-----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, A+rPef6hEyYv+yHYvhRkUs3Hr0wpq6ykRnYOCAXqTQE15aykqNMRIcJ+7PiVPKLS i7smyanQZ8nRIuxS5469cg== 0000024491-98-000009.txt : 19980505 0000024491-98-000009.hdr.sgml : 19980505 ACCESSION NUMBER: 0000024491-98-000009 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980504 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COOPER TIRE & RUBBER CO CENTRAL INDEX KEY: 0000024491 STANDARD INDUSTRIAL CLASSIFICATION: TIRES AND INNER TUBES [3011] IRS NUMBER: 344297750 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04329 FILM NUMBER: 98609092 BUSINESS ADDRESS: STREET 1: LIMA & WESTERN AVENUES CITY: FINDLAY STATE: OH ZIP: 45840 BUSINESS PHONE: 4194231321 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Commission File No. 1-4329 COOPER TIRE & RUBBER COMPANY (Exact name of registrant as specified in its charter) DELAWARE 34-4297750 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) Lima and Western Avenues, Findlay, Ohio 45840 (Address of principal executive offices) (Zip code) (419) 423-1321 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ) Number of shares of common stock of registrant outstanding at April 30, 1998: 78,769,408 1 Part I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS COOPER TIRE & RUBBER COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Dollar amounts in thousands; per-share amounts in dollars)
March 31, 1998 December 31, (Unaudited) 1997 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 32,875 $ 52,910 Accounts receivable, less allowances of $5,180 ($4,791 in 1997) 307,780 292,416 Inventories at lower of cost (last-in, first-out) or market: Finished goods 154,206 130,339 Work in process 23,136 22,650 Raw materials and supplies 28,760 38,695 --------- --------- 206,102 191,684 Prepaid expenses and deferred income taxes 17,923 17,602 --------- --------- Total current assets 564,680 554,612 Property, plant and equipment - net 863,937 860,448 Intangibles and other assets 81,440 80,896 --------- --------- $1,510,057 $1,495,956 LIABILITIES AND STOCKHOLDERS' EQUITY ========= ========= Current liabilities: Notes payable $ 11,538 $ 10,820 Accounts payable 89,308 100,135 Accrued liabilities 77,025 82,446 Income taxes 12,016 6,477 Current portion of debt 279 453 --------- --------- Total current liabilities 190,166 200,331 Long-term debt 205,423 205,525 Postretirement benefits other than pensions 146,709 144,566 Other long-term liabilities 38,452 38,351 Deferred income taxes 76,446 73,608 Stockholders' equity: Preferred stock, $1 par value; 5,000,000 shares authorized; none issued - - Common stock, $1 par value; 300,000,000 shares authorized; 83,762,608 shares issued (83,760,308 in 1997) 83,763 83,760 Capital in excess of par value 3,125 3,101 Retained earnings 868,313 849,270 Cumulative currency translation adjustment 2,664 2,448 Minimum pension liability (4,753) (4,753) --------- --------- 953,112 933,826 Less: 5,000,000 common shares in treasury at cost (100,251) (100,251) --------- --------- Total stockholders' equity 852,861 833,575 --------- --------- $1,510,057 $1,495,956 ========= ========= See accompanying notes.
2 COOPER TIRE & RUBBER COMPANY CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED) (Dollar amounts in thousands; per-share amounts in dollars)
1998 1997 -------- -------- Revenues: Net sales $437,558 $379,532 Other income 578 254 ------- ------- 438,136 379,786 Costs and expenses: Cost of products sold 363,470 315,913 Selling, general and administrative 28,512 21,812 Interest 3,849 1,691 ------- ------- 395,831 339,416 ------- ------- Income before income taxes 42,305 40,370 Provision for income taxes 15,780 15,220 ------- ------- Net income 26,525 25,150 Other comprehensive income: Currency translation adjustment 216 - ------ ------ Comprehensive income $26,741 $25,150 ====== ====== Basic and diluted earnings per share $.34 $.31 === === Weighted average number of shares outstanding (000's) 78,762 80,301 ====== ====== Dividends per share $.095 $.085 ==== ==== See accompanying notes.
3 COOPER TIRE & RUBBER COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1998 AND 1997 (UNAUDITED) (Dollar amounts in thousands)
1998 1997 -------- -------- Operating activities: Net income $26,525 $ 25,150 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 24,259 21,298 Deferred income taxes 3,581 3,470 Changes in operating assets and liabilities: Accounts receivable (14,558) 1,770 Inventories and prepaid expenses (14,466) (19,019) Accounts payable and accrued liabilities (16,408) (5,722) Postretirement benefits other than pensions 1,919 2,321 Other 3,141 3,889 ------ ------- Net cash provided by operating activities 13,993 33,157 Investing activities: Property, plant and equipment (27,382) (26,220) Acquisition of business, net of cash acquired - (94,593) Other 160 75 ------ ------- Net cash used in investing activities (27,222) (120,738) Financing activities: Issuance of debt 900 333,000 Payment on debt (346) (170,136) Purchase of treasury shares - (54,117) Payment of dividends (7,482) (6,765) Issuance of common shares 27 74 ------ ------- Net cash provided by (used in) financing activities (6,901) 102,056 Effects of exchange rate changes on cash 95 - ------ ------- Changes in cash and cash equivalents (20,035) 14,475 Cash and cash equivalents at beginning of year 52,910 19,459 ------ ------- Cash and cash equivalents at end of period $32,875 $ 33,934 ====== ======= Cash payments for interest $ 8,185 $ 1,158 ====== ======= Cash payments for income taxes $ 7,402 $ 2,858 ====== ======= See accompanying notes.
4 COOPER TIRE & RUBBER COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The consolidated financial statements at March 31, 1998 and for the three-month periods ended March 31, 1998 and 1997 are unaudited and include all adjustments, consisting only of normal recurring accruals, which the Company considers necessary for a fair presentation of financial position and operating results. The unaudited consolidated financial statements have been prepared in accordance with Article 10 of Regulation S-X and, therefore, do not contain all information and footnotes normally contained in annual financial statements; accordingly, they should be read in conjunction with the Financial Statements and notes thereto appearing in the Annual Report on Form 10-K of the Company for the year ended December 31, 1997. 2. The results of operations for the three-month period ended March 31,1998 are not necessarily indicative of those to be expected for the year ending December 31, 1998. 3. During the first quarter of 1998 the Company adopted Statement of Financial Standards (SFAS) No. 130, "Reporting Comprehensive Income." The Standard requires disclosure of total comprehensive income in the financial statements. The Company's components of comprehensive income have historically been for the impact of pension accounting and foreign currency. 4. In June, 1997 the Financial Accounting Standards Board (FASB) issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," which changed the method for determining and reporting business segment information. The FASB's approach to determine business segments will cause the Company to report certain financial information at segment levels. This Standard is required to be adopted for year-end reporting in 1998, with interim reporting commencing in 1999. The FASB issued SFAS No. 132, "Employers' Disclosures about Pensions and Other Postretirement Benefits," in February, 1998. This Standard is effective in 1998 and requires disclosure of additional information currently available to the Company. 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Net sales for the first quarter of 1998 increased 15.3% when compared to the first quarter of 1997. The Company's acquisition of Avon Tyres Limited of Melksham, England, now known as Cooper-Avon Tyres Limited (Cooper-Avon), was completed late in the first quarter of 1997 and contributed to the increase. In addition, gains were achieved in both engineered products and domestic tire shipments. Other income was higher as compared to the 1997 period due to higher amounts of interest income. Cost of products sold, as a percent of net sales, decreased slightly in the first quarter of 1998 as compared with the first quarter of 1997. Decreases in raw material costs and improvements in product mix continued to be partially offset by price concessions. Cooper-Avon operations did not contribute to the margin improvement due to recognition of a charge for staff reductions and price deterioration which resulted from a softening of replacement tire sales in Europe and the strength of the British pound relative to other European currencies. Selling, general and administrative expenses, as a percent of net sales, were higher at 6.5% compared to 5.8% in 1997 due primarily to the inclusion of Cooper-Avon. Interest expense was higher than for the first quarter of 1997 reflecting higher borrowing levels. Income before income taxes for the quarter increased 4.8% from the quarter one year ago. The 1998 quarter benefited from reductions in raw material costs and richer product mix which were partially offset by a continuation of intense price competition in the replacement tire market. Working capital of $375 million is up $20 million since year-end and up $75 million from March 31, 1997. The current ratio of 3.0 is up from both 2.2 at March 31, 1997 and 2.8 at December 31, 1997. Long-term debt, as a percent of total capitalization, is 19.4% compared to 22.9% one year ago. The financial position of the Company at March 31, 1998 continues to be excellent. The cash flows generated by operating activities of $14 million during the first three months of 1998 are lower than the $33 million for the three-month period one year ago due to increases in working capital. Investments in property, plant and equipment of $27 million are comparable to last year's quarter. In 1997, investing activities reflect the acquisition of Cooper-Avon and financing activities reflect the issuance of $200 million of long-term public debt and the repurchase of the Company's common stock. The Company expects that available cash and existing lines of credit will be sufficient to meet normal operating requirements over the near term. 6 Part II. OTHER INFORMATION Item 6(a). Exhibits. (27) Financial Data Schedule Item 6(b). Reports on Form 8-K. No Form 8-K has been filed. 7 INDEX TO EXHIBITS DESCRIPTION Part II. Item 6(a). (27) Financial Data Schedule 8 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. COOPER TIRE & RUBBER COMPANY /S/ J. Alec Reinhardt --------------------- J. Alec Reinhardt Executive Vice President and Chief Financial Officer (Principal Financial Officer) /S/ E. B. White ----------------- E. B. White Corporate Controller (Principal Accounting Officer) May 4, 1998 ----------- (Date) 9 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S BALANCE SHEET AND STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1998 JAN-1-1998 MAR-31-1998 15,878 16,997 312,960 5,180 206,102 564,680 1,426,772 562,835 1,510,057 190,166 205,423 0 0 78,763 774,098 1,510,057 437,558 438,136 363,470 363,470 28,027 485 3,849 42,305 15,780 26,525 0 0 0 26,525 .34 .34
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