Cooper Tire Reports Record 1998 Sales and Earnings
10 February 1999
Cooper Tire Reports Record 1998 Sales and Earnings
FINDLAY, Ohio--Feb. 9, 1999--
FOURTH QUARTER HIGHLIGHTS
-- Record sales and profits
-- Engineered products sales boosted by GM recovery
-- Strong proprietary brand tire sales
-- New private label tire customers on-line
-- Continued success with new premium tire line
-- Favorable contribution from one-time adjustments
COOPER TIRE & RUBBER COMPANY today reported record sales and earnings for 1998 with the record fourth quarter boosting the company's results for the year. Net sales for 1998 reached $1.9 billion, an increase of 3.5 percent over 1997 sales. Net income for 1998 was $127 million, an increase of 3.7 percent over 1997. Earnings per share also set a company record at $1.64 per share.
Fourth quarter sales were a record $496.2 million compared to $488.9 million in the prior year period, an increase of 1.5 percent. Net income for the fourth quarter was a record $38.1 million versus $34.6 million in 1997, an increase of 10 percent. Earnings per share equaled 50 cents versus 44 cents a year earlier. During the quarter, a tax rate adjustment and the sale of the company's New Brunswick, New Jersey warehouse contributed 3 cents to earnings per share.
Commenting on the year-end and quarterly results, Cooper chairman and CEO, Patrick W. Rooney said, "We concluded 1998 on a strong note. First, we experienced relatively stable tire pricing in the fourth quarter, which, combined with the favorable raw material pricing achieved by our integrated purchasing group, made a positive contribution to operating results. Indications are that we will see similar favorable raw material prices in the first quarter of this year.
"In our tire operations, we benefited from new private label business that came on-stream significantly in the fourth quarter, strong sales in our proprietary brands and excellent market reception to our new premium touring radial tire. These achievements largely offset our previously reported lower sales to a large private brand customer."
Continuing, Mr. Rooney said, "In our engineered products business, we achieved a double-digit sales gain. In addition to robust sales from our other major automotive customers, we reacted rapidly to the demand created by General Motors' quick recovery of business after the settlement of their strike. As the third quarter ended, our expectation was that our sales to GM would resume gradually. Instead, business activity bounced back strong, surpassing our earlier expectations."
SEGMENT REPORTING
Cooper Tire & Rubber Company operations are organized into two operating segments: tires and engineered products. In 1998, the tire operation contributed 77 percent of sales and 73 percent of segment profit; the engineered products operation accounted for 23 percent of sales and 27 percent of segment profit. For comparison purposes, in 1997, tires contributed 80 percent of sales and 78 percent of segment profit; engineered products contributed 20 percent of sales and 22 percent of segment profit.
FINANCIAL STRENGTH
During the year, strong cash flow from operations enabled the company to repurchase 3 million shares of common stock in accordance with a 5 million share repurchase program authorized in May 1997 and pay $30.3 million in cash dividends to shareholders. The company's debt-to-total capital ratio decreased to 19.1 percent at December 31, 1998.
MANAGEMENT OUTLOOK
Thomas A. Dattilo, Cooper's new COO and president commented on the outlook for 1999. "Since coming on board in January, Cooper appears to have all the elements in place for continued growth. During the past year, Cooper finalized its strategic business plan to help propel the company into the next millennium. This exciting project, which is referred to as 'Cooper 21', will enable the company to capitalize on many strengths: a rapidly growing engineered products operation, a new focus on globalization in both tires and engineered products and a strong balance sheet which will provide resources for potential alliance, merger and acquisition opportunities. The biggest asset, however, is the respect both industries show for the people who make up the Cooper team. Their 'can do' spirit, tenacity and enthusiasm for the company's outlook will continue to be the driving force behind Cooper's progress for the future."
COMPANY DESCRIPTION
Founded in 1914, Cooper Tire & Rubber Company is a leading manufacturer of tires and engineered rubber products widely recognized for its strong customer service commitment. In tires, the company exclusively targets the larger replacement market with a mix equally divided between proprietary house brand and private label customers. Cooper markets its tires in more than 100 countries around the world. In engineered rubber products, the company services virtually every light vehicle manufacturer in the U.S. and Canada, as well as an expanding number of European-based original equipment manufacturers. For more information on Cooper Tire & Rubber Company, visit the company's web site at www.coopertire.com.
FORWARD-LOOKING STATEMENTS
This release may contain forward-looking statements relating to future financial results. Actual results may differ materially as a result of factors over which the company has no control. These risk factors and additional information are included in the company's reports on file with the Securities and Exchange Commission.
(Statement of income and balance sheet follows...)
COOPER TIRE & RUBBER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands Quarter Ended Twelve Months Ended
except per share amounts) December 31 December 31
----------------------- -----------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
Revenues:
Net sales $ 496,211 $ 488,908 $1,876,125 $1,813,005
Other income 1,864 554 3,635 1,406
---------- ---------- ---------- ----------
498,075 489,462 1,879,760 1,814,411
Costs and expenses:
Cost of products
sold 402,882 402,434 1,545,489 1,498,432
Selling,
general,
administrative 33,235 27,477 120,830 105,532
Interest 3,866 4,379 15,224 15,655
---------- ---------- ---------- ----------
439,983 434,290 1,681,543 1,619,619
---------- ---------- ---------- ----------
Income before
income taxes 58,092 55,172 198,217 194,792
Provision for
income taxes 20,015 20,541 71,250 72,381
---------- ---------- ---------- ----------
Net income $ 38,077 $ 34,631 $ 126,967 $ 122,411
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic and diluted
earnings per share $ .50 $ .44 $ 1.64 $ 1.55
Weighted average
shares outstanding 75,821 78,844 77,656 79,213
Depreciation $ 26,779 $ 25,994 $ 101,899 $ 94,464
Capital expenditures $ 42,777 $ 34,994 $ 131,533 $ 107,523
CONSOLIDATED BALANCE SHEETS
December 31
Assets 1998 1997
------ ---------- ----------
Current assets:
Cash and cash equivalents $ 41,966 $ 52,910
Accounts receivable 319,685 292,416
Inventories 186,386 191,684
Prepaid expenses and
deferred income taxes 21,436 17,602
---------- ----------
Total current assets 569,473 554,612
Property, plant and equipment - net 885,282 860,448
Intangibles and other assets 86,520 80,896
---------- ----------
$1,541,275 $1,495,956
---------- ----------
---------- ----------
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Notes payable $ 8,129 $ 10,820
Trade payables and accrued
liabilities 181,776 182,581
Income taxes 2,834 6,477
Current portion of debt 249 453
---------- ----------
Total current liabilities 192,988 200,331
Long-term debt 205,285 205,525
Postretirement benefits other
than pensions 151,520 144,566
Other long-term liabilities 48,741 38,351
Deferred income taxes 74,805 73,608
Stockholders' equity 867,936 833,575
---------- ----------
$1,541,275 $1,495,956
---------- ----------
---------- ----------
SEGMENT INFORMATION
Twelve Months Ended
December 31
1998 1997
Net sales: ---------- ----------
Tires $1,444,334 $1,443,293
Engineered products 431,791 369,712
Segment profit(1):
Tires 142,800 149,970
Engineered products 51,782 43,416
(1) Segment profit is defined as income before income taxes and other
income and includes allocation of corporate interest expense.