First Quarter Highlights FINDLAY, Ohio, May 3
/PRNewswire-FirstCall/ -- Cooper Tire & Rubber Company
(NYSE:CTB) today reported a 16 percent year-over-year increase in
net sales, achieving a new quarterly record of $597 million in the
three months ended March 31, 2006 compared to $514 million in the
same period of 2005. The Company's acquisition of Cooper Chengshan
(Shandong) Passenger Tire Co., Ltd., and Cooper Chengshan
(Shandong) Tire Company, Ltd., which was finalized with an
effective date of February 4, 2006, increased sales by $48 million
in the quarter while higher prices, improved product mix, and
higher unit sales volumes in North America and Europe added $39
million. (Logo:
http://www.newscom.com/cgi-bin/prnh/20010404/COOPERLOGO ) While the
increase in sales volume generated additional operating profit of
$5 million, the Company's continuing operations experienced
offsetting cost increases from higher raw material costs, reduced
mold and production levels in the Company's Texarkana, Arkansas,
plant, and the transition to 7-day continuous operations in the
Findlay, Ohio plant. These cost increases outweighed the combined
effects of improved price, improved product and customer mix and
the increased sales volume. In addition, after the first quarter
ended, the Company tentatively resolved a certain product liability
claim. The unusual circumstances surrounding the claim resulted in
a tentative resolution well in excess of what the company had
anticipated and reserved previously. As required, net adjustments
to the product liability reserves were recorded retroactively to
the first quarter, reducing operating profit by $4 million, net
income by $3 million, and earnings per share by 5 cents. Including
the impact of the tentative resolution and a gain of 1 cent from
discontinued operations, the Company generated a net loss of 8
cents per share in the quarter compared to net earnings of 7 cents
per share in the first quarter of 2005. North American Tire
Operations The Company's North American tire operations reported
sales of $496 million in the quarter, up 7 percent compared to $463
million in the first quarter of 2005. This increase was driven by
improved pricing and mix as well as by higher unit sales. Cooper's
unit sales were up 1 percent overall while RMA industry shipments
of light vehicle replacement tires were down more than 4 percent.
Cooper's unit sales of SUV tires, performance tires and light truck
tires increased by 15 percent, 17 percent and 2 percent
respectively as the company gained market share in all replacement
tire categories in the quarter. Operating results for the North
American Tire operations declined year over year as a result of
several key operating factors. These included $29 million in higher
raw material costs and $5 million in higher utility costs. These
were partially offset by $20 million in improved pricing. In
addition, during January and February the Company reduced mold and
production levels in its Texarkana, Arkansas plant, in response to
weak market conditions. And in late February the Company's Findlay,
Ohio plant was converted from a 5-day operation to a 7-day
operation. The combined cost impact in the quarter from these
actions was approximately $6 million. In total, but excluding the
impact of adjustments made to product liability reserves after the
quarter ended, North American Tire operations generated an
operating loss of $2 million compared to operating profit of $6
million in the first quarter of 2005. Including the adjustments to
product liability reserves, the segment result was an operating
loss of $6 million. International Tire Operations The Company's
International Tire Operations reported sales of $125 million in the
quarter, an increase of 58 percent compared to the first quarter of
2005. Cooper Europe had an all-time record quarter as sales
increased by 18 percent. The acquisition of Cooper Chengshan
contributed $48 million in sales during the period. Total unit
sales for the International Tire Operations increased by 68
percent. Operating profit for the International segment was $3
million compared to break-even results in the first quarter of
2005. Cooper Chengshan added more than $2 million in operating
profit. Improved pricing and mix added $4 million. These were
partially offset by higher raw material costs, expenses related to
the startup of Asian operations and higher utility and other plant
costs. Management Commentary Commenting on the quarter's results,
Cooper's chairman, president and chief executive officer Thomas A.
Dattilo said, "We had good momentum in terms of sales for the
quarter as we outpaced the industry, increased market share and
improved our overall product mix in North America. We had strong,
record setting sales in Europe with improved product offering,
availability and expanded distribution. We were pleased with the
addition of Cooper Chengshan in China and the solid contribution it
is already making to our company. We were also pleased with the
dividend on our investment in Kumho. However, the North American
replacement tire market remains very competitive and raw material
prices continue to impact our results. The price increases we have
instituted in the past several months have fallen short of covering
rising material costs." Outlook "In North America we implemented
another price increase effective April 1 which will help offset a
portion of the increasing material costs going forward," Dattilo
continued. "If natural rubber and oil prices remain elevated, more
price increases will be necessary." "We will continue our efforts
around the world to improve our operations and grow our business.
We expect to improve manufacturing efficiency and reduce scrap in
all our plants as the year progresses. Cooper Chengshan presents
exciting opportunities in Asia and we look forward to significant
improvements there in the first full quarter of our ownership.
While market conditions remain challenging, particularly in North
America, we are confident that we are pursuing the right strategies
to improve the returns on our shareholders' investments in this
business," Dattilo concluded. Cooper's management team will discuss
the financial and operating results for the quarter in a conference
call today at 11:00 a.m. Eastern time. Interested parties may
access the audio portion of that conference call on the investor
relations page of the Company's web site at
http://www.coopertire.com/. Company Description Cooper Tire &
Rubber Company is a global company that specializes in the design,
manufacture, marketing and sales of passenger car, light truck,
medium truck tires and subsidiaries that specialize in motorcycle
and racing tires, as well as tread rubber and related equipment for
the retread industry. With headquarters in Findlay, Ohio, Cooper
Tire has 60 manufacturing, sales, distribution, technical and
design facilities within its family of companies located around the
world. For more information, visit Cooper Tire's web site at:
http://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, expectations
or matters that the Company anticipates may happen with respect to
the future performance of the industries in which the Company
operates, the economies of the United States and other countries,
or the performance of the Company itself, which involve uncertainty
and risk. Such "forward-looking statements" are generally, though
not always, preceded by words such as "anticipates," "expects,"
"believes," "projects," "intends," "plans," "estimates," and
similar terms that connote a view to the future and are not merely
recitations of historical fact. Such statements are made solely on
the basis of the Company's current views and perceptions of future
events, and there can be no assurance that such statements will
prove to be true. It is possible that actual results 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, especially the continuation
of the global tensions and risks of further terrorist incidents
that currently exist; -- increased competitive activity, including
the inability to obtain and maintain price increases to offset
higher production or material costs; -- the failure to achieve
expected sales levels; -- consolidation among the Company's
competitors and customers; -- technology advancements; --
fluctuations in raw material and energy prices, including those of
steel, crude petroleum and natural gas and the unavailability of
such raw materials or energy sources; -- changes in interest and
foreign exchange rates; -- increases in pension expense resulting
from investment performance of the Company's pension plan assets
and changes in discount rate, salary increase rate, and expected
return on plan assets assumptions; -- government regulatory
initiatives, including the proposed and final regulations under the
TREAD Act; -- changes in the Company's customer relationships,
including loss of particular business for competitive or other
reasons; -- the impact of labor problems, including a strike
brought against the Company; -- litigation brought against the
Company; -- an adverse change in the Company's credit ratings,
which could increase its borrowing costs and/or hamper its access
to the credit markets; -- the inability of the Company to execute
the cost reduction/Asian strategies outlined for the coming year;
-- the failure of the Company's suppliers to timely deliver
products in accordance with contract specifications; and -- the
impact of reductions in the insurance program covering the
principal risks to the Company, 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 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 ("SEC"). Cooper Tire &
Rubber Company Consolidated Statements of Income (Dollar amounts in
thousands except per share amounts) Quarter Ended March 31 2005
2006 Net sales $514,057 $596,582 Cost of products sold 465,375
552,977 Gross profit 48,682 43,605 Selling, general and
administrative 42,801 47,944 Restructuring charges -- -- Operating
profit (loss) 5,881 (4,339) Interest expense 14,215 10,813 Interest
income (5,614) (2,971) Debt extinguishment -- (77) Dividend from
unconsolidated subsidiary -- (4,609) Other income - net (1,229)
(33) Loss from continuing operations before income taxes (1,491)
(7,462) Income tax benefit 447 2,307 Loss from continuing
operations before minority interests (1,044) (5,155) Minority
interests -- (313) Loss from continuing operations (1,044) (5,468)
Income from discontinued operations, net of income taxes 6,260 314
Net income (loss) $5,216 $(5,154) Basic earnings (loss) per share
Loss from continuing operations $(0.01) $(0.09) Income from
discontinued operations $0.09 $0.01 Net income (loss) $0.07*
$(0.08) Diluted earnings (loss) per share Loss from continuing
operations $(0.01) $(0.09) Income from discontinued operations
$0.09 $0.01 Net income (loss) $0.07* $(0.08) Weighted average
shares outstanding Basic 69,871 61,330 Diluted 69,871 61,330
Depreciation $25,647 $30,039 Amortization $1,083 $1,304 Capital
expenditures $35,197 $33,323 Segment information Net sales North
American Tire $462,855 $495,851 International Tire 79,400 125,073
Eliminations (28,198) (24,342) Segment profit (loss) North American
Tire 6,452 (5,912) International Tire 180 3,415 Unallocated
corporate charges and eliminations (751) (1,842) CONSOLIDATED
BALANCE SHEETS March 31 2005 2006 Assets Current assets: Cash and
cash equivalents $563,518 $193,814 Short-term investments 91,864 --
Accounts receivable 386,174 436,872 Accounts receivable from sale
of automotive operations 54,270 -- Inventories 276,401 407,594
Other current assets 14,851 13,407 Deferred income taxes 28,022
23,826 Total current assets 1,415,100 1,075,513 Property, plant and
equipment 742,718 962,796 Goodwill 48,172 60,262 Restricted cash
13,080 12,464 Intangibles and other assets 340,162 355,088
$2,559,232 $2,466,123 Liabilities and Stockholders' Equity Current
liabilities: Notes payable $110 $6,556 Payable to non-controlling
owner -- 96,239 Trade payables and accrued liabilities 300,786
430,020 Income taxes 914 -- Liabilities of discontinued operations
6,928 4,660 Total current liabilities 308,738 537,475 Long-term
debt 770,422 502,619 Postretirement benefits other than pensions
172,798 183,970 Other long-term liabilities 190,329 226,898
Long-term liabilities of discontinued operations 23,116 12,810
Deferred income taxes 41,757 19,859 Minority interests 766 53,914
Stockholders' equity 1,051,306 928,578 $2,559,232 $2,466,123 *
Amounts do not add due to rounding These interim statements are
subject to year-end adjustments Certain amounts from 2005 have been
reclassed to conform to 2006 presentation
http://www.newscom.com/cgi-bin/prnh/20010404/COOPERLOGO
http://photoarchive.ap.org/ DATASOURCE: Cooper Tire & Rubber
Company CONTACT: Roger S. Hendriksen, +1-419-427-4768 Web site:
http://www.coopertireandrubber.com/
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