-----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, VhJhAFlNNRVkclhbgGID92pwuj+wvffCalMN9gmB2yG2+F5fl/C+fCyTDch1Tl02 QgQLtoOvgngMJ+/tsBi4XQ== 0000024491-98-000013.txt : 19980622 0000024491-98-000013.hdr.sgml : 19980622 ACCESSION NUMBER: 0000024491-98-000013 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980619 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: SEC FILE NUMBER: 001-04329 FILM NUMBER: 98651028 BUSINESS ADDRESS: STREET 1: LIMA & WESTERN AVENUES CITY: FINDLAY STATE: OH ZIP: 45840 BUSINESS PHONE: 4194231321 10-K/A 1 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, 1997 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 9, 1998). $1,855,838,060 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 9, 1998) Common Stock, $1 par per share 78,762,358 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 24, 1998 - Part III EXHIBIT INDEX appears on the following two pages INDEX TO FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS (As amended June 19, 1998 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, 1997, 1996 and 1995 Consolidated Balance Sheets at December 31, 1997 and 1996 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1997, 1996 and 1995 Consolidated Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995 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) Description of management contracts, compensatory plans, contracts, or arrangements is incorporated herein by reference from pages 6 through 12, 25 and 26 of the Company's Proxy Statement dated March 24, 1998. The following related documents are 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) 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 e) 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, 1997 1-16 Financial statements and schedules of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) for the fiscal year ended December 31, 1997 17-30 Financial statements and schedules of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) for the fiscal year ended December 31, 1997 31-44 Financial statements and schedules of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) for the fiscal year ended December 31, 1997 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, 1997 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, 1997 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, 1997 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 BYRON O. POND, Director JOHN H. SHUEY, Director By /s/ Stan C. Kaiman -------------------------------- STAN C. KAIMAN, Attorney-in-fact Date: June 19, 1998 -------------- 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 5, 1998 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, 1997. /s/ Ernst & Young LLP --------------------- ERNST & YOUNG LLP Toledo, Ohio June 19, 1998 EXHIBIT (99) Cooper Tire & Rubber Company Thrift and Profit Sharing Plan Financial Statements and Schedules Years ended December 31, 1997 and 1996 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, 1997 and 1996, 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, 1997 and 1996, 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, 1997 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 1997 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1997 basic financial statements taken as a whole. May 5, 1998 1 2 Cooper Tire & Rubber Company Thrift and Profit Sharing Plan Statements of Assets Available for Plan Benefits
December 31 1997 1996 ------------ ------------ Assets Investments (Notes 4 and 5): Value of interest in Pooled Fund $271,917,956 $231,005,924 Confederation Fund (Note 2) - 8,096,483 Cooper Tire & Rubber Company common stock 5,745,968 4,444,382 Washington Mutual Investors Fund 331,025 18,464 Investment Company of America 20,679 15,987 ----------- ----------- 278,015,628 243,581,240 Short-term investment 162,402 223,263 ----------- ----------- 278,178,030 243,804,503 Cash 5,108,412 2,990,614 Employer contribution receivable 3,654,337 3,140,072 ----------- ----------- Assets available for plan benefits $286,940,779 $249,935,189 =========== =========== 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 1997 1996 ---------- ---------- Additions: Cash contributions: Participants $ 11,784,022 $ 10,850,899 Employer (gross amount before reduction for forfeitures) 8,568,810 7,820,247 Less forfeitures arising from withdrawals (206,362) (180,000) ----------- ----------- Net employer contributions 8,362,448 7,640,247 ----------- ----------- 20,146,470 18,491,146 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) 49,701,339 (25,873,081) Net appreciation in fair value of Cooper Tire & Rubber Company common stock (Note 5) 357,002 383,377 Dividends 29,094 68,368 Interest 904,965 7,258 ----------- ----------- 50,992,400 (25,414,078) ----------- ----------- Total additions 71,138,870 (6,922,932) Participants' withdrawals (34,133,280) (36,817,103) ----------- ----------- Increase (decrease) in assets available for plan benefits during the year 37,005,590 (43,740,035) Assets available for plan benefits at beginning of year 249,935,189 293,675,224 ----------- ----------- Assets available for plan benefits at end of year $286,940,779 $249,935,189 =========== =========== See accompanying notes.
3 4 Cooper Tire & Rubber Company Thrift and Profit Sharing Plan Notes to Financial Statements December 31, 1997 and 1996 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, 1997, 4,637 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. Interest rates on contracts generally reset on a monthly or quarterly basis. 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, 1997 or 1996, 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 participants' 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 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 was 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, 1997 and 1996, 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 ruled September 9, 1996 that the Plan qualifies under Section 401(a) of the IRC and, therefore, the related trust is not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC and the Employee Retirement Income Security Act of 1974 to maintain its qualification. The Plan Committee is not aware of any course of action or series of events that have occurred that might adversely affect the Plan's qualified status. 4. Value of interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1997 ------------------------------------------------- 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 $ 1,214,344 $(1,863,178) $(1,153,143) $ 1,315,449 Cooper Tire & Rubber Company Common Stock 185,112,135 Mutual funds: The Investment Company of America Fund 18,542,498 The Washington Mutual Investors Fund 28,034,543 Cash with Interest Fund: *Allstate Life Insurance Company - 6.23% contract; matures August 16, 2004 8,589,106 New York Life Insurance Company - 7.65% contract; matures September 20, 2000 7,513,568 *John Hancock Mutual Life Insurance Company - 6.42% contract; matures May 1, 2007 7,197,589 Provident Life and Accident Insurance Company - 5.75% contract; matures January 30, 1998 6,593,931 *Continental Assurance Company 6.06% contract; matures January 1, 1998 3,862,569 *Allstate Life Insurance Company - 5.95% contract; matures February 18, 2002 3,303,020 *Allmerica Financial Life Insurance Company - 6.81% contract; matures November 15, 2004 3,259,691 *Peoples Security Life - 6.89% contract; matures June 25, 2004 3,026,927 (continued) 7 8 *Caisse Des Depots (CDC) BRIC - 6.15% contract; matures September 25, 2000 2,987,570 *Peoples Security Life - 6.08% contract; matures April 15, 1999 1,997,156 United of Omaha Life Insurance - 6.41% contract; matures August 2, 2000 1,995,770 *Peoples Security Life - 6.60% contract; matures August 25, 2004 1,979,747 *Peoples Security Life - 6.78% contract; matures March 15, 2002 1,952,166 *Peoples Security Life - 5.29% contract; matures December 17, 2001 1,721,801 *Caisse Des Depots (CDC) BRIC - 5.80%contract; matures December 16, 2002 1,550,256 *Peoples Security Life - 6.17% contract; matures July 16, 2001 1,487,592 *Caisse Des Depots (CDC) BRIC - 5.86% contract; matures May 31, 2000 1,445,881 *Peoples Security Life - 6.94% contract; matures January 26, 2004 1,299,224 Commonwealth Life Insurance Company - 3.66% contract; matures April 15, 1999 1,269,427 New York Life Insurance Company - 7.65% contract; matures April 19, 1999 1,085,983 *Peoples Security Life - 5.40% contract; matures January 18, 2000 859,422 *Peoples Security Life - 5.80% contract; matures December 31, 1999 654,404 *Peoples Security Life - 5.24% contract; matures April 15, 1998 589,726 ----------- ---------- ---------- ---------- Total assets $186,326,479 $64,359,348 $17,389,355 $29,349,992 =========== ========== ========== ==========
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 (continued) 8 9 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 - 8.47% annuity contract; matures October 31, 1997 6,754,591 Provident Life and Accident Insurance Company - 5.75% 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 - 4.93% 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 (continued) 9 10 *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 - 5.43% 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 =========== ========== ========== ========== * Collateralized or synthetic guaranteed investment contract.
The average yield of the Cash with Interest Fund for the years ended December 31, 1997 and 1996 was 6.7% and 6.3%, respectively. The value of the Plan's interest in the Pooled Fund is $271,917,956 at December 31, 1997 and $231,005,924 at December 31, 1996. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1997 1996 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 91.6% 93.1% Cash with Interest Fund 94.4% 95.6% The Investment Company of America Fund 84.5% 84.6% The Washington Mutual Investors Fund 87.9% 89.9% The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year ended December 31, 1997 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 113,940 $3,882,280 $ 30,033 $ 33,468 Dividends 2,704,175 1,804,968 2,222,234 Net realized and unrealized gain 38,049,952 1,573,724 3,744,388 ---------- --------- --------- --------- Net investment gain $40,868,067 $3,882,280 $3,408,725 $6,000,090 ========== ========= ========= =========
(continued) 10 11
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 ========== ========= ========= =========
The Plan's net investment gain from the Pooled Fund is $49,701,339 for the year ended December 31, 1997 and a net investment loss of $25,873,081 for the year ended December 31, 1996. 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. Year 2000 Issue (unaudited) The Plan Sponsor has developed and initiated its plans to address the possible exposures related to the impact of the Year 2000 on its systems and computer equipment. Key financial information and operational systems have been assessed and detailed plans have been implemented to address modifications required by December 31, 1999. The Plan Sponsor expects these modifications to be completed and tested by that time. The Plan Sponsor has also initiated communications with the Plan's Trustee to ensure it has appropriate plans to resolve Year 2000 issues where failure of its systems could adversely affect the Plan's operations. 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, 1997
Shares, Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ---------- -------- *Cooper Tire & Rubber Company common stock 235,732 $5,012,996 $5,745,968 Washington Mutual Investors Fund 10,907 286,593 331,025 Investment Company of America 732 17,351 20,679 --------- --------- $5,316,940 $6,097,672 ========= ========= Short-term investment: *Armada Government Portfolio Fund 162,403 $ 162,403 $ 162,403 ========= ========= * 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, 1997
Sales ----------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - ---------------------- --------- -------- --------- -------- Armada Government Portfolio Fund $8,068,480 $8,055,647 $8,055,647 $ - Cooper Tire & Rubber Company common stock 8,069,468 - - - 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, 1997 and 1996 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, 1997 and 1996, 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, 1997 and 1996, 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, 1997 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 1997 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1997 basic financial statements taken as a whole. May 5, 1998 1 18 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) Statements of Assets Available for Plan Benefits
December 31 1997 1996 ---------- ---------- Assets Investments: Value of interest in Pooled Fund (Note 4) $11,197,324 $8,261,977 Cooper Tire & Rubber Company common stock 158,974 148,622 ---------- --------- 11,356,298 8,410,599 Short-term investment 1,706 1,434 ---------- --------- 11,358,004 8,412,033 Cash 173,654 95,515 Employer contribution receivable 91,811 112,596 ---------- --------- Assets available for plan benefits $11,623,469 $8,620,144 ========== ========= 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 1997 1996 ---------- ---------- Additions: Cash contributions: Participants $ 1,767,097 $1,907,977 Employer 238,769 264,020 ---------- --------- 2,005,866 2,171,997 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) 2,025,254 (1,110,919) Net (depreciation) appreciation in fair value of Cooper Tire & Rubber Company common stock (3,347) 18,432 Dividends 1,494 1,271 Interest 316 210 ---------- --------- 2,023,717 (1,091,006) ---------- --------- Total additions 4,029,583 1,080,991 Participants' withdrawals (1,026,258) (800,142) ---------- --------- Increase in assets available for plan benefits during the year 3,003,325 80,849 Assets available for plan benefits at beginning of year 8,620,144 8,339,295 ---------- --------- Assets available for plan benefits at end of year $11,623,469 $8,620,144 ========== ========= See accompanying notes.
3 20 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) Notes to Financial Statements December 31, 1997 and 1996 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, 1997, 884 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. Interest rates on contracts generally reset on a monthly or quarterly basis. 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 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, 1997 or 1996, 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 participants' 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, 1997 and 1996, 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 ruled September 9, 1996 that the Plan qualifies under Section 401(a) of the IRC and, therefore, the related trust is not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC and the Employee Retirement Income Security Act of 1974 to maintain its qualification. The Plan Committee is not aware of any course of action or series of events that have occurred that might adversely affect the Plan's qualified status. 4. Value of interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1997 ------------------------------------------------- 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 $ 1,214,344 $(1,863,178) $(1,153,143) $ 1,315,449 Cooper Tire & Rubber Company Common Stock 185,112,135 Mutual funds: The Investment Company of America Fund 18,542,498 The Washington Mutual Investors Fund 28,034,543 Cash with Interest Fund: (continued) 6 23 *Allstate Life Insurance Company - 6.23% contract; matures August 16, 2004 8,589,106 New York Life Insurance Company - 7.65% contract; matures September 20, 2000 7,513,568 *John Hancock Mutual Life Insurance Company - 6.42% contract; matures May 1, 2007 7,197,589 Provident Life and Accident Insurance Company - 5.75% contract; matures January 30, 1998 6,593,931 *Continental Assurance Company 6.06% contract; matures January 1, 1998 3,862,569 *Allstate Life Insurance Company - 5.95% contract; matures February 18, 2002 3,303,020 *Allmerica Financial Life Insurance Company - 6.81% contract; matures November 15, 2004 3,259,691 *Peoples Security Life - 6.89% contract; matures June 25, 2004 3,026,927 *Caisse Des Depots (CDC) BRIC - 6.15% contract; matures September 25, 2000 2,987,570 *Peoples Security Life - 6.08% contract; matures April 15, 1999 1,997,156 United of Omaha Life Insurance - 6.41% contract; matures August 2, 2000 1,995,770 *Peoples Security Life - 6.60% contract; matures August 25, 2004 1,979,747 *Peoples Security Life - 6.78% contract; matures March 15, 2002 1,952,166 *Peoples Security Life - 5.29% contract; matures December 17, 2001 1,721,801 *Caisse Des Depots (CDC) BRIC - 5.80%contract; matures December 16, 2002 1,550,256 *Peoples Security Life - 6.17% contract; matures July 16, 2001 1,487,592 *Caisse Des Depots (CDC) BRIC - 5.86% contract; matures May 31, 2000 1,445,881 *Peoples Security Life - 6.94% contract; matures January 26, 2004 1,299,224 Commonwealth Life Insurance Company - 3.66% contract; matures April 15, 1999 1,269,427 New York Life Insurance Company - 7.65% contract; matures April 19, 1999 1,085,983 (continued) 7 24 *Peoples Security Life - 5.40% contract; matures January 18, 2000 859,422 *Peoples Security Life - 5.80% contract; matures December 31, 1999 654,404 *Peoples Security Life - 5.24% contract; matures April 15, 1998 589,726 ----------- ---------- ---------- ---------- Total assets $186,326,479 $64,359,348 $17,389,355 $29,349,992 =========== ========== ========== ==========
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 - 8.47% annuity contract; matures October 31, 1997 6,754,591 Provident Life and Accident Insurance Company - 5.75% 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 - 4.93% 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 (continued) 8 25 *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 - 5.43% 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 =========== ========== ========== ========== * Collateralized or synthetic guaranteed investment contract.
The average yield of the Cash with Interest Fund for the years ended December 31, 1997 and 1996 was 6.7% and 6.3%, respectively. The value of the Plan's interest in the Pooled Fund is $11,197,324 at December 31, 1997 and $8,261,977 at December 31, 1996. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1997 1996 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 4.1% 3.8% Cash with Interest Fund 2.8% 2.3% The Investment Company of America Fund 2.7% 3.1% The Washington Mutual Investors Fund 4.3% 2.9% (continued) 9 26 The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1997 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 113,940 $3,882,280 $ 30,033 $ 33,468 Dividends 2,704,175 1,804,968 2,222,234 Net realized and unrealized gain 38,049,952 1,573,724 3,744,388 ---------- --------- --------- --------- Net investment gain $40,868,067 $3,882,280 $3,408,725 $6,000,090 ========== ========= ========= =========
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 ========== ========= ========= =========
The Plan's net investment gain from the Pooled Fund is $2,025,254 for the year ended December 31, 1997 and a net investment loss of $1,110,919 for the year ended December 31, 1996. 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. Year 2000 Issue (unaudited) The Plan Sponsor has developed and initiated its plans to address the possible exposures related to the impact of the Year 2000 on its systems and computer equipment. Key financial information and operational systems have been assessed and detailed plans have been implemented to address modifications required by December 31, 1999. The Plan Sponsor expects these modifications to be completed and tested by that time. The Plan Sponsor has also initiated communications with the Plan's Trustee to ensure it has appropriate plans to resolve Year 2000 issues where failure of its systems could adversely affect the Plan's operations. 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, 1997
Shares, Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ---------- -------- *Cooper Tire & Rubber Company common stock 6,522 $146,924 $158,974 ======= ======= Short-term investment: *Armada Government Portfolio Fund 1,706 $ 1,706 $ 1,706 ======= ======= * 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, 1997
Sales ----------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - ---------------------- --------- -------- --------- -------- Armada Government Portfolio Fund $260,936 $260,664 $260,664 $ - Cooper Tire & Rubber Company common stock 261,074 - - - 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, 1997 and 1996 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, 1997 and 1996, 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, 1997 and 1996, 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, 1997 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 1997 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1997 basic financial statements taken as a whole. May 5, 1998 1 32 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) Statements of Assets Available for Plan Benefits
December 31 1997 1996 ---------- ---------- Assets Investments: Value of interest in Pooled Fund (Note 4) $1,391,753 $849,375 Cooper Tire & Rubber Company common stock 30,591 28,218 --------- ------- 1,422,344 877,593 Short-term investment 351 732 --------- ------- 1,422,695 878,325 Cash 33,005 14,533 Employer contribution receivable 26,459 17,804 --------- ------- Assets available for plan benefits $1,482,159 $910,662 ========= ======= 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 1997 1996 ---------- ---------- Additions: Cash contributions: Participants $ 342,846 $258,687 Employer 54,762 46,975 --------- ------- 397,608 305,662 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) 228,535 (60,566) Net (depreciation) appreciation in fair value of Cooper Tire & Rubber Company common stock (367) 2,504 Dividends 286 198 Interest 64 30 --------- ------- 228,518 (57,834) --------- ------- Total additions 626,126 247,828 Participants' withdrawals (54,629) (84,409) --------- ------- Increase in assets available for plan benefits during the year 571,497 163,419 Assets available for plan benefits at beginning of year 910,662 747,243 --------- ------- Assets available for plan benefits at end of year $1,482,159 $910,662 ========= ======= See accompanying notes.
3 34 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) Notes to Financial Statements December 31, 1997 and 1996 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, 1997, 230 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. Interest rates on contracts generally reset on a monthly or quarterly basis. 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 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, 2000. 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, 1997 or 1996, 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 participants' 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, 1997 and 1996, 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 ruled September 9, 1996 that the Plan qualifies under Section 401(a) of the IRC and, therefore, the related trust is not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC and the Employee Retirement Income Security Act of 1974 to maintain its qualification. The Plan Committee is not aware of any course of action or series of events that have occurred that might adversely affect the Plan's qualified status. 4. Value of interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1997 ------------------------------------------------- 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 $ 1,214,344 $(1,863,178) $(1,153,143) $ 1,315,449 Cooper Tire & Rubber Company Common Stock 185,112,135 Mutual funds: The Investment Company of America Fund 18,542,498 The Washington Mutual Investors Fund 28,034,543 Cash with Interest Fund: (continued) 6 37 *Allstate Life Insurance Company - 6.23% contract; matures August 16, 2004 8,589,106 New York Life Insurance Company - 7.65% contract; matures September 20, 2000 7,513,568 *John Hancock Mutual Life Insurance Company - 6.42% contract; matures May 1, 2007 7,197,589 Provident Life and Accident Insurance Company - 5.75% contract; matures January 30, 1998 6,593,931 *Continental Assurance Company 6.06% contract; matures January 1, 1998 3,862,569 *Allstate Life Insurance Company - 5.95% contract; matures February 18, 2002 3,303,020 *Allmerica Financial Life Insurance Company - 6.81% contract; matures November 15, 2004 3,259,691 *Peoples Security Life - 6.89% contract; matures June 25, 2004 3,026,927 *Caisse Des Depots (CDC) BRIC - 6.15% contract; matures September 25, 2000 2,987,570 *Peoples Security Life - 6.08% contract; matures April 15, 1999 1,997,156 United of Omaha Life Insurance - 6.41% contract; matures August 2, 2000 1,995,770 *Peoples Security Life - 6.60% contract; matures August 25, 2004 1,979,747 *Peoples Security Life - 6.78% contract; matures March 15, 2002 1,952,166 *Peoples Security Life - 5.29% contract; matures December 17, 2001 1,721,801 *Caisse Des Depots (CDC) BRIC - 5.80%contract; matures December 16, 2002 1,550,256 *Peoples Security Life - 6.17% contract; matures July 16, 2001 1,487,592 *Caisse Des Depots (CDC) BRIC - 5.86% contract; matures May 31, 2000 1,445,881 *Peoples Security Life - 6.94% contract; matures January 26, 2004 1,299,224 Commonwealth Life Insurance Company - 3.66% contract; Matures April 15, 1999 1,269,427 New York Life Insurance Company - 7.65% contract; Matures April 19, 1999 1,085,983 (continued) 7 38 *Peoples Security Life - 5.40% contract; matures January 18, 2000 859,422 *Peoples Security Life - 5.80% contract; matures December 31, 1999 654,404 *Peoples Security Life - 5.24% contract; matures April 15, 1998 589,726 ----------- ---------- ---------- ---------- Total assets $186,326,479 $64,359,348 $17,389,355 $29,349,992 =========== ========== ========== ==========
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 - 8.47% annuity contract; matures October 31, 1997 6,754,591 Provident Life and Accident Insurance Company - 5.75% 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 - 4.93% 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 (continued) 8 39 *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 - 5.43% 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 =========== ========== ========== ========== * Collateralized or synthetic guaranteed investment contract.
The average yield of the Cash with Interest Fund for the years ended December 31, 1997 and 1996 was 6.7% and 6.3%, respectively. The value of the Plan's interest in the Pooled Fund is $1,391,753 at December 31, 1997 and $849,375 at December 31, 1996. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1997 1996 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 0.4% 0.3% Cash with Interest Fund 0.4% 0.3% The Investment Company of America Fund 1.0% 1.0% The Washington Mutual Investors Fund 0.6% 0.4% (continued) 9 40 The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1997 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 113,940 $3,882,280 $ 30,033 $ 33,468 Dividends 2,704,175 1,804,968 2,222,234 Net realized and unrealized gain 38,049,952 1,573,724 3,744,388 ---------- --------- --------- --------- Net investment gain $40,868,067 $3,882,280 $3,408,725 $6,000,090 ========== ========= ========= =========
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 ========== ========= ========= =========
The Plan's net investment gain from the Pooled Fund is $228,535 for the year ended December 31, 1997 and a net investment loss of $60,566 for the year ended December 31, 1996. 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. Year 2000 Issue (unaudited) The Plan Sponsor has developed and initiated its plans to address the possible exposures related to the impact of the Year 2000 on its systems and computer equipment. Key financial information and operational systems have been assessed and detailed plans have been implemented to address modifications required by December 31, 1999. The Plan Sponsor expects these modifications to be completed and tested by that time. The Plan Sponsor has also initiated communications with the Plan's Trustee to ensure it has appropriate plans to resolve Year 2000 issues where failure of its systems could adversely affect the Plan's operations. 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, 1997
Shares, Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ---------- -------- *Cooper Tire & Rubber Company common stock 1,255 $28,273 $30,591 ====== ====== Short-term investment: *Armada Government Portfolio Fund 351 $ 351 $ 351 ====== ====== * 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, 1997
Sales ----------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - ---------------------- --------- -------- --------- -------- Armada Government Portfolio Fund $48,023 $48,404 $48,404 $ - Cooper Tire & Rubber Company common stock 47,739 901 924 (23) 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, 1997 and 1996 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, 1997 and 1996, 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, 1997 and 1996, 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, 1997 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 1997 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1997 basic financial statements taken as a whole. May 5, 1998 1 46 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) Statements of Assets Available for Plan Benefits
December 31 1997 1996 ---------- ---------- Assets Investments: Value of interest in Pooled Fund (Note 4) $10,700,422 $6,824,999 Cooper Tire & Rubber Company common stock 164,873 135,844 ---------- --------- 10,865,295 6,960,843 Short-term investment 1,633 996 ---------- --------- 10,866,928 6,961,839 Cash 314,183 142,974 Employer contribution receivable 145,345 134,794 ---------- --------- Assets available for plan benefits $11,326,456 $7,239,607 ========== ========= 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 1997 1996 ---------- ---------- Additions: Cash contributions: Participants $ 2,407,236 $2,228,008 Employer 297,746 272,696 ---------- --------- 2,704,982 2,500,704 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) 1,859,458 (370,247) Net (depreciation) appreciation in fair value of Cooper Tire & Rubber Company common stock (2,389) 9,210 Dividends 1,416 800 Interest 317 193 ---------- --------- 1,858,802 (360,044) --------- --------- Total additions 4,563,784 2,140,660 Participants' withdrawals (476,935) (220,833) ---------- --------- Increase in assets available for plan benefits during the year 4,086,849 1,919,827 Assets available for plan benefits at beginning of year 7,239,607 5,319,780 ---------- --------- Assets available for plan benefits at end of year $11,326,456 $7,239,607 ========== ========= See accompanying notes.
3 48 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) Notes to Financial Statements December 31, 1997 and 1996 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, 1997, 675 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. Interest rates on contracts generally reset on a monthly or quarterly basis. 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 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, 2000. 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, 1997 or 1996, 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 participants' 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, 1997 and 1996, 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 ruled September 9, 1996 that the Plan qualifies under Section 401(a) of the IRC and, therefore, the related trust is not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC and the Employee Retirement Income Security Act of 1974 to maintain its qualification. The Plan Committee is not aware of any course of action or series of events that have occurred that might adversely affect the Plan's qualified status. 4. Value of interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1997 ------------------------------------------------- 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 $ 1,214,344 $(1,863,178) $(1,153,143) $ 1,315,449 Cooper Tire & Rubber Company Common Stock 185,112,135 Mutual funds: The Investment Company of America Fund 18,542,498 The Washington Mutual Investors Fund 28,034,543 Cash with Interest Fund: (continued) 6 51 *Allstate Life Insurance Company - 6.23% contract; matures August 16, 2004 8,589,106 New York Life Insurance Company - 7.65% contract; matures September 20, 2000 7,513,568 *John Hancock Mutual Life Insurance Company - 6.42% contract; matures May 1, 2007 7,197,589 Provident Life and Accident Insurance Company - 5.75% contract; matures January 30, 1998 6,593,931 *Continental Assurance Company 6.06% contract; matures January 1, 1998 3,862,569 *Allstate Life Insurance Company - 5.95% contract; matures February 18, 2002 3,303,020 *Allmerica Financial Life Insurance Company - 6.81% contract; matures November 15, 2004 3,259,691 *Peoples Security Life - 6.89% contract; matures June 25, 2004 3,026,927 *Caisse Des Depots (CDC) BRIC - 6.15% contract; matures September 25, 2000 2,987,570 *Peoples Security Life - 6.08% contract; matures April 15, 1999 1,997,156 United of Omaha Life Insurance - 6.41% contract; matures August 2, 2000 1,995,770 *Peoples Security Life - 6.60% contract; matures August 25, 2004 1,979,747 *Peoples Security Life - 6.78% contract; matures March 15, 2002 1,952,166 *Peoples Security Life - 5.29% contract; matures December 17, 2001 1,721,801 *Caisse Des Depots (CDC) BRIC - 5.80%contract; matures December 16, 2002 1,550,256 *Peoples Security Life - 6.17% contract; matures July 16, 2001 1,487,592 *Caisse Des Depots (CDC) BRIC - 5.86% contract; matures May 31, 2000 1,445,881 *Peoples Security Life - 6.94% contract; matures January 26, 2004 1,299,224 Commonwealth Life Insurance Company - 3.66% contract; matures April 15, 1999 1,269,427 New York Life Insurance Company - 7.65% contract; matures April 19, 1999 1,085,983 (continued) 7 52 *Peoples Security Life - 5.40% contract; matures January 18, 2000 859,422 *Peoples Security Life - 5.80% contract; matures December 31, 1999 654,404 *Peoples Security Life - 5.24% contract; matures April 15, 1998 589,726 ----------- ---------- ---------- ---------- Total assets $186,326,479 $64,359,348 $17,389,355 $29,349,992 =========== ========== ========== ==========
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 - 8.47% annuity contract; matures October 31, 1997 6,754,591 Provident Life and Accident Insurance Company - 5.75% 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 - 4.93% 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 (continued) 8 53 *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 - 5.43% 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 =========== ========== ========== ========== * Collateralized or synthetic guaranteed investment contract.
The average yield of the Cash with Interest Fund for the years ended December 31, 1997 and 1996 was 6.7% and 6.3%, respectively. The value of the Plan's interest in the Pooled Fund is $10,700,422 at December 31, 1997 and $6,824,999 at December 31, 1996. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1997 1996 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 3.2% 2.4% Cash with Interest Fund 1.8% 1.4% The Investment Company of America Fund 10.0% 10.0% The Washington Mutual Investors Fund 6.1% 5.8% (continued) 9 54 The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1997 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 113,940 $3,882,280 $ 30,033 $ 33,468 Dividends 2,704,175 1,804,968 2,222,234 Net realized and unrealized gain 38,049,952 1,573,724 3,744,388 ---------- --------- --------- --------- Net investment gain $40,868,067 $3,882,280 $3,408,725 $6,000,090 ========== ========= ========= =========
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 ========== ========= ========= =========
The Plan's net investment gain from the Pooled Fund is $1,859,458 for the year ended December 31, 1997 and a net investment loss of $370,247 for the year ended December 31, 1996. 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. Year 2000 Issue (unaudited) The Plan Sponsor has developed and initiated its plans to address the possible exposures related to the impact of the Year 2000 on its systems and computer equipment. Key financial information and operational systems have been assessed and detailed plans have been implemented to address modifications required by December 31, 1999. The Plan Sponsor expects these modifications to be completed and tested by that time. The Plan Sponsor has also initiated communications with the Plan's Trustee to ensure it has appropriate plans to resolve Year 2000 issues where failure of its systems could adversely affect the Plan's operations. 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, 1997
Shares, Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ---------- -------- *Cooper Tire & Rubber Company common stock 6,764 $152,377 $164,873 ======= ======= Short-term investment: *Armada Government Portfolio Fund 1,633 $ 1,633 $ 1,633 ======= ======= * 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, 1997
Sales ----------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - ---------------------- --------- -------- --------- -------- Armada Government Portfolio Fund $288,485 $287,848 $287,848 $ - Cooper Tire & Rubber Company common stock 288,274 - - - 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, 1997 and 1996 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, 1997 and 1996, 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, 1997 and 1996, 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, 1997 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 1997 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1997 basic financial statements taken as a whole. May 5, 1998 1 60 Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) Statements of Assets Available for Plan Benefits
December 31 1997 1996 ---------- ---------- Assets Investments: Value of interest in Pooled Fund (Note 4) $535,669 $394,428 Cooper Tire & Rubber Company common stock 13,504 12,994 ------- ------- 549,173 407,422 Short-term investment 195 153 ------- ------- 549,368 407,575 Cash 7,769 6,515 Employer contribution receivable 8,196 9,295 ------- ------- Assets available for plan benefits $565,333 $423,385 ======= ======= 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 1997 1996 ---------- ---------- Additions: Cash contributions: Participants $148,260 $134,107 Employer 20,715 22,554 ------- ------- 168,975 156,661 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) 83,578 (23,146) Net (depreciation) appreciation in fair value of Cooper Tire & Rubber Company common stock (246) 1,263 Dividends 129 96 Interest 28 15 ------- ------- 83,489 (21,772) ------- ------- Total additions 252,464 134,889 Participants' withdrawals (110,516) (52,072) ------- ------- Increase in assets available for plan benefits during the year 141,948 82,817 Assets available for plan benefits at beginning of year 423,385 340,568 ------- ------- Assets available for plan benefits at end of year $565,333 $423,385 ======= ======= See accompanying notes.
3 62 Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) Notes to Financial Statements December 31, 1997 and 1996 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, 1997, 128 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. Interest rates on contracts generally reset on a monthly or quarterly basis. 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 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, 2000. 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, 1997 or 1996, 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 participants' 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, 1997 and 1996, 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 ruled September 9, 1996 that the Plan qualifies under Section 401(a) of the IRC and, therefore, the related trust is not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC and the Employee Retirement Income Security Act of 1974 to maintain its qualification. The Plan Committee is not aware of any course of action or series of events that have occurred that might adversely affect the Plan's qualified status. 4. Value of interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1997 ------------------------------------------------- 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 $ 1,214,344 $(1,863,178) $(1,153,143) $ 1,315,449 Cooper Tire & Rubber Company Common Stock 185,112,135 Mutual funds: The Investment Company of America Fund 18,542,498 The Washington Mutual Investors Fund 28,034,543 Cash with Interest Fund: (continued) 6 65 *Allstate Life Insurance Company - 6.23% contract; matures August 16, 2004 8,589,106 New York Life Insurance Company - 7.65% contract; matures September 20, 2000 7,513,568 *John Hancock Mutual Life Insurance Company - 6.42% contract; matures May 1, 2007 7,197,589 Provident Life and Accident Insurance Company - 5.75% contract; matures January 30, 1998 6,593,931 *Continental Assurance Company 6.06% contract; matures January 1, 1998 3,862,569 *Allstate Life Insurance Company - 5.95% contract; matures February 18, 2002 3,303,020 *Allmerica Financial Life Insurance Company - 6.81% contract; matures November 15, 2004 3,259,691 *Peoples Security Life - 6.89% contract; matures June 25, 2004 3,026,927 *Caisse Des Depots (CDC) BRIC - 6.15% contract; matures September 25, 2000 2,987,570 *Peoples Security Life - 6.08% contract; matures April 15, 1999 1,997,156 United of Omaha Life Insurance - 6.41% contract; matures August 2, 2000 1,995,770 *Peoples Security Life - 6.60% contract; matures August 25, 2004 1,979,747 *Peoples Security Life - 6.78% contract; matures March 15, 2002 1,952,166 *Peoples Security Life - 5.29% contract; matures December 17, 2001 1,721,801 *Caisse Des Depots (CDC) BRIC - 5.80%contract; matures December 16, 2002 1,550,256 *Peoples Security Life - 6.17% contract; matures July 16, 2001 1,487,592 *Caisse Des Depots (CDC) BRIC - 5.86% contract; matures May 31, 2000 1,445,881 *Peoples Security Life - 6.94% contract; matures January 26, 2004 1,299,224 Commonwealth Life Insurance Company - 3.66% contract; matures April 15, 1999 1,269,427 New York Life Insurance Company - 7.65% contract; matures April 19, 1999 1,085,983 (continued) 7 66 *Peoples Security Life - 5.40% contract; matures January 18, 2000 859,422 *Peoples Security Life - 5.80% contract; matures December 31, 1999 654,404 *Peoples Security Life - 5.24% contract; matures April 15, 1998 589,726 ----------- ---------- ---------- ---------- Total assets $186,326,479 $64,359,348 $17,389,355 $29,349,992 =========== ========== ========== ==========
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 - 8.47% annuity contract; matures October 31, 1997 6,754,591 Provident Life and Accident Insurance Company - 5.75% 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 - 4.93% 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 (continued) 8 67 *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 - 5.43% 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 =========== ========== ========== ========== * Collateralized or synthetic guaranteed investment contract.
The average yield of the Cash with Interest Fund for the years ended December 31, 1997 and 1996 was 6.7% and 6.3%, respectively. The value of the Plan's interest in the Pooled Fund is $535,669 at December 31, 1997 and $394,428 at December 31, 1996. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1997 1996 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 0.2% 0.1% Cash with Interest Fund 0.3% 0.2% The Investment Company of America Fund 0.1% 0.2% The Washington Mutual Investors Fund 0.1% 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, 1997 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 113,940 $3,882,280 $ 30,033 $ 33,468 Dividends 2,704,175 1,804,968 2,222,234 Net realized and unrealized gain 38,049,952 1,573,724 3,744,388 ---------- --------- --------- --------- Net investment gain $40,868,067 $3,882,280 $3,408,725 $6,000,090 ========== ========= ========= =========
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 ========== ========= ========= =========
The Plan's net investment gain from the Pooled Fund is $83,578 for the year ended December 31, 1997 and a net investment loss of $23,146 for the year ended December 31, 1996. 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. Year 2000 Issue (unaudited) The Plan Sponsor has developed and initiated its plans to address the possible exposures related to the impact of the Year 2000 on its systems and computer equipment. Key financial information and operational systems have been assessed and detailed plans have been implemented to address modifications required by December 31, 1999. The Plan Sponsor expects these modifications to be completed and tested by that time. The Plan Sponsor has also initiated communications with the Plan's Trustee to ensure it has appropriate plans to resolve Year 2000 issues where failure of its systems could adversely affect the Plan's operations. 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, 1997
Shares, Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ---------- -------- *Cooper Tire & Rubber Company common stock 554 $12,480 $13,504 ====== ====== Short-term investment: *Armada Government Portfolio Fund 195 $ 195 $ 195 ====== ====== * 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, 1997
Sales ----------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - ---------------------- --------- -------- --------- -------- Armada Government Portfolio Fund $21,935 $21,893 $21,893 $ - Cooper Tire & Rubber Company common stock 21,927 - - - 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, 1997 and 1996 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, 1997 and 1996, 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, 1997 and 1996, 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, 1997 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 1997 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1997 basic financial statements taken as a whole. May 5, 1998 1 74 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) Statements of Assets Available for Plan Benefits
December 31 1997 1996 ---------- ---------- Assets Investments: Value of interest in Pooled Fund (Note 4) $880,991 $467,363 Cooper Tire & Rubber Company common stock 27,056 26,031 ------- ------- 908,047 493,394 Short-term investment 1,168 - ------- ------- 909,215 493,394 Cash 25,321 9,336 Employer contribution receivable 20,363 18,769 ------- ------- Assets available for plan benefits $954,899 $521,499 ======= ======= 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 1997 1996 ---------- ---------- Additions: Cash contributions: Participants $281,293 $246,085 Employer 45,400 45,288 ------- ------- 326,693 291,373 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) 146,971 (19,262) Net (depreciation) appreciation in fair value of Cooper Tire & Rubber Company common stock (446) 1,439 Dividends 259 148 Interest 56 21 ------- ------- 146,840 (17,654) ------- ------- Total additions 473,533 273,719 Participants' withdrawals (40,133) (27,970) ------- ------- Increase in assets available for plan benefits during the year 433,400 245,749 Assets available for plan benefits at beginning of year 521,499 275,750 ------- ------- Assets available for plan benefits at end of year $954,899 $521,499 ======= ======= See accompanying notes.
3 76 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) Notes to Financial Statements December 31, 1997 and 1996 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, 1997, 238 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. Interest rates on contracts generally reset on a monthly or quarterly basis. 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 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, 2001. 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, 1997 or 1996, 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 participants' 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, 1997 and 1996, 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 ruled September 9, 1996 that the Plan qualifies under Section 401(a) of the IRC and, therefore, the related trust is not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC and the Employee Retirement Income Security Act of 1974 to maintain its qualification. The Plan Committee is not aware of any course of action or series of events that have occurred that might adversely affect the Plan's qualified status. 4. Value of interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1997 ------------------------------------------------- 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 $ 1,214,344 $(1,863,178) $(1,153,143) $ 1,315,449 Cooper Tire & Rubber Company Common Stock 185,112,135 Mutual funds: The Investment Company of America Fund 18,542,498 The Washington Mutual Investors Fund 28,034,543 Cash with Interest Fund: (continued) 6 79 *Allstate Life Insurance Company - 6.23% contract; matures August 16, 2004 8,589,106 New York Life Insurance Company - 7.65% contract; matures September 20, 2000 7,513,568 *John Hancock Mutual Life Insurance Company - 6.42% contract; matures May 1, 2007 7,197,589 Provident Life and Accident Insurance Company - 5.75% contract; matures January 30, 1998 6,593,931 *Continental Assurance Company 6.06% contract; matures January 1, 1998 3,862,569 *Allstate Life Insurance Company - 5.95% contract; matures February 18, 2002 3,303,020 *Allmerica Financial Life Insurance Company - 6.81% contract; matures November 15, 2004 3,259,691 *Peoples Security Life - 6.89% contract; matures June 25, 2004 3,026,927 *Caisse Des Depots (CDC) BRIC - 6.15% contract; matures September 25, 2000 2,987,570 *Peoples Security Life - 6.08% contract; matures April 15, 1999 1,997,156 United of Omaha Life Insurance - 6.41% contract; matures August 2, 2000 1,995,770 *Peoples Security Life - 6.60% contract; matures August 25, 2004 1,979,747 *Peoples Security Life - 6.78% contract; matures March 15, 2002 1,952,166 *Peoples Security Life - 5.29% contract; matures December 17, 2001 1,721,801 *Caisse Des Depots (CDC) BRIC - 5.80%contract; matures December 16, 2002 1,550,256 *Peoples Security Life - 6.17% contract; matures July 16, 2001 1,487,592 *Caisse Des Depots (CDC) BRIC - 5.86% contract; matures May 31, 2000 1,445,881 *Peoples Security Life - 6.94% contract; matures January 26, 2004 1,299,224 Commonwealth Life Insurance Company - 3.66% contract; matures April 15, 1999 1,269,427 New York Life Insurance Company - 7.65% contract; matures April 19, 1999 1,085,983 (continued) 7 80 *Peoples Security Life - 5.40% contract; matures January 18, 2000 859,422 *Peoples Security Life - 5.80% contract; matures December 31, 1999 654,404 *Peoples Security Life - 5.24% contract; matures April 15, 1998 589,726 ----------- ---------- ---------- ---------- Total assets $186,326,479 $64,359,348 $17,389,355 $29,349,992 =========== ========== ========== ==========
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 - 8.47% annuity contract; matures October 31, 1997 6,754,591 Provident Life and Accident Insurance Company - 5.75% 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 - 4.93% 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 (continued) 8 81 *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 - 5.43% 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 =========== ========== ========== ========== * Collateralized or synthetic guaranteed investment contract.
The average yield of the Cash with Interest Fund for the years ended December 31, 1997 and 1996 was 6.7% and 6.3%, respectively. The value of the Plan's interest in the Pooled Fund is $880,991 at December 31, 1997 and $467,363 at December 31, 1996. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1997 1996 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 0.3% 0.2% Cash with Interest Fund 0.2% 0.1% The Investment Company of America Fund 0.8% 0.6% The Washington Mutual Investors Fund 0.5% 0.5% (continued) 9 82 The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1997 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 113,940 $3,882,280 $ 30,033 $ 33,468 Dividends 2,704,175 1,804,968 2,222,234 Net realized and unrealized gain 38,049,952 1,573,724 3,744,388 ---------- --------- --------- --------- Net investment gain $40,868,067 $3,882,280 $3,408,725 $6,000,090 ========== ========= ========= =========
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 ========== ========= ========= =========
The Plan's net investment gain from the Pooled Fund is $146,971 for the year ended December 31, 1997 and a net investment loss of $19,262 for the year ended December 31, 1996. 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. Year 2000 Issue (unaudited) The Plan Sponsor has developed and initiated its plans to address the possible exposures related to the impact of the Year 2000 on its systems and computer equipment. Key financial information and operational systems have been assessed and detailed plans have been implemented to address modifications required by December 31, 1999. The Plan Sponsor expects these modifications to be completed and tested by that time. The Plan Sponsor has also initiated communications with the Plan's Trustee to ensure it has appropriate plans to resolve Year 2000 issues where failure of its systems could adversely affect the Plan's operations. 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, 1997
Shares, Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ---------- -------- *Cooper Tire & Rubber Company common stock 1,110 $25,005 $27,056 ====== ====== Short-term investment: *Armada Government Portfolio Fund 1,168 $ 1,168 $ 1,168 ====== ====== * 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, 1997
Sales ----------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - ---------------------- --------- -------- --------- -------- Armada Government Portfolio Fund $41,690 $41,368 $41,368 $ - Cooper Tire & Rubber Company common stock 42,997 - - - 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, 1997 and 1996 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, 1997 and 1996, 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, 1997 and 1996, 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, 1997 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 1997 financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1997 basic financial statements taken as a whole. May 5, 1998 1 88 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) Statements of Assets Available for Plan Benefits
December 31 1997 1996 ---------- ---------- Assets Investments: Value of interest in Pooled Fund (Note 4) $800,061 $329,039 Cooper Tire & Rubber Company common stock 28,836 12,979 ------- ------- 828,897 342,018 Short-term investment 220 138 ------- ------- 829,117 342,156 Cash 26,702 8,518 Employer contribution receivable 30,119 13,881 ------- ------- Assets available for plan benefits $885,938 $364,555 ======= ======= 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 1997 1996 ---------- ---------- Additions: Cash contributions: Participants $401,926 $171,169 Employer 56,789 27,145 ------- ------- 458,715 198,314 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) 114,027 (11,408) Net appreciation in fair value of Cooper Tire & Rubber Company common stock 736 875 Dividends 171 81 Interest 41 13 ------- ------- 114,975 (10,439) ------- ------- Total additions 573,690 187,875 Participants' withdrawals ( 52,307) (10,487) ------- ------- Increase in assets available for plan benefits during the year 521,383 177,388 Assets available for plan benefits at beginning of year 364,555 187,167 ------- ------- Assets available for plan benefits at end of year $885,938 $364,555 ======= ======= See accompanying notes.
3 90 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) Notes to Financial Statements December 31, 1997 and 1996 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, 1997, 246 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. Interest rates on contracts generally reset on a monthly or quarterly basis. 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 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, 2000. 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, 1997 or 1996, 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 participants' 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, 1997 and 1996, 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 ruled September 9, 1996 that the Plan qualifies under Section 401(a) of the IRC and, therefore, the related trust is not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC and the Employee Retirement Income Security Act of 1974 to maintain its qualification. The Plan Committee is not aware of any course of action or series of events that have occurred that might adversely affect the Plan's qualified status. 4. Value of interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1997 ------------------------------------------------- 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 $ 1,214,344 $(1,863,178) $(1,153,143) $ 1,315,449 Cooper Tire & Rubber Company Common Stock 185,112,135 Mutual funds: The Investment Company of America Fund 18,542,498 The Washington Mutual Investors Fund 28,034,543 Cash with Interest Fund: (continued) 6 93 *Allstate Life Insurance Company - 6.23% contract; matures August 16, 2004 8,589,106 New York Life Insurance Company - 7.65% contract; matures September 20, 2000 7,513,568 *John Hancock Mutual Life Insurance Company - 6.42% contract; matures May 1, 2007 7,197,589 Provident Life and Accident Insurance Company - 5.75% contract; matures January 30, 1998 6,593,931 *Continental Assurance Company 6.06% contract; matures January 1, 1998 3,862,569 *Allstate Life Insurance Company - 5.95% contract; matures February 18, 2002 3,303,020 *Allmerica Financial Life Insurance Company - 6.81% contract; matures November 15, 2004 3,259,691 *Peoples Security Life - 6.89% contract; matures June 25, 2004 3,026,927 *Caisse Des Depots (CDC) BRIC - 6.15% contract; matures September 25, 2000 2,987,570 *Peoples Security Life - 6.08% contract; matures April 15, 1999 1,997,156 United of Omaha Life Insurance - 6.41% contract; matures August 2, 2000 1,995,770 *Peoples Security Life - 6.60% contract; matures August 25, 2004 1,979,747 *Peoples Security Life - 6.78% contract; matures March 15, 2002 1,952,166 *Peoples Security Life - 5.29% contract; matures December 17, 2001 1,721,801 *Caisse Des Depots (CDC) BRIC - 5.80%contract; matures December 16, 2002 1,550,256 *Peoples Security Life - 6.17% contract; matures July 16, 2001 1,487,592 *Caisse Des Depots (CDC) BRIC - 5.86% contract; matures May 31, 2000 1,445,881 *Peoples Security Life - 6.94% contract; matures January 26, 2004 1,299,224 Commonwealth Life Insurance Company - 3.66% contract; matures April 15, 1999 1,269,427 New York Life Insurance Company - 7.65% contract; matures April 19, 1999 1,085,983 (continued) 7 94 *Peoples Security Life - 5.40% contract; matures January 18, 2000 859,422 *Peoples Security Life - 5.80% contract; matures December 31, 1999 654,404 *Peoples Security Life - 5.24% contract; matures April 15, 1998 589,726 ----------- ---------- ---------- ---------- Total assets $186,326,479 $64,359,348 $17,389,355 $29,349,992 =========== ========== ========== ==========
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 - 8.47% annuity contract; matures October 31, 1997 6,754,591 Provident Life and Accident Insurance Company - 5.75% 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 - 4.93% 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 (continued) 8 95 *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 - 5.43% 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 =========== ========== ========== ========== * Collateralized or synthetic guaranteed investment contract.
The average yield of the Cash with Interest Fund for the years ended December 31, 1997 and 1996 was 6.7% and 6.3%, respectively. The value of the Plan's interest in the Pooled Fund is $800,061 at December 31, 1997 and $329,039 at December 31, 1996. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1997 1996 ---- ---- 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 0.9% 0.5% The Washington Mutual Investors Fund 0.5% 0.3% (continued) 9 96 The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1997 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ---------- ---------- Interest $ 113,940 $3,882,280 $ 30,033 $ 33,468 Dividends 2,704,175 1,804,968 2,222,234 Net realized and unrealized gain 38,049,952 1,573,724 3,744,388 ---------- --------- --------- --------- Net investment gain $40,868,067 $3,882,280 $3,408,725 $6,000,090 ========== ========= ========= =========
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 ========== ========= ========= =========
The Plan's net investment gain from the Pooled Fund is $114,027 for the year ended December 31, 1997 and a net investment loss of $11,408 for the year ended December 31, 1996. 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. Year 2000 Issue (unaudited) The Plan Sponsor has developed and initiated its plans to address the possible exposures related to the impact of the Year 2000 on its systems and computer equipment. Key financial information and operational systems have been assessed and detailed plans have been implemented to address modifications required by December 31, 1999. The Plan Sponsor expects these modifications to be completed and tested by that time. The Plan Sponsor has also initiated communications with the Plan's Trustee to ensure it has appropriate plans to resolve Year 2000 issues where failure of its systems could adversely affect the Plan's operations. 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, 1997
Shares, Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ---------- -------- *Cooper Tire & Rubber Company common stock 1,183 $26,650 $28,836 ====== ====== Short-term investment: *Armada Government Portfolio Fund 220 $ 220 $ 220 ====== ====== * 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, 1997
Sales ----------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - ---------------------- --------- -------- --------- -------- Armada Government Portfolio Fund $40,685 $40,603 $40,603 $ - Cooper Tire & Rubber Company common stock 40,661 - - - 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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