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, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
Commission File No. 1-4329
COOPER TIRE & RUBBER COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 34-4297750
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Lima and Western Avenues, Findlay, Ohio 45840
(Address of principal executive offices)
(Zip code)
(419) 423-1321
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days.
Yes (X) No ( )
Number of shares of common stock of registrant outstanding
at July 31, 1995: 83,647,672
1
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<TABLE>
COOPER TIRE & RUBBER COMPANY
BALANCE SHEETS
(Dollar amounts in thousands; per-share amounts in dollars)
<CAPTION>
June 30, December 31,
1995 1994
(Unaudited) (Audited)
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash, including short-term investments of
$48,200 ($83,000 in 1994) $ 52,367 $ 103,285
Accounts receivable, less allowances
of $4,001 ($3,600 in 1994) 266,955 221,237
Inventories at lower of cost (last-in,
first-out) or market:
Finished goods 89,906 69,098
Work in process 11,086 10,341
Raw materials and supplies 35,145 37,084
---------- ----------
136,137 116,523
Prepaid expenses and deferred taxes 14,322 13,666
---------- ----------
Total current assets 469,781 454,711
Property, plant and equipment - net 586,328 549,601
Other assets 34,761 35,419
---------- ----------
$ 1,090,870 $ 1,039,731
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 90,391 $ 83,864
Accrued liabilities 59,134 56,583
Income taxes 979 6,049
Current portion of debt 5,014 5,112
---------- ----------
Total current liabilities 155,518 151,608
Long-term debt 33,370 33,614
Postretirement benefits other than pensions 129,911 127,347
Other long-term liabilities 35,027 35,348
Deferred income taxes 32,985 29,737
Stockholders' equity:
Preferred stock, $1 par value; 5,000,000 shares
authorized; none issued - -
Common stock, $1 par value; 300,000,000 shares
authorized; 83,645,872 shares outstanding
(83,634,072 in 1994) 83,646 83,634
Capital in excess of par value 1,786 1,656
Retained earnings 618,627 576,787
---------- ----------
Total stockholders' equity 704,059 662,077
---------- ----------
$ 1,090,870 $ 1,039,731
========== ==========
<FN>
See accompanying notes.
</TABLE>
2
<PAGE>
<TABLE>
COOPER TIRE & RUBBER COMPANY
STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
(Dollar amounts in thousands; per-share amounts in dollars)
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Revenues:
Net sales $371,366 $329,339
Other income 1,164 416
------- -------
372,530 329,755
Costs and expenses:
Cost of products sold 313,790 267,648
Selling, general and administrative 18,745 16,692
Interest and debt expense 304 716
------- -------
332,839 285,056
Income before income taxes 39,691 44,699
Provision for income taxes 15,030 17,240
------- -------
Net income $ 24,661 $ 27,459
======= =======
Net income per share $.29 $.33
=== ===
Weighted average number of
shares outstanding (000's) 83,643 83,625
====== ======
Dividends per share $.06 $.055
=== ====
<FN>
See accompanying notes.
</TABLE>
3
<PAGE>
<TABLE>
COOPER TIRE & RUBBER COMPANY
STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
(Dollar amounts in thousands; per-share amounts in dollars)
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Revenues:
Net sales $736,719 $658,471
Other income 2,677 631
------- -------
739,396 659,102
Costs and expenses:
Cost of products sold 617,721 535,292
Selling, general and administrative 36,983 34,937
Interest and debt expense 874 1,438
------- -------
655,578 571,667
Income before income taxes 83,818 87,435
Provision for income taxes 31,940 33,470
------- -------
Net income $ 51,878 $ 53,965
======= =======
Net income per share $.62 $.65
=== ===
Weighted average number of
shares outstanding (000's) 83,641 83,617
====== ======
Dividends per share $.12 $.11
=== ===
<FN>
See accompanying notes.
</TABLE>
4
<PAGE>
<TABLE>
COOPER TIRE & RUBBER COMPANY
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 AND 1994
(UNAUDITED)
(Dollar amounts in thousands; per-share amounts in dollars)
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Operating activities:
Net income $ 51,878 $53,965
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 31,957 27,830
Postretirement benefits other than
pensions 2,889 5,245
Deferred taxes 2,879 4,585
Increase in accounts receivable (45,718) (45,202)
Increase in inventories and
prepaid expenses (20,270) (11,238)
Increase in accounts payable and
accrued liabilities 9,078 17,466
Decrease in other long-term
liabilities and other (4,884) (2,030)
------ ------
Net cash provided by operating
activities 27,809 50,621
Investing activities:
Additions to property, plant and
equipment (69,505) (38,599)
Other 1,015 77
------ ------
Net cash used in investing
activities (68,490) (38,522)
Financing activities:
Issuance of debt - 13,000
Payments on debt (341) (13,370)
Issuance of common stock 142 402
Dividends paid (10,038) (9,198)
------ ------
Net cash used in financing
activities (10,237) (9,166)
------ ------
Increase (decrease) in cash and
short-term investments (50,918) 2,933
Cash and short-term investments at
beginning of year 103,285 25,799
------- ------
Cash and short-term investments at
end of period $ 52,367 $28,732
======= ======
Cash payments for interest $ 1,745 $ 2,013
======= ======
Cash payments for income taxes $ 34,131 $32,962
======= ======
<FN>
See accompanying notes.
</TABLE>
5
<PAGE>
COOPER TIRE & RUBBER COMPANY
NOTES TO FINANCIAL STATEMENTS
1. The financial statements at June 30, 1995 and for the three-month and
six-month periods ended June 30, 1995 and 1994 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, 1994.
2. The results of operations for the six-month period ended June 30, 1995
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 LLP, 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 12.8% for the second quarter of 1995 and 11.9% for the
first six months of 1995 as compared to the corresponding periods in 1994.
Sales of both tire and engineered products were higher than for the
three-month and six-month periods one year ago. Other income was higher in
the second quarter and for the six months of 1995 compared to the
corresponding 1994 periods due to increased investments of cash reserves.
Cost of products sold, as a percent of net sales, was higher in the second
quarter and six-month periods of 1995 compared to the corresponding periods in
1994. This deterioration resulted from continued increases in the cost of raw
materials which were partially offset by favorable operating levels and some
tire price increases.
Selling, general and administrative expenses were $2 million higher for the
three-month and six-month periods compared to one year ago. As a percent of
net sales, selling, general and administrative expenses were unchanged for the
quarter and lower than for the six-month period of 1994. Interest and debt
expense was lower than for the corresponding 1994 periods reflecting lower
debt levels and higher amounts of capitalized interest.
Income before income taxes decreased 11.2% for the quarter and 4.1% for the
six-month period from the corresponding periods in 1994. The impact of
increases in sales, favorable operating levels and price increases were offset
by higher raw material costs. The lower effective income tax rates for the
quarter and six-months of 1995 reflect a reduction in the estimated state
income tax rate retroactive to January 1, 1995.
The financial position of the Company at June 30, 1995 is excellent. Working
capital of $314.3 million is up $11.2 million since year end and up $63.4
million from June 30, 1994. The current ratio at 3.0 is unchanged from
December 31, 1994 and compares favorably to the current ratio of 2.8 at June
30, 1994.
Accounts receivable are up $45.7 million from year-end 1994 reflecting higher
sales. Inventories are up $19.6 million from year-end primarily reflecting
increases 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 2, 1995.
(b) All of the nominees for directors, as listed below under (c) and on
page 2 of the Company's Proxy Statement dated March 21, 1995, were
elected. The following directors have terms of office which continued
after the meeting:
Delmont A. Davis Ivan W. Gorr
Edsel D. Dunford Joseph M. Magliochetti
John Fahl Patrick W. Rooney
Dennis J. Gormley Leon F. Winbigler
(c) A description of the only matter voted upon at that meeting, the
election of directors, is contained on pages 1 and 2 of the
Company's Proxy Statement dated March 21, 1995, which pages are
incorporated herein by reference.
The number of votes cast by common stock holders with respect to such
matter is as follows:
Term Affirmative Withheld Broker
Expiration Votes Votes Abstentions Non-votes
---------- ----------- -------- ----------- ---------
Allan H. Meltzer 1998 69,398,110 893,829 0 0
J. Alec Reinhardt 1998 69,428,025 863,914 0 0
Item 6(a). Exhibits
(15) Letter regarding unaudited interim financial information
(27) Financial Data Shedule
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 10, 1995 regarding unaudited interim financial information.
(27) Financial Data Schedule
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 10, 1995
---------------
(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, 1995, and the related statements of income for the
three-month and six-month periods ended June 30, 1995 and 1994 and the
statements of cash flows for the six-month periods ended June 30, 1995 and
1994. 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, 1994, 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, 1995, 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, 1994, is fairly stated, in all material
respects, in relation to the balance sheet from which it has been derived.
/S/ Ernst & Young LLP
---------------------
ERNST & YOUNG LLP
Toledo, Ohio
July 17, 1995
11
<PAGE>
Part II
Exhibit (15)
August 10, 1995
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 12, 1995 and July 17, 1995 relating to the unaudited interim financial
statements of Cooper Tire & Rubber Company which are included in its Forms
10-Q for the quarters ended March 31, 1995 and June 30, 1995.
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
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S BALANCE SHEET AND STATEMENT OF INCOME FOR THE SIX MONTHS ENDED
JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 4,167
<SECURITIES> 48,200
<RECEIVABLES> 270,956
<ALLOWANCES> 4,001
<INVENTORY> 136,137
<CURRENT-ASSETS> 469,781
<PP&E> 948,738
<DEPRECIATION> 362,410
<TOTAL-ASSETS> 1,090,870
<CURRENT-LIABILITIES> 155,518
<BONDS> 33,370
<COMMON> 83,646
0
0
<OTHER-SE> 620,413
<TOTAL-LIABILITY-AND-EQUITY> 1,090,870
<SALES> 736,719
<TOTAL-REVENUES> 739,396
<CGS> 617,721
<TOTAL-COSTS> 617,721
<OTHER-EXPENSES> 36,583
<LOSS-PROVISION> 400
<INTEREST-EXPENSE> 874
<INCOME-PRETAX> 83,818
<INCOME-TAX> 31,940
<INCOME-CONTINUING> 51,878
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 51,878
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
</TABLE>
