Business Segments

12 Months Ended

Dec. 31, 2015

Segment Reporting [Abstract]

Business Segments

Note 19 - Business Segments

In the first quarter of 2015, the Company announced the creation of a Chief Operating Officer position with responsibility for Cooper’s worldwide operations throughout North America, Latin America, Europe and Asia. The Company made this organizational change to provide a more cohesive global approach to the Company’s business and to better leverage the Company’s brands, products and manufacturing footprint around the world. As a result of these organizational changes, the Company evaluated its segment reporting under ASC 280, “Segments.”

Based on this evaluation, it was determined that the Company has four segments:

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

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

• Europe; and

• Asia.

North America and Latin America meet the criteria for aggregation in accordance with ASC 280, as they are similar in their production and distribution processes and exhibit similar economic characteristics. The aggregated North America and Latin America segments are presented as “Americas Tire Operations” in the segment disclosure. The Americas Tire Operations segment manufactures and markets passenger car and light truck tires, primarily for sale in the U.S. replacement market. The segment also has a joint venture manufacturing operation in Mexico, COOCSA, which supplies passenger car tires to the U.S., Mexican, Central American and South American markets. The segment also distributes tires for racing, medium truck and motorcycles. The racing and motorcycle tires are manufactured in the Company’s European Operations segment and by others. The medium truck tires are sourced through an off-take agreement subsequent to the Company’s sale of its ownership interest in its former CCT joint venture, which is now known as Prinx Chengshan (Shandong) Tire Company Ltd. Major distribution channels and customers include independent tire dealers, wholesale distributors, regional and national retail tire chains, and large retail chains that sell tires as well as other automotive products. The segment does not currently sell its products directly to end users, except through three Company-owned retail stores. The segment sells a limited number of tires to original equipment manufacturers.

Both the Asia and Europe segments have been determined to be individually immaterial, as they do not meet the quantitative requirements for segment disclosure under ASC 280. In accordance with ASC 280, information about operating segments that are not reportable shall be combined and disclosed in an all other category separate from other reconciling items. As a result, these two segments have been combined in the segment operating results discussion. The results of the combined Asia and Europe segments are presented as “International Tire Operations”. The European operations have operations in the U.K. and Serbia. The U.K. entity manufactures and markets passenger car, light truck, motorcycle and racing tires and tire retread material for domestic and global markets. The Serbian entity manufactures light vehicle tires primarily for the European markets and for export to the U.S. The Asian operations are located in the PRC. In the PRC, Cooper Kunshan Tire manufactures light vehicle tires and, under an agreement with the government of the PRC, these tires were exported to markets outside of the PRC through 2012. Beginning in 2013, tires produced at the facility have also been sold in the Chinese domestic market. The segment also had a joint venture in the PRC, CCT, which manufactured and marketed radial and bias medium truck tires, as well as passenger and light truck tires for domestic and global markets. The Company sold its ownership interest in this joint venture in November 2014, and the Company now procures these tires under off-take agreements through mid-2018 from this entity, now known as Prinx Chengshan (Shandong) Tire Company Ltd. The majority of the tires manufactured by the segments are sold in the replacement market, with a portion also sold to original equipment manufacturers.

The presentation of the aggregated Americas Tire Operations segment under the Company’s new organizational structure is consistent with the segment reported as Americas Tire Operations in prior years. Similarly, the International Tire Operations disclosure is consistent with the Company’s previously reported International Tire Operations segment. As a result, the Company has not restated its prior year reportable segments as the composition of reportable segments did not change.

The following customer of the Americas Tire Operations segment contributed ten percent or more of the Company’s total consolidated net sales in 2015, 2014 and 2013. Prior year amounts have been updated to include subsidiaries which the customer has acquired. Net sales and percentage of consolidated Company sales for this customer in 2015, 2014 and 2013 were as follows:

	2015					2014					2013
Customer	Net Sales		Consolidated Net Sales			Net Sales		Consolidated Net Sales			Net Sales		Consolidated Net Sales
TBC/Treadways	$	485,257		16	%	$	440,820		13	%	$	432,011		13	%

The accounting policies of the reportable segments are consistent with those described in the Significant Accounting Policies note to the consolidated financial statements. Corporate administrative expenses are allocated to segments based principally on assets, employees and sales. The following table details segment financial information:

	2015			2014			2013
Net sales:
Americas Tire
External customers	$	2,627,619		$	2,524,554		$	2,429,808
Intercompany		57,135			60,930			56,778
		2,684,754			2,585,484			2,486,586
International Tire
External customers		345,282			900,255			1,009,425
Intercompany		106,597			240,571			232,104
		451,879			1,140,826			1,241,529
Eliminations		(163,732	)		(301,501	)		(288,882	)
Consolidated net sales		2,972,901			3,424,809			3,439,233
Operating profit (loss):
Americas Tire		422,929			274,837			204,239
International Tire		(19,133	)		74,566			83,990
Unallocated corporate charges		(52,342	)		(48,930	)		(52,578	)
Eliminations		3,026			(15	)		5,063
Consolidated operating profit		354,480			300,458			240,714
Interest expense		(23,820	)		(28,138	)		(27,906	)
Interest income		2,211			1,500			810
Gain on sale of interest in subsidiary		—			77,471			—
Other non-operating income (expense)		1,157			(2,772	)		(647	)
Income before income taxes		334,028			348,519			212,971
Depreciation and amortization expense
Americas Tire		92,377			82,457			75,132
International Tire		28,577			54,400			54,825
Corporate		454			2,309			4,794
Consolidated depreciation and amortization expense		121,408			139,166			134,751
Segment assets
Americas Tire		1,386,361			1,284,302			1,171,478
International Tire		414,051			423,059			958,914
Corporate and other		635,764			781,576			606,678
Consolidated assets		2,436,176			2,488,937			2,737,070
Expenditures for long-lived assets
Americas Tire		145,813			95,539			87,655
International Tire		33,839			44,741			61,973
Corporate		2,892			4,761			30,820
Consolidated expenditures for long-lived assets		182,544			145,041			180,448

Geographic information for revenues, based on country of origin, and long-lived assets follows:

	2015		2014		2013
Net sales
United States	$	2,518,089	$	2,423,471	$	2,332,526
PRC		126,674		635,632		745,444
Rest of world		328,138		365,706		361,263
Consolidated net sales		2,972,901		3,424,809		3,439,233
Long-lived assets
United States		537,173		474,357		453,693
PRC		105,237		113,335		353,551
Rest of world		152,788		152,511		167,025
Consolidated long-lived assets		795,198		740,203		974,269