Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - COOPER TIRE & RUBBER CO | v395803_8k.htm |
| EX-99.1 - EXHIBIT 99.1 - COOPER TIRE & RUBBER CO | v395803_ex99-1.htm |
Exhibit 99.2
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Overview
On November 26, 2014, the Chinese State Administration for Industry & Commerce (SAIC) issued a new business license for Cooper Chengshan (Shangdong) Tire Company Ltd. (“CCT”) and on November 30, 2014, Cooper Tire & Rubber Company (the “Company”) completed the sale of its 65 percent ownership interest in CCT to Prairie Investment Limited, a wholly owned subsidiary of Chengshan Group Company Ltd. (“Chengshan”), all in accordance with the previously announced option agreement between the Company and Chengshan, which we refer to as the “Sale”. The option agreement provided Chengshan a limited contractual right to purchase the Company’s 65 percent equity interest in CCT. The purchase price was based upon the fair market value of CCT on a stand-alone basis as determined by an internationally recognized valuation firm. Under the terms of the agreement, the Company received approximately $262 million, in cash, net of taxes and including dividends.
Basis of preparation
The following Unaudited Pro Forma Condensed Consolidated Financial Statements have been derived from the Company’s historical Consolidated Financial Statements and are being presented to give effect to the Sale. The Unaudited Pro Forma Condensed Consolidated Financial Statements should be read in conjunction with the Company’s historical Consolidated Financial Statements and accompanying notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, each as filed with the U.S. Securities and Exchange Commission on March 14, 2014 and November 7, 2014, respectively.
The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the nine months ended September 30, 2014 and for the fiscal year ended December 31, 2014, reflect the Company’s results as if the Sale had occurred on January 1, 2013, and do not reflect the nonrecurring gain on sale directly attributable to the sale or assume any interest income on cash proceeds. The Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2014 gives effect to the Sale as if it occurred on September 30, 2014.
The Unaudited Pro Forma Condensed Consolidated Financial Statements are subject to the assumptions and adjustments described in the accompanying notes. Given the information available at this time, the Company’s management believes that these assumptions and adjustments are reasonable under the circumstances.
The Unaudited Pro Forma Condensed Consolidated Statements of Operations do not reflect material non-recurring charges following the Sale as the Company does not anticipate incurring any such charges following the Sale.
The Unaudited Pro Forma Condensed Consolidated Financial Statements are not intended to be a complete presentation of the Company’s financial position or results of operations had the Sale occurred as of and for the periods indicated. In addition, the Unaudited Pro Forma Condensed Consolidated Financial Statements are provided for illustrative and information purposes only, and are not necessarily indicative of the Company’s future results of operations or financial condition had the Sale been completed on the dates assumed. The pro forma adjustments are based on available information and assumptions that the Company’s management believes are reasonable, that reflect the impacts of events directly attributable to the Sale that are factually supportable, and for purposes of the Statements of Operations, are expected to have a continuing impact on the Company.
| Cooper Tire & Rubber Company |
| Unaudited Pro Forma Condensed Consolidated Statement of Operations |
| For the Nine Months Ended September 30, 2014 |
| (Dollar amounts in thousands, except per share amounts) |
| Cooper Historical (a) | Disposition of CCT (b) | Cooper Adjusted | ||||||||||
| Net sales | $ | 2,605,225 | $ | (479,240 | ) | $ | 2,125,985 | |||||
| Cost of products sold | 2,152,810 | (385,904 | ) | 1,766,906 | ||||||||
| Gross profit | 452,415 | (93,336 | ) | 359,079 | ||||||||
| Selling, general and administrative | 205,540 | (24,223 | ) | 181,317 | ||||||||
| Operating profit | 246,875 | (69,113 | ) | 177,762 | ||||||||
| Interest expense | (20,960 | ) | 2,043 | (18,917 | ) | |||||||
| Interest income | 1,088 | (554 | ) | 534 | ||||||||
| Other income (expense) | (787 | ) | (332 | ) | (1,119 | ) | ||||||
| Income before income taxes | 226,216 | (67,956 | ) | 158,260 | ||||||||
| Income tax expense | 75,093 | (17,412 | ) (c) | 57,681 | ||||||||
| Net income | 151,123 | (50,544 | ) | 100,579 | ||||||||
| Net income attributable to noncontrolling shareholders' interests | 19,808 | (18,287 | ) | 1,521 | ||||||||
| Net income attributable to Cooper Tire & Rubber Company | $ | 131,315 | $ | (32,257 | ) | $ | 99,058 | |||||
| Basic earnings per share: | ||||||||||||
| Net income attributable to Cooper Tire & Rubber Company | $ | 2.10 | $ | 1.58 | ||||||||
| Diluted earnings per share: | ||||||||||||
| Net income attributable to Cooper Tire & Rubber Company | $ | 2.07 | $ | 1.56 | ||||||||
| Weighted average number of shares outstanding (000's): | ||||||||||||
| Basic | 62,504 | 62,504 | ||||||||||
| Diluted | 63,473 | 63,473 | ||||||||||
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
| Cooper Tire & Rubber Company |
| Unaudited Pro Forma Condensed Consolidated Statement of Operations |
| For the Year Ended December 31, 2013 |
| (Dollar amounts in thousands, except per share amounts) |
| Cooper Historical (a) | Disposition of CCT (b) | Cooper Adjusted | ||||||||||
| Net sales | $ | 3,439,233 | $ | (639,888 | ) | $ | 2,799,345 | |||||
| Cost of products sold | 2,923,042 | (529,465 | ) | 2,393,577 | ||||||||
| Gross profit | 516,191 | (110,423 | ) | 405,768 | ||||||||
| Selling, general and administrative | 275,477 | (35,637 | ) | 239,840 | ||||||||
| Operating profit | 240,714 | (74,786 | ) | 165,928 | ||||||||
| Interest expense | (27,906 | ) | 3,977 | (23,929 | ) | |||||||
| Interest income | 810 | (341 | ) | 469 | ||||||||
| Other income (expense) | (647 | ) | 910 | 263 | ||||||||
| Income before income taxes | 212,971 | (70,240 | ) | 142,731 | ||||||||
| Income tax expense | 79,406 | (17,794 | ) (c) | 61,612 | ||||||||
| Net income | 133,565 | (52,446 | ) | 81,119 | ||||||||
| Net income attributable to noncontrolling shareholders' interests | 22,552 | (19,322 | ) | 3,230 | ||||||||
| Net income attributable to Cooper Tire & Rubber Company | $ | 111,013 | $ | (33,124 | ) | $ | 77,889 | |||||
| Basic earnings per share: | ||||||||||||
| Net income attributable to Cooper Tire & Rubber Company | $ | 1.75 | $ | 1.23 | ||||||||
| Diluted earnings per share: | ||||||||||||
| Net income attributable to Cooper Tire & Rubber Company | $ | 1.73 | $ | 1.21 | ||||||||
| Weighted average number of shares outstanding (000's): | ||||||||||||
| Basic | 63,327 | 63,327 | ||||||||||
| Diluted | 64,282 | 64,282 | ||||||||||
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
| Cooper Tire & Rubber Company |
| Unaudited Pro Forma Condensed Consolidated Balance Sheet |
| As of September 30, 2014 |
| (Dollar amounts in thousands, except par value amounts) |
| Cooper Historical (d) | Disposition of CCT (b) | Cooper Adjusted | ||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 335,778 | $ | 171,752 | (e) | $ | 507,530 | |||||
| Notes receivable | 90,098 | (84,799 | ) | 5,299 | ||||||||
| Accounts receivable, net | 538,790 | (91,541 | ) | 447,249 | ||||||||
| Inventories, at lower of cost or market | ||||||||||||
| Finished goods | 437,816 | (68,654 | ) | 369,162 | ||||||||
| Work in process | 40,983 | (7,328 | ) | 33,655 | ||||||||
| Raw materials and supplies | 123,210 | (28,671 | ) | 94,539 | ||||||||
| 602,009 | (104,653 | ) | 497,356 | |||||||||
| Other current assets | 94,354 | (14,255 | ) | 80,099 | ||||||||
| Total current assets | 1,661,029 | (123,496 | ) | 1,537,533 | ||||||||
| Property, plant and equipment, at cost: | ||||||||||||
| Land and land improvements | 51,195 | - | 51,195 | |||||||||
| Buildings | 329,790 | (52,712 | ) | 277,078 | ||||||||
| Machinery and equipment | 1,895,692 | (345,469 | ) | 1,550,223 | ||||||||
| Molds, cores and rings | 258,282 | (43,989 | ) | 214,293 | ||||||||
| 2,534,959 | (442,170 | ) | 2,092,789 | |||||||||
| Less accumulated depreciation and amortization | 1,563,276 | (221,116 | ) | 1,342,160 | ||||||||
| Net property, plant and equipment | 971,683 | (221,054 | ) | 750,629 | ||||||||
| Goodwill | 18,851 | - | 18,851 | |||||||||
| Intangibles, net | 153,656 | (16,506 | ) | 137,150 | ||||||||
| Restricted cash | 640 | - | 640 | |||||||||
| Deferred income tax assets | 100,934 | (420 | ) | 100,514 | ||||||||
| Other assets | 16,586 | - | 16,586 | |||||||||
| Total assets | $ | 2,923,379 | $ | (361,476 | ) | $ | 2,561,903 | |||||
| Current liabilities: | ||||||||||||
| Notes payable | $ | 184,553 | $ | (16,715 | ) | $ | 167,838 | |||||
| Accounts payable | 358,320 | (102,401 | ) | 255,919 | ||||||||
| Accrued liabilities | 264,056 | (57,938 | ) | 206,118 | ||||||||
| Income taxes | 16,961 | (10,691 | ) | 6,270 | ||||||||
| Current portion of long term debt | 15,559 | (13,304 | ) | 2,255 | ||||||||
| Total current liabilities | 839,449 | (201,049 | ) | 638,400 | ||||||||
| Long-term debt | 325,538 | (26,101 | ) | 299,437 | ||||||||
| Postretirement benefits other than pensions | 239,282 | - | 239,282 | |||||||||
| Pension benefits | 249,529 | - | 249,529 | |||||||||
| Other long-term liabilities | 159,692 | - | 159,692 | |||||||||
| Deferred income taxes | 6,131 | (221 | ) | 5,910 | ||||||||
| Redeemable noncontrolling shareholder interest | 168,435 | (168,435 | ) | - | ||||||||
| Stockholders' equity: | ||||||||||||
| Preferred stock, $1 par value; 5,000,000 shares | ||||||||||||
| authorized; none issued | - | - | - | |||||||||
| Common stock, $1 par value; 300,000,000 shares | ||||||||||||
| authorized; 87,850,292 shares issued | 87,850 | - | 87,850 | |||||||||
| Capital in excess of par value | 1,721 | - | 1,721 | |||||||||
| Retained earnings | 1,790,969 | 60,793 | (f) | 1,851,762 | ||||||||
| Cumulative currency translation adjustment | 48,984 | (26,463 | ) | 22,521 | ||||||||
| Unrealized gains/(losses) on derivatives | 2,693 | - | 2,693 | |||||||||
| Unrecognized postretirement benefits | (451,355 | ) | - | (451,355 | ) | |||||||
| 1,480,862 | 34,330 | 1,515,192 | ||||||||||
| Less: 29,749,007 common shares in treasury at cost | (587,332 | ) | - | (587,332 | ) | |||||||
| Total parent stockholders' equity | 893,530 | 34,330 | 927,860 | |||||||||
| Noncontrolling shareholders' interests in consolidated subsidiaries | 41,793 | - | 41,793 | |||||||||
| Total stockholders' equity | 935,323 | 34,330 | 969,653 | |||||||||
| Total liabilities and equity | $ | 2,923,379 | $ | (361,476 | ) | $ | 2,561,903 | |||||
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements
| (a) | Reflects the historical operating results of the Company as previously reported. |
| (b) | Represents the adjustments to record the effect of the Sale. |
| (c) | In determining the tax rate to apply to the Company’s pro forma adjustments, the Company used the applicable statutory rate based on the jurisdiction in which the adjustment occurs. |
| (d) | Reflects the historical financial position of the Company as previously reported. |
| (e) | Represents the effect of the contractual cash received as a result of the Sale and final dividend distribution, net of tax withholdings. |
| (f) | Represents the adjustments to Retained earnings to reflect the estimated gain on the Sale, including income tax effects. |