-----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, QfIz2t+/+Ahe04hEE4duFkTvnFDFE87MLcTBfprEFVlsaWhgY9TxCvRrxqbppjom HLIOz/Ma27sDris/pwf5hg== 0000024491-96-000016.txt : 19960812 0000024491-96-000016.hdr.sgml : 19960812 ACCESSION NUMBER: 0000024491-96-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960809 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04329 FILM NUMBER: 96606759 BUSINESS ADDRESS: STREET 1: LIMA & WESTERN AVENUES CITY: FINDLAY STATE: OH ZIP: 45840 BUSINESS PHONE: 4194231321 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 Commission File No. 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) (419) 423-1321 (Registrant's telephone number, including area code) 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, and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ) Number of shares of common stock of registrant outstanding at July 31, 1996: 83,672,272 1 Part I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS COOPER TIRE & RUBBER COMPANY CONDENSED CONSOLIDATED BALANCE SHEETS (Dollar amounts in thousands; per-share amounts in dollars)
June 30, 1996 December 31, (Unaudited) 1995 ------------- ------------ ASSETS Current assets: Cash, including short-term investments of $70 ($14,000 in 1995) $ 12,887 $ 23,187 Accounts receivable, less allowances of $4,223 ($3,600 in 1995) 294,146 257,049 Inventories at lower of cost (last-in, first-out) or market: Finished goods 107,851 88,470 Work in process 13,089 13,154 Raw materials and supplies 33,432 36,340 ---------- ---------- 154,372 137,964 Prepaid expenses and deferred income taxes 15,956 12,384 ---------- ---------- Total current assets 477,361 430,584 Property, plant and equipment - net 761,562 678,876 Other assets 32,800 34,241 ---------- ---------- $ 1,271,723 $ 1,143,701 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 66,731 $ 78,823 Accrued liabilities 79,138 63,676 Income taxes 19 10,834 Current portion of debt 93,057 5,035 ---------- ---------- Total current liabilities 238,945 158,368 Long-term debt 28,313 28,574 Postretirement benefits other than pensions 136,922 132,963 Other long-term liabilities 38,623 38,341 Deferred income taxes 44,295 36,656 Stockholders' equity: Preferred stock, $1 par value; 5,000,000 shares authorized; none issued - - Common stock, $1 par value; 300,000,000 shares authorized; 83,672,272 shares outstanding (83,661,972 in 1995) 83,672 83,662 Capital in excess of par value 2,026 1,931 Retained earnings 708,094 672,373 Minimum pension liability (9,167) (9,167) ---------- ---------- Total stockholders' equity 784,625 748,799 ---------- ---------- $ 1,271,723 $ 1,143,701 ========== ========== See accompanying notes.
2 COOPER TIRE & RUBBER COMPANY CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED) (Dollar amounts in thousands; per-share amounts in dollars)
1996 1995 -------- -------- Revenues: Net sales $398,858 $371,366 Other income 246 1,164 ------- ------- 399,104 372,530 Costs and expenses: Cost of products sold 338,566 313,790 Selling, general and administrative 20,021 18,745 Interest 5 304 ------- ------- 358,592 332,839 ------- ------- Income before income taxes 40,512 39,691 Provision for income taxes 15,350 15,030 ------- ------- Net income $ 25,162 $ 24,661 ======= ======= Net income per share $.30 $.29 === === Weighted average number of shares outstanding (000's) 83,672 83,643 ====== ====== Dividends per share $.075 $.060 ==== ==== See accompanying notes.
3 COOPER TIRE & RUBBER COMPANY CONSOLIDATED STATEMENTS OF INCOME SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED) (Dollar amounts in thousands; per-share amounts in dollars)
1996 1995 -------- -------- Revenues: Net sales $779,896 $736,719 Other income 522 2,677 ------- ------- 780,418 739,396 Costs and expenses: Cost of products sold 662,899 617,721 Selling, general and administrative 39,869 36,983 Interest 9 874 ------- ------- 702,777 655,578 ------- ------- Income before income taxes 77,641 83,818 Provision for income taxes 29,370 31,940 ------- ------- Net income $ 48,271 $ 51,878 ======= ======= Net income per share $.58 $.62 === === Weighted average number of shares outstanding (000's) 83,669 83,641 ====== ====== Dividends per share $.15 $.12 === === See accompanying notes.
4 COOPER TIRE & RUBBER COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED) (Dollar amounts in thousands; per-share amounts in dollars)
1996 1995 -------- -------- Operating activities: Net income $ 48,271 $ 51,878 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 36,256 31,957 Deferred income taxes 6,267 2,879 Changes in operating assets and liabilities: Accounts receivable (37,097) (45,718) Inventories and prepaid expenses (19,980) (20,270) Accounts payable and accrued liabilities 3,370 9,078 Postretirement benefits other than pensions 4,110 2,889 Other (7,914) (4,884) ------- ------ Net cash provided by operating activities 33,283 27,809 Investing activities: Property, plant and equipment (119,032) (69,505) Other 133 1,015 ------- ------ Net cash used in investing activities (118,899) (68,490) Financing activities: Issuance of debt 104,000 - Payment on debt (16,239) (341) Issuance of common stock 105 142 Payment of dividends (12,550) (10,038) ------- ------ Net cash provided by (used in) financing activities 75,316 (10,237) ------- ------ Changes in cash and short-term investments (10,300) (50,918) Cash and short-term investments at beginning of year 23,187 103,285 ------- ------- Cash and short-term investments at end of period $ 12,887 $ 52,367 ======= ======= Cash payments for interest $ 2,913 $ 1,745 ======= ======= Cash payments for income taxes $ 33,973 $ 34,131 ======= ======= See accompanying notes.
5 COOPER TIRE & RUBBER COMPANY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The consolidated financial statements at June 30, 1996 and for the three-month and six-month periods ended June 30, 1996 and 1995 are unaudited and include all adjustments, consisting only of normal recurring accruals, which the Company considers necessary for a fair presentation of financial position and operating results. The unaudited consolidated financial statements have been prepared in accordance with Article 10 of Regulation S-X and, therefore, do not contain all information and footnotes normally contained in annual financial statements; accordingly, they should be read in conjunction with the Financial Statements and notes thereto appearing in the Annual Report on Form 10-K of the Company for the year ended December 31, 1995. 2. The results of operations for the three-month and six-month periods ended June 30, 1996 are not necessarily indicative of those to be expected for the year ending December 31, 1996. REVIEW BY INDEPENDENT AUDITORS The consolidated financial statements included in this filing on Form 10-Q have been reviewed by the Company's independent auditors, Ernst & Young LLP, and their report thereon is attached hereto as Part I - Exhibit 1. All material adjustments or additional disclosures proposed by the Company's independent auditors have been reflected in the data presented. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Net sales increased 7.4% for the second quarter of 1996 and 5.9% for the first six months of 1996 when compared to the corresponding periods of 1995. Sales of both tires and engineered products were higher than for the three-month and six-month periods one year ago. Other income was lower in the second quarter and for the six months of 1996 as compared to the corresponding 1995 periods due to lower amounts of interest income. Cost of products sold, as a percent of net sales, was higher in both the second quarter and six-month periods of 1996 as compared with the corresponding periods of 1995. Margin deterioration resulted from lower operating levels compared to one year ago, continued intense competition in the replacement tire market and the costs associated with new facilities. During the quarter, the favorable impact of lower raw material costs and richer product mix partially offset these conditions. For the year-to-date, richer product mix contributed to offset the deterioration. Selling, general and administrative expenses were higher for both three-month and six-month periods of 1996 compared to one year ago. As a percent of net sales, however, selling, general and administrative expenses were 5.0% for both the 1996 and 1995 quarters and 5.1% for the six months of 1996 compared to 5.0% in 1995. Interest expense was lower than for the corresponding 1995 periods reflecting higher amounts of interest expense associated with the assumption of short-term borrowings which were offset by capitalized interest. Income before income taxes for the quarter increased slightly from one year ago, but for the year-to-date decreased 7.4%. The quarter and six months of 1996 were adversely impacted by lower operating levels compared to one year ago, costs associated with new facilities, and the inability to achieve a price increase on tires in the current market environment. Working capital of $238 million is down $34 million since year end and down $76 million from June 30, 1995 reflecting decreases in cash and the assumption of $88 million of short-term debt. The current ratio of 2.0 is down from 2.7 at December 31, 1995 and 3.0 at June 30, 1995. The financial position of the Company at June 30, 1996 continues to be strong. The cash flows generated by operating activities during the first six months of 1996 are higher than for the six-month period one year ago primarily as a result of a more modest increase in accounts receivable at June 30, 1996. Accounts receivable reflects increased sales and the timing of receipts. Capital expenditures increased significantly in 1996 from 1995 reflecting higher levels of cost reduction projects and several capacity expansion projects. The Company expects that available cash and existing lines of credit will be sufficient to meet normal operating requirements over the near term. 7 Part II. OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders (a) The Company's Annual Meeting of Stockholders was held on May 7, 1996. (b) All of the nominees for directors, as listed below under (c) and on pages 2 through 4 of the Company's Proxy Statement dated March 26, 1996, were elected. The following directors have terms of office which continued after the meeting: Arthur H. Aronson Allan H. Meltzer Delmont A. Davis J. Alec Reinhardt Ivan W. Gorr Patrick W. Rooney (c) A description of each matter voted upon at that meeting, the election of directors and the proposal to approve and adopt a stock option plan, is contained on pages 2 through 4, 10 through 12 and 22 through 26 of the Company's Proxy Statement dated March 26, 1996, which pages are incorporated herein by reference. The number of votes cast by common stock holders with respect to each matter is as follows: Election of directors Term Affirmative Withheld Broker Expiration Votes Votes Abstentions Non-votes ---------- ----------- -------- ----------- --------- Edsel D. Dunford 1999 74,591,816 600,709 0 0 John Fahl 1999 74,625,543 566,982 0 0 Deborah M. Fretz 1999 74,126,280 1,066,245 0 0 Dennis J. Gormley 1999 74,592,840 599,685 0 0 Affirmative Negative Broker Votes Votes Abstentions Non-votes ----------- --------- ----------- --------- Proposal to approve and adopt a stock option plan 71,783,840 1,852,446 1,556,239 0 Item 6(a). Exhibits. (15) Letter regarding unaudited interim consolidated financial information (27) Financial Data Schedule (99) Press release regarding purchase of Company common stock Item 6(b). Reports on Form 8-K. No form 8-K has been filed. 8 INDEX TO EXHIBITS DESCRIPTION Part I. Exhibit 1. Independent Accountants' Review Report. Part II. Item 6(a). (15) Letter from Ernst & Young LLP, independent accountants, dated August 9, 1996 regarding unaudited interim consolidated financial information. (27) Financial Data Shedule (99) Press release dated July 22, 1996 regarding purchase of Company common stock. 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. COOPER TIRE & RUBBER COMPANY /S/ J. Alec Reinhardt --------------------- J. Alec Reinhardt Executive Vice President and Chief Financial Officer (Principal Financial Officer) /S/ J. A. Faisant ----------------- J. A. Faisant Vice President and Corporate Controller (Principal Accounting Officer) August 9, 1996 -------------- (Date) 10 Part I Exhibit 1 INDEPENDENT ACCOUNTANTS' REVIEW REPORT The Board of Directors Cooper Tire & Rubber Company We have reviewed the accompanying condensed consolidated balance sheet of Cooper Tire & Rubber Company as of June 30, 1996, and the related consolidated statements of income and cash flows for the three-month and six-month periods ended June 30, 1996 and 1995. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Cooper Tire & Rubber Company as of December 31, 1995, and the related consolidated statements of income, stockholders' equity, and cash flows for the year then ended (not presented herein) and in our report dated February 13, 1996, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1995, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /S/ Ernst & Young LLP --------------------- ERNST & YOUNG LLP Toledo, Ohio July 12, 1996 11 Part II Exhibit (15) August 9, 1996 Board of Directors Cooper Tire & Rubber Company We are aware of the incorporation by reference in the Registration Statements (Form S-3 No. 33-44159 and Form S-8 Nos. 2-58577, 2-77400, 33-5483, 33-35071, 33-47979, 33-47980, 33-47981, 33-47982, 33-52499, 33-52505 and 333-09619) of Cooper Tire & Rubber Company for the registration of its common stock of our reports dated April 11, 1996 and July 12, 1996 relating to the unaudited interim consolidated financial statements of Cooper Tire & Rubber Company which are included in its Form 10-Q for the quarters ended March 31, 1996 and June 30, 1996. Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not a part of the registration statements prepared or certified by accountants within the meaning of Section 7 or 11 of the Securities Act of 1933. Very truly yours, /S/ Ernst & Young LLP --------------------- ERNST & YOUNG LLP Toledo, Ohio 12 Part II Exhibit (99) COOPER TIRE & RUBBER COMPANY NEWS RELEASE Public Relations Findlay, Ohio 45840 Phone: (419) 423-1321 - ----------------------------------------------------------------------- COMPANY CONTACT: J. ALEC REINHARDT FOR IMMEDIATE RELEASE July 22, 1996 COOPER TIRE BOARD AUTHORIZES PURCHASE ------------------------------------- OF UP TO FIVE MILLION SHARES OF ITS COMMON STOCK ------------------------------------------------ FINDLAY, OHIO -- Cooper Tire & Rubber Company today announced its board of directors has authorized the purchase of up to five million shares of its common stock from time to time in the open market or otherwise. The company currently has 83,672,472 common shares outstanding. The board of directors did not establish a timetable for the purchase program. These purchases shall occur at such times as the company may elect. The shares purchased will be used for general corporate purposes. In announcing the stock purchase program, Cooper Tire chairman Patrick W. Rooney stated, "The current stock price, we believe, undervalues the company and presents the company an opportunity to reduce the number of outstanding shares. The purchases will be made with normal cash flows from operations and debt. The repurchase should not impinge on our planned capital investments in strategic plant and equipment." 13 EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S BALANCE SHEET AND STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1996 JAN-1-1996 JUN-30-1996 12,817 70 298,369 4,223 154,372 477,361 1,186,464 424,902 1,271,723 238,945 28,313 0 0 83,672 700,953 1,271,723 779,896 780,418 662,899 662,899 39,269 600 9 77,641 29,370 48,271 0 0 0 48,271 .58 .58
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