-----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, O4Iryr2fHqvCWNBEj35Xi3J3DVd4Xtn7G162YBBN/5Gt8JEgYt4zb2uSqA+Rl2Dp 75ivTFllrNsW35mGuS0Ihg== 0000024491-99-000020.txt : 19990629 0000024491-99-000020.hdr.sgml : 19990629 ACCESSION NUMBER: 0000024491-99-000020 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990628 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-K/A SEC ACT: SEC FILE NUMBER: 001-04329 FILM NUMBER: 99653460 BUSINESS ADDRESS: STREET 1: LIMA & WESTERN AVENUES CITY: FINDLAY STATE: OH ZIP: 45840 BUSINESS PHONE: 4194231321 10-K/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A No. 1 (Mark One) (X) Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 1998 or ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _________to________ Commission File Number 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) Registrant's telephone number, including area code: (419) 423-1321 Securities registered pursuant to Section 12(b) of the Act: (Name of each exchange on (Title of each class) which registered) Common Stock, $1 par per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ) Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (X) State the aggregate market value of the voting stock held by non- affiliates of the registrant (computed by reference to the closing price on the Composite Tape for securities listed on the New York Stock Exchange as of March 8, 1999). $1,516,705,360 Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. (Class) (Outstanding at March 8, 1999) Common Stock, $1 par per share 75,835,268 DOCUMENTS INCORPORATED BY REFERENCE List hereunder the following documents if incorporated by reference and the Part of the Form 10-K into which the document is incorporated: Proxy statement dated March 23, 1999 - Part III EXHIBIT INDEX appears on the following two pages INDEX TO FINANCIAL STATEMENTS, SCHEDULE AND EXHIBITS (As amended June 28, 1999 to file financial statements and supplemental schedules for the employee benefit plans identified below as exhibits (99)) Page(s) FINANCIAL STATEMENTS: Reference --------- Consolidated Statements of Income for the years ended December 31, 1998, 1997 and 1996 Consolidated Balance Sheets at December 31, 1998 and 1997 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1998, 1997 and 1996 Consolidated Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996 Notes to Financial Statements Report of Independent Auditors SUPPLEMENTARY INFORMATION: Quarterly Financial Data (Unaudited) FINANCIAL STATEMENT SCHEDULE: II. Valuation and qualifying accounts EXHIBITS: (3) Certificate of Incorporation and Bylaws (i) Certificate of Incorporation, as restated and filed with the Secretary of State of Delaware on May 17, 1993, is incorporated herein by reference from Exhibit 3(i) of the Company's Form 10-Q for the quarter ended June 30, 1993 Certificate of Correction of Restated Certificate of Incorporation as filed with the Secretary of State of Delaware on November 24, 1998. (ii) Bylaws, as amended May 5, 1987, are incorporated herein by reference from Exhibit 19 of the Company's Form 10-Q for the quarter ended June 30, 1987 (4) Amended and Restated Rights Agreement, dated May 11, 1998, between the Company and The Fifth Third Bank as Rights Agent is incorporated herein by reference from Exhibit 4 to the Company's Form 8-K dated May 15, 1998. (10) Description of management contracts, compensatory plans, contracts, or arrangements is incorporated herein by reference from pages 5 through 10 and 19 of the Company's Proxy Statement dated March 23, 1999. The following related documents are incorporated by reference: a) 1981 Incentive Stock Option Plan - Form S-8 Registration Statement No. 2-77400, Exhibit 15(a) b) 1986 Incentive Stock Option Plan - Form S-8 Registration Statement No. 33-5483, Exhibit 4(a) c) Thrift and Profit Sharing Plan - Form S-8 Registration Statement No. 2-58577, Post-Effective Amendment No. 6, Exhibit 4 d) 1991 Stock Option Plan for Non-Employee Directors - Form S-8 Registration Statement No. 33-47980 and Appendix to the Company's Proxy Statement dated March 26, 1991 e) 1996 Stock Option Plan - Form S-8 Registration Statement No. 333-09619 and Appendix to the Company's Proxy Statement dated March 26, 1996 (continued) (12) Computation of Ratio of Earnings to Fixed Charges (13) Annual report to security holders, Form 10-Q or quarterly report to security holders (23) Consent of Independent Auditors (24) Powers of Attorney (27) Financial Data Schedule (99) Undertakings of the Company Financial statements and schedules of the Cooper Tire & Rubber Company Thrift and Profit Sharing Plan for the fiscal year ended December 31, 1998 1-15 Financial statements and schedules of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) for the fiscal year ended December 31, 1998 16-30 Financial statements and schedules of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) for the fiscal year ended December 31, 1998 31-45 Financial statements and schedules of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) for the fiscal year ended December 31, 1998 46-60 Financial statements and schedules of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) for the fiscal year ended December 31, 1998 61-75 Financial statements and schedules of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) for the fiscal year ended December 31, 1998 76-90 Financial statements and schedules of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) for the fiscal year ended December 31, 1998 91-105 All other schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedules, or because the information required is included in the financial statements or the notes thereto. SIGNATURES Registrant has duly caused this Form 10-K/A No. 1 to be signed on its behalf by the undersigned, thereunto duly authorized. COOPER TIRE & RUBBER COMPANY PATRICK W. ROONEY, Chairman of the Board, Chief Executive Officer and Director (Principal Executive Officer) THOMAS A. DATTILO, President, Chief Operating Officer and Director JOHN FAHL, Vice President and Director PHILIP G. WEAVER, Vice President (Principal Financial Officer) EILEEN B. WHITE, Corporate Controller (Principal Accounting Officer) ARTHUR H. ARONSON, Director EDSEL D. DUNFORD, Director DEBORAH M. FRETZ, Director DENNIS J. GORMLEY, Director JOHN F. MEIER, Director BYRON O. POND, Director JOHN H. SHUEY, Director By /s/ Stan C. Kaiman -------------------------------- STAN C. KAIMAN, Attorney-in-fact Date: June 28, 1999 -------------- EXHIBIT (23) CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 2-58577, 33-35071, 33-47979, 33-47981, 33- 47982, 33-52499, and 33-52505) of Cooper Tire & Rubber Company pertaining to the Company's Thrift and Profit Sharing Plan, the Pre-Tax Savings Plan (Texarkana), the Pre-Tax Savings Plan (Auburn), the Pre-Tax Savings Plan (Findlay), the Pre-Tax Savings Plan (El Dorado), the Pre- Tax Savings Plan (Bowling Green - Hose) and the Pre-Tax Savings Plan (Bowling Green - Sealing), respectively, of our reports dated May 14, 1999 with respect to the financial statements and schedules of the Cooper Tire & Rubber Company Thrift and Profit Sharing Plan, the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana), the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn), the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay), the Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado), the Cooper Tire & Rubber Company Pre- Tax Savings Plan (Bowling Green - Hose), and the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) included in Amendment No. 1 to the Annual Report (Form 10-K) of Cooper Tire & Rubber Company for the year ended December 31, 1998. /s/ Ernst & Young LLP --------------------- ERNST & YOUNG LLP Toledo, Ohio June 28, 1999 EXHIBIT (99) Cooper Tire & Rubber Company Thrift and Profit Sharing Plan Financial Statements and Schedules Years ended December 31, 1998 and 1997 Contents Report of Independent Auditors 1 Audited Financial Statements Statements of Assets Available for Plan Benefits 2 Statements of Changes in Assets Available for Plan Benefits 3 Notes to Financial Statements 4 Schedules Line 27a - Schedule of Assets Held for Investment Purposes 14 Line 27d - Schedule of Reportable Transactions 15 A schedule of party-in-interest transactions has not been presented because there were no party-in- interest transactions which are prohibited by ERISA Section 406 and for which there is no statutory or administrative exemption. 1 Report of Independent Auditors Pre-Tax Savings Plan Committee Cooper Tire & Rubber Company Thrift and Profit Sharing Plan We have audited the accompanying statements of assets available for plan benefits of the Cooper Tire & Rubber Company Thrift and Profit Sharing Plan as of December 31, 1998 and 1997, and the related statements of changes in assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for plan benefits of the Cooper Tire & Rubber Company Thrift and Profit Sharing Plan at December 31, 1998 and 1997, and the changes in its assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules of assets held for investment purposes as of December 31, 1998 and reportable transactions for the year then ended, are presented for purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in our audit of the 1998 basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1998 basic financial statements taken as a whole. May 14, 1999 1 2 Cooper Tire & Rubber Company Thrift and Profit Sharing Plan Statements of Assets Available for Plan Benefits
December 31 1998 1997 ------------ ------------ Assets Investments (Notes 4 and 5): Value of interest in Pooled Fund $208,266,377 $271,917,956 Cooper Tire & Rubber Company common stock 8,198,254 5,745,968 Mutual funds: Short-term investment 490,510 162,402 Washington Mutual Investors Fund 18,318,800 331,025 Investment Company of America 33,875,469 20,679 ----------- ----------- 269,149,410 278,178,030 Cash 1,211,850 5,108,412 Employer contribution receivable 2,384,271 3,654,337 ----------- ----------- Assets available for plan benefits $272,745,531 $286,940,779 =========== =========== See accompanying notes.
2 3 Cooper Tire & Rubber Company Thrift and Profit Sharing Plan Statements of Changes in Assets Available for Plan Benefits
Year ended December 31 1998 1997 ----------- ----------- Additions: Cash contributions: Participants $18,935,001 $11,784,022 Employer (gross amount before reduction for forfeitures) 9,851,922 8,568,810 Less forfeitures arising from withdrawals (273,043) (206,362) ---------- ----------- Net employer contributions 9,578,879 8,362,448 ---------- ----------- 28,513,880 20,146,470 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) (11,707,244) 49,701,339 Net (depreciation) appreciation in fair value of Cooper Tire & Rubber Company common stock and mutual funds (417,163) 357,002 Dividends 4,291,559 29,094 Interest 24,290 904,965 ----------- ----------- (7,808,558) 50,992,400 ----------- ----------- Total additions 20,705,322 71,138,870 Participants' withdrawals (34,900,570) (34,133,280) ----------- ----------- Increase (decrease) in assets available for plan benefits during the year (14,195,248) 37,005,590 Assets available for plan benefits at beginning of year 286,940,779 249,935,189 ----------- ----------- Assets available for plan benefits at end of year $272,745,531 $286,940,779 =========== =========== See accompanying notes.
3 4 Cooper Tire & Rubber Company Thrift and Profit Sharing Plan Notes to Financial Statements December 31, 1998 and 1997 1. Summary of Plan The Cooper Tire & Rubber Company Thrift and Profit Sharing Plan (Plan), is a defined contribution plan administered by a Plan Committee appointed by the plan sponsor, Cooper Tire & Rubber Company (the Company). Participation in the Plan is voluntary and any salaried employee of the Company is eligible to participate in the Plan if he or she has completed one year of continuous credited service. At December 31, 1998, 4,862 participants had designated investment of contributions in one or more investment options of the Plan, which are as follows: 1) Cooper Tire & Rubber Company common stock. 2) Mutual funds managed by the American Funds Group, a subsidiary of Capital Group Incorporated: a) The Investment Company of America Fund - managed to provide long-term growth of capital and income, placing greater emphasis on future dividends than on current income. b) The Washington Mutual Investors Fund - managed to provide current income and opportunity for capital growth through the selection of common stocks. 3) Cash with interest - contributions are placed in investment contracts with a diversified group of insurance companies, banks, and other financial institutions. This option may also include synthetic investment contracts backed by high quality fixed income assets. All contracts have specific individual terms including interest rate and maturity date. Interest rates on contracts generally reset on a monthly or quarterly basis. The Plan provides the following: - After-tax dollar (ATD) contributions may be made in one percent multiples of participant's compensation up to sixteen percent. - Pre-tax dollar qualifier (PDQ) contributions may be made in one percent multiples of participant's compensation up to fifteen percent, subject to Internal Revenue Code (IRC) limits on annual contributions to the Plan. - In no event shall the aggregate of a participant's contributions exceed sixteen percent of participant's compensation. - The Company will contribute to the Plan each year from current or accumulated earnings an amount equal to the lesser of: (a) the aggregate of all ATD and PDQ contributions which represent up to six percent of each participant's compensation, less any forfeitures, or (b) an amount equal to fifteen percent of the Company's current year pre-tax earnings, exclusive of any deductions for contributions to the Plan, in excess of ten percent of the stockholders' equity of the Company at the beginning of the year. (continued) 4 5 1. Summary of Plan (continued) The Company's Board of Directors, at its discretion, may waive the limitation in (b) and contribute from current or accumulated earnings an amount not to exceed the limitation in (a). Administrative expenses of the Plan are paid by the Company. The Company's contributions are allocated to each participant's account in proportion to his or her ATD contributions and PDQ contributions up to an aggregate of six percent of the participant's compensation for each year. The Company contribution to a participant's account becomes vested after five years of continuous credited service; thereafter, Company contributions become vested when made. In addition, participants will have a fully vested right to the Company's contributions upon termination from the Plan due to retirement, total and permanent disability, or death and shall be eligible to receive the Company's contribution for that year as if he or she had not terminated participation. Earnings attributed to Company contributions allocated to a participant's account and those attributed to a participant's contributions are vested immediately. The Plan provides for total or partial withdrawal of a participant's account. Except for the unvested portion of Company contributions, a participant may withdraw the total of his or her ATD contributions and Company contributions at any time. No amounts may be withdrawn by a participant from PDQ contributions prior to termination of employment or plan termination unless the participant has either attained the age of 59 1/2, becomes totally and permanently disabled, or is able to demonstrate financial hardship. However, all withdrawals relating to PDQ contributions are subject to the Internal Revenue Code (IRC) and regulations thereunder. Investment options for future contributions may be changed daily. Reallocation of balances may be made among the investment options daily. Directions given by participants to the Plan trustee concerning the voting of common stock are confidential. The Company has reserved the right to amend, modify, suspend or terminate the Plan at any time by action of its Board of Directors. Upon termination of the Plan, or upon the complete discontinuance of Company contributions under the Plan, the rights of each participant to the assets then held for his or her account under the Plan shall be nonforfeitable. No material amounts of withdrawals by participants, initiated on or before December 31, 1998 or 1997, were pending. 2. Significant Accounting Policies The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of (1) additions and deductions during the reporting period, and (2) assets and liabilities, as well as disclosure of contingent assets and liabilities, at the date of the financial statements. Actual results could differ from those estimates. Investments The Plan's investments are held by National City Bank as trustee under an agreement which directs the trustee to invest participants' contributions based on their investment elections. PSP contributions and income not yet invested in the options selected by the participant due to the "transaction period" as defined by the Plan, are invested in cash with interest investments. (continued) 5 6 2. Significant Accounting Policies (continued) Investments in common stock of the Company are stated at quoted market values as determined on the last business day of the Plan year. Mutual fund investments are stated at fair value based on the net asset value thereof on the last business day of the Plan year. The Plan of Rehabilitation for Confederation Life became final on November 13, 1996. On March 12, 1997, the Company was notified the Rehabilitator had determined a fair value of the Confederation Life contracts held by the Thrift Plan was equal to 109.26% of the August, 1994 contract value. This adjustment was made by the Trustee effective March 31, 1997. On or about June 2, 1997, the total value of the Confederation Life account was unfrozen and rolled into the Cash with Interest Fund. Certain investments of the Plan are combined with similar assets of the other defined contribution plans sponsored by the Company. The combined investments (Pooled Fund) are held by National City Bank as trustee and are valued at their fair value as determined by the trustee, except for fully benefit responsive investment contracts which are valued at contract value. At December 31, 1998 and 1997, the contract value of these contracts approximates fair value. Contributions Contributions are recorded when the Company makes payroll deductions for Plan participants, and are invested in any of four investment options at the participant's election. Contributions from the Company are accrued in the period in which they become obligations of the Company and may be in the form of cash, treasury stock or authorized but unissued common stock of the Company. Company contributions are invested in common stock of the Company until the contributions become vested after which they are invested as directed by the participant. The Company contribution to a participant's account becomes vested after five years of continuous credited service; thereafter, Company contributions become vested when made. Forfeitures Forfeitures occur when an employee elects a withdrawal from current year or unvested contributions or is terminated, voluntarily or involuntarily, before being fully vested. Forfeitures are used to reduce the Company obligation. 3. Income Tax Status The Internal Revenue Service ruled September 9, 1996 that the Plan qualifies under Section 401(a) of the IRC and, therefore, the related trust is not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Committee believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 6 7 4. Value of Interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1998 ----------------------------- Cooper Tire & Rubber Company Cash with Common Interest Stock Fund Fund ------------ ------------ Armada Government Portfolio Fund $ 1,681,519 $ 3,928,115 Cooper Tire & Rubber Company Common Stock 154,085,556 *Allstate Life Insurance Company - 6.01% contract 77020; matures August 16, 2004 12,866,709 *Monumental Life Insurance Company - 6.08% contract BDA-00217TR; matures August 25,2004 11,842,635 *State Street Bank & Trust - 5.35% contract 98145; matures September 15, 2003 6,974,051 **Casisse Des Depots - 6.15% contract 223-01; matures September 25, 2000 2,390,045 John Hancock Mutual Life Insurance Company - 5.62% contract 8736; matures May 1, 2007 7,651,704 New York Life Insurance Company - 7.65% contract 30200-001; matures September 20, 2000 5,359,713 *Continental Assurance Company - 6.31% contract 63-05835; matures February 17, 2003 4,005,674 Allstate Life Insurance Company - 5.95% contract 31040; matures July 1, 2001 3,497,499 Allmerica Financial Life - 6.30% contract 99212W; matures November 15, 2004 3,474,907 **Casisse Des Depots - 5.86% contract 223-03; matures December 16, 2002 2,995,078 United of Omaha Life Insurance - 5.75% contract SDGA-11195; matures August 2, 2000 1,995,756 Monumental Life Insurance Company - 3.66% contract ADA00561FR; matures April 15, 1999 1,315,889 New York Life Insurance Company - 7.65% contract 30200-002; matures April 19, 1999 1,169,061 Monumental Life Insurance Company - 5.80% contract BDA-00217TR-10; matures December 31, 1999 59,733 ------------ ------------ $155,767,075 $ 69,526,569 ============ ============ * Synthetic contract ** Non-participating synthetic contract
7 8 The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1997 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ----------- ----------- Armada Government Portfolio Fund $ 1,214,344 $(1,863,178)$(1,153,143)$ 1,315,449 Cooper Tire & Rubber Company Common Stock 185,112,135 Mutual funds: The Investment Company of America Fund 18,542,498 The Washington Mutual Investors Fund 28,034,543 Cash with Interest Fund: *Allstate Life Insurance Company - 6.23% contract; matures August 16, 2004 8,589,106 New York Life Insurance Company - 7.65% contract; matures September 20, 2000 7,513,568 *John Hancock Mutual Life Insurance Company - 6.42% contract; matures May 1, 2007 7,197,589 Provident Life and Accident Insurance Company 5.75% - contract; matures January 30, 1998 6,593,931 *Continental Assurance Company - 6.06% contract; matures January 1, 1998 3,862,569 *Allstate Life Insurance Company - 5.95% contract; matures February 18, 2002 3,303,020 *Allmerica Financial Life Insurance Company - 6.81% contract; matures November 15, 2004 3,259,691 *Peoples Security Life - 6.89% contract; matures June 25, 2004 3,026,927 *Caisse Des Depots (CDC) BRIC - 6.15% contract; matures September 25, 2000 2,987,570 *Peoples Security Life - 6.08% contract; matures April 15, 1999 1,997,156 United of Omaha Life Insurance - 6.41% contract; matures August 2, 2000 1,995,770 *Peoples Security Life - 6.60% contract; matures August 25, 2004 1,979,747 (continued) 8 9 *Peoples Security Life - 6.78% contract; matures March 15, 2002 1,952,166 *Peoples Security Life - 5.29% contract; matures December 17, 2001 1,721,801 *Caisse Des Depots (CDC) BRIC - 5.80% contract; matures December 16, 2002 1,550,256 *Peoples Security Life - 6.17% contract; matures July 16, 2001 1,487,592 *Caisse Des Depots (CDC) BRIC - 5.86% contract; matures May 31, 2000 1,445,881 *Peoples Security Life - 6.94% contract; matures January 26, 2004 1,299,224 Commonwealth Life Insurance Company - 3.66% contract; matures April 15, 1999 1,269,427 New York Life Insurance Company - 7.65% contract; matures April 19, 1999 1,085,983 *Peoples Security Life - 5.40% contract; matures January 18, 2000 859,422 *Peoples Security Life - 5.80% contract; matures December 31, 1999 654,404 *Peoples Security Life - 5.24% contract; matures April 15, 1998 589,726 ------------ ----------- ----------- ----------- Total assets $186,326,479 $64,359,348 $17,389,355 $29,349,992 ============ =========== =========== =========== *Synthetic contract
The average yield of the Cash with Interest Fund for the years ended December 31, 1998 and 1997 was 6.1% and 6.7% respectively. The value of the Plan's interest in the Pooled Fund is $208,266,377 at December 31, 1998 and $271,917,956 at December 31, 1997. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1998 1997 ----- ----- Cooper Tire & Rubber Company Common Stock Fund 90.2% 91.6% Cash with Interest Fund 92.0% 94.4% The Investment Company of America Fund - 84.5% The Washington Mutual Investors Fund - 87.9% 9 10 The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1998 -------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ----------- ----------- ----------- ----------- Interest $ 142,892 $ 4,150,939 $ 7,700 $ 15,063 Dividends 2,724,804 417,248 378,191 Net realized and unrealized gain (loss) (23,151,293) 1,137,385 3,677,886 ----------- ----------- ----------- ----------- Net investment gain (loss) $(20,283,597) $ 4,150,939 $ 1,562,333 $ 4,071,140 =========== =========== =========== ===========
Year Ended December 31, 1997 --------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ----------- ----------- ----------- ----------- Interest $ 113,940 $ 3,882,280 $ 30,033 $ 33,468 Dividends 2,704,175 1,804,968 2,222,234 Net realized and unrealized gain 38,049,952 1,573,724 3,744,388 ----------- ----------- ----------- ----------- Net investment gain $40,868,067 $ 3,882,280 $ 3,408,725 $ 6,000,090 =========== =========== =========== ===========
The Plan's net investment loss from the Pooled Fund is $11,707,244 for the year ended December 31, 1998 and a net investment gain of $49,701,339 for the year ended December 31, 1997. The net investment gain or loss of the Pooled Fund is allocated to each participating plan based on the percentage of that Plan's units in each Pooled Fund category. 10 11 5. Investment Income On July 24, 1998, the Plan's investments in the Investment Co. of America Com and Washington Mutual Investors Fund were removed from the pooled fund. Investment income on assets held outside the pooled fund is as follows:
Net realized and unrealized appreciation (depreciation) in fair value of investments Dividends Interest ----------------------- --------- -------- Year ended December 31, 1998: Cooper Tire & Rubber Company Common $(417,163) $ 65,450 Armada Government Portfolio Fund $ 24,290 Investment Co. of America Com 1,496,629 Washington Mutual Investors Fund 2,729,480 -------- --------- ------- Totals $(417,163) $4,291,559 $ 24,290 ======== ========= =======
Net realized and unrealized appreciation (depreciation) in fair value of investments Dividends Interest ----------------------- --------- -------- Year ended December 31, 1997: Cooper Tire & Rubber Company Common $357,002 $ 29,094 Armada Government Portfolio Fund $904,965 ------- --------- ------- Totals $357,002 $ 29,094 $904,965 ======= ========= =======
6. Year 2000 Issue (unaudited) The Plan Sponsor has determined it will be necessary to take certain steps in order to ensure the Plan's information systems are prepared to handle year 2000 issues. The Plan Sponsor is taking a two-phase approach. The first phase addressed internal systems that needed to be modified or replaced to function properly. Internal resources were utilized to modify existing software applications and test the software and equipment for the year 2000 modifications. Costs associated with modifying software and equipment were paid by the Plan Sponsor and were not material. For the second phase of the project, Plan management established formal communications with its third party service providers to determine that they have developed plans to address their own year 2000 problems as they relate to the Plan's operations. All third party service providers have indicated they will be year 2000 compliant by mid-year 1999. If modification of data processing systems by the service providers is not completed timely, the Plan Sponsor believes the year 2000 problem could have a material impact on the operations of the Plan. Plan management has not developed a contingency plan, because they are confident that all systems will be year 2000 ready. 11 12 Schedules 12 13 Cooper Tire & Rubber Company Thrift and Profit Sharing Plan Employer Identification #34-4297750; Plan #005 Line 27a - Schedule of Assets Held for Investment Purposes December 31, 1998
Shares Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ----------- ----------- *Cooper Tire & Rubber Company common stock 401,128 $ 7,216,175 $ 8,198,254 Mutual funds: *Armada Government Money Market 359,060 359,060 359,060 *Armada Government Portfolio 131,450 131,450 131,450 American Funds - Washington 589,598 17,862,313 18,318,800 Mutual Investors Fund American Funds - Investment Co. 1,029,337 34,523,128 33,875,469 of America Com ---------- ---------- $60,092,126 $60,883,033 ========== ========== *Party-in-interest
13 14 Cooper Tire & Rubber Company Thrift and Profit Sharing Plan Employer Identification #34-4297750; Plan #005 Line 27d - Schedule of Reportable Transactions Year Ended December 31, 1998
Sales -------------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - --------------------- --------- -------- ---------- -------- Armada Government Portfolio Fund $11,106,749 $11,026,645 $11,026,645 $ - Cooper Tire & Rubber Company common stock 11,046,234 - - - American Washington Mutual Investors Fund 9,933,239 11,194,718 11,717,825 (523,107) Note: The purchase and selling price for each reportable transaction represents its fair value at the time of acquisition or disposition.
14 15 EXHIBIT (99) Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) Financial Statements and Schedules Years ended December 31, 1998 and 1997 Contents Report of Independent Auditors 1 Audited Financial Statements Statements of Assets Available for Plan Benefits 2 Statements of Changes in Assets Available for Plan Benefits 3 Notes to Financial Statements 4 Schedules Line 27a - Schedule of Assets Held for Investment Purposes 14 Line 27d - Schedule of Reportable Transactions 15 A schedule of party-in-interest transactions has not been presented because there were no party-in- interest transactions which are prohibited by ERISA Section 406 and for which there is no statutory or administrative exemption. 16 Report of Independent Auditors Pre-Tax Savings Plan Committee Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) We have audited the accompanying statements of assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) as of December 31, 1998 and 1997, and the related statements of changes in assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) at December 31, 1998 and 1997, and the changes in its assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules of assets held for investment purposes as of December 31, 1998 and reportable transactions for the year then ended, are presented for purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in our audit of the 1998 basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1998 basic financial statements taken as a whole. May 14, 1999 1 17 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) Statements of Assets Available for Plan Benefits
December 31 1998 1997 ----------- ----------- Assets Investments: Value of interest in Pooled Fund (Note 4) $10,452,955 $11,197,324 Cooper Tire & Rubber Company Common Stock - 158,974 Mutual funds 2,261,640 1,706 ---------- ---------- 12,714,595 11,358,004 Cash 73,171 173,654 Employer contribution receivable 243,855 91,811 Employee contribution receivable 31,173 - ---------- ---------- Assets available for plan benefits $13,062,794 $11,623,469 ========== ========== See accompanying notes.
2 18 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) Statements of Changes in Assets Available for Plan Benefits
Year Ended December 31 1998 1997 ----------- ----------- Additions: Cash contributions: Participants $ 2,130,720 $ 1,767,097 Employer 250,016 238,769 ---------- ---------- 2,380,736 2,005,866 Investment income (loss): Net gain from Pooled Fund (Note 4) (188,000) 2,025,254 Net depreciation in fair value of Cooper Tire & Rubber Company Common Stock - (3,347) Net depreciation in fair value of common stock and mutual funds (50,492) - Dividends 180,355 1,494 Interest 256 316 ---------- ---------- (57,881) 2,023,717 ---------- ---------- Total additions 2,322,855 4,029,583 Participants' withdrawals (883,530) (1,026,258) ---------- ---------- Increase in assets available for plan benefits during the year 1,439,325 3,003,325 Assets available for plan benefits at beginning of year 11,623,469 8,620,144 ---------- ---------- Assets available for plan benefits at end of year $13,062,794 $11,623,469 ========== ========== See accompanying notes.
3 19 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) Notes to Financial Statements December 31, 1998 and 1997 1. Summary of Plan The Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) (Plan), as amended and restated, is a defined contribution plan administered by a Plan Committee appointed by the plan sponsor, Cooper Tire & Rubber Company (the Company). Participation in the Plan is voluntary and any employee of the Company eligible for membership in Local Union #752, United Steelworkers of America AFL-CIO/CLC (Union) is eligible to participate in the Plan if he or she has completed thirty days of continuous credited service. At December 31, 1998, 902 participants had designated investment of contributions in one or more investment options of the Plan, which are as follows: 1) Cooper Tire & Rubber Company common stock. 2) Mutual funds managed by the American Funds Group, a subsidiary of Capital Group Incorporated: a) The Investment Company of America Fund - managed to provide long-term growth of capital and income, placing greater emphasis on future dividends than on current income. b) The Washington Mutual Investors Fund - managed to provide current income and opportunity for capital growth through the selection of common stocks. 3) Cash with interest - contributions are placed in investment contracts with a diversified group of insurance companies, banks, and other financial institutions. This option may also include synthetic investment contracts backed by high quality fixed income assets. All contracts have specific individual terms including interest rate and maturity date. Interest rates on contracts generally reset on a monthly or quarterly basis. The Plan provides that Pre-Tax Savings Plan (PSP) contributions may be made in one percent multiples of a participant's compensation up to fifteen percent, subject to Internal Revenue Code (IRC) limits on annual contributions to the Plan. The amount of contribution may be changed every thirty days. The Plan provides that the Company will contribute to the Plan each year from current or accumulated earnings an amount equal to the lesser of: (a) 25% of PSP contributions which represent up to four percent of each participant's compensation, less any forfeitures, or (b) an amount equal to fifteen percent of the Company's current year pre-tax earnings, exclusive of any deductions for contributions to the Plan, in excess of ten percent of the stockholders' equity of the Company at the beginning of the year. The Company's Board of Directors, at its discretion, may waive the limitation in (b) and contribute from current or accumulated earnings an amount not to exceed the limitation in (a). Administrative expenses of the Plan are paid by the Company. (continued) 4 20 1. Summary of Plan (continued) Investment options for future contributions may be changed daily. Reallocation of balances may be made among the investment options daily. Directions given by participants to the Plan trustee concerning the voting of common stock are confidential. No amounts may be withdrawn by a participant from PSP contributions prior to termination of employment unless the participant has either attained age 59 1/2, becomes totally and permanently disabled, or is able to demonstrate financial hardship. Hardship withdrawals by participants not yet attaining 59 1/2 years of age are limited to PSP contributions and are subject to the Internal Revenue Code (IRC) and regulations thereunder. Participants are fully vested in their contributions and earnings thereon. The Plan shall continue until March 5, 1999. Thereafter it shall renew itself for yearly periods unless written notice is given by the Company or the Union that it is desired to terminate or amend the Plan. The Company has reserved the right to amend the Plan at any time if such amendment is necessary to enable the Plan to meet the requirements of the IRC or the requirements of any governmental authority. If the Plan terminates, and a successor plan is not adopted, all assets will be distributed to participants in a lump sum. No material amounts of withdrawals by participants, initiated on or before December 31, 1998 or 1997, were pending. 2. Significant Accounting Policies The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of (1) additions and deductions during the reporting period, and (2) assets and liabilities, as well as disclosure of contingent assets and liabilities, at the date of the financial statements. Actual results could differ from those estimates. Investments The Plan's investments are held by National City Bank as trustee under an agreement which directs the trustee to invest participants' contributions based on their investment elections. PSP contributions and income not yet invested in the options selected by the participant due to the "transaction period" as defined by the Plan, are invested in cash with interest investments. Investments in common stock of the Company are stated at quoted market values as determined on the last business day of the Plan year. Mutual fund investments are stated at fair value as determined by the net asset values thereof on the last business day of the Plan year. Certain investments of the Plan are combined with similar assets of the other defined contribution plans sponsored by the Company. The combined investments (Pooled Fund) are held by National City Bank as trustee and are valued at their fair value as determined by the trustee, except for fully benefit responsive investment contracts which are valued at contract value. At December 31, 1998 and 1997, the contract value of these contracts approximates fair value. 5 21 2. Significant Accounting Policies (continued) Contributions Contributions are recorded when the Company makes payroll deductions for Plan participants, and are invested in any of four investment options at the participant's election. Contributions from the Company are accrued in the period in which they become obligations of the Company and may be in the form of cash, treasury stock or authorized but unissued common stock of the Company. Company contributions are invested in common stock of the Company until the contributions become vested after which they are invested as directed by the participant. The Company contribution to a participant's account becomes vested after five years of continuous credited service; thereafter, Company contributions become vested when made. Forfeitures Forfeitures occur when an employee elects a withdrawal from current year or unvested contributions or is terminated, voluntarily or involuntarily, before being fully vested. Forfeitures are used to reduce the Company obligation. 3. Income Tax Status The Internal Revenue Service ruled September 9, 1996 that the Plan qualifies under Section 401(a) of the IRC and, therefore, the related trust is not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Committee believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 4. Value of Interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1998 ----------------------------- Cooper Tire & Rubber Company Cash with Common Interest Stock Fund Fund ------------ ------------ Armada Government Portfolio Fund $ 1,681,519 $ 3,928,115 Cooper Tire & Rubber Company Common Stock 154,085,556 *Allstate Life Insurance Company - 6.01% contract 77020; matures August 16, 2004 12,866,709 *Monumental Life Insurance Company - 6.08% contract BDA-00217TR; matures August 25,2004 11,842,635 *State Street Bank & Trust - 5.35% contract 98145; matures September 15, 2003 6,974,051 **Casisse Des Depots - 6.15% contract 223-01; matures September 25, 2000 2,390,045 (continued) 6 22 John Hancock Mutual Life Insurance Company - 5.62% contract 8736; matures May 1, 2007 7,651,704 New York Life Insurance Company - 7.65% contract 30200-001; matures September 20, 2000 5,359,713 *Continental Assurance Company - 6.31% contract 63-05835; matures February 17, 2003 4,005,674 Allstate Life Insurance Company - 5.95% contract 31040; matures July 1, 2001 3,497,499 Allmerica Financial Life - 6.30% contract 99212W; matures November 15, 2004 3,474,907 **Casisse Des Depots - 5.86% contract 223-03; matures December 16, 2002 2,995,078 United of Omaha Life Insurance - 5.75% contract SDGA-11195; matures August 2, 2000 1,995,756 Monumental Life Insurance Company - 3.66% contract ADA00561FR; matures April 15, 1999 1,315,889 New York Life Insurance Company - 7.65% contract 30200-002; matures April 19, 1999 1,169,061 Monumental Life Insurance Company - 5.80% contract BDA-00217TR-10; matures December 31, 1999 59,733 ------------ ------------ $155,767,075 $ 69,526,569 ============ ============ * Synthetic contract ** Non-participating synthetic contract
The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1997 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ----------- ----------- Armada Government Portfolio Fund $ 1,214,344 $(1,863,178)$(1,153,143)$ 1,315,449 Cooper Tire & Rubber Company Common Stock 185,112,135 Mutual funds: The Investment Company of America Fund 18,542,498 The Washington Mutual Investors Fund 28,034,543 Cash with Interest Fund: *Allstate Life Insurance Company - 6.23% contract; matures August 16, 2004 8,589,106 New York Life Insurance Company - 7.65% contract; matures September 20, 2000 7,513,568 (continued) 7 23 *John Hancock Mutual Life Insurance Company - 6.42% contract; matures May 1, 2007 7,197,589 Provident Life and Accident Insurance Company 5.75% - contract; matures January 30, 1998 6,593,931 *Continental Assurance Company - 6.06% contract; matures January 1, 1998 3,862,569 *Allstate Life Insurance Company - 5.95% contract; matures February 18, 2002 3,303,020 *Allmerica Financial Life Insurance Company - 6.81% contract; matures November 15, 2004 3,259,691 *Peoples Security Life - 6.89% contract; matures June 25, 2004 3,026,927 *Caisse Des Depots (CDC) BRIC - 6.15% contract; matures September 25, 2000 2,987,570 *Peoples Security Life - 6.08% contract; matures April 15, 1999 1,997,156 United of Omaha Life Insurance - 6.41% contract; matures August 2, 2000 1,995,770 *Peoples Security Life - 6.60% contract; matures August 25, 2004 1,979,747 *Peoples Security Life - 6.78% contract; matures March 15, 2002 1,952,166 *Peoples Security Life - 5.29% contract; matures December 17, 2001 1,721,801 *Caisse Des Depots (CDC) BRIC - 5.80% contract; matures December 16, 2002 1,550,256 *Peoples Security Life - 6.17% contract; matures July 16, 2001 1,487,592 *Caisse Des Depots (CDC) BRIC - 5.86% contract; matures May 31, 2000 1,445,881 *Peoples Security Life - 6.94% contract; matures January 26, 2004 1,299,224 Commonwealth Life Insurance Company - 3.66% contract; matures April 15, 1999 1,269,427 New York Life Insurance Company - 7.65% contract; matures April 19, 1999 1,085,983 *Peoples Security Life - 5.40% contract; matures January 18, 2000 859,422 *Peoples Security Life - 5.80% contract; matures December 31, 1999 654,404 (continued) 8 24 *Peoples Security Life - 5.24% contract; matures April 15, 1998 589,726 ------------ ----------- ----------- ----------- Total assets $186,326,479 $64,359,348 $17,389,355 $29,349,992 ============ =========== =========== =========== *Synthetic contract
The average yield of the Cash with Interest Fund for the years ended December 31, 1998 and 1997 was 6.1% and 6.7% respectively. The value of the Plan's interest in the Pooled Fund is $10,452,955 at December 31, 1998 and $11,197,324 at December 31, 1997. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1998 1997 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 4.5% 4.1% Cash with Interest Fund 4.7% 2.8% The Investment Company of America Fund - 2.7% The Washington Mutual Investors Fund - 4.3% The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1998 -------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ----------- ----------- ----------- ----------- Interest $ 142,892 $ 4,150,939 $ 7,700 $ 15,063 Dividends 2,724,804 417,248 378,191 Net realized and unrealized gain (loss) (23,151,293) 1,137,385 3,677,886 ----------- ----------- ----------- ----------- Net investment gain (loss) $(20,283,597) $ 4,150,939 $ 1,562,333 $ 4,071,140 =========== =========== =========== ===========
Year Ended December 31, 1997 --------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ----------- ----------- ----------- ----------- Interest $ 113,940 $ 3,882,280 $ 30,033 $ 33,468 Dividends 2,704,175 1,804,968 2,222,234 Net realized and unrealized gain 38,049,952 1,573,724 3,744,388 ----------- ----------- ----------- ----------- Net investment gain $40,868,067 $ 3,882,280 $ 3,408,725 $ 6,000,090 =========== =========== =========== ===========
9 25 The Plan's net investment loss from the Pooled Fund is $188,000 for the year ended December 31, 1998 and a net investment gain of $2,025,254 for the year ended December 31, 1997. The net investment gain or loss of the Pooled Fund is allocated to each participating plan based on the percentage of that Plan's units in each Pooled Fund category. 5. Investment Income On July 24, 1998, the Plan's investments in the Investment Co. of America Com and Washington Mutual Investors Fund were removed from the pooled fund. Investment income on assets held outside the pooled fund is as follows:
Net realized and unrealized appreciation (depreciation) in fair value of investments Dividends Interest ----------------------- --------- -------- Year ended December 31, 1998: Cooper Tire & Rubber Company Common $ 377 $ 999 Armada Government Portfolio Fund $ 256 Investment Co. of America Com (23,962) 46,312 Washington Mutual Investors Fund (26,907) 133,044 -------- --------- ------- Totals $ (50,492) $ 180,355 $ 256 ======== ========= =======
Net realized and unrealized appreciation (depreciation) in fair value of investments Dividends Interest ----------------------- --------- -------- Year ended December 31, 1997: Cooper Tire & Rubber Company Common $ (3,347) $ 1,494 Armada Government Portfolio Fund $ 316 ------- --------- ------- Totals $ (3,347) $ 1,494 $ 316 ======= ========= =======
6. Year 2000 Issue (unaudited) The Plan Sponsor has determined it will be necessary to take certain steps in order to ensure the Plan's information systems are prepared to handle year 2000 issues. The Plan Sponsor is taking a two-phase approach. The first phase addressed internal systems that needed to be modified or replaced to function properly. Internal resources were utilized to modify existing software applications and test the software and equipment for the year 2000 modifications. Costs associated with modifying software and equipment were paid by the Plan Sponsor and were not material. 10 26 6. Year 2000 Issue (unaudited) (continued) For the second phase of the project, Plan management established formal communications with its third party service providers to determine that they have developed plans to address their own year 2000 problems as they relate to the Plan's operations. All third party service providers have indicated they will be year 2000 compliant by mid-year 1999. If modification of data processing systems by the service providers is not completed timely, the Plan Sponsor believes the year 2000 problem could have a material impact on the operations of the Plan. Plan management has not developed a contingency plan, because they are confident that all systems will be year 2000 ready. 7. Investments Individual investments that exceed 5% of plan assets available for benefits are as follows: December 31 1998 1997 -------------------- American Funds - Washington Mutual Investors Fund $1,675,964 $ - 11 27 Schedules 12 28 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) Employer Identification #34-4297750; Plan #012 Line 27a - Schedule of Assets Held for Investment Purposes December 31, 1998
Shares Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ----------- ------ Mutual funds: *Armada Government Portfolio Fund 6,341 $ 6,341 $ 6,341 American Funds - Investment Co. of America Com 18,647 577,492 579,335 American Funds - Washington Mutual Investors Fund 50,926 1,705,302 1,675,964 --------- --------- $2,289,135 $2,261,640 ========= ========= *Party-in-interest
13 29 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Texarkana) Employer Identification #34-4297750; Plan #012 Line 27d - Schedule of Reportable Transactions Year Ended December 31, 1998
Sales -------------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - --------------------- --------- -------- ---------- -------- Armada Government Portfolio Fund $ 99,599 $ 98,405 $ 98,405 $ - Cooper Tire & Rubber Company common stock 98,329 - - - American Funds - Investment Co. of America Com 724,561 692,149 683,492 8,657 American Funds - Washington Mutual Investors Fund 10,007,746 1,882,840 1,955,501 72,661 Note: The purchase and selling price for each reportable transaction represents its fair value at the time of acquisition or disposition.
14 30 EXHIBIT (99) Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) Financial Statements and Schedules Years ended December 31, 1998 and 1997 Contents Report of Independent Auditors 1 Audited Financial Statements Statements of Assets Available for Plan Benefits 2 Statements of Changes in Assets Available for Plan Benefits 3 Notes to Financial Statements 4 Schedules Line 27a - Schedule of Assets Held for Investment Purposes 14 Line 27d - Schedule of Reportable Transactions 15 A schedule of party-in-interest transactions has not been presented because there were no party-in- interest transactions which are prohibited by ERISA Section 406 and for which there is no statutory or administrative exemption. 31 Report of Independent Auditors Pre-Tax Savings Plan Committee Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) We have audited the accompanying statements of assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) as of December 31, 1998 and 1997, and the related statements of changes in assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) at December 31, 1998 and 1997, and the changes in its assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules of assets held for investment purposes as of December 31, 1998 and reportable transactions for the year then ended, are presented for purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in our audit of the 1998 basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1998 basic financial statements taken as a whole. May 14, 1999 1 32 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) Statements of Assets Available for Plan Benefits
December 31 1998 1997 ---------- ---------- Assets Investments: Value of interest in Pooled Fund (Note 4) $1,152,172 $1,391,753 Cooper Tire & Rubber Company Common Stock - 30,591 Mutual funds 565,298 351 --------- --------- 1,717,470 1,422,695 Cash 1,335 33,005 Employer contribution receivable 107,372 26,459 Employee contribution receivable 7,596 - --------- --------- Assets available for plan benefits $1,833,773 $1,482,159 ========= ========= See accompanying notes.
2 33 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) Statements of Changes in Assets Available for Plan Benefits
Year Ended December 31 1998 1997 ---------- ---------- Additions: Cash contributions: Participants $ 365,154 $ 342,846 Employer 107,372 54,762 --------- --------- 472,526 397,608 Investment income (loss): Net gain from Pooled Fund (Note 4) 35,186 228,535 Net depreciation in fair value of Cooper Tire & Rubber Company Common Stock - (367) Net depreciation in fair value of common stock and mutual funds (113,263) - Dividends 46,282 286 Interest 45 64 --------- --------- (31,750) 228,518 --------- --------- Total additions 440,776 626,126 Participants' withdrawals (89,162) (54,629) --------- --------- Increase in assets available for plan benefits during the year 351,614 571,497 Assets available for plan benefits at beginning of year 1,482,159 910,662 --------- --------- Assets available for plan benefits at end of year $1,833,773 $1,482,159 ========= ========= See accompanying notes.
3 34 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) Notes to Financial Statements December 31, 1998 and 1997 1. Summary of Plan The Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) (Plan), as amended and restated, is a defined contribution plan administered by a Plan Committee appointed by the plan sponsor, Cooper Tire & Rubber Company (the Company). Participation in the Plan is voluntary and any employee of the Company eligible for membership in Local Union #634, United Steelworkers of America AFL-CIO/CLC (formerly United Rubber, Cork, Linoleum and Plastic Workers of America) (Union) is eligible to participate in the Plan if he or she has completed thirty days of continuous credited service. At December 31, 1998, 260 participants had designated investment of contributions in one or more investment options of the Plan, which are as follows: 1) Cooper Tire & Rubber Company common stock. 2) Mutual funds managed by the American Funds Group, a subsidiary of Capital Group Incorporated: a) The Investment Company of America Fund - managed to provide long-term growth of capital and income, placing greater emphasis on future dividends than on current income. b) The Washington Mutual Investors Fund - managed to provide current income and opportunity for capital growth through the selection of common stocks. 3) Cash with interest - contributions are placed in investment contracts with a diversified group of insurance companies, banks, and other financial institutions. This option may also include synthetic investment contracts backed by high quality fixed income assets. All contracts have specific individual terms including interest rate and maturity date. Interest rates on contracts generally reset on a monthly or quarterly basis. The Plan provides that Pre-Tax Savings Plan (PSP) contributions may be made in one percent multiples of a participant's compensation up to fifteen percent, subject to Internal Revenue Code (IRC) limits on annual contributions to the Plan. The amount of contribution may be changed every thirty days. The Plan provides that the Company will contribute to the Plan each year from current or accumulated earnings an amount equal to the lesser of: (a) 50% (25% in 1997) of PSP contributions which represent up to four percent of each participant's compensation, less any forfeitures, or (b) an amount equal to fifteen percent of the Company's current year pre-tax earnings, exclusive of any deductions for contributions to the Plan, in excess of ten percent of the stockholders' equity of the Company at the beginning of the year. The Company's Board of Directors, at its discretion, may waive the limitation in (b) and contribute from current or accumulated earnings an amount not to exceed the limitation in (a). Administrative expenses of the Plan are paid by the Company. (continued) 4 35 1. Summary of Plan (continued) Investment options for future contributions may be changed daily. Reallocation of balances may be made among the investment options daily. Directions given by participants to the Plan trustee concerning the voting of common stock are confidential. No amounts may be withdrawn by a participant from PSP contributions prior to termination of employment unless the participant has either attained age 59 1/2, becomes totally and permanently disabled, or is able to demonstrate financial hardship. Hardship withdrawals by participants not yet attaining 59 1/2 years of age are limited to PSP contributions and are subject to the Internal Revenue Code (IRC) and regulations thereunder. Participants are fully vested in their contributions and earnings thereon. The Plan shall continue until December 5, 2000. Thereafter it shall renew itself for yearly periods unless written notice is given by the Company or the Union that it is desired to terminate or amend the Plan. The Company has reserved the right to amend the Plan at any time if such amendment is necessary to enable the Plan to meet the requirements of the IRC or the requirements of any governmental authority. If the Plan terminates, and a successor plan is not adopted, all assets will be distributed to participants in a lump sum. No material amounts of withdrawals by participants, initiated on or before December 31, 1998 or 1997, were pending. 2. Significant Accounting Policies The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of (1) additions and deductions during the reporting period, and (2) assets and liabilities, as well as disclosure of contingent assets and liabilities, at the date of the financial statements. Actual results could differ from those estimates. Investments The Plan's investments are held by National City Bank as trustee under an agreement which directs the trustee to invest participants' contributions based on their investment elections. PSP contributions and income not yet invested in the options selected by the participant due to the "transaction period" as defined by the Plan, are invested in cash with interest investments. Investments in common stock of the Company are stated at quoted market values as determined on the last business day of the Plan year. Mutual fund investments are stated at fair value as determined by the net asset value thereof on the last business day of the Plan year. Certain investments of the Plan are combined with similar assets of the other defined contribution plans sponsored by the Company. The combined investments (Pooled Fund) are held by National City Bank as trustee and are valued at their fair value as determined by the trustee, except for fully benefit responsive investment contracts which are valued at contract value. At December 31, 1998 and 1997, the contract value of these contracts approximates fair value. Contributions Contributions are recorded when the Company makes payroll deductions for Plan participants, and are invested in any of four investment options at the participant's election. (continued) 5 36 2. Significant Accounting Policies (continued) Contributions from the Company are accrued in the period in which they become obligations of the Company and may be in the form of cash, treasury stock or authorized but unissued common stock of the Company. Company contributions are invested in common stock of the Company until the contributions become vested after which they are invested as directed by the participant. The Company contribution to a participant's account becomes vested after five years of continuous credited service; thereafter, Company contributions become vested when made. Forfeitures Forfeitures occur when an employee elects a withdrawal from current year or unvested contributions or is terminated, voluntarily or involuntarily, before being fully vested. Forfeitures are used to reduce the Company obligation. 3. Income Tax Status The Internal Revenue Service ruled September 9, 1996 that the Plan qualifies under Section 401(a) of the IRC and, therefore, the related trust is not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Committee believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 4. Value of Interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1998 ----------------------------- Cooper Tire & Rubber Company Cash with Common Interest Stock Fund Fund ------------ ------------ Armada Government Portfolio Fund $ 1,681,519 $ 3,928,115 Cooper Tire & Rubber Company Common Stock 154,085,556 *Allstate Life Insurance Company - 6.01% contract 77020; matures August 16, 2004 12,866,709 *Monumental Life Insurance Company - 6.08% contract BDA-00217TR; matures August 25,2004 11,842,635 *State Street Bank & Trust - 5.35% contract 98145; matures September 15, 2003 6,974,051 **Casisse Des Depots - 6.15% contract 223-01; matures September 25, 2000 2,390,045 John Hancock Mutual Life Insurance Company - 5.62% contract 8736; matures May 1, 2007 7,651,704 New York Life Insurance Company - 7.65% contract 30200-001; matures September 20, 2000 5,359,713 (continued) 6 37 *Continental Assurance Company - 6.31% contract 63-05835; matures February 17, 2003 4,005,674 Allstate Life Insurance Company - 5.95% contract 31040; matures July 1, 2001 3,497,499 Allmerica Financial Life - 6.30% contract 99212W; matures November 15, 2004 3,474,907 **Casisse Des Depots - 5.86% contract 223-03; matures December 16, 2002 2,995,078 United of Omaha Life Insurance - 5.75% contract SDGA-11195; matures August 2, 2000 1,995,756 Monumental Life Insurance Company - 3.66% contract ADA00561FR; matures April 15, 1999 1,315,889 New York Life Insurance Company - 7.65% contract 30200-002; matures April 19, 1999 1,169,061 Monumental Life Insurance Company - 5.80% contract BDA-00217TR-10; matures December 31, 1999 59,733 ------------ ------------ $155,767,075 $ 69,526,569 ============ ============ * Synthetic contract ** Non-participating synthetic contract
The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1997 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ----------- ----------- Armada Government Portfolio Fund $ 1,214,344 $(1,863,178)$(1,153,143)$ 1,315,449 Cooper Tire & Rubber Company Common Stock 185,112,135 Mutual funds: The Investment Company of America Fund 18,542,498 The Washington Mutual Investors Fund 28,034,543 Cash with Interest Fund: *Allstate Life Insurance Company - 6.23% contract; matures August 16, 2004 8,589,106 New York Life Insurance Company - 7.65% contract; matures September 20, 2000 7,513,568 *John Hancock Mutual Life Insurance Company - 6.42% contract; matures May 1, 2007 7,197,589 (continued) 7 38 Provident Life and Accident Insurance Company 5.75% - contract; matures January 30, 1998 6,593,931 *Continental Assurance Company - 6.06% contract; matures January 1, 1998 3,862,569 *Allstate Life Insurance Company - 5.95% contract; matures February 18, 2002 3,303,020 *Allmerica Financial Life Insurance Company - 6.81% contract; matures November 15, 2004 3,259,691 *Peoples Security Life - 6.89% contract; matures June 25, 2004 3,026,927 *Caisse Des Depots (CDC) BRIC - 6.15% contract; matures September 25, 2000 2,987,570 *Peoples Security Life - 6.08% contract; matures April 15, 1999 1,997,156 United of Omaha Life Insurance - 6.41% contract; matures August 2, 2000 1,995,770 *Peoples Security Life - 6.60% contract; matures August 25, 2004 1,979,747 *Peoples Security Life - 6.78% contract; matures March 15, 2002 1,952,166 *Peoples Security Life - 5.29% contract; matures December 17, 2001 1,721,801 *Caisse Des Depots (CDC) BRIC - 5.80% contract; matures December 16, 2002 1,550,256 *Peoples Security Life - 6.17% contract; matures July 16, 2001 1,487,592 *Caisse Des Depots (CDC) BRIC - 5.86% contract; matures May 31, 2000 1,445,881 *Peoples Security Life - 6.94% contract; matures January 26, 2004 1,299,224 Commonwealth Life Insurance Company - 3.66% contract; matures April 15, 1999 1,269,427 New York Life Insurance Company - 7.65% contract; matures April 19, 1999 1,085,983 *Peoples Security Life - 5.40% contract; matures January 18, 2000 859,422 *Peoples Security Life - 5.80% contract; matures December 31, 1999 654,404 *Peoples Security Life - 5.24% contract; matures April 15, 1998 589,726 ------------ ----------- ----------- ----------- Total assets $186,326,479 $64,359,348 $17,389,355 $29,349,992 ============ =========== =========== =========== (continued) 8 39 *Synthetic contract
The average yield of the Cash with Interest Fund for the years ended December 31, 1998 and 1997 was 6.1% and 6.7% respectively. The value of the Plan's interest in the Pooled Fund is $1,152,172 at December 31, 1998 and $1,391,753 at December 31, 1997. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1998 1997 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 0.5% 0.4% Cash with Interest Fund 0.4% 0.4% The Investment Company of America Fund - 1.0% The Washington Mutual Investors Fund - 0.6% The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1998 -------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ----------- ----------- ----------- ----------- Interest $ 142,892 $ 4,150,939 $ 7,700 $ 15,063 Dividends 2,724,804 417,248 378,191 Net realized and unrealized gain (loss) (23,151,293) 1,137,385 3,677,886 ----------- ----------- ----------- ----------- Net investment gain (loss) $(20,283,597) $ 4,150,939 $ 1,562,333 $ 4,071,140 =========== =========== =========== ===========
Year Ended December 31, 1997 --------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ----------- ----------- ----------- ----------- Interest $ 113,940 $ 3,882,280 $ 30,033 $ 33,468 Dividends 2,704,175 1,804,968 2,222,234 Net realized and unrealized gain 38,049,952 1,573,724 3,744,388 ----------- ----------- ----------- ----------- Net investment gain $40,868,067 $ 3,882,280 $ 3,408,725 $ 6,000,090 =========== =========== =========== ===========
9 40 The Plan's net investment gain from the Pooled Fund is $35,186 for the year ended December 31, 1998 and a net investment gain of $228,535 for the year ended December 31, 1997. The net investment gain or loss of the Pooled Fund is allocated to each participating plan based on the percentage of that Plan's units in each Pooled Fund category. 5. Investment Income On July 24, 1998, the Plan's investments in the Investment Co. of America Com and Washington Mutual Investors Fund were removed from the pooled fund. Investment income on assets held outside the pooled fund is as follows:
Net realized and unrealized appreciation (depreciation) in fair value of investments Dividends Interest ----------------------- --------- -------- Year ended December 31, 1998: Cooper Tire & Rubber Company Common $( 3,019) $ 193 Armada Government Portfolio Fund $ 45 Investment Co. of America Com ( 54,413) 24,568 Washington Mutual Investors Fund ( 55,831) 21,521 -------- --------- ------- Totals $(113,263) $ 46,282 $ 45 ======== ========= =======
Net realized and unrealized appreciation (depreciation) in fair value of investments Dividends Interest ----------------------- --------- -------- Year ended December 31, 1997: Cooper Tire & Rubber Company Common $ (367) $ 286 Armada Government Portfolio Fund $ 64 ------- --------- ------- Totals $ (367) $ 286 $ 64 ======= ========= =======
6. Year 2000 Issue (unaudited) The Plan Sponsor has determined it will be necessary to take certain steps in order to ensure the Plan's information systems are prepared to handle year 2000 issues. The Plan Sponsor is taking a two-phase approach. The first phase addressed internal systems that needed to be modified or replaced to function properly. Internal resources were utilized to modify existing software applications and test the software and equipment for the year 2000 modifications. Costs associated with modifying software and equipment were paid by the Plan Sponsor and were not material. (continued) 10 41 6. Year 2000 Issue (unaudited) (continued) For the second phase of the project, Plan management established formal communications with its third party service providers to determine that they have developed plans to address their own year 2000 problems as they relate to the Plan's operations. All third party service providers have indicated they will be year 2000 compliant by mid-year 1999. If modification of data processing systems by the service providers is not completed timely, the Plan Sponsor believes the year 2000 problem could have a material impact on the operations of the Plan. Plan management has not developed a contingency plan, because they are confident that all systems will be year 2000 ready. 7. Investments Individual investments that exceed 5% of plan assets available for benefits are as follows: December 31 1998 1997 -------------------- American Funds - Investment Co. of America Com $294,529 $ - American Funds - Washington Mutual Investors Fund 270,179 - 11 42 Schedules 12 43 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) Employer Identification #34-4297750; Plan #015 Line 27a - Schedule of Assets Held for Investment Purposes December 31, 1998
Shares Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ----------- ----- Mutual funds: *Armada Government Portfolio Fund 590 $ 590 $ 590 American Funds - Investment Co. of America Com 9,480 285,234 294,529 American Funds - Washington Mutual Investors Fund 8,210 274,911 270,179 ------- ------- $560,735 $565,298 ======= ======= *Party-in-interest
13 44 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Auburn) Employer Identification #34-4297750; Plan #015 Line 27d - Schedule of Reportable Transactions Year Ended December 31, 1998
Sales -------------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - --------------------- --------- -------- ---------- -------- Armada Government Portfolio Fund $26,991 $26,766 $26,766 $ - Cooper Tire & Rubber Company common stock 26,689 - - - Note: The purchase and selling price for each reportable transaction represents its fair value at the time of acquisition or disposition.
14 45 EXHIBIT (99) Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) Financial Statements and Schedules Years ended December 31, 1998 and 1997 Contents Report of Independent Auditors 1 Audited Financial Statements Statements of Assets Available for Plan Benefits 2 Statements of Changes in Assets Available for Plan Benefits 3 Notes to Financial Statements 4 Schedules Line 27a - Schedule of Assets Held for Investment Purposes 14 Line 27d - Schedule of Reportable Transactions 15 A schedule of party-in-interest transactions has not been presented because there were no party-in- interest transactions which are prohibited by ERISA Section 406 and for which there is no statutory or administrative exemption. 46 Report of Independent Auditors Pre-Tax Savings Plan Committee Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) We have audited the accompanying statements of assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) as of December 31, 1998 and 1997, and the related statements of changes in assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) at December 31, 1998 and 1997, and the changes in its assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules of assets held for investment purposes as of December 31, 1998 and reportable transactions for the year then ended, are presented for purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in our audit of the 1998 basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1998 basic financial statements taken as a whole. May 14, 1999 1 47 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) Statements of Assets Available for Plan Benefits
December 31 1998 1997 ----------- ----------- Assets Investments: Value of interest in Pooled Fund (Note 4) $ 7,655,477 $10,700,422 Cooper Tire & Rubber Company Common Stock - 164,873 Mutual funds 5,885,300 1,633 ---------- ---------- 13,540,777 10,866,928 Cash 15,207 314,183 Employer contribution receivable 661,748 145,345 Employee contribution receivable 37,602 - ---------- ---------- Assets available for plan benefits $14,255,334 $11,326,456 ========== ========== See accompanying notes.
2 48 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) Statements of Changes in Assets Available for Plan Benefits
Year ended December 31 1998 1997 ----------- ---------- Additions: Cash contributions: Participants $ 2,754,961 $ 2,407,236 Employer 661,604 297,746 --------- ---------- 3,416,565 2,704,982 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) (1,280,015) 1,859,458 Net depreciation in fair value of Cooper Tire & Rubber Company Common Stock - (2,389) Net appreciation in fair value of common stock and mutual funds 817,373 - Dividends 480,752 1,416 Interest 269 317 ---------- ---------- 18,379 1,858,802 ---------- ---------- Total additions 3,434,944 4,563,784 Participants' withdrawals (506,066) (476,935) ---------- ---------- Increase in assets available for plan benefits during the year 2,928,878 4,086,849 Assets available for plan benefits at beginning of year 11,326,456 7,239,607 ---------- ---------- Assets available for plan benefits at end of year $14,255,334 $11,326,456 ========== ========== See accompanying notes.
3 49 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) Notes to Financial Statements December 31, 1998 and 1997 1. Summary of Plan The Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) (Plan), as amended and restated, is a defined contribution plan administered by a Plan Committee appointed by the plan sponsor, Cooper Tire & Rubber Company (the Company). Participation in the Plan is voluntary and any employee of the Company eligible for membership in Local Union #207, United Steelworkers of America AFL-CIO/CLC (Union) is eligible to participate in the Plan if he or she has completed thirty days of continuous credited service. At December 31, 1998, 707 participants had designated investment of contributions in one or more investment options of the Plan, which are as follows: 1) Cooper Tire & Rubber Company common stock. 2) Mutual funds managed by the American Funds Group, a subsidiary of Capital Group Incorporated: a) The Investment Company of America Fund - managed to provide long-term growth of capital and income, placing greater emphasis on future dividends than on current income. b) The Washington Mutual Investors Fund - managed to provide current income and opportunity for capital growth through the selection of common stocks. 3) Cash with interest - contributions are placed in investment contracts with a diversified group of insurance companies, banks, and other financial institutions. This option may also include synthetic investment contracts backed by high quality fixed income assets. All contracts have specific individual terms including interest rate and maturity date. Interest rates on contracts generally reset on a monthly or quarterly basis. The Plan provides that Pre-Tax Savings Plan (PSP) contributions may be made in one percent multiples of a participant's compensation up to fifteen percent, subject to Internal Revenue Code (IRC) limits on annual contributions to the Plan. The amount of contribution may be changed every thirty days. The Plan provides that the Company will contribute to the Plan each year from current or accumulated earnings an amount equal to the lesser of: (a) 50% (25% in 1997) of PSP contributions which represent up to four percent of each participant's compensation, less any forfeitures, or (b) an amount equal to fifteen percent of the Company's current year pre-tax earnings, exclusive of any deductions for contributions to the Plan, in excess of ten percent of the stockholders' equity of the Company at the beginning of the year. The Company's Board of Directors, at its discretion, may waive the limitation in (b) and contribute from current or accumulated earnings an amount not to exceed the limitation in (a). Administrative expenses of the Plan are paid by the Company. Investment options for future contributions may be changed daily. Reallocation of balances may be made among the investment options daily. Directions given by participants to the Plan trustee concerning the voting of common stock are confidential. (continued) 4 50 1. Summary of Plan (continued) No amounts may be withdrawn by a participant from PSP contributions prior to termination of employment unless the participant has either attained age 59 1/2, becomes totally and permanently disabled, or is able to demonstrate financial hardship. Hardship withdrawals by participants not yet attaining 59 1/2 years of age are limited to PSP contributions and are subject to the Internal Revenue Code (IRC) and regulations thereunder. Participants are fully vested in their contributions and earnings thereon. The Plan shall continue until October 31, 2000. Thereafter it shall renew itself for yearly periods unless written notice is given by the Company or the Union that it is desired to terminate or amend the Plan. The Company has reserved the right to amend the Plan at any time if such amendment is necessary to enable the Plan to meet the requirements of the IRC or the requirements of any governmental authority. If the Plan terminates, and a successor plan is not adopted, all assets will be distributed to participants in a lump sum. No material amounts of withdrawals by participants, initiated on or before December 31, 1998 or 1997, were pending. 2. Significant Accounting Policies The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of (1) additions and deductions during the reporting period, and (2) assets and liabilities, as well as disclosure of contingent assets and liabilities, at the date of the financial statements. Actual results could differ from those estimates. Investments The Plan's investments are held by National City Bank as trustee under an agreement which directs the trustee to invest participants' contributions based on their investment elections. PSP contributions and income not yet invested in the options selected by the participant due to the "transaction period" as defined by the Plan, are invested in cash with interest investments. Investments in common stock of the Company are stated at quoted market values as determined on the last business day of the Plan year. Mutual fund investments are stated at fair value as determined by the net asset value thereof on the last business day of the Plan year. Certain investments of the Plan are combined with similar assets of the other defined contribution plans sponsored by the Company. The combined investments (Pooled Fund) are held by National City Bank as trustee and are valued at their fair value as determined by the trustee, except for fully benefit responsive investment contracts which are valued at contract value. At December 31, 1998 and 1997, the contract value of these contracts approximates fair value. Contributions Contributions are recorded when the Company makes payroll deductions for Plan participants, and are invested in any of four investment options at the participant's election. Contributions from the Company are accrued in the period in which they become obligations of the Company and may be in the form of cash, treasury stock or authorized but unissued common stock of the Company. Company contributions are invested in common stock of the Company until the contributions become vested after which they are invested as directed by the participant. The Company contribution to a participant's account becomes vested after five years of continuous credited service; thereafter, Company contributions become vested when made. 5 51 2. Significant Accounting Policies (continued) Forfeitures Forfeitures occur when an employee elects a withdrawal from current year or unvested contributions or is terminated, voluntarily or involuntarily, before being fully vested. Forfeitures are used to reduce the Company obligation. 3. Income Tax Status The Internal Revenue Service ruled September 9, 1996 that the Plan qualifies under Section 401(a) of the IRC and, therefore, the related trust is not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Committee believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 4. Value of Interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1998 ----------------------------- Cooper Tire & Rubber Company Cash with Common Interest Stock Fund Fund ------------ ------------ Armada Government Portfolio Fund $ 1,681,519 $ 3,928,115 Cooper Tire & Rubber Company Common Stock 154,085,556 *Allstate Life Insurance Company - 6.01% contract 77020; matures August 16, 2004 12,866,709 *Monumental Life Insurance Company - 6.08% contract BDA-00217TR; matures August 25,2004 11,842,635 *State Street Bank & Trust - 5.35% contract 98145; matures September 15, 2003 6,974,051 **Casisse Des Depots - 6.15% contract 223-01; matures September 25, 2000 2,390,045 John Hancock Mutual Life Insurance Company - 5.62% contract 8736; matures May 1, 2007 7,651,704 New York Life Insurance Company - 7.65% contract 30200-001; matures September 20, 2000 5,359,713 *Continental Assurance Company - 6.31% contract 63-05835; matures February 17, 2003 4,005,674 Allstate Life Insurance Company - 5.95% contract 31040; matures July 1, 2001 3,497,499 Allmerica Financial Life - 6.30% contract 99212W; matures November 15, 2004 3,474,907 **Casisse Des Depots - 5.86% contract 223-03; matures December 16, 2002 2,995,078 United of Omaha Life Insurance - 5.75% contract SDGA-11195; matures August 2, 2000 1,995,756 (continued) 6 52 Monumental Life Insurance Company - 3.66% contract ADA00561FR; matures April 15, 1999 1,315,889 New York Life Insurance Company - 7.65% contract 30200-002; matures April 19, 1999 1,169,061 Monumental Life Insurance Company - 5.80% contract BDA-00217TR-10; matures December 31, 1999 59,733 ------------ ------------ $155,767,075 $ 69,526,569 ============ ============ * Synthetic contract ** Non-participating synthetic contract
The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1997 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ----------- ----------- Armada Government Portfolio Fund $ 1,214,344 $(1,863,178)$(1,153,143)$ 1,315,449 Cooper Tire & Rubber Company Common Stock 185,112,135 Mutual funds: The Investment Company of America Fund 18,542,498 The Washington Mutual Investors Fund 28,034,543 Cash with Interest Fund: *Allstate Life Insurance Company - 6.23% contract; matures August 16, 2004 8,589,106 New York Life Insurance Company - 7.65% contract; matures September 20, 2000 7,513,568 *John Hancock Mutual Life Insurance Company - 6.42% contract; matures May 1, 2007 7,197,589 Provident Life and Accident Insurance Company 5.75% - contract; matures January 30, 1998 6,593,931 *Continental Assurance Company - 6.06% contract; matures January 1, 1998 3,862,569 *Allstate Life Insurance Company - 5.95% contract; matures February 18, 2002 3,303,020 *Allmerica Financial Life Insurance Company - 6.81% contract; matures November 15, 2004 3,259,691 *Peoples Security Life - 6.89% contract; matures June 25, 2004 3,026,927 *Caisse Des Depots (CDC) BRIC - 6.15% contract; matures September 25, 2000 2,987,570 (continued) 7 53 *Peoples Security Life - 6.08% contract; matures April 15, 1999 1,997,156 United of Omaha Life Insurance - 6.41% contract; matures August 2, 2000 1,995,770 *Peoples Security Life - 6.60% contract; matures August 25, 2004 1,979,747 *Peoples Security Life - 6.78% contract; matures March 15, 2002 1,952,166 *Peoples Security Life - 5.29% contract; matures December 17, 2001 1,721,801 *Caisse Des Depots (CDC) BRIC - 5.80% contract; matures December 16, 2002 1,550,256 *Peoples Security Life - 6.17% contract; matures July 16, 2001 1,487,592 *Caisse Des Depots (CDC) BRIC - 5.86% contract; matures May 31, 2000 1,445,881 *Peoples Security Life - 6.94% contract; matures January 26, 2004 1,299,224 Commonwealth Life Insurance Company - 3.66% contract; matures April 15, 1999 1,269,427 New York Life Insurance Company - 7.65% contract; matures April 19, 1999 1,085,983 *Peoples Security Life - 5.40% contract; matures January 18, 2000 859,422 *Peoples Security Life - 5.80% contract; matures December 31, 1999 654,404 *Peoples Security Life - 5.24% contract; matures April 15, 1998 589,726 ------------ ----------- ----------- ----------- Total assets $186,326,479 $64,359,348 $17,389,355 $29,349,992 ============ =========== =========== =========== *Synthetic contract
The average yield of the Cash with Interest Fund for the years ended December 31, 1998 and 1997 was 6.1% and 6.7% respectively. The value of the Plan's interest in the Pooled Fund is $7,655,477 at December 31, 1998 and $10,700,422 at December 31, 1997. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1998 1997 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 3.9% 3.2% Cash with Interest Fund 2.2% 1.8% The Investment Company of America Fund - 10.0% The Washington Mutual Investors Fund - 6.1% 8 54 The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1998 -------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ----------- ----------- ----------- ----------- Interest $ 142,892 $ 4,150,939 $ 7,700 $ 15,063 Dividends 2,724,804 417,248 378,191 Net realized and unrealized gain (loss) (23,151,293) 1,137,385 3,677,886 ----------- ----------- ----------- ----------- Net investment gain (loss) $(20,283,597) $ 4,150,939 $ 1,562,333 $ 4,071,140 =========== =========== =========== ===========
Year Ended December 31, 1997 --------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ----------- ----------- ----------- ----------- Interest $ 113,940 $ 3,882,280 $ 30,033 $ 33,468 Dividends 2,704,175 1,804,968 2,222,234 Net realized and unrealized gain 38,049,952 1,573,724 3,744,388 ----------- ----------- ----------- ----------- Net investment gain $40,868,067 $ 3,882,280 $ 3,408,725 $ 6,000,090 =========== =========== =========== ===========
The Plan's net investment loss from the Pooled Fund is $1,280,015 for the year ended December 31, 1998 and a net investment gain of $1,859,458 for the year ended December 31, 1997. The net investment gain or loss of the Pooled Fund is allocated to each participating plan based on the percentage of that Plan's units in each Pooled Fund category. 9 55 5. Investment Income On July 24, 1998, the Plan's investments in the Investment Co. of America Com and Washington Mutual Investors Fund were removed from the pooled fund. Investment income on assets held outside the pooled fund is as follows:
Net realized and unrealized appreciation (depreciation) in fair value of investments Dividends Interest ----------------------- --------- -------- Year ended December 31, 1998: Cooper Tire & Rubber Company Common $ 36,031 $ 1,038 Armada Government Portfolio Fund $ 269 Investment Co. of America Com 360,185 241,313 Washington Mutual Investors Fund 421,157 238,401 -------- --------- ------- Totals $ 817,373 $ 480,752 $ 269 ======== ========= =======
Net realized and unrealized appreciation (depreciation) in fair value of investments Dividends Interest ----------------------- --------- -------- Year ended December 31, 1997: Cooper Tire & Rubber Company Common $ (2,389) $ 1,416 Armada Government Portfolio Fund $ 317 ------- --------- ------- Totals $ (2,389) $ 1,416 $ 317 ======= ========= =======
6. Year 2000 Issue (unaudited) The Plan Sponsor has determined it will be necessary to take certain steps in order to ensure the Plan's information systems are prepared to handle year 2000 issues. The Plan Sponsor is taking a two-phase approach. The first phase addressed internal systems that needed to be modified or replaced to function properly. Internal resources were utilized to modify existing software applications and test the software and equipment for the year 2000 modifications. Costs associated with modifying software and equipment were paid by the Plan Sponsor and were not material. For the second phase of the project, Plan management established formal communications with its third party service providers to determine that they have developed plans to address their own year 2000 problems as they relate to the Plan's operations. All third party service providers have indicated they will be year 2000 compliant by mid-year 1999. If modification of data processing systems by the service providers is not completed timely, the Plan Sponsor believes the year 2000 problem could have a material impact on the operations of the Plan. Plan management has not developed a contingency plan, because they are confident that all systems will be year 2000 ready. 10 56 7. Investments Individual investments that exceed 5% of plan assets available for benefits are as follows: December 31 1998 1997 -------------------- American Funds - Investment Co. of America Com $2,892,567 $ - American Funds - Washington Mutual Investors Fund 2,987,699 - 11 57 Schedules 12 58 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) Employer Identification #34-4297750; Plan #014 Line 27a - Schedule of Assets Held for Investment Purposes December 31, 1998
Shares Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ----------- ----- Mutual funds: *Armada Government Money Market 1,189 $ 1,189 $ 1,189 *Armada Government Portfolio Fund 3,845 3,845 3,845 American Funds - Investment Co. of America Com 93,098 2,804,673 2,892,567 American Funds - Washington Mutual Investors Fund 90,784 3,043,347 2,987,699 --------- --------- $5,853,054 $5,885,300 ========= ========= *Party-in-interest
13 59 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Findlay) Employer Identification #34-4297750; Plan #014 Line 27d - Schedule of Reportable Transactions Year Ended December 31, 1998
Sales -------------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - --------------------- --------- -------- ---------- -------- Armada Government Portfolio Fund $147,805 $146,398 $146,398 $ - Cooper Tire & Rubber Company common stock 146,300 - - - Note: The purchase and selling price for each reportable transaction represents its fair value at the time of acquisition or disposition.
14 60 EXHIBIT (99) Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) Financial Statements and Schedules Years ended December 31, 1998 and 1997 Contents Report of Independent Auditors 1 Audited Financial Statements Statements of Assets Available for Plan Benefits 2 Statements of Changes in Assets Available for Plan Benefits 3 Notes to Financial Statements 4 Schedules Line 27a - Schedule of Assets Held for Investment Purposes 14 Line 27d - Schedule of Reportable Transactions 15 A schedule of party-in-interest transactions has not been presented because there were no party-in- interest transactions which are prohibited by ERISA Section 406 and for which there is no statutory or administrative exemption. 61 Report of Independent Auditors Pre-Tax Savings Plan Committee Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) We have audited the accompanying statements of assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) as of December 31, 1998 and 1997, and the related statements of changes in assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) at December 31, 1998 and 1997, and the changes in its assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules of assets held for investment purposes as of December 31, 1998 and reportable transactions for the year then ended, are presented for purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in our audit of the 1998 basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1998 basic financial statements taken as a whole. May 14, 1999 1 62 Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) Statements of Assets Available for Plan Benefits
December 31 1998 1997 ---------- ---------- Assets Investments: Value of interest in Pooled Fund (Note 4) $ 509,892 $ 535,669 Cooper Tire & Rubber Company Common Stock - 13,504 Mutual funds 108,135 195 --------- --------- 618,027 549,368 Cash 1,911 7,769 Employer contribution receivable 23,424 8,196 Employee contribution receivable 2,822 - --------- --------- Assets available for plan benefits $ 646,184 $ 565,333 ========= ========= See accompanying notes.
2 63 Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) Statements of Changes in Assets Available for Plan Benefits
Year Ended December 31 1998 1997 ---------- ---------- Additions: Cash contributions: Participants $ 183,459 $ 148,260 Employer 23,574 20,715 --------- --------- 207,033 168,975 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) (48,189) 83,578 Net depreciation in fair value of Cooper Tire & Rubber Company Common Stock - (246) Net appreciation in fair value of common stock and mutual funds 17,463 - Dividends 8,817 129 Interest 24 28 --------- --------- (21,885) 83,489 --------- --------- Total additions 185,148 252,464 Participants' withdrawals (104,297) (110,516) --------- --------- Increase in assets available for plan benefits during the year 80,851 141,948 Assets available for plan benefits at beginning of year 565,333 423,385 --------- --------- Assets available for plan benefits at end of year $ 646,184 $ 565,333 ========= ========= See accompanying notes.
3 64 Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) Notes to Financial Statements December 31, 1998 and 1997 1. Summary of Plan The Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) (Plan), as amended and restated, is a defined contribution plan administered by a Plan Committee appointed by the plan sponsor, Cooper Tire & Rubber Company (the Company). Participation in the Plan is voluntary and any employee of the Company eligible for membership in Local Union #634, United Steelworkers of America AFL-CIO/CLC (Union) is eligible to participate in the Plan if he or she has completed thirty days of continuous credited service. At December 31, 1998, 144 participants had designated investment of contributions in one or more investment options of the Plan, which are as follows: 1) Cooper Tire & Rubber Company common stock. 2) Mutual funds managed by the American Funds Group, a subsidiary of Capital Group Incorporated: a) The Investment Company of America Fund - managed to provide long-term growth of capital and income, placing greater emphasis on future dividends than on current income. b) The Washington Mutual Investors Fund - managed to provide current income and opportunity for capital growth through the selection of common stocks. 3) Cash with interest - contributions are placed in investment contracts with a diversified group of insurance companies, banks, and other financial institutions. This option may also include synthetic investment contracts backed by high quality fixed income assets. All contracts have specific individual terms including interest rate and maturity date. Interest rates on contracts generally reset on a monthly or quarterly basis. The Plan provides that Pre-Tax Savings Plan (PSP) contributions may be made in one percent multiples of a participant's compensation up to fifteen percent, subject to Internal Revenue Code (IRC) limits on annual contributions to the Plan. The amount of contribution may be changed every thirty days. The Plan provides that the Company will contribute to the Plan each year from current or accumulated earnings an amount equal to the lesser of: (a) 25% of PSP contributions which represent up to four percent of each participant's compensation, less any forfeitures, or (b) an amount equal to fifteen percent of the Company's current year pre-tax earnings, exclusive of any deductions for contributions to the Plan, in excess of ten percent of the stockholders' equity of the Company at the beginning of the year. The Company's Board of Directors, at its discretion, may waive the limitation in (b) and contribute from current or accumulated earnings an amount not to exceed the limitation in (a). Administrative expenses of the Plan are paid by the Company. Investment options for future contributions may be changed daily. Reallocation of balances may be made among the investment options daily. Directions given by participants to the Plan trustee concerning the voting of common stock are confidential. (continued) 4 65 1. Summary of Plan (continued) No amounts may be withdrawn by a participant from PSP contributions prior to termination of employment unless the participant has either attained age 59 1/2, becomes totally and permanently disabled, or is able to demonstrate financial hardship. Hardship withdrawals by participants not yet attaining 59 1/2 years of age are limited to PSP contributions and are subject to the Internal Revenue Code (IRC) and regulations thereunder. Participants are fully vested in their contributions and earnings thereon. The Plan shall continue until April 27, 2000. Thereafter it shall renew itself for yearly periods unless written notice is given by the Company or the Union that it is desired to terminate or amend the Plan. The Company has reserved the right to amend the Plan at any time if such amendment is necessary to enable the Plan to meet the requirements of the IRC or the requirements of any governmental authority. If the Plan terminates, and a successor plan is not adopted, all assets will be distributed to participants in a lump sum. No material amounts of withdrawals by participants, initiated on or before December 31, 1998 or 1997, were pending. 2. Significant Accounting Policies The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of (1) additions and deductions during the reporting period, and (2) assets and liabilities, as well as disclosure of contingent assets and liabilities, at the date of the financial statements. Actual results could differ from those estimates. Investments The Plan's investments are held by National City Bank as trustee under an agreement which directs the trustee to invest participants' contributions based on their investment elections. PSP contributions and income not yet invested in the options selected by the participant due to the "transaction period" as defined by the Plan, are invested in cash with interest investments. Investments in common stock of the Company are stated at quoted market values as determined on the last business day of the Plan year. Mutual fund investments are stated at fair value as determined by the net asset value thereof on the last business day of the Plan year. Certain investments of the Plan are combined with similar assets of the other defined contribution plans sponsored by the Company. The combined investments (Pooled Fund) are held by National City Bank as trustee and are valued at their fair value as determined by the trustee, except for fully benefit responsive investment contracts which are valued at contract value. At December 31, 1998 and 1997, the contract value of these contracts approximates fair value. Contributions Contributions are recorded when the Company makes payroll deductions for Plan participants, and are invested in any of four investment options at the participant's election. Contributions from the Company are accrued in the period in which they become obligations of the Company and may be in the form of cash, treasury stock or authorized but unissued common stock of the Company. Company contributions are invested in common stock of the Company until the contributions become vested after which they are invested as directed by the participant. The Company contribution to a participant's account becomes vested after five years of continuous credited service; thereafter, Company contributions become vested when made. 5 66 2. Significant Accounting Policies (continued) Forfeitures Forfeitures occur when an employee elects a withdrawal from current year or unvested contributions or is terminated, voluntarily or involuntarily, before being fully vested. Forfeitures are used to reduce the Company obligation. 3. Income Tax Status The Internal Revenue Service ruled September 9, 1996 that the Plan qualifies under Section 401(a) of the IRC and, therefore, the related trust is not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Committee believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 4. Value of Interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1998 ----------------------------- Cooper Tire & Rubber Company Cash with Common Interest Stock Fund Fund ------------ ------------ Armada Government Portfolio Fund $ 1,681,519 $ 3,928,115 Cooper Tire & Rubber Company Common Stock 154,085,556 *Allstate Life Insurance Company - 6.01% contract 77020; matures August 16, 2004 12,866,709 *Monumental Life Insurance Company - 6.08% contract BDA-00217TR; matures August 25,2004 11,842,635 *State Street Bank & Trust - 5.35% contract 98145; matures September 15, 2003 6,974,051 **Casisse Des Depots - 6.15% contract 223-01; matures September 25, 2000 2,390,045 John Hancock Mutual Life Insurance Company - 5.62% contract 8736; matures May 1, 2007 7,651,704 New York Life Insurance Company - 7.65% contract 30200-001; matures September 20, 2000 5,359,713 *Continental Assurance Company - 6.31% contract 63-05835; matures February 17, 2003 4,005,674 Allstate Life Insurance Company - 5.95% contract 31040; matures July 1, 2001 3,497,499 Allmerica Financial Life - 6.30% contract 99212W; matures November 15, 2004 3,474,907 **Casisse Des Depots - 5.86% contract 223-03; matures December 16, 2002 2,995,078 United of Omaha Life Insurance - 5.75% contract SDGA-11195; matures August 2, 2000 1,995,756 (continued) 6 67 Monumental Life Insurance Company - 3.66% contract ADA00561FR; matures April 15, 1999 1,315,889 New York Life Insurance Company - 7.65% contract 30200-002; matures April 19, 1999 1,169,061 Monumental Life Insurance Company - 5.80% contract BDA-00217TR-10; matures December 31, 1999 59,733 ------------ ------------ $155,767,075 $ 69,526,569 ============ ============ * Synthetic contract ** Non-participating synthetic contract
The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1997 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ----------- ----------- Armada Government Portfolio Fund $ 1,214,344 $(1,863,178)$(1,153,143)$ 1,315,449 Cooper Tire & Rubber Company Common Stock 185,112,135 Mutual funds: The Investment Company of America Fund 18,542,498 The Washington Mutual Investors Fund 28,034,543 Cash with Interest Fund: *Allstate Life Insurance Company - 6.23% contract; matures August 16, 2004 8,589,106 New York Life Insurance Company - 7.65% contract; matures September 20, 2000 7,513,568 *John Hancock Mutual Life Insurance Company - 6.42% contract; matures May 1, 2007 7,197,589 Provident Life and Accident Insurance Company 5.75% - contract; matures January 30, 1998 6,593,931 *Continental Assurance Company - 6.06% contract; matures January 1, 1998 3,862,569 *Allstate Life Insurance Company - 5.95% contract; matures February 18, 2002 3,303,020 *Allmerica Financial Life Insurance Company - 6.81% contract; matures November 15, 2004 3,259,691 Peoples Security Life - 6.89% contract; matures June 25, 2004 3,026,927 *Caisse Des Depots (CDC) BRIC - 6.15% contract; matures September 25, 2000 2,987,570 (continued) 7 68 *Peoples Security Life - 6.08% contract; matures April 15, 1999 1,997,156 United of Omaha Life Insurance - 6.41% contract; matures August 2, 2000 1,995,770 *Peoples Security Life - 6.60% contract; matures August 25, 2004 1,979,747 *Peoples Security Life - 6.78% contract; matures March 15, 2002 1,952,166 *Peoples Security Life - 5.29% contract; matures December 17, 2001 1,721,801 *Caisse Des Depots (CDC) BRIC - 5.80% contract; matures December 16, 2002 1,550,256 *Peoples Security Life - 6.17% contract; matures July 16, 2001 1,487,592 *Caisse Des Depots (CDC) BRIC - 5.86% contract; matures May 31, 2000 1,445,881 *Peoples Security Life - 6.94% contract; matures January 26, 2004 1,299,224 Commonwealth Life Insurance Company - 3.66% contract; matures April 15, 1999 1,269,427 New York Life Insurance Company - 7.65% contract; matures April 19, 1999 1,085,983 *Peoples Security Life - 5.40% contract; matures January 18, 2000 859,422 *Peoples Security Life - 5.80% contract; matures December 31, 1999 654,404 *Peoples Security Life - 5.24% contract; matures April 15, 1998 589,726 ------------ ----------- ----------- ----------- Total assets $186,326,479 $64,359,348 $17,389,355 $29,349,992 ============ =========== =========== =========== *Synthetic contract
The average yield of the Cash with Interest Fund for the years ended December 31, 1998 and 1997 was 6.1% and 6.7% respectively. The value of the Plan's interest in the Pooled Fund is $509,892 at December 31, 1998 and $535,669 at December 31, 1997. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1998 1997 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 0.2% 0.2% Cash with Interest Fund 0.3% 0.3% The Investment Company of America Fund - 0.1% The Washington Mutual Investors Fund - 0.1% 8 69 The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1998 -------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ----------- ----------- ----------- ----------- Interest $ 142,892 $ 4,150,939 $ 7,700 $ 15,063 Dividends 2,724,804 417,248 378,191 Net realized and unrealized gain (loss) (23,151,293) 1,137,385 3,677,886 ----------- ----------- ----------- ----------- Net investment gain (loss) $(20,283,597) $ 4,150,939 $ 1,562,333 $ 4,071,140 =========== =========== =========== ===========
Year Ended December 31, 1997 --------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ----------- ----------- ----------- ----------- Interest $ 113,940 $ 3,882,280 $ 30,033 $ 33,468 Dividends 2,704,175 1,804,968 2,222,234 Net realized and unrealized gain 38,049,952 1,573,724 3,744,388 ----------- ----------- ----------- ----------- Net investment gain $40,868,067 $ 3,882,280 $ 3,408,725 $ 6,000,090 =========== =========== =========== ===========
The Plan's net investment loss from the Pooled Fund is $48,189 for the year ended December 31, 1998 and a net investment gain of $83,578 for the year ended December 31, 1997. The net investment gain or loss of the Pooled Fund is allocated to each participating plan based on the percentage of that Plan's units in each Pooled Fund category. 9 70 5. Investment Income On July 24, 1998, the Plan's investments in the Investment Co. of America Com and Washington Mutual Investors Fund were removed from the pooled fund. Investment income on assets held outside the pooled fund is as follows:
Net realized and unrealized appreciation (depreciation) in fair value of investments Dividends Interest ----------------------- --------- -------- Year ended December 31, 1998: Cooper Tire & Rubber Company Common $ 1,045 $ 86 Armada Government Portfolio Fund $ 24 Investment Co. of America Com 4,766 3,629 Washington Mutual Investors Fund 11,652 5,102 -------- --------- ------- Totals $ 17,463 $ 8,817 $ 24 ======== ========= =======
Net realized and unrealized appreciation (depreciation) in fair value of investments Dividends Interest ----------------------- --------- -------- Year ended December 31, 1997: Cooper Tire & Rubber Company Common $ (246) $ 129 Armada Government Portfolio Fund $ 28 ------- --------- ------- Totals $ (246) $ 129 $ 28 ======= ========= =======
6. Year 2000 Issue (unaudited) The Plan Sponsor has determined it will be necessary to take certain steps in order to ensure the Plan's information systems are prepared to handle year 2000 issues. The Plan Sponsor is taking a two-phase approach. The first phase addressed internal systems that needed to be modified or replaced to function properly. Internal resources were utilized to modify existing software applications and test the software and equipment for the year 2000 modifications. Costs associated with modifying software and equipment were paid by the Plan Sponsor and were not material. For the second phase of the project, Plan management established formal communications with its third party service providers to determine that they have developed plans to address their own year 2000 problems as they relate to the Plan's operations. All third party service providers have indicated they will be year 2000 compliant by mid-year 1999. If modification of data processing systems by the service providers is not completed timely, the Plan Sponsor believes the year 2000 problem could have a material impact on the operations of the Plan. Plan management has not developed a contingency plan, because they are confident that all systems will be year 2000 ready. 10 71 7. Investments Individual investments that exceed 5% of plan assets available for benefits are as follows: December 31 1998 1997 -------------------- American Funds - Investment Co. of America Com $43,791 $ - American Funds - Washington Mutual Investors Fund 63,894 - 11 72 Schedules 12 73 Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) Employer Identification #34-4297750; Plan #013 Line 27a - Schedule of Assets Held for Investment Purposes December 31, 1998
Shares Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ----------- ----- Mutual funds: *Armada Government Portfolio Fund 450 $ 450 $ 450 American Funds - Investment Co. of America Com 1,410 42,368 43,791 American Funds - Washington Mutual Investors Fund 1,942 64,861 63,894 ------- ------- $107,679 $108,135 ======= ======= *Party-in-interest
13 74 Cooper Tire & Rubber Company Pre-Tax Savings Plan (El Dorado) Employer Identification #34-4297750; Plan #013 Line 27d - Schedule of Reportable Transactions Year Ended December 31, 1998
Sales -------------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - --------------------- --------- -------- ---------- -------- Armada Government Portfolio Fund $ 8,835 $ 8,753 $ 8,753 $ - Cooper Tire & Rubber Company common stock 8,674 - - - Note: The purchase and selling price for each reportable transaction represents its fair value at the time of acquisition or disposition.
14 75 EXHIBIT (99) Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) Financial Statements and Schedules Years ended December 31, 1998 and 1997 Contents Report of Independent Auditors 1 Audited Financial Statements Statements of Assets Available for Plan Benefits 2 Statements of Changes in Assets Available for Plan Benefits 3 Notes to Financial Statements 4 Schedules Line 27a - Schedule of Assets Held for Investment Purposes 14 Line 27d - Schedule of Reportable Transactions 15 A schedule of party-in-interest transactions has not been presented because there were no party-in- interest transactions which are prohibited by ERISA Section 406 and for which there is no statutory or administrative exemption. 76 Report of Independent Auditors Pre-Tax Savings Plan Committee Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) We have audited the accompanying statements of assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) as of December 31, 1998 and 1997, and the related statements of changes in assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - - Hose) at December 31, 1998 and 1997, and the changes in its assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules of assets held for investment purposes as of December 31, 1998 and reportable transactions for the year then ended, are presented for purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in our audit of the 1998 basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1998 basic financial statements taken as a whole. May 14, 1999 1 77 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) Statements of Assets Available for Plan Benefits
December 31 1998 1997 ---------- ---------- Assets Investments: Value of interest in Pooled Fund (Note 4) $ 650,138 $ 880,991 Cooper Tire & Rubber Company Common Stock - 27,056 Mutual funds 504,756 1,168 --------- --------- 1,154,894 909,215 Cash (1,362) 25,321 Employer contribution receivable 110,269 20,363 Employee contribution receivable 6,200 - --------- --------- Assets available for plan benefits $1,270,001 $ 954,899 ========= ========= See accompanying notes.
2 78 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) Statements of Changes in Assets Available for Plan Benefits
Year Ended December 31 1998 1997 ---------- ---------- Additions: Cash contributions: Participants $ 367,854 $ 281,293 Employer 110,269 45,400 --------- --------- 478,123 326,693 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) (104,648) 146,971 Net depreciation in fair value of Cooper stock and mutual funds - (446) Net appreciation in fair value of common and convertible preferred stock 58,014 - Dividends 41,552 259 Interest 64 56 --------- --------- (5,018) 146,840 --------- --------- Total additions 473,105 473,533 Participants' withdrawals (158,003) (40,133) --------- --------- Increase in assets available for plan benefits during the year 315,102 433,400 Assets available for plan benefits at beginning of year 954,899 521,499 --------- --------- Assets available for plan benefits at end of year $1,270,001 $ 954,899 ========= ========= See accompanying notes.
3 79 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) Notes to Financial Statements December 31, 1998 and 1997 1. Summary of Plan The Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) (Plan), as amended and restated, is a defined contribution plan administered by a Plan Committee appointed by the plan sponsor, Cooper Tire & Rubber Company (the Company). Participation in the Plan is voluntary and any employee of the Company eligible for membership in Local Union #1152, United Steelworkers of America AFL-CIO/CLC (Union) is eligible to participate in the Plan if he or she has completed thirty days of continuous credited service. At December 31, 1998, 249 participants had designated investment of contributions in one or more investment options of the Plan, which are as follows: 1) Cooper Tire & Rubber Company common stock. 2) Mutual funds managed by the American Funds Group, a subsidiary of Capital Group Incorporated: a) The Investment Company of America Fund - managed to provide long-term growth of capital and income, placing greater emphasis on future dividends than on current income. b) The Washington Mutual Investors Fund - managed to provide current income and opportunity for capital growth through the selection of common stocks. 3) Cash with interest - contributions are placed in investment contracts with a diversified group of insurance companies, banks, and other financial institutions. This option may also include synthetic investment contracts backed by high quality fixed income assets. All contracts have specific individual terms including interest rate and maturity date. Interest rates on contracts generally reset on a monthly or quarterly basis. The Plan provides that Pre-Tax Savings Plan (PSP) contributions may be made in one percent multiples of a participant's compensation up to fifteen percent, subject to Internal Revenue Code (IRC) limits on annual contributions to the Plan. The amount of contribution may be changed every thirty days. The Plan provides that the Company will contribute to the Plan each year from current or accumulated earnings an amount equal to the lesser of: (a) 50% (25% in 1997) of PSP contributions which represent up to four percent of each participant's compensation, less any forfeitures, or (b) an amount equal to fifteen percent of the Company's current year pre-tax earnings, exclusive of any deductions for contributions to the Plan, in excess of ten percent of the stockholders' equity of the Company at the beginning of the year. The Company's Board of Directors, at its discretion, may waive the limitation in (b) and contribute from current or accumulated earnings an amount not to exceed the limitation in (a). Administrative expenses of the Plan are paid by the Company. Investment options for future contributions may be changed daily. Reallocation of balances may be made among the investment options daily. Directions given by participants to the Plan trustee concerning the voting of common stock are confidential. (continued) 4 80 1. Summary of Plan (continued) No amounts may be withdrawn by a participant from PSP contributions prior to termination of employment unless the participant has either attained age 59 1/2, becomes totally and permanently disabled, or is able to demonstrate financial hardship. Hardship withdrawals by participants not yet attaining 59 1/2 years of age are limited to PSP contributions and are subject to the Internal Revenue Code (IRC) and regulations thereunder. Participants are fully vested in their contributions and earnings thereon. The Plan shall continue until April 30, 2001. Thereafter it shall renew itself for yearly periods unless written notice is given by the Company or the Union that it is desired to terminate or amend the Plan. The Company has reserved the right to amend the Plan at any time if such amendment is necessary to enable the Plan to meet the requirements of the IRC or the requirements of any governmental authority. If the Plan terminates, and a successor plan is not adopted, all assets will be distributed to participants in a lump sum. No material amounts of withdrawals by participants, initiated on or before December 31, 1998 or 1997, were pending. 2. Significant Accounting Policies The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of (1) additions and deductions during the reporting period, and (2) assets and liabilities, as well as disclosure of contingent assets and liabilities, at the date of the financial statements. Actual results could differ from those estimates. Investments The Plan's investments are held by National City Bank as trustee under an agreement which directs the trustee to invest participants' contributions based on their investment elections. PSP contributions and income not yet invested in the options selected by the participant due to the "transaction period" as defined by the Plan, are invested in cash with interest investments. Investments in common stock of the Company are stated at quoted market values as determined on the last business day of the Plan year. Mutual fund investments are stated at fair value as determined by the net asset value thereof on the last business day of the Plan year. Certain investments of the Plan are combined with similar assets of the other defined contribution plans sponsored by the Company. The combined investments (Pooled Fund) are held by National City Bank as trustee and are valued at their fair value as determined by the trustee, except for fully benefit responsive investment contracts which are valued at contract value. At December 31, 1998 and 1997, the contract value of these contracts approximates fair value. Contributions Contributions are recorded when the Company makes payroll deductions for Plan participants, and are invested in any of four investment options at the participant's election. Contributions from the Company are accrued in the period in which they become obligations of the Company and may be in the form of cash, treasury stock or authorized but unissued common stock of the Company. Company contributions are invested in common stock of the Company until the contributions become vested after which they are invested as directed by the participant. The Company contribution to a participant's account becomes vested after five years of continuous credited service; thereafter, Company contributions become vested when made. 5 81 2. Significant Accounting Policies (continued) Forfeitures Forfeitures occur when an employee elects a withdrawal from current year or unvested contributions or is terminated, voluntarily or involuntarily, before being fully vested. Forfeitures are used to reduce the Company obligation. 3. Income Tax Status The Internal Revenue Service ruled September 9, 1996 that the Plan qualifies under Section 401(a) of the IRC and, therefore, the related trust is not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Committee believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 4. Value of Interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1998 ----------------------------- Cooper Tire & Rubber Company Cash with Common Interest Stock Fund Fund ------------ ------------ Armada Government Portfolio Fund $ 1,681,519 $ 3,928,115 Cooper Tire & Rubber Company Common Stock 154,085,556 *Allstate Life Insurance Company - 6.01% contract 77020; matures August 16, 2004 12,866,709 *Monumental Life Insurance Company - 6.08% contract BDA-00217TR; matures August 25,2004 11,842,635 *State Street Bank & Trust - 5.35% contract 98145; matures September 15, 2003 6,974,051 **Casisse Des Depots - 6.15% contract 223-01; matures September 25, 2000 2,390,045 John Hancock Mutual Life Insurance Company - 5.62% contract 8736; matures May 1, 2007 7,651,704 New York Life Insurance Company - 7.65% contract 30200-001; matures September 20, 2000 5,359,713 *Continental Assurance Company - 6.31% contract 63-05835; matures February 17, 2003 4,005,674 Allstate Life Insurance Company - 5.95% contract 31040; matures July 1, 2001 3,497,499 Allmerica Financial Life - 6.30% contract 99212W; matures November 15, 2004 3,474,907 **Casisse Des Depots - 5.86% contract 223-03; matures December 16, 2002 2,995,078 United of Omaha Life Insurance - 5.75% contract SDGA-11195; matures August 2, 2000 1,995,756 (continued) 6 82 Monumental Life Insurance Company - 3.66% contract ADA00561FR; matures April 15, 1999 1,315,889 New York Life Insurance Company - 7.65% contract 30200-002; matures April 19, 1999 1,169,061 Monumental Life Insurance Company - 5.80% contract BDA-00217TR-10; matures December 31, 1999 59,733 ------------ ------------ $155,767,075 $ 69,526,569 ============ ============ * Synthetic contract ** Non-participating synthetic contract
The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1997 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ----------- ----------- Armada Government Portfolio Fund $ 1,214,344 $(1,863,178)$(1,153,143)$ 1,315,449 Cooper Tire & Rubber Company Common Stock 185,112,135 Mutual funds: The Investment Company of America Fund 18,542,498 The Washington Mutual Investors Fund 28,034,543 Cash with Interest Fund: *Allstate Life Insurance Company - 6.23% contract; matures August 16, 2004 8,589,106 New York Life Insurance Company - 7.65% contract; matures September 20, 2000 7,513,568 *John Hancock Mutual Life Insurance Company - 6.42% contract; matures May 1, 2007 7,197,589 Provident Life and Accident Insurance Company 5.75% - contract; matures January 30, 1998 6,593,931 *Continental Assurance Company - 6.06% contract; matures January 1, 1998 3,862,569 *Allstate Life Insurance Company - 5.95% contract; matures February 18, 2002 3,303,020 *Allmerica Financial Life Insurance Company - 6.81% contract; matures November 15, 2004 3,259,691 *Peoples Security Life - 6.89% contract; matures June 25, 2004 3,026,927 *Caisse Des Depots (CDC) BRIC - 6.15% contract; matures September 25, 2000 2,987,570 (continued) 7 83 *Peoples Security Life - 6.08% contract; matures April 15, 1999 1,997,156 United of Omaha Life Insurance - 6.41% contract; matures August 2, 2000 1,995,770 *Peoples Security Life - 6.60% contract; matures August 25, 2004 1,979,747 *Peoples Security Life - 6.78% contract; matures March 15, 2002 1,952,166 *Peoples Security Life - 5.29% contract; matures December 17, 2001 1,721,801 *Caisse Des Depots (CDC) BRIC - 5.80% contract; matures December 16, 2002 1,550,256 *Peoples Security Life - 6.17% contract; matures July 16, 2001 1,487,592 *Caisse Des Depots (CDC) BRIC - 5.86% contract; matures May 31, 2000 1,445,881 *Peoples Security Life - 6.94% contract; matures January 26, 2004 1,299,224 Commonwealth Life Insurance Company - 3.66% contract; matures April 15, 1999 1,269,427 New York Life Insurance Company - 7.65% contract; matures April 19, 1999 1,085,983 *Peoples Security Life - 5.40% contract; matures January 18, 2000 859,422 *Peoples Security Life - 5.80% contract; matures December 31, 1999 654,404 *Peoples Security Life - 5.24% contract; matures April 15, 1998 589,726 ------------ ----------- ----------- ----------- Total assets $186,326,479 $64,359,348 $17,389,355 $29,349,992 ============ =========== =========== =========== *Synthetic contract
The average yield of the Cash with Interest Fund for the years ended December 31, 1998 and 1997 was 6.1% and 6.7% respectively. The value of the Plan's interest in the Pooled Fund is $650,138 at December 31, 1998 and $880,991 at December 31, 1997. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1998 1997 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 0.3% 0.3% Cash with Interest Fund 0.2% 0.2% The Investment Company of America Fund - 0.8% The Washington Mutual Investors Fund - 0.5% 8 84 The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1998 -------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ----------- ----------- ----------- ----------- Interest $ 142,892 $ 4,150,939 $ 7,700 $ 15,063 Dividends 2,724,804 417,248 378,191 Net realized and unrealized gain (loss) (23,151,293) 1,137,385 3,677,886 ----------- ----------- ----------- ----------- Net investment gain (loss) $(20,283,597) $ 4,150,939 $ 1,562,333 $ 4,071,140 =========== =========== =========== ===========
Year Ended December 31, 1997 --------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ----------- ----------- ----------- ----------- Interest $ 113,940 $ 3,882,280 $ 30,033 $ 33,468 Dividends 2,704,175 1,804,968 2,222,234 Net realized and unrealized gain 38,049,952 1,573,724 3,744,388 ----------- ----------- ----------- ----------- Net investment gain $40,868,067 $ 3,882,280 $ 3,408,725 $ 6,000,090 =========== =========== =========== ===========
The Plan's net investment loss from the Pooled Fund is $104,648 for the year ended December 31, 1998 and a net investment gain of $146,971 for the year ended December 31, 1997. The net investment gain or loss of the Pooled Fund is allocated to each participating plan based on the percentage of that Plan's units in each Pooled Fund category. 9 85 5. Investment Income On July 24, 1998, the Plan's investments in the Investment Co. of America Com and Washington Mutual Investors Fund were removed from the pooled fund. Investment income on assets held outside the pooled fund is as follows:
Net realized and unrealized appreciation (depreciation) in fair value of investments Dividends Interest ----------------------- --------- -------- Year ended December 31, 1998: Cooper Tire & Rubber Company Common $ 2,084 $ 170 Armada Government Portfolio Fund $ 64 Investment Co. of America Com 21,339 19,661 Washington Mutual Investors Fund 34,591 21,721 -------- --------- ------- Totals $ 58,014 $ 41,552 $ 64 ======== ========= =======
Net realized and unrealized appreciation (depreciation) in fair value of investments Dividends Interest ----------------------- --------- -------- Year ended December 31, 1997: Cooper Tire & Rubber Company Common $ (446) $ 259 Armada Government Portfolio Fund $ 56 ------- --------- ------- Totals $ (446) $ 259 $ 56 ======= ========= =======
6. Year 2000 Issue (unaudited) The Plan Sponsor has determined it will be necessary to take certain steps in order to ensure the Plan's information systems are prepared to handle year 2000 issues. The Plan Sponsor is taking a two-phase approach. The first phase addressed internal systems that needed to be modified or replaced to function properly. Internal resources were utilized to modify existing software applications and test the software and equipment for the year 2000 modifications. Costs associated with modifying software and equipment were paid by the Plan Sponsor and were not material. For the second phase of the project, Plan management established formal communications with its third party service providers to determine that they have developed plans to address their own year 2000 problems as they relate to the Plan's operations. All third party service providers have indicated they will be year 2000 compliant by mid-year 1999. If modification of data processing systems by the service providers is not completed timely, the Plan Sponsor believes the year 2000 problem could have a material impact on the operations of the Plan. Plan management has not developed a contingency plan, because they are confident that all systems will be year 2000 ready. 10 86 7. Investments Individual investments that exceed 5% of plan assets available for benefits are as follows: December 31 1998 1997 -------------------- American Funds - Investment Co. of America Com $232,274 $ - American Funds - Washington Mutual Investors Fund 269,195 - 11 87 Schedules 12 88 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) Employer Identification #34-4297750; Plan #017 Line 27a - Schedule of Assets Held for Investment Purposes December 31, 1998
Shares Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ----------- ----- Mutual funds: *Armada Government Portfolio Fund 3,287 $ 3,287 $ 3,287 American Funds - Investment Co. of America Com 7,476 224,969 232,274 American Funds - Washington Mutual Investors Fund 8,180 273,847 269,195 ------- ------- $502,103 $504,756 ======= ======= *Party-in-interest
13 89 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Hose) Employer Identification #34-4297750; Plan #017 Line 27d - Schedule of Reportable Transactions Year Ended December 31, 1998
Sales -------------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - --------------------- --------- -------- ---------- -------- Armada Government Portfolio Fund $21,426 $21,234 $21,234 $ - Cooper Tire & Rubber Company common stock 21,142 - - - American Funds - Investment Co. of America Com 49,735 12,247 12,290 (43) American Funds - Washington Mutual Investors Fund 65,624 28,592 29,161 (569) Note: The purchase and selling price for each reportable transaction represents its fair value at the time of acquisition or disposition.
14 90 EXHIBIT (99) Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) Financial Statements and Schedules Years ended December 31, 1998 and 1997 Contents Report of Independent Auditors 1 Audited Financial Statements Statements of Assets Available for Plan Benefits 2 Statements of Changes in Assets Available for Plan Benefits 3 Notes to Financial Statements 4 Schedules Line 27a - Schedule of Assets Held for Investment Purposes 14 Line 27d - Schedule of Reportable Transactions 15 A schedule of party-in-interest transactions has not been presented because there were no party-in- interest transactions which are prohibited by ERISA Section 406 and for which there is no statutory or administrative exemption. 91 Report of Independent Auditors Pre-Tax Savings Plan Committee Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) We have audited the accompanying statements of assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) as of December 31, 1998 and 1997, and the related statements of changes in assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for plan benefits of the Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - - Sealing) at December 31, 1998 and 1997, and the changes in its assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying schedules of assets held for investment purposes as of December 31, 1998 and reportable transactions for the year then ended, are presented for purposes of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in our audit of the 1998 basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the 1998 basic financial statements taken as a whole. May 14, 1999 1 92 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) Statements of Assets Available for Plan Benefits
December 31 1998 1997 ---------- ---------- Assets Investments: Value of interest in Pooled Fund (Note 4) $ 674,922 $ 800,061 Cooper Tire & Rubber Company Common Stock - 28,836 Mutual funds 655,191 220 --------- --------- 1,330,113 829,117 Cash (overdraft) (4,524) 26,702 Employer contribution receivable 151,072 30,119 Employee contribution receivable 9,187 - --------- --------- Assets available for plan benefits $1,485,848 $ 885,938 ========= ========= See accompanying notes.
2 93 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) Statements of Changes in Assets Available for Plan Benefits
Year Ended December 31 1998 1997 ---------- ---------- Additions: Cash contributions: Participants $ 560,028 $ 401,926 Employer 151,072 56,789 --------- --------- 711,100 458,715 Investment income (loss): Net gain (loss) from Pooled Fund (Note 4) (86,308) 114,027 Net appreciation in fair value of Cooper Tire & Rubber Company common stock - 736 Net appreciation in fair value of common stock and mutual funds 47,164 - Dividends 52,505 171 Interest 64 41 --------- --------- 13,425 114,975 --------- --------- Total additions 724,525 573,690 Participants' withdrawals (124,615) (52,307) --------- --------- Increase in assets available for plan benefits during the year 599,910 521,383 Assets available for plan benefits at beginning of year 885,938 364,555 --------- --------- Assets available for plan benefits at end of year $1,485,848 $ 885,938 ========= ========= See accompanying notes.
3 94 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) Notes to Financial Statements December 31, 1998 and 1997 1. Summary of Plan The Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) (Plan), as amended and restated, is a defined contribution plan administered by a Plan Committee appointed by the plan sponsor, Cooper Tire & Rubber Company (the Company). Participation in the Plan is voluntary and any employee of the Company eligible for membership in Local Union #1042, United Steelworkers of America AFL-CIO/CLC (Union) is eligible to participate in the Plan if he or she has completed thirty days of continuous credited service. At December 31, 1998, 285 participants had designated investment of contributions in one or more investment options of the Plan, which are as follows: 1) Cooper Tire & Rubber Company common stock. 2) Mutual funds managed by the American Funds Group, a subsidiary of Capital Group Incorporated: a) The Investment Company of America Fund - managed to provide long-term growth of capital and income, placing greater emphasis on future dividends than on current income. b) The Washington Mutual Investors Fund - managed to provide current income and opportunity for capital growth through the selection of common stocks. 3) Cash with interest - contributions are placed in investment contracts with a diversified group of insurance companies, banks, and other financial institutions. This option may also include synthetic investment contracts backed by high quality fixed income assets. All contracts have specific individual terms including interest rate and maturity date. Interest rates on contracts generally reset on a monthly or quarterly basis. The Plan provides that Pre-Tax Savings Plan (PSP) contributions may be made in one percent multiples of a participant's compensation up to fifteen percent, subject to Internal Revenue Code (IRC) limits on annual contributions to the Plan. The amount of contribution may be changed every thirty days. The Plan provides that the Company will contribute to the Plan each year from current or accumulated earnings an amount equal to the lesser of: (a) 50% (25% in 1997) of PSP contributions which represent up to four percent of each participant's compensation, less any forfeitures, or (b) an amount equal to fifteen percent of the Company's current year pre-tax earnings, exclusive of any deductions for contributions to the Plan, in excess of ten percent of the stockholders' equity of the Company at the beginning of the year. The Company's Board of Directors, at its discretion, may waive the limitation in (b) and contribute from current or accumulated earnings an amount not to exceed the limitation in (a). Administrative expenses of the Plan are paid by the Company. Investment options for future contributions may be changed daily. Reallocation of balances may be made among the investment options daily. Directions given by participants to the Plan trustee concerning the voting of common stock are confidential. (continued) 4 95 1. Summary of Plan (continued) No amounts may be withdrawn by a participant from PSP contributions prior to termination of employment unless the participant has either attained age 59 1/2, becomes totally and permanently disabled, or is able to demonstrate financial hardship. Hardship withdrawals by participants not yet attaining 59 1/2 years of age are limited to PSP contributions and are subject to the Internal Revenue Code (IRC) and regulations thereunder. Participants are fully vested in their contributions and earnings thereon. The Plan shall continue until October 31, 2000. Thereafter it shall renew itself for yearly periods unless written notice is given by the Company or the Union that it is desired to terminate or amend the Plan. The Company has reserved the right to amend the Plan at any time if such amendment is necessary to enable the Plan to meet the requirements of the IRC or the requirements of any governmental authority. If the Plan terminates, and a successor plan is not adopted, all assets will be distributed to participants in a lump sum. No material amounts of withdrawals by participants, initiated on or before December 31, 1998 or 1997, were pending. 2. Significant Accounting Policies The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of (1) additions and deductions during the reporting period, and (2) assets and liabilities, as well as disclosure of contingent assets and liabilities, at the date of the financial statements. Actual results could differ from those estimates. Investments The Plan's investments are held by National City Bank as trustee under an agreement which directs the trustee to invest participants' contributions based on their investment elections. PSP contributions and income not yet invested in the options selected by the participant due to the "transaction period" as defined by the Plan, are invested in cash with interest investments. Investments in common stock of the Company are stated at quoted market values as determined on the last business day of the Plan year. Mutual fund investments are stated at fair value as determined by the net asset values thereof on the last business day of the Plan year. Certain investments of the Plan are combined with similar assets of the other defined contribution plans sponsored by the Company. The combined investments (Pooled Fund) are held by National City Bank as trustee and are valued at their fair value as determined by the trustee, except for fully benefit responsive investment contracts which are valued at contract value. At December 31, 1998 and 1997, the contract value of these contracts approximates fair value. Contributions Contributions are recorded when the Company makes payroll deductions for Plan participants, and are invested in any of four investment options at the participant's election. Contributions from the Company are accrued in the period in which they become obligations of the Company and may be in the form of cash, treasury stock or authorized but unissued common stock of the Company. Company contributions are invested in common stock of the Company until the contributions become vested after which they are invested as directed by the participant. The Company contribution to a participant's account becomes vested after five years of continuous credited service; thereafter, Company contributions become vested when made. 5 96 2. Significant Accounting Policies (continued) Forfeitures Forfeitures occur when an employee elects a withdrawal from current year or unvested contributions or is terminated, voluntarily or involuntarily, before being fully vested. Forfeitures are used to reduce the Company obligation. 3. Income Tax Status The Internal Revenue Service ruled September 9, 1996 that the Plan qualifies under Section 401(a) of the IRC and, therefore, the related trust is not subject to tax under present income tax law. Once qualified, the Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Committee believes the Plan is being operated in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan is qualified and the related trust is tax exempt. 4. Value of Interest in Pooled Fund The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1998 ----------------------------- Cooper Tire & Rubber Company Cash with Common Interest Stock Fund Fund ------------ ------------ Armada Government Portfolio Fund $ 1,681,519 $ 3,928,115 Cooper Tire & Rubber Company Common Stock 154,085,556 *Allstate Life Insurance Company - 6.01% contract 77020; matures August 16, 2004 12,866,709 *Monumental Life Insurance Company - 6.08% contract BDA-00217TR; matures August 25,2004 11,842,635 *State Street Bank & Trust - 5.35% contract 98145; matures September 15, 2003 6,974,051 **Casisse Des Depots - 6.15% contract 223-01; matures September 25, 2000 2,390,045 John Hancock Mutual Life Insurance Company - 5.62% contract 8736; matures May 1, 2007 7,651,704 New York Life Insurance Company - 7.65% contract 30200-001; matures September 20, 2000 5,359,713 *Continental Assurance Company - 6.31% contract 63-05835; matures February 17, 2003 4,005,674 Allstate Life Insurance Company - 5.95% contract 31040; matures July 1, 2001 3,497,499 Allmerica Financial Life - 6.30% contract 99212W; matures November 15, 2004 3,474,907 **Casisse Des Depots - 5.86% contract 223-03; matures December 16, 2002 2,995,078 United of Omaha Life Insurance - 5.75% contract SDGA-11195; matures August 2, 2000 1,995,756 (continued) 6 97 Monumental Life Insurance Company - 3.66% contract ADA00561FR; matures April 15, 1999 1,315,889 New York Life Insurance Company - 7.65% contract 30200-002; matures April 19, 1999 1,169,061 Monumental Life Insurance Company - 5.80% contract BDA-00217TR-10; matures December 31, 1999 59,733 ------------ ------------ $155,767,075 $ 69,526,569 ============ ============ * Synthetic contract ** Non-participating synthetic contract
The assets of the Cooper Tire & Rubber Company Pooled Fund are as follows:
December 31, 1997 ------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ------------ ----------- ----------- ----------- Armada Government Portfolio Fund $ 1,214,344 $(1,863,178)$(1,153,143)$ 1,315,449 Cooper Tire & Rubber Company Common Stock 185,112,135 Mutual funds: The Investment Company of America Fund 18,542,498 The Washington Mutual Investors Fund 28,034,543 Cash with Interest Fund: *Allstate Life Insurance Company - 6.23% contract; matures August 16, 2004 8,589,106 New York Life Insurance Company - 7.65% contract; matures September 20, 2000 7,513,568 *John Hancock Mutual Life Insurance Company - 6.42% contract; matures May 1, 2007 7,197,589 Provident Life and Accident Insurance Company 5.75% - contract; matures January 30, 1998 6,593,931 *Continental Assurance Company - 6.06% contract; matures January 1, 1998 3,862,569 *Allstate Life Insurance Company - 5.95% contract; matures February 18, 2002 3,303,020 *Allmerica Financial Life Insurance Company - 6.81% contract; matures November 15, 2004 3,259,691 *Peoples Security Life - 6.89% contract; matures June 25, 2004 3,026,927 *Caisse Des Depots (CDC) BRIC - 6.15% contract; matures September 25, 2000 2,987,570 (continued) 7 98 *Peoples Security Life - 6.08% contract; matures April 15, 1999 1,997,156 United of Omaha Life Insurance - 6.41% contract; matures August 2, 2000 1,995,770 *Peoples Security Life - 6.60% contract; matures August 25, 2004 1,979,747 *Peoples Security Life - 6.78% contract; matures March 15, 2002 1,952,166 *Peoples Security Life - 5.29% contract; matures December 17, 2001 1,721,801 *Caisse Des Depots (CDC) BRIC - 5.80% contract; matures December 16, 2002 1,550,256 *Peoples Security Life - 6.17% contract; matures July 16, 2001 1,487,592 *Caisse Des Depots (CDC) BRIC - 5.86% contract; matures May 31, 2000 1,445,881 *Peoples Security Life - 6.94% contract; matures January 26, 2004 1,299,224 Commonwealth Life Insurance Company - 3.66% contract; matures April 15, 1999 1,269,427 New York Life Insurance Company - 7.65% contract; matures April 19, 1999 1,085,983 *Peoples Security Life - 5.40% contract; matures January 18, 2000 859,422 *Peoples Security Life - 5.80% contract; matures December 31, 1999 654,404 *Peoples Security Life - 5.24% contract; matures April 15, 1998 589,726 ------------ ----------- ----------- ----------- Total assets $186,326,479 $64,359,348 $17,389,355 $29,349,992 ============ =========== =========== =========== *Synthetic contract
The average yield of the Cash with Interest Fund for the years ended December 31, 1998 and 1997 was 6.1% and 6.7% respectively. The value of the Plan's interest in the Pooled Fund is $674,922 at December 31, 1998 and $800,061 at December 31, 1997. The Plan's interest in the Pooled Fund's assets at December 31 is as follows: 1998 1997 ---- ---- Cooper Tire & Rubber Company Common Stock Fund 0.4% 0.2% Cash with Interest Fund 0.2% 0.1% The Investment Company of America Fund - 0.9% The Washington Mutual Investors Fund - 0.5% 8 99 The net investment gain (loss) of the Cooper Tire & Rubber Company Pooled Fund is as follows:
Year Ended December 31, 1998 -------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ----------- ----------- ----------- ----------- Interest $ 142,892 $ 4,150,939 $ 7,700 $ 15,063 Dividends 2,724,804 417,248 378,191 Net realized and unrealized gain (loss) (23,151,293) 1,137,385 3,677,886 ----------- ----------- ----------- ----------- Net investment gain (loss) $(20,283,597) $ 4,150,939 $ 1,562,333 $ 4,071,140 =========== =========== =========== ===========
Year Ended December 31, 1997 --------------------------------------------------- Cooper Tire The The & Rubber Cash Investment Washington Company with Company of Mutual Common Interest America Investors Stock Fund Fund Fund Fund ----------- ----------- ----------- ----------- Interest $ 113,940 $ 3,882,280 $ 30,033 $ 33,468 Dividends 2,704,175 1,804,968 2,222,234 Net realized and unrealized gain 38,049,952 1,573,724 3,744,388 ----------- ----------- ----------- ----------- Net investment gain $40,868,067 $ 3,882,280 $ 3,408,725 $ 6,000,090 =========== =========== =========== ===========
The Plan's net investment loss from the Pooled Fund is $86,308 for the year ended December 31, 1998 and a net investment gain of $114,027 for the year ended December 31, 1997. The net investment gain or loss of the Pooled Fund is allocated to each participating plan based on the percentage of that Plan's units in each Pooled Fund category. 9 100 5. Investment Income On July 24, 1998, the Plan's investments in the Investment Co. of America Com and Washington Mutual Investors Fund were removed from the pooled fund. Investment income on assets held outside the pooled fund is as follows:
Net realized and unrealized appreciation (depreciation) in fair value of investments Dividends Interest ----------------------- --------- -------- Year ended December 31, 1998: Cooper Tire & Rubber Company Common $ 3,665 $ 183 Armada Government Portfolio Fund $ 64 Investment Co. of America Com 17,126 26,216 Washington Mutual Investors Fund 26,373 26,106 -------- --------- ------- Totals $ 47,164 $ 52,505 $ 64 ======== ========= =======
Net realized and unrealized appreciation (depreciation) in fair value of investments Dividends Interest ----------------------- --------- -------- Year ended December 31, 1997: Cooper Tire & Rubber Company Common $ 736 $ 171 Armada Government Portfolio Fund $ 41 ------- --------- ------- Totals $ 736 $ 171 $ 41 ======= ========= =======
6. Year 2000 Issue (unaudited) The Plan Sponsor has determined it will be necessary to take certain steps in order to ensure the Plan's information systems are prepared to handle year 2000 issues. The Plan Sponsor is taking a two-phase approach. The first phase addressed internal systems that needed to be modified or replaced to function properly. Internal resources were utilized to modify existing software applications and test the software and equipment for the year 2000 modifications. Costs associated with modifying software and equipment were paid by the Plan Sponsor and were not material. For the second phase of the project, Plan management established formal communications with its third party service providers to determine that they have developed plans to address their own year 2000 problems as they relate to the Plan's operations. All third party service providers have indicated they will be year 2000 compliant by mid-year 1999. If modification of data processing systems by the service providers is not completed timely, the Plan Sponsor believes the year 2000 problem could have a material impact on the operations of the Plan. Plan management has not developed a contingency plan, because they are confident that all systems will be year 2000 ready. 10 101 7. Investments Individual investments that exceed 5% of plan assets available for benefits are as follows: December 31 1998 1997 -------------------- American Funds - Investment Co. of America Com $318,952 $ - American Funds - Washington Mutual Investors Fund 332,550 - 11 102 Schedules 12 103 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) Employer Identification #34-4297750; Plan #016 Line 27a - Schedule of Assets Held for Investment Purposes December 31, 1998
Shares Cost (Plus Units, or Accrued Fair Description Face Amount Interest) Value ----------- ----------- ----------- ----- Mutual funds: *Armada Government Portfolio Fund 3,689 $ 3,689 $ 3,689 American Funds - Investment Co. of America Com 10,266 308,880 318,952 American Funds - Washington Mutual Investors Fund 10,105 337,145 332,550 ------- ------- $649,714 $655,191 ======= ======= *Party-in-interest
13 104 Cooper Tire & Rubber Company Pre-Tax Savings Plan (Bowling Green - Sealing) Employer Identification #34-4297750; Plan #016 Line 27d - Schedule of Reportable Transactions Year Ended December 31, 1998
Sales -------------------------------- Cost (Plus Cost of Accrued Gain/ Description of Assets Purchases Proceeds Interest) (Loss) - --------------------- --------- -------- ---------- -------- Armada Government Portfolio Fund $ 30,970 $30,756 $30,756 $ - Cooper Tire & Rubber Company common stock 30,672 - - - American Funds - Investment Co. of America Com 89,260 21,868 22,291 (423) American Funds - Washington Mutual Investors Fund 102,409 29,401 30,767 (1,366) Note: The purchase and selling price for each reportable transaction represents its fair value at the time of acquisition or disposition.
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