Cooper Tire & Rubber Company Reports Record Second Quarter Results

Cash generated from operations was very strong during the quarter and reached $102 million compared to $50 million a year ago. This enabled the Company to reduce debt by $29 million, pay regular dividends of $8 million and significantly strengthen its cash balance.

For the first six months of the year, the Company recorded net sales of $1.6 billion, an increase of 4 percent over the same period a year ago. Operating profit for the first six months was $140 million, up 90 percent and net income was $65 million, up 196 percent compared to last year.

"We worked very hard to execute our plans and implement our strategies. These record-breaking results indicate how well we have done and the potential for even greater improvement," Cooper's chairman, president and chief executive officer Thomas A. Dattilo said. "Our automotive group is just beginning to hit stride now, following our integration and restructuring activities last year, and our tire group has remained solid, even in the face of a difficult quarter for the industry. These results are very satisfying but there is still plenty of upside to what we can achieve."

Tire Group Operations

Net sales for Cooper's tire operations in the second quarter were $414 million, compared to $433 million in the second quarter of 2001. Operating profit in the Tire Group was $37 million, up 39 percent over last year. This increase was driven primarily by improved raw material pricing, reduced litigation costs, and improved operating efficiency, partially offset by changes in product mix and lower unit volumes. Cooper continued to gain share in the light vehicle replacement tire market during the quarter. The Company's unit shipments of light vehicle replacement tires in North America were down 5 percent, but this was stronger than the industry-wide decline in replacement tire shipments of 7 percent. For the first six months of the year, Cooper's North America unit volumes are up nearly 5 percent while industry volumes are down approximately 2 percent.

Automotive Group Operations

Net sales for Cooper-Standard Automotive increased 6 percent compared to the second quarter of last year and reached $429 million. Automotive Group sales in North America increased approximately 8 percent, outpacing the industry growth as North American light vehicle production increased approximately 6 percent. Operating profit for Cooper-Standard Automotive was $44 million for the quarter, up nearly 86 percent compared to last year. Higher production volume, improved operating efficiencies, lean manufacturing programs and the positive impact of restructuring initiatives were important factors in improving operating margins.

Restructuring savings for the Company were $8 million in the quarter, slightly exceeding, on an annualized basis, the $25 to $30 million in savings projected when the restructuring plan was developed in late 2000.

Outlook

"We had a great second quarter and a very solid first half," Dattilo said. "To set earnings records in today's environment is a solid accomplishment, and it sets the stage for a good second half.

"In our automotive operations, production schedules in North America remain very solid for the rest of the year while in Europe and Brazil they are down. Overall, we expect Cooper-Standard will once again show strong year- over-year improvement.

"In our tire operations, we expect demand for our products to increase somewhat and return to more historical patterns as we get past the anomalous market dynamics of the past two years. As we have said since the beginning of the year, we expect our unit volumes for tires to increase by 4 to 6 percent for the full year compared to 2001. I believe we are still on track to achieve that, although it won't be easy and recent volatility makes the tire market very difficult to predict in the very short term. Still, we are comfortable with the consensus views for the full year."

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 52 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, government regulatory initiatives, including the proposed regulations under the TREAD Act, the cyclical nature and overall health of the global automotive industry, the loss of a major customer or loss or delay of one or more automotive programs, 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, the results of litigation brought against the Company, the inability to obtain insurance coverage sufficient to cover the principal risks to 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 "Legal Proceedings" in the Company's Annual Report on Form 10-K for 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.

    (Statements of income and balance sheets follow ... )


                           Cooper Tire & Rubber Company
                        Consolidated Statements of Income

    (Dollar amounts in thousands except per share amounts)

                                Quarter Ended            Six Months Ended
                                   June 30                   June 30
                             2001          2002       2001            2002


    Net sales              $829,040      $836,075  $1,586,654      $1,649,052
    Cost of products sold   707,671       695,887   1,369,167       1,386,986
    Gross profit            121,369       140,188     217,487         262,066

    Class action costs        7,282             -      10,782               -
    Restructuring charges     2,150           450       3,072             967
    Amortization of
     goodwill                 3,981             -       7,831               -
    Selling, general and
     administrative          59,012        60,368     121,865         120,935
    Operating profit         48,944        79,370      73,937         140,164

    Interest expense         23,364        18,570      46,654          38,571
    Other - net              (3,667)       (1,065)     (7,782)         (1,724)
    Income before taxes      29,247        61,865      35,065         103,317
    Provision for taxes      10,909        22,890      13,079          38,227

    Net Income              $18,338       $38,975     $21,986         $65,090

    Basic and diluted
     earnings per share       $0.25         $0.52       $0.30           $0.88
    Weighted average
     shares outstanding      72,624        74,535      72,620          74,015
    Depreciation            $42,842       $43,930     $84,647         $85,906
    Amortization of
     goodwill and other
     intangibles             $5,280          $840     $10,585          $2,368
    Capital expenditures    $38,957       $32,979     $76,681         $56,836

    Segment information
      Net Sales
        Tire               $433,438      $413,639    $821,673        $847,069
        Automotive          403,623       429,353     780,411         815,394
        Eliminations         (8,021)       (6,917)    (15,430)        (13,411)


      Segment profit
        Tire                 26,527        36,949      42,731          80,341
        Automotive           23,659        44,062      33,930          65,487
        Unallocated corporate
         charges and
         eliminations        (1,242)       (1,641)     (2,724)         (5,664)


                          ******************************


                           CONSOLIDATED BALANCE SHEETS

                                                        June 30
                                              2001                    2002

    Assets
    Current assets:
      Cash and cash equivalents               $20,733                $118,624
      Accounts receivable                     607,639                 540,985
      Inventories                             340,413                 325,682
      Prepaid expenses, deferred income
        taxes and other                        75,320                  64,445
          Total current assets              1,044,105               1,049,736

    Property, plant and equipment           1,251,287               1,189,048
    Goodwill - net                            431,771                 427,895
    Intangibles and other assets              168,124                 171,515
                                           $2,895,287              $2,838,194

    Liabilities and Stockholders' Equity
    Current liabilities:
      Notes payable                          $150,593                 $11,936
      Trade payables and accrued liabilities  422,672                 490,254
      Income taxes                              9,871                       0
      Current portion of debt                  14,131                 133,216
          Total current liabilities           597,267                 635,406

    Long-term debt                          1,036,735                 890,629
    Postretirement benefits other than
     pensions                                 192,339                 204,447
    Other long-term liabilities                66,672                 111,389
    Deferred income taxes                      59,741                  20,502
    Stockholders' equity                      942,533                 975,821
                                           $2,895,287              $2,838,194

    These interim statements are subject to year-end adjustments.
    Certain amounts for 2001 have been restated to conform with 2002
    presentations.