UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
Commission File No. 1-4329
COOPER TIRE & RUBBER COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 34-4297750
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Lima and Western Avenues, Findlay, Ohio 45840
(Address of principal executive offices)
(Zip code)
(419) 423-1321
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes (X) No ( )
Number of shares of common stock of registrant outstanding
at July 29, 1994: 83,626,372
1
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<TABLE>
COOPER TIRE & RUBBER COMPANY
BALANCE SHEETS
<CAPTION>
June 30, December 31,
1994 1993
(Unaudited) (Audited)
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash, including short-term investments of
$14,000,000 ($15,000,000 in 1993) $ 28,732,149 $ 25,798,746
Accounts receivable, less allowances
of $3,721,000 ($3,100,000 in 1993) 227,405,019 182,203,436
Inventories at lower of cost (last-in,
first-out) or market:
Finished goods 90,683,508 81,066,480
Work in process 9,694,096 10,381,354
Raw materials and supplies 20,978,632 19,663,017
----------- -----------
121,356,236 111,110,851
Prepaid expenses and deferred taxes 13,896,947 12,904,058
----------- -----------
Total current assets 391,390,351 332,017,091
Property, plant and equipment - net 538,460,268 527,949,046
Other assets 29,680,952 29,618,164
----------- -----------
$959,531,571 $889,584,301
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 74,562,060 $ 65,685,355
Accrued liabilities 58,652,066 50,063,327
Income taxes 1,989,079 6,066,283
Current portion of debt 5,313,000 5,345,000
----------- -----------
Total current liabilities 140,516,205 127,159,965
Long-term debt 38,391,819 38,729,367
Postretirement benefits other than pensions 123,347,395 118,542,360
Other long-term liabilities 37,787,468 36,015,019
Deferred income taxes 24,134,000 18,952,000
Stockholders' equity:
Preferred stock, $1 par value; 5,000,000 shares
authorized; none issued - -
Common stock, $1 par value; 300,000,000 shares
authorized; 83,625,272 shares outstanding
(83,581,768 in 1993) 83,625,272 83,581,768
Capital in excess of par value 1,573,622 1,215,181
Retained earnings 510,155,790 465,388,641
----------- -----------
Total stockholders' equity 595,354,684 550,185,590
----------- -----------
$959,531,571 $889,584,301
=========== ===========
<FN>
See accompanying notes.
</TABLE>
2
<PAGE>
<TABLE>
COOPER TIRE & RUBBER COMPANY
STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
Revenues:
Net sales $329,338,632 $292,566,314
Other income 415,868 118,290
----------- -----------
329,754,500 292,684,604
Costs and expenses:
Cost of products sold 267,647,995 237,993,693
Selling, general and administrative 16,691,613 15,998,225
Interest and debt expense 715,721 309,061
----------- -----------
285,055,329 254,300,979
Income before income taxes 44,699,171 38,383,625
Provision for income taxes 17,240,000 14,360,000
----------- -----------
Net income $ 27,459,171 $ 24,023,625
=========== ===========
Net income per share $.33 $.29
=== ===
Average shares outstanding 83,624,539 83,546,726
========== ==========
Dividends per share $.055 $.045
==== ====
<FN>
See accompanying notes.
</TABLE>
3
<PAGE>
<TABLE>
COOPER TIRE & RUBBER COMPANY
STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
<CAPTION>
1994 1993
------------ ------------
<S> <C> <C>
Revenues:
Net sales $658,470,753 $572,665,913
Other income 631,075 394,931
----------- -----------
659,101,828 573,060,844
Costs and expenses:
Cost of products sold 535,291,863 461,421,852
Selling, general and administrative 34,937,174 32,248,166
Interest and debt expense 1,437,462 801,042
----------- -----------
571,666,499 494,471,060
Income before income taxes 87,435,329 78,589,784
Provision for income taxes 33,470,000 29,370,000
----------- -----------
Net income $ 53,965,329 $ 49,219,784
=========== ===========
Net income per share $.65 $.59
=== ===
Average shares outstanding 83,617,022 83,538,860
========== ==========
Dividends per share $.11 $.09
==== ===
<FN>
See accompanying notes.
</TABLE>
4
<PAGE>
<TABLE>
COOPER TIRE & RUBBER COMPANY
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
<CAPTION>
1994 1993
---- ----
<S> <C> <C>
Operating activities:
Net income $53,965,329 $49,219,784
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 27,830,090 23,640,189
Postretirement benefits other than
pensions 5,245,035 4,967,014
Deferred taxes 4,585,000 4,369,000
Increase in accounts receivable (45,201,583) (20,950,033)
Increase in inventories and
prepaid expenses (11,238,274) (61,509,487)
Increase in accounts payable and
accrued liabilities 17,465,444 9,588,121
Decrease in other long-term
liabilities and other (2,029,969) (4,438,739)
---------- ----------
Net cash provided by operating
activities 50,621,072 4,885,849
Investing activities:
Additions to property, plant and
equipment (38,598,456) (65,718,030)
Other 76,570 3,109,150
---------- ----------
Net cash used in investing
activities (38,521,886) (62,608,880)
Financing activities:
Issuance of debt 13,000,000 24,000,000
Payments on debt (13,369,548) (4,391,883)
Issuance of common stock 401,945 390,899
Dividends paid (9,198,180) (7,518,928)
---------- ----------
Net cash provided by (used in)
financing activities (9,165,783) 12,480,088
---------- ----------
Increase (decrease) in cash and
short-term investments 2,933,403 (45,242,943)
Cash and short-term investments at
beginning of year 25,798,746 55,111,255
---------- ----------
Cash and short-term investments at
end of period $28,732,149 $ 9,868,312
========== ==========
Cash payments for interest $ 2,012,729 $ 2,320,672
========== ==========
Cash payments for income taxes $32,962,204 $33,240,875
========== ==========
<FN>
See accompanying notes.
</TABLE>
5
<PAGE>
COOPER TIRE & RUBBER COMPANY
NOTES TO FINANCIAL STATEMENTS
1. The financial statements at June 30, 1994 and for the three-month and
six-month periods ended June 30, 1994 and 1993 are unaudited and include
all adjustments, consisting only of normal recurring accruals, which the
Company considers necessary for a fair presentation of financial position
and operating results. The condensed unaudited financial statements have
been prepared in accordance with Article 10 of Regulation S-X and,
therefore, do not contain all information and footnotes normally contained
in annual financial statements; accordingly, they should be read in
conjunction with the Financial Statements and notes thereto appearing in
the Annual Report on Form 10-K of the Company for the year ended
December 31, 1993.
2. Certain amounts for 1993 have been restated to conform with 1994
presentations.
3. The results of operations for the six-month period ended June 30, 1994
are not necessarily indicative of those to be expected for the full year.
REVIEW BY INDEPENDENT AUDITORS
The condensed financial statements included in this filing on Form 10-Q have
been reviewed by the Company's independent auditors, Ernst & Young, and their
report thereon is attached hereto as Part I - Exhibit 1. All adjustments or
additional disclosures proposed by the Company's independent auditors have
been reflected in the data presented.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Net sales increased 12.6% for the second quarter of 1994 and 15.0% for the
first six months of 1994 as compared to the corresponding periods in 1993.
Sales of both tire and engineered products were higher than for the
three-month and six-month periods one year ago. Other income was slightly
higher in the second quarter and for the six months of 1994 compared to the
corresponding 1993 periods reflecting the sale of a minor product line offset
by lower levels of investments.
Cost of products sold for the second quarter of 1994, as a percent of net
sales, was unchanged from the second quarter of 1993. The relationship for
the six months of 1994, compared to the six months one year ago, was slightly
higher due to decreases in pricing from the levels of the first quarter of
1993.
Increases in selling, general and administrative expenses primarily reflect
inflation and expenditures for advertising. Interest and debt expense was
higher than for the corresponding 1993 periods reflecting lower amounts of
capitalized interest and lower debt levels.
Income before income taxes increased 16.5% for the quarter and 11.3% for the
six-month period from the corresponding periods in 1993. Higher sales were
primarily responsible for the changes in income for the quarter and the
year-to-date. The increases in the effective tax rate for the three-month and
six-month periods reflect the changes enacted in the Omnibus Budget
Reconciliation Act of 1993.
The financial position of the Company at June 30, 1994 is excellent. Working
capital of $250.9 million is up $46.0 million since year end and up $61.8
million from June 30, 1993. The current ratio at 2.8 compares favorably to
the current ratio of 2.6 at December 31, 1993 and 2.1 at June 30, 1993.
Accounts receivable are up $45.2 million from year-end and are up $25.2
million from the balance one year ago reflecting higher sales. Inventories
are up $10.2 million from year-end and are down $12.0 million from one year
ago primarily reflecting the changes in finished goods inventories.
7
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company's Annual Meeting of Stockholders was held on
May 3, 1994.
(b) All of the nominees for directors, as listed below under (c) and on
pages 2 and 3 of the Company's Proxy Statement dated March 22, 1994,
were elected. The following directors have terms of office which
continued after the meeting:
John Fahl Allan H. Meltzer
Dennis J. Gormley J. Alec Reinhardt
William D. Marohn Leon F. Winbigler
(c) A description of the only matter voted upon at that meeting, the
election of directors, is contained on pages 1 through 3 of the
Company's Proxy Statement dated March 22, 1994, which pages are
incorporated herein by reference.
The number of votes cast by common stock holders with respect to such
matter is as follows:
<TABLE>
<CAPTION>
Term Affirmative Withheld Broker
Expiration Votes Votes Abstentions Non-votes
---------- ----------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Delmont A. Davis 1997 70,755,575 438,492 0 0
Edsel D. Dunford 1996 70,695,859 498,208 0 0
Ivan W. Gorr 1997 70,771,188 422,879 0 0
Joseph M. Magliochetti 1997 70,651,240 542,827 0 0
Patrick W. Rooney 1997 70,769,063 425,004 0 0
</TABLE>
Item 6(a). Exhibits.
(15) Letter regarding unaudited interim financial information.
Item 6(b). Reports on Form 8-K.
No Form 8-K has been filed.
8
<PAGE>
INDEX TO EXHIBITS
DESCRIPTION
Part I. Exhibit 1.
Independent Accountants' Review Report
Part II. Item 6(a).
(15) Letter from Ernst & Young LLP, independent accountants, dated
August 4, 1994 regarding unaudited interim financial information.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COOPER TIRE & RUBBER COMPANY
/S/ J. Alec Reinhardt
---------------------
J. Alec Reinhardt
Executive Vice President
and Chief Financial Officer
(Principal Financial Officer)
/S/ J. A. Faisant
-----------------
J. A. Faisant
Vice President and
Corporate Controller
(Principal Accounting Officer)
August 4, 1994
--------------
(Date)
10
<PAGE>
Part I
Exhibit 1
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Board of Directors
Cooper Tire & Rubber Company
We have reviewed the accompanying balance sheet of Cooper Tire & Rubber
Company as of June 30, 1994, and the related statements of income for the
three-month and six-month periods ended June 30, 1994 and 1993 and statements
of cash flows for the six-month periods ended June 30, 1994 and 1993. These
financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which will
be performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of Cooper Tire & Rubber Company as of December
31, 1993, and the related statements of income, stockholders' equity, and cash
flows for the year then ended (not presented herein) and in our report dated
February 14, 1994, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
balance sheet as of December 31, 1993, is fairly stated, in all material
respects, in relation to the balance sheet from which it has been derived.
/S/ Ernst & Young
-----------------
ERNST & YOUNG
Toledo, Ohio
July 13, 1994
11
<PAGE>
Part II
Exhibit (15)
August 4, 1994
Securities and Exchange Commission
Washington, D.C. 20549
We are aware of the incorporation by reference in the Registration Statements
(Form S-3 No. 33-44159 and Form S-8 Nos. 2-58577, 2-77400,
33-5483, 33-35071, 33-47979, 33-47980, 33-47981, 33-47982, 33-52499 and
33-52505) of Cooper Tire & Rubber Company for the registration of its common
stock of our reports dated April 13, 1994 and July 13, 1994 relating to the
unaudited interim financial statements of Cooper Tire & Rubber Company which
are included in its Form 10-Q for the quarters ended March 31, 1994 and June
30, 1994.
Pursuant to Rule 436(c) of the Securities Act of 1933 our reports are not a
part of the registration statements prepared or certified by accountants
within the meaning of Section 7 or 11 of the Securities Act of 1933.
Very truly yours,
/S/ Ernst & Young LLP
---------------------
ERNST & YOUNG LLP
Toledo, Ohio
12
