FINDLAY, Ohio (April 19, 2001) — Cooper Tire & Rubber Co. suffered double-digit drops in income and sales in the first quarter, as markets for both tires and automotive parts weakened significantly.
However, Thomas Dattilo, Cooper chairman, president and CEO, called the first quarter result an "anomaly" and said the company expects to take advantage of "a much improved selling environmentàthroughout the rest of the yearà."
First quarter operating profit of $25 million was a drop of 65.4 percent from the first quarter of 2000. Sales overall fell 18 percent from a record performance a year ago to $758 million. Net income fell 88.4 percent to $3.6 million.
Tire and related products sales were off 13 percent to $388 million, as unit sales fell 18 percent primarily due to the soft North American replacement tire market.
Cooper also blamed the fall in profits on higher raw material and energy costs, as well as charges of about $19 million for litigation and product liability provisions.
Regarding the first quarter results, Mr. Dattilo said, "This has been a very difficult quarter, especially in contrast to the record breaking first quarter of last yearà. We are by no means pleased by our first quarter results, but we continue to execute our plans and strategy which have been and will continue to be successful for us."
"In spite of the anomaly that was the first quarter, there are many reasons to be optimistic as we look to the months ahead," Mr. Dattilo said. "Tire price increases implemented in North America appear to be holding. During the quarter Cooper-Standard Automotive won over $80 million in net new business awards that will come on stream in the next few years. Light vehicle inventory has come down dramatically and should lead to more stable production patterns during the rest of the year."
Meanwhile, on April 18 the tire maker issued a warning to shareholders that they may receive — but should not accept — an offer made by a Canadian organization named TRC Capital Corp. to purchase, for investment purposes, a very small percentage (3.4 percent) of Cooper´s common stock at a price below market and book value.
In a press release, Richard Teeple, Cooper vice president and general counsel, noted that the offer is of a type that the U.S. Securities and Exchange Commission (SEC), which regulates securities transactions, has said is increasingly used to catch investors off guard. Those investors assume that the price offered is at a premium to the market price, he said, when in fact, the purpose of the offer is to acquire shares at bargain prices, without regard to shareholder interests.
Cooper said it has reviewed TRC´s offer and believes that certain aspects of it constitute highly questionable practices under the federal securities laws. The Findlay-based tire maker has contacted the SEC to inform it of TRC´s offer and has asked the agency to review the offer for potential violations of the law.