Business Segments

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Business Segments

Business Segments

The Company has four segments under ASC 280:

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

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

• Europe; and

• Asia.

North America and Latin America meet the criteria for aggregation in accordance with ASC 280, as they are similar in their production and distribution processes and exhibit similar economic characteristics. The aggregated North America and Latin America segments are presented as “Americas Tire Operations” in the segment disclosure. The Americas Tire Operations segment manufactures and markets passenger car and light truck tires, primarily for sale in the U.S. replacement market. The segment also has a joint venture manufacturing operation in Mexico, COOCSA, which supplies passenger car tires to the U.S., Mexican, Central American and South American markets. The segment also distributes tires for racing, medium trucks and motorcycles. The racing and motorcycle tires are manufactured in the Company’s European Operations segment and by others. The medium truck tires are sourced predominantly through an off-take agreement with CCT, the Company’s former joint venture. Major distribution channels and customers include independent tire dealers, wholesale distributors, regional and national retail tire chains, and large retail chains that sell tires as well as other automotive products. The segment does not currently sell its products directly to end users, except through three Company-owned retail stores. The segment sells a limited number of tires to OEMs.

Both the Asia and Europe segments have been determined to be individually immaterial, as they do not meet the quantitative requirements for segment disclosure under ASC 280. In accordance with ASC 280, information about operating segments that are not reportable shall be combined and disclosed in an all other category separate from other reconciling items. As a result, these two segments have been combined in the segment operating results discussion. The results of the combined Asia and Europe segments are presented as “International Tire Operations”. The European operations have operations in the U.K. and Serbia. The U.K. entity manufactures and markets passenger car, light truck, motorcycle and racing tires and tire retread material for domestic and global markets. The Serbian entity manufactures light vehicle tires primarily for the European markets and for export to the U.S. The Asian operations are located in the PRC. In the PRC, Cooper Kunshan Tire manufactures light vehicle tires both for the Chinese domestic market and for export to markets outside of the PRC. On December 1, 2016, the Company acquired 65 percent ownership of GRT, a joint venture manufacturing facility located in the PRC. GRT is expected to serve as a global source of truck and bus radial tire production for the Company. The segment also had another joint venture in the PRC, CCT, which manufactured and marketed radial and bias medium truck tires, as well as passenger car and light truck tires for domestic and global markets. The Company sold its ownership interest in this joint venture in November 2014, and the Company now procures these tires under off-take agreements through mid-2018 from this entity. The majority of the tires manufactured by the segments are sold in the replacement market, with a portion also sold to OEMs.

The following customer of the Americas Tire Operations segment contributed ten percent or more of the Company’s total consolidated net sales in 2016, 2015 and 2014. Net sales and percentage of consolidated Company sales for this customer in 2016, 2015 and 2014 were as follows:

	2016				2015				2014
Customer	Net Sales		Consolidated Net Sales		Net Sales		Consolidated Net Sales		Net Sales		Consolidated Net Sales
TBC/Treadways	$	414,556	14	%	$	485,257	16	%	$	440,820	13	%

The accounting policies of the reportable segments are consistent with those described in the Significant Accounting Policies note to the consolidated financial statements. Corporate administrative expenses are allocated to segments based principally on assets, employees and sales. The following table details segment financial information:

	2016			2015			2014
Net sales:
Americas Tire
External customers	$	2,549,743		$	2,627,619		$	2,524,554
Intercompany	50,580			57,135			60,930
	2,600,323			2,684,754			2,585,484
International Tire
External customers	375,126			345,282			900,255
Intercompany	88,877			106,597			240,571
	464,003			451,879			1,140,826
Eliminations	(139,457		)	(163,732		)	(301,501		)
Consolidated net sales	2,924,869			2,972,901			3,424,809
Operating profit (loss):
Americas Tire	439,941			422,929			274,837
International Tire	5,998			(19,133		)	74,566
Unallocated corporate charges	(60,308		)	(52,342		)	(48,930		)
Eliminations	(1,244		)	3,026			(15		)
Consolidated operating profit	384,387			354,480			300,458
Interest expense	(26,604		)	(23,820		)	(28,138		)
Interest income	4,378			2,211			1,500
Gain on sale of interest in subsidiary	—			—			77,471
Other non-operating income (expense)	4,932			1,157			(2,772		)
Income before income taxes	367,093			334,028			348,519
Depreciation and amortization expense
Americas Tire	85,842			92,377			82,457
International Tire	30,470			28,577			54,400
Corporate	13,945			454			2,309
Consolidated depreciation and amortization expense	130,257			121,408			139,166
Segment assets
Americas Tire	1,438,802			1,386,361			1,284,302
International Tire	547,178			414,051			423,059
Corporate and other	633,415			635,764			781,576
Consolidated assets	2,619,395			2,436,176			2,488,937
Expenditures for long-lived assets
Americas Tire	112,975			145,813			95,539
International Tire	60,359			33,839			44,741
Corporate	2,103			2,892			4,761
Consolidated expenditures for long-lived assets	175,437			182,544			145,041

Geographic information for revenues, based on country of origin, and long-lived assets follows:

	2016		2015		2014
Net sales
United States	$	2,423,932	$	2,518,089	$	2,423,471
PRC	166,289		126,674		635,632
Rest of world	334,648		328,138		365,706
Consolidated net sales	2,924,869		2,972,901		3,424,809
Long-lived assets
United States	547,599		537,173		474,357
PRC	157,858		105,237		113,335
Rest of world	158,770		152,788		152,511
Consolidated long-lived assets	864,227		795,198		740,203