Cooper Tire & Rubber Q2 Earnings Per Share Reaches Record High
21 July 1999
Cooper Tire & Rubber Company Second Quarter Earnings Per Share Reaches Record High
FINDLAY, Ohio--July 20, 1999--
SECOND QUARTER HIGHLIGHTS:
-- Record second quarter sales and earnings
-- Engineered products strong sales reflect record levels in light
vehicle production
-- Tire operations gain market share in North American replacement
market
-- New Avon tire lines introduced in the U.S.
-- Cooper-Avon facility in Melksham contributes to record quarter
COOPER TIRE & RUBBER COMPANY today reported earnings per share of 50 cents, up 22 percent over 1998's 41 cents, achieving an all-time high level for the second quarter. Sales for the period ended June 30, 1999 were $495.4 million, an increase of 7.3 percent over 1998's $461.7 million. Earnings were $38.0 million, an increase of 17.4 percent compared to $32.3 million the year earlier. The company credited its record results to strong growth and market share gains in both its tire and engineered products operations and significant progress from its "Cooper 21" strategic planning initiatives.
Sales were strong in both segments of the company with tire operations reporting sales of $368.4 million, an increase of 6.0 percent over the 1998 period. For engineered products, sales were $126.9 million, an increase of 11.2 percent compared to the same quarter in 1998. Segment profits were $42.6 million for tire operations, an increase of 28.4 percent from the year earlier quarter. For engineered products, segment profits were $16.7 million, an increase of 4.6 percent, excluding a one-time gain of $1.9 million that contributed to an exceptionally strong 1998 period.
For the first half of 1999, sales were $963.2 million, a gain of 7.1 percent over the 1998 period. Earnings were $69.3 million, up 17.8 percent, while earnings per share reached 91 cents, a gain of 21.3 percent over the first half of 1998. Sales for the tire operations were $720.4 million, an increase of 6.3 percent, while sales for engineered products reached $242.8 million, a gain of 9.6 percent. Segment profits totaled $75.8 million in tire operations, up 20.5 percent from the first half of 1998, and $32.2 million, an increase of 8.1 percent in engineered products.
In announcing these results, Cooper chairman and CEO, Patrick W. Rooney said, "Sales were strong in both business units. In our engineered products area, our combined sales of hoses, vibration control products and sealing systems were significantly bolstered by the record levels of North American light vehicle production during the quarter. In tires, our domestic market share for passenger and light truck tires grew nearly a full percentage point when comparing quarterly shipments. Modest raw material prices again helped us achieve positive financial results.
"Strong performance by our new private brand and regional retail customers, plus increases from existing customers boosted unit tire sales by more than 9 percent compared to the prior year's quarter. Also, our new regional retailer division began actively bringing new business on board for our Avon tire lines. During this past quarter five new lines of Avon products designed to fit the U.S. driving requirements were introduced into the U.S. market. These new lines have received enthusiastic support from the large retailers targeted for this program. Volume improvements, particularly in high performance passenger tires, and cost reduction efforts have resulted in improved results in Europe. We are pleased with the progress in Melksham and expect continued improvements in profitability," he concluded.
"We are delighted to see continued progress from cost reduction programs which have received even greater emphasis with our 'Cooper 21' strategic planning program," commented Thomas A. Dattilo, Cooper's president and COO. "We have challenged our team to achieve cost savings in virtually every operation of the company, setting a goal of $40 million in cost reduction for 1999. The strong performance reported this quarter is continuing evidence of our ability to improve profitability in tough competitive environments, and keeps us on track towards achieving the goal we've set for ourselves.
"Since the 'Cooper 21' strategic planning process began we have identified opportunities and then taken action to make the company a stronger competitor. Our Avon and Dean Tire acquisitions, along with the Pirelli alliance, have enabled the tire operation to strengthen our product offerings and programs in the fast-growing markets for replacement tire sales: North America and Europe. In our quest to lower costs, our operational excellence program has driven savings in many production areas. For engineered products, we have exciting developments in the areas of new products and new business, and are actively exploring opportunities for platforms that will increase shareholder value well into the new century.
"Our management team and employees worldwide are optimistic about Cooper's ability to compete in the next millennium. We are constantly searching the horizon for new opportunities which will deliver value for shareholders and strengthen their investment in Cooper Tire & Rubber Company," Dattilo concluded.
REGULAR DIVIDEND DECLARED ON COOPER TIRE STOCK
The board of directors of Cooper Tire & Rubber Company declared a quarterly dividend of 10.5 cents per share on common stock, payable September 30, 1999 to stockholders of record September 9, 1999.
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 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 serves 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 report contains forward-looking statements regarding expectations for future financial performance which involve uncertainty and risk. It is possible the company's future financial performance may differ from expectations due to a variety of factors including, but not limited to: changes in economic conditions in the world, increased competitive activity, consolidation among its competitors and customers, technology advancements, fluctuations in raw material and energy prices, changes in interest and foreign exchange rates, 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 analysis 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.
(Statements of income and balance sheets follow...)
COOPER TIRE & RUBBER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands Quarter Ended Six Months Ended
except per share amounts) June 30 June 30
------------------- --------------------
1999 1998 1999 1998
--------- --------- --------- ----------
Revenues:
Net sales $495,352 $461,740 $963,239 $899,298
Other income 290 671 1,149 1,249
-------- -------- -------- --------
495,642 462,411 964,388 900,547
Costs and expenses:
Cost of products sold 398,653 378,467 781,780 741,937
Selling, general,
administrative 33,796 28,452 65,888 56,964
Interest 3,596 3,764 7,499 7,613
-------- -------- -------- --------
436,045 410,683 855,167 806,514
-------- -------- -------- --------
Income before income
taxes 59,597 51,728 109,221 94,033
Provision for income
taxes 21,641 19,392 39,874 35,172
-------- -------- -------- --------
Net income $ 37,956 $ 32,336 $ 69,347 $ 58,861
-------- -------- -------- --------
-------- -------- -------- --------
Basic and diluted
earnings per share $.50 $.41 $.91 $.75
Weighted average
shares outstanding 75,913 78,850 75,895 78,849
Depreciation $ 26,777 $ 25,207 $ 52,427 $ 49,466
Capital expenditures $ 31,236 $ 30,825 $ 70,540 $ 58,207
CONSOLIDATED BALANCE SHEETS
June 30
-----------------------
1999 1998
---------- ----------
Assets
------
Current assets:
Cash and cash equivalents $ 27,828 $ 37,434
Accounts receivable 369,348 318,042
Inventories 206,009 209,254
Prepaid expenses and deferred
income taxes 23,580 20,426
---------- ----------
Total current assets 626,765 585,156
Property, plant and equipment - net 900,295 868,961
Intangibles and other assets 94,648 82,428
---------- ----------
$1,621,708 $1,536,545
---------- ----------
---------- ----------
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Notes payable $ 9,593 $ 11,080
Trade payables and accrued liabilities 208,585 179,770
Income taxes 0 367
Current portion of debt 205 272
---------- ----------
Total current liabilities 218,383 191,489
Long-term debt 205,180 205,282
Postretirement benefits other
than pensions 154,589 148,726
Other long-term liabilities 48,810 38,418
Deferred income taxes 76,773 75,643
Stockholders' equity 917,973 876,987
---------- ----------
$1,621,708 $1,536,545
---------- ----------
---------- ----------
SEGMENT INFORMATION
Six Months Ended
June 30
-----------------------
1999 1998
---------- ----------
Net sales:
Tires $ 720,472 $ 677,870
Engineered products 242,767 221,428
Segment profit(a)
Tires 75,828 62,953
Engineered products 32,245 29,832
(a)Segment profit is defined as income before income taxes and other
income includes allocation of corporate interest expense.
These interim statements are subject to year-end adjustments.