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 March 31, 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 April 28, 2000: 73,806,152
1
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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>
March 31,
December 31, 2000
1999 (Unaudited)
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 71,127 $ 47,990
Accounts receivable, less allowances
of $9,319 in 1999 and $15,690 in 2000 545,155 678,172
Inventories at lower of cost (last-in,
first-out) or market:
Finished goods 168,290 185,695
Work in process 25,185 33,790
Raw materials and supplies 80,488 81,007
--------- ---------
273,963 300,492
Prepaid expenses and deferred income taxes 55,183 75,864
--------- ---------
Total current assets 945,428 1,102,518
Property, plant and equipment - net 1,227,069 1,340,932
Goodwill, net of accumulated amortization
of $2,550 in 1999 and $6,731 in 2000 433,312 534,811
Intangibles and other assets 151,836 164,363
--------- ---------
$2,757,645 $3,142,624
LIABILITIES AND STOCKHOLDERS' EQUITY ========= =========
Current liabilities:
Notes payable $ 13,148 $ 260,428
Accounts payable 175,686 222,222
Accrued liabilities 188,038 235,123
Income taxes 5,100 26,951
Current portion of long-term debt 13,893 14,308
--------- ---------
Total current liabilities 395,865 759,032
Long-term debt 1,046,463 1,046,515
Postretirement benefits other than pensions 181,267 184,253
Other long-term liabilities 61,409 56,641
Deferred income taxes 97,007 112,410
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)
83,800,152 shares issued 83,799 83,800
Capital in excess of par value 3,538 3,545
Retained earnings 1,049,599 1,073,140
Cumulative other comprehensive loss (6,053) (9,994)
--------- ---------
1,130,883 1,150,491
Less: (7,989,600 in 1999) 8,913,600 common
shares in treasury at cost (155,249) (166,718)
--------- ---------
Total stockholders' equity 975,634 983,773
--------- ---------
$2,757,645 $3,142,624
<FN> ========= =========
See accompanying notes.
</TABLE>
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<TABLE>
COOPER TIRE & RUBBER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1999 AND 2000
(UNAUDITED)
(Dollar amounts in thousands except per-share amounts)
<CAPTION>
1999 2000
-------- --------
<S> <C> <C>
Net sales $467,887 $922,265
Cost of products sold 382,493 787,584
------- -------
Gross profit 85,394 134,681
Amortization of goodwill - 4,212
Selling, general and administrative 32,092 58,264
------- -------
Operating profit 53,302 72,205
Interest expense 3,903 23,922
Other-net (225) (3,359)
------- -------
Income before income taxes 49,624 51,642
Provision for income taxes 18,233 20,140
------- -------
Net income 31,391 31,502
Other comprehensive loss:
Currency translation adjustment (2,552) (3,941)
------ ------
Comprehensive income $28,839 $27,561
====== ======
Basic and diluted earnings per share $.41 $.42
=== ===
Weighted average number of
shares outstanding (000's) 75,877 75,728
====== ======
Dividends per share $.105 $.105
==== ====
<FN>
See accompanying notes.
</TABLE>
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<TABLE>
COOPER TIRE & RUBBER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 2000
(UNAUDITED)
(Dollar amounts in thousands)
<CAPTION>
1999 2000
-------- --------
<S> <C> <C>
Operating activities:
Net income $31,391 $31,502
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation 25,650 43,280
Amortization of goodwill and other
intangibles 419 4,888
Deferred income taxes (1,861) 7,147
Changes in operating assets
and liabilities:
Accounts receivable (21,543) (80,512)
Inventories and prepaid expenses (6,813) (24,885)
Accounts payable and
accrued liabilities (10,556) 35,381
Other liabilities 9,658 22,316
------- -------
Net cash provided by
operating activities 26,345 39,117
Investing activities:
Property, plant and equipment (39,304) (48,700)
Acquisition of business - (250,338)
Other - 2,022
------- -------
Net cash used in investing
activities (39,304) (297,016)
Financing activities:
Issuance of debt 1,072 262,952
Payment on debt (72) (16,718)
Purchase of treasury shares - (4,298)
Payment of dividends (7,963) (7,960)
Issuance of common shares 336 7
------- -------
Net cash provided by (used in)
financing activities (6,627) 233,983
Effects of exchange rate changes on cash 914 779
------- -------
Changes in cash and cash equivalents (18,672) (23,137)
Cash and cash equivalents at
beginning of period 41,966 71,127
------- -------
Cash and cash equivalents at
end of period $23,294 $47,990
======= =======
Cash payments for interest $ 8,067 $11,832
======= =======
Cash payments for income taxes $ 5,567 $ 2,486
======= =======
<FN>
See accompanying notes.
</TABLE>
4
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COOPER TIRE & RUBBER COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements at March 31, 2000 and for the
three-month periods ended March 31, 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 period ended March 31, 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 March 31
1999 2000
-------- --------
Revenues from external customers:
Tire $352,062 $445,344
Automotive 115,825 484,679
Eliminations - (7,758)
------- -------
Net sales $467,887 $922,265
Segment profit:
Tire $ 37,197 $ 45,109
Automotive 16,105 27,096
------- -------
53,302 72,205
Other (3,678) (20,563)
------- -------
Income before income taxes $ 49,624 $ 51,642
4. In June 1998 the Financial Accounting Standards Board 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.
5
<PAGE>
5. The Company completed its acquisition of Siebe Automotive ("Siebe"), the
automotive fluid handling division of Invensys plc, on January 28, 2000
for a price of $244.5 million. Additional transaction costs of $5.8
million were incurred to complete the acquisition. The Company financed
the acquisition by issuing commercial paper. Siebe is headquartered in
Southfield, Michigan and 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
includes 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
acquisition does not meet the SEC thresholds for a significant acquisition
and therefore no pro forma financial information is presented.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Consolidated net sales for the three months ended March 31, 2000 reached a new
first quarter record totaling $922 million, an increase of 97 percent over the
first quarter of 1999. The acquisitions of The Standard Products Company
("Standard") and Siebe Automotive ("Siebe") added $397 million in sales for
the quarter.
Net income was $32 million for the first quarter of 2000, slightly higher than
the $31 million generated for the same period in 1999.
Selling, general and administrative expenses were 6.3 percent of net sales for
the quarter, compared to 6.9 percent one year ago.
Business Segments
Tire Segment
Sales
Sales for the Tire segment, at $445 million for the first quarter, increased
$93 million, or 27 percent, from 1999. First quarter sales of Oliver Rubber
Company, which was acquired as part of the Company's acquisition of Standard,
were $42 million. Tire unit sales were up 13 percent over the same period in
1999, due primarily to strong demand for Cooper's proprietary and certain
private brand products.
Operating Profit
Operating profit increased 21 percent from $37 million in the first quarter of
1999 to $45 million in 2000. Operating margin was 10.1 percent in 2000, a
decline from 10.6 percent in 1999. Higher raw material costs, due primarily
to increases in the price of petroleum, were the principal reasons for the
decline in margin.
Automotive Segment
Sales
Automotive sales increased more than three times, from $116 million in the
first quarter of 1999 to $485 million in 2000. First quarter sales from
Standard's automotive businesses and two months of Siebe totaled $355 million.
North American light vehicle production was up 7.1 percent over the same
period in the prior year, contributing to strong first quarter sales for the
Automotive group.
6
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Operating Profit
Operating profit increased 68 percent from the first quarter of 1999.
Operating margin, however, declined from 13.9 percent in 1999 to 5.6 percent
in 2000.
Margin in Standard's operations continued to be adversely affected by
production difficulties experienced at one of Standard's automotive plastic
trim facilities. On February 8, 2000 the Company announced that it is
exploring strategic options for its Plastics Division, which includes the
affected facility. The business creating those production difficulties was
sold on April 28, 2000. The elimination of the losses from that business is
expected to improve the future operating performance of the Automotive Group.
Margin was also adversely affected by ongoing costs associated with the
Company's efforts to close one of its manufacturing facilities in France, and
by continued low volume in Brazil, where economic difficulties have depressed
the level of automotive production. The Company did substantially complete
the closure of the French facility at the end of the quarter.
Other
Interest expense was $24 million in the first quarter of 2000 compared to $4
million in the same period for 1999, reflecting the higher debt levels
incurred to finance the acquisitions of Standard and Siebe.
Other income at $3 million increased from $200,000 in 1999. The increase is
attributed to fluctuations in foreign currency gains and losses and income
from equity investees.
The effective income tax rate of 39.0 percent in 2000 is higher than the 36.7
percent in 1999. The increase in the rate reflects the impact of
nondeductible goodwill attributable to the acquisitions of Standard and Siebe.
Liquidity and Capital Resources
Working capital at $343 million is down from December 31, 1999 and March 31,
1999. The current ratio of 1.5 is down from 2.4 at December 31, 1999 and 2.9
at March 31, 1999. Long-term debt, as a percent of total capitalization is
51.6 percent compared to 18.7 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 $39 million during the first
three months of 2000 is higher than the $26 million for the three-month period
one year ago. Net income, adjusted for non-cash charges, increased $31
million.
Net cash used in investing activities during the first quarter reflects the
acquisition of Siebe for $250 million. Capital expenditures for the quarter
were $49 million compared to $39 million in last year's quarter.
Financing activities for the three month period provided cash of $234 million.
Commercial paper of $263 million was issued during the quarter primarily
related to the acquisition of Siebe. In May 1997 the Board approved an
authorization to repurchase 5,000,000 of the Company's common shares. The
Company purchased 924,000 of its common shares in March and 1,086,400 of its
common shares in April, completing the repurchase of all 5,000,000 shares
authorized. The cost of the repurchases made in March and April was $25.9
million.
The Company expects 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.
7
<PAGE>
Year 2000
In past years, the Company has discussed its concerns regarding the Year 2000
computer systems issue. In July 1999 the Company completed its remediation
efforts and testing of systems. As a result of its planning and preparedness
initiatives, the Company experienced no significant disruptions in its
critical information technology systems or its infrastructure and believes
those systems successfully responded to the Year 2000 date change. The
financial impact of making the required changes was comprised primarily of
internal costs invested since 1995 and is estimated to have been less than $3
million.
The Company is not aware of any material problems resulting from Year 2000
issues, either with its products, its internal systems, or the products and
services supplied to it by third parties. The Company will continue to
monitor its critical computer applications and those of its significant
suppliers and customers throughout the year 2000 to ensure any latent Year
2000 matters that may arise, and which could adversely affect the Company's
operations, are addressed promptly.
Euro
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 that
adoption of the euro will have a material impact on the results of its
operations, financial position or liquidity.
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, achieving sales levels to fulfill revenue
expectations, consolidation among the Company's 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, loss of a major customer, risks associated with integrating the
operations of The Standard Products Company and Siebe Automotive, and the
failure to achieve synergies or savings anticipated in both acquisitions, 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.
8
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Part II. OTHER INFORMATION
Item 6(a). Exhibits.
(10) Amendment No. 1 to the Credit Agreement (270 Day) dated as of
January 21, 2000 by and among Cooper Tire & Rubber Company, a
Delaware Corporation, and the Banks and PNC Bank, National
Association, as agent for the Banks
(27) Financial Data Schedule
Item 6(b). Reports on Form 8-K.
A Form 8-K/A was filed January 10, 2000 related to the Company's
completion of the acquisition of The Standard Products Company on
October 27, 1999
A Form 8-K was filed February 11, 2000 related to the Company's
redefined measurement of segment profit to exclude interest expense and
foreign currency gains/losses
A Form 8-K was filed February 11, 2000 related to the retirement of the
Company's chairman of the board and chief executive officer, Patrick W.
Rooney
A Form 8-K was filed February 11, 2000 related to the Company's
completion of the acquisition of Siebe Automotive on January 28, 2000
A Form 8-K was filed April 25, 2000 related to the Company's
announcement of a definitive agreement to sell a portion of its
automotive plastics division to Plastech Engineered Products, Inc.
A Form 8-K was filed May 1, 2000 related to the Company's announcement
of Thomas A. Dattilo's assumption of the roles of chairman, president
and chief executive officer
9
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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)
May 2, 2000
--------------
(Date)
10
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INDEX TO EXHIBITS
DESCRIPTION
Part II. Item 6(a).
(10) Amendment No. 1 to the Credit Agreement (270 Day) dated as of January
21, 2000 by and among Cooper Tire & Rubber Company, a Delaware
Corporation, and the Banks and PNC Bank, National Association, as agent
for the Banks
(27) Financial Data Schedule
11
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AMENDMENT NO. 1 TO CREDIT AGREEMENT
(270 Day)
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT (270 Day) dated as of
January 21, 2000 (this "Amendment No. 1"), by and among COOPER TIRE & RUBBER
COMPANY, a Delaware corporation (as more fully defined in the Original Credit
Agreement referred to below, the "Borrower"), and the Banks (as defined in the
Original Credit Agreement) and PNC BANK, NATIONAL ASSOCIATION, as agent for
the Banks under the Original Credit Agreement (in such capacity, as more fully
defined in the Original Credit Agreement, the "Agent"), with respect to that
certain Credit Agreement (270 Day) dated as of October 15, 1999, by and among
the Borrower, the Banks and the Agent (such Credit Agreement (270 Day) is
herein referred to as the "Original Credit Agreement").
WITNESSETH:
WHEREAS, the Borrower has requested an amendment of certain
covenants contained in the Original Credit Agreement; and the Banks and the
Agent have agreed to certain amendments to the Original Credit Agreement upon
the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the premises (each of which is
incorporated herein by reference), the Borrower, the Banks and the Agent,
intending to be legally bound hereby, agree as follows:
ARTICLE I
AMENDMENTS TO ORIGINAL CREDIT AGREEMENT
Section 1.01. Amendment to Section 1.1 of the Original Credit
Agreement. The following definitions set forth in Section 1.1 of the Original
Credit Agreement are amended and restated to read as follows:
"Applicable Margin" shall mean for each Revolving Credit Loan the rate per
annum determined from time to time based upon the Ratings in effect by S&P and
Moody's set forth under the relevant column heading below opposite such
Ratings:
RATINGS
Applicable Margin
(in basis points per annum)
S&P/Moody's Euro-Rate Option
- --------------------------- ---------------------------
A+/A1 or higher 18.5
A/A2 30.0
A-/A3 41.5
BBB+/Baa1 52.5
BBB/Baa2 62.5
BBB-/Baa3 or lower 72.5
provided that, in the event that the Ratings of S&P and Moody's do not
coincide, the Applicable Margin set forth above opposite the higher of such
Ratings will apply; and provided further, in the event that one Rating is in
effect, the Applicable Margin set forth above for such Rating will apply.
Notwithstanding the foregoing, in the event that no Ratings are in effect at
such time of determination, the Applicable Margin will be determined in a
manner to be mutually agreed upon by the Agent and the Borrower and consented
to by the Banks.
"Facility Fee Rate" shall mean the rate per annum determined from time to time
based upon the Ratings in effect by S&P and Moody's set forth under the
relevant column heading below opposite such Ratings:
12
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RATINGS
S&P/Moody's Facility Fee Rate
(in basis points per annum)
- ---------------------- ---------------------------
A+/A1 or higher 6.5
A/A2 7.5
A-/A3 8.5
BBB+/Baa1 10.0
BBB/Baa2 12.5
BBB-/Baa3 or lower 15.0
provided that, in the event that the Ratings of S&P and Moody's do not
coincide, the Facility Fee Rate set forth above opposite the higher of such
Ratings will apply; and provided further, in the event that one Rating is in
effect, the Facility Fee Rate set forth above for such Rating will apply.
Notwithstanding the foregoing, in the event that no Ratings are in effect at
such time of determination, the Facility Fee Rate will be determined in a
manner to be mutually agreed upon by the Agent and the Borrower and consented
to by the Banks. The Facility Fee Rate shall be adjusted if necessary as of
the date of any change in the Ratings.
"Loan Documents" shall mean this Agreement, the Revolving
Credit Notes, the Requests for Disbursements, the Amendment No. 1 Loan
Documents and any other instruments, certificates or documents delivered or
contemplated to be delivered hereunder or thereunder or in connection herewith
or therewith, as the same may be supplemented or amended from time to time in
accordance herewith or therewith; and "Loan Document" shall mean any of the
Loan Documents.
Section 1.02. Addition of Definitions to Section 1.1 of the
Original Credit Agreement. The following definitions are hereby added to
Section 1.1 of the Original Credit Agreement and shall be inserted in their
correct alphabetical order:
"Amendment No. 1" shall mean that certain Amendment No. 1 to
Credit Agreement (270 Day) dated as of January 21, 2000, by and among the
Borrower, the Agent and the Banks, together with all schedules and exhibits
attached hereto.
"Amendment No. 1 Closing Date" shall mean January 21, 2000.
"Amendment No. 1 Loan Documents" shall mean this Amendment No.
1, and any other documents delivered or contemplated to be delivered
hereunder or thereunder or in connection herewith or therewith, as the same
may be supplemented or amended from time to time in accordance herewith or
therewith; and the term "Amendment No. 1 Loan Document" shall mean any of the
Amendment No. 1 Loan Documents.
Section 1.03. Amendment to Section 5.1 of the Original Credit
Agreement. The Section 5.1 of the Original Credit Agreement is amended and
restated to read as follows:
Percentage of Consolidated Indebtedness to Consolidated Capitalization.
The Borrower shall not, at any time on or prior to December 31, 2000, allow
its Consolidated Indebtedness to be greater than sixty-five percent (65%) of
the sum of (i) Consolidated Indebtedness plus (ii) Consolidated Stockholder's
Equity. The Borrower shall not, at any time on or after January 1, 2001 but
prior to January 1, 2003, allow its Consolidated Indebtedness to be greater
than sixty percent (60%) of the sum of (i) Consolidated Indebtedness plus (ii)
Consolidated Stockholder's Equity. The Borrower shall not, at any time on or
after January 1, 2003, allow its Consolidated Indebtedness to be greater than
fifty-five percent (55%) of the sum of (i) Consolidated Indebtedness plus (ii)
Consolidated Stockholder's Equity.
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Section 1.04. No Other Amendments. The amendments to the
Original Credit Agreement set forth in Sections 1.01 through and including
1.03 of this Amendment No. 1 do not either implicitly or explicitly alter,
waive or amend, except as expressly provided in this Amendment No. 1, the
provisions of the Original Credit Agreement. The amendments set forth in
Sections 1.01 through and including 1.03 of this Amendment No. 1 do not waive,
now or in the future, compliance with any other covenant, term or condition to
be performed or complied with nor does it impair any rights or remedies of the
Banks or the Agent under the Original Credit Agreement with respect to any
such violation.
ARTICLE II
BORROWER'S SUPPLEMENTAL REPRESENTATIONS
As an inducement to the Banks and the Agent to enter into this
Amendment No. 1, the Borrower hereby represents and warrants that:
Section 2.01. Incorporation by Reference. The Borrower hereby
repeats herein for the benefit of the Banks and the Agent the representations
and warranties made by the Borrower in Article III of the Original Credit
Agreement, except that for purposes hereof such representations and warranties
shall be deemed to extend to and cover this Amendment No. 1.
ARTICLE III
MISCELLANEOUS
Section 3.01. Ratification of Terms. This Amendment No. 1 shall
be construed in connection with and as part of the Original Credit Agreement;
and the Original Credit Agreement is hereby amended and modified to include
this Amendment No. 1. Except as expressly amended by this Amendment No. 1,
the Original Credit Agreement and each and every representation, warranty,
covenant, term and condition contained therein is specifically ratified and
confirmed.
Section 3.02. References. All notices, communications,
agreements, certificates, documents or other instruments executed and
delivered after the execution and delivery of this Amendment No. 1 may refer
to the Original Credit Agreement without making specific reference to this
Amendment No. 1, but nevertheless all such references shall include this
Amendment No. 1 unless the context requires otherwise.
Section 3.03. Counterparts. This Amendment No. 1 may be
executed in any number of counterparts, and by the different parties hereto on
separate counterparts, each of which when so executed and delivered shall be
an original, but all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to this
Amendment No. 1 by telecopier shall be effective as of delivery of a manually
executed counterpart of this Amendment No. 1.
Section 3.04. Capitalized Terms. Except for proper nouns and as
otherwise defined herein, capitalized terms used herein shall have the
meanings ascribed to them in the Original Credit Agreement, as amended hereby.
Section 3.05. Conditions Precedent. It shall be a condition
precedent to the effectiveness of this Amendment No. 1 and to the amendment of
terms of the Original Credit Agreement as herein set forth that:
(i) The Agent shall have received on behalf of the Banks, on
or before the Amendment Effective Date (as hereinafter defined) the following
items, each, unless otherwise indicated, dated on or before the Amendment
Effective Date and in form and substance satisfactory to the Agent and its
counsel:
(A) A duly executed counterpart original of this Amendment
No. 1;
14
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(B) A certified copy of the corporate action of the
Borrower authorizing the execution and delivery of, and performance under,
this Amendment No. 1 and the other Amendment No. 1 Loan Documents to which it
is a party;
(C) A certificate of the secretary or assistant secretary
of the Borrower certifying the names of the persons authorized to sign this
Amendment No. 1 and the other Amendment No. 1 Loan Documents to which it is a
party, and all other documents and certificates delivered hereunder together
with the true signatures of such persons;
(D) A certificate of the Chief Financial Officer of the
Borrower certifying that the statements set forth in Section 3.05(ii) of this
Amendment No. 1, as of the Amendment No. 1 Closing Date, are true and correct;
(E) There shall be delivered to the Agent for the benefit
of each Bank a written opinion of Richard D. Teeple, vice president and
general counsel for the Borrower, dated the Amendment No. 1 Closing Date as to
such matters and in form and substance satisfactory to the Agent and its
counsel;
(F) No event has occurred to the Borrower which would
reasonably be likely to have a Material Adverse Effect on the Borrower; and
there shall be delivered to the Agent for the benefit of each Bank and the
Agent a certificate dated the Closing Date and signed by the Chief Executive
Officer, President, Chief Financial Officer or
Vice President of the Borrower to such effect;
(ii) The following statements shall be true and correct on the
Amendment Effective Date and the Agent shall have received a certificate
signed by an authorized officer of the Borrower, dated the Amendment Effective
Date, stating that:
(A) the representations and warranties contained in Section
2.01 of this Amendment No. 1 and in the other Loan Documents with respect to
the Borrower are true and correct on and as of the Amendment Effective Date as
though made on and as of such date;
(B) no Event of Default, or event which, with the passage
of time or the giving of notice or both, would become an Event of Default, has
occurred and is continuing, or would result from the execution of this
Amendment No. 1;
(C) the Borrower has in all material respects performed all
agreements, covenants and conditions required to be performed on or prior to
the date hereof under the Agreement and the other Loan Documents;
For purposes of this Amendment No. 1 the term "Amendment Effective Date" means
the date on which the Agent and its counsel has determined that each of the
conditions set forth in this Section 3.05 have been satisfied by the Borrower
or waived by the Banks or the Agent, as the case may be.
Section 3.06. Amendment Effective Date. From and after the
Amendment Effective Date, all references in the Original Credit Agreement and
each of the other Loan Documents to the Agreement shall be deemed to be
references to the Original Credit Agreement as amended hereby.
Section 3.07. Certain Taxes. The Borrower agrees to pay, and
save the Agent and the Banks harmless from, all liability for any stamp or
other taxes which may be payable with respect to the execution of this
Amendment No. 1, the other Amendment No. 1 Loan Documents or any other
documents, instruments or transactions pursuant to or in connection herewith
or therewith, which obligation shall survive the termination of this Amendment
No. 1.
15
<PAGE>
Section 3.08. Costs and Expenses. The Borrower hereby agrees to
pay all reasonable out-of-pocket costs and expenses of the Agent (including,
without limitation, the reasonable fees and the disbursements of the Agent's
special counsel, Tucker Arensberg, P.C.) in connection with the preparation,
execution and delivery of this Amendment No. 1 and the related documents.
Section 3.09. Severability. Any provision of this Amendment No.
1 which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
enforceability without invalidating the remaining portions hereof or affecting
the validity or enforceability of such provision in any other jurisdiction.
Section 3.10. Governing Law. Amendment No. 1 shall be a contract
made under and governed by the laws of the Commonwealth of Pennsylvania.
Section 3.11. Headings. The headings of this Amendment No. 1
are for purposes of reference only and shall not limit or otherwise affect the
meaning thereof.
16
<PAGE>
IN WITNESS WHEREOF, the parties hereto, with the intent to be
legally bound hereby, have caused this Amendment No. 1 to be duly executed by
their proper and duly authorized officers as of the day and year first above
written.
Borrower:
ATTEST (SEAL) COOPER TIRE & RUBBER COMPANY, a
Delaware corporation
By: By:
----------------------------- -----------------------------
Name: Name:
--------------------------- ---------------------------
Title: Title:
-------------------------- --------------------------
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
Agent:
PNC BANK, NATIONAL ASSOCIATION,
in its capacity as Agent
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
Banks:
PNC BANK, NATIONAL ASSOCIATION
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
[SIGNATURES FOR OTHER BANKS SET FORTH ON THE FOLLOWING PAGE]
17
<PAGE>
[SIGNATURE FOR OTHER BANKS SET FORTH BELOW]
Banks Cont.:
NATIONAL CITY BANK
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
BANK OF AMERICA, N.A.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
THE CHASE MANHATTAN BANK
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
BANK ONE, MICHIGAN
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
18
<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 THREE MONTHS ENDED MARCH
31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 43,067
<SECURITIES> 4,923
<RECEIVABLES> 693,862
<ALLOWANCES> 15,690
<INVENTORY> 300,492
<CURRENT-ASSETS> 1,102,518
<PP&E> 2,114,366
<DEPRECIATION> 773,434
<TOTAL-ASSETS> 3,142,624
<CURRENT-LIABILITIES> 759,032
<BONDS> 1,046,515
0
0
<COMMON> 74,887
<OTHER-SE> 908,886
<TOTAL-LIABILITY-AND-EQUITY> 3,142,624
<SALES> 922,265
<TOTAL-REVENUES> 922,265
<CGS> 787,584
<TOTAL-COSTS> 787,584
<OTHER-EXPENSES> 58,628
<LOSS-PROVISION> 489
<INTEREST-EXPENSE> 23,922
<INCOME-PRETAX> 51,642
<INCOME-TAX> 20,140
<INCOME-CONTINUING> 31,502
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,502
<EPS-BASIC> .42
<EPS-DILUTED> .42
</TABLE>
