Business Segments

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Business Segments

Business Segments

The Company has four segments under ASC 280, “Segments”:

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

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

• Europe; and

• Asia.

North America and Latin America meet the criteria for aggregation in accordance with ASC 280, as they are similar in their production and distribution processes and exhibit similar economic characteristics. The aggregated North America and Latin America segments are presented as “Americas Tire Operations” in the segment disclosure. The Americas Tire Operations segment manufactures and markets passenger car and light truck tires, primarily for sale in the U.S. replacement market. The segment also has a joint venture manufacturing operation in Mexico, Corporacion de Occidente SA de CV ("COOCSA"), which supplies passenger car tires to the North American, 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 from GRT and through an off-take agreement with Prinx Chengshan (Shandong) Tire Company Ltd. ("PCT"), 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 original equipment manufacturers ("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 United Kingdom ("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, PCT, 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 began procuring certain medium truck and passenger car tires under off-take agreements with PCT through mid-2018. The medium truck tire agreement has been extended and now expires in mid-2019. The segment sells a majority of its tires in the replacement market, with a portion also sold to OEMs.

The following table details information on the Company’s operating segments.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net sales
Americas Tire
External customers	$	615,261		$	658,727		$	1,742,863		$	1,866,926
Intercompany	10,162			13,914			29,275			39,773
	625,423			672,641			1,772,138			1,906,699
International Tire
External customers	118,582			92,186			354,758			274,056
Intercompany	44,763			20,603			101,922			65,637
	163,345			112,789			456,680			339,693
Eliminations	(54,925		)	(34,517		)	(131,197		)	(105,410		)
Consolidated net sales	$	733,843		$	750,913		$	2,097,621		$	2,140,982
Operating profit (loss):
Americas Tire	$	117,465		$	101,522		$	263,951		$	323,667
International Tire	591			3,265			3,518			4,645
Unallocated corporate charges	(15,792		)	(26,442		)	(41,177		)	(48,191		)
Eliminations	(887		)	(117		)	(1,413		)	(872		)
Operating profit	101,377			78,228			224,879			279,249
Interest expense	(7,591		)	(6,795		)	(23,629		)	(19,717		)
Interest income	1,776			1,018			5,333			2,907
Other non-operating (expense) income	(978		)	1,785			(1,468		)	4,672
Income before income taxes	$	94,584		$	74,236		$	205,115		$	267,111