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Business Segments
 6 Months Ended
Jun. 30, 2020
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 manufacturing operation in Mexico, COOCSA, which supplies passenger car and light truck tires to the Mexican, North American, Central American and South American markets. On January 24, 2020, the Company acquired the remaining noncontrolling ownership interest in COOCSA, making COOCSA a wholly-owned subsidiary. The segment also markets and distributes racing, TBR and motorcycle tires. The racing and motorcycle tires are manufactured by the Company’s European segment and by others. TBR tires are sourced from GRT and through off-take agreements with Prinx Chengshan (Shandong) Tire Company Ltd. ("PCT"), through mid-2021, and Sailun Vietnam, through December 31, 2020. On April 5, 2019, Cooper Vietnam and Sailun Vietnam established a joint venture in Vietnam, ACTR, to produce and sell TBR tires. The new joint venture began commercially producing tires in 2020.
Major distribution channels and customers include independent tire dealers, wholesale distributors, regional and national retail tire chains, large retail chains that sell tires as well as other automotive products, mass merchandisers and digital channels. 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 Europe and Asia 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 Europe and Asia segments are presented as “International Tire Operations.” The European operations include manufacturing operations in the U.K. and Serbia. The U.K. entity manufactures and markets 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 and Vietnam. 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. GRT, a joint venture manufacturing facility located in the PRC, serves as a global source of TBR tire production for the Company. The segment also procures certain TBR tires under off-take agreements with PCT, through mid-2021, and Sailun Vietnam, through December 31, 2020. On April 5, 2019, Cooper Vietnam and Sailun Vietnam established ACTR, to produce and sell TBR tires. The segment sells a majority of its tires in the replacement market, with a portion also sold to OEMs.
On January 17, 2019, Cooper Tire Europe, a wholly-owned subsidiary of the Company, committed to a plan to cease light vehicle tire production at its Melksham, U.K. facility. The phasing out of light vehicle tire production was substantially completed in the third quarter of 2019. Approximately 300 roles were eliminated at the site. Cooper Tire Europe now obtains light vehicle tires to meet customer needs from other production sites within the Company’s global production network. Approximately 400 roles remain in Melksham to support the functions that continue there, including motorsports and motorcycle tire production, a materials business, Cooper Tire Europe headquarters, sales and marketing, and the Europe Technical Center.
The following table details segment financial information:
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2020
 
2019
 
2020
 
2019
Net sales:
 
 
 
 
 
 
 
 
Americas Tire
 
 
 
 
 
 
 
 
External customers
 
$
422,653

 
$
570,537

 
$
872,139

 
$
1,075,295

Intercompany
 
2,870

 
11,770

 
10,439

 
21,948

 
 
425,523

 
582,307

 
882,578

 
1,097,243

International Tire
 
 
 
 
 
 
 
 
External customers
 
73,606

 
108,593

 
155,814

 
222,999

Intercompany
 
27,318

 
29,921

 
47,498

 
59,300

 
 
100,924

 
138,514

 
203,312

 
282,299

Eliminations
 
(30,188
)
 
(41,691
)
 
(57,937
)
 
(81,249
)
Consolidated net sales
 
$
496,259

 
$
679,130

 
$
1,027,953

 
$
1,298,293

 
 
 
 
 
 
 
 
 
Operating profit (loss):
 
 
 
 
 
 
 
 
Americas Tire
 
$
21,808

 
$
46,814

 
$
32,224

 
$
85,603

International Tire
 
1,447

 
(1,296
)
 
(8,832
)
 
(2,635
)
Unallocated corporate charges
 
(18,455
)
 
(13,278
)
 
(25,406
)
 
(23,730
)
Eliminations
 
511

 
(569
)
 
1,097

 
(1,136
)
Consolidated operating (loss) profit
 
$
5,311

 
$
31,671

 
$
(917
)
 
$
58,102

 
 
 
 
 
 
 
 
 
Interest expense
 
$
(6,507
)
 
$
(7,810
)
 
$
(11,514
)
 
$
(16,123
)
Interest income
 
650

 
1,999

 
2,346

 
5,379

Other pension and postretirement benefit expense
 
(5,582
)
 
(9,288
)
 
(9,792
)
 
(18,650
)
Other non-operating (expense) income
 
(397
)
 
(1,463
)
 
1,375

 
(84
)
(Loss) Income before income taxes
 
$
(6,525
)
 
$
15,109

 
$
(18,502
)
 
$
28,624