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 September 30, 2000
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 October 31, 2000: 72,537,869
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>
September 30,
December 31, 2000
1999 (Unaudited)
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 71,127 $ 26,400
Accounts receivable, less allowances
of $9,319 in 1999 and $12,882 in 2000 545,155 686,952
Inventories at lower of cost (last-in,
first-out) or market:
Finished goods 168,290 195,919
Work in process 25,185 28,270
Raw materials and supplies 80,488 66,190
--------- ---------
273,963 290,379
Prepaid expenses, deferred income taxes,
and other 55,183 90,840
--------- ---------
Total current assets 945,428 1,094,571
Property, plant and equipment - net 1,227,069 1,313,235
Goodwill, net of accumulated amortization
of $2,550 in 1999 and $14,492 in 2000 433,312 409,834
Intangibles and other assets 151,836 253,418
--------- ---------
$2,757,645 $3,071,058
LIABILITIES AND STOCKHOLDERS' EQUITY ========= =========
Current liabilities:
Notes payable $ 13,148 $ 179,064
Accounts payable 175,686 192,596
Accrued liabilities 188,038 241,647
Income taxes 5,100 10,238
Current portion of debt 13,893 13,498
--------- ---------
Total current liabilities 395,865 637,043
Long-term debt 1,046,463 1,045,762
Postretirement benefits other than pensions 181,267 185,522
Other long-term liabilities 61,409 56,473
Deferred income taxes 97,007 182,753
Stockholders' equity:
Preferred stock, $1 par value; 5,000,000 shares
authorized; none issued - -
Common stock, $1 par value; 300,000,000 shares
authorized; (83,799,352 in 1999)
83,842,269 shares issued 83,799 83,842
Capital in excess of par value 3,538 3,933
Retained earnings 1,049,599 1,116,669
Cumulative other comprehensive income (6,053) (43,918)
--------- ---------
1,130,883 1,160,526
Less: (7,989,600 in 1999) 11,304,400 common
shares in treasury at cost (155,249) (197,021)
--------- ---------
Total stockholders' equity 975,634 963,505
--------- ---------
$2,757,645 $3,071,058
<FN> ========= =========
See accompanying notes.
</TABLE>
<PAGE> 2
<TABLE>
COOPER TIRE & RUBBER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
(UNAUDITED)
(Dollar amounts in thousands except per-share amounts)
<CAPTION>
1999 2000
-------- --------
<S> <C> <C>
Net sales $531,883 $843,607
Cost of products sold 440,346 726,215
------- -------
Gross profit 91,537 117,392
Amortization of goodwill - 4,171
Selling, general and administrative 34,156 53,169
------- -------
Operating profit 57,381 60,052
Interest expense 3,710 23,589
Other - net (198) (1,915)
------- -------
Income before income taxes 53,869 38,378
Provision for income taxes 19,269 14,958
------- -------
Net income 34,600 23,420
Other comprehensive income:
Currency translation adjustment 2,793 (17,763)
------- -------
Comprehensive income $ 37,393 $ 5,657
======= =======
Basic and diluted earnings per share $.46 $.32
=== ===
Weighted average number of
shares outstanding (000's) 75,895 72,599
====== ======
Dividends per share $.105 $.105
==== ====
<FN>
See accompanying notes.
</TABLE>
3
<PAGE>
<TABLE>
COOPER TIRE & RUBBER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
(UNAUDITED)
(Dollar amounts in thousands except per-share amounts)
<CAPTION>
1999 2000
---------- ----------
<S> <C> <C>
Net sales $1,495,122 $2,652,524
Cost of products sold 1,220,855 2,255,172
--------- ---------
Gross profit 274,267 397,352
Amortization of goodwill - 12,854
Selling, general and administrative 100,044 169,055
--------- ---------
Operating profit 174,223 215,443
Interest expense 11,209 72,887
Other - net (76) (5,636)
--------- ---------
Income before income taxes 163,090 148,192
Provision for income taxes 59,143 57,795
--------- ---------
Net income 103,947 90,397
Other comprehensive income:
Currency translation adjustment (1,185) (37,865)
--------- ---------
Comprehensive income $ 102,762 $ 52,532
========= =========
Basic and diluted earnings per share $1.37 $1.22
==== ====
Weighted average number of
shares outstanding (000's) 75,895 74,002
====== ======
Dividends per share $.315 $.315
===== =====
<FN>
See accompanying notes.
</TABLE>
4
<PAGE>
<TABLE>
COOPER TIRE & RUBBER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
(UNAUDITED)
(Dollar amounts in thousands)
<CAPTION>
1999 2000
-------- --------
<S> <C> <C>
Operating activities:
Net income $103,947 $ 90,397
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 79,570 127,508
Amortization of goodwill and
other intangibles 1,272 14,890
Deferred income taxes (1,450) 3,185
Changes in operating assets
and liabilities:
Accounts receivable (94,008) (118,186)
Inventories and prepaid expenses 16,097 (33,856)
Accounts payable and
accrued liabilities 20,605 20,700
Other liabilities (4,574) 15,687
------- -------
Net cash provided by
operating activities 121,459 120,325
Investing activities:
Property, plant and equipment (103,918) (158,385)
Acquisition of business - (222,756)
Proceeds from the sale of businesses 26 111,329
------- -------
Net cash used in investing
activities (103,892) (269,812)
Financing activities:
Issuance of debt 32,720 317,105
Payment on debt (29,957) (149,225)
Purchase of treasury shares - (41,772)
Payment of dividends (23,890) (23,327)
Issuance of common shares 697 438
------- -------
Net cash provided by (used in)
financing activities (20,430) 103,219
Effects of exchange rate changes on cash 1,199 1,541
------- -------
Changes in cash and cash equivalents (1,664) (44,727)
Cash and cash equivalents at
beginning of period 41,966 71,127
------- -------
Cash and cash equivalents at
end of period $ 40,302 $ 26,400
======= =======
Cash payments for interest $ 16,167 $ 60,670
======= =======
Cash payments for income taxes $ 59,492 $ 73,515
======= =======
<FN>
See accompanying notes.
</TABLE>
5
<PAGE>
COOPER TIRE & RUBBER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements at September 30, 2000 and for the
three-month and nine-month periods ended September 30, 1999 and 2000 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, 1999.
2. The results of operations for the three-month and nine-month periods ended
September 30, 2000 are not necessarily indicative of those to be expected
for the year ending December 31, 2000.
3. Information on the Company's operating segments is as follows:
Three months ended Nine months ended
September 30 September 30
1999 2000 1999 2000
---------- ---------- ---------- ----------
Net sales:
Tire $ 424,310 $ 482,039 $1,144,782 $1,337,803
Automotive 107,573 368,231 350,340 1,337,835
Eliminations - (6,663) - (23,114)
------- ------- --------- ---------
Net sales $ 531,883 $ 843,607 $1,495,122 $2,652,524
======= ======= ========= =========
Segment profit:
Tire $ 47,961 $ 51,469 $ 131,281 $ 138,682
Automotive 9,420 8,583 42,942 76,761
------- ------- --------- ---------
57,381 60,052 174,223 215,443
Interest expense 3,710 23,589 11,209 72,887
Other - net (198) (1,915) (76) (5,636)
------- ------- --------- ---------
Income before income
taxes $ 53,869 $ 38,378 $ 163,090 $ 148,192
======= ======= ========= =========
4. In June 1998 the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities."
The FASB has since issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of
FASB Statement No. 133." This pronouncement 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 effect on the Company's consolidated
financial position or results of operations.
In September 1999, the Emerging Issues Task Force reached a consensus on
Issue 99-5, "Accounting for Pre-Production Costs Related to Long-Term
Supply Arrangements." This issue addresses the accounting treatment for
pre-production costs incurred by original equipment manufacturers (OEM)
suppliers to perform certain services related to the design and
development of the parts they will supply the OEM as well as the design
and development costs to build molds, dies and other tools that will be
used in producing the parts. This consensus had no material effect on the
Company's consolidated financial position or results of operations.
<continued>
<PAGE> 6
In December 1999 the SEC released Staff Accounting Bulletin (SAB) No. 101,
"Revenue Recognition in Financial Statements." The bulletin provides the
staff's views in applying generally accepted accounting principles to
selected revenue recognition issues. The SEC has since issued SAB No.
101A and SAB No. 101B which delay the implementation date of SAB No. 101.
Implementation is currently delayed until no later than the fourth quarter
of fiscal years beginning after December 15, 1999. The Company is
currently evaluating the effect this bulletin may have on its financial
position or results of operations.
5. On April 28, 2000, the Company sold the Winnsboro, South Carolina
automotive plastic trim production facility. On June 30, 2000 the Company
completed the sale of its Holm Industries, Inc. ("Holm") subsidiary. Holm
was the largest business unit of the Plastics Division within the
Automotive segment. The proceeds from the sales of these businesses
totaled approximately $110 million and were primarily used to reduce
commercial paper borrowings.
The Company is continuing its efforts to sell the remaining extruded
plastic trim operations of the Plastics Division. Net assets of $15.0
million related to these operations have been reclassified to Prepaid
expenses, deferred income taxes and other on the September 30, 2000
consolidated balance sheet. Results of the remaining operations are
immaterial to the consolidated financial position and results of
operations.
6. The Company completed its acquisition of Siebe Automotive ("Siebe"), the
automotive fluid handling division of Invensys plc, on January 28, 2000
for consideration of $244.5 million plus transaction costs, less a $28
million post-closing purchase price adjustment. The Company financed the
acquisition by issuing commercial paper.
Siebe manufactures automotive fluid handling systems, components, modules
and sub-systems for sale to the world's automotive original equipment
manufacturers and large Tier 1 suppliers. The purchase included the
operating assets of Siebe Automotive, with 16 operating locations
extending across North and South America, Europe and Australia.
The Company's consolidated financial results and financial position
subsequent to the date of the acquisition reflect Siebe operations. The
purchase price has been preliminarily allocated to assets and liabilities
acquired. The acquisition does not meet the SEC thresholds for a
significant acquisition and therefore no pro forma financial information
is presented.
7. As reported in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999, the Company has an accrual recorded for employee
separation and other exit costs relating to a plan for the reorganization
and closing of certain manufacturing facilities in Europe. As of
September 30, 2000, the plan is substantially complete. The plan
estimated a workforce reduction of approximately 460 people, of whom 39
still remain at September 30, 2000.
In May 2000, the Company announced the closure of its automotive sealing
plant in Kittaning, PA. An accrual of $3.2 million for employee
separation and related exit costs was recorded. The closure of this
facility was under consideration at the time of the purchase of The
Standard Products Company. Therefore, the charge resulted in an increase
to the goodwill recorded in conjunction with the purchase. The closure
will remove 160 people from the workforce. As of September 30, 2000, 155
people had been removed from the workforce and the closure was
substantially complete.
<continued>
7
<PAGE>
The following summarizes the restructuring charges and activity in the
accrual accounts since December 31, 1999:
Employee Other
Separation Exit Operating
Costs Costs Costs Total
------------- ------- --------- --------
Accrual at 12/31/99 $ 14,100 $ 2,800 $ - $ 16,900
Purchase accounting provision 1,900 1,300 - 3,200
Third quarter charge 800 200 - 1,000
Expensed as incurred 1,400 - 7,500 8,900
Cash payments (14,600) (1,200) (7,500) (23,300)
------- ------ ------ -------
Accrual at 9/30/00 $ 3,600 $ 3,100 $ - $ 6,700
======= ====== ====== =======
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Consolidated net sales for the three-month and nine-month periods ended
September 30, 2000 reached new records. Net sales increased 59 percent for
the quarter and were 77 percent higher for the nine months when compared to
corresponding 1999 periods. The acquisitions of The Standard Products Company
("Standard") and Siebe Automotive ("Siebe") added $294 million in sales for
the quarter and $1.1 billion for the nine months.
Selling, general and administrative expenses were 6.3 percent of net sales for
the quarter, compared to 6.4 percent one year ago. For the nine-month period,
these costs were 6.4 percent in 2000 compared to 6.7 percent in 1999.
Interest expense was $24 million in the third quarter of 2000, compared to $4
million in the same period of 1999. For the nine-month period, interest was
$73 million, $62 million higher than the $11 million in 1999. This reflects
the higher debt levels incurred to finance the acquisitions of Standard and
Siebe.
Other income at $1.9 million for the quarter improved from $198,000 in 1999,
and for the nine-month period at $5.6 million improved from $76,000 in 1999,
due primarily to income from unconsolidated subsidiaries.
The effective income tax rate of 39.0 percent in both the third quarter and
nine months of 2000 is higher than the rates in 1999. The increases in the
rates reflect the impact of nondeductible goodwill attributable to the
acquisitions of Standard and Siebe.
Net income was $23 million for the third quarter of 2000, 32 percent lower
than the $35 million generated for the same period in 1999. For the first
nine months net income was $90 million, a 13 percent decrease from the
corresponding 1999 period.
On October 19, 2000 the Company announced a comprehensive restructuring plan
to improve efficiencies and reduce costs throughout its worldwide operations.
A portion of the restructuring plan relates to the integration of Oliver
Rubber Company ("Oliver"), which was acquired as part of the Company's
acquisition of Standard, into the Tire segment and the closure of certain of
Oliver's production facilities. The full integration of Oliver into the Tire
segment, which involves the closing of Oliver's corporate headquarters in
Athens, Georgia, and the elimination of functions that are duplicative of
those already performed by the Tire segment, are expected to result in cost
savings which will positively impact the performance of the entire segment.
The major portion of the restructuring plan relates to the Automotive segment.
The acquisitions of Standard and Siebe, together with the Company's existing
automotive business, have left the Company with too many production facilities
<continued>
8
<PAGE>
and duplication of administrative functions. The restructuring plan will
reduce the segment's overhead as a percentage of sales through the closure of
several small, inefficient plants and the creation of administrative
structures that are designed to eliminate duplication. The restructuring
involves the Sealing and Fluid Systems businesses of the segment and includes
operations in North America, South America and Europe. In Europe, the
facilities to be affected and the specific actions to be taken will be
determined in consultation with local works councils and employee
representatives, where appropriate. The restructuring will commence
immediately with completion targeted by the end of 2001. When completed the
cost structure of the Automotive segment will be significantly improved.
The overall restructuring plan will affect up to 18 of the Company's
facilities around the world, and result in the reduction of approximately
1,100 employees. A restructuring charge of approximately $35 million to $40
million will be taken, primarily in the fourth quarter of 2000. Related non-
recurring expenses of $15 million to $18 million will be charged to operations
as incurred. When the restructuring is complete, it is expected to result in
annual cost savings of approximately $30 million, and will generate pretax
proceeds of approximately $25 million from the sale of related facilities and
assets.
During the two-week period ended November 10, 2000, the Company was served
with seven class action lawsuits filed against it in seven separate state
courts, alleging that the Company violated state consumer protection statutes.
The lawsuits, all of which are substantially similar, allege that the Company
violated state law by incorporating into its process of manufacturing steel-
belted radial tires a procedure that plaintiffs allege rendered the tires
unsafe, and by not disclosing such procedure to purchasers of the tires. The
plaintiffs in these cases are seeking damages which include statutory,
compensatory, and punitive damages, as well as attorneys' fees and costs, on
behalf of all persons who purchased steel-belted radial tires manufactured by
the Company from 1985 to the present, and still retain those tires. In one
case, a recall of all such tires and other injunctive relief is sought. The
Company is presently evaluating its defenses to these claims, and is unable at
this time to make a meaningful assessment of the impact, if any, of this
litigation on the Company. The Company believes that substantial defenses to
the allegations contained in the lawsuits exist, and it intends to vigorously
contest the claims made in these lawsuits.
Business Segments
Tire Segment
Sales
Sales for the Tire segment, at $482 million for the third quarter, increased
$58 million, or 14 percent, from 1999. Sales for the nine-month period of 2000
were $1.3 billion, up $193 million or 17 percent over the prior year period.
Sales of Oliver were $40 million for the third quarter and $123 million for
the first nine months of 2000.
Tire unit sales for the third quarter were unchanged from the same period in
1999. The third quarter period began with the continuation of the industry
conditions first experienced in the second quarter of this year. Soft demand
at the retail level and generally high levels of inventory in the replacement
tire industry were resulting in intense competition. During the quarter,
however, strong demand for certain of the Company's premium passenger tires
and the recall of certain Firestone tires announced in August contributed to
increases in sales. These increases were offset by the continued effects of
high levels of low-priced tire imports and a decreased focus at one of the
segment's largest customers on the marketing of the private brand tires
manufactured by the Company.
(continued)
9
<PAGE>
For the nine-month period, unit sales were up more than 3 percent from the
1999 period. Strong demand for the Company's proprietary and certain private
brand products during the nine months of this year was partially offset by the
adverse impacts of low-priced tire imports and a customer's shift away from
the marketing of private brand tires manufactured by the Company.
During the third quarter, Oliver's largest customer announced its intention to
terminate its agreement with the Company. The loss of sales from this
customer will have an adverse impact on Oliver's operating profit in 2001.
Oliver is aggressively seeking to replace this business and intends to
mitigate the impact of its loss through the obtaining of new business and the
restructuring of its operations.
Operating Profit
Operating profit increased 7 percent from $48 million in the third quarter of
1999 to $51 million in 2000. For the nine-month period operating profit at
$139 million was up 6 percent from one year ago. Operating margin was 10.7
percent for the third quarter of 2000, a decrease from 11.3 percent in 1999.
For the nine months of 2000, operating margin was 10.4 percent, a decline from
11.5 percent in the same period of 1999.
Higher raw material costs, due primarily to increases in the price of
petroleum, were the principal reason for the decline in margin during the
quarter and nine-month periods. Improvements in product mix partially offset
this impact. Operating profit for the quarter and nine-month periods
benefited from the settlement of a real estate tax dispute, allowing the
reversal of a $3.3 million reserve accrued in prior years, but was partially
offset by charges of $1.5 million for restructuring and integration
initiatives within Oliver.
In October the Company announced price increases for its North American tire
products effective at the end of December 2000. The tire industry continues
to experience intense competitive pricing in the replacement tire market,
generally resulting from overcapacity, high inventory levels and imports of
low-priced tires. However, inventory levels in the domestic replacement tire
industry were reduced in recent months due, in part, to the increased demand
created by the recall of Firestone's products. The Company, therefore, is
cautiously optimistic that it will realize the price increases necessary to
offset escalating raw material costs.
Automotive Segment
Sales
Sales for the Automotive segment more than tripled, from $108 million in the
third quarter of 1999 to $368 million in 2000. For the nine-month period,
sales increased from $350 million in 1999 to $1.3 billion in 2000. Third
quarter and nine-month sales from the automotive businesses of Standard and
Siebe totaled $261 million and $976 million, respectively. While North
American light vehicle production decreased slightly during the third quarter,
it increased 3.7 percent in the first nine months of 2000 compared to the
corresponding period in 1999. These trends in light vehicle production were
the primary reasons for lower than expected sales in the third quarter and for
strong sales during the nine month period.
Operating Profit
Operating profit decreased nearly 9 percent from the $9.4 million in the third
quarter of 1999 to $8.6 million for the same period in 2000. For the nine-
month period, operating profit increased from $43 million in 1999 to $77
million in 2000, a 79 percent increase. Operating margin was 2.3 percent in
the third quarter, decreasing from 8.8 percent in the prior year quarter and
8.5 percent in the second quarter. For the year to date, operating margin
declined from 12.3 percent in 1999 to 5.7 percent in 2000.
(continued)
10
<PAGE>
Reduced third quarter production levels, resulting from scheduled vacation
shutdowns at automotive manufacturers' facilities in North America and Europe
and decreases in automobile production in North America, contributed to lower
operating profit. Historically, the vacation shutdown period has made the
July through September period the weakest for the Company's automotive
businesses. Results were also adversely impacted by poor performance at two
of the Company's operations in Mexico where costs associated with new product
launches and the expansion of operations resulted in a loss for the quarter.
Operating losses were also incurred in the Company's European sealing business
during the quarter. The adverse impacts of vacation shutdowns, depressed
demand for light vehicles at the retail level in the United Kingdom (due in
significant part to economic disruptions), price concessions demanded by
automotive customers in the United Kingdom, and ongoing costs related to
closure of a French manufacturing facility resulted in unacceptable financial
results. In consultation with local works councils and employee
representatives, where appropriate, the Company intends to restructure its
operations in Europe in order to create a substantially leaner organization.
The Company believes this initiative will greatly improve the efficiencies of
its operations and, as a result, its profitability.
Operating profit in the first quarter of 2000 was adversely affected by
production difficulties experienced at Standard's automotive plastic trim
facility in Winnsboro, SC. That facility was sold on April 28, 2000.
Operating profit was also adversely affected in the first nine months of 2000
by ongoing costs associated with the Company's efforts to close one of its
manufacturing facilities in France. The Company substantially completed the
closure of this facility at the end of March.
Liquidity and Capital Resources
Working capital at $458 million is down from December 31, 1999 and up from
September 30, 1999. The current ratio of 1.7 is down from 2.4 at December 31,
1999 and 3.0 at September 30, 1999. Debt, as a percent of total
capitalization, is 56.2 percent compared to 18.6 percent one year ago. These
changes reflect the increases in both short-term and long-term debt levels
related to the acquisitions of Standard and Siebe.
Net cash provided by operating activities of $121 million during the first
nine months of 2000 is unchanged from the nine-month period one year ago. Net
income, adjusted for non-cash charges, increased $53 million, while changes in
operating assets and liabilities used $53 million more cash than in 2000.
Net cash used in investing activities during the first nine months reflects
the acquisition of Siebe for $223 million. In May 2000, the Company received
$28 million as a post-closing purchase price adjustment. Pretax proceeds from
the sale of the Holm and Winnsboro businesses provided approximately $110
million. Capital expenditures for the nine months were $158.4 million
compared to $103.9 million for the same period in 1999.
Financing activities for the nine-month period provided cash of $103 million.
Commercial paper of $317 million was issued during the first nine months of
2000 to fund the acquisition of Siebe and seasonal working capital
requirements. Cash from the sale of the businesses and the Siebe purchase
price adjustment was used to pay down commercial paper during the second
quarter. During the nine months ended September 30, 2000, the Company
purchased 3,314,800 of its common shares at a cost of $41.8 million. These
repurchases were made under a program approved in May 1997 and under an
additional program to repurchase up to 10,000,000 common shares which was
authorized by the Company's Board of Directors in May 2000. The Company paid
dividends of $23.3 million during the first nine months.
The Company expects that, given current business projections, adequate
liquidity will be provided by cash flows from operations and its credit
facilities to fund debt service obligations, capital expenditures, dividends
on its common shares and working capital requirements.
(continued)
11
<PAGE>
Forward-Looking Statements
This report contains "forward-looking statements," as that term is defined
under the Private Securities Litigation Reform Act of 1995, regarding
expectations for future financial performance, which involve uncertainty and
risk. It is possible that the Company's future financial performance 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, the failure to achieve expected sales levels,
consolidation among the Company's competitors and customers, technology
advancements, unexpected costs and charges, fluctuations in raw material and
energy prices and in particular changes in the price of crude oil, changes in
interest and foreign exchange rates, regulatory and other approvals, the
cyclical nature of the automotive industry, loss of a major customer or
program, risks associated with integrating the operations of Standard and
Siebe, and the failure to achieve synergies or savings anticipated in both
acquisitions, risks associated with the restructuring plan and the failure to
achieve the savings anticipated from the restructuring, litigation brought
against the Company, including the litigation described under "Legal
Proceedings" herein, 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
analyses 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.
Further information covering issues that could materially affect financial
performance is contained in the Company's periodic filings with the U. S.
Securities and Exchange Commission.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
During the two-week period ended November 10, 2000, the Company was
served with seven class action lawsuits in which it was named the
defendant brought in seven separate state courts. The cases were brought
in the state courts of New Jersey, Arizona, Oklahoma, North Dakota, North
Carolina, Texas and Ohio.
All of the cases, which are brought on behalf of all persons in those
states (except that the case brought in New Jersey purports to cover
persons in all states) who purchased steel-belted radial tires
manufactured by the Company from 1985 to the present, and still retain
those tires, allege that the Company violated the states' consumer
protection statutes, by incorporating into its process of manufacturing
steel-belted radial tires a procedure that plaintiffs allege rendered the
tires unsafe, and by not disclosing such procedure to purchasers. The
plaintiffs are seeking, generally, monetary damages in an amount
necessary to obtain non-defective tires, plus statutory, compensatory,
and punitive damages, and costs and attorneys' fees. In addition,
plaintiffs in North Carolina include a claim seeking the recall of all
such tires and other injunctive relief.
12
<PAGE>
Item 6(a). Exhibits.
(10) Cooper Tire & Rubber Company Executive Financial Planning
Assistance
(27) Financial Data Schedule
Item 6(b). Reports on Form 8-K.
No form 8-K has been filed.
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)
November 14, 2000
-----------------
(Date)
13
<PAGE>
INDEX TO EXHIBITS
DESCRIPTION
Part II. Item 6(a).
(10) Cooper Tire & Rubber Company Executive Financial Planning
Assistance
(27) Financial Data Schedule
14
<PAGE>
Part II
Exhibit (10)
Cooper Tire & Rubber Company
Executive Financial Planning Assistance
Given the travel demands and competitive conditions facing today's global
executives, substantially all of their available time should be devoted to
creation of shareholder value. Nevertheless, personal financial concerns
weigh heavily on the executives' minds and may lessen the focus on pressing
business issues. As companies recognize these concerns, more are offering
personal financial planning assistance to top executives. The Compensation
Committee of the Board of Directors has approved this plan to provide such
assistance for members of the Management Executive Committee (Messrs. Dattilo,
Fahl, McElya, Millhof and Weaver) and for the Operations Committee members
(twelve persons as of June 30, 2000).
Such assistance is in the form of an annual monetary allowance to enable the
executive to select service providers of their choice. The services include:
For the Executive Committee:
Personal financial and estate planning
Tax compliance and related discussions/planning
Investment advisory services
For the Operations Committee:
Tax compliance and related discussions/planning
Based on data obtained from National City Bank's Sterling Division and Ernst &
Young's Financial and Tax Consulting Group, the annual allowance is as
follows:
Executive Committee - year one $25,000
thereafter $20,000
Operations Committee - annually $ 3,000
The billings for qualified services would be paid directly or reimbursed to
the executive.
15
