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, 1999
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 30, 1999: 75,847,362
1
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<TABLE>
COOPER TIRE & RUBBER COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands except per-share amounts)
<CAPTION>
June 30,
1999 December 31,
(Unaudited) 1998
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 27,828 $ 41,966
Accounts receivable, less allowances
of $5,442 ($4,806 in 1998) 369,348 319,685
Inventories at lower of cost (last-in,
first-out) or market:
Finished goods 157,752 132,696
Work in process 17,428 20,368
Raw materials and supplies 30,829 33,322
--------- ---------
206,009 186,386
Prepaid expenses and deferred income taxes 23,580 21,436
--------- ---------
Total current assets 626,765 569,473
Property, plant and equipment - net 900,295 885,282
Intangibles and other assets 94,648 86,520
--------- ---------
$1,621,708 $1,541,275
LIABILITIES AND STOCKHOLDERS' EQUITY ========= =========
Current liabilities:
Notes payable $ 9,593 $ 8,129
Accounts payable 90,294 94,502
Accrued liabilities 118,291 87,274
Income taxes - 2,834
Current portion of debt 205 249
--------- ---------
Total current liabilities 218,383 192,988
Long-term debt 205,180 205,285
Postretirement benefits other than pensions 154,589 151,520
Other long-term liabilities 48,810 48,741
Deferred income taxes 76,773 74,805
Stockholders' equity:
Preferred stock, $1 par value; 5,000,000 shares
authorized; none issued - -
Common stock, $1 par value; 300,000,000 shares
authorized; 83,835,762 shares issued
(83,781,058 in 1998) 83,836 83,781
Capital in excess of par value 4,253 3,296
Retained earnings 999,395 945,975
Cumulative other comprehensive income (13,845) (9,867)
--------- ---------
1,073,639 1,023,185
Less: 7,989,600 common shares in
treasury at cost (155,249) (155,249)
Deferred compensation on
restricted stock (417) -
--------- ---------
Total stockholders' equity 917,973 867,936
--------- ---------
$1,621,708 $1,541,275
<FN> ========= =========
See accompanying notes.
</TABLE>
2
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<TABLE>
COOPER TIRE & RUBBER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
(Dollar amounts in thousands except per-share amounts)
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Revenues:
Net sales $495,352 $461,740
Other income 290 671
------- -------
495,642 462,411
Costs and expenses:
Cost of products sold 398,653 378,467
Selling, general and administrative 33,796 28,452
Interest 3,596 3,764
------- -------
436,045 410,683
------- -------
Income before income taxes 59,597 51,728
Provision for income taxes 21,641 19,392
------- -------
Net income 37,956 32,336
Other comprehensive loss:
Currency translation adjustment (1,426) (889)
------- -------
Comprehensive income $ 36,530 $ 31,447
======= =======
Basic and diluted earnings per share $.50 $.41
=== ===
Weighted average number of
shares outstanding (000's) 75,913 78,850
====== ======
Dividends per share $.105 $.095
==== ====
<FN>
See accompanying notes.
</TABLE>
3
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<TABLE>
COOPER TIRE & RUBBER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
(Dollar amounts in thousands except per-share amounts)
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Revenues:
Net sales $963,239 $899,298
Other income 1,149 1,249
------- -------
964,388 900,547
Costs and expenses:
Cost of products sold 781,780 741,937
Selling, general and administrative 65,888 56,964
Interest 7,499 7,613
------- -------
855,167 806,514
------- -------
Income before income taxes 109,221 94,033
Provision for income taxes 39,874 35,172
------- -------
Net income 69,347 58,861
Other comprehensive loss:
Currency translation adjustment (3,978) (673)
------- -------
Comprehensive income $ 65,369 $ 58,188
======= =======
Basic and diluted earnings per share $.91 $.75
=== ===
Weighted average number of
shares outstanding (000's) 75,895 78,849
====== ======
Dividends per share $.21 $.19
==== ====
<FN>
See accompanying notes.
</TABLE>
4
<PAGE>
<TABLE>
COOPER TIRE & RUBBER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
(Dollar amounts in thousands)
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Operating activities:
Net income $ 69,347 $ 58,861
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 52,427 49,466
Deferred income taxes 227 973
Changes in operating assets
and liabilities:
Accounts receivable (53,678) (26,301)
Inventories and prepaid expenses (23,295) (20,490)
Accounts payable and
accrued liabilities 28,005 (2,659)
Other liabilities (4,687) (2,528)
------- -------
Net cash provided by
operating activities 68,346 57,322
Investing activities:
Property, plant and equipment (70,539) (58,207)
Other - 27
------- -------
Net cash used in investing
activities (70,539) (58,180)
Financing activities:
Issuance of debt 30,849 2,783
Payment on debt (29,957) (2,327)
Payment of dividends (15,926) (14,965)
Issuance of common shares 593 189
------- -------
Net cash used in financing
activities (14,441) (14,320)
Effects of exchange rate changes on cash 2,496 (298)
------- -------
Changes in cash and cash equivalents (14,138) (15,476)
Cash and cash equivalents at
beginning of period 41,966 52,910
------- -------
Cash and cash equivalents at
end of period $ 27,828 $ 37,434
======= =======
Cash payments for interest $ 8,385 $ 8,540
======= =======
Cash payments for income taxes $ 42,116 $ 40,552
======= =======
<FN>
See accompanying notes.
</TABLE>
5
<PAGE>
COOPER TIRE & RUBBER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements at June 30, 1999 and for the
three-month and six-month periods ended June 30, 1999 and 1998 are
unaudited and include all adjustments, consisting only of normal recurring
accruals, which the Company considers necessary for a fair presentation of
financial position and operating results. The unaudited consolidated
financial statements have been prepared in accordance with Article 10 of
Regulation S-X and, therefore, do not contain all information and
footnotes normally contained in annual financial statements; accordingly,
they should be read in conjunction with the Financial Statements and notes
thereto appearing in the Annual Report on Form 10-K of the Company for the
year ended December 31, 1998.
2. The results of operations for the three-month and six-month periods ended
June 30, 1999 are not necessarily indicative of those to be expected for
the year ending December 31, 1999.
3. Information on the Company's operating segments is as follows:
Three months ended Six months ended
June 30 June 30
1999 1998 1999 1998
-------- -------- -------- --------
Revenues from external
customers:
Tires $368,410 $347,544 $720,472 $677,870
Engineered products 126,942 114,196 242,767 221,428
------- ------- ------- -------
Net sales $495,352 $461,740 $963,239 $899,298
======= ======= ======= =======
Segment profit:
Tires $ 42,568 $ 33,156 $ 75,827 $ 62,953
Engineered products 16,739 17,901 32,245 29,832
------- ------- ------- -------
59,307 51,057 108,072 92,785
Other 290 671 1,149 1,248
------- ------- ------- -------
Income before income
taxes $ 59,597 $ 51,728 $109,221 $ 94,033
======= ======= ======= =======
4. During the first quarter of 1999 the Company adopted Statement of
Financial Position 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use," requiring the capitalization of
certain costs previously expensed by the Company. The effect of adoption
was not material to the Company's consolidated financial position or
results of operations.
In June 1998 the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting
for Derivative Instruments and Hedging Activities" to become effective
for fiscal years beginning after June 15, 1999, with earlier adoption
permitted. The FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of
FASB Statement No. 133," which amended SFAS No. 133 to defer its effective
date to years beginning after June 15, 2000. The Company is currently
evaluating the effect of the provisions of this Statement on its
accounting and reporting policies, but does not anticipate adoption of
this Statement will have a material adverse effect on the Company's
consolidated financial position or results of operations. The Company
does not have derivative instruments at June 30, 1999.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Net sales and earnings achieved new records for the three-month and six-month
periods ended June 30, 1999. Net sales increased 7.3% for the quarter and
were 7.1% higher for the six months when compared to corresponding 1998
periods. Shipments were strong for both engineered products and tires during
the quarter with increases in net sales of 11.2% and 6%, respectively, from
1998. Net sales for the six months ended June 30, 1999 were 6.3% higher for
tire operations and 9.6% higher for engineered products operations. Other
income was lower as compared to the 1998 periods due to lower amounts of
interest income.
Cost of products sold, as a percent of net sales, decreased resulting in
margin improvements of 1.5% in the quarter and 1.3% in the six-month period as
compared with 1998. Decreases in raw material costs, improvements in product
mix and cost reduction initiatives are responsible for these improvements.
The 1998 quarter and six-month periods benefited from a $1.9 million recovery
of previously expensed costs related to a dispute with a former owner of an
engineered products plant site.
Selling, general and administrative expenses were higher for the quarter
compared to one year ago. As a percent of net sales, selling, general and
administrative expenses for the quarter were 6.8% compared to 6.2% in 1998.
For the six-month period, these costs were 6.8% of net sales in 1999 compared
to 6.3% in 1998. The Company's decision to expand its national advertising
program is primarily responsible for these increases.
Interest expense was lower in both the quarter and six-month periods when
compared to the 1998 periods. The effective income tax rate during the
quarter of 36.3% in 1999 is lower than the 37.5% in 1998 as a result of
foreign tax planning initiatives. These initiatives caused the six-month tax
rate to decrease to 36.5% in 1999 from 37.4% in 1998.
Segment profit for the quarter was $59.3 million in 1999, an increase of 16.2%
from $51.1 million reported in the second quarter of 1998. Tire operations
segment profit increased 28.4% from the 1998 quarter and engineered products
segment profit increased 4.6%, excluding the $1.9 million recovery in 1998 of
previously expensed costs. For the six-month period, segment profit was
$108.1 million in 1999 compared to $92.8 million in 1998. Tire operations
segment profit increased 20.5% and engineered products segment profit
increased 15.4%, excluding the recovery of expenses in 1998. Income before
income taxes for the quarter increased 15.2% from the quarter one year ago and
increased 16.2% for the six-month period. The 1999 quarter and six-month
period benefited from strong sales, reductions in raw material costs and more
favorable product mix. Price competition in the replacement tire market and
price concessions to automotive customers continue to impact the Company's
operations.
Working capital of $408 million is up from December 31, 1998 and June 30,
1998, primarily as a result of changes in accounts receivable and accrued
liabilities. The current ratio of 2.9 is down slightly from 3.0 at December
31, 1998 and 3.1 at June 30, 1998. Long-term debt, as a percent of total
capitalization, is 18.3% compared to 19% one year ago. The financial position
of the Company at June 30, 1999 continues to be excellent.
The cash flows generated by operating activities of $68 million during the
first six months of 1999 are higher than the $57 million for the six-month
period one year ago due primarily to the increase in income. Investments in
property, plant and equipment of $71 million compare to $58 million in last
year's period. Financing activities in 1999 reflect borrowing and repayment
of debt required by seasonal operating needs and, in 1999 and 1998, reflect
the payment of dividends. The Company expects that available cash and
existing lines of credit will be sufficient to meet normal operating
requirements over the near term.
(continued)
7
<PAGE>
On July 27, 1999 the Company announced that it signed a definitive merger
agreement to acquire The Standard Products Company ("Standard Products").
Standard Products' outstanding shares will be valued at $36.50 per share or
approximately $584.4 million. In addition, the Company will assume Standard
Products' outstanding debt which was approximately $173 million at June 30,
1999.
The merger agreement calls for holders of approximately 45% of Standard
Products' outstanding shares to receive stock and 55% to receive cash. If,
however, the mean of the high and low price for Cooper shares on the closing
date falls below $18, the entire purchase price will be paid in cash at $36.50
per Standard Products share.
The transaction has been approved by the board of directors of each company,
and is subject to the satisfaction of customary closing conditions, including
requirements of the Hart-Scott-Rodino Act and approval of Standard Products
shareholders.
The Company's existing lines of credit are not adequate for this transaction
and are currently being renegotiated. The Company's banks are working with
the Company to arrange increased limits for its credit and commercial paper
agreements. After the closing of the merger is completed, the Company
presently intends to replace a significant portion of the credit agreement and
commercial paper borrowings with proceeds from the issuance of long-term debt.
The Company may terminate the agreement prior to closing if it is not able to
obtain the financing required to consummate the merger. In the event the
Company fails to secure financing and terminates the agreement, it will be
required to remit a $23 million breakup fee to Standard Products. While the
Company believes it will be successful in arranging the additional financing
required to close this transaction and in the issuance of the long-term debt,
there can be no assurance that such financing will be obtained, or if
obtained, on terms favorable to the Company.
The Company has developed and initiated plans to address the possible
exposures related to the impact of the Year 2000 on its systems and computer
equipment, including those involved in its manufacturing operations. The
Company initiated its planning in 1995, commenced identification of exposures
in 1996, and began remediation of its systems in 1997. Other information
systems' projects were not significantly delayed as a result of the allocation
of resources to Year 2000 remediation.
The Year 2000 issue is the result of computer programs being written in the
past using two digits rather than four to define the applicable year.
Computer equipment and systems that have date-sensitive chips or codes may not
be able to correctly recognize a two-digit year in dates beyond December 31,
1999. There is potential for failure of systems and equipment around the
world due to this logic on January 1, 2000.
The Company's key financial information and operational systems have been
assessed and detailed plans have been implemented to address modifications
required by December 31, 1999. The Company is on schedule with these plans,
with virtually all of its originally non-compliant systems and equipment now
compliant. Contingency plans are in place to assure resources are available
to resolve any systems and equipment failures which may occur on January 1,
2000.
The financial impact of making the required changes is comprised primarily of
internal costs and estimated to be less than $3 million. Internal costs and
other non-capital costs incurred to upgrade and replace systems have been
expensed as incurred since 1997. Capital expenditures required for Year 2000
remediation in 1998 and 1997 were not significant and are not anticipated to
be significant in 1999. These expenditures include amounts for upgrades of
manufacturing control systems, more powerful personal computers able to handle
upgrades to application software, and information systems' technical
infrastructure for the transfer of data between computers.
(continued) 8
<PAGE>
The Company has communicated with its significant suppliers and customers to
ensure they have appropriate plans to resolve Year 2000 issues where failure
of their systems could adversely affect the Company's operations. Contingency
plans have been developed to address potential failures by these third
parties. Certain electronic communication systems of the Company's trading
partners have been tested and are compliant and the Company believes minimal
risk exists for their failure on January 1, 2000.
The "most likely worst case scenario" for Year 2000 issues is the failure of
the systems and equipment of other parties throughout the world which could
result in the unavailability of global communications, financial resources,
transportation, critical raw materials, energy and other vital commercial
systems. The Company's ability to maintain its operations on domestic and
international levels could be disrupted by these failures until corrected.
Certain member states of the European Union adopted a common currency on
January 1, 1999 known as the euro. The many requirements for adoption of the
new currency include the single-document invoicing of customers in both the
euro and their domestic currency during a three-year transition period. After
2001 businesses must conduct all transactions in the euro and convert their
financial records and reports to be euro-based. Certain of the Company's
information systems have been converted for compliance with the requirements
of this new currency at minimal cost. The Company does not anticipate
adoption of the euro will have a material impact on the results of its
operations, financial position or liquidity.
This report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 regarding expectations for
future financial performance, including with respect to the proposed merger,
which involve uncertainty and risk. It is possible the Company's future
financial performance and the results of the proposed merger may differ from
expectations due to a variety of factors including, but not limited to:
changes in economic and business conditions in the world, increased
competitive activity, achieving sales levels to fulfill revenue expectations,
consolidation among its competitors and customers, technology advancements,
unexpected costs and charges, fluctuations in raw material and energy prices,
changes in interest and foreign exchange rates, regulatory and other
approvals, the cyclical nature of the automotive industry, risks associated
with integrating the operations of The Standard Products Company and the
failure to achieve synergies or savings anticipated in the merger, failure to
satisfy the closing conditions of the pending merger and the failure to
complete the merger, and other unanticipated events and conditions.
It is not possible to foresee or identify all such factors. Any forward-
looking statements in this report are based on certain assumptions and
analysis made by the Company in light of its experience and perception of
historical trends, current conditions, expected future developments and other
factors it believes are appropriate in the circumstances. Prospective
investors are cautioned that any such statements are not a guarantee of future
performance and actual results or developments may differ materially from
those projected. The Company makes no commitment to update any forward-
looking statement included herein, or to disclose any facts, events or
circumstances that may affect the accuracy of any forward-looking statement.
9
<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 4, 1999.
(b) All of the nominees for directors, as listed below under (c) and on
pages 3 and 4 of the Company's Proxy Statement dated March 23, 1999,
were elected. The following directors have terms of office which
continued after the meeting.
Arthur H. Aronson Byron O. Pond
Thomas A. Dattilo Patrick W. Rooney
John F. Meier John H. Shuey
(c) A description of each matter voted upon at that meeting is contained on
pages 2 through 4 and pages 10 and 11 of the Company's Proxy Statement
dated March 23, 1999, which pages are incorporated herein by reference.
The number of votes cast by common stock holders with respect to each
matter is as follows:
Election of directors
Term Affirmative Withheld Broker
Expiration Votes Votes Abstentions Non-votes
---------- ----------- -------- ----------- ---------
Edsel D. Dunford 2002 65,825,803 1,306,446 - -
John Fahl 2002 65,801,844 1,330,405 - -
Deborah M. Fretz 2002 65,798,247 1,334,002 - -
Dennis J. Gormley 2002 65,818,562 1,313,687 - -
Stockholder proposal requesting declassification of the Board of
Directors and establishment of annual elections of directors
Affirmative Votes 30,280,917
Negative Votes 27,187,986
Abstentions 899,064
Broker Non-Votes -
The following stockholder proposals, discussed on pages 11 through 15
of the Company's Proxy Statement dated March 23, 1999, were submitted
for introduction at the Company's Annual Meeting but failed for lack of
a second in accordance with the Company's standard procedural
practices:
Stockholder proposal urging confidential voting at all meetings of
Stockholders. The votes that had been submitted on the proposal were
Affirmative Votes 28,529,383
Negative Votes 28,431,092
Abstentions 1,407,496
Broker Non-Votes -
Stockholder proposal urging that rights issued pursuant to the
Company's Rights Plan be redeemed. The votes that had been submitted
on the proposal were
Affirmative Votes 30,392,351
Negative Votes 27,047,654
Abstentions 927,966
Broker Non-Votes -
10
<PAGE>
Item 6(a). Exhibits.
(10) First Amended and Restated Employment Agreement dated as of
January 1, 1999 between Cooper Tire & Rubber Company and Patrick W.
Rooney
First Amended and Restated Employment Agreement dated as of
January 1, 1999 between Cooper Tire & Rubber Company and John Fahl
(27) Financial Data Schedule
Item 6(b). Reports on Form 8-K.
A Form 8-K was filed July 30, 1999 related to the Company's Agreement
and Plan of Merger with The Standard Products Company announced on
July 27, 1999
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/ P. G. Weaver
---------------------
P. G. Weaver
Vice President and
Chief Financial Officer
(Principal Financial Officer)
/S/ E. B. White
-----------------
E. B. White
Corporate Controller
(Principal Accounting Officer)
August 6, 1999
- ---------------
(Date)
11
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INDEX TO EXHIBITS
DESCRIPTION
Part II. Item 6(a).
(10)(i) First Amended and Restated Employment Agreement dated as of
January 1, 1999 between Cooper Tire & Rubber Company and Patrick W.
Rooney
(ii) First Amended and Restated Employment Agreement dated as of
January 1, 1999 between Cooper Tire & Rubber Company and John Fahl
(27) Financial Data Schedule
12
<PAGE>
Part II
Exhibit (10)(i)
FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of January
1, 1999, between COOPER TIRE & RUBBER COMPANY, a Delaware corporation with its
principal offices located at 701 Lima Avenue, Findlay, Ohio 45840 (the
"Company"), and Patrick W. Rooney, 3 Hunters Gate, Findlay, Ohio 45840
("Executive") amends and restates in its entirety that certain EMPLOYMENT
AGREEMENT dated January 1, 1991, between the Company and the Executive.
WITNESSETH:
----------
WHEREAS, the Executive has been employed by the Company in the capacity
of Chairman of the Board and Chief Executive Officer as of the date hereof;
WHEREAS, the Company desires to retain the services of the Executive in
the future; and
WHEREAS, the Executive desires to serve in the capacity of Chairman of
the Board and Chief Executive Officer of the Company, pursuant to the terms
and provisions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
1. Employment and Duties.
(a) General. The Company hereby employs Executive and Executive agrees
upon the terms and conditions herein set forth to serve as Chairman
of the Board and Chief Executive Officer and in such capacity, shall
perform such duties as may be delineated in the by-laws of the
Company, and such other duties, commensurate with Executive's title
and position of Chairman of the Board and Chief Executive Officer as
may be assigned to Executive from time to time by the Board of
Directors of the Company (the "Board"). Executive will serve as a
member of the Board and on committees of the Board.
(b) Exclusive Services. Throughout the Period (as defined in paragraph 2
below), Executive shall, except as may from time to time be otherwise
agreed in writing by the Company and during reasonable vacations and
unless prevented by ill health, devote his full-time and undivided
attention during normal business hours to the business and affairs of
the Company consistent with his senior executive position, shall in
all respects conform to and comply with the lawful and reasonable
directions and instructions given to him by the Board or such
officer of the Company as may be designated by the Board, and shall
use his best efforts to promote and serve the interests of the
Company.
(c) Restrictions on Other Employment. Throughout the Period and provided
that such activities do not contravene the provisions of subparagraph
l(b) hereof or paragraph 5 hereof:
(i) Executive may engage in charitable and community affairs;
(ii) Executive may perform inconsequential services without specific
compensation therefor in connection with the management of
personal investments; and,
(continued)
13
<PAGE>
(iii) Executive may, directly or indirectly, render services to any
other person or organization (including service as a member of
the Board of Directors of any other unaffiliated company), for
which he receives compensation, that is not in competition with
the Company, subject in each case to the approval of the Board.
Executive may retain all fees he receives for such services,
and the Company shall not reduce his compensation by the amount
of such fees. For purposes of this subparagraph l(c)(iii)
competition shall have the same meaning as intended for the
purposes of paragraph 5.
2. Term of Employment. Subject to the provisions of paragraph 4. hereof, the
Company shall retain Executive and Executive shall serve in the employ of
the Company for a period (the "Period") commencing on the date hereof
and continuing through October 15, 2000, unless earlier terminated by
Executive having given six (6) months prior written notice to the Company
of Executive's intent to terminate this Agreement.
3. Compensation and Other Benefits. Subject to the provisions of this
Agreement, the Company shall pay and provide the following compensation
and other benefits to Executive during the Period as compensation for
services rendered hereunder:
(a) Base Salary. The Company shall pay to Executive an annual base
salary, as defined in the Company's Top Management Compensation Plan
adopted by the Board on April 28, 1973 (the "Compensation Plan"), at
the rate of $439,453 per annum, payable biweekly. The Company shall
be entitled to deduct or withhold all taxes and charges which the
Company may be required to deduct or withhold therefrom. The base
salary will be reviewed not less than annually by the Board or by the
Audit and Compensation Committee of the Board and may be increased,
but not decreased.
(b) Employee Benefit Plans. At all times during the Period, Executive
shall be provided the opportunity to participate in such pension and
welfare plans, programs and arrangements (the "Plans") as are
generally made available to executives of the Company. Unless
otherwise required by law, the Plans, when considered as a whole, will
provide for benefits to Executive no less favorable than those
currently provided.
(c) Incentive Compensation. The Company shall pay to Executive annual
incentive compensation under the system established by the
Compensation Plan.
4. Termination of Employment.
(a) Termination for Cause; Resignation Without Good Reason.
(i) If, prior to the expiration of the Period, Executive's
employment is terminated by the Company for Cause, as defined
in subparagraph 4(a)(ii), or if Executive resigns from his
employment hereunder without Good Reason, as defined in
subparagraph 4(b)(vii) hereof, Executive shall not be eligible
to receive base salary under subparagraph 3(a) or to participate
in any Plans under subparagraph 3(b) with respect to future
periods after the date of such termination or resignation except
for the right to receive vested benefits under any Plan in
accordance with the terms of such Plan. However, Executive
shall be eligible to receive a pro rata portion of any
incentive compensation for the Company's fiscal year during
which the date of termination or resignation occurs, but not for
any later years.
(continued)
14
<PAGE>
(ii) Termination for "Cause" shall mean termination of Executive's
employment with the Company by the Board because of:
(A) any act or omission constituting a material breach by
Executive of any of his significant obligations or
agreements under this Agreement or the continued failure or
refusal of Executive to adequately perform the duties
reasonably required hereunder which is materially injurious
to the financial condition or business reputation of, or is
otherwise materially injurious to, the Company or any
affiliate thereof, after notification by the Board of such
breach, failure or refusal and failure of Executive to
correct such breach, failure or refusal within thirty (30)
days of such notification (other than by reason of the
incapacity of Executive due to physical or mental illness),
or
(B) the commission by and conviction of Executive of a felony,
or the perpetration by and criminal conviction of or civil
verdict finding Executive committed a dishonest act or
common law fraud against the Company or any affiliate
thereof (for the avoidance of doubt, conviction and civil
verdict, in each case, shall mean when no further appeals
may be taken by Executive from such conviction or civil
verdict and such conviction or civil verdict becomes final
and binding upon Executive with no further right of
appeal), or
(C) any other willful act or omission which is materially
injurious to the financial condition or business reputation
of, or is otherwise materially injurious to, the Company or
any affiliate thereof, and failure of Executive to correct
such act or omission after notification by the Board of any
such act or omission.
Any notification to be given by the Board in accordance with
clause (A) or (C) of the preceding sentence shall specifically
identify the breach, failure, refusal, act or omission to which
the notification relates and, in the case of clauses (A) and
(C), shall describe the injury to the Company, and such
notification must be given within twelve (12) months of the
Board becoming aware, or within twelve (12) months of when the
Board should have reasonably become aware of the breach,
failure, refusal, act, or omission identified in the
notification. Notwithstanding paragraph 8, failure to notify
Executive within any such twelve (12) month period shall be
deemed to be a waiver by the Board of any such breach, failure,
refusal, act or omission by Executive and any such breach,
failure, refusal, act or omission by Executive shall not then be
determined to be a breach of this Agreement.
For the avoidance of doubt and for the purpose of determining
Cause pursuant to this subparagraph 4(a)(ii), the exercise of
business judgment by Executive shall not be determined to be
Cause under this subparagraph 4(a)(ii), even if such business
judgment materially injures the financial condition or business
reputation of, or is otherwise materially injurious to the
Company or any affiliate thereof, unless such business judgment
by Executive was not made in good faith, or constitutes willful
or wanton misconduct, or was an intentional violation of state
or federal law.
(continued)
15
<PAGE>
(iii) The date of termination of employment by the Company under this
subparagraph 4(a) shall be the date specified in a written
notice of termination (which date shall be no earlier than the
date of furnishing such notice), or if no such date is specified
therein, the date of receipt by Executive of such written notice
of termination. The date of resignation under this subparagraph
4(a) shall be two weeks after receipt by the Company of written
notice of resignation.
(b) Termination Without Cause; Resignation for Good Reason.
(i) Subject to the provisions of subparagraph 4(b)(iii) and
subparagraph 4(b)(vi), if, prior to the expiration of the
Period, Executive's employment is terminated by the Company
without Cause or if Executive resigns from his employment
hereunder for Good Reason as defined in subparagraph 4(b)(vii)
hereof, Executive shall be entitled to receive as "Severance
Benefits" biweekly payments at the rate of his average
compensation for the remainder of the Period. As used in this
subparagraph, "average compensation" means Executive's average
annual compensation, including any incentive compensation,
during the five (5) years prior to the year in which such
termination or such resignation occurs.
(ii) If Severance Benefits become payable to Executive under
subparagraph 4(b)(i),the Company shall, in addition to paying
Severance Benefits, pay or provide to Executive the payments and
benefits described below:
(A) The Company shall pay to Executive all legal fees and
expenses incurred by him as a result of or in connection
with his termination or resignation (including all such fees
and expenses, if any, incurred in contesting or disputing
any termination or in seeking to obtain or enforce any right
or benefit provided by this Agreement).
(B) For the remainder of the Period after such termination or
such resignation, the Company shall arrange to provide
Executive with life, accident and health insurance benefits
substantially similar to those to which he was entitled
immediately prior to the termination or resignation.
Benefits otherwise receivable by Executive pursuant to
this subparagraph 4(b)(ii)(B) shall be reduced to the
extent comparable benefits are actually received by
Executive during the remainder of the Period following
his termination or resignation, and any such benefits
actually received by Executive shall be reported to the
Company.
(C) In addition to the pension benefits to which Executive is
entitled under the Company's Salaried Employees' Retirement
Plan and the Company's Nonqualified Supplementary Benefit
Plan or any successor plans thereto which provide comparable
benefits (the "Retirement Plans"), the Company shall pay
Executive in one sum in cash within thirty (30) days
following the date of termination or resignation, a lump sum
equal to the actuarial equivalent of the excess of (1) the
retirement pension (determined as a straight life annuity
commencing at age sixty-five (65)) which he would have
accrued under the terms of the Retirement Plans (without
regard to any amendment to such Retirement Plans or other
pension benefit program described in subparagraph
4(b)(vii)(C) hereof), determined as if Executive were fully
vested thereunder and had accumulated (after the date of
(continued)
16
<PAGE>
termination or resignation) twenty-four (24) additional
months (or, if greater, the number of months remaining in
the Period) of service credit thereunder at his highest
annual rate of compensation during the twelve (12) months
immediately preceding the date of termination or resignation
(but in no event shall Executive be deemed to have
accumulated additional months of service credit after his
sixty-fifth (65th) birthday), over (2) the retirement
pension (determined as a straight life annuity commencing
at age sixty-five (65)) which Executive had then accrued
pursuant to the provisions of the Retirement Plans. For
purposes of this subsection, "actuarial equivalent" shall be
determined using the same methods and assumptions utilized
under the Retirement Plans.
(D) Within thirty (30) days after termination of Executive's
employment described in subparagraph 4(b)(i) above, the
Company shall pay to Executive in cash an amount equal to
the aggregate of the difference between the exercise price
of each stock option granted to Executive prior to the date
of such termination, and the fair market value of the
Company's stock subject to the related option, determined as
of the date of such termination. Such cash payment shall be
deemed to be in lieu of and in substitution for any right
Executive may have to exercise such stock option or a
related stock appreciation right under the terms of the
relevant stock option plan describing such rights, and
Executive agrees to surrender all stock options and related
stock appreciation rights being cashed out hereunder prior
to receiving the cash payment described above.
(iii) If, following a termination of employment without Cause or
resignation for Good Reason, Executive breaches the provisions
of paragraph 5 hereof, Executive shall not be eligible, as of
the date of such breach, for the payment of Severance Benefits
as provided in subparagraph 4(b)(i) and all obligations and
agreements of the Company to pay such Severance Benefits
shall thereupon cease.
(iv) The date of termination of employment by the Company under this
subparagraph 4(b) shall be the date specified in a written
notice of termination to Executive (which date shall be no
earlier than the date of furnishing such notice) or, if no such
date is specified therein, the date on which such notice is
given to Executive. The date of resignation by Executive under
this subparagraph 4(b) shall be two (2) weeks after the receipt
by the Company of written notice of resignation.
(v) Severance Benefits shall be paid in equal installments
commencing within thirty (30) days following the date of the
termination or resignation under subparagraph 4(b).
(vi) In the event that the Severance Benefits would not be
deductible in whole or in part in the calculation of Federal
income tax owed by the Company or any of its affiliates or any
other person or entity making such payment or providing such
benefit by reason of Section 280G of the Internal Revenue Code
of 1986, as amended, (the "Code"), the Severance Benefits shall
be reduced until no portion of the Severance Benefits is not
deductible by reason of Section 280G of the Code; provided,
however, that the foregoing reduction shall be made only if and
to the extent that such reduction would result in an increase in
the aggregate payment and benefits to be provided to Executive,
determined on an after-tax basis (taking into account the excise
tax imposed pursuant to Section 4999 of the Code, or any
(continued)
17
<PAGE>
successor provision thereto, any tax imposed by any comparable
provision of state law, and any applicable federal, state and
local income or other taxes).
(vii) Executive shall be entitled to terminate his employment for
Good Reason. For purposes of this Agreement, "Good Reason"
shall mean, without Executive's express, prior written consent,
any of the following:
(A) a material breach by the Company of paragraph 1 or paragraph
3 of this Agreement, including but not limited to, the
assignment to Executive of any duties inconsistent with his
status as Chairman of the Board and Chief Executive Officer
of the Company, or his removal from such position, or a
substantial alteration in the nature or status of his
responsibilities from those described herein, except, in
each case, in connection with a promotion of Executive, and
the failure of the Company to remedy such breach within
thirty (30) days after receipt of written notice of such
breach from Executive;
(B) the relocation of the office of the Company where Executive
is employed to a location other than Findlay, Ohio, except
for required travel on the Company's business to an extent
reasonably required to perform his duties hereunder;
(C) except as required by law, the failure by the Company to
continue to provide Executive with benefits at least as
favorable as those provided to him under the Plans, the
taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits or
deprive Executive of any material fringe benefits enjoyed
by him or the failure by the Company to provide Executive
with the number of paid vacation days to which he is
entitled on the basis of years of service with the Company
in accordance with the Company's normal vacation policy in
effect at the date of this Agreement; or
(D) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform
this Agreement, as contemplated in paragraph 6 hereof or, if
the business of the Company for which Executive's services
are principally performed is sold, the purchaser of such
business shall fail to agree to assume this Agreement or to
provide Executive with the same or a comparable position,
duties, benefits, and base salary and incentive compensation
as provided in paragraph 3 of this Agreement.
(E) Voluntary termination by Executive for any reason, or
without reason, during a period of three hundred sixty-five
(365) days from the date a change of control of the Company
has occurred. "Change of control", as used herein, shall
mean when any person (as a person is defined in Section 13d-
3 of the Securities Exchange Act of 1934, as amended,)
through or as a result of a merger, consolidation or other
business combination, tender or exchange offer, open market
purchases, privately negotiated purchases, or otherwise, has
become the beneficial owner (within the meaning of Rule 13d-
3 under the Securities Exchange Act of 1934, as amended),
directly or indirectly without the express approval of the
Board, of at least 50% of the capital stock of the Company
entitled to vote for the election of directors of the
Company.
(continued)
18
<PAGE>
(c) Termination by Death. If Executive dies prior to the expiration of
the Period, his beneficiary or estate shall be entitled to receive (i)
for a period of 90 days beginning on the date of Executive's death a
biweekly amount equal to the biweekly amount paid to Executive by the
Company for the payroll, period immediately prior to his death, and
(ii) any pro rata portion of Executive's incentive compensation for
the fiscal year in which Executive's death occurs.
(d) Termination by Disability. If, prior to the expiration of the Period,
Executive becomes Disabled (as defined below), the Company or
Executive shall be entitled to terminate his employment, and Executive
shall be entitled to all available benefits under the Plans, including
any pro rata portion of Executive's incentive compensation for the
fiscal year in which Executive's disability occurs.
Executive shall be deemed "Disabled" for purposes of this Agreement
when, and only when, he has been totally disabled by bodily injury
or disease so as to prevent him from being physically able to perform
the job duties as required under this Agreement, and such total
disability shall have continued for five (5) consecutive months, and,
in the opinion of a qualified physician selected by the Company, such
disability will presumably be permanent and continuous during the
remainder of Executive's life.
(e) Termination by Retirement. If, prior to the expiration of the Period,
Executive voluntarily elects to retire under the Company's Salaried
Employees' Retirement Plan, Executive's employment will be terminated
as of the date of such retirement.
(f) Mitigation. Nothing in this Agreement shall be construed to require
Executive to mitigate his damages upon termination of employment
without Cause or resignation for Good Reason.
5. Secrecy and Noncompetition.
(a) No Competing Employment. For so long as Executive is employed by the
Company and continuing for two (2) years after the termination of
such employment for any reason other than pursuant to subparagraph
4(b)(i) or (vii) hereof (such period being referred to hereinafter as
the "Restricted Period"), Executive shall not, unless he receives the
prior written consent of the Board, directly or indirectly, whether
as owner, consultant, employee, partner, venturer, agent, through
stock ownership (except ownership of less than one percent (1.0%) of
the number of shares outstanding of any securities which are publicly
traded), investment of capital, lending of money or property,
rendering of services, or otherwise, compete with any of the
businesses engaged in by the Company or any subsidiary, affiliate or
predecessor of the Company ("Affiliate") at the time of the
termination of Executive's employment hereunder (such businesses are
herein after referred to as the "Business"), or assist, become
interested in or be connected with any Corporation, firm,
partnership, joint venture, sole proprietorship or other entity which
so competes with the Business. The restrictions imposed by this
subparagraph shall not apply to any geographic area in which neither
the Company nor any Affiliate is engaged in the Business.
(b) No Interference. During the Restricted Period, Executive shall not,
whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business
organization or entity (other than the Company), intentionally
solicit, endeavor to entice away from the Company or any
Affiliate or otherwise interfere with the relationship of the Company
or any Affiliate with, any person who is employed by or associated
with the Company or any Affiliate (including, but not limited to,
(continued)
19
<PAGE>
any independent sales representatives or organizations) or any person
or entity who is, or was within the then most recent 12-month
period, a customer or client of the Company or any Affiliate.
(c) Secrecy. Executive recognizes that the services to be performed by
him hereunder are special, unique and extraordinary in that, by
reason of his employment hereunder and his past employment with the
Company, he may acquire or has acquired confidential information
and trade secrets concerning the operation of the Company or any
Affiliate, the use or disclosure of which could cause the Company
substantial loss and damages which could not be readily calculated
and for which no remedy at law would be adequate. Accordingly,
Executive covenants and agrees with the Company that he will not at
any time, except in performance of Executive's obligations to the
Company hereunder or with the prior written consent of the Board,
directly or indirectly, disclose any secret or confidential
information that he may learn or has learned by reason of his
association with the Company or any Affiliate, or use any such
information to the detriment of the Company or any Affiliate. The
term "confidential information", includes, without limitation,
information not previously disclosed to the public or to the trade
by the Company's management with respect to the Company's or any
Affiliate's products, manufacturing processes, facilities and
methods, research and development, trade secrets, know-how and
other intellectual property, systems, procedures, manuals,
confidential reports, product price lists, customer lists, marketing
plans or strategies, financial information (including the revenues,
costs or profits associated with the Company's or any Affiliate's
products), business plans, prospects or opportunities. Executive
understands and agrees that the rights and obligations set forth in
this subparagraph 5(c) are perpetual and, in any case, shall extend
beyond the Restricted Period and Executive's employment hereunder.
(d) Exclusive Property. Executive confirms that all confidential
information is and shall remain the exclusive property of the
Company. All business records, papers and documents kept or made by
Executive relating to the business of the Company shall be and remain
the property of the Company. Upon the termination of his employment
with the Company or upon the request of the Company at anytime,
Executive shall promptly deliver to the Company, and shall not,
without the consent of the Board (which consent shall not be
unreasonably withheld), retain copies of, any written materials not
previously made available to the public, records and documents made
by Executive or coming into his possession concerning the business
or affairs of the Company excluding records relating exclusively to
the terms and conditions of his employment relationship with the
Company. Executive understands and agrees that the rights and
obligations set forth in this subparagraph 5(d) are perpetual and, in
any case, shall extend beyond the restricted Period and Executive's
employment hereunder.
(e) Stock Ownership. Other than as specified in subparagraph l(c) or
5(a) hereof, nothing in this Agreement shall prohibit Executive from
acquiring or holding any issue of stock or securities of any company
or other business entity.
(f) Injunctive Relief. Without intending to limit the remedies available
to the Company, executive acknowledges that a breach of any of the
covenants contained in this paragraph 5 may result in material
irreparable injury to the Company for which there is no adequate
remedy at law, that it will not be possible to measure damages for
such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary
(continued)
20
<PAGE>
restraining order and/or a preliminary or permanent injunction
restraining Executive from engaging in activities prohibited by this
paragraph 5 or such other relief as may be required to specifically
enforce any of the covenants in this paragraph 5.
(g) Extension of Restricted Period. In addition to the remedies the
Company may seek and obtain pursuant to subparagraph (f) of this
paragraph 5, the Restricted Period shall be extended by any and all
periods during which Executive shall be found by a court possessing
personal jurisdiction over him to have been in violation of the
covenants contained in this paragraph 5.
6. Successors; Assignability.
(a) By Executive. Neither this Agreement nor any right, duty, obligation
or interest hereunder shall be assignable or delegable by Executive
without the Company's prior written consent; provided, however, that
nothing in this paragraph shall preclude Executive from designating
any of his beneficiaries to receive any benefits payable hereunder
upon his death, or the executors, administrators, or other legal
representatives, from assigning any rights hereunder to the person or
persons entitled thereto.
(b) By the Company. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required
to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Executive to compensation from the
Company in the same amount and on the same terms as Executive would
be entitled to hereunder if Executive had terminated his employment
for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective
shall be deemed the Date of Termination or if earlier the date of
resignation specified in subparagraph 4(b)(iv). As used in this
Agreement, "Company", shall mean the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law,
or otherwise.
7. Severability. If the final determination of a court of competent
jurisdiction declares, after the expiration of the time within which
judicial review (if permitted) of such determination may be perfected,
that any term or provision hereof is invalid or unenforceable, (a) the
remaining terms and provisions hereof shall be unimpaired and (b) the
invalid or unenforceable term or provision shall be replaced by a term or
provision that is mutually agreeable to the parties hereto and is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision.
8. Amendment; Waiver. This Agreement may not be modified, amended or waived
in any manner except by an instrument in writing signed by both parties
hereto. The waiver by either party of compliance with any provision of
this Agreement by the other party shall not operate or be construed as a
waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement.
9. Governing Law. All matters affecting this Agreement, including the
validity thereof, are to be governed by, interpreted and construed in
accordance with the laws of the State of Ohio.
(continued)
21
<PAGE>
10. Notices. Any notice hereunder by either party to the other shall be given
in writing by personal delivery or certified mail, return receipt
requested. If addressed to Executive, the notice shall be delivered or
mailed to Executive at the address specified under Executive's
signature hereto or such other address as Executive shall give notice in
writing in accordance herewith. If addressed to the Company, the notice
shall be delivered or mailed to the Company at its executive offices to
the attention of the Board. A notice shall be deemed given, if by
personal delivery, on the date of such delivery or, if by certified mail,
on the date shown on the applicable return receipt.
11. Previous Agreements. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement; provided, however, that this Agreement shall not supersede or
in any way limit the rights, duties or obligations of the Employee or the
Company under the Plans.
12. Counterparts. This Agreement may be executed by either of the parties
hereto in counterpart, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same
instrument.
13. Headings. The headings of paragraphs herein are included solely for
convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
IN WITNESS WHEREOF, the Company has caused the Agreement to be signed by its
officers pursuant to the authority of its Board, and Executive has executed
this Agreement, as of the day and year first written above.
COOPER TIRE & RUBBER COMPANY
By /S/ John Fahl
------------------------
Title: Vice President
By /S/ Thomas A. Dattilo
------------------------
Title: President & Chief Operating Officer
Patrick W. Rooney
-----------------------
Executive
/S/ Patrick W. Rooney
-----------------------
Signature
3 Hunters Gate
-----------------------
Findlay, Ohio 45840
-----------------------
Address
22
<PAGE>
Part II
Exhibit (10)(ii)
FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of January
1, 1999, between COOPER TIRE & RUBBER COMPANY, a Delaware corporation with its
principal offices located at 701 Lima Avenue, Findlay, Ohio 45840 (the
"Company"), and John Fahl, 1811 Windsor Place, Findlay, Ohio 45840
("Executive") amends and restates in its entirety that certain EMPLOYMENT
AGREEMENT dated January 1, 1995, between the Company and the Executive.
WITNESSETH:
----------
WHEREAS, the Executive has been employed by the Company in the capacity
of Vice President and Tire Division President as of the date hereof;
WHEREAS, the Company desires to retain the services of the Executive in
the future; and
WHEREAS, the Executive desires to serve in the capacity of Vice President
and Tire Division President of the Company, pursuant to the terms and
provisions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
1. Employment and Duties.
(a) General. The Company hereby employs Executive and Executive agrees
upon the terms and conditions herein set forth to serve as Vice
President and Tire Division President and in such capacity, shall
perform such duties as may be delineated in the by-laws of the
Company, and such other duties, commensurate with Executive's title
and position of Vice President and Tire Division President, as may be
assigned to Executive from time to time by the Board of Directors of
the Company (the "Board") or such officer of the Company as may be
designated by the Board. If elected, Executive will serve as a
member of the Board or on committees of the Board.
(b) Exclusive Services. Throughout the Period (as defined in paragraph 2
below), Executive shall, except as may from time to time be otherwise
agreed in writing by the Company and during reasonable vacations and
unless prevented by ill health, devote his full-time and undivided
attention during normal business hours to the business and affairs of
the Company consistent with his senior executive position, shall in
all respects conform to and comply with the lawful and reasonable
directions and instructions given to him by the Board or such
officer of the Company as may be designated by the Board, and shall
use his best efforts to promote and serve the interests of the
Company.
(c) Restrictions on Other Employment. Throughout the Period and provided
that such activities do not contravene the provisions of subparagraph
l(b) hereof or paragraph 5 hereof:
(i) Executive may engage in charitable and community affairs;
(ii) Executive may perform inconsequential services without specific
compensation therefor in connection with the management of
personal investments; and,
(continued)
23
<PAGE>
(iii) Executive may, directly or indirectly, render services to any
other person or organization (including service as a member of
the Board of Directors of any other unaffiliated company), for
which he receives compensation, that is not in competition with
the Company, subject in each case to the approval of the Board.
Executive may retain all fees he receives for such services,
and the Company shall not reduce his compensation by the amount
of such fees. For purposes of this subparagraph l(c)(iii)
competition shall have the same meaning as intended for the
purposes of paragraph 5.
2. Term of Employment. Subject to the provisions of paragraph 4. hereof, the
Company shall retain Executive and Executive shall serve in the employ of
the Company for a period (the "Period") commencing on the date hereof
and continuing through June 12, 2001, unless earlier terminated by
Executive having given six (6) months prior written notice to the Company
of Executive's intent to terminate this Agreement.
3. Compensation and Other Benefits. Subject to the provisions of this
Agreement, the Company shall pay and provide the following compensation
and other benefits to Executive during the Period as compensation for
services rendered hereunder:
(a) Base Salary. The Company shall pay to Executive an annual base
salary, as defined in the Company's Top Management Compensation Plan
adopted by the Board on April 28, 1973 (the "Compensation Plan"), at
the rate of $223,766 per annum, payable biweekly. The Company shall
be entitled to deduct or withhold all taxes and charges which the
Company may be required to deduct or withhold therefrom. The base
salary will be reviewed not less than annually by the Board or by the
Audit and Compensation Committee of the Board and may be increased,
but not decreased.
(b) Employee Benefit Plans. At all times during the Period, Executive
shall be provided the opportunity to participate in such pension and
welfare plans, programs and arrangements (the "Plans") as are
generally made available to executives of the Company. Unless
otherwise required by law, the Plans, when considered as a whole, will
provide for benefits to Executive no less favorable than those
currently provided.
(c) Incentive Compensation. The Company shall pay to Executive annual
incentive compensation under the system established by the
Compensation Plan.
4. Termination of Employment.
(a) Termination for Cause; Resignation Without Good Reason.
(i) If, prior to the expiration of the Period, Executive's
employment is terminated by the Company for Cause, as defined
in subparagraph 4(a)(ii), or if Executive resigns from his
employment hereunder without Good Reason, as defined in
subparagraph 4(b)(vii) hereof, Executive shall not be eligible
to receive base salary under subparagraph 3(a) or to participate
in any Plans under subparagraph 3(b) with respect to future
periods after the date of such termination or resignation except
for the right to receive vested benefits under any Plan in
accordance with the terms of such Plan. However, Executive
shall be eligible to receive a pro rata portion of any
incentive compensation for the Company's fiscal year during
which the date of termination or resignation occurs, but not for
any later years.
(continued)
24
<PAGE>
(ii) Termination for "Cause" shall mean termination of Executive's
employment with the Company by the Board because of:
(A) any act or omission constituting a material breach by
Executive of any of his significant obligations or
agreements under this Agreement or the continued failure or
refusal of Executive to adequately perform the duties
reasonably required hereunder which is materially injurious
to the financial condition or business reputation of, or is
otherwise materially injurious to, the Company or any
affiliate thereof, after notification by the Board of such
breach, failure or refusal and failure of Executive to
correct such breach, failure or refusal within thirty (30)
days of such notification (other than by reason of the
incapacity of Executive due to physical or mental illness),
or
(B) the commission by and conviction of Executive of a felony,
or the perpetration by and criminal conviction of or civil
verdict finding Executive committed a dishonest act or
common law fraud against the Company or any affiliate
thereof (for the avoidance of doubt, conviction and civil
verdict, in each case, shall mean when no further appeals
may be taken by Executive from such conviction or civil
verdict and such conviction or civil verdict becomes final
and binding upon Executive with no further right of
appeal), or
(C) any other willful act or omission which is materially
injurious to the financial condition or business reputation
of, or is otherwise materially injurious to, the Company or
any affiliate thereof, and failure of Executive to correct
such act or omission after notification by the Board of any
such act or omission.
Any notification to be given by the Board in accordance with
clause (A) or (C) of the preceding sentence shall specifically
identify the breach, failure, refusal, act or omission to which
the notification relates and, in the case of clauses (A) and
(C), shall describe the injury to the Company, and such
notification must be given within twelve (12) months of the
Board becoming aware, or within twelve (12) months of when the
Board should have reasonably become aware of the breach,
failure, refusal, act, or omission identified in the
notification. Notwithstanding paragraph 8, failure to notify
Executive within any such twelve (12) month period shall be
deemed to be a waiver by the Board of any such breach, failure,
refusal, act or omission by Executive and any such breach,
failure, refusal, act or omission by Executive shall not then be
determined to be a breach of this Agreement.
For the avoidance of doubt and for the purpose of determining
Cause pursuant to this subparagraph 4(a)(ii), the exercise of
business judgment by Executive shall not be determined to be
Cause under this subparagraph 4(a)(ii), even if such business
judgment materially injures the financial condition or business
reputation of, or is otherwise materially injurious to the
Company or any affiliate thereof, unless such business judgment
by Executive was not made in good faith, or constitutes willful
or wanton misconduct, or was an intentional violation of state
or federal law.
(continued)
25
<PAGE>
(iii) The date of termination of employment by the Company under this
subparagraph 4(a) shall be the date specified in a written
notice of termination (which date shall be no earlier than the
date of furnishing such notice), or if no such date is specified
therein, the date of receipt by Executive of such written notice
of termination. The date of resignation under this subparagraph
4(a) shall be two weeks after receipt by the Company of written
notice of resignation.
(b) Termination Without Cause; Resignation for Good Reason.
(i) Subject to the provisions of subparagraph 4(b)(iii) and
subparagraph 4(b)(vi), if, prior to the expiration of the
Period, Executive's employment is terminated by the Company
without Cause or if Executive resigns from his employment
hereunder for Good Reason as defined in subparagraph 4(b)(vii)
hereof, Executive shall be entitled to receive as "Severance
Benefits" biweekly payments at the rate of his average
compensation for the remainder of the Period. As used in this
subparagraph, "average compensation" means Executive's average
annual compensation, including any incentive compensation,
during the five (5) years prior to the year in which such
termination or such resignation occurs.
(ii) If Severance Benefits become payable to Executive under
subparagraph 4(b)(i),the Company shall, in addition to paying
Severance Benefits, pay or provide to Executive the payments and
benefits described below:
(A) The Company shall pay to Executive all legal fees and
expenses incurred by him as a result of or in connection
with his termination or resignation (including all such fees
and expenses, if any, incurred in contesting or disputing
any termination or in seeking to obtain or enforce any right
or benefit provided by this Agreement).
(B) For the remainder of the Period after such termination or
such resignation, the Company shall arrange to provide
Executive with life, accident and health insurance benefits
substantially similar to those to which he was entitled
immediately prior to the termination or resignation.
Benefits otherwise receivable by Executive pursuant to
this subparagraph 4(b)(ii)(B) shall be reduced to the
extent comparable benefits are actually received by
Executive during the remainder of the Period following
his termination or resignation, and any such benefits
actually received by Executive shall be reported to the
Company.
(C) In addition to the pension benefits to which Executive is
entitled under the Company's Salaried Employees' Retirement
Plan and the Company's Nonqualified Supplementary Benefit
Plan or any successor plans thereto which provide comparable
benefits (the "Retirement Plans"), the Company shall pay
Executive in one sum in cash within thirty (30) days
following the date of termination or resignation, a lump sum
equal to the actuarial equivalent of the excess of (1) the
retirement pension (determined as a straight life annuity
commencing at age sixty-five (65)) which he would have
accrued under the terms of the Retirement Plans (without
regard to any amendment to such Retirement Plans or other
pension benefit program described in subparagraph
4(b)(vii)(C) hereof), determined as if Executive were fully
vested thereunder and had accumulated (after the date of
(continued)
26
<PAGE>
termination or resignation) twenty-four (24) additional
months (or, if greater, the number of months remaining in
the Period) of service credit thereunder at his highest
annual rate of compensation during the twelve (12) months
immediately preceding the date of termination or resignation
(but in no event shall Executive be deemed to have
accumulated additional months of service credit after his
sixty-fifth (65th) birthday), over (2) the retirement
pension (determined as a straight life annuity commencing
at age sixty-five (65)) which Executive had then accrued
pursuant to the provisions of the Retirement Plans. For
purposes of this subsection, "actuarial equivalent" shall be
determined using the same methods and assumptions utilized
under the Retirement Plans.
(D) Within thirty (30) days after termination of Executive's
employment described in subparagraph 4(b)(i) above, the
Company shall pay to Executive in cash an amount equal to
the aggregate of the difference between the exercise price
of each stock option granted to Executive prior to the date
of such termination, and the fair market value of the
Company's stock subject to the related option, determined as
of the date of such termination. Such cash payment shall be
deemed to be in lieu of and in substitution for any right
Executive may have to exercise such stock option or a
related stock appreciation right under the terms of the
relevant stock option plan describing such rights, and
Executive agrees to surrender all stock options and related
stock appreciation rights being cashed out hereunder prior
to receiving the cash payment described above.
(iii) If, following a termination of employment without Cause or
resignation for Good Reason, Executive breaches the provisions
of paragraph 5 hereof, Executive shall not be eligible, as of
the date of such breach, for the payment of Severance Benefits
as provided in subparagraph 4(b)(i) and all obligations and
agreements of the Company to pay such Severance Benefits
shall thereupon cease.
(vi) The date of termination of employment by the Company under this
subparagraph 4(b) shall be the date specified in written notice
of termination to Executive (which date shall be no earlier than
the date of furnishing such notice) or, if no such date is
specified therein, the date on which such notice is given to
Executive. The date of resignation by Executive under this
subparagraph 4(b) shall be two (2) weeks after the receipt
by the Company of written notice of resignation.
(v) Severance Benefits shall be paid in equal installments
commencing within thirty (30) days following the date of the
termination or resignation under subparagraph 4(b).
(vi) In the event that the Severance Benefits would not be
deductible in whole or in part in the calculation of Federal
income tax owed by the Company or any of its affiliates or any
other person or entity making such payment or providing such
benefit by reason of Section 280G of the Internal Revenue Code
of 1986, as amended, (the "Code"), the Severance Benefits shall
be reduced until no portion of the Severance Benefits is not
deductible by reason of Section 280G of the Code; provided,
however, that the foregoing reduction shall be made only if and
to the extent that such reduction would result in an increase in
the aggregate payment and benefits to be provided to Executive,
(continued)
27
<PAGE>
determined on an after-tax basis (taking into account the excise
tax imposed pursuant to Section 4999 of the Code, or any
successor provision thereto, any tax imposed by any comparable
provision of state law, and any applicable federal, state and
local income or other taxes).
(vii) Executive shall be entitled to terminate his employment for
Good Reason. For purposes of this Agreement, "Good Reason"
shall mean, without Executive's express, prior written consent,
any of the following:
(A) a material breach by the Company of paragraph 1 or paragraph
3 of this Agreement, including but not limited to, the
assignment to Executive of any duties inconsistent with his
status as Vice President and Tire Division President of the
Company, or his removal from such position, or a substantial
alteration in the nature or status of his responsibilities
from those described herein, except, in each case, in
connection with a promotion of Executive, and the failure of
the Company to remedy such breach within thirty (30) days
after receipt of written notice of such breach from
Executive;
(B) the relocation of the office of the Company where Executive
is employed to a location other than Findlay, Ohio, except
for required travel on the Company's business to an extent
reasonably required to perform his duties hereunder;
(C) except as required by law, the failure by the Company to
continue to provide Executive with benefits at least as
favorable as those provided to him under the Plans, the
taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits or
deprive Executive of any material fringe benefits enjoyed
by him or the failure by the Company to provide Executive
with the number of paid vacation days to which he is
entitled on the basis of years of service with the Company
in accordance with the Company's normal vacation policy in
effect at the date of this Agreement; or
(D) the failure of the Company to obtain a satisfactory
agreement from any successor to assume and agree to perform
this Agreement, as contemplated in paragraph 6 hereof or, if
the business of the Company for which Executive's services
are principally performed is sold, the purchaser of such
business shall fail to agree to assume this Agreement or to
provide Executive with the same or a comparable position,
duties, benefits, and base salary and incentive compensation
as provided in paragraph 3 of this Agreement.
(E) Voluntary termination by Executive for any reason, or
without reason, during a period of three hundred sixty-five
(365) days from the date a change of control of the Company
has occurred. "Change of control", as used herein, shall
mean when any person (as a person is defined in Section 13d-
3 of the Securities Exchange Act of 1934, as amended,)
through or as a result of a merger, consolidation or other
business combination, tender or exchange offer, open market
purchases, privately negotiated purchases, or otherwise, has
become the beneficial owner (within the meaning of Rule 13d-
3 under the Securities Exchange Act of 1934, as amended),
directly or indirectly without the express approval of the
Board, of at least 50% of the capital stock of the Company
entitled to vote for the election of directors of the
Company.
(continued)
28
<PAGE>
(c) Termination by Death. If Executive dies prior to the expiration of
the Period, his beneficiary or estate shall be entitled to receive (i)
for a period of 90 days beginning on the date of Executive's death a
biweekly amount equal to the biweekly amount paid to Executive by the
Company for the payroll, period immediately prior to his death, and
(ii) any pro rata portion of Executive's incentive compensation for
the fiscal year in which Executive's death occurs.
(d) Termination by Disability. If, prior to the expiration of the Period,
Executive becomes Disabled (as defined below), the Company or
Executive shall be entitled to terminate his employment, and Executive
shall be entitled to all available benefits under the Plans, including
any pro rata portion of Executive's incentive compensation for the
fiscal year in which Executive's disability occurs.
Executive shall be deemed "Disabled" for purposes of this Agreement
when, and only when, he has been totally disabled by bodily injury
or disease so as to prevent him from being physically able to perform
the job duties as required under this Agreement, and such total
disability shall have continued for five (5) consecutive months, and,
in the opinion of a qualified physician selected by the Company, such
disability will presumably be permanent and continuous during the
remainder of Executive's life.
(e) Termination by Retirement. If, prior to the expiration of the Period,
Executive voluntarily elects to retire under the Company's Salaried
Employees' Retirement Plan, Executive's employment will be terminated
as of the date of such retirement.
(f) Mitigation. Nothing in this Agreement shall be construed to require
Executive to mitigate his damages upon termination of employment
without Cause or resignation for Good Reason.
5. Secrecy and Noncompetition.
(a) No Competing Employment. For so long as Executive is employed by the
Company and continuing for two (2) years after the termination of
such employment for any reason other than pursuant to subparagraph
4(b)(i) or (vii) hereof (such period being referred to hereinafter as
the "Restricted Period"), Executive shall not, unless he receives the
prior written consent of the Board, directly or indirectly, whether
as owner, consultant, employee, partner, venturer, agent, through
stock ownership (except ownership of less than one percent (1.0%) of
the number of shares outstanding of any securities which are publicly
traded), investment of capital, lending of money or property,
rendering of services, or otherwise, compete with any of the
businesses engaged in by the Company or any subsidiary, affiliate or
predecessor of the Company ("Affiliate") at the time of the
termination of Executive's employment hereunder (such businesses are
herein after referred to as the "Business"), or assist, become
interested in or be connected with any Corporation, firm,
partnership, joint venture, sole proprietorship or other entity which
so competes with the Business. The restrictions imposed by this
subparagraph shall not apply to any geographic area in which neither
the Company nor any Affiliate is engaged in the Business.
(b) No Interference. During the Restricted Period, Executive shall not,
whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business
organization or entity (other than the Company), intentionally
solicit, endeavor to entice away from the Company or any
Affiliate or otherwise interfere with the relationship of the Company
or any Affiliate with, any person who is employed by or associated
(continued)
29
<PAGE>
with the Company or any Affiliate (including, but not limited to,
any independent sales representatives or organizations) or any person
or entity who is, or was within the then most recent 12-month
period, a customer or client of the Company or any Affiliate.
(c) Secrecy. Executive recognizes that the services to be performed by
him hereunder are special, unique and extraordinary in that, by
reason of his employment hereunder and his past employment with the
Company, he may acquire or has acquired confidential information
and trade secrets concerning the operation of the Company or any
Affiliate, the use or disclosure of which could cause the Company
substantial loss and damages which could not be readily calculated
and for which no remedy at law would be adequate. Accordingly,
Executive covenants and agrees with the Company that he will not at
any time, except in performance of Executive's obligations to the
Company hereunder or with the prior written consent of the Board,
directly or indirectly, disclose any secret or confidential
information that he may learn or has learned by reason of his
association with the Company or any Affiliate, or use any such
information to the detriment of the Company or any Affiliate. The
term "confidential information", includes, without limitation,
information not previously disclosed to the public or to the trade
by the Company's management with respect to the Company's or any
Affiliate's products, manufacturing processes, facilities and
methods, research and development, trade secrets, know-how and
other intellectual property, systems, procedures, manuals,
confidential reports, product price lists, customer lists, marketing
plans or strategies, financial information (including the revenues,
costs or profits associated with the Company's or any Affiliate's
products), business plans, prospects or opportunities. Executive
understands and agrees that the rights and obligations set forth in
this subparagraph 5(c) are perpetual and, in any case, shall extend
beyond the Restricted Period and Executive's employment hereunder.
(d) Exclusive Property. Executive confirms that all confidential
information is and shall remain the exclusive property of the
Company. All business records, papers and documents kept or made by
Executive relating to the business of the Company shall be and remain
the property of the Company. Upon the termination of his employment
with the Company or upon the request of the Company at anytime,
Executive shall promptly deliver to the Company, and shall not,
without the consent of the Board (which consent shall not be
unreasonably withheld), retain copies of, any written materials not
previously made available to the public, records and documents made
by Executive or coming into his possession concerning the business
or affairs of the Company excluding records relating exclusively to
the terms and conditions of his employment relationship with the
Company. Executive understands and agrees that the rights and
obligations set forth in this subparagraph 5(d) are perpetual and, in
any case, shall extend beyond the restricted Period and Executive's
employment hereunder.
(e) Stock Ownership. Other than as specified in subparagraph l(c) or
5(a) hereof, nothing in this Agreement shall prohibit Executive from
acquiring or holding any issue of stock or securities of any company
or other business entity.
(f) Injunctive Relief. Without intending to limit the remedies available
to the Company, executive acknowledges that a breach of any of the
covenants contained in this paragraph 5 may result in material
irreparable injury to the Company for which there is no adequate
remedy at law, that it will not be possible to measure damages for
such injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a temporary
(continued)
30
<PAGE>
restraining order and/or a preliminary or permanent injunction
restraining Executive from engaging in activities prohibited by this
paragraph 5 or such other relief as may be required to specifically
enforce any of the covenants in this paragraph 5.
(g) Extension of Restricted Period. In addition to the remedies the
Company may seek and obtain pursuant to subparagraph (f) of this
paragraph 5, the Restricted Period shall be extended by any and all
periods during which Executive shall be found by a court possessing
personal jurisdiction over him to have been in violation of the
covenants contained in this paragraph 5.
6. Successors; Assignability.
(a) By Executive. Neither this Agreement nor any right, duty, obligation
or interest hereunder shall be assignable or delegable by Executive
without the Company's prior written consent; provided, however, that
nothing in this paragraph shall preclude Executive from designating
any of his beneficiaries to receive any benefits payable hereunder
upon his death, or the executors, administrators, or other legal
representatives, from assigning any rights hereunder to the person or
persons entitled thereto.
(b) By the Company. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required
to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Executive to compensation from the
Company in the same amount and on the same terms as Executive would
be entitled to hereunder if Executive had terminated his employment
for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective
shall be deemed the Date of Termination or if earlier the date of
resignation specified in subparagraph 4(b)(iv). As used in this
Agreement, "Company", shall mean the Company as hereinbefore defined
and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law,
or otherwise.
7. Severability. If the final determination of a court of competent
jurisdiction declares, after the expiration of the time within which
judicial review (if permitted) of such determination may be perfected,
that any term or provision hereof is invalid or unenforceable, (a) the
remaining terms and provisions hereof shall be unimpaired and (b) the
invalid or unenforceable term or provision shall be replaced by a term or
provision that is mutually agreeable to the parties hereto and is valid
and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision.
8. Amendment; Waiver. This Agreement may not be modified, amended or waived
in any manner except by an instrument in writing signed by both parties
hereto. The waiver by either party of compliance with any provision of
this Agreement by the other party shall not operate or be construed as a
waiver of any other provision of this Agreement, or of any subsequent
breach by such party of a provision of this Agreement.
9. Governing Law. All matters affecting this Agreement, including the
validity thereof, are to be governed by, interpreted and construed in
accordance with the laws of the State of Ohio.
(continued)
31
<PAGE>
10. Notices. Any notice hereunder by either party to the other shall be given
in writing by personal delivery or certified mail, return receipt
requested. If addressed to Executive, the notice shall be delivered or
mailed to Executive at the address specified under Executive's
signature hereto or such other address as Executive shall give notice in
writing in accordance herewith. If addressed to the Company, the notice
shall be delivered or mailed to the Company at its executive offices to
the attention of the Board. A notice shall be deemed given, if by
personal delivery, on the date of such delivery or, if by certified mail,
on the date shown on the applicable return receipt.
11. Previous Agreements. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not expressly set forth in this
Agreement; provided, however, that this Agreement shall not supersede or
in any way limit the rights, duties or obligations of the Employee or the
Company under the Plans.
12. Counterparts. This Agreement may be executed by either of the parties
hereto in counterpart, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same
instrument.
13. Headings. The headings of paragraphs herein are included solely for
convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.
IN WITNESS WHEREOF, the Company has caused the Agreement to be signed by its
officers pursuant to the authority of its Board, and Executive has executed
this Agreement, as of the day and year first written above.
COOPER TIRE & RUBBER COMPANY
By /S/ Patrick W. Rooney
------------------------
Title: Chairman of the Board &
Chief Executive Officer
By /S/ Thomas A. Dattilo
------------------------
Title: President & Chief Operating Officer
John Fahl
-------------------
Executive
/S/ John Fahl
-------------------
Signature
1811 Windsor Place
-------------------
Findlay, Ohio 45840
-------------------
Address
32
<PAGE>
<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, 1999 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 13,725
<SECURITIES> 14,103
<RECEIVABLES> 374,790
<ALLOWANCES> 5,442
<INVENTORY> 206,009
<CURRENT-ASSETS> 626,765
<PP&E> 1,575,629
<DEPRECIATION> 675,334
<TOTAL-ASSETS> 1,621,708
<CURRENT-LIABILITIES> 218,383
<BONDS> 205,180
0
0
<COMMON> 75,846
<OTHER-SE> 842,127
<TOTAL-LIABILITY-AND-EQUITY> 1,621,708
<SALES> 963,239
<TOTAL-REVENUES> 964,388
<CGS> 781,780
<TOTAL-COSTS> 781,780
<OTHER-EXPENSES> 65,354
<LOSS-PROVISION> 534
<INTEREST-EXPENSE> 7,499
<INCOME-PRETAX> 109,221
<INCOME-TAX> 39,874
<INCOME-CONTINUING> 69,347
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 69,347
<EPS-BASIC> .91
<EPS-DILUTED> .91
</TABLE>
