UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-K/A

For Annual and Transition Reports Pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934

(Mark One)

þ		Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2009

o		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _________to________

Commission File Number 001-04329

COOPER TIRE & RUBBER COMPANY

(Exact name of registrant as specified in its charter)

DELAWARE (State of incorporation)		34-4297750 (I.R.S. employer identification no.)
701 Lima Avenue, Findlay, Ohio (Address of principal executive offices)		45840 (Zip Code)

Registrant’s telephone number, including area code: (419) 423-1321

Securities registered pursuant to Section 12(b) of the Act:

(Title of each class)		(Name of each exchange on which registered)
Common Stock, $1 par value per share		New York Stock Exchange
Rights to Purchase Series A Preferred Stock		New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months. Yes o No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

o Large accelerated filer		þ Accelerated filer		o Non-Accelerated Filer (Do not check if a small reporting company)		o Smaller Reporting Company

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

     Yes o No þ

The aggregate market value of the voting common stock held by non-affiliates of the registrant at June 30, 2009 was $565,983,553.

The number of shares outstanding of the registrant’s common stock as of January 31, 2010 was 60,791,397.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information from the registrant’s definitive proxy statement for its 2010 Annual Meeting of Stockholders is hereby incorporated by reference into Part III, Items 10 – 14, of this report.

 

 

Explanatory Note

Cooper Tire & Rubber Company (the “Company”) is filing this Amendment No. 1 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 is filing this Form 10-K/A to reflect restatements of its consolidated balance sheets at December 31, 2008 and December 31, 2009, and its Consolidated Statements of Operations and Equity for the fiscal years ended December 31, 2007, December 31, 2008 and December 31, 2009, and the related notes thereto, as a result of a review of the Company’s accounting of noncontrolling shareholders’ interests.

Historically, the Company classified the Cooper Chengshan noncontrolling shareholders’ interest as permanent equity. After consideration of the applicable financial accounting guidance and evaluation of the related agreements, management determined that noncontrolling shareholders’ interest in Cooper Chengshan should be classified as a redeemable noncontrolling shareholder interest in mezzanine equity on the balance sheet. Pursuant to the agreements related to Cooper Chengshan, the owners of the noncontrolling shareholders’ interest in Cooper Chengshan had the right to sell and, if exercised, the Company had the obligation to purchase, the remaining 49 percent noncontrolling shareholders’ interest share at a minimum price of $62.7 million. This put option was previously disclosed in the footnotes to the financial statements, with a term beginning January 1, 2009 and continuing through December 31, 2011. The restatement also relates, in part to the Company’s accounting for foreign currency translation adjustments. In accordance with applicable financial accounting guidance, a portion of the currency translation adjustment recorded in comprehensive income (loss) and cumulative other comprehensive loss should have been allocated to the noncontrolling shareholders’ interests in consolidated subsidiaries which include Cooper Chengshan, Cooper Kenda and Cooper de Mexico. For a more detailed description of the restatement, see Note 1A – Restatement in the Notes to the Consolidated Financial Statements.

This Form 10-K/A amends and restates “Item 1A. Risk Factors,” “Item 6. Selected Financial Data,” “Item 7. Management’s Discussion and Analysis of Results of Operations and Financial Condition,” “Item 8. Financial Statements and Supplementary Data,” “Item 9A. Controls and Procedures,” and “Item 15. Financial Statements” of Part IV of the Original Filing, solely as a result of, and to reflect, the restatement. Pursuant to the rules of the SEC, Item 15 of Part IV of the Original Filing has been amended to contain the consents of the Company’s independent registered public accountants and currently-dated certifications from the Company’s principal executive officer and principal financial officer, as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. The consent of the Company’s independent registered public accounting firm is attached to the Form 10-K/A as exhibit 23. The certifications of the Company’s principal executive officer and principal financial officer are attached to this form 10-K/A as Exhibits 31.1, 31.2 and 32.

Except for the foregoing amended information, this Form 10-K/A continues to describe conditions as of the date of the Original Filing, and the Company has not updated the disclosures contained herein to reflect events that have occurred subsequent to that date. Other events occurring after the date of the Original Filing or other information necessary to reflect subsequent events have been disclosed in reports filed with the SEC subsequent to the Original Filing.

Item 1A. RISK FACTORS

The more significant risk factors related to the Company and its subsidiaries follow:

The Company is facing heightened risks due to the current business environment.

Current global economic conditions may affect demand for the Company’s products, create volatility in raw material costs and affect the availability and cost of credit. These conditions also affect the Company’s customers and suppliers as well as retail customers.

A deterioration in the global macroeconomic environment or in specific regions could impact the Company and, depending upon the severity and duration of these factors, the Company’s profitability and liquidity position could be negatively impacted.

This may also be the result of increased price competition and product discounts, resulting in lower margins in the business.

Pricing volatility for raw materials could result in increased costs and may affect the Company’s profitability.

The pricing volatility for natural rubber and petroleum-based materials contributes to the difficulty in managing the costs of raw materials. Costs for certain raw materials used in the Company’s operations, including natural rubber, chemicals, carbon black, steel reinforcements and synthetic rubber remain volatile. Increasing costs for raw material supplies will increase the Company’s production costs and affect its margins if the Company is unable to pass the higher production costs on to its customers in the form of price increases.

Further, if the Company is unable to obtain adequate supplies of raw materials in a timely manner, its operations could be interrupted. In recent years, the severity of hurricanes and the consolidation of the supplier base have had an impact on the availability of raw materials.

If the price of natural gas or other energy sources increases, the Company’s operating expenses could increase significantly.

The Company’s manufacturing facilities rely principally on natural gas, as well as electrical power and other energy sources. High demand and limited availability of natural gas and other energy sources have resulted in significant increases in energy costs in the past several years which have increased the Company’s operating expenses and transportation costs. Higher energy costs would increase the Company’s production costs and adversely affect its margins and results of operations.

Further, if the Company is unable to obtain adequate sources of energy, its operations could be interrupted.

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

The replacement tire industry is a highly competitive, global industry. Some of the Company’s competitors are large companies with relatively greater financial resources. Most of the Company’s competitors have operations in lower-cost countries. Intense competitive activity in the replacement tire industry has caused, and will continue to cause, pressures on the Company’s business. The Company’s ability to compete successfully will depend in part on its ability to balance capacity with demand, leverage global purchasing of raw materials, improve productivity, eliminate redundancies and increase production at low-cost, high-quality supply sources. If the Company is unable to offset continued pressures with improved operating efficiencies, its sales, margins, operating results and market share would decline and the decline could become material.

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’s business strategy emphasizes the development of new equipment and new products and using new technology to improve quality, performance and operating efficiency. Developing new products and technologies requires significant investment and capital expenditures, is technologically challenging and requires extensive testing and accurate anticipation of technological and market trends. If the Company fails to develop new products that are appealing to its customers, or fails to develop products on time and within budgeted amounts, the Company may be unable to recover its product development and testing costs.

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 has operations worldwide, including in the U.S., the United Kingdom, Europe, Mexico and the PRC. The Company has two joint venture manufacturing plants, Cooper Chengshan and Cooper Kenda, in the PRC and has continued to expand operations in that country. The Company has also invested in a tire manufacturing operation in Mexico. There are a number of risks in doing

business abroad, including political and economic uncertainty, social unrest, shortages of trained labor and the uncertainties associated with entering into joint ventures or similar arrangements in foreign countries. These risks may impact the Company’s ability to expand its operations in the PRC and elsewhere and otherwise achieve its objectives relating to its foreign operations including utilizing these locations as suppliers to other markets. In addition, compliance with multiple and potentially conflicting foreign laws and regulations, import and export limitations and exchange controls is burdensome and expensive. The Company’s foreign operations also subject it to the risks of international terrorism and hostilities and to foreign currency risks, including exchange rate fluctuations and limits on the repatriation of funds.

The Company’s results could be impacted by the tariffs recently imposed by the United States government on tires imported from the PRC.

On September 26, 2009, a tariff was imposed on light vehicle tires imported into the United States from the PRC at a level of 35 percent for the first 12 months, 30 percent for the second 12 months, and 25 percent for the third 12 months. The Company’s ability to competitively source tires from its operations in the PRC could be significantly impacted. Other effects ranging from impacts on the price of tires to responsive actions from other governments could also have significant impacts on the Company’s results.

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 provides defined benefit and hybrid pension plan coverage to union and non-union U.S. employees and a contributory defined benefit plan in the U.K. The Company’s pension expense and its required contributions to its pension plans are directly affected by the value of plan assets, the projected and actual rates of return on plan assets and the actuarial assumptions the Company uses to measure its defined benefit pension plan obligations, including the discount rate at which future projected and accumulated pension obligations are discounted to a present value and the inflation rate. The Company could experience increased pension expense due to a combination of factors, including the decreased investment performance of its pension plan assets, decreases in the discount rate and changes in its assumptions relating to the expected return on plan assets. The Company could also experience increased other postretirement expense due to decreases in the discount rate and/or increases in the health care trend rate.

In the event of declines in the market value of the Company’s pension assets or lower discount rates to measure the present value of pension obligations, the Company could experience changes to its Consolidated Balance Sheet which would include an increase to Pension benefits liabilities and a corresponding decrease in Stockholders’ equity through Cumulative other comprehensive loss and could result in higher minimum funding requirements.

Compliance with the TREAD Act and similar regulatory initiatives could increase the cost of operating the Company’s business.

The Company is subject to the Transportation Recall Enhancement Accountability and Documentation Act, or the TREAD Act, which was adopted in 2000. Proposed and final rules issued under the TREAD Act regulate test standards, tire labeling, tire pressure monitoring, early warning reporting, tire recalls and record retention. Compliance with TREAD Act regulations has increased, and will continue to increase, the cost of producing and distributing tires in the U.S. Compliance with the TREAD Act and other federal, state and local laws and regulations now in effect, or that may be enacted, could require significant capital expenditures, increase the Company’s production costs and affect its earnings and results of operations.

In addition, while the Company believes that its tires are free from design and manufacturing defects, it is possible that a recall of the Company’s tires, under the TREAD Act or otherwise, could occur in the future. A substantial recall could harm the Company’s reputation, operating results and financial position.

Beginning with the third quarter, 2003, the TREAD Act required that all tire companies submit quarterly data to NHTSA on fatalities, injuries and property damage claims on tires. On July 22, 2008, the U.S. District Court of Appeals for the District of Columbia Circuit ruled that this data is not subject to automatic exemption from disclosure made in response to requests under the Freedom of Information Act. Consequently, the Company’s data, which is unverified at the time of submission to NHTSA, has been made public. The impact, if any, of this release on current or future litigation or on future sales is not known at this time.

Any interruption in the Company’s skilled workforce could impair its operations and harm its earnings and results of operations.

The Company’s operations depend on maintaining a skilled workforce and any interruption of its workforce due to shortages of skilled technical, production and professional workers could interrupt the Company’s operations and affect its operating results. Further, a significant number of the Company’s U.S. employees are currently represented by unions. The labor agreement at the Findlay, Ohio operation expires October 2011 and the labor agreement at the Texarkana, Arkansas operations expires January 2012. Although the Company believes that its relations with its employees are generally good, the Company cannot provide assurance that it will be able to successfully maintain its relations with its employees. If the Company fails to extend or renegotiate its collective bargaining agreements

with the labor unions on satisfactory terms, or if its unionized employees were to engage in a strike or other work stoppages, the Company’s business and operating results could suffer.

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’s operations expose it to potential liability for personal injury or death as an alleged result of the failure of or conditions in the products that it designs and manufactures. Specifically, the Company is a party to a number of products liability cases in which individuals involved in motor vehicle accidents seek damages resulting from allegedly defective tires that it manufactured. Products liability claims and lawsuits, including possible class action litigation, could have a negative effect on the Company’s financial position, cash flows and results of operations.

Those claims may result in material losses in the future and cause the Company to incur significant litigation defense costs. Further, the Company cannot provide assurance that its insurance coverage will be adequate to address any claims that may arise. A successful claim brought against the Company in excess of its available insurance coverage may have a significant negative impact on its business and financial condition.

Further, the Company cannot provide assurance that it will be able to maintain adequate insurance coverage in the future at an acceptable cost or at all.

The Company has a risk due to volatility of the capital and financial markets.

The Company periodically requires access to the capital and financial markets as a significant source of liquidity for capital requirements that it cannot satisfy by cash on hand or operating cash flows. Substantial volatility in world capital markets and the banking industry may make it difficult for the Company to access credit markets and to obtain financing or refinancing, as the case may be, on satisfactory terms or at all. In addition, various additional factors, including a deterioration of the Company’s credit ratings or its business or financial condition, could further impair its access to the capital markets. See also related comments under “There are risks associated with the Company’s global strategy of using joint ventures and partially owned subsidiaries” below.

Additionally, any inability to access the capital markets, including the ability to refinance existing debt when due, could require the Company to defer critical capital expenditures, reduce or not pay dividends, reduce spending in areas of strategic importance, sell important assets or, in extreme cases, seek protection from creditors.

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.

In February 2008, the Company announced its strategic plan which contains three imperatives:

Build a sustainable, competitive cost position,
Drive profitable top line growth, and
Build bold organizational capabilities and enablers to support strategic goals.

If the assumptions used in developing the strategic plan vary significantly from actual conditions, the Company’s sales, margins and profitability could be harmed.

The Company may not be able to protect its intellectual property rights adequately.

The Company’s success depends in part upon its ability to use and protect its proprietary technology and other intellectual property, which generally covers various aspects in the design and manufacture of its products and processes. The Company owns and uses tradenames and trademarks worldwide. The Company relies upon a combination of trade secrets, confidentiality policies, nondisclosure and other contractual arrangements and patent, copyright and trademark laws to protect its intellectual property rights. The steps the Company takes in this regard may not be adequate to prevent or deter challenges, reverse engineering or infringement or other violations of its intellectual property, and the Company may not be able to detect unauthorized use or take appropriate and timely steps to enforce its intellectual property rights. In addition, the laws of some countries may not protect and enforce the Company’s intellectual property rights to the same extent as the laws of the United States.

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 Company routinely evaluates potential acquisitions and may pursue acquisition opportunities, some of which could be material to its business. While the Company believes there are a number of potential acquisition candidates available that would complement its business, it currently has no agreements to acquire any specific business or material assets. The Company cannot predict whether it will be successful in pursuing any acquisition opportunities or what the consequences of any acquisition would be. Additionally, in any future acquisitions, the Company may encounter various risks, including:

	•		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.

Some or all of those risks could impair the Company’s results of operations and impact its financial condition. The Company may finance any future acquisitions from internally generated funds, bank borrowings, public offerings or private placements of equity or debt securities, or a combination of the foregoing. Future acquisitions may involve the expenditure of significant funds and management time. Future acquisitions may also require the Company to increase its borrowings under its bank credit facilities or other debt instruments, or to seek new sources of liquidity. Increased borrowings would correspondingly increase the Company’s financial leverage, and could result in lower credit ratings and increased future borrowing costs. These risks could also reduce the Company’s flexibility to respond to changes in its industry or in general economic conditions.

The Company is required to comply with environmental laws and regulations that could cause it to incur significant costs.

The Company’s manufacturing facilities are subject to numerous laws and regulations designed to protect the environment, and the Company expects that additional requirements with respect to environmental matters will be imposed on it in the future. Material future expenditures may be necessary if compliance standards change or material unknown conditions that require remediation are discovered. If the Company fails to comply with present and future environmental laws and regulations, it could be subject to future liabilities or the suspension of production, which could harm its business or results of operations. Environmental laws could also restrict the Company’s ability to expand its facilities or could require it to acquire costly equipment or to incur other significant expenses in connection with its manufacturing processes.

A portion of the Company’s business is seasonal, which may affect its period-to-period results.

Although there is year-round demand for replacement tires, demand for passenger replacement tires is typically strongest during the third and fourth quarters of the year in the northern hemisphere where the majority of the Company’s business is conducted, principally due to higher demand for winter tires during the months of June through November. The seasonality of this portion of the Company’s business may affect its operating results from quarter-to-quarter.

The realizability of deferred tax assets may affect the Company’s profitability and cash flows.

A valuation allowance is required pursuant to ASC 740 relating to Accounting for Income Taxes, when, based upon an assessment which is largely dependent upon objectively verifiable evidence including recent operating loss history, expected reversal of existing deferred tax liabilities and tax loss carry back capacity, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are determined separately for each taxing jurisdiction in which the Company conducts its operations or otherwise generates taxable income or losses. In the United States, the Company has recorded significant deferred tax assets, the largest of which relate to tax attribute carryforwards, products liabilities, pension and other post retirement 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 $174.4 million valuation allowance for the portion of U.S. deferred tax assets exceeding deferred tax liabilities. In addition, the Company has recorded valuation allowances of $2.4 million for certain non-U.S. net deferred tax assets primarily associated with losses in foreign jurisdictions. As a result of changes in the amount of U.S. and certain foreign net deferred tax assets during the year, the valuation allowance was decreased in 2009 by $56.8 million. The pension liability and associated deferred tax asset accounts for $127.0 million of the total valuation allowance at December 31, 2009.

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.

The Financial Accounting Standards Board is considering the second part of its review of accounting for pension and postretirement benefit plans. This second phase of this project may result in changes to the current manner in which pension and other postretirement benefit plan costs are expensed. These changes could result in higher pension and other postretirement costs.

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

The Company’s strategy includes expanding its global footprint through the use of joint ventures and other partially owned subsidiaries. These entities operate in countries outside of the U.S., are generally less well capitalized than the Company and bear risks similar to the risks of the Company. However, there are specific additional risks applicable to these subsidiaries and these risks, in turn, add potential risks to the Company. Such risks include: somewhat greater risk of sudden changes in laws and regulations which could impact their competitiveness, risk of joint venture partners or other investors failing to meet their obligations under related shareholders’ agreements and risk of being denied access to the capital markets which could lead to resource demands on the Company in order to maintain or advance its strategy. The Company’s outstanding notes and primary credit facility contain cross default provisions in the event of certain defaults by the Company under other agreements with third parties, including certain of the agreements with the Company’s joint venture partners or other investors. In the event joint venture partners or other investors do not satisfy their funding or other obligations and the Company does not or cannot satisfy such obligations, the Company could be in default under its outstanding notes and primary credit facility and, accordingly, be required to repay or refinance such obligations. There is no assurance that the Company would be able to repay such obligations or that the current noteholders or creditors would agree to refinance or to modify the existing arrangements on acceptable terms or at all. For further discussion of access to the capital markets, see above “Capital and Financial Markets; Liquidity.”

The two consolidated Chinese joint ventures have been financed in part using multiple loans from several lenders to finance facility construction, expansions and working capital needs. These loans are generally for terms of three years or less. Therefore, debt maturities occur frequently and access to the capital markets is crucial to their ability to maintain sufficient liquidity to support their operations.

In connection with its acquisition of Cooper Chengshan, beginning January 1, 2009, and continuing through December 31, 2011, the minority interest partner has the right to sell and, if exercised, the Company has the obligation to purchase, the remaining 49 percent minority interest share at a minimum price of $62.7 million. The Company has received notification from its noncontrolling shareholder of its intention to exercise a portion of its put option. After receiving governmental approvals, the Company will purchase the 14 percent share for $17.9 million. The remaining shares may be sold to the Company under the put option through December 31, 2011.

The minority investment in a tire operation in Mexico, which is not consolidated with the Company’s results, is being funded largely by loans from the Company. The amount of such loans fluctuates with its results of operations and working capital needs and its ability to repay the existing loans is heavily dependent upon successful operations and cash flows.

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.

The Company is required by the SEC to establish and maintain adequate internal control over financial reporting that provides reasonable assurance regarding the reliability of its financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. The Company is likewise required, on a quarterly basis, to evaluate the effectiveness of its internal controls and to disclose any changes and material weaknesses in those internal controls.

As described in greater detail elsewhere in this Annual Report on Form 10-K/A, in connection with the restatement process, the Company identified a material weakness with regard to the reporting of its noncontrolling shareholders’ interests.

In connection with this restatement, the Company has taken a series of steps designed to improve its control processes. These actions include a review of the accounting for joint ventures from acquisition to present with a special focus on changes to reporting guidance that may affect the Company’s accounting. The Company is also implementing measures to enhance the controls by which authoritative guidance will be monitored and applied on a regular basis. The Company believes these measures will appropriately address the material weakness described above.

Item 6. SELECTED FINANCIAL DATA

The following Selected Financial Data of the Company reflects its continuing operations after the sale of its automotive operations, known as Cooper-Standard Automotive, in a transaction which closed on December 23, 2004 and the sale of the Oliver Rubber Company in a transaction which closed on October 5, 2007.

(Dollar amounts in thousands except for per share amounts)

														Income (loss) from				Earnings (Loss) Per Share
														Continuing Operations				from Continuing Operations
										Income (loss)				available to				available to
										from Continuing				Cooper Tire &				Cooper Tire & Rubber Company
		Net				Operating				Operations Before				Rubber Company				common stockholders
		Sales				Profit (Loss)				Income taxes				common stockholders (1)				Basic (1)				Diluted (1)
2005		$	2,035,623			$	25,150			$	(15,953	)		$	(16,016	)		$	(0.25	)		$	(0.25	)
2006			2,575,218				(45,252	)			(75,995	)			(74,320	)			(1.21	)			(1.21	)
2007			2,932,575				134,392				116,030				91,435				1.48				1.46
2008			2,881,811				(216,633	)			(257,775	)			(229,383	)			(3.88	)			(3.88	)
2009			2,778,990				156,269				115,523				93,359				1.57				1.54

						Redeemable
						Noncontrolling												Net Property,
		Stockholders’				Shareholders’				Long-term				Total				Plant &
		Equity (1)				Interests (1)				Debt				Assets				Equipment
2005		$	943,730			$	—			$	491,618			$	2,152,186			$	751,767
2006			666,244				44,956				513,213				2,237,136				971,072
2007			826,262				56,686				464,608				2,298,490				992,215
2008			318,246				62,720				325,749				2,042,896				901,274
2009			380,524				83,528				330,971				2,100,340				850,971

														Average
		Capital								Dividends				Common Shares				Number of
		Expenditures				Depreciation				Per Share				(000)				Employees
2005		$	160,273			$	103,047			$	0.42				63,653				8,762
2006			186,190				127,693				0.42				61,338				13,361
2007			140,972				131,007				0.42				61,938				13,355
2008			128,773				138,805				0.42				59,048				13,311
2009			79,333				121,483				0.42				59,439				12,568

Effective February 4, 2006, the Company acquired a 51 percent ownership position in Cooper Chengshan (Shandong) Passenger Tire Company Ltd. and Cooper Chengshan (Shandong) Tire Company, Ltd. (“Cooper Chengshan”). The acquisition has been accounted for as a purchase transaction and the fair value of fixed assets, liabilities and tangible and identifiable intangible assets have been included in the Company’s Consolidated Balance Sheets at December 31, 2008 and 2009. The operating results of Cooper Chengshan have been included in the consolidated financial statements of the Company since the date of acquisition.

The Company’s continuing operations recorded an impairment charge during 2006 of $47,973 related to goodwill and an indefinite-lived intangible asset and recorded an impairment charge during 2008 of $31,340 related to goodwill as described in Note 4 – Goodwill and Intangibles.

In 2008, the Company’s continuing operations recorded $76,402 of restructuring charges associated with the closures of its Albany, Georgia manufacturing facility and Dayton, New Jersey distribution center as described in Note 16 – Restructuring.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business of the Company

The Company produces and markets passenger, light and medium truck, motorsport and motorcycle tires which are sold internationally in the replacement tire market to independent tire dealers, wholesale distributors, regional and national retail tire chains and large retail chains that sell tires, as well as other automotive and racing products.

In recent years the Company has faced both general industry and company-specific challenges. These included volatile raw material costs, increasing product complexity and pressure from competitors with manufacturing in lower-cost regions. Industry demand for tires has been weak in recent years. The global economic environment began to severely decline in 2007 with a global recession beginning in 2008.

To address these conditions and position the Company for future success, a Strategic Plan was developed which the Company is implementing. This plan, originally communicated in February 2008, has three strategic imperatives:

Building a sustainable cost competitive position,
Driving top-line profitable growth, and
Building bold organizational capabilities and enablers to support strategic goals.

To support these imperatives the Company has undertaken a number of cost saving and profit improvement initiatives. These included a wide variety of projects in the areas of manufacturing, supply chain, selling and general administrative and logistics. The implementation of these projects had a favorable impact on the Company’s profitability in 2009.

The Company also is expanding operations in what are considered lower-cost countries. These initiatives include the Cooper Kenda Tire manufacturing joint venture in the PRC, the Cooper Chengshan joint venture in the PRC and an investment in a manufacturing operation in Mexico. Products from these operations will both provide a lower cost source of tires for existing markets and be used to expand the Company’s market share in Mexico and the PRC.

Products that meet changing demands in the market, including improved fuel efficiency and consumer value, have been recently launched.

The following discussion of financial condition and results of operations should be read together with “Selected Financial Data,” the Company’s consolidated financial statements and the notes to those statements and other financial information included elsewhere in this report.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations presents information related to the consolidated results of the continuing operations of the Company, including the impact of restructuring costs on the Company’s results, a discussion of past results and future outlook of each of the Company’s segments and information concerning both the liquidity and capital resources and critical accounting policies of the Company. A discussion of the past results of its discontinued operations and information related to the gains recognized on the sales of Cooper-Standard Automotive and Oliver Rubber Company are also included. This report contains forward-looking statements that involve risks and uncertainties. The Company’s actual results may differ materially from those indicated in the forward-looking statements. See Risk Factors in Item 1A for information regarding forward-looking statements.

Consolidated Results of Continuing Operations

						%						%
(Dollar amounts in millions except per share amounts)		2007				Change		2008				Change		2009
Revenues:
North American Tire		$	2,209.8			-3.1%		$	2,142.1			-6.3%		$	2,006.2
International Tire			881.3			10.6%			975.0			1.9%			993.8
Eliminations			(158.5	)		48.5%			(235.3	)		-6.1%			(221.0	)
Net sales		$	2,932.6			-1.7%		$	2,881.8			-3.6%		$	2,779.0
Operating profit (loss):
North American Tire		$	119.4			n/m		$	(174.1	)		n/m		$	111.0
International Tire			28.9			n/m			(30.1	)		n/m			72.8
Eliminations			(0.5	)		n/m			(1.3	)		n/m			(1.6	)
Unallocated corporate charges			(13.4	)		-17.2%			(11.1	)		133.3%			(25.9	)
Operating profit (loss)			134.4			n/m			(216.6	)		n/m			156.3
Interest expense			48.5			4.1%			50.5			-6.5%			47.2
Debt extinguishment (gains) losses			2.6			n/m			0.6			n/m			—
Interest income			(18.0	)		-28.3%			(12.9	)		-59.7%			(5.2	)
Dividend from unconsolidated subsidiary			(2.0	)		-5.0%			(1.9	)		-100.0%			—
Other — net			(12.7	)		n/m			4.9			n/m			(1.2	)
Income (loss) from continuing operations before income taxes			116.0			n/m			(257.8	)		n/m			115.5
Provision (benefit) for income taxes			15.8			n/m			(30.3	)		n/m			0.2
Income (loss) from continuing operations			100.2			n/m			(227.5	)		n/m			115.3
Noncontrolling shareholders’ interests			(8.8	)		n/m			8.1			n/m			(31.9	)
Income (loss) from continuing operations attributable to Cooper Tire & Rubber Company		$	91.4			n/m		$	(219.4	)		n/m		$	83.4
Basic earnings (loss) per share		$	1.48			—		$	(3.88)	1		—		$	1.57	1
Diluted earnings (loss) per share		$	1.46			—		$	(3.88)	1		—		$	1.54	1

2009 versus 2008

Consolidated net sales decreased by $102.8 million in 2009. The decrease in net sales was primarily a result of lower volumes in the North American Tire Operations segment, unfavorable foreign currency impacts in the International Tire Operations segment and decreased pricing and mix in both the North American Tire Operations and International Tire Operations segments. These were partially offset by improved volumes in the International segment.

The Company recorded operating profit in 2009 of $156.3 million compared to an operating loss of $216.6 million in 2008. The favorable impacts of lower raw material costs, improved manufacturing operations, reduced restructuring costs and non-recurrence of a write off in 2008 of goodwill in the International Tire Operations segment all contributed to the profit improvement from 2008 to 2009. Partially offsetting improved operating profits were lower volumes, unfavorable pricing and mix and higher incentive-related compensation. During 2009, the Company recognized a benefit in its North American Tire Operations segment from inventory valuations as a result of the decline in finished goods inventory and the elimination of inventory layers at historically lower costs due to the Company’s LIFO accounting for inventory in this segment. This decline in inventory levels resulted in the Company recognizing a $15.6 million benefit in operating profit.

The principal raw materials for the Company include natural rubber, synthetic rubber, carbon black, chemicals and steel reinforcement components. Approximately 65 percent of the Company’s raw materials are petroleum-based. The Company experienced significant decreases in the costs of certain of its principal raw materials during 2009 compared with the record high levels experienced during 2008. The decreases in the cost of natural rubber and petroleum-based materials were the most significant drivers of lower raw material costs during 2009, which were down $411.1 million from 2008.

The Company strives to assure raw material supply and to obtain the most favorable pricing. For natural rubber and natural gas, procurement is managed through a combination of buying forward of production requirements and utilizing the spot market. For other principal materials, procurement arrangements include supply agreements that may contain formula-based pricing based on commodity indices, multi-year agreements or spot purchase contracts. While these arrangements typically provide quantities necessary to satisfy normal manufacturing demands, the pricing volatility in these commodities contributes to the difficulty in managing the costs of raw materials.

Selling, general and administrative expenses were $207.0 million (7.4 percent of net sales) in 2009 compared to $185.1 million (6.4 percent of net sales) in 2008. The increase in selling, general and administrative expenses was due primarily to higher incentive-based compensation and increases in accruals for stock-based liabilities.

Products liability costs in 2009 were flat compared to 2008. Included in the $81.5 million total recorded for 2009 are recoveries of legal fees of $2.5 million. Policies applicable to claims occurring on April 1, 2003 and thereafter do not provide for recovery of legal fees. Additional information related to the Company’s accounting for products liability costs appears in the “Critical Accounting Policies” portion of this Management’s Discussion and Analysis.

During 2009, the Company recorded $48.7 million in restructuring costs related to the closure of its Albany, Georgia manufacturing facility and the closure of three distribution centers located in Dayton, New Jersey; Moraine, Ohio and Cedar Rapids, Iowa. The Company recorded $76.4 million in restructuring costs in 2008 related to the two initiatives described in the Restructuring section below.

Interest expense decreased $3.3 million in 2009 from 2008 primarily due to lower debt levels primarily in the PRC.

Interest income decreased $7.7 million in 2009 from 2008 primarily as a result of lower interest rates.

The Company recorded dividend income from its investment in Kumho Tire Co., Inc. in both 2008 and 2007. The Company sold this investment in the third quarter of 2008.

Other – net increased $6.1 million in 2009 from 2008 as a result of the Company recording lower foreign currency losses in 2009, reduced losses from an unconsolidated subsidiary and proceeds from the settlement of a lawsuit.

For the twelve months ended December 31, 2009, the Company recorded an income tax expense of $0.2 million on income before taxes from continuing operations of $115.5 million, prior to the deduction of noncontrolling shareholders’ interests of $31.9 million. Worldwide tax expense was favorably impacted by the decrease in the valuation allowance against U.S. net deferred tax assets and certain foreign net deferred tax assets. It was also favorably impacted by the continuation of tax holidays for some of the Company’s operations in the PRC and a tax benefit for U.S. “specified liability loss” carrybacks. Comparable amounts for 2008 were an income tax benefit of $30.3 million on a loss before taxes of $257.8 million.

The Company continues to maintain a valuation allowance on the U.S. and certain non-U.S. net deferred tax assets existing at December 31, 2009. A valuation allowance is required pursuant to ASC 740 relating to Accounting for Income Taxes, when, based upon an assessment which is largely dependent upon objectively verifiable evidence including recent operating loss history, expected reversal of existing deferred tax liabilities and tax loss carry back capacity, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are determined separately for each taxing jurisdiction in which the Company conducts its operations or otherwise generates taxable income or losses. In the United States, the Company has recorded significant deferred tax assets, the largest of which relate to tax attribute carryforwards, products liabilities, pension and other post retirement 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 $174.4 million valuation allowance for the portion of U.S. deferred tax assets exceeding deferred tax liabilities. In addition, the Company has recorded valuation allowances of $2.4 million for certain non-U.S. net deferred tax assets primarily associated with losses in foreign jurisdictions. As a result of changes in the amount of U.S. and certain foreign net deferred tax assets during the year, the valuation allowance was decreased in 2009 by $56.8 million. The pension liability and associated deferred tax asset adjustment recorded to equity accounts for $127.0 million of the total valuation allowance at December 31, 2009.

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., and its Canadian affiliate. In 2009 the governments settled the APA between the governments and the taxpayers for periods 2000-2007. Under terms of the 2004 sale agreement for the subsidiary, the Company is responsible for all tax obligations and is entitled to promptly receive all tax refunds for periods relating to its ownership ending December 23, 2004. The anticipated cash impact to the Company of the above settlement consisted of a refund of taxes paid in Canada, net of various offsets, of approximately $70 million and a tax and interest obligation in the U.S. of approximately $31.1 million which was paid in the fourth quarter of 2009. On July 27, 2009, the Canadian affiliate received a substantial portion of the anticipated refund. However, the refund was not remitted to the Company and on August 3, 2009, Cooper-Standard Holdings Inc., the company that acquired the former subsidiary and its U.S. affiliates filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Canadian affiliate filed for bankruptcy protection in Canada on August 4, 2009. Based upon these facts, the Company does not believe the criteria for recognition of the receivable for the taxes paid during the Company’s ownership has been met and will not record a receivable until the certainty of realization is assured. The Company is pursuing all options to recover the tax refunds to which it is entitled and has filed adversary proceedings in the Delaware Bankruptcy Court against Cooper-Standard Holdings Inc., Cooper-Standard Automotive Inc., and its Canadian affiliate.

The effects of inflation in areas other than raw materials and utilities did not have a material effect on the results of operations of the Company in 2009.

2008 versus 2007

Consolidated net sales decreased by $50.8 million in 2008. The decrease in net sales was primarily a result of lower volume, primarily in the North American Tire Operations segment. Partially offsetting the lower volumes were improved pricing and mix in both the North American Tire Operations and International Tire Operations segments. The Company recorded an operating loss in 2008 of $216.6 million compared to an operating profit of $134.4 million in 2007. The favorable impacts of improved pricing and mix, along with lower incentive-related compensation were offset by lower volumes, higher raw material costs, production curtailment costs, higher products liability costs and a lower of cost or market inventory adjustment in the International Tire Operations segment. During 2007, the Company recognized a benefit in its North American Tire Operations segment from inventory valuations as a result of the decline in finished goods inventory. In 2008 the Company wrote off the goodwill of the International Tire Operations segment which totaled $31.3 million. In December 2008, the Company announced the planned closure of its Albany, Georgia manufacturing facility and its Dayton, New Jersey distribution center. The Company recorded $76.4 million of restructuring expenses associated with these initiatives in 2008.

The Company continued to experience significant increases in the costs of certain of its principal raw materials during 2008 compared with the levels experienced during 2007. The principal raw materials for the Company include natural rubber, synthetic rubber, carbon black, chemicals and reinforcement components. Approximately 65 percent of the Company’s raw materials are petroleum-based and crude oil prices reached record high levels during 2008. Natural rubber prices also peaked at all-time highs during 2008. The increases in the cost of natural rubber and petroleum-based materials were the most significant drivers of higher raw material costs during 2008, which were up approximately $302.9 million from 2007. The pricing volatility in these commodities contributes to the difficulty in managing the costs of raw materials. The increased price of crude oil and natural rubber, along with the growing global demand, remains a fundamental factor to the cost increases experienced for raw materials used by the Company.

Selling, general and administrative expenses were $185.1 million (6.4 percent of net sales) in 2008 compared to $177.5 million (6.1 percent of net sales) in 2007. The increase in selling, general and administrative expenses was due primarily to higher advertising costs in the International Tire Operations segment and the continued ramp-up of the Company’s operations in the PRC, partially offset by lower incentive-related compensation costs.

Products liability costs totaled $70.3 million and $81.3 million in 2007 and 2008, respectively, and include recoveries of legal fees of $9.8 million and $5.7 million in 2007 and 2008, respectively. Policies applicable to claims occurring on April 1, 2003 and thereafter do not provide for recovery of legal fees.

Additional information related to the Company’s accounting for products liability costs appears in the “Critical Accounting Policies” portion of this Management’s Discussion and Analysis.

During 2008, the Company recorded $76.4 million in restructuring costs related to the closure of its Albany, Georgia manufacturing facility and the closure of a distribution center in Dayton, New Jersey. The Company recorded $3.5 million in restructuring costs in 2007 related to the four initiatives described in the Restructuring section below.

Interest expense increased $2.0 million in 2008 from 2007 primarily due to debt related to investments in PRC, partially offset by the Company’s repurchases of debt in 2008.

The Company incurred $.6 million in costs associated with the repurchase of $14.3 million of its long-term debt during 2008. During 2007, the Company incurred $2.6 million in costs associated with the repurchase of $80.9 million of its long-term debt.

Interest income decreased $5.1 million in 2008 from 2007 as a result of lower cash levels and short-term investments in 2008 than in 2007.

The Company recorded dividend income from its investment in Kumho Tire Co., Inc. of $2.0 million and $1.9 million in 2007 and 2008, respectively.

Other – net decreased $17.5 million in 2008 from 2007 as a result of the Company recording a $3.1 million gain on the sale of stock in Nishikawa Rubber Co., Ltd. and a $4.2 million gain on the sale of a corporate aircraft in 2007. Foreign currency losses were recorded in 2008 compared to foreign currency gains in 2007 accounting for a $6.9 million decrease. The Company recorded losses from an unconsolidated subsidiary of $2.4 million in 2008 compared to earnings of $1.7 million in 2007.

For the twelve months ended December 31, 2008, the Company recorded an income tax benefit of $30.3 million on a loss before taxes from continuing operations of $257.8 million prior to the loss on noncontrolling shareholders’ interests of $8.1 million. Worldwide tax expense was unfavorably impacted by the increase in the valuation allowance against U.S. net deferred tax assets and certain foreign net deferred tax assets. It was favorably impacted by the continuation of tax holidays for some of the Company’s Asian operations and a tax benefit for U.S. “specified liability loss” carry backs. Comparable amounts for 2007 were an income tax expense of $15.8 million on income before taxes of $116.0 million.

The Company continues to maintain a valuation allowance on the U.S. net deferred tax assets and certain foreign net operating losses existing at December 31, 2008. A valuation allowance is required pursuant to SFAS No. 109, “Accounting for Income Taxes,” when, based upon an assessment which is largely dependent upon objectively verifiable evidence including recent operating loss history, expected reversal of existing deferred tax liabilities and tax loss carry back capacity, it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are determined separately for each taxing jurisdiction in which the Company conducts its operations or otherwise generates taxable income or losses. In the United States, the Company has recorded significant deferred tax assets, the largest of which relate to tax attribute carryforwards, products liabilities, pension and other post retirement 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 maintained a $222.1 million valuation allowance for the portion of U.S. deferred tax assets exceeding deferred tax liabilities. As a result of changes in the amount of U.S. and certain foreign net deferred tax assets during the year, the valuation allowance was increased in 2008 by $135.5 million. In addition, the Company has recorded valuation allowances of $9.2 million for net deferred tax assets primarily associated with losses in foreign jurisdictions. The pension liability and associated deferred tax asset adjustment recorded to equity accounts for $142.3 million of the total valuation allowance at December 31, 2008.

The effects of inflation in areas other than raw materials and utilities did not have a material effect on the results of operations of the Company in 2008.

Restructuring

During 2009, the North American Tire Operations and the International Tire Operations segments recorded $48.3 million and $0.4 million, respectively, of restructuring expense associated with initiatives announced at various times throughout 2008 and 2009.

On October 21, 2008, the Company announced it would conduct a capacity study of its United States manufacturing facilities. The study was an evolution of the Strategic Plan as outlined by the Company in February 2008. All of the Company’s U.S. manufacturing facilities were included for review and were analyzed based on a combination of factors, including long-term financial benefits, labor relations and productivity.

At the conclusion of the capacity study, on December 17, 2008, the North American Tire Operations segment announced its plans to close its tire manufacturing facility in Albany, Georgia. This closure resulted in a workforce reduction of approximately 1,330 people. Certain equipment in the facility has been relocated to other manufacturing facilities of the Company. The segment ceased production at the Albany facility in the third quarter of 2009 and has targeted the third quarter of 2010 to complete the relocation of equipment to its other facilities and completion of this initiative.

The cost of this initiative is estimated to range from between $135 million and $145 million. This amount consists of personnel related costs between $28 million and $30 million; and equipment related and other costs are estimated to be between $107 million and $115 million, including asset write downs of between $76 million and $79 million. The above estimates of personnel related costs for this initiative include pension curtailment and settlement costs.

Since the inception of this initiative in December 2008, the Company has recorded $122.7 million of costs related to this initiative. This amount includes employee related costs of $20.6 million and equipment related and other costs of $102.1 million, including impairment losses of $76.1 million to write the Albany land, building and equipment to fair value.

In the North American Tire Operations segment for 2009, the Company recorded $46.7 million of net restructuring expense related to the Albany closure, with $28.4 million used for equipment relocation and other costs, $20.2 million for employee related costs and $.9 million to write the Albany land, building and equipment down to fair value. Included in employee related costs are severance and other employee related costs of $15.4 million, and $4.8 million of settlement losses partially offset by curtailment gains related to pension benefits. The Company received $2.8 million in government grant receipts throughout 2009, partially offsetting gross restructuring expense.

At December 31, 2008, the accrued severance balance was $0.4 million. During 2009, the Company recorded severance costs of $12.9 million and made $12.5 million of severance payments resulting in an accrued severance balance at December 31, 2009 of $0.8 million. The severance charges recorded represent the Company’s best estimate of future amounts to be paid and approximate fair value.

During 2009, the Company also recorded restructuring expenses associated with the closure of three North American distribution centers. The closure of these distribution centers impacted approximately 73 people and had a total cost of $1.6 million. Personnel related costs totaled $1.0 million and equipment related costs totaled $.6 million. All of the closures had been completed by the end of 2009 and severance payments totaled $0.8 million, leaving an accrual balance of $.2 million at December 31, 2009. The severance charges recorded represent the Company’s best estimate of future amounts to be paid and approximate fair value.

In the International Tire Operations segment, Cooper Europe initiated a restructuring program to reduce headcount to align with production volume requirements during the second quarter of 2009. This initiative resulted in the elimination of 45 positions and was completed early in the third quarter of 2009. The Company recorded $.4 million of severance cost related to this initiative and all severance amounts have been paid.

During 2008, the Company incurred restructuring expenses related to the closure of its Albany, Georgia manufacturing facility and the closure of a distribution center in Dayton, New Jersey.

In connection with the Albany initiative, the Company recorded $0.4 million of personnel related costs all of which was accrued at December 31, 2008. The Company also recorded an impairment loss of $75.2 million to write down the Albany land, building and equipment to fair value. The fair value of the land and buildings was determined using a sales comparison approach using recent market data and comparing values to the Albany, Georgia location. The fair value of the machinery and equipment which will not be transferred to other Company locations was determined using the market value approach. The Company also recorded $0.4 million in other restructuring costs related to the Albany facility.

In December 2008, the Company also announced the planned closure of its Dayton, New Jersey distribution center. The cost of this initiative was $0.4 million related to asset write-downs taken in the fourth quarter of 2008. This initiative was completed during the first quarter 2009 and impacted nine people.

During 2007, the North American Tire Operations and the International Tire Operations segments recorded $3.3 million and $0.2 million, respectively, of restructuring expense associated with initiatives announced and started during 2006.

North American Tire Operations Segment

						Change								Change
(Dollar amounts in millions)		2007				%				2008				%				2009
Sales		$	2,209.8				-3.1	%		$	2,142.1				-6.3	%		$	2,006.2
Operating profit (loss)		$	119.4				n/m			$	(174.1	)			n/m			$	111.0
Operating profit margin			5.4	%			n/m				-8.1	%			n/m				5.5	%
United States unit shipments changes:
Passenger tires
Segment							-16.1	%							-4.2	%
RMA members							-8.1	%							-3.4	%
Total Industry							-4.6	%							-2.2	%
Light truck tires
Segment							-18.6	%							-13.6	%
RMA members							-15.0	%							-5.2	%
Total Industry							-15.1	%							-6.5	%
Total light vehicle tires
Segment							-16.6	%							-6.0	%
RMA members							-9.1	%							-3.6	%
Total Industry							-6.1	%							-2.8	%
Total segment unit sales changes							-11.2	%							-5.2	%

Overview

The North American Tire Operations segment produces passenger car and light truck tires, primarily for sale in the United States replacement market. Major distribution channels and customers include independent tire dealers, wholesale distributors, regional and national retail tire chains, and large retail chains that sell tires as well as other automotive products. The segment does not sell its products directly to end users, except through three Company-owned retail stores, and does not manufacture tires for sale to the automobile original equipment manufacturers (“OEMs”). The segment also distributes in North America radial medium truck and motorcycle tires that are manufactured in the Company’s foreign subsidiaries.

2009 versus 2008

Sales of the North American Tire Operations segment decreased $136 million in 2009 from the sales levels achieved in 2008. The decrease in sales was a result of lower unit volume ($98.6 million) and reduced pricing and mix ($37.4 million). The volume decline occurred in all product categories, but primarily in broadline and light truck tires similar to the decrease experienced in the industry. The reduced pricing and mix declined as industry pricing mirrored lower raw material costs as compared to 2008. The pricing reductions all occurred in the first half of 2008 and were partially recovered by price increases during the third and fourth quarters of 2009 in reaction to additional tariffs imposed on imported tires from the PRC.

In the United States, the segment’s unit shipments of total light vehicle tires decreased 6.0 percent in 2009 from 2008. This decrease exceeded the 3.6 percent decrease in total light vehicle shipments experienced by all members of the Rubber Manufacturers Association (“RMA”) and also exceeded the 2.8 percent decrease in total light vehicle shipments for the total industry (which includes an estimate for non-RMA members) for 2009. The industry decrease in light vehicle tire units was primarily due to the overall economic conditions in North America during the first half of 2009 as impacts of a global recession have affected the demand for tires. During the second half of 2009, the industry began to stabilize and show improvement compared with 2008. Miles driven data improved .5% during 2009.

Operating profit for the segment increased $285 million in 2009 compared to 2008. The improvement was due to lower raw material costs ($307.4 million), improved manufacturing operations ($43.3 million) and reduced restructuring charges ($28.1 million) as the segment continues to reduce manufacturing overhead and scrap costs through the implementation of Six Sigma and LEAN initiatives. These improvements were partially offset by reduced pricing and mix ($45.7 million), higher incentive-related compensation expense ($26.8 million), lower unit volumes ($16.9 million) and the effects of production curtailments during the first half of 2009 required to align production with demand ($4.2 million). The significant decrease in raw material costs was a result of lower prices for raw materials throughout 2009. Raw material costs had reached record high levels during the latter part of 2008.

The segment’s United States based operations determine inventory cost flows using the last-in, first-out (“LIFO”) method. During 2009, inventory levels declined as a result of the segment’s inventory management as well as increases in global demand for replacement tires in the third and fourth quarters. This decline in inventory levels resulted in the segment recognizing a $15.6 million benefit in operating profit from inventory valued at historically lower costs.

During 2009, the North American Tire Operations segment recorded restructuring charges of $48.3 million related to the ongoing initiative to close its Albany, Georgia manufacturing facility, as well as the decisions to close three distribution centers in Dayton, New Jersey; Moraine, Ohio and Cedar Rapids, Iowa. During 2008, the North American Tire Operations segment recorded restructuring charges of $76.4 million related to the previously noted Albany manufacturing facility and the Dayton distribution center. See the discussion of these initiatives in the Restructuring section.

2008 versus 2007

Sales of the North American Tire Operations segment decreased slightly in 2008 from levels in 2007. The decrease in sales was a result of lower unit volume ($312.3 million) offset by improved pricing and mix ($244.6 million). The improved pricing was the result of price increases implemented during 2007 and 2008. The improved mix was primarily the result of increased sales volumes of the Cooper brand, which continues to gain market share, while unit sales to private brand distributors declined from the prior year. The volume decline in the segment was the result of lower unit sales in almost all product segments, but primarily in broadline and light truck tires similar to the decrease experienced in the industry.

In the United States, the segment’s unit shipments of total light vehicle tires decreased 16.6 percent in 2008 from 2007. This decrease exceeded the 9.1 percent decrease in total light vehicle shipments experienced by all members of the Rubber Manufacturers Association (“RMA”) and also exceeded the 6.1 percent decrease in total light vehicle shipments for the total industry (which includes an estimate for non-RMA members) for 2008. Partially offsetting this decrease in the United States were increased shipments by the segment to Mexico and Canada. The industry decrease in light vehicle tire units was primarily due to the macroeconomic conditions in North America. Higher fuel prices during the first half of the year and recession concerns during the latter half of the year reduced consumer replacement tire purchases. Volumes in the segment decreased more significantly than the industry due to a tougher comparable period as the segment benefited in 2007 from a competitor’s strike. Further impacting the segment’s volumes were strategic decisions made by the Company to eliminate one brand and to exit unprofitable lines of business. Sales to both private brand distributors and to wholesale channel customers decreased as competition increased in these price sensitive channels.

Segment operating profit in 2008 decreased $293.5 million from 2007. The decreased operating profit was due to higher raw material costs ($258.7 million), increased restructuring costs ($73.1 million), lower unit volumes ($68.6 million), higher products liability costs ($11.0 million) and LIFO inventory liquidation benefits experienced in 2007 that were not available in 2008 ($22.1 million). Production curtailments caused by raw material shortages and management actions to control inventories in response to the weak North American replacement tire market negatively impacted operating profit ($41.9 million). Partially offsetting these factors were improvements in pricing and mix ($164 million) and lower incentive-related compensation expense and other costs.

The United States based operations of the segment determines its inventory cost flows using the last-in, first-out (“LIFO”) method. During 2007, inventory levels declined as a result of the segment’s inventory management initiative. This 2007 decline resulted in the segment recognizing a $22.1 million benefit in operating profit from inventory liquidations due to the elimination of LIFO inventory layers at historically lower costs.

During 2008, the North American Tire Operations segment recorded restructuring charges of $76.4 million related to the decisions to close its Albany, Georgia manufacturing facility and its Dayton, New Jersey distribution center. During 2007, the North American Tire Operations segment recorded restructuring charges of $3.3 million, primarily related to the reconfiguration of the Texarkana, Arkansas manufacturing facility and the reduction of salaried support positions. See the discussion of these initiatives under the Restructuring section above.

International Tire Operations Segment

						Change								Change
(Dollar amounts in millions)		2007				%				2008				%				2009
Sales		$	881.3				10.6	%		$	975.0				1.9	%		$	993.8
Operating profit (loss)		$	28.9				n/m			$	(30.1	)			n/m			$	72.8
Operating profit margin			3.3	%			n/m				-3.1	%			n/m				7.3	%
Unit sales change							7.3	%							8.7	%

Overview

In the United Kingdom, the segment produces passenger car, light truck, racing and motorcycle tires and markets these products primarily to dealers in the replacement markets in the United Kingdom, continental Europe and Scandinavia. The segment does not sell its products directly to end users and does not manufacture tires for sale to OEMs in Europe, other than several small contracts with specialty vehicle manufacturers in the United Kingdom.

The segment has two joint venture manufacturing facilities in the PRC, Cooper Chengshan and Cooper Kenda. These facilities produce passenger car, light and medium truck tires and off-the-road tires. These products are manufactured for export to Europe, North America and other markets as well as marketed to dealers in the replacement tire market within the PRC. Only a small percentage of the tires manufactured in the PRC are sold to OEMs.

The segment’s Cooper Kenda joint venture manufactures tires to be exported to markets outside of the PRC. Under the current agreement all of the tires produced by this joint venture will be exported and sold through Cooper Tire & Rubber Company and its affiliates until May 2012.

2009 versus 2008

Sales of the International Tire Operations segment increased $18.8 million in 2009 from the sales levels achieved in 2008. The increase in sales was primarily due to higher unit volumes ($86.7 million) partially offset by decreased pricing and mix ($51.3 million) and the foreign currency impact of a stronger United States dollar in relation to the British pound ($16.6 million). The increase in unit sales was primarily in the Asian operations of this segment. This increase was the result of unusually weak demand at the end of 2008 followed by relatively strong demand in 2009 as economic stimulus programs in the PRC were implemented. European volumes decreased for the year as a result of the carryover effect from the global economic crisis.

Operating profit for the segment in 2009 was $72.8 million, $102.8 million higher than in 2008. Excluding the $31.3 million write-off of goodwill in 2008, the increase in operating profit was due to lower raw material costs ($103.7 million), favorable foreign currency impact ($18.0 million) and improved manufacturing operations ($10.6 million). These impacts were partially offset by unfavorable pricing and mix ($62.6 million) and the effects of production curtailments in the European operations required to align production with demand ($2.4 million).

2008 versus 2007

Sales of the International Tire Operations segment increased $93.7 million in 2008 from the sales levels in 2007. The foreign currency impact increased sales $26.7 million in 2008. The remainder of the increase in sales was due to higher unit volumes ($35.5 million) and improved pricing and mix ($31.5 million). The increase in unit sales was the result of increased transfers to the Company’s North American segment. During the first three quarters of 2008 the segment experienced strong sales in its operations in the PRC. These increases declined during the fourth quarter as a result of the global economic slow down and its effects on both the PRC market and the segment’s exports. European volumes decreased slightly for the year. Throughout 2008 the segment increased prices to offset raw material cost increases. These contributed to a positive price impact, while a higher relative percentage of passenger tires versus radial medium truck tires resulted in an offsetting negative mix impact.

Operating profit for the segment in 2008 was $59.0 million lower than in 2007. The impacts of improved pricing and mix ($76 million) and volume ($2 million) were offset by higher raw material costs ($82 million), including a lower of cost or market inventory adjustment to reflect current prices in PRC ($10 million), the write-off of goodwill ($31 million) and higher advertising, utility and Cooper Kenda ramp up costs. The segments operations reacted to the declining global demand for tires by curtailing operations in its manufacturing facilities to align inventory. During 2007, the segment recorded a gain on the sale of land in Europe ($2.2 million).

Discontinued Operations

On October 5, 2007, the Company sold its Oliver Rubber Company subsidiary which manufactured tread rubber and retreading equipment. During 2007, this subsidiary recorded net sales of $62.3 million and generated an operating profit of $5.2 million.

As discussed in Footnote 7 — Income Taxes in the Notes to Consolidated Financial Statements, during 2009, the Company recorded an income tax and interest obligation related to the Advance Pricing Agreement of $31.1 million. This was recorded as a current tax liability for discontinued operations. The Company is pursuing all options to recover approximately $70 million in tax refunds to which it is entitled under the 2004 Sale agreement for the disposition of the Cooper-Standard Automotive group. During the third quarter of 2009, Cooper-Standard Holdings, Inc., the company that acquired Cooper-Standard Automotive, and its United States and Canadian affiliates filed for bankruptcy protection and the Company has filed adversary proceedings in the Delaware Bankruptcy Court.

The following table provides details of the Company’s discontinued operations:

		2007				2008				2009
Income (loss) related to former automotive operations, net of tax		$	(1.8	)		$	0.3			$	(31.4	)
Income (loss) from Oliver Rubber subsidiary, net of tax			3.5				(0.2	)			(0.3	)
		$	1.7			$	0.1			$	(31.7	)

Gain on Sale of Oliver Rubber Company

On October 5, 2007, the Company sold its Oliver Rubber Company subsidiary to Michelin North America, Inc. Proceeds from the sale were $66.3 million. The sale resulted in a gain of $26.5 million, net of taxes of $1.9 million including the release of a tax valuation allowance.

Outlook for the Company

The Company expects the return to more normal levels of demand in the replacement tire industry that began in the second half of 2009 will continue into 2010. Demand and growth rates will vary by region as developing markets, including PRC, present more robust opportunities for improvement. Mature tire markets are expected to return to growth approximating normal historical growth rates of two to three percent. While the Company believes pent up demand for tires exists, it does not believe a surge in demand for tires will occur until consumer confidence recovers more fully.

The heightened demand, in combination with relatively low levels of inventory, means the Company expects to operate its manufacturing facilities at very high utilization rates in 2010. This is partially the result of successful efforts to optimize production capacity in recent years. The Company also expects to invest in increased inventory levels during the year, both as a function of the normal pattern of seasonal demand and to support service expectations of customers.

As success continues to build through improved competitiveness there will be additional focus shifted to the imperative of profitable growth. This is designed to leverage the Company’s position and prepare for future growth opportunities. These actions will include the launch of new products to meet market demands, growth in sales channels where the Company is underrepresented and progress in emerging markets. The Company expects this will position it for growth at or above industry rates.

Raw material prices have proven very difficult to accurately predict as commodity markets remain volatile. The Company expects prices for commodities to be higher in 2010 than in 2009. The Company expects its effective tax rate for 2010 will most likely be between 5 percent and 15 percent.

In 2010, the Company will continue to focus on building a strong foundation to take advantage of future market opportunities. This will require the Company to continue investing in opportunities that will make it more cost competitive including automation, LEAN-Six Sigma and manufacturing located in lower cost countries. Additionally, in 2010 the Company will continue to prepare for the implementation of a global ERP system that will enhance organizational capabilities.

The Company remains committed to the Strategic Plan initially communicated in February, 2008. The plan calls for the Company to improve its cost structure, pursue profitable top line growth and improve organizational capabilities. Successful implementation of the three imperatives detailed in the Strategic Plan and improvement in market or industry conditions can drive improved operating results, which may also be subjected to uncontrollable factors including: consumer confidence, gasoline prices, raw material cost volatility, intense competition, government intervention and currency fluctuations. The Company’s focus remains on prudent management of critical resources to drive shareholder value. The Company’s outlook remains cautiously optimistic. The successes it achieves combined with improved global industry conditions can result in an even stronger Company with a more consistent level of profitability.

Liquidity and Capital Resources

Generation and uses of cash — Net cash provided by the operating activities of continuing operations was $478.3 million in 2009, an improvement of $643.3 million from 2008. The improved operating results of continuing operations and the decrease in inventories in 2009 compared to an increase in inventories during 2008 were the primary reasons for this improvement. In 2009, the Company paid the tax and interest liability recorded as discussed in Discontinued Operations.

Net cash used in investing activities during 2009 reflects capital expenditures of $79.3 million, a decrease of $49.4 million from 2008. During the third quarter of 2008, the Company received $107.0 million as a result of exercising its put option on its investment in Kumho Tire Co., Inc. and sold the available-for-sale securities initially purchased in 2007. During 2008, the Company acquired an approximately 38 percent ownership share of a manufacturing operation in Mexico with an investment of $29.2 million and increased its investment in 2009 by $0.7 million. The manufacturing facility is located in Guadalajara, Mexico and is the second largest tire plant in Mexico. The Company made the final payment related to the purchase of Cooper Chengshan in 2008. The Company, in 2007, realized proceeds of $66.3 million from the sale of Oliver Rubber Company. In 2007, “Proceeds from the sale of assets” related primarily to the sale of the Company’s 25 percent interest in the steel cord facility acquired with the Chengshan acquisition, the sale of a corporate aircraft and the sale of a stock investment. The Company’s capital expenditure commitments at December 31, 2009 are $16.1 million and are included in the “Unconditional purchase” line of the Contractual Obligations table which appears later in this section. These commitments will be satisfied with existing cash and cash flows from operations in early 2010.

In December 2009, the Company repaid $96.9 million of its Senior Notes. The Company repurchased $80.9 million and $14.3 million of these notes during 2007 and 2008, respectively and has remaining authorization to repurchase $104 million of debt. During 2007, the Company repurchased 2,991,900 shares of its common stock for $45.9 million and during 2008 the Company repurchased 803,300 shares of its common stock for $13.9 million. At December 31, 2009, the Company has remaining authorization of $40 million for share repurchases. The Company has temporarily suspended it debt and share repurchase programs. During 2009, the Company repaid $63.1 million of debt borrowed in the PRC. Cooper Kenda received capital contributions in 2007 and 2008 from its non-controlling owner for construction of the tire manufacturing facility in the PRC.

Dividends paid on the Company’s common shares in 2009 were $24.9 million, compared to $24.7 million in 2008. The Company has maintained a quarterly dividend of 10.5 cents per share in each quarter during the three years ending December 31, 2009. During 2009, stock options were exercised to acquire 26,230 shares of common stock and the Company recorded $1.9 million of excess tax benefits on equity instruments. During 2008 stock options were exercised to acquire 19,192 shares of common stock compared to 2007 when stock options were exercised to acquire 1,236,660 shares of common stock.

Available credit facilities — On August 30, 2006, the Company established an accounts receivable securitization facility of up to $175 million. Pursuant to the terms of the facility, the Company is permitted to sell certain of its domestic trade receivables on a continuous basis to its wholly-owned, bankruptcy-remote subsidiary, Cooper Receivables LLC (“CRLLC”). In turn, CRLLC may sell from time to time an undivided ownership interest in the purchased trade receivables, without recourse, to a PNC Bank administered, asset-backed commercial paper conduit. The facility was initially scheduled to expire in August 2009. On September 14, 2007, the Company amended the accounts receivable facility to exclude the sale of certain receivables, reduce the size of the facility to $125 million and to extend the maturity to September 2010. No ownership interests in the purchased trade receivables had been sold to the bank conduit as of December 31, 2009. The Company had issued standby letters of credit under this facility totaling $29.5 million and $36.0 million at December 31, 2008 and 2009, respectively.

On November 9, 2007, the Company and its subsidiary, Max-Trac Tire Co., Inc., entered into a Loan and Security Agreement (New Credit Agreement) with a consortium of six banks. This New Credit Agreement provides a $200 million credit facility to the Company and Max-Trac Tire Co., Inc. The New Credit Agreement is a revolving credit facility maturing on November 9, 2012 and is secured by the Company’s United States inventory, certain North American accounts receivable that have not been previously pledged and general intangibles related to the foregoing. The New Credit Agreement and the accounts receivable securitization facility have no significant financial covenants until available credit is less than specified amounts. There were no borrowings under the New Credit Agreement at December 31, 2008 or December 31, 2009.

The Company established a $1.2 billion universal shelf registration in 1999 in connection with an acquisition. Fixed rate debt of $800 million was issued pursuant to the shelf registration in December 1999 to fund the acquisition. The remaining $400 million available under the shelf registration continues to be available at December 31, 2009. Securities that may be issued under this shelf registration include debt securities, preferred stock, fractional interests in preferred stock represented by depositary shares, common stock and warrants to purchase debt securities, common stock or preferred stock.

Available cash and contractual commitments - At December 31, 2009, the Company had cash and cash equivalents totaling $427.0 million. The Company’s additional borrowing capacity based on eligible collateral through use of the above credit facilities with its bank group and other bank lines at December 31, 2009 was $295.6 million. The facilities are sized to meet seasonal working capital demands which are generally highest in the second and third quarters and lowest at year-end.

The Company believes that available cash and credit facilities will be adequate to fund its projected capital expenditures, including its portion of capital expenditures in partially-owned subsidiaries and meet dividend goals. The long-term debt due within one year and the entire amount of short-term notes payable outstanding at December 31, 2009 is primarily debt of consolidated subsidiaries. The Company expects its subsidiaries to refinance or pay these amounts during 2010.

In connection with its acquisition of Cooper Chengshan, beginning January 1, 2009 and continuing through December 31, 2011, the minority interest partner has the right to sell and, if exercised, the Company has the obligation to purchase, the remaining 49 percent minority interest share at a minimum price of $62.7 million. The Company has received notification from its noncontrolling shareholder of its intention to exercise a portion of its put option. After receiving governmental approvals, the Company will purchase the 14 percent share for $17.9 million. This put option is not included in the following table.

The Company’s cash requirements relating to contractual obligations at December 31, 2009 are summarized in the following table:

(Dollar amounts in thousands)

		Payment Due by Period
						Less than												After
Contractual Obligations		Total				1 year				1-3 years				3-5 years				5 years
Long-term debt		$	335,405			$	14,915			$	30,032			$	—			$	290,458
Capital lease obligations and other			11,081				600				1,200				1,200				8,081
Interest on debt and capital lease obligations			297,954				24,464				47,143				46,257				180,090
Operating leases			86,136				15,522				29,072				12,222				29,320
Notes payable (b)			156,719				156,719				—				—				—
Unconditional purchase (a)			83,578				83,578				—				—				—
Postretirement benefits other than pensions (c)			261,926				17,021				34,757				35,178				174,970
Other long-term liabilities and noncontrolling
shareholder exercised put option (d) (e)			439,550				18,037				52,451				46,523				322,539
Total contractual cash obligations		$	1,672,349			$	330,856			$	194,655			$	141,380			$	1,005,458

Credit agency ratings — Standard & Poor’s has rated the Company’s long-term corporate credit and senior unsecured debt at B with a positive outlook. Moody’s Investors Service has assigned a B2 corporate family rating and a B3 rating to senior unsecured debt.

New Accounting Standards

For a discussion of recent accounting pronouncements and their impact on the Company, see the “Significant Accounting Policies — Accounting pronouncements” note to the consolidated financial statements.

Critical Accounting Policies

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” discusses the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. When more than one accounting principle, or the method of its application, is generally accepted, the Company selects the principle or method that is appropriate in its specific circumstances. The Company’s accounting policies are more fully described in the “Significant Accounting Policies” note to the consolidated financial statements. Application of these accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates and judgments on historical experience and on other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The Company believes that of its significant accounting policies, the following may involve a higher degree of judgment or estimation than other accounting policies.

Products liability — The Company is a defendant in various products liability claims brought in numerous jurisdictions in which individuals seek damages resulting from automobile accidents allegedly caused by defective tires manufactured by the Company. Each of the products liability claims faced by the Company generally involve different types of tires, models and lines, different circumstances surrounding the accident such as different applications, vehicles, speeds, road conditions, weather conditions, driver error, tire repair and maintenance practices, service life conditions, as well as different jurisdictions and different injuries. In addition, in many of the Company’s products liability lawsuits the plaintiff alleges that his or her harm was caused by one or more co-defendants who acted independently of the Company. Accordingly, both the claims asserted and the resolutions of those claims have an enormous amount of variability. The aggregate amount of damages asserted at any point in time is not determinable since often times when claims are filed, the plaintiffs do not specify the amount of damages. Even when there is an amount alleged, at times the amount is wildly inflated and has no rational basis.

The fact that the Company is a defendant in products liability lawsuits is not surprising given the current litigation climate which is largely confined to the United States. However, the fact that the Company is subject to claims does not indicate that there is a quality issue with the Company’s tires. The Company sells approximately 35 to 40 million passenger, light truck, SUV, high performance, ultra high performance and radial medium truck tires per year in North America. The Company estimates that approximately 300 million Cooper-produced tires — made up of thousands of different specifications — are still on the road in North America. While tire disablements do occur, it is the Company’s and the tire industry’s experience that the vast majority of tire failures relate to service-related conditions which are entirely out of the Company’s control — such as failure to maintain proper tire pressure, improper maintenance, road hazard and excessive speed.

The Company’s exposure for each claim occurring prior to April 1, 2003 is limited by the coverage provided by its excess liability insurance program. The program for that period includes a relatively low per claim retention and a policy year aggregate retention limit on claims arising from occurrences which took place during a particular policy year. Effective April 1, 2003, the Company established a new excess liability insurance program. The new program covers the Company’s products liability claims occurring on or after April 1, 2003 and is occurrence-based insurance coverage which includes an increased per claim retention limit, increased policy limits and the establishment of a captive insurance company.

The Company accrues costs for products liability at the time a loss is probable and the amount of loss can be estimated. The Company believes the probability of loss can be established and the amount of loss can be estimated only after certain minimum information is available, including verification that Company-produced products were involved in the incident giving rise to the claim, the condition of the product purported to be involved in the claim, the nature of the incident giving rise to the claim and the extent of the purported injury or damages. In cases where such information is known, each products liability claim is evaluated based on its specific facts and circumstances. A judgment is then made to determine the requirement for establishment or revision of an accrual for any potential liability. The liability often cannot be determined with precision until the claim is resolved.

Pursuant to applicable accounting rules, the Company accrues the minimum liability for each known claim when the estimated outcome is a range of possible loss and no one amount within that range is more likely than another. The Company uses a range of settlements because an average settlement cost would not be meaningful since the products liability claims faced by the Company are unique and widely variable. The cases involve different types of tires, models and lines, different circumstances surrounding the accident such as different applications, vehicles, speeds, road conditions, weather conditions, driver error, tire repair and maintenance practices, service life conditions, as well as different jurisdictions and different injuries. In addition, in many of the Company’s products liability lawsuits the plaintiff alleges that his or her harm was caused by one or more co-defendants who acted independently of the Company.

Accordingly, the claims asserted and the resolutions of those claims have an enormous amount of variability. The costs have ranged from zero dollars to $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 United States, the Company does not believe a meaningful aggregate range of potential loss for asserted and unasserted claims can be determined. The Company’s experience has demonstrated that its estimates have been reasonably accurate and, on average, cases are settled at amounts close to the reserves established. However, it is possible an individual claim from time to time may result in an aberration from the norm and could have a material impact.

The Company determines its reserves using the number of incidents expected during a year. During 2008, the Company increased its products liability reserve by $55.9 million. The addition of another year of self-insured incidents accounted for $35.3 million of this increase. The Company revised its estimates of future settlements for unasserted and premature claims. These revisions increased the reserve by $8.0 million. Finally, changes in the amount of reserves for cases where sufficient information is known to estimate a liability increased by $12.6 million.

During 2009, the Company increased its products liability reserve by $55.5 million. The addition of another year of self-insured incidents accounted for $38.4 million of this increase. The Company revised its estimates of future settlements for unasserted and premature claims. In addition, the Company also revised its estimate of the number of additional incidents expected during each year for years subsequent to 2008. These revisions increased the reserve by $3.4 million. Finally, changes in the amount of reserves for cases where sufficient information is known to estimate a liability increased by $13.7 million.

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.

During 2008, the Company paid $39.6 million and during 2009, the Company paid $27.7 million to resolve cases and claims. The Company’s products liability reserve balance at December 31, 2008 totaled $123.6 million (current portion of $28.7 million). At December 31, 2009, the products liability reserve balance totaled $151.4 million (current portion of $30.8 million).

The products liability expense reported by the Company includes amortization of insurance premium costs, adjustments to settlement reserves and legal costs incurred in defending claims against the Company offset by recoveries of legal fees. Legal costs are expensed as incurred and products liability insurance premiums are amortized over coverage periods. The Company is entitled to reimbursement, under certain insurance contracts in place for periods ending prior to April 1, 2003, of legal fees expensed in prior periods based on events occurring in those periods. The Company records the reimbursements under such policies in the period the conditions for reimbursement are met.

Products liability costs totaled $70.3 million, $81.3 million and $81.5 million in 2007, 2008 and 2009, respectively, and include recoveries of legal fees of $9.8 million, $5.7 million and $2.5 million in 2007, 2008 and 2009, respectively. Policies applicable to claims occurring on April 1, 2003, and thereafter, do not provide for recovery of legal fees.

Income Taxes — The Company is required to make certain estimates and judgments to determine income tax expense for financial statement purposes. These estimates and judgments are made in the calculation of tax credits, tax benefits and deductions (such as the U.S. tax incentive for domestic manufacturing activities) and in the calculation of certain tax assets and liabilities which arise from differences in the timing of the recognition of revenue and expense for tax and financial statement purposes. Changes to these estimates will result in an increase or decrease to tax provisions in subsequent periods.

The Company must assess the likelihood that it will be able to recover its deferred tax assets. If recovery is not likely, the provision for income tax expense must be increased by recording a valuation allowance against the deferred tax assets that are deemed to be not recoverable. The Company has maintained a full valuation allowance against its net U.S. deferred tax asset position at December 31, 2009, as it cannot assure the utilization of these assets before they expire. In the event there is a change in circumstances in the future which would affect the utilization of these deferred tax assets, the tax provision in that accounting period would be adjusted by the amount of the assets then deemed to be realizable.

In addition, the calculation of the Company’s tax liabilities involves a degree of uncertainty in the application of complex tax regulations. The Company recognizes liabilities for anticipated tax audit issues in the U. S. and other jurisdictions based on its estimates of whether, and the extent to which, additional tax payments are more likely than not. If, and at the time, the Company determines payment of such amounts are less likely than not, the liability will be reversed and a tax benefit recognized to reduce the provision for income taxes. The Company will record an increase to its provision for income tax expense in the period it determines it is more likely than not that recorded liabilities are less than the ultimate tax assessment.

The Company applies the rules under ASC 740-10 in its Accounting for Uncertainty in Income Taxes for uncertain tax positions using a “more likely than not” recognition threshold for tax positions. Pursuant to these rules, the Company will initially recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits of the tax position, that such a position will be sustained upon examination by the relevant tax authorities. If the tax benefit meets the “more likely than not” threshold, the measurement of the tax benefit will be based on the Company’s estimate of the ultimate tax benefit to be sustained if audited by the taxing authority. The Company’s liability for unrecognized tax benefits for permanent and temporary book/tax differences for continuing operations, exclusive of interest, totals approximately $7.5 million.

Impairment of long-lived assets — The Company’s long-lived assets include property, plant and equipment and other intangible assets. If an indicator of impairment exists for certain groups of property, plant and equipment or definite-lived intangible assets, the Company will compare the forecasted undiscounted cash flows attributable to the assets to their carrying values. If the carrying values exceed the undiscounted cash flows, the Company then determines the fair values of the assets. If the carrying values exceed the fair values of the assets, then an impairment charge is recognized for the difference.

The Company assesses the potential impairment of its indefinite-lived assets at least annually or when events or circumstances indicate impairment may have occurred. The carrying value of these assets is compared to their fair value. If the carrying values exceed the fair values, then a hypothetical purchase price allocation is computed and the impairment charge, if any, is then recorded.

As discussed in the footnotes to the financial statements, Note 4 — Goodwill and Intangible Assets, during 2006, the Company recorded goodwill of $31.3 million and recorded definite-lived intangible assets of $7.2 million associated with the Chengshan acquisition. At December 1, 2008, the Company assessed the goodwill in the International Tire Operations segment and determined that impairment existed. Following a review of the valuation of the segment’s identifiable assets, the Company wrote off the goodwill of the segment.

The Company cannot predict the occurrence of future impairment-triggering events. Such events may include, but are not limited to, significant industry or economic trends and strategic decisions made in response to changes in the economic and competitive conditions impacting the Company’s businesses.

Pension and postretirement benefits — The Company has recorded significant pension liabilities in the United States and the United Kingdom and other postretirement benefit liabilities in the United States that are developed from actuarial valuations. The determination of the Company’s pension liabilities requires key assumptions regarding discount rates used to determine the present value of future benefits payments, expected returns on plan assets and the rates of future compensation increases. The discount rate is also significant to the development of other postretirement benefit liabilities. The Company determines these assumptions in consultation with its actuaries.

The discount rate reflects the rate used to estimate the value of the Company’s pension and other postretirement liabilities for which they could be settled at the end of the year. When determining the discount rate, the Company discounted the expected pension disbursements over the next fifty years using Citigroup Pension Discount Liability Index yield curve rates. Based upon this analysis, the Company used a discount rate of 5.75 percent to measure its United States pension and postretirement benefit liabilities, which is lower than the 6.0 percent used at December 31, 2008. A similar analysis was completed in the United Kingdom and the Company decreased the discount rate used to measure its United Kingdom pension liabilities to 5.7 percent at December 31, 2009 from 6.5 percent at December 31, 2008.

The rate of future compensation increases is used to determine the future benefits to be paid for salaried and non-bargained employees, since the amount of a participant’s pension is partially attributable to the compensation earned during his or her career. The rate reflects the Company’s expectations over time for salary and wage inflation and the impacts of promotions and incentive compensation, which is based on profitability. The Company used 3.25 percent for the estimated future compensation increases in measuring its United States pension liabilities at December 31, 2009 and December 31, 2008. In the United Kingdom, the Company used 3.75 percent for the estimated future compensation increase at December 31, 2009 compared to a rate of 3.57 percent at December 31, 2008.

The assumed long-term rate of return on pension plan assets is applied to the market value of plan assets to derive a reduction to pension expense that approximates the expected average rate of asset investment return over ten or more years. A decrease in the expected long-term rate of return will increase pension expense, whereas an increase in the expected long-term rate will reduce pension expense. Decreases in the level of actual plan assets will serve to increase the amount of pension expense, whereas increases in the level of actual plan assets will serve to decrease the amount of pension expense. Any shortfall in the actual return on plan assets from the expected return will increase pension expense in future years due to the amortization of the shortfall, whereas any excess in the actual return on plan assets from the expected return will reduce pension expense in future periods due to the amortization of the excess.

The Company’s investment policy for United States plans’ assets is to maintain an allocation of 70 percent in equity securities and 30 percent in debt securities. The Company’s investment policy for United Kingdom plan assets is to maintain an allocation of 60 percent in equity securities and 40 percent in fixed income securities. Equity security investments are structured to achieve a balance between growth and value stocks. The Company determines the annual rate of return on pension assets by first analyzing the composition of its asset portfolio. Historical rates of return are applied to the portfolio. This computed rate of return is reviewed by the Company’s investment advisors and actuaries. Industry comparables and other outside guidance is also considered in the annual selection of the expected rates of return on pension assets.

The actual return on United States pension plans’ assets approximated 22.6 percent in 2009 compared to an asset loss of approximately 26.4 percent in 2008. The actual return on United Kingdom pension plan assets approximated 15.6 percent in 2009 compared to an asset loss of 18.5 percent in 2008. The Company’s estimate for the expected long-term return on its United States plan assets was 8.5 percent which was used to derive 2008 and 2009 pension expense. The expected long-term return on United Kingdom plan assets used to derive the 2008 and 2009 pension expense was 7.6 percent and 7.4 percent, respectively.

The Company has accumulated net deferred losses resulting from the shortfalls and excesses in actual returns on pension plan assets from expected returns and, in the measurement of pensions liabilities, decreases and increases in the discount rate and the rate of future compensation increases and differences between actuarial assumptions and actual experience totaling $448.3 million at December 31, 2009. These amounts are being amortized in accordance with the corridor amortization requirements of US GAAP over periods ranging from 10 years to 15 years. Amortization of these net deferred losses was $11.6 million and $34.3 million in 2008 and 2009, respectively.

The Company has implemented household caps on the amounts of retiree medical benefits it will provide to future retirees. The caps do not apply to individuals who retired prior to certain specified dates. Costs in excess of these caps will be paid by plan participants. The Company implemented increased cost sharing in 2004 in the retiree medical coverage provided to certain eligible current and future retirees. Since then cost sharing has expanded such that nearly all covered retirees pay a charge to be enrolled. See Item 1A. Risk Factors — “The Company’s expenditures for pension and postretirement obligations could be materially higher than it has predicted if its underlying assumptions prove to be incorrect.”

In accordance with US GAAP, the Company recognizes the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligation) of its pension and other postretirement benefit (“OPEB”) plans and the net unrecognized actuarial losses and unrecognized prior service costs in the consolidated balance sheets. The unrecognized actuarial losses and unrecognized prior service costs (components of cumulative other comprehensive loss in the stockholder equity section of the balance sheet) will be subsequently recognized as net periodic pension cost pursuant to the Company’s historical accounting policy for amortizing such amounts. Further, actuarial gains and losses that arise in subsequent periods and are not recognized as net periodic benefit costs in the same periods will be recognized as a component of other comprehensive income.

Off-Balance Sheet Arrangements

Certain operating leases related to property and equipment used in the operations of Cooper-Standard Automotive were guaranteed by the Company. These guarantees require the Company, in the event Cooper-Standard Automotive fails to honor its commitments, to satisfy the terms of the lease agreements. As part of the sale of the automotive operations, the Company is seeking releases of those guarantees but to date has been unable to secure releases from certain lessors. The most significant of those leases is for a U. S. manufacturing facility with a remaining term of seven years and total remaining payments of approximately $8.2 million. Other leases cover two facilities in the United Kingdom. These leases have remaining terms of four years and remaining payments of approximately $2.6 million. The Company does not believe it is presently probable that it will be called upon to make these payments. Accordingly, no accrual for these guarantees has been recorded. If information becomes known to the Company at a later date which indicates its performance under these guarantees is probable, accruals for the obligations will be required.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31
(Dollar amounts in thousands except per share amounts)

		2007				2008				2009
Net sales		$	2,932,575			$	2,881,811			$	2,778,990
Cost of products sold			2,617,161				2,805,638				2,359,963
Gross profit			315,414				76,173				419,027
Selling, general and administrative			177,507				185,064				206,990
Impairment of goodwill and indefinite-lived intangible asset			—				31,340				—
Restructuring			3,515				76,402				48,718
Settlement of retiree medical case			—				—				7,050
Operating profit (loss)			134,392				(216,633	)			156,269
Interest expense			48,492				50,525				47,211
Debt extinguishment costs			2,558				593				—
Interest income			(18,004	)			(12,887	)			(5,193	)
Dividend from unconsolidated subsidiary			(2,007	)			(1,943	)			—
Other — net			(12,677	)			4,854				(1,272	)
Income (loss) from continuing operations before income taxes			116,030				(257,775	)			115,523
Provision (benefit) for income taxes			15,835				(30,274	)			231
Income (loss) from continuing operations			100,195				(227,501	)			115,292
Income (loss) from discontinued operations, net of income taxes			1,660				64				(31,653	)
Gain on sale of discontinued operations, net of income taxes			26,475				—				—
Net income (loss)			128,330				(227,437	)			83,639
Net income (loss) attributable to noncontrolling shareholders’ interests			8,760				(8,057	)			31,872
Net income (loss) attributable to Cooper Tire & Rubber Company		$	119,570			$	(219,380	)		$	51,767
Basic earnings (loss) per share:
Income (loss) from continuing operations available to Cooper Tire & Rubber Company common stockholders		$	1.48			$	(3.88)	1		$	1.57	1
Income (loss) from discontinued operations			0.03				—				(0.53	)
Gain on sale of discontinued operations			0.43				—				—
Net income (loss) available to Cooper Tire & Rubber Company common stockholders		$	1.932			$	(3.88)	1		$	1.04	1
Diluted earnings (loss) per share:
Income (loss) from continuing operations available to Cooper Tire & Rubber Company common stockholders		$	1.46			$	(3.88)	1		$	1.54	1
Income (loss) from discontinued operations			0.03				—				(0.52	)
Gain on sale of discontinued operations			0.42				—				—
Net income (loss) available to Cooper Tire & Rubber Company common stockholders		$	1.91			$	(3.88)	1		$	1.02	1

See Notes to Consolidated Financial Statements, pages 30 to 62.

CONSOLIDATED BALANCE SHEETS
December 31
(Dollar amounts in thousands, except par value amounts)

		2008				2009
ASSETS
Current assets:
Cash and cash equivalents		$	247,672			$	426,981
Accounts receivable, less allowances of $10,680 in 2008 and $10,928 in 2009			318,109				367,023
Inventories at lower of cost or market:
Finished goods			247,187				188,323
Work in process			28,234				22,090
Raw materials and supplies			144,691				88,022
			420,112				298,435
Other current assets			58,290				39,392
Total current assets			1,044,183				1,131,831
Property, plant and equipment:
Land and land improvements			33,731				33,321
Buildings			319,025				320,021
Machinery and equipment			1,627,896				1,587,306
Molds, cores and rings			273,641				246,395
			2,254,293				2,187,043
Less accumulated depreciation and amortization			1,353,019				1,336,072
Net property, plant and equipment			901,274				850,971
Intangibles, net of accumulated amortization of $24,096 in 2008 and $23,165 in 2009			19,902				18,546
Restricted cash			2,432				2,219
Other assets			75,105				96,773
		$	2,042,896			$	2,100,340

See Notes to Consolidated Financial Statements, pages 30 to 62.

		2008				2009
LIABILITIES AND EQUITY
Current liabilities:
Notes payable		$	184,774			$	156,719
Accounts payable			248,637				300,448
Accrued liabilities			123,771				158,643
Income taxes			1,409				3,955
Liabilities of discontinued operations			1,182				1,061
Current portion of long-term debt			147,761				15,515
Total current liabilities			707,534				636,341
Long-term debt			325,749				330,971
Postretirement benefits other than pensions			236,025				244,905
Pension benefits			268,773				272,050
Other long-term liabilities			115,803				145,978
Long-term liabilities related to the sale of automotive operations			8,046				6,043
Redeemable noncontrolling shareholders’ interests			62,720	1			83,528	1
Equity:
Preferred stock, $1 par value; 5,000,000 shares authorized; none issued			—				—
Common stock, $1 par value; 300,000,000 shares authorized; 86,322,514 shares issued in 2008 and 87,850,292 issued in 2009			86,323				87,850
Capital in excess of par value			43,764				70,645
Retained earnings			1,096,405	1			1,133,133
Cumulative other comprehensive loss			(464,427)	1			(470,272)	1
			762,065	1			821,356	1
Less: common shares in treasury at cost (27,411,564 in 2008 and 27,327,646 in 2009)			(492,236	)			(490,548	)
Total parent stockholders’ equity			269,829	1			330,808	1
Noncontrolling shareholders’ interests in consolidated subsidiaries			48,417	1			49,716	1
Total equity			318,246	1			380,524	1
		$	2,042,896			$	2,100,340

1        Amounts have been restated, see Footnote 1A for additional information.

See Notes to Consolidated Financial Statements, pages 30 to 62.

CONSOLIDATED STATEMENTS OF EQUITY — RESTATED
(Dollar amounts in thousands except per share amounts)

						Total Equity
																														Noncontrolling
		Redeemable																Cumulative								Total				Shareholders’
		Noncontrolling				Common				Capital In								Other				Common				Parent				Interests in
		Shareholders’				Stock				Excess of				Retained				Comprehensive				Shares in				Stockholders’				Consolidated
		Interests				$1 Par Value				Par Value				Earnings				Income (Loss)				Treasury				Equity				Subsidiaries
Balance at January 1, 2007		$	44,956			$	86,323			$	38,144			$	1,256,971			$	(284,509	)		$	(458,995	)		$	637,934			$	28,310
Net income			8,358												119,570												119,570				402
Other comprehensive income:
Unrecognized postretirement benefits, net of $6,629 tax effect																			68,462								68,462
Currency translation adjustment			3,372																8,067								8,067				2,408
Change in the fair value of derivatives and unrealized gain on marketable securities, net of $1,835 tax effect																			(5,434	)							(5,434	)
Comprehensive income			11,730																								190,665				2,810
Transactions between Cooper Tire & Rubber Company and noncontrolling shareholders																															10,588
Purchase of 2,991,900 treasury shares																							(45,882	)			(45,882	)
Stock compensation plans, including tax benefit of $2,915											2,532				(13	)							25,319				27,838
Cash dividends — $.42 per share															(26,001	)											(26,001	)
Balance at December 31, 2007			56,686				86,323				40,676				1,350,527				(213,414	)			(479,558	)			784,554				41,708
Net (loss)			(7,584	)											(219,380	)											(219,380	)			(473	)
Other comprehensive income (loss):
Unrecognized postretirement benefits, net of $1,306 tax effect																			(234,455	)							(234,455	)
Currency translation adjustment			3,679																(23,961	)							(23,961	)			2,932
Change in the fair value of derivatives and unrealized gain on marketable securities, net of $103 tax effect																			7,403								7,403
Comprehensive income (loss)			(3,905	)																							(470,393	)			2,459
Transactions between Cooper Tire & Rubber Company and noncontrolling shareholders																															4,250
Accretion of redeemable noncontrolling shareholders’ interests			9,939												(9,939	)											(9,939	)
Purchase of 803,300 treasury shares																							(13,853	)			(13,853	)
Stock compensation plans, including tax benefit of $26											3,088				(30	)							1,175				4,233
Cash dividends — $.42 per share															(24,773	)											(24,773	)
Balance at December 31, 2008			62,720				86,323				43,764				1,096,405				(464,427	)			(492,236	)			269,829				48,417
Net income			30,539												51,767												51,767				1,333
Other comprehensive income (loss):
Unrecognized postretirement benefits, net of $17,337 tax effect																			(4,801	)							(4,801	)
Currency translation adjustment			208																3,774								3,774				(34	)
Change in the fair value of derivatives and unrealized gain on marketable securities, net of $2,397 tax effect																			(4,818	)							(4,818	)
Comprehensive income			30,747																								45,922				1,299
Accretion of redeemable noncontrolling shareholders’ interests			(9,939	)											9,939												9,939
Issuance of 1,527,778 shares of stock							1,527				20,473																22,000
Stock compensation plans, including tax benefit of $1,944											6,408				(52	)							1,688				8,044
Cash dividends — $.42 per share															(24,926	)											(24,926	)
Balance at December 31, 2009		$	83,528			$	87,850			$	70,645			$	1,133,133			$	(470,272	)		$	(490,548	)		$	330,808			$	49,716

See Notes to Consolidated Financial Statements, pages 30 to 62.

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31
(Dollar amounts in thousands)

		2007				2008				2009
Operating activities:
Net income/(loss)		$	128,330			$	(227,437	)		$	83,639
Adjustments to reconcile net income/(loss) to net cash provided by (used in) continuing operations:
Loss (income) from discontinued operations, net of income taxes			(1,660	)			(64	)			31,653
Gain on sale of discontinued operations, net of income taxes			(26,475	)			—				—
Depreciation			131,007				138,805				121,483
Amortization			5,925				3,954				2,028
Deferred income taxes			16,717				(3,327	)			(6,950	)
Stock based compensation			3,731				3,924				5,419
Net impact of inventory write-down and change in LIFO reserve			(7,585	)			92,283				(94,790	)
Amortization of unrecognized postretirement benefits			18,499				12,963				32,903
Loss (gain) on sale of assets			(3,477	)			4,199				874
Debt extinguishment costs			2,558				593				—
Restructuring asset write-down			197				75,557				900
Impairment of goodwill and indefinite-lived intangible asset			—				31,340				—
Changes in operating assets and liabilities of continuing operations:
Accounts receivable			42,748				20,149				(42,544	)
Inventories			48,311				(217,557	)			221,109
Other current assets			(2,654	)			(34,600	)			26,769
Accounts payable			30,026				(46,906	)			49,548
Accrued liabilities			19,446				(8,518	)			32,658
Other items			(44,893	)			(10,350	)			13,647
Net cash provided by (used in) continuing operations			360,751				(164,992	)			478,346
Net cash provided by (used in) discontinued operations			12,043				(2,225	)			(33,777	)
Net cash provided by (used in) operating activities			372,794				(167,217	)			444,569
Investing activities:
Property, plant and equipment			(140,972	)			(128,773	)			(79,333	)
Proceeds from sale of investment in Kumho Tire Company			—				106,950				—
Proceeds from the sale of (investment in) available-for-sale debt securities			(49,765	)			49,765				—
Investment in unconsolidated subsidiary			—				(29,194	)			(659	)
Acquisition of businesses, net of cash acquired			(11,964	)			(5,956	)			—
Proceeds from the sale of business			66,256				—				—
Proceeds from the sale of assets			19,654				6,408				1,535
Net cash used in continuing operations			(116,791	)			(800	)			(78,457	)
Net cash used in discontinued operations			(1,859	)			—				—
Net cash used in investing activities			(118,650	)			(800	)			(78,457	)
Financing activities:
Payments on long-term debt of parent company			(80,867	)			(14,300	)			(96,913	)
Premium paid on debt repurchases			(2,224	)			(552	)			—
Net borrowings (repayments) on debt in partially owned subsidiaries			(10,667	)			108,818				(63,111	)
Contributions of joint venture partner			15,588				4,250				—
Purchase of treasury shares			(45,882	)			(13,853	)			—
Payment of dividends			(26,001	)			(24,773	)			(24,926	)
Issuance of common shares and excess tax benefits on options			24,107				309				2,301
Net cash provided by (used in) financing activities			(125,946	)			59,899				(182,649	)
Effects of exchange rate changes on cash of continuing operations			(3,906	)			9,843				(4,154	)
Changes in cash and cash equivalents			124,292				(98,275	)			179,309
Cash and cash equivalents at beginning of year			221,655				345,947				247,672
Cash and cash equivalents at end of year		$	345,947			$	247,672			$	426,981