##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D. C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 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
 (COOPERTIRES LOGO)
 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
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
  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 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKItem 4. CONTROLS AND PROCEDURESPart II. OTHER INFORMATIONItem 1. LEGAL PROCEEDINGSItem 1A. RISK FACTORSItem 6. EXHIBITSSIGNATURESEX-31.1EX-31.2EX-32    Table of Contents  
  
  
 December 31,
    
    
    September 30,2009
    
    
    2010(Note 1)
    
    
    (Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    426,981
    
    
    $
    347,412Accounts receivable, less allowances
of $10,928 in 2009 and $11,455 in 2010
    
    
    367,023
    
    
    
    521,019Inventories at lower of cost or market:Finished goods
    
    
    188,323
    
    
    
    236,143Work in process
    
    
    22,090
    
    
    
    26,394Raw materials and supplies
    
    
    88,022
    
    
    
    108,451298,435
    
    
    
    370,988Other current assets
    
    
    39,392
    
    
    
    47,157Total current assets
    
    
    1,131,831
    
    
    
    1,286,576Property, plant and equipment:Land and land improvements
    
    
    33,321
    
    
    
    34,235Buildings
    
    
    320,021
    
    
    
    319,522Machinery and equipment
    
    
    1,587,306
    
    
    
    1,620,214Molds, cores and rings
    
    
    246,395
    
    
    
    254,5632,187,043
    
    
    
    2,228,534Less accumulated depreciation and amortization
    
    
    1,336,072
    
    
    
    1,391,757Net property, plant and equipment
    
    
    850,971
    
    
    
    836,777Intangibles, net of accumulated amortization of $23,165
in 2009 and $24,134 in 2010
    
    
    18,546
    
    
    
    17,577Restricted cash
    
    
    2,219
    
    
    
    2,267Other assets
    
    
    96,773
    
    
    
    95,727Total assets (1)
    
    $
    2,100,340
    
    
    $
    2,238,924LIABILITIES AND EQUITYCurrent liabilities:Notes payable
    
    $
    156,719
    
    
    $
    138,002Accounts payable
    
    
    300,448
    
    
    
    362,511Accrued liabilities
    
    
    158,643
    
    
    
    160,264Income taxes
    
    
    3,955
    
    
    
    5,091Liabilities of discontinued operations
    
    
    1,061
    
    
    
    Current portion of long-term debt
    
    
    15,515
    
    
    
    5,076Total current liabilities
    
    
    636,341
    
    
    
    670,944Long-term debt
    
    
    330,971
    
    
    
    325,703Postretirement benefits other than pensions
    
    
    244,905
    
    
    
    240,457Pension benefits
    
    
    272,050
    
    
    
    241,168Other long-term liabilities
    
    
    145,978
    
    
    
    172,474Long-term liabilities related to the sale of automotive operations
    
    
    6,043
    
    
    
    Redeemable noncontrolling shareholders interests
    
    
    83,528
    
    
    
    65,603Equity: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
    
    
    
    58,799Retained earnings
    
    
    1,133,133
    
    
    
    1,213,540Cumulative other comprehensive loss
    
    
    (470,272
    )
    
    
    (427,295
    )821,356
    
    
    
    932,894Less: common shares in treasury at cost
(27,327,646 in 2009 and 26,348,741 in 2010)
    
    
    (490,548
    )
    
    
    (470,841
    )Total parent stockholders equity
    
    
    330,808
    
    
    
    462,053Noncontrolling shareholders interests in consolidated subsidiaries
    
    
    49,716
    
    
    
    60,522Total equity
    
    
    380,524
    
    
    
    522,575Total liabilities and equity (1)
    
    $
    2,100,340
    
    
    $
    2,238,924
 
 (1)
    
    Assets of consolidated variable interest entities (VIEs) were $204,995 and $207,391 at December
31, 2009
and September 30, 2010, respectively. The assets (principally Property, plant and equipment) of
the VIEs can only
be used to settle obligations of those VIEs. Liabilities (principally Notes payable) of
consolidated VIEs were
$105,806 and $86,318 at December 31, 2009 and September 30, 2010, respectively, and represent
claims against
the specific assets of the VIEs.  2




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##### Table of Contents



2009
    
    
    2010Net sales
    
    $
    802,794
    
    
    $
    882,942Cost of products sold
    
    
    662,277
    
    
    
    754,695Gross profit
    
    
    140,517
    
    
    
    128,247Selling, general and administrative
    
    
    56,444
    
    
    
    56,351Restructuring
    
    
    13,385
    
    
    
    4,766Operating profit
    
    
    70,688
    
    
    
    67,130Interest expense
    
    
    11,440
    
    
    
    9,397Interest income
    
    
    (2,259
    )
    
    
    (2,166
    )Other expense (income)
    
    
    1,047
    
    
    
    (719
    )Income from continuing operations before income taxes
    
    
    60,460
    
    
    
    60,618Income tax expense
    
    
    2,628
    
    
    
    10,309Income from continuing operations
    
    
    57,832
    
    
    
    50,309Loss from discontinued operations, net of income taxes
    
    
    (337
    )
    
    
    (1
    )Net income
    
    
    57,495
    
    
    
    50,308Net income attributable to noncontrolling shareholders interests
    
    
    10,664
    
    
    
    5,710Net income attributable to Cooper Tire & Rubber Company
    
    $
    46,831
    
    
    $
    44,598Basic earnings per share:Income from
continuing operations available to Cooper Tire & Rubber Company common stockholders
    
    $
    0.87
    
    1
    $
    0.73Loss from discontinued operations
    
    
    (0.01
    )
    
    
    (0.00
    )Net income
available to Cooper Tire & Rubber Company common stockholders
    
    $
    0.87
    
    1,2
    $
    0.73Diluted earnings per share:Income from
continuing operations available to Cooper Tire & Rubber Company common stockholders
    
    $
    0.85
    
    1
    $
    0.71Loss from discontinued operations
    
    
    (0.01
    )
    
    
    (0.00
    )Net income
available to Cooper Tire & Rubber Company common stockholders
    
    $
    0.84
    
    1
    $
    0.71Weighted average number of shares outstanding (000s):Basic
    
    
    59,331
    
    
    
    61,440Diluted
    
    
    61,050
    
    
    
    62,759Dividends per share
    
    $
    0.105
    
    
    $
    0.105
 
 1
    
    Amounts have been restated, see Footnote 1 for additional information.2
    
    Amounts do not add due to rounding.  3




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2009
    
    
    2010Net sales
    
    $
    2,005,931
    
    
    $
    2,441,344Cost of products sold
    
    
    1,714,685
    
    
    
    2,132,543Gross profit
    
    
    291,246
    
    
    
    308,801Selling, general and administrative
    
    
    151,828
    
    
    
    155,230Restructuring
    
    
    36,446
    
    
    
    19,804Settlement of retiree medical case
    
    
    7,050
    
    
    
    Operating profit
    
    
    95,922
    
    
    
    133,767Interest expense
    
    
    36,192
    
    
    
    27,276Interest income
    
    
    (4,739
    )
    
    
    (4,150
    )Other income
    
    
    (1,025
    )
    
    
    (1,944
    )Income from continuing operations before income taxes
    
    
    65,494
    
    
    
    112,585Income tax expense (benefit)
    
    
    (178
    )
    
    
    19,299Income from continuing operations
    
    
    65,672
    
    
    
    93,286Income (loss) from discontinued operations, net of income taxes
    
    
    (37,786
    )
    
    
    24,365Net income
    
    
    27,886
    
    
    
    117,651Net income attributable to noncontrolling shareholders interests
    
    
    15,282
    
    
    
    17,400Net income attributable to Cooper Tire & Rubber Company
    
    $
    12,604
    
    
    $
    100,251Basic earnings per share:Income from
continuing operations available to Cooper Tire & Rubber Company common stockholders
    
    $
    1.02
    
    1
    $
    1.24Income (loss) from discontinued operations
    
    
    (0.64
    )
    
    
    0.40Net income
available to Cooper Tire & Rubber Company common stockholders
    
    $
    0.38
    
    1
    $
    1.64Diluted earnings per share:Income from
continuing operations available to Cooper Tire & Rubber Company common stockholders
    
    $
    1.00
    
    1
    $
    1.21Income (loss) from discontinued operations
    
    
    (0.63
    )
    
    
    0.39Net income
available to Cooper Tire & Rubber Company common stockholders
    
    $
    0.38
    
    1,2
    $
    1.60Weighted average number of shares outstanding (000s):Basic
    
    
    59,078
    
    
    
    61,217Diluted
    
    
    60,095
    
    
    
    62,556Dividends per share
    
    $
    0.315
    
    
    $
    0.315
 
 1
    
    Amounts have been restated, see Footnote 1 for additional information.2
    
    Amounts do not add due to rounding.  4




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##### Table of Contents



2009
    
    
    2010Operating activities:Net income
    
    $
    27,886
    
    
    $
    117,651Adjustments to reconcile net income to
net cash provided by continuing operations:Loss (income) from discontinued operations, net of income taxes
    
    
    37,786
    
    
    
    (24,365
    )Depreciation
    
    
    90,968
    
    
    
    91,885Amortization
    
    
    1,645
    
    
    
    1,492Deferred income taxes
    
    
    (1,524
    )
    
    
    (800
    )Stock based compensation
    
    
    3,752
    
    
    
    5,643Change in LIFO inventory reserve
    
    
    (117,874
    )
    
    
    40,121Amortization of unrecognized postretirement benefits
    
    
    25,843
    
    
    
    29,121Loss on sale of assets
    
    
    248
    
    
    
    1,272Changes in operating assets and liabilities of
continuing operations:Accounts receivable
    
    
    (108,170
    )
    
    
    (152,925
    )Inventories
    
    
    230,999
    
    
    
    (110,452
    )Other current assets
    
    
    12,539
    
    
    
    (4,977
    )Accounts payable
    
    
    52,079
    
    
    
    58,635Accrued liabilities
    
    
    60,042
    
    
    
    (299
    )Other items
    
    
    9,734
    
    
    
    (1,918
    )Net cash provided by continuing operations
    
    
    325,953
    
    
    
    50,084Net cash provided by (used in) discontinued operations
    
    
    (2,489
    )
    
    
    17,261Net cash provided by operating activities
    
    
    323,464
    
    
    
    67,345Investing activities:Property, plant and equipment
    
    
    (63,978
    )
    
    
    (75,040
    )Investments in unconsolidated subsidiary
    
    
    (659
    )
    
    
    Proceeds from the sale of assets
    
    
    1,159
    
    
    
    1,211Net cash used in investing activities
    
    
    (63,478
    )
    
    
    (73,829
    )Financing activities:Payments on short-term debt
    
    
    (39,607
    )
    
    
    (25,672
    )Payments on long-term debt
    
    
    (36,086
    )
    
    
    (10,600
    )Contributions of joint venture partner
    
    
    
    
    
    
    6,750Acquisition of noncontrolling shareholders interest
    
    
    
    
    
    
    (17,920
    )Payment of dividends to noncontrolling shareholders
    
    
    
    
    
    
    (11,637
    )Payment of dividends
    
    
    (18,573
    )
    
    
    (19,309
    )Issuance of common shares and excess tax benefits on options
    
    
    84
    
    
    
    5,484Net cash used in financing activities
    
    
    (94,182
    )
    
    
    (72,904
    )Effects of exchange rate changes on cash of
continuing operations
    
    
    (3,933
    )
    
    
    (181
    )Changes in cash and cash equivalents
    
    
    161,871
    
    
    
    (79,569
    )Cash and cash equivalents at beginning of year
    
    
    247,672
    
    
    
    426,981Cash and cash equivalents at end of period
    
    $
    409,543
    
    
    $
    347,412
  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 (U.S.) for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. There is a year-round demand
for the Companys passenger and truck replacement tires, but passenger replacement tires are
generally strongest during the third and fourth quarters of the year. Winter tires are sold
principally during the months of June through November. Operating results for the three-month
and nine-month periods ended September 30, 2010, are not necessarily indicative of the results
that may be expected for the year ended December 31, 2010.On August 5, 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
audited restated 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. The
reclassification of the currency translation adjustment also impacted the related equity
accounts.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 Redeemable noncontrolling shareholders interests, 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 the reversal of accretion of $4,545
and $9,939 during the three
and nine month periods ended September 30, 2009, respectively, with an offset to Retained
earnings.
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##### Table of Contents



According to authoritative accounting guidance, the redeemable 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 the Companys
common stockholders. The tables below present the impact of these adjustments on the Companys
earnings per share and the Companys comprehensive income:
 Three months ended September 30, 2009
    
    
    Nine months ended September 30, 2009As Originally
    
    
    
    
    
    
    As OriginallyReported
    
    
    Restated
    
    
    Reported
    
    
    RestatedBasic earnings per share:Income from
continuing operations available to Cooper Tire & Rubber Company common stockholders
    
    $
    0.79
    
    
    $
    0.87
    
    
    $
    0.85
    
    
    $
    1.02Loss from discontinued operations
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.64
    )
    
    
    (0.64
    )Net income
available to Cooper Tire & Rubber Company common stockholders
    
    $
    0.79
    *
    
    $
    0.87
    *
    
    $
    0.21
    
    
    $
    0.38Diluted earnings per share:Income from
continuing operations available to Cooper Tire & Rubber Company common stockholders
    
    $
    0.77
    
    
    $
    0.85
    
    
    $
    0.84
    
    
    $
    1.00Loss from discontinued operations
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.63
    )
    
    
    (0.63
    )Net income
available to Cooper Tire & Rubber Company common stockholders
    
    $
    0.77
    *
    
    $
    0.84
    
    
    $
    0.21
    
    
    $
    0.38
    *
 
 *
    
    Amounts do not add due to rounding
 Three months ended September 30, 2009
    
    
    Nine months ended September 30, 2009As Originally
    
    
    
    
    
    
    As OriginallyReported
    
    
    Restated
    
    
    Reported
    
    
    RestatedNet income
attributable to Cooper Tire & Rubber Company
    
    $
    46,831
    
    
    $
    46,831
    
    
    $
    12,604
    
    
    $
    12,604Other comprehensive income (loss):Currency translation adjustments
    
    
    (2,013
    )
    
    
    (2,431
    )
    
    
    8,962
    
    
    
    8,730Unrealized net gains (losses) on
derivative
instruments and marketable securities,
net of tax
    
    
    (2,273
    )
    
    
    (2,273
    )
    
    
    (6,886
    )
    
    
    (6,886
    )Unrecognized postretirement benefit
plans,
net of tax
    
    
    13,225
    
    
    
    13,225
    
    
    
    14,725
    
    
    
    14,725Comprehensive income attributable to Cooper Tire & Rubber Company
    
    
    55,770
    
    
    
    55,352
    
    
    
    29,405
    
    
    
    29,173Net income attributable to
noncontrolling shareholders interests
    
    
    10,664
    
    
    
    10,664
    
    
    
    15,282
    
    
    
    15,282Other
comprehensive income Currency translation adjustments
    
    
    
    
    
    
    418
    
    
    
    
    
    
    
    232Comprehensive income attributable to
noncontrolling shareholders interests
    
    
    10,664
    
    
    
    11,082
    
    
    
    15,282
    
    
    
    15,514Total comprehensive income
    
    $
    66,434
    
    
    $
    66,434
    
    
    $
    44,687
    
    
    $
    44,687
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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 ventures. 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 a tire manufacturing facility in Mexico represents an approximate 38 percent
ownership interest and is accounted for under the equity method.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 to Cooper Tire & Rubber Company and its affiliates at a price that provides an acceptable
return to the joint venture. 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.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 determined it is the primary beneficiary of this joint venture due to its ability to
control the primary economic activity.Since the Company has determined that each of these entities, Cooper Kenda and Cooper de
Mexico, 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.
Assets recognized as a result of consolidating these VIEs do not represent additional assets
that could be used to satisfy claims against the Companys general assets. Conversely,
liabilities recognized as a result of consolidating these VIEs do not represent additional
claims against the Companys general assets; rather, they represent claims against the
specific assets of the consolidated VIEs. The Company has recorded the interest related to
the joint venture partners ownership in noncontrolling shareholders interests in
consolidated subsidiaries.
 8




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##### Table of Contents



The following table summarizes the balance sheets of those variable interest entities at
December 31, 2009 and September 30, 2010:
 December 31,
    
    
    September 30,2009
    
    
    2010AssetsCash and cash equivalents
    
    $
    23,998
    
    
    $
    22,378Accounts receivable
    
    
    9,359
    
    
    
    12,493Inventories
    
    
    16,472
    
    
    
    21,838Prepaid expenses
    
    
    2,688
    
    
    
    3,395Total current assets
    
    
    52,517
    
    
    
    60,104Net property, plant and equipment
    
    
    139,705
    
    
    
    135,013Intangibles and other assets
    
    
    12,773
    
    
    
    12,274Total assets
    
    $
    204,995
    
    
    $
    207,391Liabilities and stockholders equityNotes payable
    
    $
    87,016
    
    
    $
    77,437Accounts payable
    
    
    7,147
    
    
    
    10,295Accrued liabilities
    
    
    1,118
    
    
    
    (1,414
    )Current portion of long-term debt
    
    
    10,525
    
    
    
    Current liabilities
    
    
    105,806
    
    
    
    86,318Stockholders equity
    
    
    99,189
    
    
    
    121,073Total liabilities and stockholders equity
    
    $
    204,995
    
    
    $
    207,391
 Accounting PronouncementsIn January 2010, the FASB issued guidance to amend the disclosure requirements
related to recurring and nonrecurring fair value measurements. The guidance
requires disclosure of transfers of assets and liabilities between Level 1 and
Level 2 of the fair value measurement hierarchy, including the reasons and the
timing of the transfers and information on purchases, sales, issuances, and
settlements on a gross basis in the reconciliation of the assets and
liabilities measured under Level 3 of the fair value measurement hierarchy.
The Company has adopted this guidance as of January 1, 2010 and it did not have
a material impact on the Companys consolidated financial statements.In June 2009, the FASB issued accounting guidance on accounting for transfers
of financial assets. This guidance amends previous guidance by including: the
elimination of the qualifying special-purpose entity (QSPE) concept; a new
participating interest definition that must be met for transfers of portions of
financial assets to be eligible for sale accounting; clarifications and changes
to the derecognition criteria for a transfer to be accounted for as a sale; and
a change to the amount of recognized gain or loss on a transfer of financial
assets accounted for as a sale when beneficial interests are received by the
transferor. Additionally, the guidance requires extensive new disclosures
regarding an entitys involvement in a transfer of financial assets. Finally,
existing QSPEs (prior to the effective date of this guidance) must be evaluated
for consolidation by reporting entities in accordance with the applicable
consolidation guidance upon the elimination of this concept. The Company
adopted this new guidance effective January 1, 2010 and it did not have an
impact on the Companys consolidated financial statements.In February 2010, the FASB amended its guidance on the accounting for and disclosure of events
that occur after the balance sheet date but before financial statements are issued or available
to be issued, otherwise known as subsequent events. Specifically, these changes clarify that
an entity that is required to file or furnish its financial statements with the Securities and
Exchange Commission is not required to disclose the date through which subsequent events have
been evaluated. Other than the elimination of disclosing the date through which management has
performed its evaluation for subsequent events, the adoption of these changes had no impact on
the Companys consolidated financial statements.
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##### Table of Contents



2.
    
    Earnings per share is computed on the basis of the weighted average number of common shares
outstanding each period. Diluted earnings 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 per share:
 Three months ended September 30
    
    
    Nine months ended September 30Restated
    
    
    
    
    
    
    Restated2009
    
    
    2010
    
    
    2009
    
    
    2010NumeratorIncome from continuing operations attributable
to Cooper Tire & Rubber Company
    
    $
    47,168
    
    
    $
    44,598
    
    
    $
    50,390
    
    
    $
    75,886Reversal of accretion of redeemable
noncontrolling shareholders interest
    
    
    4,545
    
    
    
    
    
    
    
    9,939
    
    
    
    Numerator for basic and diluted earnings per
share  income from continuing operations
available to common stockholders
    
    $
    51,713
    
    
    $
    44,598
    
    
    $
    60,329
    
    
    $
    75,886DenominatorDenominator for basic earnings per share 
weighted average shares outstanding
    
    
    59,331
    
    
    
    61,440
    
    
    
    59,078
    
    
    
    61,217Effect of dilutive securities  stock options and
other stock units
    
    
    1,719
    
    
    
    1,319
    
    
    
    1,017
    
    
    
    1,339Denominator for diluted earnings per share 
adjusted weighted average shares outstanding
    
    
    61,050
    
    
    
    62,759
    
    
    
    60,095
    
    
    
    62,556Basic earnings per share:Income from
continuing operations available to Cooper Tire & Rubber Company common stockholders
    
    $
    0.87
    
    
    $
    0.73
    
    
    $
    1.02
    
    
    $
    1.24Income (loss) from discontinued operations,
net of income taxes
    
    
    (0.01
    )
    
    
    
    
    
    
    (0.64
    )
    
    
    0.40Net income
available to Cooper Tire & Rubber Company common stockholders
    
    $
    0.87
    *
    
    $
    0.73
    
    
    $
    0.38
    
    
    $
    1.64Diluted earnings per share:Income from
continuing operations available to Cooper Tire & Rubber Company common stockholders
    
    $
    0.85
    
    
    $
    0.71
    
    
    $
    1.00
    
    
    $
    1.21Income (loss) from discontinued operations,
net of income taxes
    
    
    (0.01
    )
    
    
    
    
    
    
    (0.63
    )
    
    
    0.39Net income
available to Cooper Tire & Rubber Company common stockholders
    
    $
    0.84
    
    
    $
    0.71
    
    
    $
    0.38
    *
    
    $
    1.60
 
 *
    
    Amounts do not add due to rounding
 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. Exchange rate fluctuations on the foreign
currency-denominated intercompany loans and obligations are offset by the change in values of
the fair value foreign currency hedges. The Company presently hedges exposures in the Euro,
Canadian dollar, British pound sterling, Swiss franc, Swedish kronar, Mexican peso and Chinese
renminbi 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 September 30,
2010 was $207,600 and $201,500, respectively. The counterparties to each of these agreements
are major commercial banks.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 income in the
period in which the exchange rates change and offset the foreign currency gains and losses on
the underlying exposure being hedged.
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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 $(2,022) as of December 31,
2009 and September 30, 2010, respectively) are recorded as a separate component of stockholders
equity in the accompanying Condensed Consolidated Balance Sheets and reclassified into net sales
as the hedged transaction affects earnings.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 Condensed Consolidated Balance Sheets:
 (assets)/liabilities
    
    December 31, 2009
    
    
    September 30, 2010Derivatives designated as hedging
instruments
    
    Accrued liabilities
    
    $
    2,158
    
    
    Accrued liabilities
    
    $
    2,093Derivatives not designated as hedging
instruments
    
    Accrued liabilities
    
    $
    (78
    )
    
    Accrued liabilities
    
    $
    397
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The following table presents the location and amount of gains and losses on derivative
instruments in the consolidated statement of operations:
 Amount of Gain (Loss)
    
    
    Amount of (Gain) LossRecognized in Other
    
    
    Reclassified from
    
    
    Amount of Gain (Loss)Comprehensive Income on
    
    
    Other Comprehensive Income
    
    
    Recognized in Income onDerivative (Effective Portion)
    
    
    into Income (Effective Portion)
    
    
    Derivative (Ineffective Portion)Derivatives in
    
    Three
    
    
    Three
    
    
    Three
    
    
    Three
    
    
    Three
    
    
    ThreeCash Flow
    
    Months
    
    
    Months
    
    
    Months
    
    
    Months
    
    
    Months
    
    
    MonthsHedging
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    EndedRelationships
    
    Sept 30, 2009
    
    
    Sept 30, 2010
    
    
    Sept 30, 2009
    
    
    Sept 30, 2010
    
    
    Sept 30, 2009
    
    
    Sept 30, 2010Foreign exchange contracts
    
    $
    (2,183
    )
    
    $
    (6,739
    )
    
    $
    641
    
    
    $
    880
    
    
    $
    (242
    )
    
    $
    172
 Nine
    
    
    Nine
    
    
    Nine
    
    
    Nine
    
    
    Nine
    
    
    NineDerivatives in
    
    Months
    
    
    Months
    
    
    Months
    
    
    Months
    
    
    Months
    
    
    MonthsCash Flow Hedging
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    EndedRelationships
    
    Sept 30, 2009
    
    
    Sept 30, 2010
    
    
    Sept 30, 2009
    
    
    Sept 30, 2010
    
    
    Sept 30, 2009
    
    
    Sept 30, 2010Foreign exchange contracts
    
    $
    (6,838
    )
    
    $
    824
    
    
    $
    (1,460
    )
    
    $
    (685
    )
    
    $
    (530
    )
    
    $
    (43
    )
 Amount of Gain (Loss) RecognizedLocation of
    
    
    in Income on DerivativesGain (Loss)
    
    
    Three
    
    
    Three
    
    
    Nine
    
    
    NineDerivatives not
    
    Recognized
    
    
    Months
    
    
    Months
    
    
    Months
    
    
    MonthsDesignated as
    
    in Income on
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    EndedHedging Instruments
    
    Derivatives
    
    
    Sept 30, 2009
    
    
    Sept 30, 2010
    
    
    Sept 30, 2009
    
    
    Sept 30, 2010Foreign exchange contracts
    
    Other income  (expense)
    
    $
    129
    
    
    $
    (438
    )
    
    $
    (800
    )
    
    $
    (594
    )Interest rate swap contracts
    
    Other income (expense)
    
    
    (142
    )
    
    
    
    
    
    
    1,855
    
    
    
    $
    (13
    )
    
    $
    (438
    )
    
    $
    1,055
    
    
    $
    (594
    )
 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.
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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 September 30, 2010 and December 31, 2009:
 Quoted Prices
    
    
    SignificantTotal
    
    
    in Active Markets
    
    
    Other
    
    
    SignificantDerivative
    
    
    for Identical
    
    
    Observable
    
    
    Unobservable(Assets)
    
    
    Assets
    
    
    Inputs
    
    
    InputsDerivative Contracts
    
    Liabilities
    
    
    Level (1)
    
    
    Level (2)
    
    
    Level (3)September 30, 2010
    
    $
    2,490
    
    
    
    
    
    
    $
    2,490December 31, 2009
    
    $
    2,080
    
    
    
    
    
    
    $
    2,080
 The land, building and certain manufacturing equipment located at Albany, Georgia are now
classified as assets held for sale at estimated fair value less costs to sell determined based
on discussions with interested third parties. The fair value of these assets, $9,000 at
September 30, 2010, is considered a Level 2 valuation. See Footnote 9 for additional details
on the Albany restructuring initiative.The fair value of the Companys debt is based upon prices of similar instruments in the
marketplace. The carrying amounts and fair values of the Companys financial instruments are as
follows:
 December 31, 2009
    
    
    September 30, 2010Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    ValueCash and cash equivalents
    
    $
    426,981
    
    
    $
    426,981
    
    
    $
    347,412
    
    
    $
    347,412Notes payable
    
    
    (156,719
    )
    
    
    (156,719
    )
    
    
    (138,002
    )
    
    
    (138,002
    )Current portion of long-term debt
    
    
    (15,515
    )
    
    
    (15,515
    )
    
    
    (5,076
    )
    
    
    (5,076
    )Long-term debt
    
    
    (330,971
    )
    
    
    (309,371
    )
    
    
    (325,703
    )
    
    
    (322,103
    )Derivative financial instruments
    
    
    (2,080
    )
    
    
    (2,080
    )
    
    
    (2,490
    )
    
    
    (2,490
    )
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4.
    
    The following table details information on the Companys operating segments.
 Three months ended September 30
    
    
    Nine months ended September 302009
    
    
    2010
    
    
    2009
    
    
    2010Revenues:North American Tire
    
    $
    573,886
    
    
    $
    647,787
    
    
    $
    1,440,536
    
    
    $
    1,754,472International Tire
    
    
    296,841
    
    
    
    325,200
    
    
    
    720,235
    
    
    
    930,913Eliminations
    
    
    (67,933
    )
    
    
    (90,045
    )
    
    
    (154,840
    )
    
    
    (244,041
    )Net sales
    
    $
    802,794
    
    
    $
    882,942
    
    
    $
    2,005,931
    
    
    $
    2,441,344Segment profit (loss):North American Tire
    
    $
    47,618
    
    
    $
    54,971
    
    
    $
    71,949
    
    
    $
    88,253International Tire
    
    
    29,902
    
    
    
    20,511
    
    
    
    46,285
    
    
    
    63,589Eliminations
    
    
    (520
    )
    
    
    (1,183
    )
    
    
    (1,579
    )
    
    
    (1,650
    )Unallocated corporate charges
    
    
    (6,312
    )
    
    
    (7,169
    )
    
    
    (20,733
    )
    
    
    (16,425
    )Operating profit
    
    
    70,688
    
    
    
    67,130
    
    
    
    95,922
    
    
    
    133,767Interest expense
    
    
    11,440
    
    
    
    9,397
    
    
    
    36,192
    
    
    
    27,276Interest income
    
    
    (2,259
    )
    
    
    (2,166
    )
    
    
    (4,739
    )
    
    
    (4,150
    )Other expense (income)
    
    
    1,047
    
    
    
    (719
    )
    
    
    (1,025
    )
    
    
    (1,944
    )Income from
continuing operations before income taxes and noncontrolling
shareholders interests
    
    $
    60,460
    
    
    $
    60,618
    
    
    $
    65,494
    
    
    $
    112,585
 5.
    
    At December 31, 2009, approximately 45 percent of the Companys inventories had been valued
under the LIFO method. At September 30, 2010, approximately 40 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 $167,185 at
December 31, 2009 and September 30, 2010, respectively, from current cost which would be
reported under the first-in, first-out method.6.
    
    The Companys incentive compensation plans allow the Company to grant awards to key employees
in the form of stock options, stock awards, restricted stock units, stock appreciation rights,
performance units, dividend equivalents and other awards. Compensation related to these
awards is determined based on the fair value on the date of grant and is amortized to expense
over the vesting period. For restricted stock units and performance based units, the Company
recognizes compensation expense based on the earlier of the vesting date or the date when the
employee becomes eligible to retire. If awards can be settled in cash, these awards are
recorded as liabilities and marked to market.
 14




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##### Table of Contents



The following table discloses the amount of stock based compensation expense for the three-month
and nine-month periods ended September 30, 2009 and 2010 relating to continuing operations:
 Stock Based CompensationThree months ended September 30
    
    
    Nine months ended September 302009
    
    
    2010
    
    
    2009
    
    
    2010Stock options
    
    $
    287
    
    
    $
    398
    
    
    $
    657
    
    
    $
    1,015Restricted stock units
    
    
    434
    
    
    
    63
    
    
    
    1,214
    
    
    
    707Performance based units
    
    
    697
    
    
    
    1,650
    
    
    
    1,881
    
    
    
    3,921Total stock based
compensation
    
    $
    1,418
    
    
    $
    2,111
    
    
    $
    3,752
    
    
    $
    5,643
 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 in March 2010 which will vest
one-third each year from March 2011 through March 2013.The fair value of options granted was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions as of September 30:
 2009
    
    
    2010Risk-free interest rate
    
    
    2.2
    %
    
    
    2.8
    %Dividend yield
    
    
    2.7
    %
    
    
    2.2
    %Expected volatility of the Companys common stock
    
    
    0.570
    
    
    
    0.604Expected life in years
    
    
    6.0
    
    
    
    6.0
 The weighted-average fair value of options granted in April of 2009 was $2.08, and of options
granted in March of 2010 was $9.01. The estimated fair value of options is amortized to expense
over the options vesting period.
 15




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##### Table of Contents



The following table provides details of the stock option activity for the nine months ended
September 30, 2009 and 2010:
 Long-Term Incentive Plan Years2009 - 2011
    
    
    2010 - 2012January 1, 2009Outstanding
    
    
    
    
    
    
    Exercisable
    
    
    
    
    
    
    Granted
    
    
    1,155,000
    
    
    
    September 30, 2009Outstanding
    
    
    1,155,000
    
    
    
    Exercisable
    
    
    
    
    
    
    January 1, 2010Outstanding
    
    
    1,037,000
    
    
    
    Exercisable
    
    
    59,000
    
    
    
    Granted
    
    
    
    
    
    
    303,120Exercised
    
    
    (181,500
    )
    
    
    September 30, 2010Outstanding
    
    
    855,500
    
    
    
    303,120Exercisable
    
    
    203,500
    
    
    
    
 The following table provides details of the restricted stock unit activity for the nine
months ended September 30, 2009 and 2010:
 2009
    
    
    2010Restricted stock units outstanding at January 1
    
    
    403,637
    
    
    
    526,809Restricted stock units granted
    
    
    42,473
    
    
    
    Accrued dividend equivalents
    
    
    16,147
    
    
    
    4,478Restricted stock units settled
    
    
    (40,564
    )
    
    
    (251,225
    )Restricted stock units cancelled
    
    
    (3,729
    )
    
    
    (4,149
    )Restricted stock units outstanding at September 30
    
    
    417,964
    
    
    
    275,913
 16




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##### Table of Contents



The following table provides details of the performance based units earned under the Companys
Long-Term Incentive Plans for the nine months ended September 30, 2009 and 2010:
 Long-Term Incentive Plan Years2007-2009
    
    
    2008-2010Performance-based units outstanding at January 1, 2009
    
    
    290,671
    
    
    
    Accrued dividend equivalents
    
    
    12,725
    
    
    
    Performance-based units settled
    
    
    
    
    
    
    Performance-based units outstanding at September 30, 2009
    
    
    303,396
    
    
    
    Performance-based units outstanding at January 1, 2010
    
    
    559,951
    
    
    
    290,860Accrued dividend equivalents
    
    
    
    
    
    
    4,721Performance-based units settled
    
    
    (559,951
    )
    
    
    Performance-based units outstanding at September 30, 2010
    
    
    
    
    
    
    295,581
 The Companys restricted stock units and performance based units are not participating
securities. These units will be converted into shares of Company common stock in accordance
with the distribution date indicated in the agreements. Restricted stock units earn dividend
equivalents from the time of the award until distribution is made in common shares. Performance
based units earn dividend equivalents from the time the units have been earned based upon
Company performance metrics until distribution is made in common shares. Dividend equivalents
are only earned subject to vesting of the underlying restricted stock units or performance based
units, accordingly, such units do not represent participating securities.
 17




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##### Table of Contents



7.
    
    The following tables disclose the amount of net periodic benefit costs for the three-month
and nine-month periods ended September 30, 2009 and 2010 for the Companys defined benefit
plans and other postretirement benefits relating to continuing operations:
 Pension BenefitsThree months ended September 30
    
    
    Nine months ended September 302009
    
    
    2010
    
    
    2009
    
    
    2010Components of net periodic benefit cost:Service cost
    
    $
    806
    
    
    $
    1,663
    
    
    $
    7,332
    
    
    $
    4,970Interest cost
    
    
    14,378
    
    
    
    15,588
    
    
    
    43,603
    
    
    
    46,644Expected return on plan assets
    
    
    (14,095
    )
    
    
    (16,349
    )
    
    
    (41,674
    )
    
    
    (48,934
    )Amortization of prior service cost
    
    
    (270
    )
    
    
    (156
    )
    
    
    (803
    )
    
    
    (463
    )Recognized actuarial loss
    
    
    8,087
    
    
    
    8,428
    
    
    
    35,908
    
    
    
    25,240Spectrum plan freeze
    
    
    
    
    
    
    
    
    
    
    (10,133
    )
    
    
    Albany curtailment gain
    
    
    (1,193
    )
    
    
    
    
    
    
    (4,906
    )
    
    
    Albany settlement loss
    
    
    5,108
    
    
    
    
    
    
    
    6,008
    
    
    
    4,751Net periodic benefit cost
    
    $
    12,821
    
    
    $
    9,174
    
    
    $
    35,335
    
    
    $
    32,208
 Other Postretirement BenefitsThree months ended September 30
    
    
    Nine months ended September 302009
    
    
    2010
    
    
    2009
    
    
    2010Components of net periodic benefit cost:Service cost
    
    $
    828
    
    
    $
    790
    
    
    $
    2,728
    
    
    $
    2,371Interest cost
    
    
    3,501
    
    
    
    3,528
    
    
    
    10,901
    
    
    
    10,586Amortization of prior service cost
    
    
    (80
    )
    
    
    (135
    )
    
    
    (230
    )
    
    
    (407
    )Recognized actuarial loss (gain)
    
    
    (150
    )
    
    
    
    
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    4,099
    
    
    $
    4,183
    
    
    $
    13,399
    
    
    $
    12,550
 During 2010, the Company expects to contribute between $35,000 and $45,000 to its domestic and
foreign pension plans. On May 11, 2010, the Company filed a Form S-3 which will permit the
Company to fund a portion of the expected domestic contributions in the form of Company common
stock.
 In March 2010, the Patient Protection and Affordable Care Act and the Health Care and Education
Affordability Act of 2010 (the Acts) were enacted. The primary focus of the Acts is to
significantly reform health care in the U.S. The Acts will reduce the tax deduction available
to the Company to the extent of receipt of Medicare Part D prescription drug subsidies; however,
this will not have a material impact on the Companys financial results. The Company is
currently evaluating other effects of the Acts.
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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 shareholders
interests.
 NoncontrollingTotal
    
    
    Shareholders
    
    
    
    
    
    
    RedeemableParent
    
    
    Interests in
    
    
    Total
    
    
    NoncontrollingStockholders
    
    
    Consolidated
    
    
    Stockholders
    
    
    ShareholdersEquity
    
    
    Subsidiaries
    
    
    Equity
    
    
    InterestsBalance at December 31, 2009
    
    $
    330,808
    
    
    $
    49,716
    
    
    $
    380,524
    
    
    $
    83,528Net income
    
    
    100,251
    
    
    
    3,057
    
    
    
    103,308
    
    
    
    14,343Other comprehensive income
(loss)
    
    
    42,977
    
    
    
    999
    
    
    
    43,976
    
    
    
    (1,327
    )Dividends payable to
noncontrolling shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,637
    )Contribution of
noncontrolling shareholder
    
    
    
    
    
    
    6,750
    
    
    
    6,750Acquisition of noncontrolling
shareholders interest
    
    
    1,384
    
    
    
    
    
    
    
    1,384
    
    
    
    (19,304
    )Stock compensation plans,
including
tax benefit of $472
    
    
    5,942
    
    
    
    
    
    
    
    5,942Cash dividends  $.315 per share
    
    
    (19,309
    )
    
    
    
    
    
    
    (19,309
    )Balance at September 30, 2010
    
    $
    462,053
    
    
    $
    60,522
    
    
    $
    522,575
    
    
    $
    65,603
 The following table provides the details of the Companys comprehensive income.
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 benefit plans.
 The Companys comprehensive income is as follows:
 Three months ended September 30
    
    
    Nine months ended September 302009
    
    
    2010
    
    
    2009
    
    
    2010Net income
attributable to Cooper Tire & Rubber Company
    
    $
    46,831
    
    
    $
    44,598
    
    
    $
    12,604
    
    
    $
    100,251Other comprehensive income:Currency translation adjustments
    
    
    (2,431)
    1
    
    
    9,590
    
    
    
    8,730
    1
    
    
    4,434Unrealized net gains (losses) on derivative
instruments and marketable securities,
net of tax
    
    
    (2,273
    )
    
    
    (5,032
    )
    
    
    (6,886
    )
    
    
    361Unrecognized postretirement benefit plans,
net of tax
    
    
    13,225
    
    
    
    2,547
    
    
    
    14,725
    
    
    
    38,182Comprehensive income attributable to Cooper Tire & Rubber Company
    
    
    55,352
    1
    
    
    51,703
    
    
    
    29,173
    1
    
    
    143,228Net income attributable to
noncontrolling shareholders interests
    
    
    10,664
    
    
    
    5,710
    
    
    
    15,282
    
    
    
    17,400Other comprehensive income:Currency translation adjustments
    
    
    418
    1
    
    
    1,504
    
    
    
    232
    1
    
    
    (328
    )Comprehensive income attributable to
noncontrolling shareholders interests
    
    
    11,082
    1
    
    
    7,214
    
    
    
    15,514
    1
    
    
    17,072Total comprehensive income
    
    $
    66,434
    
    
    $
    58,917
    
    
    $
    44,687
    
    
    $
    160,300
 
 1
    
    Amounts have been restated, see Footnote 1 for additonal information.
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9.
    
    The table below details the Companys restructuring expenses for the periods indicated:
 Three months ended September 30
    
    
    Nine months ended September 302009
    
    
    2010
    
    
    2009
    
    
    2010Albany plant closureAsset writedowns
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,000Equipment relocated and other costs
    
    
    6,596
    
    
    
    4,471
    
    
    
    17,617
    
    
    
    12,980Employee related costs
    
    
    5,741
    
    
    
    
    
    
    
    17,037
    
    
    
    4,75112,337
    
    
    
    4,471
    
    
    
    34,654
    
    
    
    18,731Distribution centerEmployee related costs
    
    
    1,048
    
    
    
    
    
    
    
    1,387
    
    
    
    Europe headcount reductionEmployee related costs
    
    
    
    
    
    
    295
    
    
    
    405
    
    
    
    1,073Total restructuring costs
    
    $
    13,385
    
    
    $
    4,766
    
    
    $
    36,446
    
    
    $
    19,804
 During the third quarter of 2010, the Company recorded restructuring expenses associated with
the two initiatives described below.
 Albany manufacturing facility closure
 The Company recorded $4,471 of restructuring expense during the third quarter of 2010 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. The total
cost of this initiative was $141,390 for restructuring expense and asset impairment. This
initiative was completed at September 30, 2010.
 During the first nine months of 2010, the Company has recorded $18,731 of restructuring expense
related to the Albany closure.
 At January 1, 2010, the accrued severance balance was $848 and the Company made $717 of
severance payments during the first nine months of 2010 resulting in an accrued severance
balance at September 30, 2010, of $131. All other employee related, equipment relocation and
other costs are expensed as incurred.
 International Tire Operations segment headcount reduction
 The Companys International Tire operations segment, at its European location, implemented a
workforce reduction program during the second quarter of 2010. This initiative impacted 67
employees with a total cost of approximately $1,073. This initiative was completed during the
third quarter of 2010. Employee severance of $1,073 has been accrued for this initiative and
payments of $777 have been made resulting in an accrued severance balance of $296 at September
30, 2010.
 
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##### Table of Contents



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 for 2009 and 2010:
 2009
    
    
    2010Reserve at January 1
    
    $
    18,244
    
    
    $
    23,814Additions
    
    
    14,757
    
    
    
    15,376Payments
    
    
    (11,949
    )
    
    
    (15,670
    )Reserve at September 30
    
    $
    21,052
    
    
    $
    23,520
 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 U.S. 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 30 to 35 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.
 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.
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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 of resolved cases have ranged from zero dollars to $12 million 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
U.S., 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 third quarter of 2010, the Company increased its products liability reserve by
$13,689. The addition of another quarter of self-insured incidents accounted for $9,890 of this
increase and changes in estimated amounts on existing reserves increased by $3,799.
 During the first nine months of 2010, the Company increased its products liability reserve by
$63,766. The addition of another nine months of self-insured incidents accounted for $29,670 of
this increase. The Company revised its estimates of future settlements for unasserted and
premature claims, which increased the reserve by $1,065. Finally, changes in estimated amounts
on existing reserves increased by $33,031. 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 intends to appeal the case. 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.
 The Company paid $16,594 during the third quarter of 2010 to resolve cases and claims and has
paid $33,454 through the first nine months of 2010. The Companys products liability reserve
balance at December 31, 2009 totaled $151,421 (current portion of $30,805) and the balance at
September 30, 2010, totaled $181,733 (current portion of $34,229).
 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.
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For the three-month periods ended September 30, 2009 and 2010, products liability expenses
totaled $20,968 and $21,270, respectively. For the nine-month periods ended September 30, 2009
and 2010, products liability expenses totaled $61,888 and $80,988, respectively, and include
recoveries of legal fees of $2,368 and $5,623 in the periods ended September 30, 2009 and 2010,
respectively. Policies applicable to claims occurring on April 1, 2003, and thereafter do not
provide for recovery of legal fees.
 12.
    
    For the quarter ended September 30, 2010, the Company recorded an income tax expense for
continuing operations of $10,309 as compared to $2,628 for the comparable period in 2009. The
provision includes a tax expense for discrete items of $905 relating primarily to return to
provision changes in estimates for the 2009 U.S. tax return, the impact on deferred taxes from
the reduction in the United Kingdom (U.K.) statutory rate, and valuation allowance
adjustments. The effective tax rate for continuing operations, exclusive of discrete items,
for the quarter and nine month periods ended September 30, 2010, is 15.5 and 18.3 percent,
respectively, using the applicable effective tax rate determined using forecasted
multi-jurisdictional annual effective tax rates. For comparable periods in 2009, the
effective tax rate for continuing operations, exclusive of discrete items, was 6.4 percent and
-0.9 percent, respectively, using forecasted jurisdictional annual effective tax rates.
 The $7,681 increase in tax expense for the quarter relates primarily to the reduction in the
impact of the U.S. valuation allowances of $2,964; differences in the effective tax rates of
international operations of $2,535; and increases in discrete tax expense items of $2,116.
 For the nine month period ended September 30, 2010, the Company recorded income tax expense for
continuing operations of $19,299 compared to a tax benefit of $178 recorded for the nine month
period ended September 30, 2009. The $19,477 increase in tax expense relates primarily to:
$16,491 from the impact of increases in earnings at the U.S. statutory rate; $5,865 from the
reduction in the impact of the U.S. valuation allowances; $(1,195) from differences in the
effective tax rates of international operations; and $(1,684) from reduced discrete tax expense
items.
 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 asset may 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 relate 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 $175,873 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 $2,451
for deferred tax assets associated with losses in foreign jurisdictions.
 In conjunction with the Companys ongoing review of its actual results and anticipated future
earnings, the Company reassesses the possibility of releasing the Valuation Allowance currently
in place on its U.S. deferred tax assets. Based upon this assessment, the release of the
Valuation Allowance may occur during 2010 or 2011. The required accounting for the release will
involve significant tax amounts and it will impact earnings in the quarter in which it is deemed
appropriate to release the reserve. At September 30, 2010, the U.S. Valuation Allowance was
approximately $176 million.
 The Company also 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 September 30, 2010, the Companys liability, exclusive of interest, totals
approximately $7,411. The Company accrued approximately $20 of interest expense for the quarter
which has been recorded as a discrete item in the tax provision.
 At September 30, 2010, the Company has a receivable for approximately $26,393 of U.S. cash tax
refunds, including interest. It is anticipated that approximately $12,956 of these receivables
will be collected in 2010.
 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 and became final and

non-appealable on April 29, 2010.  Pursuant to the settlement agreement, CSA paid the Company approximately $17,639.  In addition
CSA provided a letter of credit to be issued for the benefit of the Company in the initial amount of $7,000 in connection with the
 Companys guaranty of a lease for certain property in Surgoinsville, Tennessee.   The letter of 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 for mutual releases with only certain limited obligations under the 2004 sale agreement to remain in force.  Based upon the settlement, the Company released liabilities recorded on its books relating to the disposition of CSA in the amount of $7,400 through Discontinued Operations net of the tax impact.
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##### Table of Contents



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 has amended its retiree medical plan to reflect the changed method of providing
future health care to specified current retiree groups. 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 was reflected as an
increase in the accrual for Other Post-employment Benefits with an offset to the Cumulative
Other Comprehensive Loss component of Shareholders Equity. The Company has finalized the
impact of the amendment on its accrual for Other Post-employment Benefits and recorded the
impact during the second quarter of 2010. As a result of plan design changes, lower per capita
health care costs experienced compared to the costs assumed in early 2009 and other assumption
updates, the Company has recorded a reduction of $9,700 to the accrual for Other Post-employment
Benefits with an offset to the Cumulative Other Comprehensive Loss component of Shareholders
Equity as a change in actuarial assumptions.
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##### Table of Contents



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 the reversal of accretion of $4,545
and $9,939 during the three and nine month periods ended September 30, 2009, respectively, with
an offset to Retained earnings. According to authoritative accounting guidance, the redeemable
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 in footnote 2.
 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 September 30, 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
  25




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Consolidated Results of Operations
  Three months ended September 30
    
    
    Nine months ended September 302009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010Revenues:North American Tire
    
    $
    573.9
    
    
    
    12.9
    %
    
    $
    647.8
    
    
    $
    1,440.6
    
    
    
    21.8
    %
    
    $
    1,754.4International Tire
    
    
    296.8
    
    
    
    9.6
    %
    
    
    325.2
    
    
    
    720.2
    
    
    
    29.3
    %
    
    
    930.9Eliminations
    
    
    (67.9
    )
    
    
    32.7
    %
    
    
    (90.1
    )
    
    
    (154.9
    )
    
    
    57.5
    %
    
    
    (244.0
    )Net sales
    
    $
    802.8
    
    
    
    10.0
    %
    
    $
    882.9
    
    
    $
    2,005.9
    
    
    
    21.7
    %
    
    $
    2,441.3Segment profit (loss):North American Tire
    
    $
    47.6
    
    
    
    15.5
    %
    
    $
    55.0
    
    
    $
    71.9
    
    
    
    22.8
    %
    
    $
    88.3International Tire
    
    
    29.9
    
    
    
    -31.4
    %
    
    
    20.5
    
    
    
    46.3
    
    
    
    37.4
    %
    
    
    63.6Eliminations
    
    
    (0.5
    )
    
    
    n/m
    
    
    
    (1.2
    )
    
    
    (1.6
    )
    
    
    6.2
    %
    
    
    (1.7
    )Unallocated corporate charges
    
    
    (6.3
    )
    
    
    14.3
    %
    
    
    (7.2
    )
    
    
    (20.7
    )
    
    
    -20.8
    %
    
    
    (16.4
    )Operating profit
    
    
    70.7
    
    
    
    -5.1
    %
    
    
    67.1
    
    
    
    95.9
    
    
    
    39.5
    %
    
    
    133.8Interest expense
    
    
    11.4
    
    
    
    -17.5
    %
    
    
    9.4
    
    
    
    36.2
    
    
    
    -24.6
    %
    
    
    27.3Interest income
    
    
    (2.2
    )
    
    
    0.0
    %
    
    
    (2.2
    )
    
    
    (4.8
    )
    
    
    -12.5
    %
    
    
    (4.2
    )Other expense (income)
    
    
    1.1
    
    
    
    n/m
    
    
    
    (0.7
    )
    
    
    (1.0
    )
    
    
    90.0
    %
    
    
    (1.9
    )Income from
continuing operations before income taxes
    
    
    60.4
    
    
    
    
    
    
    
    60.6
    
    
    
    65.5
    
    
    
    
    
    
    
    112.6Income tax expense (benefit)
    
    
    2.6
    
    
    
    
    
    
    
    10.3
    
    
    
    (0.2
    )
    
    
    
    
    
    
    19.3Income from continuing operations
    
    
    57.8
    
    
    
    
    
    
    
    50.3
    
    
    
    65.7
    
    
    
    
    
    
    
    93.3Noncontrolling shareholders interests
    
    
    10.7
    
    
    
    
    
    
    
    5.7
    
    
    
    15.3
    
    
    
    
    
    
    
    17.4Income from continuing operations
attributable to Cooper Tire & Rubber Company
    
    $
    47.1
    
    
    
    
    
    
    $
    44.6
    
    
    $
    50.4
    
    
    
    
    
    
    $
    75.9Basic earnings per share
    
    $
    0.87
    1
    
    
    
    
    
    $
    0.73
    
    
    $
    1.02
1
    
    
    
    
    
    $
    1.24Diluted earnings per share
    
    $
    0.85
    1

    
    
    
    
    $
    0.71
    
    
    $
    1.00
    1
    
    
    
    
    
    $
    1.21
 
 1
    
    Amounts have been restated, see Footnote 1 for additional information.    26




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Cates
  27




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28




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##### Table of Contents



North American Tire Operations Segment
 Three months ended September 30
    
    
    Nine months ended September 30(Dollar amounts in millions)
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010Sales
    
    $
    573.9
    
    
    
    12.9
    %
    
    $
    647.8
    
    
    $
    1,440.6
    
    
    
    21.8
    %
    
    $
    1,754.4Operating profit
    
    $
    47.6
    
    
    
    15.5
    %
    
    $
    55.0
    
    
    $
    71.9
    
    
    
    22.8
    %
    
    $
    88.3United States unit shipments changes:Passenger tiresSegment
    
    
    
    
    
    
    0.4
    %
    
    
    
    
    
    
    
    
    
    
    13.5
    %RMA members
    
    
    
    
    
    
    2.3
    %
    
    
    
    
    
    
    
    
    
    
    6.8
    %Total Industry
    
    
    
    
    
    
    -2.2
    %
    
    
    
    
    
    
    
    
    
    
    6.6
    %Light truck tiresSegment
    
    
    
    
    
    
    -11.9
    %
    
    
    
    
    
    
    
    
    
    
    7.4
    %RMA members
    
    
    
    
    
    
    3.6
    %
    
    
    
    
    
    
    
    
    
    
    7.6
    %Total Industry
    
    
    
    
    
    
    -5.7
    %
    
    
    
    
    
    
    
    
    
    
    2.6
    %Total light vehicle tiresSegment
    
    
    
    
    
    
    -1.8
    %
    
    
    
    
    
    
    
    
    
    
    12.4
    %RMA members
    
    
    
    
    
    
    2.4
    %
    
    
    
    
    
    
    
    
    
    
    6.9
    %Total Industry
    
    
    
    
    
    
    -2.7
    %
    
    
    
    
    
    
    
    
    
    
    6.1
    %Total segment unit sales changes
    
    
    
    
    
    
    -3.8
    %
    
    
    
    
    
    
    
    
    
    
    10.1
    %
 Overview
  Sales
  29




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Operating Profit
    International Tire Operations Segment
 Three months ended September 30
    
    
    Nine months ended September 30(Dollar amounts in
millions)
    
    2009
    
    
    Change
    
    
    2010
    
    
    2009
    
    
    Change
    
    
    2010Sales
    
    $
    296.8
    
    
    
    9.6
    %
    
    $
    325.2
    
    
    $
    720.2
    
    
    
    29.3
    %
    
    $
    930.9Operating profit
    
    $
    29.9
    
    
    
    -31.4
    %
    
    $
    20.5
    
    
    $
    46.3
    
    
    
    37.4
    %
    
    $
    63.6Unit sales change
    
    
    
    
    
    
    -6.7
    %
    
    
    
    
    
    
    
    
    
    
    16.9
    %
 Overview
  30




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Sales
   Operating Profit
   Outlook for Company
      31




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Liquidity and Capital Resources
 Generation and uses of cash 
    Available credit facilities 
  Available cash and contractual commitments 
  32




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Parent company8% unsecured notes due December 2019
    
    $
    173.67.625% unsecured notes due March 2027
    
    
    116.9Capitalized leases and other
    
    
    10.5301.0Consolidated Subsidiaries5.4% unsecured notes due in 2010
    
    
    4.55.13% unsecured notes due in 2011
    
    
    5.24.86% to 5.13% unsecured notes due in 2012
    
    
    20.129.8Total debt
    
    
    330.8Less current maturities
    
    
    5.1$
    325.7
  Credit agency ratings 
 Contingencies
 Litigation
   33




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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 and 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, including regulations under the TREAD Act;
 
    
    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 of tariffs for certain tires imported into the United States from the
Peoples Republic of China, and;
 
    
    changes in the Companys relationship with joint venture partners.
  34




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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 Item 4. CONTROLS AND PROCEDURES
      35




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##### Table of Contents



Part II. OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
  Cates, et al Johnson, et al
 
 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.
   36




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##### Table of Contents



The Companys industry is highly competitive, and it may not be able to compete effectively with
low-cost producers and larger competitors.
  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.
  37




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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.
   The Company is facing unknown risks relating to enactment of healthcare legislation .
 Patient Protection and Affordable Care Act Healthcare
and Education Reconciliation Act
 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.
  38




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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.
    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.
  39




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##### Table of Contents



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.
  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.
  40




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##### Table of Contents



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.
  There are risks associated with the Companys global strategy of using joint ventures and partially
owned subsidiaries.
   41




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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.
    
 Item 6. 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
 42




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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) November 1, 2010
 43