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 racing, TBR and motorcycle tires. The racing and motorcycle tires are manufactured by the Company’s European operations and by others. TBR tires are sourced from GRT and through an off-take agreement that was entered with Prinx Chengshan (Shandong) Tire Company Ltd. ("PCT"), the Company’s former joint venture. In December 2017, the Company signed an off-take agreement with Sailun Vietnam Co. Ltd. ("Sailun"), effective from January 1, 2018 through December 31, 2020, as an additional source of TBR tires. 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 include manufacturing 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 passenger car and light truck tires primarily for the European markets and for export to the North American segment. The Asian operations are located in the PRC. Cooper Kunshan Tire manufactures passenger car and light truck 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 China-based GRT, a joint venture manufacturing facility located in the PRC. GRT serves as a global source of TBR tire production for the Company. The segment also had another joint venture in the PRC, PCT, which manufactured and marketed truck and bus radial and bias 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 TBR and passenger car tires under off-take agreements with PCT through mid-2018. The TBR tire agreement has been extended and now expires in mid-2019. In December 2017, the Company signed an off-take agreement with Sailun as an additional source of TBR tires. The segment sells a majority of its tires in the replacement market, with a growing portion also sold to OEMs.

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



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net sales
Americas Tire
External customers	$	573,807		$	605,234		$	1,052,634		$	1,127,603
Intercompany	10,605			10,122			17,170			19,112
	584,412			615,356			1,069,804			1,146,715
International Tire
External customers	124,601			115,519			247,270			236,175
Intercompany	43,238			35,851			81,813			57,160
	167,839			151,370			329,083			293,335
Eliminations	(53,843		)	(45,973		)	(98,983		)	(76,272		)
Consolidated net sales	$	698,408		$	720,753		$	1,299,904		$	1,363,778
Operating profit (loss):
Americas Tire	$	40,480		$	90,884		$	71,715		$	161,669
International Tire	5,652			2,690			13,086			5,715
Unallocated corporate charges	(13,705		)	(9,199		)	(25,670		)	(24,663		)
Eliminations	336			(174		)	87			(526		)
Operating profit	32,763			84,201			59,218			142,195
Interest expense	(8,417		)	(8,210		)	(16,108		)	(16,037		)
Interest income	1,988			1,755			4,303			3,557
Other pension and postretirement benefit expense	(6,967		)	(9,369		)	(13,953		)	(18,693		)
Other non-operating expense	(1,391		)	(255		)	(3,050		)	(491		)
Income before income taxes	$	17,976		$	68,122		$	30,410		$	110,531