Cooper Tire & Rubber Company Reports 2002 First Quarter Results
FINDLAY, Ohio, April 18 Cooper Tire & Rubber Company today reported first quarter net income of $26 million, or 36 cents per share, on strong sales that outpaced the market in both the Company's tire operations and automotive components business. The Company's net sales totaled $813 million, up 7 percent compared to the first quarter of last year, while operating profit increased 143 percent to reach $61 million for the quarter. implementation of our strategies,'' Cooper chairman, president and chief executive officer Thomas A. Dattilo said. ``While greater strength in the economy certainly played an important part in our results, we were able to outperform our industries because of several factors, including new business in both tires and automotive components and the savings from our restructuring initiatives. These are things we will be able to build on and benefit from throughout the year.''
Tire Group Operations
Net sales for Cooper's tire operations in the first quarter were $433 million, compared to $388 million in the first quarter of 2001. This increase was driven by a strong performance in North America where sales increased more than 16 percent. Unit sales in North America were up 15 percent compared to an industry-wide increase in replacement tires of just 5 percent. Cooper Tire's operating profit increased 168 percent during the quarter to $43 million compared to $16 million last year. Higher volumes, lower raw material costs and savings from restructuring activities completed last year all contributed to the higher profit margin.
Automotive Group Operations
Net sales for Cooper-Standard Automotive increased nearly 3 percent compared to the first quarter of last year and reached $386 million. Automotive group sales in North America increased 7 percent, again significantly outpacing the growth in North America light vehicle production, as a result of the start of production on some of the previously announced new business. A strong base of top platforms and several new platform launches planned for the next several quarters should allow Cooper-Standard's North American operations to continue to grow at a rate that exceeds that of the North American light vehicle industry.
First quarter operating profit for Cooper-Standard Automotive was $21 million, up 109 percent compared to last year. Higher production volume, better capacity utilization and the positive impact of restructuring initiatives were important factors in the improvement.
Restructuring savings for the Company were $7 million in the quarter, in line with the $25 to $30 million in annualized savings projected when the restructuring plan was developed in late 2000. Current restructuring initiatives should be completed by the end of the second quarter.
Outlook
``We had a solid quarter,'' Dattilo said, ``and we intend to keep the momentum going. Looking ahead, we expect the demand for tires to remain relatively strong through the spring and into the summer. That should help keep pricing steady and inventories declining. And even though raw material markets are tightening, we were able to lock in a significant portion of our material requirements for the next several months with contracts at good prices. This will keep our overall raw material costs in good shape as well.
``We also expect continued improvement throughout the year in our Automotive Group,'' Dattilo continued. ``Industry expectations for light vehicle production in North America continue to creep upward as consumer confidence rebounds. Our focus will remain on reducing costs and launching our new products and platforms flawlessly. This will certainly move us toward our goals as the new business comes on stream over the next few years.
``We continue to do just what we said we would by implementing our plans and strategies to drive shareholder value. Our forecasts for the next several months are positive and we expect our earnings to be in the range of 45 to 50 cents per share in the second quarter of 2002,'' Dattilo concluded.
Company Description
Cooper Tire & Rubber Company is headquartered in Findlay, Ohio and specializes in the manufacture and marketing of automotive products. Products for Cooper's Tire Group include automotive, motorcycle and truck tires, inner tubes, tread rubber and equipment. In the Automotive Group, Cooper is an original equipment supplier of sealing, trim, NVH control systems and fluid handling systems for the automotive industry in North America, Europe, Australia and South America. Cooper has more than 20,000 employees and 55 manufacturing facilities in 13 countries. For more information, visit the Company's web site at: www.coopertire.com .
Forward-Looking Statements
This report contains what the Company believes are ``forward-looking statements,'' as that term is defined under the Private Securities Litigation Reform Act of 1995, regarding projections or expectations for future financial performance, which involve uncertainty and risk. It is possible that the Company's future financial performance may differ materially from those projections or 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, changes in interest and foreign exchange rates, regulatory and other approvals, the cyclical nature of the automotive industry, the loss of a major customer or loss or delay of a program, risks associated with new vehicle launches, risks to the economy associated with external events, including those resulting from the events of September 11, 2001 and the impact on the economy of similar events which may occur in the future, litigation brought against the Company, and other unanticipated events and conditions. In addition, it is possible that the Company will fail to obtain final approval of the settlement of the class action litigation which has been described under ``Class Action Litigation'' in the Company's Quarterly Report on Form 10Q for the third quarter of 2001.
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.
Cooper Tire & Rubber Company
Consolidated Statements of Income
(Dollar amounts in thousands except per share amounts)
Three Months Ended
March 31
2001 2002
Net sales $757,614 $812,977
Cost of products sold 660,366 691,099
Gross profit 97,248 121,878
Class action costs 3,500 -
Restructuring charges 922 517
Amortization of goodwill 3,850 -
Selling, general and administrative 63,983 60,567
Operating profit 24,993 60,794
Interest expense 23,290 20,001
Other - net (4,115) (659)
Income before taxes 5,818 41,452
Provision for taxes 2,170 15,337
Net Income $3,648 $26,115
Basic and diluted earnings per share $0.05 $0.36
Weighted average shares outstanding 72,617 73,361
Depreciation $41,805 $41,976
Amortization of goodwill and other
intangibles $5,305 $1,528
Capital expenditures $37,724 $23,857
Segment information
Net Sales
Tire $388,235 $433,430
Automotive 376,788 386,041
Eliminations (7,409) (6,494)
Segment profit
Tire 16,204 43,392
Automotive 10,271 21,425
Unallocated corporate charges and
eliminations (1,482) (4,023)
******************************
CONSOLIDATED BALANCE SHEETS
March 31
2001 2002
Assets
Current assets:
Cash and cash equivalents $24,881 $84,561
Accounts receivable 592,650 569,279
Inventories 347,660 297,655
Prepaid expenses, deferred income
taxes and other 85,197 69,756
Total current assets 1,050,388 1,021,251
Property, plant and equipment 1,261,934 1,186,896
Goodwill - net 434,521 427,895
Intangibles and other assets 168,959 173,287
$2,915,802 $2,809,329
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $158,471 $9,520
Trade payables and accrued liabilities 446,909 481,766
Income taxes 10,415 612
Current portion of debt 14,332 170,028
Total current liabilities 630,127 661,926
Long-term debt 1,036,960 885,119
Postretirement benefits other than
pensions 190,636 201,108
Other long-term liabilities 68,874 111,274
Deferred income taxes 59,186 20,218
Stockholders' equity 930,019 929,684
$2,915,802 $2,809,329
These interim statements are subject to year-end adjustments.
Certain amounts for 2001 have been restated to conform with 2002
presentations.