stated at quoted market values as determined on the last business day of the Plan year. Short-term investments are stated at cost which approximates fair value. Certain investments of the Plan are combined with similar assets of the other defined contribution plans sponsored by the Company. The combined investments (Pooled Fund) are held by National City Bank as trustee and are valued at their fair value as determined by the trustee, except for fully benefit responsive investment contracts which are valued at contract value. At December 31, 1996 and 1995, the contract value of these contracts approximates fair value. 5 78 2. Significant Accounting Policies (continued) Contributions Contributions are recorded when the Company makes payroll deductions for Plan participants, and are invested in any of four investment options at the participant's election. Contributions from the Company are accrued in the period in which they become obligations of the Company and may be in the form of cash, treasury stock or authorized but unissued common stock of the Company. Company contributions are invested in common stock of the Company until the contributions become vested after which they are invested as directed by the participant. The Company contribution to a participant's account becomes vested after five years of continuous credited service; thereafter, Company contributions become vested when made. Forfeitures Forfeitures occur when an employee elects a withdrawal from current year or unvested contributions or is terminated, voluntarily or involuntarily, before being fully vested. Forfeitures are used to reduce the Company obligation. 3. Income Tax Status The Internal Revenue Service issued a determination letter dated September 9, 1996 advising that the Plan meets the requirements of Section 401(a) of the IRC and, therefore, the Trust created pursuant to the Plan qualifies as a tax-exempt Trust under Section 501(a). 4. Value of interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1996 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Armada Government Portfolio Fund $ 3,920,716 $ 2,549,491 $ 131,992 $ 77,455 Cooper Tire & Rubber Company Common Stock 154,672,046 Mutual funds: The Investment Company of America Fund 11,216,964 The Washington Mutual Investors Fund 16,458,231 (continued) 6 79 Cash with Interest Fund: New York Life Insurance Company - 7.65% annuity contract; matures January 4, 2000 6,979,869 John Hancock Mutual Life Insurance Company - 8.27% annuity contract; matures October 31, 1997 6,754,591 Provident Life and Accident Insurance Company - 5.55% annuity contract; matures January 30, 1998 6,235,476 * Provident Life and Accident Insurance Company - 6.17% annuity contract; matures August 15, 2000 4,973,573 Principal Mutual Life Insurance Insurance Company - 4.73% annuity contract; matures July 31, 1997 4,211,797 * Allstate Life Insurance Company - 5.43% annuity contract; matures February 18, 2002 3,124,695 * Allmerica Financial Life Insurance Company - 6.69% contract, matures November 15, 2004 3,054,620 * Caisse Des Depots (CDC) BRIC - 6.15% annuity contract; matures September 25, 2000 2,987,598 * John Hancock Mutual Life Insurance Company - 6.35% annuity contract; matures May 1, 2007 2,500,000 Commonwealth Life Insurance Company - 3.66% annuity contract; matures August 1, 1998 2,449,214 * Peoples Security Life - 5.29% annuity contract BDA-00217TR-3; matures December 17, 2001 2,401,106 * Caisse Des Depots (CDC) BRIC - 5.80% annuity contract; matures May 31, 2000 2,260,633 New York Life Insurance Company - 7.65% annuity contract; matures July 31, 1998 2,010,797 * Peoples Security Life - 6.08% annuity contract BDA-00217TR-1; matures December 15, 1999 1,998,773 * Peoples Security Life - 5.36% annuity contract BDA-00217TR-2; matures September 15, 1998 1,998,062 (continued) 7 80 United of Omaha Life Insurance Company - variable rate annuity contract; matures August 2, 2000 1,995,680 * Peoples Security Life - 5.41% annuity contract BDA-00217TR-4; matures December 15, 1999 1,671,599 * Peoples Security Life - 6.17% annuity contract BDA-00217TR-5; matures August 15, 2001 1,498,125 ----------- ---------- ---------- ---------- Total assets $158,592,762 $61,655,699 $11,348,956 $16,535,686 =========== ========== ========== ==========
December 31, 1995 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Armada Government Portfolio Fund $ 3,336,254 $ 154,498 $ - $1,304,299 Cooper Tire & Rubber Company Common Stock 207,226,787 Mutual funds: The Investment Company of America Fund 6,983,308 The Washington Mutual Investors Fund 8,429,803 Cash with Interest Fund: John Hancock Mutual Life Insurance Company - 8.27% annuity contract; matures October 31, 1997 10,450,587 Prudential Life Insurance Company - 5.48% annuity contract; matures July 31, 1996 9,053,865 Sun Life Insurance Company of Canada (U. S.) - 8.07% annuity contract; matures January 31, 1996 7,101,876 New York Life Insurance Company - 7.65% annuity contract; matures January 4, 2000 6,524,348 *Provident Life and Accident Insurance Company - 6.17% annuity contract; matures August 15, 2000 5,958,643 Provident Life and Accident Insurance Company - 5.55% annuity contract; matures January 30, 1998 5,924,419 (continued) 8 81 Commonwealth Life Insurance Company - 3.66% annuity contract; 50% of balance matures January 31, 1996 and remainder matures July 31, 1998 4,710,320 Principal Mutual Life Insurance Company - 4.73% annuity contract; matures July 31, 1997 4,030,173 *Caisse Des Depots (CDC) BRIC - 6.15% annuity contract; matures September 25, 2000 3,002,945 *Peoples Security Life - 6.08% annuity contract; matures December 15, 1999 2,010,675 United of Omaha Life Insurance Company - variable rate annuity contract; matures August 2, 2000 2,005,766 New York Life Insurance Company - 7.65% annuity contract; matures July 31, 1998 1,879,568 ----------- ---------- --------- --------- Total assets $210,563,041 $62,807,683 $6,983,308 $9,734,102 =========== ========== ========= ========= * Collateralized or synthetic guaranteed investment contract.
The average yield of the Cash with Interest Fund for the years ended December 31, 1996 and 1995 was 6.3% and 6.8%, respectively. The value of the Plan's interest in the Pooled Fund is $467,363 at December 31, 1996 and $238,558 at December 31, 1995. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1996 1995 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 0.2% 0.1% Cash with Interest Fund 0.1% 0.1% The Investment Company of America Fund 0.6% 0.5% The Washington Mutual Investors Fund 0.5% 0.4% (continued) 9 82 The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1996 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 107,783 $3,754,969 $ 21,998 $ 22,910 Dividends 2,492,409 672,816 1,182,597 Net realized and unrealized gain(loss) (38,694,302) 1,167,742 1,802,447 ----------- --------- --------- --------- Net investment gain(loss) $(36,094,110) $3,754,969 $1,862,556 $3,007,954 ========== ========= ========= =========
Year ended December 31, 1995 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 71,378 $3,862,115 $ 15,634 $ 14,846 Dividends 2,397,313 554,405 649,061 Net realized and unrealized gain 15,994,194 645,921 820,148 ----------- --------- --------- --------- Net investment gain $18,462,885 $3,862,115 $1,215,960 $1,484,055 ========== ========= ========= =========
The Plan's net investment loss from the Pooled Fund is $19,262 for the year ended December 31, 1996 and a net investment gain of $15,098 for the year ended December 31, 1995. The net investment gain or loss of the Pooled Fund is allocated to each participating plan based on the percentage of that Plan's units in each Pooled Fund category. 10 83 Schedules 84 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) Employer Identification #34-4297750; Plan #017 Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1996
Shares, Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ---------- -------- *Cooper Tire & Rubber Company common stock 1,318 $26,484 $26,031 ====== ====== * Party-in-interest
11 85 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) Employer Identification #34-4297750; Plan #017 Item 27d - Schedule of Reportable Transactions Year Ended December 31, 1996
Sales ----------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - ---------------------- --------- -------- --------- -------- Armada Government Portfolio Fund $38,926 $39,001 $39,001 $ - Cooper Tire & Rubber Company common stock 42,591 - - - Note: The purchase and selling price for each reportable transaction represents its fair value at the time of acquisition or disposition.
12 86 EXHIBIT (99) Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) Financial Statements and Schedules Years ended December 31, 1996 and 1995 Contents Report of Independent Auditors 1 Audited Financial Statements Statements of Assets Available for Plan Benefits 2 Statements of Changes in Assets Available for Plan Benefits 3 Notes to Financial Statements 4 Schedules Item 27a - Schedule of Assets Held for Investment Purposes 11 Item 27d - Schedule of Reportable Transactions 12 A schedule of party-in-interest transactions has not been presented because there were no party-in- interest transactions which are prohibited by ERISA Section 406 and for which there is no statutory or administrative exemption. 87 Report of Independent Auditors Pre-Tax Savings Plan Committee Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) We have audited the accompanying statements of assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) as of December 31, 1996 and 1995, and the related statements of changes in assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - - Sealing) at December 31, 1996 and 1995, and the changes in its assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules of assets held for investment purposes as of December 31, 1996 and reportable transactions for the year then ended, are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The schedules have been subjected to the auditing procedures applied in our audit of the 1996 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1996 basic financial statements taken as a whole. May 16, 1997 1 88 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) Statements of Assets Available for Plan Benefits
December 31 1996 1995 ---------- ---------- Assets Investments: Value of interest in Pooled Fund (Note 4) $329,039 $162,463 Cooper Tire & Rubber Company common stock 12,979 8,471 ------- ------- 342,018 170,934 Short-term investment 138 54 ------- ------- 342,156 170,988 Cash 8,518 9,935 Employer contribution receivable 13,881 6,244 ------- ------- Assets available for plan benefits $364,555 $187,167 ======= ======= See accompanying notes.
2 89 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) Statements of Changes in Assets Available for Plan Benefits
Year ended December 31 1996 1995 ---------- ---------- Additions: Cash contributions: Participants $171,169 $100,162 Employer 27,145 14,494 ------- ------- 198,314 114,656 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) (11,408) 9,030 Net appreciation in fair value of Cooper Tire & Rubber Company common stock 875 254 Dividends 81 17 Interest 13 4 ------- ------- (10,439) 9,305 ------- ------- Total additions 187,875 123,961 Participants' withdrawals (10,487) (1,240) ------- ------- Increase in assets available for plan benefits during the year 177,388 122,721 Assets available for plan benefits at beginning of year 187,167 64,446 ------- ------- Assets available for plan benefits at end of year $364,555 $187,167 ======= ======= See accompanying notes.
3 90 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) Notes to Financial Statements December 31, 1996 and 1995 1. Summary of Plan The Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) (Plan), as amended and restated, is a defined contribution plan administered by a Plan Committee appointed by the plan sponsor, Cooper Tire & Rubber Company (the Company). Participation in the Plan is voluntary and any employee of the Company eligible for membership in Local Union #1042, United Steelworkers of America AFL-CIO/CLC (Union) is eligible to participate in the Plan if he or she has completed thirty days of continuous credited service. At December 31, 1996, 113 participants had designated investment of contributions in one or more investment options of the Plan, which are as follows: 1) Cooper Tire & Rubber Company common stock. 2) Mutual funds managed by the American Funds Group, a subsidiary of Capital Group Incorporated: a) The Investment Company of America Fund - managed to provide long-term growth of capital and income, placing greater emphasis on future dividends than on current income. b) The Washington Mutual Investors Fund - managed to provide current income and opportunity for capital growth through the selection of common stocks. 3) Cash with interest - contributions are placed in investment contracts with a diversified group of insurance companies, banks, and other financial institutions. This option may also include alternative investment contracts which are backed by high quality fixed income assets. All contracts have specific individual terms including interest rate and maturity date. The Plan provides that Pre-Tax Savings Plan (PSP) contributions may be made in one percent multiples of a participant's compensation up to fifteen percent, subject to Internal Revenue Code (IRC) limits on annual contributions to the Plan. The amount of contribution may be changed every thirty days. The Plan provides that, beginning in 1995, the Company will contribute to the Plan each year from current or accumulated earnings an amount equal to the lesser of: (a) 25% of PSP contributions which represent up to four percent of each participant's compensation, less any forfeitures, or (b) an amount equal to fifteen percent of the Company's current year pre-tax earnings, exclusive of any deductions for contributions to the Plan, in excess of ten percent of the stockholders' equity of the Company at the beginning of the year. 4 91 1. Summary of Plan (continued) The Company's Board of Directors, at its discretion, may waive the limitation in (b) and contribute from current or accumulated earnings an amount not to exceed the limitation in (a). Administrative expenses of the Plan are paid by the Company. Investment options for future contributions may be changed daily. Reallocation of balances may be made among the investment options daily. Directions given by participants to the Plan trustee concerning the voting of common stock are confidential. No amounts may be withdrawn by a participant from PSP contributions prior to termination of employment unless the participant has either attained age 59 1/2, becomes totally and permanently disabled, or is able to demonstrate financial hardship. Hardship withdrawals by participants not yet attaining 59 1/2 years of age are limited to PSP contributions and are subject to the IRC and regulations thereunder. Participants are fully vested in their contributions and earnings thereon. The Plan shall continue until October 31, 1997. Thereafter it shall renew itself for yearly periods unless written notice is given by the Company or the Union that it is desired to terminate or amend the Plan. The Company has reserved the right to amend the Plan at any time if such amendment is necessary to enable the Plan to meet the requirements of the IRC or the requirements of any governmental authority. If the Plan terminates, and a successor plan is not adopted, all assets will be distributed to participants in a lump sum. No material amounts of withdrawals by participants, initiated on or before December 31, 1996 or 1995, were pending. 2. Significant Accounting Policies The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of (1) additions and deductions during the reporting period, and (2) assets and liabilities, as well as disclosure of contingent assets and liabilities, at the date of the financial statements. Actual results could differ from those estimates. Investments The Plan's investments are held by National City Bank as trustee under an agreement which directs the trustee to invest participant contributions based on their investment elections. PSP contributions and income not yet invested in the options selected by the participant due to the "transaction period" as defined by the Plan, are invested in cash with interest investments. Investments in common stock of Cooper Tire & Rubber Company (Company) are stated at quoted market values as determined on the last business day of the Plan year. Short-term investments are stated at cost which approximates fair value. Certain investments of the Plan are combined with similar assets of the other defined contribution plans sponsored by the Company. The combined investments (Pooled Fund) are held by National City Bank as trustee and are valued at their fair value as determined by the trustee, except for fully benefit responsive investment contracts which are valued at contract value. At December 31, 1996 and 1995, the contract value of these contracts approximates fair value. 5 92 2. Significant Accounting Policies (continued) Contributions Contributions are recorded when the Company makes payroll deductions for Plan participants, and are invested in any of four investment options at the participant's election. Contributions from the Company are accrued in the period in which they become obligations of the Company and may be in the form of cash, treasury stock or authorized but unissued common stock of the Company. Company contributions are invested in common stock of the Company until the contributions become vested after which they are invested as directed by the participant. The Company contribution to a participant's account becomes vested after five years of continuous credited service; thereafter, Company contributions become vested when made. Forfeitures Forfeitures occur when an employee elects a withdrawal from current year or unvested contributions or is terminated, voluntarily or involuntarily, before being fully vested. Forfeitures are used to reduce the Company obligation. 3. Income Tax Status The Internal Revenue Service issued a determination letter dated September 9, 1996 advising that the Plan meets the requirements of Section 401(a) of the IRC and, therefore, the Trust created pursuant to the Plan qualifies as a tax-exempt Trust under Section 501(a). 4. Value of interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1996 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Armada Government Portfolio Fund $ 3,920,716 $ 2,549,491 $ 131,992 $ 77,455 Cooper Tire & Rubber Company Common Stock 154,672,046 Mutual funds: The Investment Company of America Fund 11,216,964 The Washington Mutual Investors Fund 16,458,231 (continued) 6 93 Cash with Interest Fund: New York Life Insurance Company - 7.65% annuity contract; matures January 4, 2000 6,979,869 John Hancock Mutual Life Insurance Company - 8.27% annuity contract; matures October 31, 1997 6,754,591 Provident Life and Accident Insurance Company - 5.55% annuity contract; matures January 30, 1998 6,235,476 * Provident Life and Accident Insurance Company - 6.17% annuity contract; matures August 15, 2000 4,973,573 Principal Mutual Life Insurance Insurance Company - 4.73% annuity contract; matures July 31, 1997 4,211,797 * Allstate Life Insurance Company - 5.43% annuity contract; matures February 18, 2002 3,124,695 * Allmerica Financial Life Insurance Company - 6.69% contract, matures November 15, 2004 3,054,620 * Caisse Des Depots (CDC) BRIC - 6.15% annuity contract; matures September 25, 2000 2,987,598 * John Hancock Mutual Life Insurance Company - 6.35% annuity contract; matures May 1, 2007 2,500,000 Commonwealth Life Insurance Company - 3.66% annuity contract; matures August 1, 1998 2,449,214 * Peoples Security Life - 5.29% annuity contract BDA-00217TR-3; matures December 17, 2001 2,401,106 * Caisse Des Depots (CDC) BRIC - 5.80% annuity contract; matures May 31, 2000 2,260,633 New York Life Insurance Company - 7.65% annuity contract; matures July 31, 1998 2,010,797 * Peoples Security Life - 6.08% annuity contract BDA-00217TR-1; matures December 15, 1999 1,998,773 * Peoples Security Life - 5.36% annuity contract BDA-00217TR-2; matures September 15, 1998 1,998,062 (continued) 7 94 United of Omaha Life Insurance Company - variable rate annuity contract; matures August 2, 2000 1,995,680 * Peoples Security Life - 5.41% annuity contract BDA-00217TR-4; matures December 15, 1999 1,671,599 * Peoples Security Life - 6.17% annuity contract BDA-00217TR-5; matures August 15, 2001 1,498,125 ----------- ---------- ---------- ---------- Total assets $158,592,762 $61,655,699 $11,348,956 $16,535,686 =========== ========== ========== ==========
December 31, 1995 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Armada Government Portfolio Fund $ 3,336,254 $ 154,498 $ - $1,304,299 Cooper Tire & Rubber Company Common Stock 207,226,787 Mutual funds: The Investment Company of America Fund 6,983,308 The Washington Mutual Investors Fund 8,429,803 Cash with Interest Fund: John Hancock Mutual Life Insurance Company - 8.27% annuity contract; matures October 31, 1997 10,450,587 Prudential Life Insurance Company - 5.48% annuity contract; matures July 31, 1996 9,053,865 Sun Life Insurance Company of Canada (U. S.) - 8.07% annuity contract; matures January 31, 1996 7,101,876 New York Life Insurance Company - 7.65% annuity contract; matures January 4, 2000 6,524,348 *Provident Life and Accident Insurance Company - 6.17% annuity contract; matures August 15, 2000 5,958,643 Provident Life and Accident Insurance Company - 5.55% annuity contract; matures January 30, 1998 5,924,419 (continued) 8 95 Commonwealth Life Insurance Company - 3.66% annuity contract; 50% of balance matures January 31, 1996 and remainder matures July 31, 1998 4,710,320 Principal Mutual Life Insurance Company - 4.73% annuity contract; matures July 31, 1997 4,030,173 *Caisse Des Depots (CDC) BRIC - 6.15% annuity contract; matures September 25, 2000 3,002,945 *Peoples Security Life - 6.08% annuity contract; matures December 15, 1999 2,010,675 United of Omaha Life Insurance Company - variable rate annuity contract; matures August 2, 2000 2,005,766 New York Life Insurance Company - 7.65% annuity contract; matures July 31, 1998 1,879,568 ----------- ---------- --------- --------- Total assets $210,563,041 $62,807,683 $6,983,308 $9,734,102 =========== ========== ========= ========= * Collateralized or synthetic guaranteed investment contract.
The average yield of the Cash with Interest Fund for the years ended December 31, 1996 and 1995 was 6.3% and 6.8%, respectively. The value of the Plan's interest in the Pooled Fund is $329,039 at December 31, 1996 and $162,463 at December 31, 1995. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1996 1995 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 0.1% 0.1% Cash with Interest Fund 0.1% 0.1% The Investment Company of America Fund 0.5% 0.3% The Washington Mutual Investors Fund 0.3% 0.2% (continued) 9 96 The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1996 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 107,783 $3,754,969 $ 21,998 $ 22,910 Dividends 2,492,409 672,816 1,182,597 Net realized and unrealized gain(loss) (38,694,302) 1,167,742 1,802,447 ----------- --------- --------- --------- Net investment gain(loss) $(36,094,110) $3,754,969 $1,862,556 $3,007,954 ========== ========= ========= =========
Year ended December 31, 1995 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 71,378 $3,862,115 $ 15,634 $ 14,846 Dividends 2,397,313 554,405 649,061 Net realized and unrealized gain 15,994,194 645,921 820,148 ----------- --------- --------- --------- Net investment gain $18,462,885 $3,862,115 $1,215,960 $1,484,055 ========== ========= ========= =========
The Plan's net investment loss from the Pooled Fund is $11,408 for the year ended December 31, 1996 and a net investment gain of $9,030 for the year ended December 31, 1995. The net investment gain or loss of the Pooled Fund is allocated to each participating plan based on the percentage of that Plan's units in each Pooled Fund category. 10 97 Schedules 98 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) Employer Identification #34-4297750; Plan #016 Item 27a - Schedule of Assets Held for Investment Purposes December 31, 1996
Shares, Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ---------- -------- *Cooper Tire & Rubber Company common stock 657 $13,211 $12,979 ====== ====== Short-term investment: *Armada Government Portfolio Fund 138 $ 138 $ 138 ====== ====== * Party-in-interest
11 99 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) Employer Identification #34-4297750; Plan #016 Item 27d - Schedule of Reportable Transactions Year Ended December 31, 1996
Sales ----------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - ---------------------- --------- -------- --------- -------- Armada Government Portfolio Fund $19,566 $19,482 $19,482 $ - Cooper Tire & Rubber Company common stock 19,516 - - - Note: The purchase and selling price for each reportable transaction represents its fair value at the time of acquisition or disposition.
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