##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D. C. 20549
 FORM 10-Q/A
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 OR
 o
    
    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
  DELAWARE
(State or other jurisdiction of 
incorporation or organization)
    
    34-4297750
(I.R.S. employer
identification no.)
 
 
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o

Smaller reporting company o(Do not check if a smaller
reporting company
  o þ




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TABLE OF CONTENTS  Part I. FINANCIAL INFORMATIONItem 1. FINANCIAL STATEMENTSItem 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSItem 4. CONTROLS AND PROCEDURESPart II. OTHER INFORMATIONItem 1A. RISK FACTORSItem 6. EXHIBITSSIGNATURESEX-31.1EX-31.2EX-32    Table of Contents  EXPLANATORY NOTE
     2




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##### Table of Contents



December 31,
    
    
    March 31,2009
    
    
    2010(Note 1)
    
    
    (Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    426,981
    
    
    $
    337,500Accounts receivable, less allowances
of $10,928 in 2009 and $11,161 in 2010
    
    
    367,023
    
    
    
    458,968Inventories at lower of cost or market:Finished goods
    
    
    188,323
    
    
    
    210,865Work in process
    
    
    22,090
    
    
    
    28,536Raw materials and supplies
    
    
    88,022
    
    
    
    121,548298,435
    
    
    
    360,949Other current assets
    
    
    39,392
    
    
    
    39,165Total current assets
    
    
    1,131,831
    
    
    
    1,196,582Property, plant and equipment:Land and land improvements
    
    
    33,321
    
    
    
    33,330Buildings
    
    
    320,021
    
    
    
    317,869Machinery and equipment
    
    
    1,587,306
    
    
    
    1,583,168Molds, cores and rings
    
    
    246,395
    
    
    
    246,8712,187,043
    
    
    
    2,181,238Less accumulated depreciation and amortization
    
    
    1,336,072
    
    
    
    1,347,601Net property, plant and equipment
    
    
    850,971
    
    
    
    833,637Intangibles, net of accumulated amortization of $23,165
in 2009 and $23,492 in 2010
    
    
    18,546
    
    
    
    18,219Restricted cash
    
    
    2,219
    
    
    
    2,172Other assets
    
    
    96,773
    
    
    
    92,282$
    2,100,340
    
    
    $
    2,142,892LIABILITIES AND  EQUITYCurrent liabilities:Notes payable
    
    $
    156,719
    
    
    $
    145,088Accounts payable
    
    
    300,448
    
    
    
    352,029Accrued liabilities
    
    
    158,643
    
    
    
    155,292Income taxes
    
    
    3,955
    
    
    
    5,318Liabilities of discontinued operations
    
    
    1,061
    
    
    
    1,052Current portion of long term debt
    
    
    15,515
    
    
    
    4,995Total current liabilities
    
    
    636,341
    
    
    
    663,774Long-term debt
    
    
    330,971
    
    
    
    327,441Postretirement benefits other than pensions
    
    
    244,905
    
    
    
    246,624Pension benefits
    
    
    272,050
    
    
    
    265,963Other long-term liabilities
    
    
    145,978
    
    
    
    174,072Long-term liabilities related to the sale of automotive operations
    
    
    6,043
    
    
    
    5,888Redeemable noncontrollng shareholders interests
    
    
    83,528      1
    
    
    
    55,0411Equity: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 in 2009 and in 2010
    
    
    87,850
    
    
    
    87,850Capital in excess of par value
    
    
    70,645
    
    
    
    56,338Retained earnings
    
    
    1,133,133
    
    
    
    1,137,764Cumulative other comprehensive loss
    
    
    (470,272)
    1
    
    
    (456,816)
    1821,356
    1
    
    
    825,136
    1Less: common
shares in treasury at cost (27,327,646 in 2009 and 26,635,823 in 2010)
    
    
    (490,548
    )
    
    
    (476,503
    )Total parent stockholders equity
    
    
    330,808
    1
    
    
    348,633
    1Noncontrolling shareholders interests in consolidated
subsidiaries
    
    
    49,716
    1
    
    
    55,456
    1Total equity
    
    
    380,524
    1
    
    
    404,089
    1$
    2,100,340
    
    
    $
    2,142,892
 
 1
    
    Amounts have been restated, see Footnote 1 for additional information.  3




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##### Table of Contents



2009
    
    
    2010Net sales
    
    $
    571,408
    
    
    $
    754,443Cost of products sold
    
    
    521,139
    
    
    
    669,271Gross profit
    
    
    50,269
    
    
    
    85,172Selling, general and administrative
    
    
    45,106
    
    
    
    44,605Restructuring
    
    
    14,352
    
    
    
    7,612Settlement of retiree medical case
    
    
    7,050
    
    
    
    Operating profit (loss)
    
    
    (16,239
    )
    
    
    32,955Interest expense
    
    
    12,655
    
    
    
    8,730Interest income
    
    
    (1,375
    )
    
    
    (1,213
    )Other income
    
    
    (823
    )
    
    
    (237
    )Income (loss) from continuing operations
before income taxes
    
    
    (26,696
    )
    
    
    25,675Income tax expense (benefit)
    
    
    (3,773
    )
    
    
    7,743Income (loss) from continuing operations
    
    
    (22,923
    )
    
    
    17,932Income (loss) from discontinued operations, net of income taxes
    
    
    (364
    )
    
    
    (760
    )Net income (loss)
    
    
    (23,287
    )
    
    
    17,172Net income (loss) attributable to
noncontrolling shareholders interests
    
    
    (2,020
    )
    
    
    5,596Net income (loss) attributable to Cooper Tire & Rubber Company
    
    $
    (21,267
    )
    
    $
    11,576Basic earnings per share:Income (loss) from continuing operations
attributable to Cooper Tire & Rubber Company
    
    $
    (0.37)
    1
    
    $
    0.20Income (loss) from discontinued operations
    
    
    (0.01
    )
    
    
    (0.01
    )Net income (loss) available to Cooper Tire & Rubber Company
commom stockholders
    
    $
    (0.38)
    1
    
    $
    0.19Diluted earnings per share:Income (loss) from continuing operations
attributable to Cooper Tire & Rubber Company
    
    $
    (0.37)
    1
    
    $
    0.20Income (loss) from discontinued operations
    
    
    (0.01
    )
    
    
    (0.01
    )Net income (loss) available to Cooper Tire & Rubber Company
commom stockholders
    
    $
    (0.38)
    1
    
    $
    0.19Dividends per share
    
    $
    0.105
    
    
    $
    0.105
 
 1
    
    Amounts have been restated, see Footnote 1 for additional information  4




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##### Table of Contents



2009
    
    
    2010Operating activities:Net income (loss)
    
    $
    (23,287
    )
    
    $
    17,172Adjustments to reconcile net income (loss) to net cash
provided by (used in) continuing operations:Loss from discontinued operations, net of income taxes
    
    
    364
    
    
    
    760Depreciation
    
    
    30,551
    
    
    
    29,859Amortization
    
    
    566
    
    
    
    501Deferred income taxes
    
    
    (66
    )
    
    
    (154
    )Stock based compensation
    
    
    838
    
    
    
    1,087Change in LIFO inventory reserve
    
    
    (87,559
    )
    
    
    15,021Amortization of unrecognized postretirement benefits
    
    
    7,410
    
    
    
    8,282Loss (gain) on sale of assets
    
    
    (46
    )
    
    
    211Changes in operating assets and liabilities of
continuing operations:Accounts receivable
    
    
    (36,396
    )
    
    
    (107,397
    )Inventories
    
    
    105,610
    
    
    
    (80,030
    )Other current assets
    
    
    1,855
    
    
    
    2,880Accounts payable
    
    
    14,027
    
    
    
    52,914Accrued liabilities
    
    
    14,923
    
    
    
    8,496Other items
    
    
    4,471
    
    
    
    21,062Net cash provided by (used in) continuing operations
    
    
    33,261
    
    
    
    (29,336
    )Net cash used in discontinued operations
    
    
    (613
    )
    
    
    (924
    )Net cash provided by (used in) operating activities
    
    
    32,648
    
    
    
    (30,260
    )Investing activities:Additions to property, plant and equipment
    
    
    (16,917
    )
    
    
    (15,464
    )Investments in unconsolidated subsidiary
    
    
    (86
    )
    
    
    Proceeds from the sale of assets
    
    
    208
    
    
    
    80Net cash used in investing activities
    
    
    (16,795
    )
    
    
    (15,384
    )Financing activities:Issuance of (payments on) short-term debt
    
    
    (17,310
    )
    
    
    (14,466
    )Payments on long-term debt
    
    
    (4,380
    )
    
    
    (10,600
    )Contributions by noncontrolling shareholder
    
    
    
    
    
    
    5,250Acquisition of noncontrolling shareholder interest
    
    
    
    
    
    
    (17,920
    )Payment of dividends
    
    
    (6,190
    )
    
    
    (6,416
    )Issuance of common shares and excess
tax benefits on options
    
    
    
    
    
    
    2,167Net cash used in financing activities
    
    
    (27,880
    )
    
    
    (41,985
    )Effects of exchange rate changes on cash of
continuing operations
    
    
    (2,952
    )
    
    
    (1,852
    )Changes in cash and cash equivalents
    
    
    (14,979
    )
    
    
    (89,481
    )Cash and cash equivalents at beginning of year
    
    
    247,672
    
    
    
    426,981Cash and cash equivalents at end of period
    
    $
    232,693
    
    
    $
    337,500
  5




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##### Table of Contents



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 sales of passenger replacement tires are
generally strongest during the third and fourth quarters of the year. Winter tires are sold
principally during the months of June through November. Operating results for the three-month
period ended March 31, 2010 are not necessarily indicative of the results that may be expected
for the year ended December 31, 2010.
 On August 4, 2010, the Company filed an amendment to its Annual Report on Form 10-K
(Form 10-K/A) for the fiscal year ended December 31, 2009, which was filed with the Securities
and Exchange Commission (SEC) on March 2, 2010 (the Original Filing). The Company filed this
Form 10-K/A to reflect restatements of its Consolidated Balance Sheets at December 31, 2009 and
December 31, 2008, and its consolidated Statements of Operations and Equity for the fiscal years
ended December 31, 2009, December 31, 2008 and December 31, 2007, and the related notes thereto,
as a result of a review of the Companys accounting for its noncontrolling shareholders
interests. The balance sheet at December 31, 2009 included herein has been derived from the
restated 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.The restatement relates, in part, to the Companys classification of the noncontrolling
shareholders interests in Cooper Chengshan. Historically, the Company classified the Cooper
Chengshan noncontrolling shareholders interests as permanent equity. After consideration of the
applicable financial accounting guidance and evaluation of the related agreements,
classification of the noncontrolling interest as redeemable noncontrolling shareholders
interest within mezzanine equity was deemed appropriate. Further, the restatement reflects the
reclassification of a portion of the currency translation adjustment recorded in the Companys
comprehensive income (loss) which should have been allocated to comprehensive income
attributable to noncontrolling shareholders interest in consolidated subsidiaries.In connection with the investment in Cooper Chengshan, beginning January 1, 2009 and continuing
through December 31, 2011, the noncontrolling shareholders have the option, which is embedded in
the noncontrolling interest, to require the Company to purchase the remaining 49 percent
noncontrolling share at the greater of a minimum price of $62,700 or a formula price that varies
based on operating results of the entity. The combination of a noncontrolling interest and a
put option resulted in a redeemable noncontrolling shareholder interest. The put option is not
separated from the shares as an embedded derivative because the underlying shares are not
readily convertible into cash.The noncontrolling interest is redeemable at other than fair value as the put value is
determined to be the greater of either a fixed amount or a specific formulaic amount as
described above. The Company records the noncontrolling shareholders interests in Cooper
Chengshan at the greater of 1) the initial carrying amount, increased or decreased for the
noncontrolling shareholders share of net income or loss and its share of other comprehensive
income or loss and dividends (carrying amount) or 2) the value of the put option which is
determined based on the greater of the minimum amount or the formula derived amount. Prior to
exercisability of the put option on January 1, 2009, the noncontrolling shareholders interest
has been recorded at the greater of 1) the carrying amount or 2) the cumulative amount required
to accrete the initial carrying amount to the redemption value using the effective interest
method which resulted in accretion of $1,110 during the quarter ended March 31, 2009 with an
offset to Retained earnings. According to authoritative
accounting guidance, the Redeemable noncontrolling shareholders interests are classified
outside of permanent equity, mezzanine equity, on the Companys Condensed Consolidated Balance
Sheets.
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According to authoritative accounting guidance for redeemable noncontrolling shareholders
interests, to the extent the noncontrolling shareholders have a contractual right to receive an
amount upon exercise of a put option that is other than fair value, and such amount is greater
than carrying value, then the noncontrolling shareholder has, in substance, received a dividend
distribution that is different than other common stockholders. Therefore accretion adjustments
to the carrying value of noncontrolling shareholders interests to reflect the put option amount
should also be reflected in the computation of earnings per share available to the Companys
common stockholders. The tables below present the impact of these adjustments on the Companys
earnings per share, selected components of the Condensed Consolidated Balance Sheets and the
Companys comprehensive income (loss):
 Three months ended March 31, 2009As OriginallyReported
    
    
    RestatedBasic earnings per share:Loss from continuing operations available to
Cooper Tire & Rubber Company common stockholders
    
    $
    (0.35
    )
    
    $
    (0.37
    )Loss from discontinued operations
    
    
    (0.01
    )
    
    
    (0.01
    )Net loss available to
Cooper Tire & Rubber Company common stockholders
    
    $
    (0.36
    )
    
    $
    (0.38
    )Diluted earnings per share:Loss from continuing operations available to
Cooper Tire & Rubber Company common stockholders
    
    $
    (0.35
    )
    
    $
    (0.37
    )Loss from discontinued operations
    
    
    (0.01
    )
    
    
    (0.01
    )Net loss available to
Cooper Tire & Rubber Company common stockholders
    
    $
    (0.36
    )
    
    $
    (0.38
    )
 As of December 31, 2009
    
    
    As of March 31, 2010As Originally
    
    
    
    
    
    
    As OriginallyReported
    
    
    Restated
    
    
    Reported
    
    
    RestatedRedeemable noncontrolling
shareholders interest
    
    
    
    
    
    
    83,528
    
    
    
    
    
    
    
    55,041Cumulative other comprehensive loss
    
    
    (455,750
    )
    
    
    (470,272
    )
    
    
    (444,946
    )
    
    
    (456,816
    )Total parent stockholders equity
    
    
    345,330
    
    
    
    330,808
    
    
    
    360,503
    
    
    
    348,633Noncontrolling shareholders interests
in consolidated subsidiaries
    
    
    118,722
    
    
    
    49,716
    
    
    
    98,627
    
    
    
    55,456Total stockholders equity
    
    
    464,052
    
    
    
    380,524
    
    
    
    459,130
    
    
    
    404,089
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Three months ended March 31, 2009
    
    
    Three months ended March 31, 2010As Originally
    
    
    
    
    
    
    As OriginallyReported
    
    
    Restated
    
    
    Reported
    
    
    RestatedNet income (loss) attributable to
Cooper Tire & Rubber Company
    
    $
    (21,267
    )
    
    $
    (21,267
    )
    
    $
    11,576
    
    
    $
    11,576Other comprehensive income (loss):Currency translation adjustments
    
    
    (2,982
    )
    
    
    (3,083
    )
    
    
    (7,224
    )
    
    
    (4,572
    )Unrealized net gains (losses) on derivative
instruments and marketable securities,
net of tax
    
    
    3,367
    
    
    
    3,367
    
    
    
    1,362
    
    
    
    1,362Unrecognized postretirement benefit plans,
net of tax
    
    
    354
    
    
    
    354
    
    
    
    16,666
    
    
    
    16,666Comprehensive income (loss) attributable to
Cooper Tire & Rubber Company
    
    
    (20,528
    )
    
    
    (20,629
    )
    
    
    22,380
    
    
    
    25,032Net income attributable to
noncontrolling shareholders interests
    
    
    (2,020
    )
    
    
    (2,020
    )
    
    
    5,596
    
    
    
    5,596Other comprehensive income (loss):Currency translation adjustments
    
    
    
    
    
    
    101
    
    
    
    
    
    
    
    (2,652
    )Comprehensive income attributable to
noncontrolling shareholders interests
    
    
    (2,020
    )
    
    
    (1,919
    )
    
    
    5,596
    
    
    
    2,944Total comprehensive income (loss)
    
    $
    (22,548
    )
    
    $
    (22,548
    )
    
    $
    27,976
    
    
    $
    27,976
 The consolidated financial statements include the accounts of the Company, its majority-owned
(based on voting interests) subsidiaries and variable-interest entities for which the Company is
the primary beneficiary. Acquired businesses are included in the consolidated financial
statements from the dates of acquisition. The Company consolidates certain joint ventures in
which it has a variable interest based on power to direct the activities and significant
participation in expected returns of the joint venture. On January 1, 2010, the Company adopted
Statement of Financial Accounting Standards (SFAS) No. 167, Amendments to FASB Interpretation
No. 46(R). The requirements of SFAS No. 167 have been incorporated into Financial Accounting
Standards Board (FASB) Accounting Standards Codification (ASC) 810, Consolidation. SFAS
No. 167 changes the consolidation guidance for variable interest entities and the adoption of
this standard did not have a material impact on the Companys consolidated financial statements.
All intercompany accounts and transactions have been eliminated.The equity method of accounting is followed for investments in 20 percent to 50 percent owned
companies that are not otherwise consolidated based on variable interests. The Companys
investment in the Mexican tire manufacturing facility represents an approximate 38 percent
ownership interest.The cost method is followed in those situations where the Companys ownership is less than 20
percent and the Company does not have the ability to exercise significant influence over the
affiliate.The Company entered into a joint venture with Kenda Tire Company to construct and operate a tire
manufacturing facility in the Peoples Republic of China (PRC) which began production in 2007.
Until May 2012, all of the tires produced by this joint venture are required to be exported and
sold by Cooper Tire & Rubber Company and its affiliates. Due to this requirement, the Company
has the power to direct the manufacturing operations of the joint venture to produce the types
of tires required by the Company to meet its global demands. The Company has determined it is
the primary beneficiary of this joint venture because
of the operational control and the fact it currently receives all of the tires produced by this
manufacturing operation.
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The Company has also entered into a joint venture with Nemet International to market and
distribute Cooper, Pneustone and associated brand tires in Mexico. The Company has determined
it has the power to control the purchasing and marketing of tires for this joint venture. The
Company has also provided additional financial support to this joint venture in order to allow
it to finance its business activities. The joint venture partner has not provided such
additional support. The Company has determined it is the primary beneficiary of this joint
venture due to its ability to control the primary economic activity and to the subordinated
financial support it has provided to the entity which would require the Company to absorb more
than 50% of expected losses.Since the Company has determined that each of these entities is a Variable Interest Entity
(VIE) and it is the primary beneficiary, it has included their assets, liabilities and
operating results in its consolidated financial statements. The Company has recorded the
interest related to the joint venture partners ownership in noncontrolling shareholders
interests in consolidated subsidiaries. The following table summarizes the balance sheets of
these variable interest entities at December 31, 2009 and March 31, 2010:
 December 31,
    
    
    March 31,2009
    
    
    2010AssetsCash and cash equivalents
    
    $
    23,998
    
    
    $
    13,196Accounts receivable
    
    
    9,359
    
    
    
    12,465Inventories
    
    
    16,472
    
    
    
    20,495Prepaid expenses
    
    
    2,688
    
    
    
    3,617Total current assets
    
    
    52,517
    
    
    
    49,773Net property, plant and equipment
    
    
    139,705
    
    
    
    135,473Intangibles and other assets
    
    
    12,773
    
    
    
    10,585Total assets
    
    $
    204,995
    
    
    $
    195,831Liabilities and stockholders equityNotes payable
    
    $
    87,016
    
    
    $
    76,379Accounts payable
    
    
    7,147
    
    
    
    10,250Accrued liabilities
    
    
    1,118
    
    
    
    (1,767
    )Current portion of long-term debt
    
    
    10,525
    
    
    
    Current liabilities
    
    
    105,806
    
    
    
    84,862Stockholders equity
    
    
    99,189
    
    
    
    110,969Total liabilities and stockholders equity
    
    $
    204,995
    
    
    $
    195,831
 9




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##### Table of Contents



2.
    
    Net income (loss) per share is computed on the basis of the weighted average number of common shares outstanding each year. Diluted earnings (loss) per share from continuing operations
includes the dilutive effect of stock options and other stock units. The following table sets
forth the computation of basic and diluted earnings (loss) per share:
 Three months ended March 31,Restated2009
    
    
    2010NumeratorIncome (loss) from continuing operations attributable to
Cooper Tire & Rubber Company
    
    $
    (20,903
    )
    
    $
    12,336Accretion of redeemable noncontrolling
shareholders interest
    
    
    (1,110
    )
    
    
    Numerator for basic and diluted earnings (loss) per
share  income (loss) from continuing operations
available to common stockholders
    
    $
    (22,013
    )
    
    $
    12,336DenominatorDenominator for basic earnings (loss) per share -
weighted average shares outstanding
    
    
    58,941
    
    
    
    60,614Effect of dilutive securities  stock options and
other stock units
    
    
    
    
    
    
    1,680Denominator for diluted earnings per share -
adjusted weighted average share outstanding
    
    
    58,941
    
    
    
    62,294Basic earnings (loss) per share:Income
(loss) from continuing operations available to Cooper Tire
& Rubber Company common stockholders
    
    $
    (0.37
    )
    
    $
    0.20Loss from discontinued operations,
net of income taxes
    
    
    (0.01
    )
    
    
    (0.01
    )Net income (loss) available to Cooper Tire & Rubber
Company common stockholders
    
    $
    (0.38
    )
    
    $
    0.19Diluted earnings (loss) per share:Income (loss) from continuing operations available to Cooper
 Tire &  Rubber Company common stockholders
    
    $
    (0.37
    )
    
    $
    0.20Loss from discontinued operations,
net of income taxes
    
    
    (0.01
    )
    
    
    (0.01
    )Net income (loss) available to Cooper Tire & Rubber
Company common stockholders
    
    $
    (0.38
    )
    
    $
    0.19
 3.
    
    Derivative financial instruments are utilized by the Company to reduce foreign currency
exchange risks. The Company has established policies and procedures for risk assessment and
the approval, reporting and monitoring of derivative financial instrument activities. The
Company does not enter into financial instruments for trading or speculative purposes. The
derivative financial instruments include fair value and cash flow hedges of foreign currency
exposures. The change in values of the fair value foreign currency hedges offset exchange
rate fluctuations on the foreign currency-denominated intercompany loans and obligations. The
Company presently hedges exposures in the Euro, Canadian dollar, British pound sterling, Swiss
franc, Swedish krona, Norwegian krone, Mexican peso and Chinese yuan generally for
transactions
expected to occur within the next 12 months. The notional amount of these foreign currency
derivative instruments at December 31, 2009 and March 31, 2010 was $207,600 and $187,400,
respectively. The counterparties to each of these agreements are major commercial banks.
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The Company uses foreign currency forward contracts as hedges of the fair value of certain
non-U.S. dollar denominated asset and liability positions, primarily accounts receivable and
debt. Gains and losses resulting from the impact of currency exchange rate movements on these
forward contracts are recognized in the accompanying consolidated statements of operations in
the period in which the exchange rates change and offset the foreign currency gains and losses
on the underlying exposure being hedged.Foreign currency forward contracts are also used to hedge variable cash flows associated with
forecasted sales and purchases denominated in currencies that are not the functional currency of
certain entities. The forward contracts have maturities of less than twelve months pursuant to
the Companys policies and hedging practices. These forward contracts meet the criteria for and
have been designated as cash flow hedges. Accordingly, the effective portion of the change in
fair value of such forward contracts (approximately $(2,160) and $(939) as of December 31, 2009
and March 31, 2010, respectively) are recorded as a separate component of stockholders equity
in the accompanying consolidated balance sheets and reclassified into earnings as the hedged
transaction affects net sales.The Company assesses hedge ineffectiveness quarterly using the hypothetical derivative
methodology. In doing so, the Company monitors the actual and forecasted foreign currency sales
and purchases versus the amounts hedged to identify any hedge ineffectiveness. Any hedge
ineffectiveness is recorded as an adjustment in the accompanying consolidated financial
statements of operations in the period in which the ineffectiveness occurs. The Company also
performs regression analysis comparing the change in value of the hedging contracts versus the
underlying foreign currency sales and purchases, which confirms a high correlation and hedge
effectiveness.The following table presents the location and amounts of derivative instrument fair values in
the Statement of Financial Position:
 (assets)/liabilities
    
    December 31, 2009
    
    
    March 31, 2010Derivatives designated as
hedging instruments
    
    Accrued liabilities
    
    $
    2,158
    
    
    Accrued liabilities
    
    $
    1,024Derivatives not designated as
hedging instruments
    
    Accrued liabilities
    
    $
    (78
    )
    
    Accrued liabilities
    
    $
    412
 The following table presents the location and amount of gains and losses on derivative
instruments in the consolidated statement of operations:
 Amount of (Gain) LossAmount of Gain (Loss)
    
    
    Reclassified
    
    
    Amount of Gain (Loss)Recognized in
    
    
    from Cumulative
    
    
    Recognized inOther Comprehensive
    
    
    Other Comprehensive
    
    
    Other - netIncome on Derivatives
    
    
    Loss into Net Sales
    
    
    on Derivatives(Effective Portion)
    
    
    (Effective Portion)
    
    
    (Ineffective Portion)DerivativesDesignated as
    
    Three Months
    
    
    Three Months
    
    
    Three Months
    
    
    Three Months
    
    
    Three Months
    
    
    Three MonthsCash Flow
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    EndedHedges
    
    March 31, 2009
    
    
    March 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2010
    
    
    March 31, 2009
    
    
    March 31, 2010Foreign exchange
contracts
    
    $
    3,647
    
    
    $
    2,550
    
    
    $
    769
    
    
    $
    (1,329
    )
    
    $
    (78
    )
    
    $
    (29
    )
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##### Table of Contents



Amount of Gain (Loss)Location of
    
    
    Recognized in IncomeGain (Loss)
    
    
    on DerivativesDerivatives not
    
    Recognized
    
    
    Three Months EndedDesignated as
    
    in Income on
    
    
    March 31,Hedging Instruments
    
    Derivatives
    
    
    2009
    
    
    2010Foreign exchange contracts
    
    Other income
    
    $
    454
    
    
    $
    (613
    )Interest swap contracts
    
    Other income
    
    
    2,245
    
    
    
    $
    2,699
    
    
    $
    (613
    )
 The Company has categorized its financial instruments, based on the priority of the inputs
to the valuation technique, into the three-level fair value hierarchy. The fair value hierarchy
gives the highest priority to quoted prices in active markets for identical assets or
liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs
used to measure the financial instruments fall within the different levels of the hierarchy, the
categorization is based on the lowest level input that is significant to the fair value
measurement of the instrument.Financial assets and liabilities recorded on the Consolidated Balance Sheet are categorized
based on the inputs to the valuation techniques as follows:Level 1. Financial assets and liabilities whose values are based on unadjusted quoted prices
for identical assets or liabilities in an active market that the Company has the ability to
access.Level 2. Financial assets and liabilities whose values are based on quoted prices in markets
that are not active or model inputs that are observable either directly or indirectly for
substantially the full term of the asset or liability. Level 2 inputs include the following:
 a.
    
    Quoted prices for similar assets or liabilities in active markets;b.
    
    Quoted prices for identical or similar assets or liabilities in non-active markets;c.
    
    Pricing models whose inputs are observable for substantially the full term of the asset or
liability; andd.
    
    Pricing models whose inputs are derived principally from or corroborated by observable market
data
through correlation or other means for substantially the full term of the asset or
liability.
 Level 3. Financial assets and liabilities whose values are based on prices or valuation
techniques that require inputs that are both unobservable and significant to the overall fair
value measurement. These inputs reflect managements own assumptions about the assumptions a
market participant would use in pricing the asset or liability.The following table presents the Companys fair value hierarchy for those assets and liabilities
measured at fair value on a recurring basis as of March 31, 2010:
 Fair Value Measurements UsingQuoted Pricesin Active
    
    
    SignificantTotal
    
    
    Markets
    
    
    Other
    
    
    SignificantDerivative
    
    
    for Identical
    
    
    Observable
    
    
    Unobservable(Assets)
    
    
    Assets
    
    
    Inputs
    
    
    InputsForeign Exchange Contracts
    
    Liabilities
    
    
    Level (1)
    
    
    Level (2)
    
    
    Level (3)March 31, 2010
    
    $
    1,436
    
    
    
    
    
    
    $
    1,436
    
    
    
    December 31, 2009
    
    $
    2,080
    
    
    
    
    
    
    $
    2,080
    
    
    
    
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The carrying amounts and fair values of the Companys financial instruments are as
follows:
 December 31, 2009
    
    
    March 31, 2010Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueCash and cash equivalents
    
    $
    426,981
    
    
    $
    426,981
    
    
    $
    337,500
    
    
    $
    337,500Notes payable
    
    
    (156,719
    )
    
    
    (156,719
    )
    
    
    (145,088
    )
    
    
    (145,088
    )Current portion of long-term debt
    
    
    (15,515
    )
    
    
    (15,515
    )
    
    
    (4,995
    )
    
    
    (4,995
    )Long-term debt
    
    
    (330,971
    )
    
    
    (309,371
    )
    
    
    (327,441
    )
    
    
    (303,441
    )Derivative financial instruments
    
    
    (2,080
    )
    
    
    (2,080
    )
    
    
    (1,436
    )
    
    
    (1,436
    )
 The fair value of the Companys debt is computed using discounted cash flow analyses based on
the Companys estimated current incremental borrowing rates.4.
    
    The following table details information on the Companys operating segments.
 Three months ended March 312009
    
    
    2010Revenues from external customers:North American Tire
    
    $
    439,317
    
    
    $
    531,717International Tire
    
    
    166,212
    
    
    
    293,557Eliminations
    
    
    (34,121
    )
    
    
    (70,831
    )Net sales
    
    $
    571,408
    
    
    $
    754,443Segment profit (loss):North American Tire
    
    $
    (3,620
    )
    
    $
    13,602International Tire
    
    
    (2,821
    )
    
    
    22,550Eliminations
    
    
    (274
    )
    
    
    (509
    )Unallocated corporate charges
    
    
    (9,524
    )
    
    
    (2,688
    )Operating profit (loss)
    
    
    (16,239
    )
    
    
    32,955Interest expense
    
    
    12,655
    
    
    
    8,730Interest income
    
    
    (1,375
    )
    
    
    (1,213
    )Other income
    
    
    (823
    )
    
    
    (237
    )Income (loss) from continuing operations
before income taxes
    
    $
    (26,696
    )
    
    $
    25,675
 5.
    
    At December 31, 2009, approximately 45 percent of the Companys inventories had been valued
under the LIFO method. At March 31, 2010, approximately 44 percent of the Companys
inventories are valued under the LIFO method. The remaining inventories have been valued
under the FIFO method or average cost method. All inventories are stated at the lower of cost
or market.
 Under the LIFO method, inventories have been reduced by approximately $127,064 and $142,085 at
December 31, 2009 and March 31, 2010, respectively, from current cost which would be reported
under the first-in, first-out method.
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6.
    
    The following table discloses the amount of stock based compensation expense for the three-month
period ended March 31, 2009 and 2010:
 Three months ended March 312009
    
    
    2010Stock options
    
    $
    86
    
    
    $
    221Restricted stock units
    
    
    400
    
    
    
    167Performance based units
    
    
    352
    
    
    
    699Total stock based compensation
    
    $
    838
    
    
    $
    1,087
 Executives participating in the Companys Long-Term Incentive Plan for the plan year 2007 
2009 and 2008  2010, earn performance based units based on the Companys financial
performance. As part of the 2007  2009 plan, the units earned in 2007 and 2009 vested in
February 2010. As part of the 2008  2010 plan, the units earned in 2009 and any units earned
in 2010 will vest at December 31, 2010. No units were earned in 2008.In April 2009, executives participating in the 2009  2011 Long Term Incentive Plan were
granted stock options which vest one third each year from April 2010 through April 2012.Executives participating in the Companys Long-Term Incentive Plan for the plan year 2010 
2012, earn performance based units and cash. Any units and cash earned during 2010 will vest at
December 31, 2012. The executives also received stock options which will vest one third each
year from March 2011 through March 2013. The following table provides details of the stock
option activity for the three months ended March 31, 2010:
 Long-Term Incentive Plan Years2009 - 2011
    
    
    2010 - 2012January 1, 2010Outstanding
    
    
    1,037,000
    
    
    
    Exercisable
    
    
    59,000
    
    
    
    Granted
    
    
    
    
    
    
    303,120Exercised
    
    
    (35,000
    )
    
    
    March 31, 2010
    
    
    
    
    
    
    Outstanding
    
    
    1,002,000
    
    
    
    303,120Exercisable
    
    
    24,000
    
    
    
    
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The following table provides details of the restricted stock unit activity for the three months
ended March 31, 2010:
 Restricted stock units outstanding at January 1, 2010
    
    
    526,809Restricted stock units granted
    
    
    Accrued dividend equivalents
    
    
    1,506Restricted stock units settled
    
    
    (248,818
    )Restricted stock units cancelled
    
    
    (4,149
    )Restricted stock units outstanding at March 31, 2010
    
    
    275,348
 The following table provides details of the performance based units earned under the Companys
Long-Term Incentive Plans for the three months ended March 31, 2010:
 Long-Term Incentive Plan Years2007-2009
    
    
    2008-2010Performance-based units outstanding
at January 1, 2010
    
    
    559,951
    
    
    
    290,860Accrued dividend equivalents
    
    
    
    
    
    
    1,578Performance-based units settled
    
    
    (559,951
    )
    
    
    Performance-based units outstanding
at March 31, 2010
    
    
    0
    
    
    
    292,438
 7.
    
    The following table discloses the amount of net periodic benefit costs for the three months
ended March 31, 2009 and 2010 for the Companys defined benefit plans and other postretirement
benefits relating to continuing operations:
 OtherPension Benefits
    
    
    Postretirement Benefits2009
    
    
    2010
    
    
    2009
    
    
    2010Components of net periodic
benefit cost:Service cost
    
    $
    3,387
    
    
    $
    1,667
    
    
    $
    853
    
    
    $
    790Interest cost
    
    
    14,618
    
    
    
    15,624
    
    
    
    3,706
    
    
    
    3,529Expected return on plan assets
    
    
    (13,687
    )
    
    
    (16,379
    )
    
    
    
    
    
    
    Amortization of prior service cost
    
    
    (1,456
    )
    
    
    (158
    )
    
    
    (77
    )
    
    
    (136
    )Recognized actuarial loss
    
    
    8,925
    
    
    
    8,440
    
    
    
    18
    
    
    
    Albany settlement loss
    
    
    
    
    
    
    3,330
    
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    11,787
    
    
    $
    12,524
    
    
    $
    4,500
    
    
    $
    4,183
 During 2010, the Company expects to contribute between $35,000 and $40,000 to its domestic and
foreign pension plans.
 In March 2010, the Patient Protection and Affordable Care Act and the Health Care and Education
Affordability Act of 2010 (the Act) was enacted. The primary focus of the Act is to
significantly reform health care in the U.S. The Act will reduce the tax deduction available to
the Company to the extent of receipt of Medicare Part D prescription drug subsidy; however, this
will not have a material impact on the Companys financial results. The Company is currently
evaluating other prospective effects of the Act.
 15




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##### Table of Contents



8.
    
    The following table reconciles the beginning and end of the period equity accounts
attributable to Cooper Tire & Rubber Company and to the noncontrolling shareholder interests:
 NoncontrollingTotal
    
    
    Shareholders
    
    
    
    
    
    
    RedeemableParent
    
    
    Interests in
    
    
    Total
    
    
    NoncontrollingStockholders
    
    
    Consolidated
    
    
    Stockholders
    
    
    ShareholdersEquity
    
    
    Subsidiaries
    
    
    Equity
    
    
    InterestsBalance at December 31, 2009 (1)
    
    $
    330,808
    
    
    $
    49,716
    
    
    $
    380,524
    
    
    $
    83,528Net income
    
    
    11,576
    
    
    
    685
    
    
    
    12,261
    
    
    
    4,911Other comprehensive income (1)
    
    
    13,456
    
    
    
    (195
    )
    
    
    13,261
    
    
    
    (2,457
    )Dividends payable to
noncontrolling shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,637
    )Contribution of
noncontrolling shareholder
    
    
    
    
    
    
    5,250
    
    
    
    5,250
    
    
    
    Acquisition of noncontrolling
shareholder interest
    
    
    1,384
    
    
    
    
    
    
    
    1,384
    
    
    
    (19,304
    )Stock compensation plans, including
tax charge of $392
    
    
    (2,175
    )
    
    
    
    
    
    
    (2,175
    )
    
    
    Cash dividends  $.105 per share
    
    
    (6,416
    )
    
    
    
    
    
    
    (6,416
    )
    
    
    Balance at March 31, 2010 (1)
    
    $
    348,633
    
    
    $
    55,456
    
    
    $
    404,089
    
    
    $
    55,041
 
 (1)
    
    Amounts have been restated, see Footnote 1 for additional information. The following table provides the details of the Companys comprehensive income (loss).
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 unrecognized postretirement benefits plans.
 The Companys comprehensive income (loss) is as follows:
 Three months ended March 312009
    
    
    2010Net income (loss) attributable to
Cooper Tire & Rubber Company
    
    $
    (21,267
    )
    
    $
    11,576Other comprehensive income (loss):Currency translation adjustments (1)
    
    
    (3,083
    )
    
    
    (4,572
    )Unrealized net gains on derivative instruments and
marketable securities, net of tax effect
    
    
    3,367
    
    
    
    1,362Unrecognized postretirement benefit plans,
net of tax effect
    
    
    354
    
    
    
    16,666Comprehensive income (loss) attributable to
Cooper Tire & Rubber Company (1)
    
    
    (20,629
    )
    
    
    25,032Net income (loss) attributable
to noncontrolling shareholders interests
    
    
    (2,020
    )
    
    
    5,596Other comprehensive income (loss):Currency translation adjustments (1)
    
    
    101
    
    
    
    (2,652
    )Comprehensive income (loss) attributable to
noncontrolling shareholders interests (1)
    
    
    (1,919
    )
    
    
    2,944Total comprehensive income (loss)
    
    $
    (22,548
    )
    
    $
    27,976
 
 (1)
    
    Amounts have been restated, see Footnote 1 for additional information. 16




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9.
    
    During the first quarter of 2010, the Company recorded restructuring expenses associated with
the closure of its Albany, Georgia manufacturing facility. This initiative, announced
December 17, 2008, resulted in a workforce reduction of approximately 1,330 people with an
estimated cost between $140,000 and $145,000 for restructuring expense and asset impairment.
 The Company recorded $4,282 of equipment relocation and other costs during the first quarter of
2010. The Company also recorded $3,330 of employee related costs representing pension
settlement losses. Through March 31, 2010, the Company has recorded $130,301 of restructuring
costs associated with this initiative.At January 1, 2010, the accrued severance balance was $848 and the Company made $600 of
severance payments resulting in an accrued severance balance at March 31, 2010 of $248.During the first quarter of 2009, the Company recorded $4,852 of equipment relocation and other
costs related to the Albany closure. The Company also recorded $9,454 of employee related
costs. Included in employee related costs are severance costs of $10,707 partially offset by
the amortization of prior service cost related to pension benefits. The Company also recorded
$46 of restructuring expenses associated with the closure of the Dayton, New Jersey distribution
center.
 10.
    
    The Company provides for the estimated cost of product warranties at the time revenue is
recognized based primarily on historical return rates, estimates of the eligible tire
population and the value of tires to be replaced. The following table summarizes the activity
in the Companys product warranty liabilities:
 2009
    
    
    2010Reserve at January 1
    
    $
    18,244
    
    
    $
    23,814Additions
    
    
    2,423
    
    
    
    4,223Payments
    
    
    (3,084
    )
    
    
    (3,902
    )Reserve at March 31
    
    $
    17,583
    
    
    $
    24,135
 11.
    
    The Company is a defendant in various products liability claims brought in numerous
jurisdictions in which individuals seek damages resulting from automobile accidents allegedly
caused by defective tires manufactured by the Company. Each of the products liability claims
faced by the Company generally involve different types of tires, models and lines, different
circumstances surrounding the accident such as different applications, vehicles, speeds, road
conditions, weather conditions, driver error, tire repair and maintenance practices, service
life conditions, as well as different jurisdictions and different injuries. In addition, in
many of the Companys products liability lawsuits the plaintiff alleges that his or her harm
was caused by one or more co-defendants who acted independently of the Company. Accordingly,
both the claims asserted and the resolutions of those claims have an enormous amount of
variability. The aggregate amount of damages asserted at any point in time is not
determinable since often times when claims are filed, the plaintiffs do not specify the amount
of damages. Even when there is an amount alleged, at times the amount is wildly inflated and
has no rational basis.
 The fact that the Company is a defendant in products liability lawsuits is not surprising given
the current litigation climate which is largely confined to the United States. However, the
fact that the Company is subject to claims does not indicate that there is a quality issue with
the Companys tires. The Company sells approximately 35 to 40 million passenger, light truck,
SUV, high performance, ultra high performance and radial medium truck tires per year in North
America. The Company estimates that approximately 300 million Cooper-produced tires  made up
of thousands of different specifications  are still on the road in North America. While tire
disablements do occur, it is the Companys and the tire industrys experience that the vast
majority of tire failures relate to service-related conditions which are entirely out of the
Companys control  such as failure to maintain proper tire pressure, improper maintenance,
road hazard and excessive speed.
 17




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##### Table of Contents



The Companys exposure for each claim occurring prior to April 1, 2003 is limited by the
coverage provided by its excess liability insurance program. The program for that period
includes a relatively low per claim retention and a policy year aggregate retention limit on
claims arising from occurrences which took place during a particular policy year. Effective
April 1, 2003, the Company established a new excess liability insurance program. The new
program covers the Companys products 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.The Company accrues costs for products liability at the time a loss is probable and the amount
of loss can be estimated. 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 to determine the requirement for
establishment or revision of an accrual for any potential liability. The liability often
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. The Company uses a range of settlements because an
average settlement cost would not be meaningful since the products liability claims faced by the Company are unique and widely
variable. The cases involve different types of tires, models and lines, different
circumstances surrounding the accident such as different applications, vehicles, speeds, road
conditions, weather conditions, driver error, tire repair and maintenance practices, service
life conditions, as well as different jurisdictions and different injuries. In addition, in
many of the Companys products liability lawsuits the plaintiff alleges that his or her harm
was caused by one or more co-defendants who acted independently of the Company. Accordingly,
the claims asserted and the resolutions of those claims have an enormous amount of variability.
The costs have ranged from zero dollars to $33,000 in one case with no average that is
meaningful. No specific accrual is made for individual unasserted claims or for premature
claims, 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 litigation activity and the settled claims history is
maintained. Because of the speculative nature of litigation in the United States, the Company
does not believe a meaningful aggregate range of potential loss for asserted and unasserted
claims can be determined. The Companys experience has demonstrated that its estimates have
been reasonably accurate and, on average, cases are settled at amounts close to the reserves
established. However, it is possible an individual claim from time to time may result in an
aberration from the norm and could have a material impact.The Company determines its reserves using the number of incidents expected during a year.
During the first quarter of 2010, the Company increased its products liability reserve by
$36,821. The addition of another quarter of self-insured incidents accounted for $9,890 of
this increase. The Company revised its estimates of future settlements for unasserted and
premature claims increasing the reserve by $1,065. Finally, changes in the amount of reserves
for cases where sufficient information is known to estimate a liability increased by $25,866.
Of this amount, $21,800 was the result of the Company increasing its self-insured portion of a
jury verdict in one case during the first quarter. The Company considered the impact of this
case when evaluating the assumptions used in establishing reserve balances and did not adjust
its assumptions based solely on this case.The time frame for the payment of a products liability claim is too variable to be meaningful.
From the time a claim is filed to its ultimate disposition depends on the unique nature of the
case, how it is resolved  claim dismissed, negotiated settlement, trial verdict and appeals
process  and is highly dependent on jurisdiction, specific facts, the plaintiffs attorney,
the courts docket and other factors. Given that some claims may be resolved in weeks and
others may take five years or more, it is impossible to predict with any reasonable reliability
the time frame over which the accrued amounts may be paid.
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##### Table of Contents



The Company paid $4,781 during the first quarter of 2010 to resolve cases and claims. The
Companys products liability reserve balance at December 31, 2009 totaled $151,421 (current
portion of $30,805) and the balance at March 31, 2010 totaled $183,461 (current portion of
$31,621).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. Legal costs are expensed as incurred
and products liability insurance premiums are amortized over coverage periods. 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 those
periods. The Company records the reimbursements under such policies in the period the
conditions for reimbursement are met. Products liability expense totaled $20,568 and $44,598
for the periods ended March 31, 2009 and 2010, respectively.
 12.
    
    For the quarter ended March 31, 2010, the Company recorded an income tax expense for
continuing operations of $7,743 including discrete items. The effective tax rate for the
three-month period ended March 31, 2010, for continuing operations is 18.9 percent, exclusive
of discrete items, using the applicable effective tax rate determined using the forecasted
multi-jurisdictional annual effective tax rates. For comparable periods in 2009, the
effective tax rate for continuing operations, exclusive of discrete items, was 16.2 percent
using forecasted jurisdictional annual effective tax rates. The change in the tax rate,
exclusive of discrete items, relates primarily to the reversal of a valuation allowances
relating to the anticipated usage of various tax attribute carryforwards including tax credit and net operating loss carryforwards plus the
impact of the mix of earnings or loss by jurisdiction as compared to 2009.
 The Company maintains a valuation allowance pursuant to ASC 740 Accounting for Income Taxes,
on its net U.S. deferred tax asset position. The valuation allowance will be maintained as
long as it is more likely than not that some portion of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are determined separately for each taxing
jurisdiction in which the Company conducts its operations or otherwise generates taxable income
or losses. In the U.S., the Company has recorded significant deferred tax assets, the largest
of which relates to products liability, pension and other postretirement benefit obligations.
These deferred tax assets are partially offset by deferred tax liabilities, the most
significant of which relates to accelerated depreciation. Based upon this assessment, the
Company maintains a $145,244 valuation allowance for the portion of U.S. deferred tax assets
exceeding its U.S. deferred tax liabilities. In addition, the Company has recorded valuation
allowances of $2,475 for deferred tax assets associated with losses in foreign jurisdictions.The Company maintains an ASC 740-10, Accounting for Uncertainty in Income Taxes liability for
unrecognized tax benefits for permanent and temporary book/tax differences for continuing
operations. At March 31, 2010, the Companys liability, exclusive of interest, totals
approximately $7,461. The Company accrued approximately $19 of interest expense for the
quarter which has been recorded as a discrete item in its tax provision.In 2003 the Company initiated bilateral Advance Pricing Agreement (APA) negotiations with the
Canadian and U.S. governments to change its intercompany transfer pricing process between a
formerly owned subsidiary, Cooper-Standard Automotive, Inc., (CSA) and its Canadian
affiliate. In 2009 the governments settled the APA between the governments and the taxpayers
for periods 2000-2007. On August 19, 2009, the Company filed an action in the United States
Bankruptcy Court, District of Delaware, in response to the Bankruptcy petition filed by Cooper
Standard Holdings Inc. on August 3, 2009. The action related to the tax refunds owed to the
Company pursuant to the September 16, 2004 sale agreement of CSA for pre-disposition periods
ending December 23, 2004. On March 17, 2010, the Company entered into a settlement agreement
with Cooper Standard Holdings, Inc., et al. to resolve the subject proceedings. The approved
settlement agreement was docketed by the Court on April 15, 2010 and became final and
non-appealable on April 29, 2010. Pursuant to the settlement agreement, CSA paid the Company
approximately $17,600. Also, CSA must provide a release of the Company from all liability in
connection with the Companys guaranty of a lease for certain property in Surgoinsville,
Tennessee, or alternatively, cause a letter of credit to be issued for the benefit of the
Company in the initial amount of $7,000. The letter of
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credit will be payable to the Company for amounts that the Company is called upon to pay in connection with the Companys guaranty.
The settlement agreement also provides that the Company has no obligation for any payments made
under a pension plan covering certain employees of a former subsidiary. When all conditions
have been satisfied, the parties have agreed to certain mutual releases with only certain
limited obligations under the 2004 sale agreement to remain in force. Based upon the
settlement, the Company recognized the cash received and released additional liabilities
recorded on its books relating to the disposition of CSA as income from discontinued operations
during the second quarter of 2010.The Company and its subsidiaries are subject to income taxes in the U.S. federal jurisdiction
and various state and foreign jurisdictions. With few exceptions, the Company is no longer
subject to U.S. federal, state and foreign tax examinations by tax authorities for years prior
to 2000.
 13.
    
    On February 2, 2010 in the case of Cates, et al v. Cooper Tire & Rubber Company, the United
States District Court for the Northern District of Ohio entered an order approving the
settlement agreement negotiated by the parties in April 2009, in its entirety, as being fair,
reasonable and adequate and dismissed, with prejudice, the case and a related lawsuit,
Johnson, et al v. Cooper Tire & Rubber Company. The settlement agreement provides for 1) a
cash payment of $7,050 to the Plaintiffs for reimbursement of costs; and 2) modification to
the Companys approach and costs of providing future health care to specified current retiree
groups which will result in an amendment to the Companys retiree medical plan.
 A group of the Companys union retirees and surviving spouses filed the Cates lawsuit on behalf
of a purported class claiming that the Company was not entitled to impose any contribution
requirement for the cost of their health care coverage pursuant to a series of letter
agreements entered into by the Company and the United Steelworkers and that Plaintiffs were
promised lifetime benefits, at no cost, after retirement. As a result of settlement
discussions, the related Johnson case was filed with the Court on behalf of a different,
smaller group of hourly union-represented retirees.The Company is making plans to implement the settlement agreement. As a consequence of the
settlement agreement, the Company recorded $7,050 of expense during the first quarter of 2009
relating to the specified payments. Also during the first quarter of 2009, the actuarial value
of costs related to the plan amendment was estimated to be approximately $7,700 which has been
reflected as an increase in the accrual for Other Post-employment Benefits with an offset to
the Accumulated Other Comprehensive Income component of Shareholders Equity. The Company is
currently in the process of finalizing the impact of the amendment on its accrual for Other
Post-employment Benefits and will record the impact when the settlement agreement is
implemented.
 14.
    
    In connection with the investment in Cooper Chengshan, beginning January 1, 2009 and
continuing through December 31, 2011, the noncontrolling shareholders have the option, which
is embedded in the noncontrolling interest, to require the Company to purchase the remaining
49 percent noncontrolling share at the greater of a minimum price of $62,700 or a formula
price that varies based on operating results of the entity. The combination of a
noncontrolling interest and a put option resulted in a redeemable noncontrolling shareholder
interest. The put option is not separated from the shares as an embedded derivative because
the underlying shares are not readily convertible into cash.
 The noncontrolling interest is redeemable at other than fair value as the put value is
determined based on a specified formula as described above. The Company records the
noncontrolling shareholders interests in Cooper Chengshan at the greater of 1) the initial
carrying amount, increased or decreased for the noncontrolling shareholders share of net income
or loss and its share of other comprehensive income or loss and dividends (carrying amount) or
2) the value of the put option which is determined based on the greater of the minimum amount or
the formula derived amount. Prior to exercisability of the put option on January 1, 2009, the
noncontrolling shareholders interest has been recorded at the greater of 1) the carrying amount
or 2) the cumulative amount required to accrete the initial carrying amount to the redemption
value using the effective interest method which resulted in accretion of $1,110 during the
quarter ended March 31, 2009 with an offset to Retained earnings. According to authoritative
accounting guidance, the redeemable
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noncontrolling shareholders interests are classified
outside of permanent equity, as a mezzanine item, on the Companys Condensed Consolidated
Balance Sheets.According to authoritative accounting guidance for redeemable noncontrolling shareholders
interests, to the extent the noncontrolling shareholders have a contractual right to receive an
amount upon exercise of a put option that is other than fair value, and such amount is greater
than carrying value, then the noncontrolling shareholder has, in substance, received a dividend
distribution that is different than other common stockholders. Therefore accretion adjustments
to the carrying value of noncontrolling shareholders interests to reflect the put option amount
should also be reflected in the computation of earnings per share available to Cooper Tire &
Rubber Company common stockholders. During 2009, the Company recorded adjustments to the
redeemable noncontrolling shareholders interests which are shown on the Condensed Consolidated
Statements of Operations.In 2009, the Company was notified by a noncontrolling shareholder that it had exercised its put
option and after governmental approval, the Company purchased the 14 percent share for $17,920
on March 31, 2010. The remaining noncontrolling shareholder has the right to sell its 35
percent share to the Company at a minimum price of $44,780. At March 31, 2010, the formula
price of $45,417 exceeds the minimum price, however, the carrying value exceeds the formula
price and the carrying value is the amount shown on the Companys Condensed Consolidated Balance
Sheets.
 
 Item 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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Consolidated Results of Operations
  Three months ended March 312009
    
    
    Change
    
    
    2010Revenues:North American Tire
    
    $
    439.3
    
    
    
    21.0
    %
    
    $
    531.7International Tire
    
    
    166.2
    
    
    
    76.7
    %
    
    
    293.6Eliminations
    
    
    (34.1
    )
    
    
    107.9
    %
    
    
    (70.9
    )Net sales
    
    $
    571.4
    
    
    
    32.0
    %
    
    $
    754.4Segment profit (loss):North American Tire
    
    $
    (3.6
    )
    
    
    n/m
    
    
    $
    13.6International Tire
    
    
    (2.8
    )
    
    
    n/m
    
    
    
    22.6Unallocated corporate charges
    
    
    (9.5
    )
    
    
    -71.6
    %
    
    
    (2.7
    )Eliminations
    
    
    (0.3
    )
    
    
    66.7
    %
    
    
    (0.5
    )Operating profit (loss)
    
    
    (16.2
    )
    
    
    n/m
    
    
    
    33.0Interest expense
    
    
    12.7
    
    
    
    -31.5
    %
    
    
    8.7Interest income
    
    
    (1.4
    )
    
    
    -14.3
    %
    
    
    (1.2
    )Other income
    
    
    (0.8
    )
    
    
    -75.0
    %
    
    
    (0.2
    )Income (loss) from continuing operations
before income taxes
    
    
    (26.7
    )
    
    
    n/m
    
    
    
    25.7Income tax expense (benefit)
    
    
    (3.8
    )
    
    
    n/m
    
    
    
    7.7Income (loss) from continuing operations
    
    
    (22.9
    )
    
    
    n/m
    
    
    
    18.0Income (loss) from discontinued operations,
net of income taxes
    
    
    (0.4
    )
    
    
    n/m
    
    
    
    (0.8
    )Noncontrolling shareholders interests
    
    
    (2.0
    )
    
    
    n/m
    
    
    
    5.6Net income (loss) attributable to
Cooper Tire & Rubber Company
    
    $
    (21.3
    )
    
    
    n/m
    
    
    $
    11.6Basic earnings per share attributable to
Cooper Tire & Rubber Company
    
    $
    (0.38
    )                1
    
    
    
    
    
    $
    0.19Diluted earnings per share attributable to
Cooper Tire & Rubber Company
    
    $
    (0.38
    )                1
    
    
    
    
    
    $
    0.19
 
 1
    
    Amounts have been restated  see Footnote 1 for additional information.  22




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Cates
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##### Table of Contents



North American Tire Operations Segment
 Three months ended March 31(Dollar amounts in millions)
    
    2009
    
    
    Change
    
    
    2010Sales
    
    $
    439.3
    
    
    
    21.0
    %
    
    $
    531.7Operating profit (loss)
    
    $
    (3.6
    )
    
    
    n/m
    
    
    $
    13.6United States unit shipments changes:Passenger tiresSegment
    
    
    
    
    
    
    19.8
    %RMA members
    
    
    
    
    
    
    9.6
    %Total Industry
    
    
    
    
    
    
    12.6
    %Light truck tiresSegment
    
    
    
    
    
    
    14.6
    %RMA members
    
    
    
    
    
    
    11.5
    %Total Industry
    
    
    
    
    
    
    17.8
    %Total light vehicle tiresSegment
    
    
    
    
    
    
    18.9
    %RMA members
    
    
    
    
    
    
    9.8
    %Total Industry
    
    
    
    
    
    
    13.2
    %Total segment unit sales change
    
    
    
    
    
    
    19.2
    %
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##### Table of Contents



Overview
  Sales
  Operating Profit
  International Tire Operations Segment
 Three months ended March 31(Dollar amounts in millions)
    
    2009
    
    
    Change
    
    
    2010Sales
    
    $
    166.2
    
    
    
    76.7
    %
    
    $
    293.6Operating profit (loss)
    
    $
    (2.8
    )
    
    
    n/m
    
    
    $
    22.6Unit sales change
    
    
    
    
    
    
    64.6
    %
 Overview
  25




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Sales
  Operating Profit
  Outlook for Company
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##### Table of Contents



Liquidity and Capital Resources
 Generation and uses of cash 
    Available credit facilities 
  Available cash and contractual commitments 
  27




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##### Table of Contents



Parent company8% unsecured notes due December 2019
    
    $
    173.67.625% unsecured notes due March 2027
    
    
    116.9Capitalized leases and other
    
    
    10.5301.0Subsidiaries5.4% unsecured notes due in 2010
    
    
    4.45.13% unsecured notes due in 2011
    
    
    6.64.86% to 5.13% unsecured notes due in 2012
    
    
    20.431.4Less current maturities
    
    
    5.0$
    327.4
 Contingencies
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##### Table of Contents



Forward-Looking Statements
  
    
    changes in economic and business conditions in the world;
    
    the failure to achieve expected sales levels;
    
    consolidation among the Companys competitors and customers;
    
    technology advancements;
    
    the failure of the Companys suppliers to timely deliver products in accordance with
contract specifications;
    
    changes in interest and foreign exchange rates;
    
    changes in the Companys customer relationships, including loss of particular business for
competitive or other reasons;
    
    the impact of reductions in the insurance program covering the principal risks to the
Company, and other unanticipated events and conditions;
    
    volatility in raw material and energy prices, including those of steel, petroleum based
products and natural gas and the unavailability of such raw materials or energy sources;
    
    the inability to obtain and maintain price increases to offset higher production or
material costs;
    
    increased competitive activity including actions by larger competitors or low-cost
producers;
    
    the inability to recover the costs to develop and test new products or processes;
    
    the risks associated with doing business outside of the United States;
    
    changes in pension expense and/or funding 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, or changes to related accounting regulations;
    
    government regulatory initiatives;
    
    the impact of labor problems, including a strike brought against the Company or against one
or more of its large customers or suppliers;
    
    litigation brought against the Company including products liability;
    
    an adverse change in the Companys credit ratings, which could increase its borrowing costs
and/or hamper its access to the credit markets;
    
    changes to the credit markets and/or access to those markets;
    
    inaccurate assumptions used in developing the Companys strategic plan or the inability or
failure to successfully implement the Companys strategic plan;
    
    inability to adequately protect the Companys intellectual property rights;
    
    failure to successfully integrate acquisitions into operations or their related financings
may impact liquidity and capital resources;
    
    inability to use deferred tax assets;
    
    recent changes to tariffs on certain tires imported into the United States from the PRC
and;
    
    changes in the Companys relationship with joint venture partners.
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##### Table of Contents



Item 4. CONTROLS AND PROCEDURES
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##### Table of Contents



Part II. OTHER INFORMATION
 
 Item 1A. RISK FACTORS
  The Company is facing heightened risks due to the current business environment.
    Inadequate supply of key raw materials and pricing volatility for raw materials could result in
increased costs and may affect the Companys profitability.
   If the price of natural gas or other energy sources increases, the Companys operating expenses
could increase significantly.
   The Companys industry is highly competitive, and it may not be able to compete effectively with
low-cost producers and larger competitors.
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##### Table of Contents



The Company may be unable to recover new product and process development and testing costs, which
could increase the cost of operating its business.
  The Company conducts its manufacturing, sales and distribution operations on a worldwide basis and
is subject to risks associated with doing business outside the United States.
  The Companys results could be impacted by the tariffs recently imposed by the United States
government on tires imported from the PRC.
  The Companys expenditures for pension and other postretirement obligations could be materially
higher than it has predicted if its underlying assumptions prove to be incorrect.
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##### Table of Contents



The cost of compliance with the recently enacted health care reforms could affect the Companys
operating costs.
  Compliance with regulatory initiatives could increase the cost of operating the Companys business.
    Any interruption in the Companys skilled workforce could impair its operations and harm its
earnings and results of operations.
  The Company has a risk of exposure to products liability claims which, if successful, could have a
negative impact on its financial position, cash flows and results of operations.
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##### Table of Contents



The Company has a risk due to volatility of the capital and financial markets.
   If assumptions used in developing the Companys strategic plan are inaccurate or the Company is
unable to execute its strategic plan effectively, its profitability and financial position could be
negatively impacted.
  
  The Company may not be able to protect its intellectual property rights adequately.
  The Company may not be successful in executing and integrating acquisitions into its operations,
which could harm its results of operations and financial condition.
  
    
    the possible inability to integrate an acquired business into its operations;
    
    increased intangible asset amortization;
    
    diversion of managements attention;
    
    loss of key management personnel;
    
    unanticipated problems or liabilities; and
    
    increased labor and regulatory compliance costs of acquired businesses.
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##### Table of Contents



The Company is required to comply with environmental laws and regulations that could cause it to
incur significant costs.
  A portion of the Companys business is seasonal, which may affect its period-to-period results.
  The realizability of deferred tax assets may affect the Companys profitability and cash flows.
 Accounting for Income Taxes
 The impact of new accounting standards on determining pension and other postretirement benefit
plans expense may have a negative impact on the Companys results of operations.
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##### Table of Contents



There are risks associated with the Companys global strategy of using joint ventures and partially
owned subsidiaries.
     The Company may fail to maintain an effective system of internal control over financial reporting
and it may not be able to accurately report its financial results, and current and potential
stockholders may lose confidence in its financial reporting.
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##### Table of Contents



Item 6. EXHIBITS
 (a)
    
    Exhibits
 (31.1)
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(31.2)
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002(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
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##### Table of Contents



COOPER TIRE & RUBBER COMPANY/s/ B. E. HughesB. E. HughesVice President and Chief
Financial Officer
(Principal Financial Officer)/s/ R. W. HuberR. W. HuberDirector of External Reporting
(Principal Accounting Officer) August 4, 2010
 38