COOPER TIRE & RUBBER CO - 10-Q Quarterly Report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934

Commission File No. 1-4329

COOPER TIRE & RUBBER COMPANY
(Exact name of registrant as specified in its charter)

DELAWARE 34-4297750
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)

701 Lima Avenue, Findlay, Ohio 45840
(Address of principal executive offices)
(Zip code)

(419) 423-1321
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.

Yes (X) No ( )

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).
Yes (X) No ( )

Number of shares of common stock of registrant outstanding
at October 29, 2004: 74,866,947

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Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS

COOPER TIRE & RUBBER COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands except per-share amounts)

See accompanying notes.

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COOPER TIRE & RUBBER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 2003 AND 2004
(UNAUDITED)
(Dollar amounts in thousands except per-share amounts)

See accompanying notes.

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COOPER TIRE & RUBBER COMPANY
CONSOLIDATED STATEMENTS OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2004
(UNAUDITED)
(Dollar amounts in thousands except per-share amounts)

See accompanying notes.

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COOPER TIRE & RUBBER COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2004
(UNAUDITED)
(Dollar amounts in thousands)

See accompanying notes.

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COOPER TIRE & RUBBER COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands except per-share amounts)

1. The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally
accepted in the United States for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United
States for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. There is a
year-round demand for the Company's passenger and truck replacement
tires, but passenger replacement tires are generally strongest during
the third and fourth quarters of the year. Operating results for the
three-month and nine-month periods ended September 30, 2004 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 2004.

The balance sheet at December 31, 2003 has been derived from the
audited financial statements at that date but does not include all of
the information and footnotes required by accounting principles
generally accepted in the United States for complete financial
statements.

For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 2003.

2. On September 17, 2004, the Company announced the signing of a
definitive agreement to sell its automotive business, Cooper-Standard
Automotive ("Cooper-Standard"). Also in September, the Tire Group
announced its intent to cease its inner tube business. The Company is
currently in discussions with potential buyers of the inner tube
business or its assets. These operations are considered to be
discontinued operations as defined under Statement of Financial
Accounting Standard ("SFAS") No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," and require specific accounting and
reporting for this quarter which differs from the approach used to
report the Company's results in prior quarters. The standard also
requires restatement of comparable prior periods to conform to the
required presentation.

The Company's consolidated financial statements reflect the accounting
and disclosure requirements of SFAS No. 144, which mandate the
segregation of operating results for the current year and comparable
prior year periods and the current balance sheet related to the
discontinued operations from those related to ongoing operations.
Accordingly, the consolidated statements of income for the three and
nine month periods ended September 30, 2003 and 2004 reflect this
segregation as income from continuing operations and income from
discontinued operations and the consolidated balance sheet at September
30, 2004 displays the segregation of the total assets of the operations
to be sold as an aggregated current asset and the related total
liabilities as an aggregated current liability.

In addition to the segregation of operating financial results, assets,
and liabilities, Emerging Issues Task Force ("EITF") No. 87-24,
"Allocation of Interest to Discontinued Operations," mandates the
reallocation to continuing operations of general corporate overhead
previously allocated to discontinued operations and permits the
allocation of interest to discontinued operations in accordance with
specific guidelines. Corporate overhead that previously would have been
allocated to Cooper-Standard of $3,223 for the quarter ended September
30, 2004 ($3,149 for the quarter ended September 30, 2003) and $9,670
for the nine-month period ended September 30, 2004 ($9,449 for the
nine-month period ended September 30, 2003) is charged against
continuing operations in the Company's consolidated statements of
income. The Company is using the permitted allocation method for
interest expense on corporate debt, which is based on the ratio of net
assets to be sold or discontinued to the sum of total net assets of the
consolidated Company plus consolidated debt. Under this method, $7,845
and $23,656 of interest has been attributed to discontinued operations
in the three-month and nine-month periods ended September 30, 2003 and
2004, respectively in addition to interest on debt held directly by
Cooper-Standard. The actual amount of debt to be liquidated by
application of the proceeds of the sale of Cooper-Standard has not yet
been determined and may differ from the amount used in

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the allocation process for preparing the consolidated financial
statements. The Company has previously announced that proceeds from the
sale of Cooper-Standard will be used for debt reduction, investment in
the Company's tire operations, the repurchase of shares or a
combination thereof and the amount of such uses will not be determined
until an assessment is made of the Company's investment prospects and
market conditions after the proceeds are available. In October of 2004
the Company commenced the repurchase of its common shares under a
program approved by the Board of Directors in May of 2000.

Operating results for Cooper-Standard included in income from
discontinued operations, net of income taxes on the Company's
consolidated statements of income and are presented in the following
table.

The total assets and total liabilities of Cooper-Standard at December 31,
2003 and September 30, 2004 are detailed below. The Company's condensed
consolidated balance sheet at September 30, 2004 presents these amounts as
assets of discontinued operations and liabilities of discontinued
operations.

Operating results for the inner tube business are included in income from
discontinued operations, net of income taxes on the Company's consolidated
statements of income and are presented in the following table.

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The total assets of the inner tube facility at December 31, 2003
included in the Company's condensed consolidated balance sheets as
assets of discontinued operations were $10,299. These assets included
land, buildings, machinery and equipment. During the third quarter of
2004, the buildings, machinery and equipment of the inner tube facility
were written down to fair market value, as determined by the Company's
expectations for proceeds upon its disposition, and liabilities were
recorded for employee benefit, severance and environmental costs. At
September 30, 2004, the total assets and total liabilities of the inner
tube facility were $5,729 and $2,400, respectively.

3. In accordance with SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," the Company has evaluated the
determination of its reporting segments as a result of changes in its
organizational reporting structure and the classification of
Cooper-Standard as discontinued operations during the third quarter of
2004. The Company has determined it has two reportable segments for
continuing operations - North American Tire Group and International
Tire Group.

The following table details information on the Company's operating
segments:

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Geographic information for revenues, based on continent of origin, and
long-lived assets follows:

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4. On an annual basis, disclosure of comprehensive income is incorporated
into the Statement of Shareholders' Equity. This statement is not
presented on a quarterly basis. Comprehensive income includes net
income and components of other comprehensive income, such as foreign
currency translation adjustments, unrealized gains or losses on certain
marketable securities and derivative instruments and minimum pension
liability adjustments.

The Company's comprehensive income is as follows:

5. The Company accounts for employee stock option plans in accordance with
Accounting Principles Board Opinion ("APB") No. 25, "Accounting for
Stock Issued to Employees." SFAS No. 123, "Accounting for Stock-Based
Compensation," requires, if APB Opinion No. 25 is followed, disclosure
of pro forma information regarding net income and earnings per share
determined as if the Company accounted for its employee stock options
under the fair value method. The fair value for these options was
estimated at the date of grant using a Black-Scholes option pricing
model with the following weighted-average assumptions:

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The weighted-average fair value of options granted in 2003 and 2004 was
$3.74 and $5.68, respectively. For purposes of pro forma disclosures,
the estimated fair value of options is amortized to expense over the
options' vesting period. The Company's reported and pro forma financial
results are as follows:

6. The following table discloses the amount of net periodic benefit costs
related to continuing operations for the nine months ended September
30, 2003 and 2004 for the Company's defined benefit plans and other
postretirement benefits:

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The Medicare Prescription Drug, Improvement and Modernization Act of
2003 (the "Act") was enacted in December 2003. The Act introduced a
prescription drug benefit under Medicare Part D as well as a federal
subsidy to sponsors of retiree health plans that provide a benefit that
is at least actuarially equivalent to Medicare Part D. In May 2004, the
Financial Accounting Standards Board ("FASB") issued FASB Staff
Position ("FSP") 106-2, "Accounting and Disclosure Requirements Related
to the Medicare Prescription Drug Improvement and Modernization Act of
2003." This FSP provided accounting and disclosure guidance for
employers who sponsor postretirement health care plans that provide
drug benefits. Preliminary Medicare reform regulations were issued in
draft form late in July for comment before October 4, 2004. These
regulations are complex and contain acknowledged open issues. The
Company has prepared an estimate of their potential effect and recorded
it during the third quarter of 2004, retroactive to January 1, 2004 as
prescribed by FSP 106-2.

The Act reduced net periodic postretirement benefit cost by $546 and
$1,637 for the three and nine months ended September 30, 2004,
respectively, including service cost, interest cost and amortization of
the actuarial gain. The total impact of the Act on the Company's
actuarial liability under all U.S. plans was a reduction of $15,300 and
is being accounted for as an actuarial gain that will be amortized as a
reduction of the Company's periodic expense and balance sheet liability
over periods ranging from ten to twelve years.

7. The earnings per share previously reported for the first and second
quarters and six months of 2004 are restated below for the segregation
of operating results related to continuing operations from those
related to discontinued operations, as well as for the impact of the
Medicare Prescription Drug, Improvement and Modernization Act of 2003
which was recorded during the third quarter of 2004, retroactive to
January 1, 2004.

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8. During the third quarter of 2004, the North American Tire segment
continued its consolidation of pre-cure retread operations and recorded
$1,100 of restructuring expense related to equipment disposal.

Also during the third quarter of 2004, the North American Tire segment
announced a plan to cease production of radial medium truck tires at
its Albany, GA facility by the end of the third quarter of 2005. These
tires will be sourced from Asian manufacturers in the future. No
employees will be affected by this initiative. The segment recorded an
impairment charge of $7,300 for equipment associated with radial medium
truck tire production in order to write the equipment down to its fair
market value, as determined by the Company's expectations for proceeds
upon its disposition.

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9. The Company provides a reserve for the estimated cost of product
warranties at the time revenue is recognized. The reserve is based
primarily on historical return rates and includes accruals for the
Company's normal warranty programs and the enhanced warranty granted
under terms of the settlement of class action litigation during 2001.
During the quarter ended September 30, 2004, the Company received
notice from the judge overseeing the Company's compliance with the
terms of the settlement agreement that the court had reviewed the
Company's compliance efforts and was satisfied with the Company's
compliance. Such review included plant visits, reports by a third party
of the Company's compliance with terms of the agreement, and the number
of claims for enhanced warranty benefits. After considering this
development and the number of enhanced warranty claims to date, the
Company reevaluated the reserve required for the enhanced warranty
claims and reduced it by $11,867 during the quarter to reflect costs
expected during the remaining term of the enhanced warranty. The
following table summarizes the activity in the Company's product
warranty liabilities since December 31, 2003:

Reserve at December 31, 2003 $ 22,642

Additions 3,558

Reduction to enhanced warranty reserve (11,867)

Payments (4,345)
-------------

Reserve at September 30, 2004 $ 9,988
=============

10. The Company has provided a guarantee of a portion of the bank loans
made to its automotive business joint venture with Nishikawa Rubber
Company. In 2003, the joint venture entered into an additional bank
loan, maturing in 2008, with the joint venture partners each
guaranteeing an equal portion of the amount borrowed. In accordance
with FASB Interpretation No. 45, "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others," guarantees meeting the characteristics
described in the Interpretation are required to be recorded at fair
value. As of September 30, 2004, the Company has recorded a $36
liability related to the guarantee of this debt with a corresponding
increase to the carrying value of its investment in the joint venture.
The Company's maximum exposure under the two guarantee arrangements at
September 30, 2004 was approximately $4,500.

11. The Company is a defendant in various judicial proceedings arising in
the ordinary course of business. A significant portion of these
proceedings are products liability cases in which individuals involved
in vehicle accidents seek damages resulting from allegedly defective
tires manufactured by the Company. Litigation of this type has
increased significantly throughout the tire industry following the
Firestone tire recall announced in 2000.

The Company accrues costs for products liability at the time a loss is
probable and the amount of loss can be estimated. During the quarter
ended June 30, 2004, the Company refined the specific criteria against
which to evaluate claims. The Company believes the probability of loss
can be established and the amount of loss can be estimated only after
certain minimum information is available, including verification that
Company-produced products were involved in the incident giving rise to
the claim, the condition of the product purported to be involved in the
claim, the nature of the incident giving rise to the claim, and the
extent of the purported injury or damages. In cases where such
information is known, each products liability claim is evaluated based
on its specific facts and circumstances. A judgment is then made,
taking into account the views of counsel and other relevant factors, to
determine the requirement for establishment or revision of an accrual
for any potential liability. In most cases, the liability cannot be
determined with precision until the claim is resolved. Pursuant to
applicable accounting rules, the Company accrues the minimum liability
for each known claim when the estimated outcome is a range of possible
loss and no one amount within that range is more likely than another.
No specific accrual is made for individual unasserted claims or for
asserted claims where the minimum information needed to evaluate the
probability of a liability is not yet known. However, an accrual for
such claims based, in part, on management's expectations for future

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litigation activity is maintained. The total cost of resolution of such
claims, or increase in reserves resulting from greater knowledge of
specific facts and circumstances related to such claims, could have a
greater impact on the consolidated results of operations and financial
position of the Company in future periods and, in some periods, could
be material.

The products liability expense reported by the Company includes
amortization of insurance premium costs, adjustments to settlement
reserves, and legal costs incurred in defending claims against the
Company offset by recoveries of legal fees. The Company is entitled to
reimbursement under certain insurance contracts in place for periods
ending prior to April 1, 2003 of legal fees expensed in prior periods
based on events occurring in the those periods. During the three month
periods ended September 30, 2003 and 2004 products liability expense
totaled $12,800 and $16,800, respectively. For the nine month periods
ended September 30, 2003 and 2004 products liability expense totaled
$28,200 and $44,500, respectively. The nine-month period of 2003
included only six months under the new program which was initiated on
April 1, 2003. The new program includes occurrence-based insurance
coverage with an increased per claim retention limit, increased policy
limits, and the establishment of a captive insurance company. Premium
costs for insurance coverage in excess of the self-insured amounts for
the first policy year were $10,300 higher than under the previous
program, the per claim retention limit increased $13,300 and the
aggregate retention limit was eliminated, while excess liability
coverage increased by $35,000. The program was renewed effective April
1, 2004 with a two percent increase in insurance premiums cost.
Recoveries of legal fees were $1,400 and $400, respectively, in the
three months ended September 30, 2003 and 2004 and $10,400 and $5,900,
respectively, in the nine months ended September 30, 2003 and 2004.
Policies applicable to claims occurring on April 1, 2003 and thereafter
do not provide for recovery of legal fees.

12. The Company's effective income tax rate for continuing operations for
both the third quarter and first nine months of 2003 and 2004 was 34.3
percent and 31.2 percent, respectively. The rates reflect the impact of
tax credits, global tax planning, the mix of earnings by entity across
foreign and domestic jurisdictions and, for the 2004 periods, the
effect of the benefit accruing to the Company under the Medicare
Prescription Drug, Improvement and Modernization Act of 2003

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

This Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") presents information related to the consolidated results of
operations of the Company, including the impact of restructuring costs on the
Company's results, a discussion of the past results and future outlook of each
of the Company's segments and its discontinued operations, and information
concerning both the liquidity and capital resources of the Company. An important
qualification regarding the "forward-looking statements" made in this discussion
is then presented.

On September 17, 2004 the Company announced the signing of a definitive
agreement to sell its automotive business, Cooper-Standard Automotive. Also in
September, the Tire Group announced its intent to cease its inner tube business
and is currently in discussions with potential buyers for this business or its
assets. These operations are considered to be discontinued operations as defined
under Statement of Financial Accounting Standard ("SFAS") No. 144, "Accounting
for the Impairment or Disposal of Long-Lived Assets," and require specific
accounting and reporting for this quarter which differs from the approach used
to report the Company's results in prior quarters. It also requires restatement
of comparable prior periods to conform to the required presentation.

The Company's consolidated financial statements reflect the accounting and
disclosure requirements of SFAS No. 144 which mandates the segregation of
operating results for the current year and comparable prior year periods and the
current balance sheet related to the operations to be sold from those related to
ongoing operations. Accordingly, the consolidated statements of income for the
three and nine-month periods ended September 30, 2003 and 2004 reflect this
segregation as income from continuing operations and income from discontinued
operations and the consolidated balance sheet at September 30, 2004 displays the
segregation of the

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total assets of the operations to be sold as an aggregated current
asset and the related total liabilities as an aggregated current
liability.

CONSOLIDATED RESULTS OF OPERATIONS

(Dollar amounts in millions except per share amounts)

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Consolidated net sales for the three-month period ended September 30, 2004 were
$32 million higher than for the comparable period one year ago. Net sales for
the North American Tire segment increased $22 million. The International Tire
segment increased net sales by $11 million, with favorable foreign currency
contributing $7 million to this improvement. The impacts of more favorable mix
and the price increases achieved since October of 2003 more than offset the
impact of lower sales volumes. Operating profit in the third quarter of 2004
decreased by $3 million from the operating profit reported for third quarter of
2003. This reduction in operating profit was the result of higher raw material
costs, inefficiencies in plant operations, lower unit volume, restructuring
charges, increased marketing programs costs, increased product liability costs
and expanded advertising programs which were partially offset by the impacts of
improvements in pricing and mix, Lean savings and the reduction to the class
action liability reserve.

Consolidated net sales for the nine-month period ended September 30, 2004 were
$205 million higher than for the comparable period one year ago. Net sales for
the North American Tire segment increased $173 million and net sales for the
International Tire segment increased by $36 million, with favorable foreign
currency contributing $22 million to the latter increase. The increase in net
sales was a result of increased sales volumes, price increases achieved since
October of 2003 and more favorable mix. Operating profit in the first nine
months of 2004 increased by $8 million from the operating profit reported for
the first nine-months of 2003. The improvement in operating profit resulted from
the impacts of improved pricing, Lean savings, improved mix, higher sales
volumes and the reduction to the class action liability reserve which exceeded
the impacts of higher raw material costs, increased marketing costs, expanded
advertising programs, product liability costs, inefficiencies in plant
operations and restructuring charges.

The Company experienced significant increases in the costs of certain of its
principal raw materials during the third quarter and the first nine months of
2004 compared with the levels experienced during the comparable periods of 2003.
The principal raw materials for the North American Tire and International Tire
segments include synthetic rubber, carbon black, natural rubber, chemicals and
reinforcement components. The principal raw materials for the former Automotive
segment, now classified as discontinued operations, include fabricated
metal-based components, synthetic rubber, carbon black and natural rubber. The
Company manages the procurement of its raw materials to assure supply and to
obtain the most favorable pricing. For natural rubber, procurement is managed by
buying forward of production requirements and by buying in the spot market. For
metal-based components, procurement is managed through long-term supply
contracts. For other principal materials, procurement arrangements include
multi-year supply agreements that may contain formula-based pricing based on
commodity indices. These arrangements provide quantities needed to satisfy
normal manufacturing demands.

The increases in the costs of natural rubber and crude oil were the most
significant drivers of higher raw material costs during the third quarter and
the first nine months of 2004. The cost of natural rubber increased
approximately 33 percent and 37 percent, respectively, from the quarter and
nine-month levels of the comparable periods of 2003. The price of crude oil, the
primary raw material used in the production of the synthetic rubber, carbon
black and many chemicals used by the Company, has risen to historically high
levels during 2004 The increasing price of crude oil and the growing global
demand for its derivative products is contributing to the cost increases being
experienced for raw materials used by the Company and adding to concerns
regarding their availability.

The price of components fabricated from steel, including automotive fabricated
metal-based components and tire cord and bead components, are being adversely
impacted by scarcity of supply. Since March 2004, the Company has paid
surcharges for its steel components in excess of the pricing contained in its
steel-component supplier contracts to ensure supply. Through September 30, no
interruption of the supply of components fabricated from steel has been
experienced. Surcharges continued to be implemented during the third quarter and
are anticipated to remain at current levels at least through the fourth quarter
of 2004.

Selling, general, and administrative expenses were $39 million in the third
quarter of 2004 (7.1 percent of net sales) compared to $36 million (7.0 percent
of net sales) in the same period in 2003. Increased costs associated with an
expanded advertising program and the timing of those costs were responsible for
the increase. For the

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first nine months of 2004, selling, general, and administrative costs were $126
million (8.2 percent of net sales) compared to $107 million (8.0 percent of net
sales) in the comparable period of 2003 with the same factors contributing to
the increase.

Interest expense decreased less than $1 million in the third quarter of 2004
from the third quarter of 2003 and decreased slightly more than $1 million
during the first nine months of 2004 compared to the first nine months of 2003
reflecting lower interest rates and lower debt levels.

Other-net decreased during the third quarter as a result of foreign currency
losses being recorded in 2004 compared to gains recorded in 2003 and higher
interest income in 2004. For the nine months ended September 30, 2004, other-net
decreased less than $1 million from the first nine months of 2003 due to the
same factors impacting the quarter.

The Company's effective income tax rate for continuing operations for the third
quarter and first nine months of 2003 and 2004 was 34.3 percent and 31.2
percent, respectively. The rates reflect the impact of tax credits, global tax
planning, the mix of earnings by entity across foreign and domestic
jurisdictions and, for the 2004 periods, the effect of the benefit accruing to
the Company under the Medicare Prescription Drug, Improvement and Modernization
Act of 2003.

RESTRUCTURING

During the third quarter of 2004, the North American Tire segment continued its
consolidation of pre-cure retread operations and recorded $1.1 million of
restructuring expense related to equipment disposal.

Also during the third quarter of 2004, the North American Tire segment announced
a plan to cease production of radial medium truck tires at its Albany, GA
facility by the end of the third quarter of 2005. These tires will be sourced
from Asian manufacturers in the future. No employees will be affected by this
initiative. The segment recorded an impairment charge of $7.3 million for
equipment associated with radial medium truck tire production, writing it down
to its fair market value, as determined by the Company's expectations for
proceeds upon its disposition.

North American Tire Segment

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OVERVIEW

Shipments of passenger car and light truck tire replacement units in the United
States market by members of the Rubber Manufacturers Association ("RMA"), a
group comprised of the eleven largest tire companies in the world including the
segment, and which accounted for over 90 percent of the total United States tire
market in recent years, decreased approximately 4.9 percent in the third quarter
of 2004 from shipment levels in the third quarter of 2003. Passenger tire unit
shipments, which account for over 80 percent of the combined passenger and light
truck tire markets, decreased by 4.5 percent while light truck tire unit
shipments decreased by approximately 7.3 percent.

For the first nine months of 2004, RMA shipments of passenger and light truck
tire replacement units increased 2.0 percent from the first nine months of 2003.
Passenger tire shipments increased 1.9 percent while light truck tire shipments
increased 2.7 percent. The replacement tire market in the United States was weak
throughout the first five months of 2003 but started to strengthen in June, and
remained strong for the rest of the year.

SALES

Sales of the North American Tire segment increased $22 million in the third
quarter of 2004 from 2003 levels. Tire unit sales were down 6.9 percent from the
2003 third quarter period. The segment's unit sales of passenger and light truck
tires decreased by 8.2 percent and 5.0 percent, respectively, in the third
quarter of 2004 compared to the third quarter of 2003.

Increased unit sales volumes were achieved in several product categories in
which new product offerings are being introduced -- high performance and sport
utility vehicle tires. However, declines in the broadline economy and light
truck tire product categories during the quarter more than offset those improved
volumes. The segment recorded increased sales in the distributor channel and
increased sales of its proprietary, brand name tires. Declines in sales to mass
merchandiser customers partially offset those increases. In addition to the
impact of improvements to customer and product mix achieved during the third
quarter, sales for the segment benefited from the price increases implemented in
October of 2003 and in February and June of 2004.

Sales increased $173 million during the first nine months of 2004 from levels in
2003 due to higher sales volumes, the price increases achieved since October
2003, and improvements in both customer and product mix. Increases in sales in
the distributor and retail channels and increased sales of its proprietary,
brand name tires were partially offset by a decline in sales to mass
merchandiser customers.

The segment's tire unit sales were up 4.0 percent from the 2003 nine-month
period. Unit sales of passenger and light truck tires increased by .9 percent
and 12.0 percent, respectively, during the first nine months of 2004 compared to
the first nine months of 2003.

OPERATING PROFIT

Segment operating profit in the third quarter of 2004 decreased $4 million from
the third quarter of 2003. The impact of price increases ($34 million), improved
customer and product mix ($8 million), savings generated by Lean initiatives ($8
million) and the reversal of a portion of the class action reserve ($7 million)
increased operating profit during the quarter. Higher raw material costs ($27
million), lower unit sales volumes ($9 million), increased marketing program
costs ($7 million), restructuring charges ($8 million), increases in products
liability costs ($4 million) and increases in other operating costs lowered
operating profit.

For the first nine months of 2004, operating profit increased $9 million over
the comparable period of 2003. The impact of price increases ($64 million),
savings generated from Lean initiatives ($29 million), improved customer and
product mix ($21 million), higher sales ($17 million) and the reversal of a
portion of the class action reserve ($7 million) more than offset higher raw
material costs ($60 million), increased marketing costs associated with the
higher sales revenue ($19 million), increased product liability costs ($16
million), increases in other operating costs ($14 million), increased costs
associated with expanded advertising programs ($12 million) and restructuring
charges ($8 million).

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During the quarter ended September 30, 2004, the Company received notice from
the judge overseeing the Company's compliance with the terms of the 2001 class
action settlement agreement that the court had reviewed the Company's compliance
efforts and was satisfied with the Company's compliance. Such review included
plant visits, reports by a third party of the Company's compliance with terms of
the agreement, and the number of claims for enhanced warranty benefits. After
considering this development, the number of enhanced warranty claims to date,
and the adequacy of other settlement-related serves, the Company reevaluated the
class action settlement reserve and reduced it by $11.3 million during the
quarter to reflect costs expected during the remaining term of the enhanced
warranty. During the quarter ended September 30, 2003, the Company had reviewed
the adequacy of the enhanced warranty liability related to the class action
settlement and reduced it by $3.9 million. The reduction was attributed to a
reduction in the eligible population of tires subject to the enhanced warranty
due to the passage of time and to lower than expected claims.

OUTLOOK

The Company is optimistic that the net sales improvement experienced by the
North American Tire segment during the third quarter will carry over into the
fourth quarter of the year. Future comparisons into the first half of 2005 will
be difficult given the strong industry volumes achieved in the first half of
2004, but the segment's continued market share gains by its house brands and
increased volumes for its high performance products are expected to continue in
2005.

The Company believes the segment's operating profit levels will improve due not
only to the implementation of recently announced price increases, but also due
to the favorable impact of improved product and customer mix, improvements in
operating efficiencies and manufacturing capacity, and the cost reductions
generated through Lean initiatives. Raw material prices continue to be very
difficult to predict accurately due to the volatility of prices for crude oil,
energy and transportation. The market scarcity of steel for the segment's tire
cord and bead components and crude oil-based raw materials is a concern and is
being actively managed, although no interruption of supply has been experienced.
The Company believes raw material costs will be approximately three percent
higher on average in the fourth quarter of 2004 than in the third quarter of
2004.

The segment is near completion of expansions at two of its domestic tire
manufacturing facilities and has expansions underway at two other domestic
facilities. The segment currently has manufacturing supply agreements with two
Asian manufacturers to provide passenger tires from China for distribution in
the North American market. In addition, the segment is implementing its plans to
transfer its radial medium truck tire production to China through contract
manufacturing arrangements which will make domestic production capacity
available for production of certain light truck tires and other higher-margin
products. The timing of the transfer of radial medium truck tires has lagged
expectations and, as a result, total deliveries for the year will be less than
previously anticipated. The domestic plant expansions and inventory management
initiatives will compensate for the passenger tire units originally expected to
be sourced from Asia. The domestic plant expansions, Asian sourcing arrangements
and inventory management initiatives are important to the segment's ability to
profitably provide tire products to its customers.

In the wake of the Firestone recall announced in 2000, the tire industry and the
Company have experienced a significantly higher level of product liability
litigation. Effective April 1, 2003, the Company established a new excess
liability insurance program. The new program covers the Company's product
liability claims occurring on or after April 1, 2003 and is occurrence-based
insurance coverage which includes an increased per claim retention limit,
increased policy limits, and the establishment of a captive insurance company.
Premium costs for insurance coverage in excess of the self-insured amounts for
the first policy year were $10.3 million higher than under the previous program,
the per claim retention limit increased $13.3 million and the aggregate
retention limit was eliminated, while excess liability coverage increased by $35
million. The program was renewed effective April 1, 2004 with a two percent
increase in insurance premiums cost. It is possible product liability costs may
fluctuate from period to period in the future and that such costs could have a
greater impact on the consolidated results of operations and financial position
of the Company in future periods than in the past and, in some periods, could be
material. The Company is aggressively managing its product liability costs.

-20-

INTERNATIONAL TIRE SEGMENT

(Dollar amounts in millions)

OVERVIEW

The International Tire segment currently manufactures and markets passenger car,
light truck and motorcycle tires for the replacement market, as well as racing
tires and materials for the tire retread industry, in Europe and the United
Kingdom.

Shipments of passenger car and light truck tires in the segment's markets, based
on data published by the industry and other sources, increased approximately six
percent in the third quarter of 2004 from the comparable period in 2003. For the
first nine months of 2004, market shipments of passenger and light truck tires
increased four percent from the first nine months of 2003.

SALES

Sales of the Company's International Tire operations increased $11 million, or
20.4 percent, in the third quarter of 2004 from the comparable period of 2003.
Approximately $7 million of the increase was attributable to the foreign
exchange impact of a weakened United States dollar in relation to the British
pound. The remaining sales growth resulted from increased sales volumes in
established distribution channels and sales growth of new product offerings in
the performance lines of tires.

Sales increased $35 million, or 22.3 percent, in the first nine months of 2004
from the comparable period of 2003. Approximately $22 million of the increase
was attributable to the foreign exchange impact of a weakened United States
dollar in relation to the British pound. The remaining sales growth resulted
from increased sales volumes in established distribution channels in the United
Kingdom and the rest of Europe.

OPERATING PROFIT

Operating profit for the International Tire segment for the third quarter of
2004 was equal to the operating profit generated in the third quarter of 2003.
The impact of price increases ($2 million), savings generated from Lean
initiatives ($2 million) and the increased sales volume ($1 million) were offset
by increases in other operating costs ($4 million) and increased raw material
prices ($1 million).

For the nine months ended September 30, 2004, operating profit for the segment
decreased less than $1 million due to the same factors cited for the third
quarter.

OUTLOOK

The Company believes that the net sales improvements experienced in the third
quarter by the International Tire segment will continue into the fourth quarter,
and that demand is expected to remain strong for its products into the first
half of 2005.

The Company also believes that the segment's operating profit levels will
improve over the fourth quarter of 2003 due to price increases implemented
earlier in the year, improved product and customer mix, improvements in
operating efficiencies and cost reductions generated through its Lean
initiatives. Raw material costs are expected to be three percent higher on
average in the fourth quarter of 2004 than in the third quarter of 2004, and
energy costs remain high.

-21-

The segment continues to pursue opportunities for expansion in Asia through
joint ventures and other forms of alliance. The segment currently has a
manufacturing supply agreement with an Asian manufacturer to provide passenger
tires for distribution in its markets.

DISCONTINUED OPERATIONS

On September 17, 2004 the Company announced the signing of a definitive
agreement to sell its automotive business, Cooper-Standard Automotive. Also in
September, the Tire Group announced its intent to cease its inner tube business
and is currently in discussions with potential buyers for this business. These
operations are considered to be discontinued operations as defined under
Statement of Financial Accounting Standard ("SFAS") No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," and require specific accounting
and reporting for this quarter which differs from the approach used to report
the Company's results in prior quarters. It also requires restatement of
comparable prior periods to conform to the required presentation.

COOPER-STANDARD AUTOMOTIVE

OVERVIEW

Cooper-Standard Automotive serves automotive original equipment manufacturers
("OEMs") throughout the world. Light vehicle production in North America fell by
more than one percent but production in Europe increased by almost three
percent. For the nine months ended September 30, 2004, light vehicle production
in North America was slightly lower than during the nine month period of 2003
while European production increased by more than four percent.

Market share pressure on the U.S.-based OEMs, as evidenced by the pricing
environment of zero percent financing and record high rebates, increased pension
and other retirement-related costs, and the impact of global overcapacity have
reduced the overall profitability of the industry, and have resulted in
continued pressure on suppliers for price concessions.

In spite of these industry conditions, Cooper-Standard Automotive has improved
its profitability in the first nine months of 2004 by emphasizing continuous
improvement, Lean manufacturing and cost reduction initiatives, execution of
restructuring initiatives and implementing the sourcing of components and
product from low-cost Asian manufacturers.

In May 2003, the Company increased its ownership position in Jin Young Standard
of South Korea from 49 percent to 90 percent and changed the name of the
operations to Cooper-Standard Automotive Korea, Inc. Cooper-Standard Automotive
is working closely with its Korean subsidiary to expand its business with the
Korean OEMs, who have increased their share of the global automobile market in
recent years.

-22-

In July 2004, the segment entered into a joint-venture agreement with
China-based Saiyang Sealing Products to manufacture and sell automotive sealing
products in China under the name Cooper Saiyang Wuhu Automotive. The venture has
secured business with two Chinese OEMs.

Cooper-Standard recently established two small manufacturing facilities in China
for the production of NVH control systems and fluid handling systems products.
The NVH control systems location has begun operations for the manufacture and
sales of NVH control systems in Kunshan, China and will soon break ground for an
expanded manufacturing, research and development facility in the same city.

SALES

Sales for Cooper-Standard Automotive ("Cooper-Standard") increased $30 million
in the third quarter of 2004 compared to the third quarter of 2003. Sales
increases in North America of $15 million for the quarter were the result of net
new business and the impact of favorable foreign currency translation offset by
lower production volumes and price concessions. In the segment's international
operations, a sales increase of $15 million is attributable to the favorable
impact of foreign currency translation, net new business and higher production
volumes.

Cooper-Standard's sales for the first nine months of 2004 increased $191 million
over the comparable 2003 period. Sales increases in North America of $116
million for the nine-month period were the result of net new business, higher
production levels and the impact of favorable foreign currency translation
offset by price concessions. The sales increase in the international operations
was $75 million and is attributable to the favorable impact of foreign currency
translation, higher production levels and the inclusion of the sales of
Cooper-Standard Automotive Korea.

OPERATING PROFIT

Operating profit in the third quarter of 2004 for Cooper-Standard was more than
$3 million lower than the operating profit reported in the third quarter of
2003. Operating margins were 1.1 percentage points lower than in 2003. The
positive impacts of net new business ($26 million) and Lean savings ($17
million) were more than offset by higher raw material costs ($13 million), lower
volumes ($13 million), increased price concessions ($8 million), higher
restructuring costs ($3 million), higher selling, general and administrative and
benefit costs ($3 million), and increases in other operating costs.

Cooper-Standard's operations in North America were less profitable in the third
quarter of 2004 than in the comparable 2003 period due to the impact of raw
material costs and price concessions which were only partially offset by net new
business and Lean savings. Operations outside of North America improved due to
the accomplishment of Lean savings and improved pricing.

Operating profit in the first nine months of 2004 for Cooper-Standard Automotive
was $31 million higher than the operating profit reported in the comparable
period of 2003. Operating margins were 1.4 percentage points higher than in
2003. The positive impacts of net new business ($59 million), Lean savings ($54
million), favorable foreign currency translation ($7 million) and higher
production levels ($2 million) were offset by higher raw material costs ($28
million), increased price concessions ($28 million), increased manufacturing
costs not related to volume ($13 million), higher restructuring costs ($10
million), higher selling, general and administrative and benefit costs ($10
million) and other cost increases.

OUTLOOK

On September 17, 2004, the Company announced the signing of a definitive
agreement to sell its automotive business, Cooper-Standard Automotive. The
segment is continuing its operations as usual by seeking new business,
developing new products, implementing its Asian strategy, and filling customer
orders as needed to maintain the expected level of customer service.

-23-

On September 27, 2004, the United Steel Workers of America ("USWA") filed a
complaint asserting they have the right to require the buyer to negotiate new
labor agreements affecting four Cooper-Standard facilities before a sale takes
place. On November 2, 2004, the U. S. District Court for the Northern District
of Indiana issued a preliminary injunction enjoining the sale of those four
facilities and ordering expedited arbitration of the USWA grievance to determine
whether the proposed sale violates successorship language of the collective
bargaining agreements. On November 5, 2004, the Company appealed this decision
to the U. S. Seventh Circuit Court of Appeals. The Company believes this ruling
will be reversed on appeal and continues to pursue the closing of the
transaction according to the original schedule.

INNER TUBE BUSINESS

On September 8, 2004 the Company announced its intent to cease its inner tube
business and is currently in discussions with potential buyers for this business
or its assets. During the third quarter of 2004, the Company recorded
restructuring charges of $7.1 million related to this decision. The charges
included equipment write-downs of $4.2 million, severance costs of $1.6 million,
and employee benefit costs of $1.0 million and environmental cost of $.3
million.

Sales for the Company's inner tube business for the third quarter and nine
months of 2004 decreased $3 million from the comparable 2003 periods. Without
the restructuring charge, the operating loss in the third quarter was $.4
million compared to $.1 million in 2003. For the nine months ended September 30,
2004, the operating profit before the restructuring charge was $.5 million,
lower than the $.8 million recorded in the comparable period of 2003.

LIQUIDITY AND CAPITAL RESOURCES

Generation and uses of cash -- Net cash provided by operating activities of
continuing operations was $151 million in the first nine months of 2004, an
increase of $66 million from the $85 million generated in the first nine months
of 2003. Net income after adjustments for non-cash items increased $10 million
reflecting higher net income ($7 million), restructuring asset write-downs ($9
million) and the reduction of the class action settlement reserve ($7 million).
Changes in operating assets and liabilities provided cash of $44 million in 2004
versus the use of $12 million of cash in 2003. These changes result primarily
from the timing of payrolls and higher accruals for benefits, product liability
reserves and enhanced advertising programs. Accounts receivable balances in 2003
increased partly due to changes in payment patterns of certain North American
Tire segment customers. No additional impact of the customer changes occurred in
2004 and accounts receivable balances increased only modestly in 2004 in spite
of increases in net sales. Inventory balances have increased in 2004 in the
North American Tire finished goods component and in the Company's raw materials
area.

Net cash used in investing activities during the first nine months of 2004
reflects capital expenditures of $96 million, up $29 million from the comparable
period in 2003. During the first nine months of 2003, the Company acquired
Max-Trac Tire Co., Inc., known as Mickey Thompson Performance Tires & Wheels,
for $13 million.

The Company's financing activities during the first nine months of 2004 reflect
the early payment of $90 million under a variable rate facility that was due in
2006. Borrowings under the Company's short-term credit facilities were reduced
$45 million during the nine months of 2004 while in the nine months of 2003 the
Company borrowed $26 million. The issuance of common shares from the exercise of
stock options generated $15 million during the first nine months of 2004.
Dividends paid on the Company's common shares in the first nine months of 2004
and 2003 were $23 million.

Available credit facilities - On June 30, 2004, the Company extended its
revolving credit facility with a consortium of eleven banks ("the Agreement") by
an additional one year that provides up to $175 million in credit facilities
until August 31, 2008 and an additional $175 million in credit facilities until
June 29, 2005. The Company has the option to convert any outstanding loans under
the short-term commitment into a one-year term loan. The Company generally
renegotiates the short-term portion of its credit facility each year. The credit
facilities support the issuance of commercial paper.

-24-

Also on June 30, 2004, the credit facility was restated and amended. Pursuant to
the amendment, the ratio of income before fixed charges and income taxes to
fixed charges (the "fixed charge coverage ratio") was eliminated and replaced by
an interest coverage ratio. This ratio (consolidated earnings before interest,
taxes, depreciation and amortization divided by consolidated net interest
expense) is required to be maintained at a minimum of 3.0 times by the Company.
The amendment also changed the computation of the ratio of total debt to total
capitalization to consolidated net indebtedness to consolidated capitalization.
Consolidated net indebtedness is indebtedness measured in accordance with
generally accepted accounting principles in the United States reduced by cash
and eligible short term investments in excess of $30 million. The Company is
required to maintain this ratio below 55 percent. As of September 30, 2004 the
Company was in compliance with the financial covenants contained in its credit
agreements. At that date, the percentage of consolidated net indebtedness to
consolidated capitalization was 41.8 percent and the interest coverage ratio was
6.6 times. The Company anticipates that it will remain in compliance with these
covenants in 2004, based upon its business forecast for the year.

The Company's credit agreement also contains a covenant which prevents the
disposition of a substantial portion of its assets. The pending disposition of
Cooper-Standard Automotive will require a waiver of this covenant by its
consortium of lenders to continue the credit agreements. The Company is in
discussions with its agent bank and expects to obtain a waiver of this covenant
by its lenders prior to the closing of the sale transaction.

There were no changes in the Company's long and short-term debt ratings during
the quarter. However, Standard & Poor's placed its credit ratings for the
Company on "credit watch with negative implications" in March 2004 following the
announcement of the exploration of the possibility of a sale of Cooper-Standard
Automotive. If a downgrade in its credit ratings were to occur, the Company
believes it would continue to have access to the credit markets, although at
higher borrowing costs than is presently the case.

Available cash and contractual commitments -- The Company anticipates cash flows
from operations in 2004 will meet its projected capital expenditures and
dividends goals. The Company will begin to make investments in China during the
fourth quarter of 2004 and in October of 2004 commenced the repurchase of its
common shares under a program approved by the Board of Directors in May of 2000
under which it has authority as of September 30, 2004 to acquire an additional
8.7 million shares. The Company may consider a self-tender for its shares in the
future. At September 30, 2004 the Company had cash of $25 million and could
borrow, under its credit agreement with its bank group and other bank lines, up
to an additional $350 million without violating the financial covenants
contained in its credit agreements.

CONTINGENCIES

The Company is a defendant in various judicial proceedings arising in the
ordinary course of business. A significant portion of these proceedings are
product liability cases, in which individuals involved in vehicle accidents
allege damages resulting from allegedly defective tires manufactured by the
Company. Litigation of this type has increased significantly throughout the tire
industry following the Firestone tire recall announced in 2000. After reviewing
all of such proceedings known at the time of this filing, and taking into
account all relevant factors concerning them, the Company does not believe that
any liabilities resulting from these proceedings, in excess of amounts currently
reserved, are reasonably likely to have a material adverse effect on its
liquidity, financial condition or results of operations. As a result of the
changes in the Company's insurance program effective April 1, 2003, product
liability costs could have a greater impact on the consolidated results of
operations and financial position of the Company in future periods than in the
past and, in some periods, could be material. The Company is aggressively
managing its product liability costs.

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,

-25-

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:

o 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;

o increased competitive activity, including the inability of the Tire
segment to obtain and maintain price increases to offset higher
production or material costs;

o the failure to achieve expected sales levels;

o consolidation among the Company's competitors and customers;

o technology advancements;

o unexpected costs and charges, including those associated with new
vehicle launches;

o 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;

o changes in interest and foreign exchange rates;

o increased 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;

o government regulatory initiatives, including the proposed and final
regulations under the TREAD Act;

o the cyclical nature and overall health of the global automotive
industry, and the impact of the inability of the Company's customers to
meet their sales and production goals;

o changes in the Company's customer relationships, including loss of
particular business for competitive or other reasons;

o the impact of labor problems, including a strike brought against the
Company or against one or more of its large customers;

o litigation brought against the Company;

o an adverse change in the Company's credit ratings, which could increase
its borrowing costs and/or hamper its access to the credit markets;

o the impact of the disposition of Cooper-Standard Automotive, if
completed;

o the inability of its segments to execute the cost reduction/Asian
strategies outlined by each for the coming year; and

o 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in market risk at September 30, 2004 from
those detailed in the Company's Annual Report on Form 10-K filed with the U. S.
Securities and Exchange Commission ("SEC") for the year ended December 31, 2003.

-26-

ITEM 4. CONTROLS AND PROCEDURES

Pursuant to the requirements of the Sarbanes-Oxley Act, the Company's
management, with the participation of the Chief Executive Officer and Chief
Financial Officer of the Company, has evaluated, as of the end of the period
covered by this quarterly report on Form 10-Q, the effectiveness of the
Company's disclosure controls and procedures, as defined in Rules 13a-15(e) and
15d-15(e) promulgated under the Securities Exchange Act of 1934, including its
internal controls and procedures. Based upon that evaluation, the Chief
Executive Officer and the Chief Financial Officer have concluded that, as of the
end of such period, the Company's disclosure controls and procedures are
effective in identifying the information required to be disclosed in the
Company's periodic reports filed with the SEC, including this quarterly report
on Form 10-Q, and ensuring that such information is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms.

There have been no changes in the Company's internal control over financial
reporting during the quarter ended September 30, 2004 that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is a defendant in various judicial proceedings arising in the
ordinary course of business. A significant portion of these proceedings are
products liability cases, in which individuals involved in vehicle accidents
seek damages resulting from allegedly defective tires manufactured by the
Company. Litigation of this type has increased significantly throughout the tire
industry following the Firestone tire recall announced in 2000. After reviewing
all such proceedings known at the time of this filing, and taking into account
all relevant factors concerning them, the Company does not believe that any
liabilities resulting from these proceedings, in excess of amounts currently
reserved, are reasonably likely to have a material adverse effect on its
liquidity, financial condition or results of operations. As a result of the
changes in the Company's insurance program effective April 1, 2003, product
liability costs could have a greater impact on the consolidated results of
operations and financial position of the Company in future periods than in the
past and, in some periods, could be material.

On September 17, 2004, the Company announced the signing of a definitive
agreement to sell its automotive business, Cooper-Standard Automotive. On
September 27, 2004, the United Steel Workers of America ("USWA") filed a
complaint asserting they have the right to require the buyer to negotiate new
labor agreements affecting four Cooper-Standard facilities before a sale takes
place. On November 2, 2004, the U. S. District Court for the Northern District
of Indiana issued a preliminary injunction enjoining the sale of those four
facilities and ordering expedited arbitration of the USWA grievance to determine
whether the proposed sale violates successorship language of the collective
bargaining agreements. On November 5, 2004, the Company appealed this decision
to the U. S. Seventh Circuit Court of Appeals. The Company believes this ruling
will be reversed on appeal and continues to pursue the closing of the
transaction according to the original schedule.

ITEM 5. OTHER INFORMATION

(a) On September 11, 2004, management of the North American Tire segment
determined that an impairment charge of $7.3 million with respect to equipment
used in the production of radial medium truck tires at the segment's Albany,
Georgia facility was required under generally accepted accounting principles.
The equipment was tested for impairment as a result of approval of a plan to
cease production of radial medium truck tires at the Albany facility by the end
of the third quarter of 2005. These tires will be sourced from Asian
manufacturers in the future. As a result of the charge, the equipment has been
written down to its fair market value as determined by the Company's
expectations for proceeds upon its disposition.

-27-

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

(4) Amendment No. 1 to Amended and Restated Rights Agreement,
dated as of May 7, 2004, by and among Cooper Tire & Rubber
Company, Fifth Third and Computershare Investor Services, LLC

(10) Stock Purchase Agreement, dated as of September 16, 2004, by
and among Cooper Tire & Rubber Company, Cooper Tyre & Rubber
Company UK Limited, and CSA Acquisition Corp.

(31.1) Certification of Chief Executive Officer pursuant to Rule 13a
- 14(a)

(31.2) Certification of Chief Financial Officer pursuant to Rule 13a
- 14(a)

(32) Certification of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b) Reports on Form 8-K

A Form 8-K (Item 8.01) was furnished on September 8, 2004 relating to the
Company's announced cessation of inner tube production.

A Form 8-K (Items 1.01 and 9.01) was furnished on September 17, 2004 relating to
the Company's announcement of the execution of a definitive stock purchase
agreement to sell its automotive business, Cooper-Standard Automotive.

A Form 8-K (Items 2.02 and 9.01) was furnished on October 21, 2004 relating to
the release of the Company's third quarter 2004 earnings.

-28-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

COOPER TIRE & RUBBER COMPANY

/S/ P. G. Weaver
-------------------------------------
P. G. Weaver
Vice President and Chief
Financial Officer
(Principal Financial Officer)

/S/ E. B. White
-------------------------------------
E. B. White
Corporate Controller
(Principal Accounting Officer)

November 8, 2004
- ----------------
(Date)