Cooper Tire & Rubber Company Announces Record Operating Profits, 2nd Quarter Results
20 July 2000
Cooper Tire & Rubber Company Announces Record Operating Profits, Second Quarter Results
FINDLAY, Ohio - COOPER TIRE & RUBBER COMPANY today reported an all-time company record of $83.2 million operating profit for the quarter ended June 30, 2000. This represents a 31 percent increase over the same period last year when operating profit was $63.5 million. Net sales for the quarter were $887 million, a 79 percent increase over the second quarter 1999 mark of $495 million. The Company's net income was $35.5 million or 48 cents per share in the second quarter compared to $38.0 million or 50 cents per share in 1999. Earnings before interest, taxes, depreciation and amortization rose 45 percent to $130.6 million for the quarter.On a segment basis, automotive group sales nearly quadrupled last year's second-quarter levels, reaching a record $485 million. That total included $359 million attributable to the acquisition of The Standard Products Company and the former Siebe Automotive operations. Tire group net sales totaled $410 million in the second quarter, an 11 percent increase over the same period of 1999. Sales by Oliver Rubber Company, which was acquired with Standard late last year, contributed $41 million to the tire group total.
For the first half of 2000, sales were $1.8 billion, an increase of nearly 88 percent over the $963 million recorded in the first six months of 1999. Operating profits were $155 million, an increase of 33 percent over 1999; and net income was $67.0 million or 90 cents per share in 2000 compared to $69.3 million or 91 cents per share in 1999.
The acquisitions of The Standard Products Company and Siebe Automotive contributed $393 million in sales to the quarter total and $790 million in the first half. The reported second-quarter net income includes the negative impact (about 2 cents per share) of continued transition activities including the closure of one production facility in France and losses from the operation of a plant within the Plastics Division of Cooper-Standard Automotive prior to its sale during the quarter. Despite these charges, the acquisitions were accretive in the quarter. Other factors affecting earnings included higher raw materials costs, which, when compared to the same period last year, reduced earnings for the quarter by approximately 8 cents per share.
Commenting on the quarter's results, Cooper's chairman, president and CEO Thomas A. Dattilo said, "Our record operating earnings are the direct result of our recent acquisitions and the expanded market penetration those operations bring to our company. The acquisitions had a positive impact on our bottom line for the quarter even when considering related nonrecurring charges for transition and integration activities. Without those charges, the acquisitions added about 4 cents per share to the record quarter results.
"Cooper-Standard Automotive sales were solid during the quarter as North American light vehicle production continued to be strong," Dattilo continued. "Our position on some of the world's most popular vehicle platforms has allowed us to benefit from high automotive production. In addition, we continue to win business on new platforms. This quarter, Cooper-Standard was awarded contracts for over $29 million in net new business annually. This brings the total new business awarded for the year to over $75 million annually."
Regarding the company's tire operations, Dattilo said, "Our tire group performed well, and in spite of softening in the market, we achieved our sales goals for the quarter. Tire sales were particularly strong in our popular light truck lines where we continue to grow our market share. Certainly, the increased costs of raw materials were significant, but our continued efforts to reduce production costs overall kept the impact to a minimum and we were able to exceed last year's operating profit for the first six months. We will have to work even harder at this in the coming months since we do not anticipate much relief in raw material prices during the rest of the year."
During the quarter, the company announced the sale of two units of the Plastics Division of Cooper-Standard Automotive and the shutdown of four manufacturing locations. Total after-tax proceeds from the sale of the two Plastics Division units approximated $90 million. Regarding these moves, Dattilo said, "This is part of our ongoing integration activities and strategic planning. The proceeds from the sale of the assets will reduce debt and the consolidation of operations will improve synergies already achieved. We expect to close on the sale of the remainder of our Plastics Division during the third quarter.
"This was another solid quarter for us," 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 23,000 employees and 63 manufacturing facilities in 13 countries.
(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
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1999 2000 1999 2000
---------- ---------- ---------- ----------
Net sales $ 495,352 $ 886,652 $ 963,239 $1,808,917
Costs of
products sold 398,016 741,373 780,509 1,528,957
---------- ---------- ---------- ----------
Gross profit 97,336 145,279 182,730 279,960
Amortization
of goodwill -- 4,471 -- 8,683
Selling, general
and administrative 33,796 57,622 65,888 115,886
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Operating profit 63,540 83,186 116,842 155,391
Interest expense 3,596 25,376 7,499 49,298
Other - net 347 (362) 122 (3,721)
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Income before
income taxes 59,597 58,172 109,221 109,814
Provision for
income taxes 21,641 22,697 39,874 42,837
---------- ---------- ---------- ----------
Net income $ 37,956 $ 35,475 $ 69,347 $ 66,977
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic and diluted
earnings per share $ 0.50 $ 0.48 $ 0.91 $ 0.90
Weighted average
shares outstanding 75,913 73,648 75,895 74,703
Depreciation $ 26,777 $ 42,193 $ 52,427 $ 85,473
Amortization of
goodwill and
other intangibles $ 424 $ 5,154 $ 843 $ 10,042
Capital expenditures $ 31,236 $ 51,524 $ 70,540 $ 100,224
Segment information:
Net sales:
Tire $ 368,410 $ 410,420 $ 720,472 $ 855,764
Automotive 126,942 484,925 242,767 969,604
Eliminations -- (8,693) -- (16,451)
Segment profit:
Tire 46,123 42,104 83,320 87,213
Automotive 17,417 41,082 33,522 68,178
CONSOLIDATED BALANCE SHEETS
June 30
-----------------------
1999 2000
---------- ----------
Assets
------
Current assets:
Cash and cash equivalents $ 27,828 $ 24,994
Accounts receivable 369,348 679,162
Inventories 206,009 324,824
Prepaid expenses, deferred
income taxes and other 23,580 84,978
---------- ----------
Total current assets 626,765 1,113,958
Property, plant and equipment - net 900,295 1,289,996
Intangibles and other assets 94,648 705,693
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$1,621,708 $3,109,647
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Liabilities and Stockholders' Equity
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Current liabilities:
Notes payable $ 9,593 $ 189,032
Trade payables and
accrued liabilities 208,585 450,213
Income taxes -- 18,814
Current portion of debt 205 13,866
---------- ----------
Total current liabilities 218,383 671,925
Long-term debt 205,180 1,046,150
Postretirement benefits
other than pensions 154,589 183,116
Other long-term liabilities 48,810 59,340
Deferred income taxes 76,773 182,726
Stockholders' equity 917,973 966,390
---------- ----------
$1,621,708 $3,109,647
---------- ----------
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These interim statements are subject to year-end adjustments.