D e l i v e r i n g o n o u r p r o m i s e s
COOPER TIRE & RUBBER COMPANY
2002 Annual Report
A Letter to Our Shareholders
Delivering on our promises
During the past year, we continued our pattern of growth
and progress despite some serious economic and market
challenges. An added obstacle during the past year was the
declining confidence in corporate America. Unfortunately,
the actions of a few have cascaded into an overall concern
with business ethics. At Cooper, however, we have main-
tained an unwavering focus on our plans and strategies so
that we can continue to deliver on our promises to our
shareholders, our customers and our people.
We selected the theme Delivering on our promises
for the 2002 annual report because we believe it accurately
portrays what we have accomplished during the past few
years. It also accurately describes the type of company
that we have always been – straightforward and focused
on generating shareholder value.
In 1999, we initiated a strategic transformation of
our company. As we announced and implemented those
plans, we made several related commitments and promises
to our people, our customers and our shareholders.
2002 was a year in which we delivered on many of those
promises and made solid progress on the rest.
At the time of our acquisitions of Standard Products
and Siebe Automotive, we stated publicly that it would take
three years to fully integrate the businesses and achieve
normalized operating levels. As I said, we have made a lot
of promises to our shareholders, to our employees and to
the public since then. We have developed and implemented
some very aggressive but achievable plans to drive
shareholder value.
Promises:
• Expand Automotive Group Globally
• Grow Market Share
• Outperform our Industries
• Restructuring Savings of $30 million
• Pay down 2002 debt with cash
• Automotive Operating Margins of 10%
Pre-Tax Return On Invested Capital (ROIC) of 20%
The acquisitions in late 1999 and early 2000,
primarily in our automotive group, enabled us to
deliver on the promise we would expand the automotive
group globally.
In North America, our automotive component
sales were up about 7.2 percent while light vehicle
production was up about 5.3 percent. Sales in our
international operations were up 7.8 percent. The tire
group unit sales in North America were up more than
4 percent even though market shipments were down
2.6 percent.
We exceeded our goal of $30 million in annual
savings from our restructuring efforts.
We paid off the $225 million portion of acquisition-
related debt with cash when it came due in December.
We said that our goal was to return our automotive
operating margins to near their historical levels but
on four times greater sales volume. We achieved that
target during the second quarter, and averaged within
two percentage points of that goal for the year 2002.
Financial Highlights
(Dollar amounts in thousands except per-share amounts)
2000
2001
2002
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per share . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt to capitalization ratio . . . . . . . . . . . . . . . . . . . . . . . .
$3,472,372
$3,154,702
325,734 (a)
233,409 (a)
148,661 (a)
2.02 (a)
2.02 (a)
.42
55.9%
202,781 (b)
117,442 (c)
79,087 (c)
1.09 (c)
1.09 (c)
.42
55.1%
$3,329,957
248,396
177,197
111,845
1.53
1.51
.42
49.2%
(a) Prior to restructuring charges of $38,699 ($24,274 after tax, $.33 per share), losses at closed and sold facilities of $19,001 ($12,100 after tax,
$.17 per share), and amortization of goodwill of $15,553 ($.21 per share).
(b) Prior to class action costs of $72,194 ($44,977 after tax, $.62 per share), restructuring charges of $8,648 ($5,387 after tax, $.07 per share),
and amortization of goodwill of $15,705 ($.22 per share).
(c) Prior to class action costs of $72,194 ($44,977 after tax, $.62 per share), restructuring charges of $8,648 ($5,387 after tax, $.07 per share),
gains on sales of non-manufacturing assets of $8,263 ($5,148 after tax, $.07 per share), and amortization of goodwill of $15,705 ($.22 per share).
CE Tom Dattilo with
three of the company’s
Lean champions
Gustavo Vasconcellos,
Mary Coughlin and
Mike Foster
And finally, we have a goal of 20 percent pre-tax ROIC.
We are not there yet, but we are confident that we will
get that checked off in the not-too-distant future.
Additionally, with our plans and execution, we have
been able to beat our peers and the S&P 500 during the
past three years. We are very happy about that.
In short, we have told you what we were going to do,
and we have done it.
We are staying focused on our plans and continue
to drive for leaner operations, taking costs out wherever
possible and being as efficient as we can be. The results
of our lean efforts were key this year. We generated
nearly $100 million in lean savings through the implemen-
tation of literally thousands of lean initiatives throughout
our operations.
The tire group continues to manage its assets
and provide the same great service and products to our
customers. Even though we reduced inventory by more
than 1.2 million units last year, our order fill rates were
at or near our 95 percent goal.
While we continue to receive top industry honors
in customer service from our dealer network, we also
received national recognition from consumers this year.
The J.D. Power and Associates 2002 Replacement Tire
Customer Satisfaction Study SM ranked Cooper the highest
light truck replacement tire in a tie.This type of well-earned
recognition will be a part of our success in the future and
indicates some of the sustainable strengths that we have
been developing in tire technology.
Providing top-notch launches for our automotive
customers had an escalated importance this year as we
had 59 new launches.The Cooper integrated launch team
approach that we have implemented in all our facilities has
quickly improved the success rate of our new product
launches and that shows up in our operating margins.This
approach also will benefit us going into 2003 as we have
approximately 30 launches in the coming year.
One of the most significant highlights of the year
occurred in the second quarter when we announced
earnings of 52 cents per share, which was an all-time
company record. And, for the second consecutive year,
the average closing price of our stock increased.
2002
2001
2000
$18.55
13.83
11.65
So this is what Cooper looked like at the end
of 2002 – a Fortune 500 company with global presence,
great accomplishments and great opportunity.
Even though things are improving significantly
for Cooper, I certainly think that we will continue to
see challenging conditions in both our businesses at some
point in the remainder of 2003. There is still a lot of
uncertainty out there and we are in tough industries.
We recognize that. Still, we have solid plans in place to
continue to make our company successful and to perform
better than our industries overall.
On the tire side, we will again see our sales growing
faster than the industry. There are signs that the industry
overall will pick up as the year goes on and we think we
will be even stronger than the industry. On the automotive
side of our business, production schedules may be slightly
lighter in 2003 but our new business will allow our sales
to out-pace the industry yet again.
These continue to be exciting times at Cooper Tire
& Rubber Company. We are primed to be among the
winners in an increasingly competitive environment.
On behalf of the 23,000 Cooper people, thank you for
your continued support.
Thomas A. Dattilo
Chairman, President and CEO
1
Three-Year Shareholder Returns150(cid:13)100(cid:13)50(cid:13)0Dec. '99Dec. '00Cooper Tire & Rubber Company(cid:13)S&P 500 Index(cid:13)S&P 500 Auto Parts & EquipmentDec. '01Dec. '02 Cooper people are
dedicated to total
customer satisfaction,
understanding customers’
needs and exceeding
their expectations.
Phil Caris,
Fran Brennan,
Kurt Thomas and
Lyle Campbell
keep their focus
on customers.
The J.D. Power and
Associates 2002
Replacement Tire
Customer
Satisfaction Study SM
named Cooper the
highest light truck
replacement tire
in a tie.
Promise: provide replacement tire
customers with 95 percent fill rates
Promise: strive for flawless launches
We have implemented the integrated launch team
While the tire group continued its focus on
approach which has been a key to Cooper’s
managing assets and reduced the number of tires
success in our automotive business for years.
in inventory by 1.2 million units in 2002, the
The launch process is always the most costly
promise was met to provide a 95 percent order
period in the production process and if it is handled
fill rate to customers.
Promise: earn customers’ business
every day through new products
In 2002 we made good progress on our Ultra
High Performance (UHP) tire initiative. We are
on target to launch a new line of UHP tires during
the spring of 2003.This strategic and important
introduction will associate Cooper’s name with
performance tires – a growing and profitable
market and one in which we should be able to
compete very well. UHP is the fastest growing
segment of the tire industry. Our strategy will
offer H,V and Z speed rated tires in sizes with
larger rim diameters that are in growing demand.
Each UHP tire sale will bring us higher margins
and a stronger market penetration.
effectively, as Cooper has done in the past, it can
greatly improve the profit margins on any given
product or platform.
• Cooper-Standard Automotive’s Torreon,
Mexico, operations received the Quality
Master 2002 award from Nissan
• Griffin, Ga., and Adelaide, South Australia,
facilities received Q1 certifications from
Ford
• Auburn, Ind., facility received the GM
Service Parts Operations 100 percent
on-time delivery certificate of recognition
• Cooper’s Information Technology was
listed among CMP Media LLC’s
InformationWeek 500
• Adelaide, South Australia, facility awarded
‘A’ rating by the Toyota Motor Company
• El Dorado,Ark., earned the Certificate
of Achievement for Quality and Delivery
from NUMMI
• Cooper Tire received an appreciation
award from Del-Nat Tire for Cooper’s
outstanding contributions to Del-Nat
2
Cooper will increase the
value of shareholders’
investments by growing the
company, controlling assets,
increasing cash flow
and ROIC.
Susan Kill (standing),
Jia Chen, Jonathan Fisk,
Kimberly Ziegler, Buo Chen,
Jolene Minich and Barry
Maxwell know superior
financial performance
can only result from a
company-wide team effort.
Promise: be a transparent company
We have always been a straightforward company
doing business and earning money the old fashioned
way. We make high quality products that satisfy
our customers. We sell these products and deliver
top-quality service. And, we book the resulting
revenue when the goods are shipped and recognize
expenses when they are incurred.
Promise: reduce debt
The first portion of acquisition-related debt
was $225 million and was due in December.
Our strong cash generation during the year allowed
us to pay off that portion without refinancing, as
promised. Our remaining long-term debt is spread
relatively evenly over the next 24 years, with a
small portion due in 2006 and larger portions due
in 2009, 2019 and 2027. The debt is structured
with a good mix of fixed versus floating rates and
current weighted interest rates of about 7 percent.
Interest rate swaps and the lower debt balances
have enabled us to reduce interest costs by
$15 million. Debt to total capital at year end
was 49.2 percent.
Promise: achieve annual restructuring
savings of $30 million
of $30 million. Not only did we deliver on that
promise, but we exceeded it. Total restructuring
savings in 2002 were $38 million.
Promise: achieve four times automotive
sales with 10 percent margins
Our automotive operating margins have steadily
increased from one percent in 2000, to three
percent in 2001 to eight percent this year. Our
goal is to achieve a 10 percent operating margin
in our automotive group on four times the sales
we had before the acquisitions. For the second
quarter we achieved that goal.
Promise: grow market share and
outpace the industry
We continued to outpace both industries in which
we compete during the entire year. Light vehicle
tire shipments for the industry declined 2.6 percent
among RMA member companies, while at the
same time our shipments increased by more than
4 percent. We also increased our market share
from 16 percent to 17 percent. Our automotive
sales growth of 7.2 percent outpaced the industry’s
light vehicle production growth of 5.3 percent.
As new automotive business continues to come
on line, we are seeing our revenue grow faster
When we announced our restructuring plan in the
than the vehicle build rates.
third quarter of 2000, we promised annual savings
3
Empowering people is key to
many of Cooper’s initiatives.
Cooper is committed to enlist
participation, provide
development opportunities
and regularly evaluate
performance.
Bruce Schubert
and Jerry Yoder
(standing) use
unique training
to better develop
Lean thinkers.
Participating
in Cooper’s
customized
Lean simulation
are Jennifer Crager,
Klaus Rode and
Adrian Lowrance.
Promise: develop a Lean culture
throughout the organization
A Lean focus has to be part of our business every
day in order to remain competitive. Through the
Promise: provide a strategic focus for
both Cooper people and the company
in the development of careers and the
evaluation of performance
years, we have made low-cost operations a priority
Promoting from within is a key element of our
and it has become a true advantage for us.
Currently we have hundreds of Lean teams
working together to take the “waste” out of our
operations both in the plants and the offices.
Our people know that it takes the efforts of
everyone to truly be a Lean organization and
that we all must concentrate on Lean every day.
To assist our people to be their best every
day, we have a Lean champion in every plant.
And both operating groups work together to
learn best Lean practices from each other.
Through the efforts of the Cooper team,
we saved $100 million through Lean initiatives
across the organization in 2002.
Philosophy & Beliefs. To do so, we must hire the
right people at the baseline of the company and
develop them into experienced, globally thinking
managers. To help accomplish this, we have
developed a performance management and career
development system which was implemented
during the first quarter of 2003.
Performance Management at Cooper is a
system that will help all Cooper people who want
to improve their performance to their highest level.
Cooper people will be able to identify their
long-term career objectives, conduct a gap analysis
to determine areas for improvement and put
together individual development plans to address
areas on which they choose to focus.
Additionally, the system will assist senior
leaders in improving the succession planning
process.This process then cascades to all levels
of the organization, ensuring the right person is
in place for the right position at the right time.
4
Directory
EXECUTIVE OFFICES
TRANSFER AGENT & REGISTRAR
Cooper Tire & Rubber Company
701 Lima Avenue
Findlay, Ohio 45840
(419) 423-1321
FOR INFORMATION
Tire products – (800) 854-6288
Automotive products – (248) 596-5900
Common stock and dividends – (419) 424-4323
Investor relations – (419) 427-4768
Web sites – www.coopertire.com
www.cooperstandard.com
ANNUAL MEETING
Fifth Third Bank
Corporate Trust Services
38 Fountain Square Plaza
Mail Drop #10AT66
Cincinnati, Ohio 45202
(800) 837-2755 or (513) 579-5320,
Mon. - Fri, 8 a.m. to 5 p.m. Eastern time
http://investordirect.53.com
Shareholders requiring a change of name, address or ownership of stock,
as well as information about shareholder records, lost or stolen certificates,
dividend checks, dividend direct deposit, and dividend reinvestment should
contact our stock transfer agent by mail, telephone or website.
Direct Investment Plan – Fifth Third Bank serves
as Administrator for a direct investment plan for
the purchase, sale and/or dividend reinvestment
of Cooper Tire & Rubber Company common stock.
For information, call: (800) 837-2755.
The annual meeting of stockholders will be held at 10 a.m.,Tuesday, May 6, 2003, at Urbanski’s, 1500 Manor Hill Road,
Findlay, Ohio. All stockholders are cordially invited to attend. Proxy material is sent to stockholders together with this report.
BOARD OF DIRECTORS
Arthur H. Aronson2
Former Executive Vice President,
Allegheny Teledyne Incorporated
John F. Fiedler 2
Chairman of the Board,
Borg Warner Inc.
Thomas A. Dattilo
Chairman, President and
Chief Executive Officer
of the Company
Dennis J. Gormley 2
Former Chairman of the Board
and Chief Executive Officer,
Federal-Mogul Corporation
John F. Meier 1,3
Chairman and Chief Executive Officer
Libbey Inc.
Byron O. Pond3
President and Chief Executive Officer,
Amcast Industrial Corporation
1 Member of the Nominating and Governance Committee
2 Member of the Audit Committee
3 Member of the Compensation Committee
61
Edsel D. Dunford1,3
Former President and
Chief Operating Officer,
TRW Inc.
John J. Holland2
Chairman and Chief Executive Officer
Butler Manufacturing Company
John H. Shuey 1,2
Former Chairman, President
and Chief Executive Officer,
Amcast Industrial Corporation
Who We Are
Cooper Tire & Rubber Company (NYSE: CTB)
we have significant expertise and sustainable
is a leading manufacturer of replacement tires
competitive advantage. These businesses are:
and original equipment automotive components.
North American replacement tires; global
Based in Findlay, Ohio, Cooper currently operates
automotive sealing and fluid handling systems;
52 manufacturing facilities in 13 countries.
and North American NVH products. Our sustain-
Cooper Tire is the fourth largest tire manufacturer
able competitive advantages include industry
in North America and one of only two remaining
leading customer service, technology and
U.S.-owned tire companies. Cooper-Standard
manufacturing efficiency.
Automotive is the world leader in design and
manufacture of automotive sealing products and
ranks among the top producers of noise, vibration
and harshness (NVH) control products and fluid
handling systems for the automotive industry.
Management focus is on maximizing return
on invested capital (ROIC) and growth of EPS.
Management’s variable compensation plan is based
on ROIC achievement for corporate executives
and return on assets managed (ROAM) achievement
Cooper’s strategy for increasing shareholder value
for operations executives.
consists of focusing on core businesses in which
A Sampling of Our Products
encapsulated glass
sealing system
hydraulic engine mount
NVH control system
Cooper Zeon 2XS
ultra-high performance tire
fuel, brake and vapor system
fluid handling system
62
Our Focus, Our Customers
AUTOMOTIVE GROUP:
Vehicle manufacturers
Tier I automotive suppliers
Aftermarket retailers
Heavy truck, and engine,
manufacturers
TIRE GROUP:
Independent tire dealers
Mass merchandisers
Retail chains
Retreaders
Wholesale distributors
door seal
sealing system
hydraulic engine mount
NVH control system
heating and cooling system
fluid handling system
Discoverer H/T
light truck tire
valves and coolers
fluid handling system
door seals
glass runs
sealing system
63
Discoverer CSD 444
radial medium truck tire
Executive Officers
Thomas A. Dattilo
Chairman, President and
Chief Executive Officer
James E. Kline
Vice President
Harold C. Miller
Vice President
D. Richard Stephens
Vice President
Mark F. Armstrong
Vice President
James S. McElya
Vice President
Roderick F. Millhof
Vice President
Richard D.Teeple
Vice President, General Counsel
and Corporate Secretary
Philip G. Weaver
Vice President and Chief
Financial Officer
Eileen B. White
Corporate Controller
Other Corporate Officers
Larry J. Beard
Vice President
Larry J. Enders
Vice President
Paul C. Gilbert
Vice President
Edward A. Hasler
Vice President
James H. Geers
Vice President
Donald P. Ingols
Vice President
Richard N. Jacobson
Asst. Corporate Secretary/
Asst. General Counsel
James P. Keller
Vice President
Gregory E. Meyers
Asst. General Counsel
James W. Pifer
Vice President
Charles F. Nagy
Assistant Treasurer
Stephen O. Schroeder
Treasurer
Worldwide Facilities
NORTH AMERICA
United States
El Dorado, Arkansas, NVH control systems
Texarkana, Arkansas, tires
Albany, Georgia, tires
Athens, Georgia, tread rubber
Griffin, Georgia, sealing
Auburn, Indiana, NVH control systems headquarters
Auburn, Indiana, NVH control systems
Auburn, Indiana, technical center
Bremen, Indiana, sealing (joint venture)
New Haven, Indiana, sealing (joint venture)
Topeka, Indiana, sealing (joint venture)
Mt. Sterling, Kentucky, fluid systems
Auburn Hills, Michigan, fluid systems headquarters
Auburn Hills, Michigan, technical center
Dearborn, Michigan, technical center
Fairview, Michigan, fluid systems
Gaylord, Michigan, sealing
Novi, Michigan, automotive operations and
N.A. sealing headquarters
Clarksdale, Mississippi, tubes
Tupelo, Mississippi, tires
Asheboro, North Carolina, tread rubber
Goldsboro, North Carolina, sealing
Salisbury, North Carolina, tread rubber
Bowling Green, Ohio, fluid systems
Bowling Green, Ohio, sealing
Cleveland, Ohio, plastics
Findlay, Ohio, corporate and
tire operations headquarters
Findlay, Ohio (2), technical centers
Findlay, Ohio, tires
Spartanburg, South Carolina, plastics
Surgoinsville,Tennessee, fluid systems
San Antonio,Texas, technical center
Canada
Georgetown, Ontario, sealing
Mitchell, Ontario, NVH control systems
Mitchell, Ontario, technical center
Sault Ste. Marie, Ontario, fluid systems
Stratford, Ontario (3), sealing
Stratford, Ontario, technical center
Mexico
Aguascalientes, Mexico, sealing (joint venture)
Piedras Negras, Mexico, sealing
Torreon, Mexico (2), fluid systems
SOUTH AMERICA
Brazil
Camasari, Brazil, fluid systems
Varginha, Brazil, sealing
AUSTRALIA
Adelaide, South Australia, fluid systems
ASIA
Republic of Korea
Chung-Ju, Korea, sealing (joint venture)
Kim Hae, Korea, sealing (joint venture)
Seo-Cheon, Korea, sealing (joint venture)
India
Chennai, India, fluid systems
EUROPE
Czech Republic
Zdar, Czech Republic, fluid systems
France
Baclair, France, sealing
Bezons, France, technical center
Lillebonne, France, sealing
Vitre, France, sealing
Germany
Grünberg, Germany, fluid systems
Schelklingen, Germany, fluid systems
Poland
Bielsko-Biala, Poland, sealing
Spain
Getafé, Spain, fluid systems
United Kingdom
Banbury, U.K., Cooper-Standard international
headquarters
Huntingdon, U.K., technical center
Maesteg, U.K., sealing
Melksham, U.K., tires
Plymouth, U.K., fluid systems
Plymouth, U.K., sealing
This report has been produced in its entirety on recycled paper.
64
Make a promise to yourself
and your family.
Be tire smart
Check your tire pressure. An under-inflated tire can have a big
impact in terms of safety and reliability.
Mind your tread. When inspecting your tires look for uneven
tread wear, shallow tread, damaged areas, slow leaks and valve caps.
Take turns. Your owner’s manual will tell you how often to rotate
your tires, but generally, it should be done every 6,000 to 8,000 miles.
w w w . c o o p e r t i r e . c o m