Cooper Tire & Rubber Company Reports Fourth Quarter Results

FINDLAY, Ohio, February 26, 2009: Cooper Tire & Rubber Company today reported a net loss of $143 million, or $2.43 per share, for the quarter ended Dec. 31, 2008. Net sales for the period were $636 million, down $130 million from the prior year. The decreased revenues were driven by volume declines offset by improved pricing and mix.

Cooper's results during the quarter included pretax restructuring charges of $76 million related to the impending closure of its facility in Albany, Ga. The Company also had a $31 million pretax charge for impairment of goodwill in the International segment. Results were pressured by high raw material cost increases and production curtailments as the Company manages inventory to align with demand.

For the year Cooper generated net sales of $2.9 billion, down slightly from 2007. Net losses were $219 million for the year compared with net income of $91 million from continuing operations in 2007.

North American Tire Operations

North American Tire operations generated sales of $511 million during the fourth quarter, down from 2007's record fourth quarter. Operating losses for the fourth quarter were $109 million, compared with operating profit of $45 million from the same period in 2007. Sales were affected by weak demand in North America as consumers reacted to the credit crisis and increased gas prices. The most significant volume decreases were in the broadline and light truck product segments and were particularly acute in the private brand distributor channel. The Cooper brand continued to perform well in the U.S. market compared to the Rubber Manufacturer Association's reported shipments. The Company also had success in expanding its market presence in Mexico and Canada.

Operating profit for North American Tire declined during the fourth quarter, year over year, as a result of several key factors. Raw material cost increases during the quarter negatively affected results by $79 million compared to the prior year quarter. This was partially offset by price and mix increases of $49 million. Volume decreases affected profits by $33 million. The curtailment of production resulted in unabsorbed fixed overhead during the period of $20 million. Manufacturing operations improved by $6 million, despite increased utility costs, as a result of the Company's continued focus on improvement in this area. Restructuring charges amount to $76 million during the quarter. The fourth quarter of 2007 included an $8 million dollar LIFO inventory benefit, which did not repeat in 2008.

High prices for raw materials, coupled with the use of last-in, first-out (LIFO) cost flow assumptions for inventory accounting in North America, have contributed to decreased earnings. The LIFO accounting method charges the most recent costs against sales and, in periods of rising raw material costs, results in lower profits compared to other inventory accounting methods. When costs moderate, in the short term, the North American operations will experience lower charges to cost of goods sold than would be reported under other inventory costing methods.

On Dec. 17, the Company announced the impending closure of its facility in Albany, Ga. The total restructuring charges were estimated to be $150 million to $175 million, of which 50 to 60 percent would be non-cash. The equipment write-down charge taken during the fourth quarter of 2008 was $76 million. The Company now estimates that the total charge will be slightly lower, somewhere in the range of $120 million to $145 million. The non-cash portion of the total is now estimated to be 60 percent to 70 percent.

International Tire Operations

The Company's International Tire Operations reported sales of $176 million in the quarter, a decrease from the fourth quarter of 2007. This decrease was the result of decreased volume offset by improved price and mix. Expansion of the facilities in China was partially affected by the decrease in demand globally for tires. The Company continued to implement price increases along with cost savings measures across its international operations in an effort to offset increased raw material costs. The segment was also negatively impacted by the $31 million charge for impairment of goodwill. For the full year, the segment reported net sales of $975 million, an increase of 11 percent from the prior year.

Management Commentary and Outlook

Roy Armes, Chief Executive Officer, commented, "The tire industry and our business are under intense pressure from several angles. These include volatile raw material costs, decreased global demand, and more intense competition. We are proactively taking steps to implement elements of our Strategic Plan and at the same time address market conditions. During the fourth quarter there were further decreases in the global demand for tires.

"We are focused on improving our global cost structure and are beginning to see some of the benefits from these actions; unfortunately much of what we have done is camouflaged by current market conditions.

"While the near term outlook is pressured by macroeconomic events around the globe, we believe the actions we are taking are appropriate and will strengthen our business longer term. We have been able to maintain considerable cash reserves to support our plans, and we maintain unused existing credit facilities. We are repositioning Cooper to emerge from the current recession a stronger competitor."

Cooper's management team will discuss the financial and operating results for the quarter in a conference call today at 11 a.m. Eastern time. Interested parties may access the audio portion of that conference call on the investor relations page of the Company's web site at COOPER TIRE.