SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

_______________________________________________



x☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2018~~2019



¨☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ~~AND~~ EXCHANGE ACT OF 1934

(Address of principal executive offices)

(Registrant’s telephone number, including area code)

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

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, and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No ¨☐

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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x☒ No ¨☐

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

¨☐ (Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ¨☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No x☒

Number of shares of common stock of registrant outstanding as of ~~August 3, 2018: 50,059,790~~

Jul 26, 2019: 50,176,046

~~Part I. FINANCIAL INFORMATION~~




COOPER TIRE & RUBBER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(Dollar amounts in thousands except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net sales	$	679,130		$	698,408		$	1,298,293		$	1,299,904
Cost of products sold	579,989			604,185			1,110,894			1,121,196
Gross profit	99,141			94,223			187,399			178,708
Selling, general and administrative expense	65,811			61,460			122,665			119,490
Restructuring expense	1,659			—			6,632			—
Operating profit	31,671			32,763			58,102			59,218
Interest expense	(7,810		)	(8,417		)	(16,123		)	(16,108		)
Interest income	1,999			1,988			5,379			4,303
Other pension and postretirement benefit expense	(9,288		)	(6,967		)	(18,650		)	(13,953		)
Other non-operating expense	(1,463		)	(1,391		)	(84		)	(3,050		)
Income before income taxes	15,109			17,976			28,624			30,410
Provision for income taxes	5,851			2,267			12,186			5,718
Net income	9,258			15,709			16,438			24,692
Net income attributable to noncontrolling shareholders' interests	437			701			637			1,400
Net income attributable to Cooper Tire & Rubber Company	$	8,821		$	15,008		$	15,801		$	23,292

Earnings per share:
Basic	$	0.18		$	0.30		$	0.32		$	0.46
Diluted	$	0.18		$	0.30		$	0.31		$	0.46

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.




COOPER TIRE & RUBBER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(Dollar amounts in thousands except per share amounts)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net income	$	9,258		$	15,709		$	16,438		$	24,692
Other comprehensive income (loss):
Cumulative currency translation adjustments	(7,334		)	(35,851		)	1,974			(10,982		)
Financial instruments:
Change in the fair value of derivatives	(1,220		)	470			(2,341		)	2,610
Income tax benefit (provision) on derivative instruments	350			(159		)	683			(747		)
Financial instruments, net of tax	(870		)	311			(1,658		)	1,863
Postretirement benefit plans:
Amortization of actuarial loss	9,215			9,320			18,448			18,666
Amortization of prior service credit	(102		)	(135		)	(204		)	(270		)
Income tax provision on postretirement benefit plans	(2,041		)	(2,206		)	(4,082		)	(4,416		)
Foreign currency translation effect	1,429			4,082			(31		)	1,180
Postretirement benefit plans, net of tax	8,501			11,061			14,131			15,160
Other comprehensive income (loss)	297			(24,479		)	14,447			6,041
Comprehensive income (loss)	9,555			(8,770		)	30,885			30,733
Less comprehensive income attributable to noncontrolling shareholders' interests	97			(4,382		)	1,277			261
Comprehensive income attributable to Cooper Tire & Rubber Company	$	9,458		$	(4,388	)	$	29,608		$	30,472

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

~~COOPER TIRE & RUBBER COMPANY~~

~~(Dollar amounts in thousands except per share amounts)~~

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

~~COOPER TIRE & RUBBER COMPANY~~

~~CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME~~

~~(Dollar amounts in thousands)~~

Three Months Ended
June 30, Six Months Ended
June 30,
2018 2017 2018 2017
Net income $ 15,709
$ 45,824
$ 24,692
$ 75,206
Other comprehensive income (loss):
Foreign currency translation adjustments (35,851 ) 14,184
(10,982 ) 29,572
Financial instruments:
Change in the fair value of derivatives 470
(2,678 ) 2,610
(3,077 )
Income tax (provision) benefit on derivative instruments (159 ) 958
(747 ) 1,111
Financial instruments, net of tax 311
(1,720 ) 1,863
(1,966 )
Postretirement benefit plans:
Amortization of actuarial loss 9,320
10,631
18,666
21,222
Amortization of prior service credit (135 ) (142 ) (270 ) (283 )
Income tax provision on postretirement benefit plans (2,206 ) (3,725 ) (4,416 ) (7,444 )
Foreign currency translation effect 4,082
(3,702 ) 1,180
(4,567 )
Postretirement benefit plans, net of tax 11,061
3,062
15,160
8,928
Other comprehensive (loss) income (24,479 ) 15,526
6,041
36,534
Comprehensive (loss) income (8,770 ) 61,350
30,733
111,740
Less: comprehensive (loss) income attributable to noncontrolling shareholders' interests (4,382 ) 1,822
261
3,513
Comprehensive (loss) income attributable to Cooper Tire & Rubber Company $ (4,388 ) $ 59,528
$ 30,472
$ 108,227




COOPER TIRE & RUBBER COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands except per share amounts)

(Continued)	June 30, 2019 (Unaudited)			December 31, 2018
LIABILITIES AND EQUITY
Current liabilities:
Notes payable	$	19,656		$	15,288
Accounts payable	267,851			286,671
Accrued liabilities	280,933			282,650
Income taxes payable	8,881			975
Current portion of long-term debt and finance leases	173,766			174,760
Total current liabilities	751,087			760,344
Long-term debt and finance leases	120,624			121,284
Noncurrent operating leases	67,214			—
Postretirement benefits other than pensions	234,782			236,454
Pension benefits	132,024			147,950
Other long-term liabilities	144,316			135,730
Equity:
Preferred stock, $1 par value; 5,000,000 shares authorized; none issued
Common stock, $1 par value; 300,000,000 shares authorized; 87,850,292 shares issued at 2019 and 2018	87,850			87,850
Capital in excess of par value	20,837			21,124
Retained earnings	2,454,811			2,449,714
Accumulated other comprehensive loss	(447,782		)	(461,589		)
Parent stockholders' equity before treasury stock	2,115,716			2,097,099
Less: Common shares in treasury at cost (37,680,647 at 2019 and 37,776,659 at 2018)	(923,367		)	(925,056		)
Total parent stockholders' equity	1,192,349			1,172,043
Noncontrolling shareholders' interests in consolidated subsidiaries	61,677			60,400
Total equity	1,254,026			1,232,443
Total liabilities and equity	$	2,704,073		$	2,634,205

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

~~COOPER TIRE & RUBBER COMPANY~~

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~

~~(Dollar amounts in thousands except per-share amounts)~~

June 30,
2018
(Unaudited) December 31,
2017
ASSETS
Current assets:
Cash and cash equivalents $ 180,493
$ 371,684
Notes receivable 24,022
13,753
Accounts receivable, less allowances of $6,972 at 2018 and $7,570 at 2017 582,524
528,250
Inventories:
Finished goods 423,506
365,672
Work in process 31,307
31,000
Raw materials and supplies 125,282
115,085
580,095
511,757
Other current assets 59,600
63,063
Total current assets 1,426,734
1,488,507
Property, plant and equipment:
Land and land improvements 53,292
52,683
Buildings 310,544
311,199
Machinery and equipment 1,925,381
1,890,210
Molds, cores and rings 233,359
220,528
2,522,576
2,474,620
Less: accumulated depreciation 1,558,418
1,507,873
Property, plant and equipment, net 964,158
966,747
Goodwill 53,960
54,613
Intangibles, net of accumulated amortization of $104,405 at 2018 and $93,353 at 2017 125,979
133,256
Deferred income tax assets 54,006
58,665
Other assets 7,942
6,137
Total assets $ 2,632,779
$ 2,707,925

LIABILITIES AND EQUITY
Current liabilities:
Notes payable $ 47,378
$ 39,450
Accounts payable 240,506
277,060
Accrued liabilities 262,233
280,666
Income taxes payable 2,295
6,954
Current portion of long-term debt 1,398
1,413
Total current liabilities 553,810
605,543
Long-term debt 295,017
295,987
Postretirement benefits other than pensions 255,527
256,888
Pension benefits 198,421
219,534
Other long-term liabilities 152,736
144,217
Equity:
Preferred stock, $1 par value; 5,000,000 shares authorized; none issued —
—
Common stock, $1 par value; 300,000,000 shares authorized; 87,850,292 shares issued 87,850
87,850
Capital in excess of par value 19,365
20,740
Retained earnings 2,406,943
2,394,372
Accumulated other comprehensive loss (471,298 ) (478,478 )
2,042,860
2,024,484
Less: common shares in treasury at cost (37,761,516 at 2018 and 36,908,553 at 2017) (924,513 ) (897,388 )
Total parent stockholders’ equity 1,118,347
1,127,096
Noncontrolling shareholders' interests in consolidated subsidiaries 58,921
58,660
Total equity 1,177,268
1,185,756
Total liabilities and equity $ 2,632,779
$ 2,707,925




COOPER TIRE & RUBBER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollar amounts in thousands except per share amounts)
��
	Six Months Ended June 30,
	2019			2018
Operating activities:
Net income	$	16,438		$	24,692
Adjustments to reconcile net income to net cash from operations:
Depreciation and amortization	74,347			73,587
Stock-based compensation	2,319			2,627
Change in LIFO inventory reserve	9,797			2,411
Amortization of unrecognized postretirement benefits	18,240			18,396
Changes in operating assets and liabilities:
Accounts and notes receivable	(68,786		)	(68,485		)
Inventories	(119,118		)	(74,104		)
Other current assets	(958		)	(12,572		)
Accounts payable	2,599			(12,622		)
Accrued liabilities	(30,482		)	(13,970		)
Other items	(3,560		)	(18,599		)
Net cash used in operating activities	(99,164		)	(78,639		)
Investing activities:
Additions to property, plant and equipment and capitalized software	(105,354		)	(97,759		)
Investment in joint venture	(49,001		)	—
Proceeds from the sale of assets	49			160
Net cash used in investing activities	(154,306		)	(97,599		)
Financing activities:
Net issuances of short-term debt	4,721			10,718
Repayments of long-term debt and finance lease obligations	(989		)	(1,013		)
Payment of financing fees	(2,207		)	(1,230		)
Repurchase of common stock	—			(29,355		)
Payments of employee taxes withheld from share-based awards	(1,158		)	(1,894		)
Payment of dividends to Cooper Tire & Rubber Company stockholders	(10,529		)	(10,623		)
Issuance of common shares related to stock-based compensation	177			—
Excess tax benefits on stock-based compensation	—			270
Net cash used in financing activities	(9,985		)	(33,127		)
Effects of exchange rate changes on cash	601			1,344
Net change in cash, cash equivalents and restricted cash	(262,854		)	(208,021		)
Cash, cash equivalents and restricted cash at beginning of period	378,246			392,306
Cash, cash equivalents and restricted cash at end of period	$	115,392		$	184,285

Unrestricted Cash and cash equivalents	$	111,681		$	180,493
Restricted cash included in Other current assets	2,211			1,702
Restricted cash included in Other assets	1,500			2,090
Total cash, cash equivalents and restricted cash	$	115,392		$	184,285

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

~~COOPER TIRE & RUBBER COMPANY~~

~~CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(UNAUDITED)~~

~~(Dollar amounts in thousands)~~

Six Months Ended
June 30,
2018 2017
Operating activities:
Net income $ 24,692
$ 75,206
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization 73,587
70,676
Stock-based compensation 2,627
2,575
Change in LIFO inventory reserve 2,411
(3,484 )
Amortization of unrecognized postretirement benefits 18,396
20,939
Changes in operating assets and liabilities:
Accounts and notes receivable (68,485 ) (61,691 )
Inventories (74,104 ) (94,490 )
Other current assets (12,572 ) (15,541 )
Accounts payable (12,622 ) (23,202 )
Accrued liabilities (13,970 ) (21,011 )
Other items (18,599 ) (33,223 )
Net cash used in operating activities (78,639 ) (83,246 )
Investing activities:
Additions to property, plant and equipment and capitalized software (97,759 ) (89,803 )
Proceeds from the sale of assets 160
43
Net cash used in investing activities (97,599 ) (89,760 )
Financing activities:
Net issuances of (payments on) short-term debt 10,718
(359 )
Repayments of long-term debt (1,013 ) (600 )
Payment of financing fees (1,230 ) —
Repurchase of common stock (29,355 ) (38,567 )
Payments of employee taxes withheld from shared-based awards (1,894 ) (6,429 )
Payment of dividends to Cooper Tire & Rubber Company stockholders (10,623 ) (11,081 )
Issuance of common shares related to stock-based compensation 270
4,122
Net cash used in financing activities (33,127 ) (52,914 )
Effects of exchange rate changes on cash 1,344
6,008
Net change in cash, cash equivalents and restricted cash (208,021 ) (219,912 )
Cash, cash equivalents and restricted cash at beginning of year 392,306
524,249
Cash, cash equivalents and restricted cash at end of period $ 184,285
$ 304,337



COOPER TIRE & RUBBER COMPANY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands except per share amounts)

~~See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.~~

~~COOPER TIRE & RUBBER COMPANY~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Dollar amounts in thousands except per-share amounts)~~


Note 1.	Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.

There is a year-round demand for passenger car and truck replacement tires, but passenger car replacement tire sales are generally strongest during the third and fourth quarters of the year. Winter tires are sold principally during the months of June through November. Operating results for the six month period ended June 30, ~~2018~~2019 are not necessarily indicative of the results that may be expected for the year ended December 31, ~~2018.~~2019.

The Company consolidates into its financial statements the accounts of the Company, all wholly-owned subsidiaries, and any partially-owned subsidiary that the Company has the ability to control. Control generally equates to ownership percentage, whereby investments that are more than 50 percent owned are consolidated, investments in affiliates of 50 percent or less but greater than 20 percent are accounted for using the equity method, and investments in affiliates of 20 percent or less are accounted for using the cost method. The Company does not consolidate any entity for which it has a variable interest based solely on power to direct the activities and significant participation in the entity’s expected results that would not otherwise be consolidated based on control through voting interests. Further, the Company’s joint ventures are businesses established and maintained in connection with the Company’s operating strategy. All intercompany transactions and balances have been eliminated.

On April 5, 2019, Cooper Tire & Rubber Company Vietnam Holding, LLC ("Cooper Vietnam"), a wholly owned subsidiary of the Company, and Sailun (Vietnam) Co., Ltd. ("Sailun Vietnam") established a joint venture in Vietnam which will produce and sell truck and bus radial ("TBR") tires. The Company’s investment in the joint venture represents a 35 percent ownership interest and is accounted for under the equity method. Total investment in the facility and equipment in the joint venture is expected to be in the range of $190,000 to $210,000, funded through capital contributions and debt, with Cooper being responsible for its pro rata share. As of June 30, 2019, the Company has invested $49,001 into the joint venture. Construction of the facility began in 2019, with tire production expected to commence in the first half of 2020.

The capacity created by the planned Vietnam joint venture will decrease expected production requirements for Cooper's China-based Qingdao Ge Rui Da Rubber Co., Ltd. ("GRT") joint venture. The Company included the expected impact of the new Vietnam joint venture on projected future cash flows in performing its annual goodwill impairment assessment on GRT in the fourth quarter of 2018. Based on the assessment performed, the goodwill balance was deemed to be fully impaired and resulted in a non-cash fourth quarter 2018 impairment charge of $33,827.

Earnings per common share – Net income per share is computed on the basis of the weighted average number of common shares outstanding each year. Diluted earnings per share includes the dilutive effect of stock options and other stock units. The following table sets forth the computation of basic and diluted earnings per share:



(Number of shares and dollar amounts in thousands except per share amounts)	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Numerator
Numerator for basic and diluted earnings per share - income from continuing operations available to common stockholders	$	8,821	$	15,008	$	15,801	$	23,292
Denominator
Denominator for basic earnings per share - weighted average shares outstanding	50,165		50,436		50,133		50,636
Effect of dilutive securities - stock options and other stock units	197		154		237		247
Denominator for diluted earnings per share - adjusted weighted average shares outstanding	50,362		50,590		50,370		50,883
Earnings per share:
Basic	$	0.18	$	0.30	$	0.32	$	0.46
Diluted	$	0.18	$	0.30	$	0.31	$	0.46

At June 30, 2019 and 2018, all options to purchase shares of the Company’s common stock were included in the computation of diluted earnings per share as the options’ exercise prices were less than the average market price of the common shares.

Warranties – Warranties are provided on the sale of certain of the Company’s products and an accrual for estimated future claims is recorded at the time revenue is recognized. Tire replacement under most of the warranties the Company offers is on a prorated basis. The Company provides for the estimated cost of product warranties based primarily on historical return rates, estimates of the eligible tire population and the value of tires to be replaced. The following table summarizes the activity in the Company’s product warranty liabilities, which are recorded in Accrued liabilities and Other long-term liabilities on the Company’s Condensed Consolidated Balance Sheets:



	Six Months Ended June 30,
	2019			2018
Reserve at beginning of year	$	12,431		$	12,093
Additions	5,412			7,398
Payments	(5,989		)	(6,963		)
Reserve at period end	$	11,854		$	12,528

Truck and Bus Tire Tariffs

– Antidumping and countervailing duty investigations into certain ~~truck and bus~~TBR tires imported from the ~~People's~~People’s Republic of China ("PRC") into the United States ("U.S.") were initiated on January 29, 2016. The preliminary determinations announced in both investigations were affirmative and resulted in the imposition of significant additional duties from each. ~~The Company incurred expense of $22,042 over the final seven months of the year ended December 31, 2016 related to these additional duties.~~ On February 22, 2017, the ~~United States ("~~U.S.") International Trade Commission ~~determined~~("ITC") made a final determination that the U.S. market had not suffered material injury because of imports of ~~truck and bus~~TBR tires from ~~China.~~the PRC. As a result of this decision, preliminary antidumping and countervailing duties from Chinese ~~truck and bus~~TBR tires imported subsequent to the preliminary determination were not ~~to be~~ collected and any amounts previously paid were refunded by U.S. Customs and Border Protection. ~~Further, prospective imports of truck and bus~~On April 14, 2017, the United Steelworkers Union filed a civil action challenging the ITC's decision not to impose duties on TBR tires from China imported into the ~~PRC are not subject~~U.S. and that case is still pending. On November 1, 2018, the Court of International Trade (“CIT”) remanded the case back to ~~these additional duties. In~~ the ~~first quarter~~ITC for reconsideration. On January 30, 2019, the ITC reversed its earlier decision and made an affirmative determination of ~~2017,~~material injury. On February 15, 2019, the determination was published in the Federal Register and countervailing duties of 42.16 percent were imposed on the Company's TBR tire imports into the U.S. from China. The ITC’s re-determination, along with comments from the parties regarding the re-determination, were filed with the CIT. The CIT will make a final determination. Since the publication of the determination in the Federal Register, the Company ~~reversed the previously expensed preliminary~~incurred duties of ~~$22,042 due to~~$7,888 and $17,936 for the ~~decision by the U.S. International Trade Commission. This amount was~~three and six month periods ended June 30, 2019. These amounts were recorded as a ~~reduction~~component of Cost of products sold in the Condensed Consolidated ~~Statement~~Statements of ~~Income~~Income.

Section 301 Tariffs - Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, passenger, light truck and truck and bus tires, raw materials and tire-manufacturing equipment from

the PRC imported into the U.S. became subject to additional 10 percent duties effective September 24, 2018. These tariffs increased to 25 percent effective May 10, 2019. The Company has incurred duties of $5,450 and $9,430 for the three and six month ~~period~~periods ended June 30, ~~2017.~~2019 related to these Section 301 tariffs. These amounts were recorded as a component of Cost of products sold in the Condensed Consolidated Statements of Income.

North American Distribution Center

– On January 22, 2017, a tornado hit the Company’s leased Albany, Georgia distribution center, causing damage to the Company's assets and disrupting certain operations. Insurance, less applicable deductibles, ~~covers~~covered the repair or replacement of the Company's assets that suffered loss or damage, and the Company ~~is working~~worked closely with its insurance carriers and claims adjusters to ascertain the full amount of insurance proceeds due to the Company as a result of the damages and the ~~losses~~loss the Company suffered. The Company's insurance policies also ~~provide~~provided coverage for interruption to its business, including lost profits, and reimbursement for other expenses and costs that ~~have been~~were incurred relating to the damages and losses suffered. In the second quarter of 2017, the Company recorded insurance recoveries of $5,500 for direct costs caused by the tornado, while incurring direct costs of $1,974 related to the disposal of damaged tires, freight to move product to other warehouses and professional fees to secure and maintain the site. For the ~~six months~~year ended ~~June 30,~~December 31, 2017, the Company incurred direct expenses of ~~$8,772 related to damages caused by the tornado, less proceeds of $5,500 recovered from insurance. For the full year 2017, the Company incurred direct expenses of $12,569,~~$12,583, less proceeds of $7,000 recovered from insurance. For the year ended December 31, 2018, the Company recorded insurance recoveries of $7,300, less direct costs of $1,569. In the second quarter of 2018, the Company recorded insurance recoveries of $2,987, while incurring direct costs of $325. For the six months ended June 30, 2018, the Company recorded insurance recoveries of $6,796, while incurring direct costs of $1,539. These amounts were recorded as a component of Cost of products sold in the Condensed Consolidated Statements of Income for the ~~three and six month periods ended June 30, 2018 and 2017, respectively, and~~respective periods. The Company's insurance claim related to the tornado was closed in the year ended December 31, ~~2017. At this time, the full amount of~~2018, with no further direct expenses or insurance recoveries ~~cannot be estimated, and accordingly, no additional amounts have been recorded as of June 30, 2018.~~anticipated.

Recent Accounting Pronouncements

Each change to U.S. GAAP is established by the Financial Accounting Standards Board (“FASB”) in the form of an accounting standards update (“ASU”) to the FASB’s Accounting Standards Codification (“ASC”).

The Company considers the applicability and impact of all ~~accounting standards updates. Accounting standards updates~~ASUs. ASUs not listed below were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s condensed consolidated financial statements.

Accounting Pronouncements – Recently ~~Adopted~~adopted

~~Revenue Recognition~~

~~In May 2014,~~SEC Disclosure Regulation Simplifications

During the ~~FASB issued ASU 2014-09, "Revenue from Contracts with Customers" (the “new revenue standard”), which supersedes previous revenue recognition guidance, including industry-specific guidance,~~fourth quarter of 2018, the U.S. Securities and ~~requires entities to recognize revenue when control~~Exchange Commission (“SEC”) published Final Rule Release No. 33-10532, "Disclosure Update and Simplification." This standard, effective for quarterly and annual reports submitted after November 5, 2018, streamlines disclosure requirements by removing certain redundant topics. For the Company, the most notable simplification implemented in 2019 was the expansion of the ~~promised goods or services is transferred~~shareholders' equity reconciliation to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods and services. The Company adopted the new revenue standard as of January 1, 2018 using the modified retrospective transition method. See Note 2 for additional details.

~~Pensions and Postretirement Benefits Other than Pensions~~

In March 2017, the FASB issued ASU 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” which requires changes to the income statement presentation of net periodic benefit cost. The service cost component of net periodic benefit cost will continue to be classifieddisplay quarter-to-quarter details beginning in the ~~same line item as other compensation costs arising from services rendered by the pertinent employees during the period. The other components~~first quarter of net periodic benefit cost are required to be presented in the income statement separately from the service cost component and outside of operating profit. In addition, the new standard will allow only the service cost component to be eligible for capitalization, when applicable. The Company adopted the new standard as of January 1, 2018 and revised prior periods in accordance with the standard. See Note 9 for additional details.2019.

~~Statement of Cash Flows~~

In November 2016, the FASB issued ASU 2016-18, "Restricted Cash," which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash. Therefore, amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown on the statement of cash flows. The new standard also requires companies to disclose the nature of the restriction on restricted cash. The Company adopted the new standard as of January 1, 2018 and revised prior periods in accordance with the standard. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets to the total of the same such amounts reported within the Condensed Consolidated Statements of Cash Flows:

June 30,
2018
(Unaudited) June 30,
2017
(Unaudited) December 31, 2017 December 31, 2016
Cash and cash equivalents $ 180,493
$ 302,386
$ 371,684
$ 504,423
Restricted cash included in Other current assets 1,702
614
19,200
18,499
Restricted cash included in Other assets 2,090
1,337
1,422
1,327
Total cash, cash equivalents and restricted cash $ 184,285
$ 304,337
$ 392,306
$ 524,249

Restricted cash is comprised primarily of funds within a voluntary employees' beneficiary trust restricted to the future payment of employee benefit obligations and amounts on deposit to collateralize certain credit arrangements in the PRC.

~~Accounting Pronouncements – To Be Adopted~~

Leases

In February 2016, the FASB issued ASU 2016-02, “Leases,” which requires balance sheet recognition of lease liabilities and right-of-use assets for most leases having terms of twelve months or longer. The Company ~~plans to adopt~~adopted the ~~new~~ standard on ~~its~~the required effective date of January 1, ~~2019.~~2019 using the transition option, “Comparatives Under 840 Option,” established by ASU 2018-11, Leases (Topic 842), Targeted Improvements (ASU 2018-11). The FASB issued multiple amendments to the standard which provided clarification, additional guidance, practical expedients and other improvements to ASU 2016-02. The ~~Company expects the most significant impact of the standard will be the~~new guidance requires recognition of ~~right of use~~lease assets and ~~lease~~ liabilities ~~as part~~for operating leases with terms of ~~its condensed consolidated balance sheets. The Company is~~more than 12 months, in addition to those currently ~~evaluating~~recorded, on the impact of the new standard, including optional practical expedients, and assessing its existing lease portfolio to determine the impact of adoption on its condensed consolidated financial statements and the related disclosures. The Company is also evaluating new controls and processes designed to meet the requirements of the topic.

~~Goodwill~~

~~In January 2017, the FASB issued ASU 2017-04, “Simplifying the Test~~Company's Condensed Consolidated Balance Sheets. See Note 9 for Goodwill Impairment," which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The standard requires goodwill impairment to be measured as the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of its goodwill. Application of the standard, which should be applied prospectively, is required for the annual and interim periods beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact the new standard will have on its condensed consolidated financial statements.additional details.

Derivatives and Hedging

In August 2017, the FASB issued ASU 2017-12, “Targeted Improvements to Accounting for Hedging Activities,” which expands and refines hedge accounting for both financial and non-financial risk components, aligns the recognition and presentation of the effects of hedging instruments and hedge items in the financial statements, and includes certain targeted improvements to ease the application of current guidance related to the assessment of hedge effectiveness. ~~Adoption~~The Company adopted this standard effective January 1, 2019. The adoption of this standard did not materially impact the Company's condensed consolidated financial statements.

Additionally, in October 2018, the FASB issued ASU 2018-16, "Derivatives and Hedging (Topic 815)." The Federal Reserve and Alternative Reference Rates Committee expressed the importance of including the Overnight Index Swap ("OIS") rate based on Secured Overnight Financing Rate ("SOFR") as a benchmark rate for hedge accounting purposes in facilitating broader use of the ~~new~~underlying SOFR rate in the marketplace to facilitate the market's move away from the London Interbank Offered Rate ("LIBOR"). This update, effective on January 1, 2019, provides the option to use the OIS rate based on SOFR as a benchmark for hedge accounting. The Company does not currently hold any SOFR-based instruments, but will continue to evaluate its use as the markets transition away from LIBOR.

Accounting Pronouncements – To be adopted

Fair Value Measurement

In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820)," which removes, modifies and adds various disclosure requirements around the topic in order to clarify and improve the cost-benefit nature of disclosures. For example, disclosures around transfers between fair value hierarchy levels will be removed and further detail around changes in unrealized gains and losses for the period and unobservable inputs determining level 3 fair value measurements will be added. This standard is ~~required~~effective for ~~the~~interim and annual ~~and interim~~reporting periods beginning after December 15, ~~2018. Early~~2019, and early adoption is permitted. The Company is currently evaluating the impact the new standard will have on its condensed consolidated financial statements.

~~Comprehensive Income~~

Defined Benefit Plans

In ~~February~~August 2018, the FASB issued ASU ~~2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,~~2018-14, "Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20)," which ~~provides for an election~~removes, modifies and adds various disclosure requirements around the topic in order to ~~reclassify stranded tax effects within accumulated other comprehensive income (loss) to retained earnings due to~~clarify and improve the ~~U.S. federal corporate income tax rate~~cost-benefit nature of disclosures. For example, disclosures around the effect of a one-percentage-point change in assumed health care costs will be removed and an explanation of the ~~Tax Cuts~~reasons for significant gains and ~~Jobs Act~~losses related to changes in the benefit obligation for the period will be added. This standard is effective for fiscal years ending after December 15, 2020, and early adoption is permitted. These amendments must be applied on a retrospective basis for all periods presented. The Company is currently evaluating the impact the new standard will have on its condensed consolidated financial statements.

Internal-Use Software

In August 2018, the FASB issued ASU 2018-15, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)," which aligns the requirements for capitalizing implementation costs incurred in a service contract hosting arrangement with those of ~~2017.~~developing or obtaining internal-use software. This standard is effective for interim and annual reporting periods beginning after December 15, ~~2018,~~2019, and early adoption is permitted. The Company is currently evaluating the impact the new standard will have on its condensed consolidated financial ~~statements~~statements.

Related Parties

In October 2018, the FASB issued ASU 2018-17 "Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for VIEs." When determining if fees paid to decision makers and ~~has not yet determined whether it~~service providers are variable interests, entities must now also consider indirect interests of those decision makers and service providers held through related parties under common control. This standard is effective January 1, 2020, with early adoption permitted. The Company is currently evaluating the impact the new standard will ~~make the election to reclassify~~have on its ~~stranded tax effects.~~condensed consolidated financial statements.


Note 2.	Restructuring

On January 17, 2019, Cooper Tire Europe, a wholly owned subsidiary of the Company, committed to the planned cessation of passenger car and light truck tire production ("light vehicle tire production") at its Melksham, U.K. facility, which is included in the International Segment. This initiative is expected to result in charges to 2019 pre-tax earnings of approximately $8 to $11 million, of which 5 to 10 percent are expected to be non-cash charges. An estimated 300 roles will be eliminated at the site. Cooper Tire Europe will obtain light vehicle tires to meet customer needs from other production sites within the Company’s global production network. Approximately 400 roles will remain in Melksham to support the functions that continue there, including motorsports and motorcycle tire production, the materials business, Cooper Tire Europe headquarters, sales and marketing, and the Europe Technical Center. Phasing out of light vehicle tire production is expected to be completed in the third quarter of 2019.

For the three and six months periods ended June 30, 2019, the Company recorded restructuring expense of $1,659 and $6,632, made up of employee severance, asset write-downs and other costs. At June 30, 2019, the Company's accrued restructuring balance is $4,609, related largely to employee severance costs.



	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Employee severance costs	$	1,556		$	5,719
Asset write-downs & other costs	103			913
Total restructuring expense	$	1,659		$	6,632

Beginning balance of accrued restructuring - severance	$	4,163		$	—
Additional severance accrual	1,556			5,719
Payment of severance costs	(1,235		)	(1,235		)

Beginning balance of accrued restructuring - other	125			—
Additional other accrual	103			303
Payment of other costs	(103		)	(178		)
Ending balance of total accrued restructuring	$	4,609		$	4,609

In addition to the costs classified as restructuring expense, the Company incurred additional costs of $314 in the second quarter of 2019 as a result of Cooper Tire Europe's decision to cease light vehicle tire production at the Melksham facility. These additional costs relate to professional fees associated with the Company's evaluation of its legal entity structure moving forward and are included within selling, general and administrative expense for the three and six months periods ended June 30, 2019. These costs, as well as estimates for similar types of costs in future periods, are included in the $8 to $11 million overall estimate of costs related to the Melksham decision.


Note 2.3.	Revenue from Contracts with Customers

Accounting policy

On January 1, 2018, the Company adopted the new U.S. GAAP revenue standard using the modified retrospective transition method applied to contracts which were not completed as of January 1, 2018. Results from reporting periods beginning after January 1, 2018 are presented under the new revenue standard while prior period amounts are not adjusted and continue to be reported under previous revenue recognition guidance. The new revenue standard requires ~~recognition of~~ revenue to ~~depict~~be recognized when control of the ~~transfer of~~

promised goods or services is transferred to customers inat an amount that reflects the consideration to which the ~~Company~~entity expects to be entitled to in exchange for those goods orand services.

In accordance with the new revenue standard, revenue is measured based on the consideration specified in a contract with a customer and excludes any sales incentives or rebates. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product ~~or service~~ to a customer. This occurs with shipment or delivery, depending on the underlying terms ofwith the ~~underlying contract.~~customer. The transaction price will include estimates of variable consideration to the extent it is probable that a significant reversal of revenue recognized will not occur. At the time of sale, the Company estimates provisions for different forms of variable consideration (discounts and rebates) based on historical experience, current conditions and contractual obligations, as applicable. Payment terms with customers vary by region and customer, but are generally 30-90 days. The Company does not have significant financing components or significant payment terms. Incidental items that are immaterial in the context of the contract are expensed as incurred.

Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue.

Shipping and handling costs associated with outbound freight after control of a product has transferred to a customer are accounted for as a fulfillment cost and not as a separate performance obligation. Therefore, such items are accrued upon recognition of revenue.

Nature of goods and services

The following is a description of principal activities, separated by reportable segments, from which the Company generates its revenue. See Note 14 - Business Segments for additional details on the Company's reportable segments.

The Company’s reportable segments have the following revenue characteristics:

Americas Tire Operations - The Americas Tire Operations segment manufactures and markets passenger car and light truck tires. The segment also markets and distributes wheels and racing, motorcycle and ~~truck and bus radial ("TBR")~~TBR tires.

International Tire Operations - The International Tire Operations segment manufactures and markets passenger car, light truck, motorcycle, racing and TBR tires and tire retread material for global markets.

~~See~~ ~~Note 16~~ ~~- Business Segments for additional details.~~

Disaggregation of revenue

In the following tables, revenue is disaggregated by major market channel for the three and six ~~month periods~~months ended June 30, ~~2018:~~2019 and 2018, respectively:


	Three Months Ended June 30, 2018									Three Months Ended June 30, 2019
	Americas		International		Eliminations			Total		Americas		International		Eliminations			Total
Light vehicle⁽¹⁾	$	527,284	$	122,872	$	(31,423	)	$	618,733	$	516,648	$	100,265	$	(21,621	)	$	595,292
Truck and bus radial	43,573		26,527		(22,420		)	47,680		49,772		23,892		(20,070		)	53,594
Other⁽²⁾	13,555		18,440		—			31,995		15,887		14,357		—			30,244
Net sales	$	584,412	$	167,839	$	(53,843	)	$	698,408	$	582,307	$	138,514	$	(41,691	)	$	679,130

										Six Months Ended June 30, 2019
										Americas		International		Eliminations			Total
Light vehicle⁽¹⁾										$	970,663	$	205,585	$	(40,943	)	$	1,135,305
Truck and bus radial										99,858		47,588		(40,306		)	107,140
Other⁽²⁾										26,722		29,126		—			55,848
Net sales										$	1,097,243	$	282,299	$	(81,249	)	$	1,298,293


	Six Months Ended June 30, 2018									Three Months Ended June 30, 2018
	Americas		International		Eliminations			Total		Americas		International		Eliminations			Total
Light vehicle⁽¹⁾	$	960,668	$	244,213	$	(56,373	)	$	1,148,508	$	527,284	$	122,872	$	(31,423	)	$	618,733
Truck and bus radial	85,034		53,116		(42,610		)	95,540		43,573		26,527		(22,420		)	47,680
Other⁽²⁾	24,102		31,754		—			55,856		13,555		18,440		—			31,995
Net sales	$	1,069,804	$	329,083	$	(98,983	)	$	1,299,904	$	584,412	$	167,839	$	(53,843	)	$	698,408

										Six Months Ended June 30, 2018
										Americas		International		Eliminations			Total
Light vehicle⁽¹⁾										$	960,668	$	244,213	$	(56,373	)	$	1,148,508
Truck and bus radial										$	85,034	$	53,116	$	(42,610	)	95,540
Other⁽²⁾										$	24,102	$	31,754	$	—		55,856
Net sales										$	1,069,804	$	329,083	$	(98,983	)	$	1,299,904

~~The following table provides information about contract liabilities from contracts with customers.~~

June 30, 2018 December 31, 2017
Contract liabilities $ 2,055
$ 1,111

~~The contract~~Contract liabilities relate to customer payments received in advance of shipment. As the Company does not generally have rights to consideration for work completed but not billed at the reporting date, the Company does not have any contract assets. Accounts receivable are not considered contract assets under the new revenue standard as contract assets are conditioned upon the Company's future satisfaction of a performance obligation. Accounts receivable, in contrast, are unconditional rights to consideration.

Significant changes in the contract liabilities balance during the ~~period~~six months ended June 30, 2019 are as follows:



	Contract Liabilities
Contract liabilities at beginning of year	$	947
Increases to deferred revenue for cash received in advance from customers	4,776
Decreases due to recognition of deferred revenue	(4,142		)
Contract liabilities at June 30, 2019	$	1,581

Deferred
revenue
Deferred revenue at beginning of year $ 1,111
Increases due to cash received from customers 5,980
Decreases due to recognition of revenue (5,036 )
Deferred revenue at June 30, 2018 $ 2,055

Transaction price allocated to remaining performance obligations

For the three and six ~~month periods~~months ended June 30, 2019 and 2018, respectively, revenue recognized from performance obligations related to prior periods was not material.

Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, contracts where revenue is recognized as invoiced and contracts with variable consideration related to undelivered performance obligations, is not material.

The Company applies the practical expedient in ASC 606 "Revenue from Contracts with Customers" and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

~~Changes in accounting policies~~

The Company adopted ASC 606 with a date of initial application of January 1, 2018. As a result, the Company has changed its accounting policy for revenue recognition as detailed below. The guidance has been applied to all contracts at the date of initial application. There were no significant changes to the Company's accounting for revenue following the adoption of the new revenue standard.

~~Impacts on financial statements~~

~~Aside from the enhanced disclosures, adoption of the new revenue standard had no impact on the Company's Condensed Consolidated Statement of Income.~~

The Company has reclassified its volume and customer rebate programs from a contra-asset included within Accounts receivable to a liability within Accrued liabilities on the Condensed Consolidated Balance Sheets. The table below summarizes the impact to the balance sheet as of December 31, 2017:

As Adjusted Effect of Change Previously Reported
Accounts receivable, less allowances $ 528,250
$ 100,190
$ 428,060
Accrued liabilities 280,666
100,190
180,476

On January 4, 2016, the Company announced that it had entered into an agreement to purchase a majority of China-based Qingdao Ge Rui Da Rubber Co., Ltd. ("GRT"). In the first quarter of 2016, the Company made a down payment in the amount of $5,929 for this transaction in accordance with the purchase agreement. The down payment was fully refundable in the event

that the transaction did not close and did not provide the Company with any power to direct the activities of the existing GRT entity prior to the transaction closing. After the transaction closed on December 1, 2016, the Company owned 65 percent of GRT. Based on the Company's ownership percentage and corresponding control of voting rights, the results of GRT and 100 percent of its assets and liabilities are consolidated from the date of the closing. GRT serves as a global source of truck and bus radial tire production for the Company. Passenger car radial tires may also be manufactured at the facility in the future.

The down payment of $5,929, as well as an additional $8,090 at the time of closing, were paid to the non-controlling shareholder of GRT. In December 2016, the Company contributed an additional $35,842 to GRT to purchase additional shares issued by GRT, as well as to fund working capital requirements. The Company contributed $14,570 in the first quarter of 2017, and an additional $22,125 to GRT in the second quarter of 2017 to fund working capital requirements. In total, the Company has invested $86,556 related to GRT, with $14,019 paid directly to a third party and the remainder invested in GRT.

The GRT acquisition has been accounted for as a purchase transaction. The total consideration has been allocated to the assets acquired, liabilities assumed and noncontrolling shareholder interest based on their estimated fair values at December 1, 2016. The excess purchase price over the estimated fair value of the net assets acquired has been allocated to goodwill. Goodwill consists of anticipated growth opportunities for GRT and is recorded in the Asia Operations segment, which is included in the International Tire Segment. Goodwill is not deductible for federal income tax purposes.

The following table summarizes the allocations of the fair values of the assets acquired and liabilities assumed, as adjusted. The originally reported amounts were provisional and were based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed on December 1, 2016, translated into U.S. dollars at the exchange rate on that date. Subsequent to December 1, 2016, the valuation was completed and adjustments were made to the allocations of the fair value of the assets acquired and liabilities assumed from the GRT acquisition.

As Originally
Assets Reported Adjustments As Adjusted
Cash $ 8,091
$ —
$ 8,091
Accounts receivable 2,844
—
2,844
Notes receivable 3,050
—
3,050
Inventories 7,983
485
8,468
Other current assets 981
—
981
Property, plant and equipment 46,712
829
47,541
Intangible assets 7,412
16
7,428
Other long-term assets 289
—
289
Goodwill 33,861
(611 ) 33,250

Liabilities
Accounts payable (61,570 ) (719 ) (62,289 )
Notes payable (10,122 ) —
(10,122 )
Accrued liabilities (2,866 ) —
(2,866 )
Long-term debt (3,383 ) —
(3,383 )
Other long-term liabilities (940 ) —
(940 )
$ 32,342
$ —
$ 32,342
Noncontrolling shareholder interest (18,323 ) —
(18,323 )

Cooper Tire & Rubber Company consideration $ 14,019
$ —
$ 14,019

The Company has determined that the nonrecurring fair value measurements related to each of these assets and liabilities rely primarily on Company-specific inputs and the Company’s assumptions about the use of the assets and settlement of liabilities, as observable inputs are not available and, as such, reside within Level 3 of the fair value hierarchy as defined in Note 6. The Company utilized a third party to assist in the fair value determination of certain components of the purchase price allocation, namely Property, plant and equipment and the Noncontrolling shareholder interest. The valuation of Property, plant and equipment was developed using primarily the cost approach. The fair value of the Noncontrolling shareholder interest was determined based upon internal and external inputs considering various relevant market transactions and discounted cash flow valuation methods, among other factors.

Three Months Ended
June 30, Six Months Ended
June 30,
2018 2017 2018 2017
Numerator
Numerator for basic and diluted earnings per share - Net income attributable to common stockholders $ 15,008
$ 45,310
$ 23,292
$ 75,872
Denominator
Denominator for basic earnings per share - weighted average shares outstanding 50,436
52,796
50,636
52,815
Effect of dilutive securities - stock options and other stock units 154
395
247
542
Denominator for diluted earnings per share - adjusted weighted average shares outstanding 50,590
53,191
50,883
53,357
Earnings per share:
Basic $ 0.30
$ 0.86
$ 0.46
$ 1.44
Diluted $ 0.30
$ 0.85
$ 0.46
$ 1.42

All options to purchase shares of the Company’s common stock were included in the computation of diluted earnings per share as the options’ exercise prices were less than the average market price of the common shares at both June 30, 2018 and 2017.

Inventory costs are determined using the last-in, first-out ~~(“LIFO”~~("LIFO") method for substantially all U.S. inventories. The current cost of the U.S. inventories under the ~~first-in, first-out (“FIFO”)~~FIFO method was ~~$489,729~~$484,351 and ~~$415,640~~$380,990 at June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. These FIFO values have been reduced by approximately ~~$90,505~~$94,865 and ~~$88,094~~$85,068 at June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, to arrive at the LIFO value reported on the Condensed Consolidated Balance Sheets. The remaining inventories have been valued under the FIFO method. All LIFO inventories are ~~stated~~valued at the lower of cost or market. All other inventories are stated at the lower of cost or net realizable value.

For the three month period ended June 30, 2019, the Company recorded a provision for income taxes of $5,851 (effective tax rate of 38.7 percent) compared to $2,267 (effective tax rate of 12.6 percent) for the same period in 2018. For the six month period ended June 30, 2019, the Company recorded a provision for income taxes of $12,186 (effective tax rate of 42.6 percent) compared to $5,718 (effective tax rate of 18.8 percent) for the same period in 2018. The 2019 and 2018 three and six month period provisions for income taxes are calculated using a forecasted multi-jurisdictional annual effective tax rate to determine a blended annual effective tax rate. The effective tax rate for the three and six month periods ended June 30, 2019 differs from the U.S. federal statutory rate of 21 percent primarily due to net discrete tax expense of $1,968 and $4,385 recorded during the three and six month periods, respectively, as well as due to the projected mix of earnings in international jurisdictions with differing tax rates and jurisdictions where valuation allowances are recorded. The discrete tax items in the second quarter primarily consist of state reserves for additional uncertain tax positions of $4,710 partially offset by expected refunds and deferred tax benefits related to other state filings of $2,958. For the six month period ended June 30, 2019, the discrete items also include 2017 transition tax and unrecognized tax benefits accrued of $1,655 and $670, respectively, as a result of final U.S. federal tax guidance issued during the first quarter pertaining to the one-time mandatory deemed repatriation under the 2017 Tax Act.

The Company continues to maintain valuation allowances pursuant to ASC 740, “Accounting for Income Taxes,” against portions of its U.S. and non-U.S. deferred tax assets at June 30, 2019 as it cannot assure the future realization of the associated tax benefits prior to their reversal or expiration. In the U.S., the Company has offset a portion of its deferred tax asset relating primarily to a loss carryforward by a valuation allowance of $1,402. In addition, the Company has recorded valuation allowances of $23,065 relating to non-U.S. net operating losses and other deferred tax assets for a total valuation allowance of $24,467. In conjunction with the Company’s ongoing review of its actual results and anticipated future earnings, the Company will continue to reassess the possibility of releasing all or part of the valuation allowances currently in place when the associated deferred tax assets are deemed to be realizable.

The Company maintains an ASC 740-10, “Accounting for Uncertainty in Income Taxes,” liability for unrecognized tax benefits. At June 30, 2019, the Company’s liability, exclusive of penalty and interest, totals approximately $11,663. The Company accrued an additional $5,138 for gross unrecognized tax benefits and $946 of interest expense during the six month

period ended June 30, 2019. Based upon the outcome of tax examinations, judicial proceedings, or expiration of statutes of limitations, it is possible that the ultimate resolution of the Company's unrecognized tax benefits may result in a payment that is materially different from the current estimate of the tax liabilities.

The Company operates in multiple jurisdictions throughout the world. The Company has effectively settled U.S. federal tax examinations for tax years before 2015 and state and local examinations for tax years before 2013, with limited exceptions. Furthermore, the Company’s non-U.S. subsidiaries are generally no longer subject to income tax examinations in major foreign taxing jurisdictions for tax years prior to 2015. Certain of the Company's state income tax returns in various jurisdictions are currently under examination and it is possible that these examinations will conclude within the next twelve months. However, it is not possible to estimate net increases or decreases in the Company’s unrecognized tax benefits during the next twelve months.

On February 15, 2018, the Company amended its revolving credit facility ("Credit Facility") with a consortium of banks that provided up to $400,000 based on available collateral, including an $110,000 letter of credit subfacility, set to expire in February 2023. As of June 27, 2019, the Company amended this Credit Facility with a consortium of several banks that provides up to $700,000 and is set to expire in June 2024. Of this amended borrowing capacity, $200,000 is allocated to a Delayed Draw Term Loan A ("Term Loan A"), which is scheduled to be drawn in December 2019, while the remaining $500,000 is allocated to the Credit Facility. The Credit Facility still includes the $110,000 letter of credit sub-facility. The Company may elect, with lender consent, to increase the commitments under the Credit Facility or incur one or more tranches of term loans in an aggregate amount of up to $300,000 (or an unlimited increase if the Proforma Net Secured Leverage Ratio is less than 1.75x). The proceeds of the Credit Facility will be used to pay the Company's unsecured notes which expire in December 2019, and to provide working capital and funds for general corporate purposes. Debt issuance costs related to the Credit Facility amendment totaled $1,507 while those related to the Term Loan A totaled $700, for a combined $2,207 in debt issuance costs. These costs, along with the remaining debt issuance costs from the February 2018 credit facility amendment, will be amortized over the life of the underlying debt instruments and are included in the Other assets classification in the Condensed Consolidated Balance Sheets. The Company may elect to add certain foreign subsidiaries as additional borrowers under the Credit Facility, subject to the satisfaction of certain conditions.

The Term Loan A will be drawn in December 2019. These funds will be used to pay for the unsecured notes maturing at that time. The Company will incur a ticking fee of 20 basis points beginning 30 days after the facility begins. The estimated amount of ticking fees to be incurred from June 2019 through the draw date in December 2019 is $150.

The Company amended its accounts receivable securitization facility that provides up to $150,000 based on available collateral and expires in February 2021. 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 accounts receivable securitization facility has no significant financial covenants until available credit is less than specified amounts.

The Company had no borrowings under the revolving credit facility or the accounts receivable securitization facility at June 30, 2019 or December 31, 2018, other than amounts used to secure letters of credit. Amounts used to secure letters of credit totaled $16,800 at June 30, 2019 and December 31, 2018. The Company’s additional borrowing capacity, net of borrowings and amounts used to back letters of credit, and based on eligible collateral through use of its credit facility with its bank group and its accounts receivable securitization facility at June 30, 2019, was $807,900, including the capacity of the Term Loan A.

The Company’s consolidated operations in Asia have renewable unsecured credit lines that provide up to $47,100 of borrowings and do not contain financial covenants. The additional borrowing capacity on the Asian credit lines, based on eligible collateral and the short-term notes payable, totaled $27,400 at June 30, 2019.

The following table summarizes the long-term debt and finance leases of the Company at June 30, 2019 and December 31, 2018. Except for the finance leases and other, the remaining long-term debt is due in an aggregate principal payment on the due date:



	June 30, 2019		December 31, 2018
Parent company
8% unsecured notes due December 2019	$	173,578	$	173,578
7.625% unsecured notes due March 2027	116,880		116,880
Finance leases and other	5,250		6,245
	295,708		296,703
Less: unamortized debt issuance costs	1,318		659
	294,390		296,044
Less: current maturities	173,766		174,760
	$	120,624	$	121,284

In addition, at June 30, 2019 and December 31, 2018, the Company had short-term notes payable of $19,656 and $15,288, respectively, due within twelve months, consisting of funds borrowed by the Company’s operations in the PRC. The weighted average interest rate of the short-term notes payable at June 30, 2019 and December 31, 2018 was 4.76 percent and 4.82 percent, respectively.

Derivative financial instruments are utilized by the Company to reduce foreign currency exchange risks. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. The Company does not enter into financial instruments for trading or speculative purposes. The derivative financial instruments include non-designated and cash flow hedges of foreign currency exposures. The change in values of the non-designated foreign currency hedges offset the exchange rate fluctuations related to assets and liabilities recorded on the condensed consolidated balance sheets. The cash flow hedges offset exchange rate fluctuations on the foreign currency-denominated intercompany loans and forecasted cash flows. The Company presently hedges exposures in ~~the Euro, Canadian dollar, British pound sterling, Swiss franc, Swedish krona, Norwegian krone, Mexican peso, Chinese yuan and Serbian dinar~~various currencies generally for transactions expected to occur within the next 12 months. Additionally, the Company utilizes cash flow hedges that hedge already recognized intercompany loans with maturities of up to ~~four~~three years. The notional amount of these foreign currency derivative instruments at June 30, ~~2018~~2019 and December 31, ~~2017~~2018 was ~~$174,924~~$181,319 and ~~$134,530,~~$129,542, respectively. The counterparties to each of these agreements are major commercial banks.

The Company uses non-designated foreign currency forward contracts to hedge its net foreign currency monetary assets and liabilities primarily resulting from non-functional currency denominated receivables and payables of certain U.S. and foreign entities.

Foreign currency forward contracts are also used to hedge variable cash flows associated with forecasted sales and purchases denominated in currencies that are not the functional currency of certain entities. The forward contracts have maturities of less than twelve months pursuant to the Company’s policies and hedging practices. These forward contracts meet the criteria for and have been designated as cash flow hedges. Accordingly, the effective portion of the change in fair value of such forward contracts ~~(approximately $180~~($(1,821) and ~~$(2,640)~~$713 as of June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively) are recorded as a separate component of stockholders’ equity in the accompanying Condensed Consolidated Balance Sheets and reclassified into earnings as the hedged transactions occur.

The Company utilizes cross-currency interest rate swaps to hedge the principal and interest repayment of some intercompany loans. These contracts have maturities of up to ~~four~~three years and meet the criteria for and have been designated as cash flow hedges. Spot to spot changes are recorded in income and all other effective changes are recorded as a separate component of stockholders' equity.

The Company assesses hedge effectiveness prospectively and retrospectively, based on regression of the change in foreign currency exchange rates. Time value of money is included in effectiveness testing. The Company measures ineffectiveness on a trade by trade basis, using the hypothetical derivative method. Any hedge ineffectiveness is recorded in the Condensed Consolidated Statements of Income in the period in which the ineffectiveness occurs.

The derivative instruments are subject to master netting arrangements with the counterparties to the contracts. The following table presents the location and amounts of derivative instrument fair values in the Condensed Consolidated Balance Sheets:



Assets/(liabilities)	June 30, 2019			December 31, 2018
Designated as hedging instruments:
Gross amounts recognized	$	(2,059	)	$	(1,524	)
Gross amounts offset	238			2,237
Net amounts	(1,821		)	713
Not designated as hedging instruments:
Gross amounts recognized	$	(185	)	$	(544	)
Gross amounts offset	53			201
Net amounts	(132		)	(343		)
Net amounts presented:
Other current assets	$	(818	)	$	1,750
Other long-term liabilities	$	(1,135	)	$	(1,380	)

June 30, 2018 December 31, 2017
Assets/(liabilities)
Designated as hedging instruments:
Gross amounts recognized $ (1,717 ) $ (2,808 )
Gross amounts offset 1,897
168
Net amounts $ 180
$ (2,640 )
Not designated as hedging instruments:
Gross amounts recognized (556 ) (684 )
Gross amounts offset 291
97
Net amounts $ (265 ) $ (587 )
Net amounts presented:
Other current assets (accrued liabilities) $ 1,472
$ (1,893 )
Other long-term liabilities $ (1,557 ) $ (1,334 )

The following table presents the location and amount of gains and losses on derivative instruments designated as cash flow hedges in the Condensed Consolidated Statements of ~~Income:~~Income.

Three Months Ended
June 30, Six Months Ended
June 30,
Derivatives Designated as Cash Flow Hedges 2018 2017 2018 2017
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion) $ 2,062
$ (2,335 ) $ 2,708
$ (2,724 )
Amount of Gain Reclassified from Cumulative Other Comprehensive Loss into Income (Effective Portion) 1,592
343
98
353



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Amount of (Loss)/Gain Recognized in Other Comprehensive Income on Derivatives	$	(367	)	$	2,062		$	(1,550	)	$	2,708
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income into Income
Net sales	$	455		$	382		$	854		$	(218	)
Interest expense	(31		)	(36		)	(63		)	(71		)
Other non-operating expense	429			1,246			—			387
	$	853		$	1,592		$	791		$	98

Location of Gain (Loss) Recognized in Income on Derivatives Amount of Gain (Loss)
Recognized in Income on Derivatives
Three Months Ended Six months ended
June 30, June 30,
Derivatives not Designated as Hedging Instruments 2018 2017 2018 2017
Foreign exchange contracts Other non-operating expense $ 2,324
$ (759 ) $ 43
$ (1,405 )

~~For~~The following table presents the location and amount of gains and losses on foreign exchange ~~hedges of forecasted sales and purchases~~contract derivatives not designated as ~~effective,~~hedging instruments in the ~~Company reclassifies the gain (loss) from Other comprehensive income into Net sales and the ineffective portion is recorded directly into Other non-operating expense.~~Condensed Consolidated Statements of Income.



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019			2018
Other non-operating expense	$	376	$	2,324	$	(630	)	$	43

The Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into the three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within the different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

Financial assets and liabilities recorded on the Condensed Consolidated Balance Sheets are categorized based on the inputs to the valuation techniques as follows:

Level 1. Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access.

Level 2. Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the ~~following:~~following.

a.Quoted prices for similar assets or liabilities in active markets;

b.Quoted prices for identical or similar assets or liabilities in non-active markets;

c.Pricing models whose inputs are observable for substantially the full term of the asset or liability; and

Level 3. Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.

The valuation of foreign currency derivative instruments was determined using widely accepted valuation techniques. This analysis reflected the contractual terms of the derivatives, including the period to maturity, and used observable market-based inputs, including forward points. The Company incorporated credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. Although the Company determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as current credit ratings, to evaluate the likelihood of default by itself and its counterparties. However, as of June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions

The valuation of stock-based liabilities was determined using the ~~Company’s~~Company's stock price, and as a result, these liabilities are classified in Level 1 of the fair value hierarchy.

The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of June 30, ~~2018~~2019 and December 31, ~~2017:~~2018:



	December 31, 2018
	Total Assets (Liabilities)			Quoted Prices in Active Markets for Identical Assets Level (1)			Significant Other Observable Inputs Level (2)		Significant Unobservable Inputs Level (3)


Foreign Currency Derivative	$	370		$	—		$	370	$	—
Stock-based Liabilities	(14,644		)	(14,644		)	—		—

December 31, 2017

Total
Assets
(Liabilities)

Quoted Prices
in Active Markets
for Identical
Assets
Level (1)

Significant
Other
Observable
Inputs
Level (2)

Significant
Unobservable
Inputs
Level (3)
Foreign Currency Derivative Instruments $ (3,227 ) $ —
$ (3,227 ) $ —
Stock-based Liabilities $ (16,713 ) $ (16,713 ) $ —
$ —

The fair market value of Cash and cash equivalents, Notes receivable, Restricted cash included in Other current assets, Restricted cash included in Other assets, Notes payable and Current portion of long-term debt and finance leases at June 30, ~~2018~~2019 and December 31, ~~2017~~2018 are equal to their corresponding carrying values as reported on the Condensed Consolidated Balance Sheets as of June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively. Each of these classes of assets and liabilities is classified aswithin Level 1 ~~within~~of the fair value hierarchy.

The fair market value of Long-term debt and finance leases is ~~$318,418~~$140,142 and ~~$329,329~~$137,343 at June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively, and is classified within Level 1 of the fair value hierarchy. The carrying value of Long-term debt is ~~$295,017~~$120,624 and ~~$295,987~~$121,284 as reported on the Condensed Consolidated Balance Sheets as of June 30, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

For the three month period ended June 30, 2018, the Company recorded a provision for income taxes of $2,267 (effective tax rate of 12.6 percent) compared to $22,298 (effective tax rate of 32.7 percent) for the same period in 2017. For the six month period ended June 30, 2018, the Company recorded a provision for income taxes of $5,718 (effective tax rate of 18.8 percent) compared to $35,325 (effective tax rate of 32.0 percent) for the same period in 2017. The 2018 and 2017 three and six month period provisions for income taxes are calculated using a forecasted multi-jurisdictional annual effective tax rate to determine a blended annual effective tax rate. The effective tax rate for the three month period ended June 30, 2018 differs from the U.S. federal statutory rate of 21 percent primarily due to net discrete tax benefits of $1,059 recorded during the quarter, the projected mix of earnings in international jurisdictions with differing tax rates, and jurisdictions where valuation allowances are recorded. The effective tax rate for the six month period ended June 30, 2018 differs from the U.S. federal statutory rate of 21 percent primarily due to net discrete tax benefits of $292 recorded during the period, partially offset by increases in unrecognized tax benefits recorded in the period, the projected mix of earnings in international jurisdictions with differing tax rates, and jurisdictions where valuation allowances are recorded.

The Tax Act also subjects a U.S. parent shareholder to current tax on its global intangible low-taxed income (“GILTI”). At December 31, 2017, a provisional estimate under SAB 118 could not be made and the Company had not yet elected an accounting policy to either recognize deferred taxes for basis differences expected to reverse as GILTI or to record GILTI as a period cost when incurred. Due to the complexity of the GILTI provisions, the Company continues to evaluate the impact of

GILTI and has not yet determined its accounting policy; however, at June 30, 2018, a reasonable estimate of GILTI related to current year operations has been made and included in the annual effective tax rate as a period cost. The Company did not record additional GILTI related to basis differences.

The Company continues to maintain a valuation allowance pursuant to ASC 740, “Accounting for Income Taxes,” against portions of its U.S. and non-U.S. deferred tax assets at June 30, 2018, as it cannot assure the future realization of the associated tax benefits prior to their reversal or expiration. In the U.S., the Company has offset a portion of its deferred tax asset relating primarily to a loss carryforward by a valuation allowance of $1,413. In addition, the Company has recorded valuation allowances of $28,153 relating to non-U.S. net operating losses and other deferred tax assets for a total valuation allowance of $29,566. In conjunction with the Company’s ongoing review of its actual results and anticipated future earnings, the Company will continue to reassess the possibility of releasing all or part of the valuation allowances currently in place when the associated deferred tax assets are deemed to be realizable.

The following tables disclose the amount of net periodic benefit costs for the three and six months ended June 30, 2019 and 2018, ~~and 2017~~respectively, for the Company’s defined benefit plans and other postretirement benefits:



	Pension Benefits - Domestic
	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Components of net periodic benefit cost:
Service cost	$	2,244		$	2,580		$	4,488		$	5,160
Interest cost	9,875			9,210			19,749			18,419
Expected return on plan assets	(12,042		)	(13,508		)	(24,022		)	(27,017		)
Amortization of actuarial loss	8,284			8,235			16,568			16,471
Net periodic benefit cost	$	8,361		$	6,517		$	16,783		$	13,033



	Other Post Retirement Benefits
	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Components of net periodic benefit cost:
Service cost	$	393		$	487		$	787		$	974
Interest cost	2,472			2,313			4,944			4,625
Amortization of prior service cost	(102		)	(135		)	(204		)	(270		)
Net periodic benefit cost	$	2,763		$	2,665		$	5,527		$	5,329

Pension Benefits - International
Three Months Ended
June 30, Six Months Ended
June 30,
2018 2017 2018 2017
Components of net periodic benefit cost:
Service cost $ —
$ —
$ —
$ —
Interest cost 2,840
2,860
5,746
5,630
Expected return on plan assets (3,073 ) (2,795 ) (6,216 ) (5,502 )
Amortization of actuarial loss 1,085
1,351
2,195
2,661
Net periodic benefit cost $ 852
$ 1,416
$ 1,725
$ 2,789

The Company leases certain warehouses, distribution centers, office space, material handling equipment, office equipment, cars and information technology hardware. The Company determines if an arrangement is a lease or contains an embedded lease at contract inception.

Lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term at an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items such as initial direct costs paid or incentives received.

Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 10 years or more. The exercise of lease renewal options is at our sole discretion. For purposes of calculating operating lease liabilities, lease terms may be deemed to include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Certain of our lease agreements include rental payments based on the use of the leased property over contractual levels. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company has lease agreements with lease and non-lease components, which are accounted for separately. Although separation of lease and non-lease components is required, certain practical expedients are available to entities. Entities electing the practical expedient would account for each lease component and the related non-lease component together as a single component. For certain building leases, including the lease of warehouses, distribution centers and office space, the Company accounts for the lease and non-lease components as a single lease component. For all other asset types, the Company accounts for lease and non-lease components separately.

For operating leases, the right-of-use asset is subsequently measured throughout the lease term at the carrying amount of the lease liability. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

For finance leases, the right-of-use asset is subsequently amortized using the straight-line method from the lease commencement date to the earlier of the end of its useful life or the end of the lease term. In those cases, the right-of-use asset is amortized over the useful life of the underlying asset. Amortization of the right-of-use asset is recognized and presented separately from interest expense on the lease liability.

Right-of-use assets for operating and finance leases are periodically reviewed for impairment losses. The Company uses the long-lived assets impairment guidance in ASC Subtopic 360-10, "Property, Plant, and Equipment - Overall", to determine whether a right-of-use asset is impaired, and if so, the amount of the impairment loss to recognize. No impairment losses have been recognized to date.

The following table presents the location and amount of lease assets and liabilities in the Condensed Consolidated Balance Sheets:



Assets	Location	June 30, 2019
Operating lease assets	Operating lease right-of-use assets	$	93,183
Finance lease assets	Property, plant and equipment	3,217
Total leased assets		$	96,400
Liabilities	Location
Current:
Operating	Accrued liabilities	$	28,793
Finance	Current portion of long-term debt and finance leases	187
Noncurrent:
Operating	Noncurrent operating leases	67,214
Finance	Long-term debt and finance leases	5,063
Total lease liabilities		$	101,257

The following table presents the location and amount of lease expense in the Condensed Consolidated Income Statement:

Other Postretirement Benefits
Three Months Ended
June 30, Six Months Ended
June 30,
2018 2017 2018 2017
Components of net periodic benefit cost:
Service cost $ 487
$ 501
$ 974
$ 1,002
Interest cost 2,313
2,516
4,625
5,031
Amortization of prior service credit (135 ) (142 ) (270 ) (283 )
Net periodic benefit cost $ 2,665
$ 2,875
$ 5,329
$ 5,750



Lease cost	Location	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Operating lease cost ^(a)	Cost of Sales	$	8,787	$	18,022
Operating lease cost	Selling General & Administrative Expenses	1,515		2,898
Total operating lease cost		10,302		20,920

Amortization of finance lease assets	Cost of sales	$	55	$	109
Interest on finance lease liabilities	Interest expense	1		2
Total finance lease cost		56		111
Net lease cost		$	10,358	$	21,031

^(a) - Includes short-term lease costs of $1,515 and $3,401 and variable lease costs of $844 and $1,680 for the three and six month periods ended June 30, 2019, respectively.

~~As discussed in Note 1,~~The following table presents the Company retrospectively applied the adoption of ASU 2017-07, “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” in the first quarter of 2018. The effect of the retrospective presentation change related to the net periodic costfuture maturities of the Company's ~~defined benefit plans~~lease obligations:



	June 30, 2019
	Operating Leases		Finance Leases		Total
2019	$	16,424	$	187	$	16,611
2020	31,079		—		31,079
2021	17,776		5,063		22,839
2022	13,539		—		13,539
2023	9,590		—		9,590
After 2024	24,009		—		24,009
Total lease payments	112,417		5,250		117,667
Less: Interest	16,410		—		16,410
Present value of lease liabilities	$	96,007	$	5,250	$	101,257

The following table presents the weighted-average lease term and ~~other postretirement benefits on~~discount rates of the Company's lease obligations:



Weighted-average remaining lease term (years)	June 30, 2019
Operating leases	5.06
Finance leases	0.17
Weighted-average discount rate
Operating leases	5.76	%
Finance leases	1.31	%

The following table presents the cash flow amounts related to lease liabilities included in the Company's Condensed Consolidated Statement of ~~Income for the three and six months ended June 30, 2017 is shown in the following tables:~~Cash Flows



	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	9,098		$	17,181
Operating cash flows from finance leases	55			109
Financing cash flows from finance leases	(193		)	(389		)
Leased assets obtained in exchange for new operating lease liabilities	20			72

~~Three Months Ended June 30, 2017~~

Effect of change
As Adjusted Americas International Corporate Previously Reported
Cost of products sold $ 581,202
$ 7,295
$ 1,416
$ —
$ 589,913
Selling, general and administrative expense 55,350
296
—
362
56,008
Other pension and postretirement benefit expense (9,369 ) (7,591 ) (1,416 ) (362 ) —

~~Six Months Ended June 30, 2017~~

Effect of change
As Adjusted Americas International Corporate Previously Reported
Cost of products sold $ 1,105,642
$ 14,591
$ 2,788
$ —
$ 1,123,021
Selling, general and administrative expense 115,941
592
—
722
117,255
Other pension and postretirement benefit expense (18,693 ) (15,183 ) (2,788 ) (722 ) —


~~Note 10.~~	~~Product Warranty Liabilities~~

The Company provides for the estimated cost of product warranties at the time revenue is recognized based primarily on historical return rates, estimates of the eligible tire population and the value of tires to be replaced. The following table summarizes the activity in the Company’s product warranty liabilities:

2018 2017
Reserve at beginning of year $ 12,093
$ 10,634
Additions 7,398
4,483
Payments (6,963 ) (4,403 )
Reserve at June 30 $ 12,528
$ 10,714


Note 10.	Stockholders’ Equity

~~Note 11. Stockholders’ Equity~~

The following ~~table reconciles the beginning and end~~tables provide a quarterly reconciliation of the ~~period~~ equity accounts attributable to Cooper Tire & Rubber Company and to the noncontrolling shareholders' ~~interests:~~interests for the year to date as of June 30, 2019 and 2018:

Total Equity
Total Parent Stockholders’ Equity Noncontrolling Shareholders’ Interests in Consolidated Subsidiary Total Stockholders’ Equity
Balance at December 31, 2017 $ 1,127,096
$ 58,660
$ 1,185,756
Net income 23,292
1,400
24,692
Other comprehensive income 7,180
(1,139 ) 6,041
Share repurchase program (29,355 ) —
(29,355 )
Stock compensation plans 757
—
757
Cash dividends - $0.210 per share (10,623 ) —
(10,623 )
Dividend paid to noncontrolling shareholder —
—
—
Balance at June 30, 2018 $ 1,118,347
$ 58,921
$ 1,177,268



	Total Equity
	Total Parent Stockholders’ Equity			Noncontrolling Shareholders’ Interests in Consolidated Subsidiary			Total Stockholders’ Equity
Balance at December 31, 2018	$	1,172,043		$	60,400		$	1,232,443
Net income	6,980			200			7,180
Other comprehensive income	13,170			980			14,150
Stock compensation plans	(290		)	—			(290		)
Cash dividends - 0.105 per share	(5,262		)	—			(5,262		)
Balance at March 31, 2019	$	1,186,641		$	61,580		$	1,248,221
Net income	8,821			437			9,258
Other comprehensive income	637			(340		)	297
Stock compensation plans	1,517			—			1,517
Cash dividends - 0.105 per share	(5,267		)	—			(5,267		)
Balance at June 30, 2019	$	1,192,349		$	61,677		$	1,254,026



	Total Equity
	Total Parent Stockholders’ Equity			Noncontrolling Shareholders’ Interests in Consolidated Subsidiary			Total Stockholders’ Equity
Balance at December 31, 2017	$	1,127,096		$	58,660		$	1,185,756
Net income	8,284			699			8,983
Other comprehensive income	26,575			3,945			30,520
Share repurchase program	(15,565		)	—			(15,565		)
Stock compensation plans	(335		)	—			(335		)
Cash dividends - 0.105 per share	(5,334		)	—			(5,334		)
Balance at March 31, 2018	$	1,140,721		$	63,304		$	1,204,025
Net income	15,008			701			15,709
Other comprehensive income	(19,395		)	(5,084		)	(24,479		)
Share repurchase program	(13,790		)	—			—
Stock compensation plans	1,092			—			1,092
Cash dividends - 0.105 per share	(5,289		)	—			(5,289		)
Balance at June 30, 2018	$	1,118,347		$	58,921		$	1,177,268


Note 11.	Changes in Accumulated Other Comprehensive Income (Loss) by Component

The balances of each component of accumulated other comprehensive income (loss) in the accompanying Consolidated Statements of Equity were as follows:



	Cumulative Translation Adjustment			Derivative Instruments			Post- retirement Benefits			Total
Ending Balance, December 31, 2018	$	(62,133	)	$	2,150		$	(401,606	)	$	(461,589	)
Other comprehensive income (loss) before reclassifications	8,328			(1,183		)	—			7,145
Foreign currency translation effect	—			—			(1,460		)	(1,460		)
Income tax effect	—			245			—			245
Amount reclassified from accumulated other comprehensive income (loss)
Cash flow hedges	—			62			—			62
Amortization of prior service credit	—			—			(102		)	(102		)
Amortization of actuarial losses	—			—			9,233			9,233
Income tax effect	—			88			(2,041		)	(1,953		)
Other comprehensive income (loss)	8,328			(788		)	5,630			13,170
Ending Balance, March 31, 2019	$	(53,805	)	$	1,362		$	(395,976	)	$	(448,419	)
Other comprehensive (loss) income before reclassifications	(6,994		)	(367		)	—			(7,361		)
Foreign currency translation effect	—			—			1,429			1,429
Income tax effect	—			226			—			226
Amount reclassified from accumulated other comprehensive (loss) income
Cash flow hedges	—			(853		)	—			(853		)
Amortization of prior service credit	—			—			(102		)	(102		)
Amortization of actuarial losses	—			—			9,215			9,215
Income tax effect	—			124			(2,041		)	(1,917		)
Other comprehensive (loss) income	(6,994		)	(870		)	8,501			637
Ending Balance, June 30, 2019	$	(60,799	)	$	492		$	(387,475	)	$	(447,782	)



	Cumulative Translation Adjustment			Derivative Instruments			Post- retirement Benefits			Total
Ending Balance, December 31, 2017	$	(39,940	)	$	349		$	(438,887	)	$	(478,478	)
Other comprehensive income before reclassifications	20,925			646			—			21,571
Foreign currency translation effect	—			—			(2,900		)	(2,900		)
Income tax effect	—			(416		)	—			(416		)
Amount reclassified from accumulated other comprehensive income (loss)
Cash flow hedges	—			1,493			—			1,493
Amortization of prior service credit	—			—			(135		)	(135		)
Amortization of actuarial losses	—			—			9,345			9,345
Income tax effect	—			(172		)	(2,210		)	(2,382		)
Other comprehensive income	20,925			1,551			4,100			26,576
Ending Balance, March 31, 2018	$	(19,015	)	$	1,900		$	(434,787	)	$	(451,902	)
Other comprehensive (loss) income before reclassifications	(30,768		)	2,062			—			(28,706		)
Foreign currency translation effect	—			—			4,082			4,082
Income tax effect	—			(285		)	—			(285		)
Amount reclassified from accumulated other comprehensive income (loss)
Cash flow hedges	—			(1,592		)	—			(1,592		)
Amortization of prior service credit	—			—			(135		)	(135		)
Amortization of actuarial losses	—			—			9,320			9,320
Income tax effect	—			126			(2,206		)	(2,080		)
Other comprehensive income (loss)	(30,768		)	311			11,061			(19,396		)
Ending Balance, June 30, 2018	$	(49,783	)	$	2,211		$	(423,726	)	$	(471,298	)


Note 12.	~~Share Repurchase Programs~~

Share repurchase programs require the approval of the Company's Board of Directors. The following table summarizes the Company’s Board authorized share repurchase programs and related information for the six months ended June 30, 2018 and for the full year 2017:

Program⁽¹⁾
Date Authorized by Board of Directors Expiration Date
Amount Authorized (excluding commissions)

Amount Spent as of June 30, 2018
(excluding commissions)
Status
2017 Repurchase Program February 16, 2017 December 31, 2019 $ 300,000
$ 106,050
Active
2016 Repurchase Program February 19, 2016 December 31, 2017 200,000
104,366

Superseded⁽²⁾

~~(1)~~

The repurchase programs listed above do not obligate the Company to acquire any specific number of shares and can be suspended or discontinued at any time without notice. Shares can be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. All repurchases under the programs listed above have been made using cash resources.


~~(2)~~	~~The approximately $95,634 remaining authorization under the 2016 Repurchase Program as of February 16, 2017 was included in the $300,000 maximum amount authorized by the 2017 Repurchase Program.~~

~~The following table summarizes the Company’s open market and 10b5-1 plan share repurchase activity and related information during the six months ended June 30, 2018 and for the full year 2017:~~

Number of Shares Average Repurchase Price Per Share
Amount
(including commissions)
2018 share repurchase activity:
2017 Repurchase Program 986,935
$ 29.74
$ 29,355
2017 share repurchase activity:
2017 Repurchase Program 2,136,237
$ 35.95
$ 76,788
2016 Repurchase Program 383,690
$ 36.70
14,080
Total 2017 share repurchases 2,519,927
$ 36.06
$ 90,868

~~Since the share repurchases began in August 2014 through June 30, 2018, the Company has repurchased 15,737,691 shares of the Company’s common stock at an average cost of $34.12 per share.~~


~~Note 13.~~	~~Changes in Accumulated Other Comprehensive Loss by Component~~

~~The following tables present the changes in Accumulated Other Comprehensive Loss by Component for the three month periods ended June 30, 2018 and 2017, respectively.~~

Cumulative Translation Adjustment Derivative Instruments Post-retirement Benefits Total
Beginning balance, March 31, 2018 $ (19,015 ) $ 1,901
$ (434,788 ) $ (451,902 )
Other comprehensive income (loss) before reclassifications (30,768 ) 2,062
—
(28,706 )
Foreign currency translation effect —
—
4,082
4,082
Income tax effect —
(285 ) —
(285 )
Amount reclassified from accumulated other comprehensive loss
Cash flow hedges —
(1,592 ) —
(1,592 )
Amortization of prior service credit —
—
(135 ) (135 )
Amortization of actuarial losses —
—
9,320
9,320
Income tax effect —
126
(2,206 ) (2,080 )
Other comprehensive income (loss) (30,768 ) 311
11,061
(19,396 )
Ending balance, June 30, 2018 $ (49,783 ) $ 2,212
$ (423,727 ) $ (471,298 )

Cumulative Translation Adjustment Derivative Instruments Post-retirement Benefits Total
Beginning balance, March 31, 2017 $ (62,898 ) $ 1,721
$ (465,837 ) $ (527,014 )
Other comprehensive income (loss) before reclassifications 12,876
(2,335 ) —
10,541
Foreign currency translation effect —
—
(3,702 ) (3,702 )
Income tax effect —
759
—
759
Amount reclassified from accumulated other comprehensive loss
Cash flow hedges —
(343 ) —
(343 )
Amortization of prior service credit —
—
(142 ) (142 )
Amortization of actuarial losses —
—
10,631
10,631
Income tax effect —
199
(3,725 ) (3,526 )
Other comprehensive income (loss) 12,876
(1,720 ) 3,062
14,218
Ending balance, June 30, 2017 $ (50,022 ) $ 1
$ (462,775 ) $ (512,796 )

Cumulative
Translation
Adjustment Derivative
Instruments Post-
retirement
Benefits Total
Beginning balance, December 31, 2017 (39,940 ) 349
(438,887 ) (478,478 )
Other comprehensive income (loss) before reclassifications (9,843 ) 2,708
—
(7,135 )
Foreign currency translation effect —
—
1,180
1,180
Income tax effect —
(701 ) —
(701 )
Amount reclassified from accumulated other comprehensive loss
Cash flow hedges —
(98 ) —
(98 )
Amortization of prior service credit —
—
(270 ) (270 )
Amortization of actuarial losses —
—
18,666
18,666
Pension settlement charge —
—
—
—
Income tax effect —
(46 ) (4,416 ) (4,462 )
Other comprehensive income (loss) (9,843 ) 1,863
15,160
7,180
Ending balance, June 30, 2018 (49,783 ) 2,212
(423,727 ) (471,298 )

Cumulative
Translation
Adjustment Derivative
Instruments Post-
retirement
Benefits Total
Beginning balance, December 31, 2016 (75,415 ) 1,967
(471,703 ) (545,151 )
Other comprehensive income (loss) before reclassifications 25,393
(2,724 ) —
22,669
Foreign currency translation effect —
—
(4,567 ) (4,567 )
Income tax effect —
908
—
908
Amount reclassified from accumulated other comprehensive loss
Cash flow hedges —
(353 ) —
(353 )
Amortization of prior service credit —
—
(283 ) (283 )
Amortization of actuarial losses —
—
21,222
21,222
Pension settlement charge —
—
—
—
Income tax effect —
203
(7,444 ) (7,241 )
Other comprehensive income (loss) 25,393
(1,966 ) 8,928
32,355
Ending balance, June 30, 2017 (50,022 ) 1
(462,775 ) (512,796 )


~~Note 14.~~	Comprehensive Income (Loss) Attributable to Noncontrolling ~~Shareholders'~~Shareholders’ Interests

The following table provides the details of the comprehensive income (loss) attributable to noncontrolling shareholders' interests:



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019		2018
Net income attributable to noncontrolling shareholders’ interests	$	437		$	701		$	637	$	1,400
Other comprehensive income (loss):
Currency translation adjustments	(340		)	(5,083		)	640		(1,139		)
Comprehensive income (loss) attributable to noncontrolling shareholders’ interests	$	97		$	(4,382	)	$	1,277	$	261

Three Months Ended
June 30, Six Months Ended
June 30,
2018 2017 2018 2017
Net income attributable to noncontrolling shareholders' interests $ 701
$ 514
$ 1,400
$ (666 )
Other comprehensive income (loss):
Currency translation adjustments (5,083 ) 1,308
(1,139 ) 4,179
Comprehensive income (loss) attributable to noncontrolling shareholders' interests $ (4,382 ) $ 1,822
$ 261
$ 3,513


Note ~~15.~~13.	Contingent Liabilities

Product Liability Claims

The Company is a defendant in various product liability claims brought in numerous jurisdictions in which individuals seek damages resulting from motor vehicle accidents allegedly caused by defective tires manufactured by the Company. Each of the product liability claims faced by the Company generally involves different types of tires and 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 product 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 product 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 30 to 35 million passenger car, light truck, CUV, SUV, TBR and motorcycle tires per year in North America. The Company estimates that approximately 300 million Company-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, improper repairs, road hazard and excessive speed.

The Company accrues costs for product 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 product 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 product 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. Adjustments to estimated reserves are recorded in the period in which the change in estimate occurs. The liability often cannot be determined with precision until the claim is resolved.

Pursuant to ASU 450 "Contingencies," the Company accrues the minimum liability for each known claim when the estimated outcome is a range of probable loss and no one amount within that range is more likely than another. The Company uses a range of losses because an average cost would not be meaningful since the product liability claims faced by the Company are unique and widely variable, and accordingly, the resolutions of those claims have an enormous amount of variability. The costs have ranged from zero dollars to $33 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. The Company periodically reviews such estimates and any adjustments for changes in reserves are recorded in the period in which the change in estimate occurs. Because of the speculative nature of litigation in the U.S., the Company does not believe a meaningful aggregate range of potential loss for

asserted and unasserted claims can be determined. While the Company believes its reserves are reasonably stated, 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 time frame for the payment of a product 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 or appeals process - and is highly dependent on jurisdiction, specific facts, the plaintiff’s attorney, the court’s docket and other factors. Given that some claims may be resolved in weeks and others may take five years or more, it is impossible to predict with any reasonable reliability the time frame over which the accrued amounts may be paid.

The Company regularly reviews the probable outcome of outstanding legal proceedings and the availability and limits of the insurance coverage, and accrues for such legal proceedings at the time a loss is probable and the amount of the loss can be estimated. As part of its regular review, the Company monitors trends that may affect its ultimate liability and analyzes the developments and variables likely to affect pending and anticipated claims against the Company and the reserves for such claims. The Company utilizes claims experience, as well as trends and developments in the litigation climate, in estimating its required accrual. Based on the ~~Company’s~~Company's quarterly reviews, coupled with normal activity, including the addition of ~~another~~ two quarters of self-insured incidents, settlements and changes in the amount of reserves, the Company increased its accrual to $114,636 at June 30, 2019 from ~~$129,892~~$112,124 at December 31, ~~2017 to $137,794 at June 30,~~ 2018.

The addition of another six months of self-insured incidents accounted for an increase of ~~$22,025~~$18,593 in the Company's product liability reserve. Settlements, changes in the amount of reserves for cases where sufficient information is known to estimate a liability, and changes in assumptions decreased the liability by ~~$2,303 for the six month period ended June 30, 2018.~~$956. The Company paid ~~$11,820 through~~$15,125 during the first six months of ~~2018~~2019 to resolve cases and ~~claims..~~claims.

The Company’s product liability reserve balance at June 30, ~~2018~~2019 totaled ~~$137,794~~$114,636 (the current portion of ~~$44,978~~$30,690 is included in Accrued liabilities and the long-term portion is included in Other long-term liabilities on the Condensed Consolidated Balance Sheets), and the balance at December 31, ~~2017~~2018 totaled ~~$129,892~~$112,124 (current portion of ~~$44,700)~~$30,550).

The product 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. Legal costs are expensed as incurred and product liability insurance premiums are amortized over coverage periods.

For the three month periods ended June 30, 2018 and 2017, product liability expense totaled $12,155 and $16,179, respectively. For the six month periods ended June 30, 2018 and 2017, product liability expense totaled $27,223 and $32,447, respectively.

Product liability expenses are included in Cost of products sold in the Condensed Consolidated Statements of Income. For the three and six months ended June 30, 2019 and 2018, product liability expense was as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Product liability expense	$	12,714	$	12,155	$	23,532	$	27,223

~~Note 16. Business Segments~~


Note 14.	Business Segments

The Company has four segments under ASC 280, ~~“Segments”~~"Segments":

North America, composed of the Company’s operations in the United States and Canada;

Latin America, composed of the Company’s operations in Mexico, Central America and South America;

Europe; and

Asia.

North America and Latin America meet the criteria for aggregation in accordance with ASC 280, as they are similar in their production and distribution processes and exhibit similar economic characteristics. The aggregated North America and Latin America segments are presented as “Americas Tire Operations” in the segment disclosure. The Americas Tire Operations segment manufactures and markets passenger car and light truck tires, primarily for sale in the U.S. replacement market. The segment also has a joint venture manufacturing operation in Mexico, Corporacion de Occidente SA de CV ("COOCSA"), which supplies passenger car tires to the North American, Mexican, Central American and South American markets. The segment also markets and distributes racing, TBR and motorcycle tires. The racing and motorcycle tires are manufactured by the Company’s European ~~operations~~Operations segment and by others. TBR tires are sourced from GRT and through an off-take agreement that was entered with Prinx Chengshan (Shandong) Tire Company Ltd. ("PCT"), the ~~Company’s~~Company's former joint venture. In December 2017, the Company signed an off-take agreement with Sailun Vietnam, ~~Co. Ltd. ("Sailun"),~~ effective from January 1, 2018 through December 31, 2020, as an additional source of TBR tires. On April 5, 2019, Cooper Vietnam, a wholly owned subsidiary of Cooper,and Sailun Vietnam established a joint venture in Vietnam which will produce and sell TBR tires. The new joint venture is expected to begin producing tires in 2020. 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.~~products, mass merchandisers and digital channels. The segment does not currently sell its products directly to end users, except through three Company-owned retail stores. The segment sells a limited number of tires to ~~original equipment manufacturers ("OEMs").~~OEMs.

Both the ~~Asia~~Europe and ~~Europe~~Asia segments have been determined to be individually immaterial, as they do not meet the quantitative requirements for segment disclosure under ASC 280. In accordance with ASC 280, information about operating segments that are not reportable shall be combined and disclosed in an all other category separate from other reconciling items. As a result, these two segments have been combined in the segment operating results discussion. The results of the combined ~~Asia~~Europe and ~~Europe~~Asia segments are presented as “International Tire Operations.” The European operations include manufacturing operations in the ~~United Kingdom ("~~U.K.") and Serbia. The U.K. entity manufactures and markets passenger car, light truck, motorcycle

and racing tires and tire retread material for domestic and global markets. The Serbian entity manufactures passenger car and light truck tires primarily for the European markets and for export to the North American segment. The Asian operations are located in the ~~PRC.~~PRC and Vietnam. Cooper Kunshan Tire manufactures passenger car and light truck tires both for the Chinese domestic market and for export to markets outside of the PRC. ~~On December 1, 2016, the Company acquired 65 percent ownership of China-based~~ GRT, a joint venture manufacturing facility located in the ~~PRC. GRT~~PRC, serves as a global source of TBR tire production for the Company. The segment also had another joint venture in the PRC, PCT, which manufactured and marketed truck and bus radial and bias tires, as well as passenger car and light truck tires for domestic and global markets. The Company sold its ownership interest in this joint venture in November 2014, and the Company began procuringprocures certain TBR and passenger car tires under off-take agreements with PCT through ~~mid-2018. The TBR tire agreement has been extended~~mid-2021 and, ~~now expires~~ in ~~mid-2019. In~~ December 2017, the Company signed an off-take agreement with Sailun Vietnam, as ~~an additional~~a source of TBR ~~tires.~~tires through December 31, 2020. On April 5, 2019, Cooper Vietnamand Sailun Vietnam established a joint venture in Vietnam which will produce and sell TBR tires in addition to the off-take agreement. The new joint venture is expected to begin producing tires in 2020. The segment sells a majority of its tires in the replacement market, with a ~~growing~~ portion also sold to OEMs.

On January 17, 2019, Cooper Tire Europe, a wholly owned subsidiary of the Company, committed to a plan to cease light vehicle tire production at its Melksham, U.K. facility. Phasing out of light vehicle tire production is expected to be completed in the third quarter of 2019. An estimated 300 roles will be eliminated at the site. Cooper Tire Europe will obtain light vehicle tires to meet customer needs from other production sites within the Company’s global production network. Approximately 400 roles will remain in Melksham to support the functions that continue there, including motorsports and motorcycle tire production, the materials business, Cooper Tire Europe headquarters, sales and marketing, and the Europe Technical Center.

The following table details ~~information on the Company’s operating segments.~~segment financial information:



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Net sales:
Americas Tire
External customers	$	570,537		$	573,807		$	1,075,295		$	1,052,634
Intercompany	11,770			10,605			21,948			17,170
	582,307			584,412			1,097,243			1,069,804
International Tire
External customers	108,593			124,601			222,999			247,270
Intercompany	29,921			43,238			59,300			81,813
	138,514			167,839			282,299			329,083
Eliminations	(41,691		)	(53,843		)	(81,249		)	(98,983		)
Consolidated net sales	679,130			698,408			1,298,293			1,299,904
Operating profit (loss):
Americas Tire	46,814			40,480			85,603			71,715
International Tire	(1,296		)	5,652			(2,635		)	13,086
Unallocated corporate charges	(13,278		)	(13,705		)	(23,730		)	(25,670		)
Eliminations	(569		)	336			(1,136		)	87
Consolidated operating profit	31,671			32,763			58,102			59,218

Interest expense	(7,810		)	(8,417		)	(16,123		)	(16,108		)
Interest income	1,999			1,988			5,379			4,303
Other pension and postretirement benefit expense	(9,288		)	(6,967		)	(18,650		)	(13,953		)
Other non-operating expense	(1,463		)	(1,391		)	(84		)	(3,050		)
Income before income taxes	$	15,109		$	17,976		$	28,624		$	30,410

Three Months Ended
June 30, Six Months Ended
June 30,
2018 2017 2018 2017
Net sales
Americas Tire
External customers $ 573,807
$ 605,234
$ 1,052,634
$ 1,127,603
Intercompany 10,605
10,122
17,170
19,112
584,412
615,356
1,069,804
1,146,715
International Tire
External customers 124,601
115,519
247,270
236,175
Intercompany 43,238
35,851
81,813
57,160
167,839
151,370
329,083
293,335
Eliminations (53,843 ) (45,973 ) (98,983 ) (76,272 )
Consolidated net sales $ 698,408
$ 720,753
$ 1,299,904
$ 1,363,778
Operating profit (loss):
Americas Tire $ 40,480
$ 90,884
$ 71,715
$ 161,669
International Tire 5,652
2,690
13,086
5,715
Unallocated corporate charges (13,705 ) (9,199 ) (25,670 ) (24,663 )
Eliminations 336
(174 ) 87
(526 )
Operating profit 32,763
84,201
59,218
142,195
Interest expense (8,417 ) (8,210 ) (16,108 ) (16,037 )
Interest income 1,988
1,755
4,303
3,557
Other pension and postretirement benefit expense (6,967 ) (9,369 ) (13,953 ) (18,693 )
Other non-operating expense (1,391 ) (255 ) (3,050 ) (491 )
Income before income taxes $ 17,976
$ 68,122
$ 30,410
$ 110,531


Item 2.	~~MANAGEMENT’S~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) presents information related to the consolidated results of the operations of the Company, a discussion of past results of the Company’s segments, future outlook for the Company and information concerning the liquidity and capital resources of the Company. The ~~Company’s~~Company's future results may differ materially from those indicated herein, for reasons including those indicated under the forward-looking statements heading below.

Consolidated Results of Operations


(Dollar amounts in thousands except per share amounts)	Three Months Ended June 30,								Six Months Ended June 30,								(Dollar amounts in thousands except per share amounts)
(Dollar amounts in thousands except per share amounts)	2018			% Change		2017			2018			% Change		2017
																		Three Months Ended June 30,								Six Months Ended June 30,
																		2019			Change		2018			2019			Change		2018
Net Sales
Americas Tire																		$	582,307		(0.4	)%	$	584,412		$	1,097,243		2.6	%	$	1,069,804
International Tire																		138,514			(17.5	)%	167,839			282,299			(14.2	)%	329,083
Eliminations																		(41,691		)	22.6	%	(53,843		)	(81,249		)	17.9	%	(98,983		)
Net sales																		679,130			(2.8	)%	698,408			1,298,293			(0.1	)%	1,299,904
Americas Tire
External customers	$	573,807		(5.2	)	$	605,234		$	1,052,634		(6.6	)	$	1,127,603
Intercompany	10,605			4.8		10,122			17,170			(10.2	)	19,112
	584,412			(5.0	)	615,356			1,069,804			(6.7	)	1,146,715
International Tire
External customers	124,601			7.9		115,519			247,270			4.7		236,175
Intercompany	43,238			20.6		35,851			81,813			43.1		57,160
	167,839			10.9		151,370			329,083			12.2		293,335
Eliminations	(53,843		)	(17.1	)	(45,973		)	(98,983		)	(29.8	)	(76,272		)
Consolidated net sales	$	698,408		(3.1	)	$	720,753		$	1,299,904		(4.7	)	$	1,363,778
Operating profit (loss):
Americas Tire	$	40,480		(55.5	)	$	90,884		$	71,715		(55.6	)	$	161,669			46,814			15.6	%	40,480			85,603			19.4	%	71,715
International Tire	5,652			110.1		2,690			13,086			129.0		5,715				(1,296		)	n/m		5,652			(2,635		)	n/m		13,086
Unallocated corporate charges	(13,705		)	(49.0	)	(9,199		)	(25,670		)	(4.1	)	(24,663		)		(13,278		)	(3.1	)%	(13,705		)	(23,730		)	(7.6	)%	(25,670		)
Eliminations	336			n/m		(174		)	87			n/m		(526		)		(569		)	n/m		336			(1,136		)	n/m		87
Operating profit	32,763			(61.1	)	84,201			59,218			(58.4	)	142,195				31,671			(3.3	)%	32,763			58,102			(1.9	)%	59,218

Interest expense	(8,417		)	2.5		(8,210		)	(16,108		)	(0.4	)	(16,037		)		(7,810		)	(7.2	)%	(8,417		)	(16,123		)	0.1	%	(16,108		)
Interest income	1,988			13.3		1,755			4,303			21.0		3,557				1,999			0.6	%	1,988			5,379			25.0	%	4,303
Other pension and postretirement benefit expense	(6,967		)	(25.6	)	(9,369		)	(13,953		)	(25.4	)	(18,693		)		(9,288		)	33.3	%	(6,967		)	(18,650		)	33.7	%	(13,953		)
Other non-operating expense	(1,391		)	445.5		(255		)	(3,050		)	521.2		(491		)		(1,463		)	5.2	%	(1,391		)	(84		)	(97.2	)%	(3,050		)
Income before income taxes	17,976			(73.6	)	68,122			30,410			(72.5	)	110,531				15,109			(15.9	)%	17,976			28,624			(5.9	)%	30,410
Provision for income taxes	2,267			(89.8	)	22,298			5,718			(83.8	)	35,325				5,851			158.1	%	2,267			12,186			113.1	%	5,718
Net income	15,709			(65.7	)	45,824			24,692			(67.2	)	75,206				9,258			(41.1	)%	15,709			16,438			(33.4	)%	24,692
Net income (loss) attributable to noncontrolling shareholders' interests	701			36.4		514			1,400			n/m		(666		)
Net income attributable to noncontrolling shareholders’ interests																		437			(37.7	)%	701			637			(54.5	)%	1,400
Net income attributable to Cooper Tire & Rubber Company	$	15,008		(66.9	)	$	45,310		$	23,292		(69.3	)	$	75,872			$	8,821		(41.2	)%	$	15,008		$	15,801		(32.2	)%	$	23,292

Earnings per share:
Basic	$	0.30		(65.1	)	$	0.86		$	0.46		(68.1	)	$	1.44
Diluted	$	0.30		(64.7	)	$	0.85		$	0.46		(67.6	)	$	1.42
Basic earnings per share																		$	0.18		(40.0	)%	$	0.30		$	0.32		(30.4	)%	$	0.46
Diluted earnings per share																		$	0.18		(40.0	)%	$	0.30		$	0.31		(32.6	)%	$	0.46

n/m – not meaningful

2019 versus 2018

Consolidated net sales for the ~~second~~ quarter ended June 30, 2019 were $679 million, a decrease of ~~2018 were $698~~$19 million ~~compared with $721 million in the comparable period one year ago. In the second quarter of 2018, the Company experienced lower~~from 2018. Lower unit ~~volume~~volumes ($1634 million) and unfavorable ~~price and mix ($13 million), partially offset by favorable~~ foreign currency impact ($6 million).

~~The Company recorded operating profit in the second quarter of 2018 of $33 million, a decrease of $51 million compared with the second quarter of 2017. Operating profit included unfavorable~~ were partially offset by favorable price and mix ~~net of lower raw material costs ($20 million), and higher manufacturing costs~~ ($21 million). The higher manufacturing costs reflect decisions to align production to demand to control inventory levels. In addition, operating profit decreased due to lower unit volume ($4 million) and increased selling, general and administrative costs ($6 million).

Consolidated net sales for the first six months of ~~2018~~2019 were ~~$1,300~~$1,298 million, a decrease of ~~$64~~$2 million from the comparable period one year ago. In the first ~~half~~six months of ~~2018,~~2019, the Company experienced favorable price and mix ($45 million), offset by lower unit volume ($5439 million) and unfavorable ~~price and mix ($34 million), partially offset by favorable~~ foreign currency impact ($248 million).

The Company recorded operating profit of $32 million in the ~~first half~~second quarter of ~~2018~~2019, compared to operating profit of ~~$59~~$33 million ~~a decrease~~in the second quarter of ~~$83 million compared with the first half of 2017.~~2018. Operating profit ~~included unfavorable price and mix, net~~for 2019 was negatively affected by $13 million of ~~lower raw material~~new tariffs on products imported into the U.S. from China compared to the same period a year ago, as well as $2 million of restructuring costs ($14 million), lower unit volume ($16 million) and higher manufacturing costs ($33 million). The higher manufacturing costs reflect the alignment of production to demand in order to control inventory levels.

~~The first quarter of 2017 included the reversal of $22 million~~ related to ~~preliminary truck and bus~~the decision to cease light vehicle tire ~~duties expensed in 2016. The preliminary truck and bus tire duties were reversed~~production at the Melksham, U.K. facility in the first quarter of ~~2017~~2019. In addition, the quarter included $17 million of favorable price and mix and $15 million of favorable raw material costs (excluding the new tariffs). The quarter also included lower unit volume of $6 million, increased selling, general and administrative expenses of $4 million and $1 million of increased product liability expense. Other costs increased $7 million compared to the second quarter of 2018 as a result of increased distribution costs, as well as the ~~International Trade Commission's vote nullifying the preliminary duties. This was partially offset by $9~~nonrecurrence of insurance recoveries net of direct costs of $3 million ~~related~~recorded in 2018 relating to ~~the timing of costs resulting from~~ tornado damage at a North American distribution center in ~~the first quarter~~2017.

The Company recorded operating profit of ~~2017. The first half of 2017 included $3~~$58 million of direct expenses related to the tornado damage, net of recoveries, while the first half of 2018 includes insurance recoveries net of direct expenses of $5 million. Other operating costs increased fromin the first six months of ~~2017 ($7 million), including~~2019, compared to operating profit of $59 million in the first six months of 2018. Operating profit for the first half of 2019 was negatively affected by $27 million of new tariffs on products imported into the U.S. from China, as well as $7 million of restructuring costs related to ~~workforce actions~~the decision to cease light vehicle tire production at the Melksham, U.K. The first six months of 2019 also included $31 million of favorable price and mix, $16 million of favorable raw material costs (excluding the new tariffs), lower manufacturing costs of $5 million and reduced product liability expense of $4 million. The first half of 2019 also included lower unit volume of $8 million and additional selling, general and administrative costs of $5 million. Other costs increased $10 million in 2019, including higher distribution costs and the nonrecurrence of $5 million of insurance recoveries recorded in the first half of 2018.

On February 15, 2019, countervailing duties of 42.16 percent were imposed on the Company's TBR tire imports into the U.S. from the PRC. The Company incurred duties of $8 million and ~~Latin America, as well as start-up costs~~$18 million for the three and six month periods ended June 30, 2019 related to ~~two new~~countervailing duties on TBR tire imports. Additionally, pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, passenger, light truck and truck and bus tires, raw materials and tire-manufacturing equipment from the PRC imported into the U.S. ~~distribution warehouses which will be operational in~~became subject to additional 10 percent duties effective September 24, 2018. These tariffs increased to 25 percent effective May 10, 2019. The Company has incurred duties of $5 million and $9 million for the three and six month periods ended June 30, 2019 related to these Section 301 tariffs.

The principal raw materials for the Company include natural rubber, synthetic rubber, carbon black, chemicals and steel reinforcement components. Approximately 70 percent of the Company’s raw materials are petroleum-based. Substantially all U.S. inventories have been valued using the LIFO method of inventory costing, which accelerates the impact to cost of ~~products~~goods sold from changes to raw material prices.

The Company strives to assure raw material and energy supply and to obtain the most favorable pricing possible. For natural rubber, ~~and~~ natural gas and certain principal materials, 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 the Company uses these arrangements to satisfy normal manufacturing demands, the pricing volatility in these commodities contributes to the difficulty in managing the costs of raw materials.

Product liability ~~expenses, which are included~~expense totaled $13 million in the ~~Cost~~second quarter of ~~products sold in the Condensed Consolidated Statements of Income, totaled~~2019 as compared to $12 million in the second quarter of ~~2018,~~2018. Product liability expense totaled $24 million in the first six months of 2019 as compared to ~~$16 million from the comparable period one year ago. Product liability expenses totaled~~ $27 million in the first six months of ~~2018, compared~~2018. The change in expense from period to ~~$32 million in~~period is based on the ~~first six months of 2017. The expense is a result of the Company’s~~Company's quarterly review of its reserves, coupled with normal activity, ~~such as~~including the addition of another period of self-insured incidents, ~~and~~ settlements and changes in the amount of reserves. Additional information related to the Company’s accounting for product liability costs appears in the Notes to the condensed consolidated financial statements.

Selling, general, and administrative expenses were ~~$61~~$66 million in the second quarter of 2019 (9.7 percent of net sales) and $61 million in 2018 (8.8 percent of net sales). Selling, general, and ~~$55~~administrative expenses were $123 million in the ~~second quarter~~first six months of ~~2017 (7.7~~2019 (9.4 percent of net sales) and $119 million in the first six months of 2018 (9.2 percent of net sales). ~~The~~In both periods, the increase in selling, general and administrative expenses was driven primarily by an increase in professional fees and mark to market costs of stock-based liabilities, both within unallocated corporate charges. Selling, general and administrative expenses were $119 million in the first half of 2018 (9.2 percent of net sales) compared to $116 million in the first half of 2017 (8.5 percent of net sales). Selling, general, and administrative expenses in the first half of 2018 included decreased mark to market costs of stock-based liabilities and ~~reduced~~increased incentive ~~compensation, offset~~compensation.

During the first six months of 2019, the Company recorded restructuring expense associated with the planned cessation of light vehicle tire production at the Melksham, U.K. facility. This initiative, which was committed to on January 17, 2019 by ~~an increase~~Cooper Tire Europe, a wholly owned subsidiary of the Company, is expected to result in ~~professional fees~~charges to 2019 pre-tax earnings of approximately $8 to $11 million, of which 5 to 10 percent are expected to be non-cash charges. The Company recorded restructuring expense of $2 million for the quarter ended June 30, 2019, consisting primarily of employee severance costs. The Company recorded restructuring expense of $7 million for the six months ended June 30, 2019, consisting of $6 million of employee severance costs and ~~costs related to workforce actions~~$1 million in ~~the U.S.~~asset write-downs and ~~Latin America, all included primarily within unallocated corporate charges. 2017 unallocated corporate charges also included the write-off of assets~~other costs. Additional information related to the ~~Company's global ERP system implementation, which did not recur~~Company’s accounting for restructuring costs appears in ~~2018.~~the Notes to the condensed consolidated financial statements.

Interest expense and interest income in the second quarter of 2019 and for the first six months of 2019 were comparable to the similar periods in 2018.

For the quarter ended June 30, 2019, other pension and postretirement benefit expense was $9 million as compared to $7 million for the quarter ended June 30, 2018. For the six months ended June 30, 2019, other pension and postretirement benefit expense was $19 million as compared to $14 million for the six months ended June 30, 2018. The increase is primarily the result of lower estimated returns on plan assets compared to 2018, reflective of an improved pension funded status resulting in the portfolio taking less risk in order to preserve the funded status.

Other expense was comparable for the second quarter of 2019 compared to the second quarter of 2018. Other expense decreased $3 million for the six month period ended June 30, 2019 compared to the comparable period of 2018, primarily due to the impact of foreign currency exchange rates.

For the three month period ended June 30, 2019, the Company recorded income tax expense of $6 million (effective tax rate of 38.7 percent) compared to $2 million (effective tax rate of 12.6 percent) for the same period in 2018. For the six month period ended June 30, 2019, the Company recorded income tax expense of $12 million (effective tax rate of 42.6 percent) compared to $6 million (effective tax rate of 18.8 percent) for the same period in 2018. The effective tax rate for the three and six month periods ended June 30, ~~2018 and 2017, respectively, were comparable.~~

As a result of the adoption of ASU 2017-07, the income statement presentation of net periodic benefit cost was changed in the first quarter of 2018. The service cost component of net periodic benefit cost continues to be classified in the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic benefit cost are presented in the income statement separately from the service cost component as Other pension and postretirement benefit expense, outside of operating profit. Application of the standard has been applied retrospectively for all periods presented. Other pension and postretirement benefit expense decreased to $7 million in the second quarter of 2018 from $9 million in the second quarter of 2017. For the six months ended June 30, 2018, other pension and postretirement benefit expense decreased to $14 million from $19 million in the comparable period of 2017. The decrease in both periods is

~~primarily the result of decreased amortization of actuarial loss in 2018 as a result of improved funding levels at the last actuarial valuation date of December 31, 2017.~~

~~Other income decreased $1 million in the second quarter of 2018 and $3 million in the first half of 2018 due primarily to the impact of foreign currency forward contracts.~~

For the three month period ended June 30, 2018, the Company recorded income tax expense of $2 million (effective rate of 12.6 percent) compared to $22 million (effective rate of 32.7 percent) for the same period in 2017. For the six month period ended June 30, 2018, the Company recorded a provision for income taxes of $6 million (effective tax rate of 18.8 percent) compared to $35 million (effective tax rate of 32.0 percent) for the same period in 2017. The effective tax rate for the three month period ended June 30, 20182019 differs from the U.S. federal statutory rate of 21 percent primarily due to net discrete tax ~~benefits~~expense of $1$2 million and $4 million recorded during the ~~quarter,~~three and six month periods, respectively, as well as the projected mix of earnings in international jurisdictions with differing tax rates and jurisdictions where valuation allowances are recorded. The effective tax rate for the six month period ended June 30, 2018 differs from the U.S. federal statutory rate of 21 percent primarily due to net discrete tax benefits of $300 thousand recorded during the quarter, partially offset by increases in unrecognized tax benefits recorded in the prior quarter, the projected mix of earnings in international jurisdictions with differing tax rates, and jurisdictions where valuation allowances are recorded. The lower statutory rate in 2018 reflects the impact of the 2017 comprehensive U.S. tax legislation.

The Company continues to maintain a valuation ~~allowance~~allowances pursuant to ASC 740, “Accounting for Income Taxes,” against ~~a portion~~portions of its U.S. and non-U.S. deferred tax ~~asset position,~~assets at June 30, 2019 as it cannot assure the ~~utilization~~future realization of ~~these assets before they expire.~~the associated tax benefits prior to their reversal or expiration. In the U.S., the Company has offset a portion of its deferred tax asset relating primarily to a loss carryforward by a valuation allowance of $1 million. In addition, the Company has recorded valuation allowances of ~~$28~~$23 million relating to non-U.S. net operating ~~losses.~~losses and other deferred tax assets for a total valuation allowance of $24 million. In conjunction with the Company’s ongoing review of its actual results and anticipated future earnings, the Company will continue to reassess the possibility of releasing all or part of the valuation allowances currently in place when ~~they~~the associated deferred tax assets are deemed to be realizable.

Segment Operating Results

The Company has four segments under ASC 280:

North America, composed of the Company’s operations in the ~~United States~~U.S. and Canada;

Latin America, composed of the Company’s operations in Mexico, Central America and South America;

Europe; and

Asia.

Both the ~~Asia~~Europe and ~~Europe~~Asia segments have been determined to be individually immaterial, as they do not meet the quantitative requirements for segment disclosure under ASC 280. In accordance with ASC 280, information about operating segments that are not reportable shall be combined and disclosed in an all other category separate from other reconciling items. As a result, these two segments have been combined in the segment operating results discussion. The results of the combined ~~Asia~~Europe and ~~Europe~~Asia segments are presented as “International Tire ~~Operations.”~~Operations” in the segment disclosure.

Americas Tire Operations Segment


(Dollar amounts in thousands)	Three Months Ended June 30,								Six Months Ended June 30,								Three Months Ended June 30,					Six Months Ended June 30,
	2018			Change		2017			2018			Change		2017			2019		Change	2018		2019		Change	2018
Net sales	$	584,412		(5.0	)%	$	615,356		$	1,069,804		(6.7	)%	$	1,146,715
Sales																	$	582,307	(0.4)%	$	584,412	$	1,097,243	2.6%	$	1,069,804
Operating profit	$	40,480		(55.5	)%	$	90,884		$	71,715		(55.6	)%	$	161,669		$	46,814	15.6%	$	40,480	$	85,603	19.4%	$	71,715
Operating margin	6.9		%	(7.9) points		14.8		%	6.7		%	(7.4) points		14.1		%	8.0%		1.1 points	6.9%		7.8%		1.1 points	6.7%
Total unit sales change				(3.7	)%							(4.6	)%						(3.8)%					(2.1)%
United States replacement market unit shipment changes:
Total light vehicle tires
Segment				(3.3	)%							(4.7	)%						(4.0)%					(1.7)%
USTMA members				(0.6	)%							(2.9	)%						(1.5)%					0.3%
Total Industry				4.2	%							1.1	%						0.7%					3.9%

The source of this information is the United States Tire Manufactures Association ("USTMA") and internal sources.

~~The Americas Tire Operations segment is the aggregation of the Company’s North America and Latin America operating segments.~~ The Americas Tire Operations segment manufactures and markets passenger car and light truck tires, primarily for sale in the U.S. replacement market. The segment also has a joint venture manufacturing operation in Mexico, COOCSA, which supplies passenger car tires to the North American, Mexican, Central American and South American markets. The segment also markets and distributes racing, TBR and motorcycle tires. The racing and motorcycle tires are manufactured by the Company’s European ~~operations~~Operations segment and by others. ~~The~~ TBR tires are sourced from GRT and through an off-take agreement that was entered with PCT, the Company's former joint venture. In December 2017, the Company signed an off-take agreement with Sailun Vietnam, effective from January 1, 2018 through December 31, 2020, as an additional source of TBR tires. On April 5, 2019, Cooper Vietnam and Sailun Vietnam established a joint venture in Vietnam which will produce and sell TBR tires. The new joint venture is expected to begin producing tires in 2020. 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.~~products, mass merchandisers and digital channels. The segment does not currently sell its products directly to end users, except through three Company-owned retail stores. The segment sells a limited number of tires to OEMs.

Net sales of the Americas Tire Operations segment ~~for~~decreased from $584 million in the second quarter of 2018 ~~decreased $31~~to $582 million ~~or 5.0 percent, from~~in the second quarter of ~~2017.~~2019. The decrease in sales was a result of lower unit volume ($2322 million), ~~unfavorable~~partially offset by favorable pricing and mix ($~~6 million) and unfavorable foreign currency impact ($2~~20 million). Unit shipments for the segment decreased ~~3.7~~3.8 percent in the second quarter of 2019 compared with the second quarter of ~~2017.~~2018. In the U.S., the segment’s unit shipments of total light vehicle tires decreased ~~3.3~~4.0 percent in the second quarter of ~~2018~~2019 compared with the ~~second quarter of 2017.~~same period in 2018. This decrease compares with a ~~0.6~~1.5 percent decrease in total light vehicle tire shipments experienced by the ~~members of the U.S. Tire Manufacturing Association (“USTMA”),~~USTMA, and a ~~4.2~~0.7 percent increase in total light vehicle tire shipments experienced for the total industry, ~~(which~~which includes an estimate for non-USTMA ~~members).~~members.

Net sales of the Americas Tire Operations segment ~~for~~increased from $1,070 million in the first six months of 2018 ~~decreased $77~~to $1,097 million ~~or 6.7 percent, from~~in the first six months of ~~2017.~~2019. The ~~decrease~~increase in sales was a result of ~~lower unit volume ($53 million), unfavorable~~favorable pricing and mix ($2650 million), partially offset by ~~favorable foreign currency~~unfavorable volume impact ($223 million). Unit shipments for the segment decreased ~~4.6~~2.1 percent in the first six months of 2019 compared with the first ~~half~~six months of ~~2017.~~2018. In the U.S., the segment’s unit shipments of total light vehicle tires decreased ~~4.7~~1.7 percent in the first ~~half~~six months of ~~2018~~2019 compared with the ~~first half of 2017.~~same period in 2018. This decrease compares with a ~~2.9~~0.3 percent ~~decrease~~increase in total light vehicle tire shipments experienced by the ~~members of the~~ USTMA, and a ~~1.1~~3.9 percent increase in total light vehicle tire shipments experienced for the total industry.

Operating profit for the segment ~~decreased $51~~for the second quarter of 2019 increased $7 million to ~~$40~~$47 million over the same period in 2018. Operating profit for 2019 was negatively affected by $13 million of new tariffs on products imported into the U.S. from China compared to the same period a year ago. In addition, the quarter included $22 million of favorable price and mix and $12 million of favorable raw material costs (excluding the new tariffs). The second quarter of 2019 also included $3 million of favorable manufacturing costs. The segment experienced $6 million of unfavorable selling, general and administrative costs, $5 million as a result of lower unit volume and $1 million of higher product liability costs in the second quarter of ~~2018. The segment experienced unfavorable price and mix ($25 million),~~2019. Other costs increased $5 million, including increased distribution costs, as well as ~~higher raw material costs ($2 million) in~~ the ~~second quarter~~nonrecurrence of 2018. Manufacturing costs were unfavorable ($17 million), which reflect the alignment of production to demand in order to control inventory levels. Additionally, the segment experienced lower unit volume ($4 million) and increased other costs ($3 million) in the second quarter of 2018.

~~Operating profit for the segment decreased $90 million to $72 million in the first six months of 2018. The segment experienced unfavorable price and mix,~~insurance recoveries net of ~~raw material~~direct costs ~~($27 million) and lower unit volumes ($14 million) compared~~of $3 million recorded in 2018 relating to the first six months of 2017. The segment also experienced increased manufacturing costs ($29 million) as a result of decisions to lower production volume and control inventory levels due to the decline in unit shipments in the first six months of 2018. In the first quarter of 2017, the Company had a reversal of $22 million related to preliminary truck and bus tire duties expensed in 2016. This was partially offset by $9 million of favorability related to the timing of costs resulting from tornado damage at a North American distribution center in 2017.

Operating profit for the segment for the first ~~quarter~~six months of ~~2017. The first half of 2017 included $3~~2019 increased $14 million ~~of direct expenses related~~compared to the ~~tornado damage, net~~first six months of ~~recoveries, while~~2018 to $86 million. Operating profit for the first half of ~~2018 includes~~2019 was negatively affected by $27 million of new tariffs on products imported into the U.S. from China. In addition, operating profit for the first six months of 2019 included $39 million of favorable price and mix and $11 million of favorable raw material costs (excluding the new tariffs). The first six months of 2019 also included $9 million of favorable manufacturing costs, and $4 million of lower product liability costs. The segment experienced $8 million of unfavorable selling, general and administrative costs and $5 million of lower unit volume. The first six months of 2019 also included increased other costs of $9 million, including higher distribution costs and the nonrecurrence of $5 million of insurance recoveries net of direct ~~expenses of $5 million. Other~~ costs ~~increased ($7 million)~~recorded in the first half of ~~2018, including costs related to workforce actions in Latin America, as well as start-up costs related to two new U.S. distribution warehouses which will be operational in~~ 2018.

The segment’s internally calculated raw material index of ~~163.8 during~~161.8 for the quarter ended June 30, 2019 was ~~an increase~~a decrease of ~~0.2~~1.2 percent from the second quarter of ~~2017.~~2018. The raw material index increased ~~4.6~~0.9 percent ~~from~~over the quarter ended March 31, ~~2018.~~

The International Tire Operations segment is the combination of the ~~Asia~~Europe and ~~Europe~~Asia operating segments. The European operations include manufacturing operations in the U.K. and Serbia. The U.K. entity manufactures and markets passenger car, light truck, motorcycle and racing tires and tire retread material for domestic and global markets. The Serbian entity manufactures passenger car and light truck tires primarily for the European markets and for export to the ~~U.S.~~North American segment. The Asian operations are located in the ~~PRC.~~PRC and Vietnam. Cooper Kunshan Tire manufactures passenger car and light truck tires both for the Chinese domestic market and for export to markets outside of the PRC. ~~On December 1, 2016, the Company acquired 65 percent of China-based~~ GRT, a joint venture manufacturing facility located in the ~~PRC. GRT~~PRC, serves as a global source of ~~truck and bus radial~~TBR tire production for the Company. The segment also had another joint venture in the PRC, PCT, which manufactured and marketed truck and bus radial and bias tires as well as passenger car and light truck tires for domestic and global markets. The Company sold its ownership interest in this joint venture in November 2014, and the Company began procuringprocures certain TBR and passenger car tires under off-take agreements with PCT through ~~mid-2018. The TBR tire agreement has been extended~~mid-2021 and, ~~now expires~~ in ~~mid-2019. In~~ December 2017, the Company signed an off-take agreement with Sailun Vietnam, as ~~an additional~~a source of TBR ~~tires.~~tires through December 31, 2020. On April 5, 2019, Cooper Vietnam and Sailun Vietnam established a joint venture in Vietnam which will produce and sell TBR tires in addition to the off-take agreement. The new joint venture is expected to begin producing tires in 2020. The segment sells a majority of its tires in the replacement market, with a ~~growing~~ portion also sold to OEMs.

On January 17, 2019, Cooper Tire Europe, a wholly owned subsidiary of the Company, committed to a plan to cease light vehicle tire production at its Melksham, England facility. Light vehicle tire production is expected to be phased out and an estimated 300 roles will be eliminated at the site. Cooper Tire Europe will obtain light vehicle tires to meet customer needs from other production sites within the Company’s global production network. Approximately 400 roles will remain in Melksham to support the functions that continue there, including motorsports and motorcycle tire production, the materials business, Cooper Tire Europe headquarters, sales and marketing, and the Europe Technical Center.

Net sales of the International Tire Operations segment ~~increased~~decreased $29 million, or 17.5 percent, from ~~$151 million in~~ the second quarter of ~~2017 to $168 million in the second quarter of 2018, an increase of 10.9 percent.~~2018. The segment experienced $25 million of lower unit volume and $6 million of unfavorable foreign currency impact, partially offset by $2 million of favorable price and ~~mix ($5 million) and increased~~mix. Segment unit volume ~~($1 million), coupled~~was down 15.1 percent, with ~~favorable foreign currency impact ($11 million). Net segment~~ unit ~~exports to the U.S. decreased 8.6 percent compared with the second quarter of 2017.~~volume decreases in Asia and Europe.

Net sales of the International Tire Operations segment ~~for the first six months of 2018 increased $36~~decreased $47 million, or ~~12.2~~14.2 percent, from the first six months of ~~2017.~~2018. The segment experienced $40 million of lower unit volume and $8 million of unfavorable foreign currency impact, partially offset by $1 million of favorable price and ~~mix ($17 million) and foreign currency impact ($26 million), partially offset by decreased~~mix. Segment unit volume ~~($7 million) compared~~was down 12.1 percent, with ~~the first six months of 2017. Net segment exports to the U.S. decreased 1.8 percent compared with the first six months of 2017.~~unit volume decreases in Asia and Europe.

Operating profit for the segment ~~increased $3~~decreased $7 million ~~from the second quarter of 2017~~ to an operating ~~profit~~loss of $6$1 million in the second quarter of ~~2018.~~2019. The ~~segment experienced favorable raw materials, net~~decrease was driven by $3 million of lower unit volume, $2 million of unfavorable price and mix, ~~($6 million),~~$3 million of higher manufacturing costs, Melksham restructuring charges of $2 million and $1 million of increased other costs. These decreases were partially offset by ~~increased manufacturing~~$3 million of decreased raw material costs ~~($4 million). Other~~and $1 million of decreased selling, general and administrative costs ~~($1 million) decreased compared to~~in the second quarter of ~~2017.~~2019.

Operating profit for the segment ~~increased $7~~decreased $16 million ~~from~~to an operating loss of $3 million in the first six months of ~~2017~~2019. The decrease was driven by Melksham restructuring charges of $7 million, $5 million of lower unit volume, $5 million of unfavorable price and mix, $4 million of higher manufacturing costs and $1 million of increased other expenses. These were partially offset by $6 million of decreased raw material costs in the first half of 2019.

Sources and uses of cash in operating activities

Net cash used by operating activities of continuing operations was $99 million in the first six months of 2019 compared to $79 million in the first six months of 2018. Net income provided $16 million in 2019 as compared to net income of $25 million in 2018. In the first six months of 2019, non-cash items contributed $105 million, including a favorable increase in the Company's LIFO reserve of $10 million, compared to $97 million contributed in the first six months of 2018. In the first six months of 2019, changes in working capital used $220 million, as compared to the usage of $200 million in the first six months of 2018. The ~~segment experienced lower raw material costs ($9 million)~~increased 2019 usage was driven primarily by higher growth in inventory as a result of normal seasonal volume growth and ~~favorable price~~increased cost, including the impact of tariffs on tires imported from China to the U.S., and ~~mix ($3 million), partially offset by increased manufacturing costs ($4 million) and decreased volume ($1 million)~~a decrease in the ~~first half~~Company's customer reserve accruals in 2019 as a result of ~~2018.~~reduced unit volumes.

~~Outlook for Company~~

The Company anticipates unit volume will be flat for the full year 2018 versus 2017. The Company expects a modest sequential improvement in operating profit margin in the second half of 2018 as compared to the first half of 2018.

~~The Company expects its full year 2018 effective tax rate will be in a range between 23~~Sources and ~~26 percent.~~

~~The Company expects capital expenditures for 2018 will be in a range of $200 million to $220 million.~~

~~Liquidity and Capital Resources~~

~~Uses~~uses of cash in ~~operating~~investing activities -

Net cash ~~consumed by operating~~used in investing activities ~~was $79~~reflect capital expenditures of $105 million in the first six months of ~~2018 compared to net cash consumed~~2019 and $98 million in the same period of ~~$83 million~~2018. Additionally, investing activities in the first six months of ~~2017.~~ 2019 also include the Company's $49 million investment in the Sailun Vietnam equity joint venture.

Sources and uses of cash in financing activities

In the first six months of 2019 and 2018, ~~net income provided $25~~the Company added $5 million and ~~other non-cash charges contributed $97~~$11 million, ~~which were more than offset by changes in working capital accounts, which consumed $201 million. In the first six months~~respectively, of ~~2017, net income provided $75~~short-term debt at its Asian operations.

The Company paid $2 million and ~~other non-cash charges contributed $91~~$1 million ~~which were more than offset by changes~~ in ~~working capital accounts, which consumed $249 million. The decrease in cash consumed in operating activities in 2018 as compared~~fees associated with amendments to ~~2017 is primarily the result of management of inventory levels and movement in long-term liabilities~~its domestic credit facilities in the first six months of 2019 and 2018, ~~partially offset by lower net income in 2018.~~respectively.

~~Uses of cash in investing activities~~ ~~- Net cash used in investing activities during the first six months of 2018 and 2017 reflect capital expenditures of $98 million and $90 million, respectively.~~

~~Uses of cash in financing activities~~ - The Company repurchased $29 ~~million and $39~~ million of its common stock in the first six months of 2018 ~~and 2017, respectively. During~~as part of the Company’s share repurchase program authorized by the Board of Directors. No share repurchases occurred in the first six months of 2018, the Company borrowed $11 million more on short-term debt compared with the first six months of 2017 in order to meet working capital requirements. In 2018, the Company borrowed $30.5 million from the domestic accounts receivable securitization facility, which was partially offset by the repayment of short-term notes payable in Asia. 2019.

Dividends paid on the Company’s common shares were ~~comparable over~~$11 million in the first six months of both ~~2018~~2019 and 2017. During the first six months of 2018, stock options were exercised to acquire 13,111 shares of common stock with a cash impact of $0.3 million. During the first six months of 2017, stock options were exercised to acquire 204,384 shares of common stock with a cash impact of $4 million.2018.

Available cash, credit facilities and contractual commitments -

At June 30, ~~2018,~~2019, the Company had cash and cash equivalents of ~~$180~~$112 million.

Domestically, the ~~Company has a revolving credit facility~~Company's recently amended Credit Facility with a consortium of banks ~~that~~ provides up to ~~$400~~$700 million ~~based on available collateral, including~~and is set to expire in June 2024. Of this amended borrowing capacity, $200 million is allocated to the Term Loan A, while the remaining $500 million is allocated to the Revolving Credit Facility. The Term Loan A is scheduled to be drawn in December 2019 primarily to pay for the maturing unsecured notes of $174 million that are classified within the current portion of long-term debt at June 30, 2019. The Credit Facility also includes a $110 million letter of credit subfacility. ~~The revolving credit facility was amended in the first quarter of 2018, which extended the maturity date to February 2023.~~

The Company also has an accounts receivable securitization facility with a borrowing limit of up to $150 million, based on available ~~collateral. The accounts receivable securitization facility was also amended~~collateral, which expires in ~~the first quarter~~February 2021.

These credit facilities are undrawn, other than to secure letters of ~~2018, which extended the maturity date to February 2021.~~

Atcredit, at June 30, ~~2018, the Company had $30.5 million outstanding on the accounts receivable securitization facility.~~2019. The Company’s additional borrowing capacity under these facilities, net of amounts used to back letters of credit and based on available collateral at June 30, ~~2018,~~2019, was ~~$484 million.~~$808 million, including the capacity of the Term Loan A.

The Company’s operations in Asia have annual renewable unsecured credit lines that provide up to ~~$67~~$47 million of borrowings and do not contain significant financial covenants. The additional borrowing capacity on the Asian credit lines totaled ~~$50~~$27 million at June 30, ~~2018.~~2019.

The Company believes that its cash and cash equivalent balances, along with available cash from operating cash flows and credit facilities, will be adequate to fund its typical needs, including working capital requirements, projected capital expenditures, including its portion of capital expenditures in its partially-owned subsidiaries, ~~and~~ dividend and share repurchase ~~goals.~~goals and maturing long-term debt. The Company also believes it has access to additional funds from capital markets to fund potential strategic ~~initiatives.~~initiatives and to finance maturing long-term debt. The entire amount of short-term notes payable outstanding at June 30, ~~2018~~2019 is debt of consolidated subsidiaries. The Company expects its subsidiaries to refinance or pay these amounts within the next twelve months.

The following table summarizes long-term debt at June 30, ~~2018:~~

product liability claims faced by the Company generally involves different types of tires and 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 product 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.

Pursuant to ASC 450, the Company accrues the minimum liability for each known claim when the estimated outcome is a range of probable loss and no one amount within that range is more likely than another. The Company uses a range of losses because an average cost would not be meaningful since the product liability claims faced by the Company are unique and widely variable, and accordingly, the resolutions of those claims have an enormous amount of variability. The costs have ranged from zero dollars to $33 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. The Company periodically reviews such estimates and any adjustments for changes in reserves are recorded in the period in which the change in estimate occurs. Because of the speculative nature of litigation in the U.S., the Company does not believe a meaningful aggregate range of potential loss for asserted and unasserted claims can be determined. While the Company believes its reserves are reasonably stated, it is possible an individual claim from time to time may result in an aberration from the norm and could have a material impact.

In addition to the product liability cases described above, the Company is involved in various other legal proceedings arising in the ordinary course of business. The Company regularly reviews the probable outcome of these proceedings, the expenses expected to be incurred, the availability and limits of the insurance coverage, and accrues for these proceedings at the time a loss is probable and the amount of the loss can be estimated. Although the outcome of these pending proceedings cannot be predicted with certainty and an estimate of any such loss cannot be made, the Company believes that any liabilities that may result from these proceedings are not reasonably likely to have a material adverse effect on the Company’s liquidity, financial condition or results of operations. Additional information regarding the Company’s legal proceedings is included in Item 1 of Part II of this Form 10-Q titled, “Legal Proceedings.”

Forward Looking Statements

This report contains what the Company believes are “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995, regarding projections, expectations or matters that the Company anticipates may happen with respect to the future performance of the industries in which the Company operates, the economies of the United States and other countries, or the performance of the Company itself, which involve uncertainty and risk. Such “forward-looking statements” are generally, though not always, preceded by words such as “anticipates,” “expects,” “will,” “should,” “believes,” “projects,” “intends,” “plans,” “estimates,” and similar terms that connote a view to the future and are not merely recitations of historical fact. Such statements are made solely on the basis of the Company’s current views and perceptions of future events, and there can be no assurance that such statements will prove to be true.

It is possible that actual results may differ materially from projections or expectations due to a variety of factors, including, but not limited to:

It is not possible to foresee or identify all such factors. Any forward-looking statements in this report are based on certain assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Prospective investors are cautioned that any such statements are not a guarantee of future performance and actual results or developments may differ materially from those projected.

The Company makes no commitment to update any forward-looking statement included herein or to disclose any facts, events or circumstances that may affect the accuracy of any forward-looking statement. Further information covering issues that could materially affect financial performance is contained under Risk Factors below and in the Company’s other filings with the U. S. Securities and Exchange Commission (“SEC”).

There have been no material changes in market risk at June 30, ~~2018~~2019 from those detailed in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, ~~2017.~~2018.

There were no changes in the Company’s internal control over financial reporting that occurred during the quarter ended June 30, ~~2018~~2019 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

PART II. OTHER INFORMATION

The Company is a defendant in various judicial proceedings arising in the ordinary course of business. A significant portion of these proceedings are product liability cases in which individuals involved in motor vehicle accidents seek damages resulting from allegedly defective tires manufactured by the Company. After reviewing all of these proceedings, and taking into account all relevant factors concerning them, the Company does not believe that any liabilities resulting from these proceedings are reasonably likely to have a material adverse effect on its liquidity, financial condition or results of operations in excess of amounts recorded at June 30, ~~2018.~~2019. In the future, such costs could have a materially greater impact on the consolidated results of operations and financial position of the Company than in the past.

Some of the more significant risk factors related to the Company follow:

Pricing volatility for raw materials or commodities or an inadequate supply of key raw materials could result in increased costs and may significantly affect the Company’s profitability.

The pricing volatility for natural rubber, petroleum-based materials and other raw 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 highly 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. Even if the Company is able to pass along these higher costs, its profitability may be adversely affected until it is able to do so. Decreasing costs for raw materials could also affect margins if the Company is unable to maintain its pricing structure due to the need to offer price reductions to remain competitive. Further, if the Company is unable to obtain adequate supplies of raw materials in a timely manner for any reason, its operations could be interrupted or otherwise adversely affected.

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

Current global and regional 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 the ultimate consumer.

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.

The Company’s competitors may also change their actions as a result of changes to the business environment, which could result in increased price competition and discounts, resulting in lower margins or reduced sales volumes for the business.

The current economic environment continues to cause increased financial pressures and stresses on the Company's customers, which could impact the timeliness of customer payments and, ultimately, the collectability of accounts receivable. In addition, the bankruptcy, restructuring, financial condition, consolidation or other cooperation of one or more of the Company’s major customers or suppliers, as well as the strategic actions of competitors, could result in the write-off of accounts receivable, a reduction in purchases of the Company’s products or a supply disruption to its facilities, which could harm the Company’s results of operations, financial condition and liquidity.

The Company’s results could be impacted by changes in tariffs, trade agreements or other trade restrictions imposed by the U.S. or other governments on imported tires, raw materials or equipment used in tire manufacturing.

The Company’s ability to competitively source and sell tires can be significantly impacted by changes in tariffs, changes or repeals of trade agreements, including withdrawal from or material modifications to NAFTA, including the implementation of the USMCA, or certain other international trade agreements, or other trade restrictions or retaliatory actions imposed by various governments. Other effects, including impacts on the price of tires, responsive actions from governments and the opportunity for competitors to establish a presence in markets where the Company participates, could also have significant impacts on the Company’s results.

For example, antidumping and countervailing duty investigations into certain passenger car and light truck tires imported from the PRC into the United States were initiated on July 14, 2014. The determinations announced in both investigations were affirmative and resulted in the imposition of significant additional duties from each.

Antidumping and countervailing duty investigations into certain truck and bus tires imported from the PRC into the U.S. were initiated on January 29, 2016. The preliminary determinations announced in both investigations were affirmative and resulted

in the imposition of significant additional duties from each. On February 22, 2017, the International Trade Commission ("ITC") made a final determination that the U.S. market had not suffered material injury because of imports of truck and bus tires from

China. As a result of this decision, preliminary antidumping and countervailing duties from Chinese truck and bus tires imported subsequent to the preliminary determination were not collected and any amounts previously paid were refunded. On April 14, 2017, the United Steelworkers Union filed a civil action challenging the ITC's decision not to impose duties on truck and bus tires from China imported into the U.S. and that case is still pending. On November 1, 2018, the Court of International Trade (“CIT”) remanded the case back to the ITC for reconsideration. On January 30, 2019, the ITC reversed its earlier decision and made an affirmative determination of material injury. On February 15, 2019, the determination was published in the Federal Register and significant duties were imposed on Chinese truck and bus tire imports. The ITC’s re-determination, along with comments from the parties regarding the re-determination were filed with the CIT. The CIT will make a final determination.

In addition, depending on the outcome of the Section 232 National Security Investigation of Automobiles, Including Cars, SUVs, Vans and Light Trucks, and Automotive Parts (“Automobile 232 Investigation”), passenger car and light truck tires imported into the U.S. may be subject to an additional duty. Also, depending on the outcome of the July 2018 Proposed Determination of Action Pursuant to Section 301: China’s Acts, Policies, and Practices Related to Technology Transfer, Intellectual Property, and Innovation, ~~(“July 301 Investigation”),~~ passenger, light truck and truck and bus tires, raw materials and tire-manufacturing equipment from the PRC imported into the U.S. ~~may be~~became subject to additional ~~duties. Such~~10 percent duties effective September 24, 2018. These increased to 25 percent effective May 10, 2019. Future changes to duty percentages, if ~~implemented, would be in addition to existing duties, including the Section 232 steel investigation and prior Section 301 investigation, and~~ any, ~~additional duty from the Automobile 232 Investigation.~~are unknown at this time. Retaliatory duties on U.S. products have been ~~threatened if~~implemented in response to these ~~investigations impose any~~ additional ~~duties.~~duties by China.

The imposition of additional duties or other trade restrictions in the U.S. or elsewhere on raw materials or tire-manufacturing equipment used by the Company or on certain tires imported from the PRC or other countries will result in higher costs and potentially lower margins, or in the case of finished goods, in those tires being diverted to other regions of the world, such as Europe, Latin America or elsewhere in Asia, which could materially harm the Company’s results of operations, financial condition and liquidity.

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

The tire industry is a highly competitive, global industry. Some of the Company’s competitors are larger companies with greater financial resources. Intense competitive activity in the replacement tire industry, including consolidation or other cooperation by and among the Company's competitors, has caused, and will continue to cause, pressures on the Company’s business, as well as pressure on certain of the Company's customers, suppliers or distribution network. As the Company increases its presence in the original equipment market, the demand for products by the OEM's will be impacted by automotive vehicle production. 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, make required investments to 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 impact could become material on the Company’s earnings.

The Company is facing supply risks related to certain tires it purchases from PCT.

In 2014, the Company sold its ownership interest in PCT and entered into off-take agreements with PCT to provide the continuous supply of certain TBR and passenger car tires for the Company through mid-2018. The ~~TBR tire agreement has~~agreements have been extended and now ~~expires~~expire in ~~mid-2019.~~mid-2021. If there are any disruptions in or quality issues with the supply of ~~Cooper-branded~~TBR products from PCT, it could have a material negative impact on the Company’s business. The Company is actively pursuing options to ensure the uninterrupted supply of these tires to meet the demands of the business beyond the terms of the PCT off-take agreements, including sourcing through GRT, ~~and~~ an off-take agreement with Sailun Vietnam and the recently announced joint venture between Cooper Vietnam and Sailun Vietnam, which is expected to begin producing tires in 2020, but there can be no assurance that the Company will be able to do so in a timely manner.

If the Company fails to develop technologies, processes or products needed to keep up with rapidly evolving distribution channels and to support consumer demand or, changes in consumer behavior, it may lose significant market share or be unable to recover associated costs.

The Company’s ~~ability to sell tires~~tire sales, margins and profitability may be significantly impacted if it does not develop or have available technologies, processes, including distribution methods, or products that competitors may be developing and consumers or dealers are demanding. This includes, but is not limited to, changes in the design of and materials used to manufacture tires, changes in the types of tires consumers desire and changes in the vehicles consumers are ~~purchasing~~purchasing. Additionally, the Company is also impacted by changes in the way consumers buy tires and failure to effectively compete in various sales and marketing channels, including digital channels and others in which the Company has been less active in the ~~past.~~past, such as through mass merchandisers, which have negotiating leverage and costs associated with their operating procedures that are unique to their needs.

Technologies or processes may also be developed by competitors that better distribute tires to consumers, including through wholly-owned distributors, which could affect the Company’s customers and implementation of its strategic plan.

An increase in consumer preference for car- and ride-sharing services, as opposed to automobile ownership, may result in a long term reduction in the number of vehicles per capita. Additionally, refreshing existing products and 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. If the Company cannot successfully use new production or equipment methodologies it invests in, it may also not be able to recover those costs.

If assumptions used in developing the Company’s strategic plan are inaccurate or the Company is unable to execute its strategic plan effectively, its profitability and financial position could be negatively impacted.

The Company faces both general industry and company-specific challenges. These include volatile raw material costs, increasing product complexity and pressure from competitors with greater resources or manufacturing in lower-cost regions. To address these challenges and position the Company for future success, the Company continues to execute towards strategic imperatives outlined in its Strategic Plan. The three strategic imperatives are building a sustainable cost competitive position, driving top-line profitable growth and building organizational capabilities and enablers to support strategic goals.

The Company continually reviews and updates its business plans to achieve these imperatives. If the assumptions used in developing the Company’s business plans vary significantly from actual conditions, the Company’s sales, margins and profitability could be harmed. If the Company is unsuccessful in implementing the tactics necessary to execute its business plans, it may not be able to achieve or sustain future profitability, which could impair its ability to meet debt and other obligations and could otherwise negatively affect its operating results, financial condition and liquidity.

The Company may not be successful in executing and integrating investments and acquisitions into its operations, which could harm its results of operations and financial condition.



~~DELAWARE~~Delaware		34-4297750
(State or other jurisdiction of incorporation or organization)		(I.R.S. employer identification no.)



Common Stock, $1 par value per share	CTB	New York Stock Exchange
(Title of Each Class)	(Trading Symbol)	(Name of Each Exchange on which Registered)



Large accelerated filer	x☒	Accelerated filer	¨☐
Non-accelerated filer	¨☐ (Do not check if a smaller reporting company)	Smaller reporting company	¨☐
		Emerging growth company	¨ ☐




COOPER TIRE & RUBBER COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollar amounts in thousands except per share amounts)

	June 30, 2019 (Unaudited)		December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	111,681	$	356,254
Notes receivable	4,175		5,737
Accounts receivable, less allowances of $7,922 at 2019 and $5,836 at 2018	616,974		546,905
Inventories:
Finished goods	438,848		338,133
Work in process	30,149		27,265
Raw materials and supplies	120,413		114,582
Total inventories	589,410		479,980
Other current assets	48,863		67,856
Total current assets	1,371,103		1,456,732
Property, plant and equipment:
Land and land improvements	52,979		52,668
Buildings	330,942		314,555
Machinery and equipment	2,024,852		1,981,857
Molds, cores and rings	254,596		238,911
Total property, plant and equipment	2,663,369		2,587,991
Less: Accumulated depreciation	1,646,013		1,586,070
Property, plant and equipment, net	1,017,356		1,001,921
Operating lease right-of-use assets, net of accumulated amortization of $13,620 at 2019 and $0 at 2018	93,183		—
Goodwill	18,851		18,851
Intangibles, net of accumulated amortization of $115,905 at 2019 and $106,871 at 2018	115,937		120,321
Deferred income tax assets	27,246		28,146
Investment in joint venture	49,001		—
Other assets	11,396		8,234
Total assets	$	2,704,073	$	2,634,205



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net sales	$	698,408		$	720,753		$	1,299,904		$	1,363,778
Cost of products sold	604,185			581,202			1,121,196			1,105,642
Gross profit	94,223			139,551			178,708			258,136
Selling, general and administrative expense	61,460			55,350			119,490			115,941
Operating profit	32,763			84,201			59,218			142,195
Interest expense	(8,417		)	(8,210		)	(16,108		)	(16,037		)
Interest income	1,988			1,755			4,303			3,557
Other pension and postretirement benefit expense	(6,967		)	(9,369		)	(13,953		)	(18,693		)
Other non-operating expense	(1,391		)	(255		)	(3,050		)	(491		)
Income before income taxes	17,976			68,122			30,410			110,531
Provision for income taxes	2,267			22,298			5,718			35,325
Net income	15,709			45,824			24,692			75,206
Net income (loss) attributable to noncontrolling shareholders' interests	701			514			1,400			(666		)
Net income attributable to Cooper Tire & Rubber Company	$	15,008		$	45,310		$	23,292		$	75,872

Earnings per share:
Basic	$	0.30		$	0.86		$	0.46		$	1.44
Diluted	$	0.30		$	0.85		$	0.46		$	1.42

Cash dividends declared per share	$	0.105		$	0.105		$	0.210		$	0.210



	June 30, 2018 (Unaudited)			December 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	180,493		$	371,684
Notes receivable	24,022			13,753
Accounts receivable, less allowances of $6,972 at 2018 and $7,570 at 2017	582,524			528,250
Inventories:
Finished goods	423,506			365,672
Work in process	31,307			31,000
Raw materials and supplies	125,282			115,085
	580,095			511,757
Other current assets	59,600			63,063
Total current assets	1,426,734			1,488,507
Property, plant and equipment:
Land and land improvements	53,292			52,683
Buildings	310,544			311,199
Machinery and equipment	1,925,381			1,890,210
Molds, cores and rings	233,359			220,528
	2,522,576			2,474,620
Less: accumulated depreciation	1,558,418			1,507,873
Property, plant and equipment, net	964,158			966,747
Goodwill	53,960			54,613
Intangibles, net of accumulated amortization of $104,405 at 2018 and $93,353 at 2017	125,979			133,256
Deferred income tax assets	54,006			58,665
Other assets	7,942			6,137
Total assets	$	2,632,779		$	2,707,925

LIABILITIES AND EQUITY
Current liabilities:
Notes payable	$	47,378		$	39,450
Accounts payable	240,506			277,060
Accrued liabilities	262,233			280,666
Income taxes payable	2,295			6,954
Current portion of long-term debt	1,398			1,413
Total current liabilities	553,810			605,543
Long-term debt	295,017			295,987
Postretirement benefits other than pensions	255,527			256,888
Pension benefits	198,421			219,534
Other long-term liabilities	152,736			144,217
Equity:
Preferred stock, $1 par value; 5,000,000 shares authorized; none issued	—			—
Common stock, $1 par value; 300,000,000 shares authorized; 87,850,292 shares issued	87,850			87,850
Capital in excess of par value	19,365			20,740
Retained earnings	2,406,943			2,394,372
Accumulated other comprehensive loss	(471,298		)	(478,478		)
	2,042,860			2,024,484
Less: common shares in treasury at cost (37,761,516 at 2018 and 36,908,553 at 2017)	(924,513		)	(897,388		)
Total parent stockholders’ equity	1,118,347			1,127,096
Noncontrolling shareholders' interests in consolidated subsidiaries	58,921			58,660
Total equity	1,177,268			1,185,756
Total liabilities and equity	$	2,632,779		$	2,707,925



	June 30, 2018 (Unaudited)		June 30, 2017 (Unaudited)		December 31, 2017		December 31, 2016
Cash and cash equivalents	$	180,493	$	302,386	$	371,684	$	504,423
Restricted cash included in Other current assets	1,702		614		19,200		18,499
Restricted cash included in Other assets	2,090		1,337		1,422		1,327
Total cash, cash equivalents and restricted cash	$	184,285	$	304,337	$	392,306	$	524,249


⁽¹⁾	Light vehicle includes passenger car and light truck tires


⁽²⁾	Other includes motorcycle and racing tires, wheels, tire retread material, and other items



	June 30, 2018		December 31, 2017
Contract liabilities	$	2,055	$	1,111



	Deferred revenue
Deferred revenue at beginning of year	$	1,111
Increases due to cash received from customers	5,980
Decreases due to recognition of revenue	(5,036		)
Deferred revenue at June 30, 2018	$	2,055



	As Adjusted		Effect of Change		Previously Reported
Accounts receivable, less allowances	$	528,250	$	100,190	$	428,060
Accrued liabilities	280,666		100,190		180,476



	As Originally
Assets	Reported			Adjustments			As Adjusted
Cash	$	8,091		$	—		$	8,091
Accounts receivable	2,844			—			2,844
Notes receivable	3,050			—			3,050
Inventories	7,983			485			8,468
Other current assets	981			—			981
Property, plant and equipment	46,712			829			47,541
Intangible assets	7,412			16			7,428
Other long-term assets	289			—			289
Goodwill	33,861			(611		)	33,250

Liabilities
Accounts payable	(61,570		)	(719		)	(62,289		)
Notes payable	(10,122		)	—			(10,122		)
Accrued liabilities	(2,866		)	—			(2,866		)
Long-term debt	(3,383		)	—			(3,383		)
Other long-term liabilities	(940		)	—			(940		)
	$	32,342		$	—		$	32,342
Noncontrolling shareholder interest	(18,323		)	—			(18,323		)

Cooper Tire & Rubber Company consideration	$	14,019		$	—		$	14,019



	Three Months Ended June 30,					Six Months Ended June 30,
Derivatives Designated as Cash Flow Hedges	2018		2017			2018		2017
Amount of Gain (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion)	$	2,062	$	(2,335	)	$	2,708	$	(2,724	)
Amount of Gain Reclassified from Cumulative Other Comprehensive Loss into Income (Effective Portion)	1,592		343			98		353


Note 3.	~~GRT Acquisition~~


~~Note~~ 4.	~~Earnings Per Share~~



	Location of Gain (Loss) Recognized in Income on Derivatives	Amount of Gain (Loss)
		Recognized in Income on Derivatives
		Three Months Ended					Six months ended
		June 30,					June 30,
Derivatives not Designated as Hedging Instruments		2018		2017			2018		2017
Foreign exchange contracts	Other non-operating expense	$	2,324	$	(759	)	$	43	$	(1,405	)


a.	~~Quoted prices for similar assets or liabilities in active markets;~~


b.	~~Quoted prices for identical or similar assets or liabilities in non-active markets;~~


c.	~~Pricing models whose inputs are observable for substantially the full term of the asset or liability; and~~


d.	Pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the asset or liability.


Note 9.8.	Pensions and Postretirement Benefits Other than Pensions


	Pension Benefits - Domestic												Pension Benefits - International
	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017			2019			2018			2019			2018
Components of net periodic benefit cost:
Service cost	$	2,580		$	2,465		$	5,160		$	4,930		$	—		$	—		$	—		$	—
Interest cost	9,210			9,813			18,419			19,626			2,768			2,840			5,575			5,746
Expected return on plan assets	(13,498		)	(13,514		)	(26,997		)	(27,029		)	(2,898		)	(3,073		)	(5,836		)	(6,216		)
Amortization of actuarial loss	8,235			9,280			16,471			18,561			931			1,085			1,876			2,195
Net periodic benefit cost	$	6,527		$	8,044		$	13,053		$	16,088		$	801		$	852		$	1,615		$	1,725



	Other Postretirement Benefits
	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Components of net periodic benefit cost:
Service cost	$	487		$	501		$	974		$	1,002
Interest cost	2,313			2,516			4,625			5,031
Amortization of prior service credit	(135		)	(142		)	(270		)	(283		)
Net periodic benefit cost	$	2,665		$	2,875		$	5,329		$	5,750



	Number of Shares	Average Repurchase Price Per Share		Amount (including commissions)
2018 share repurchase activity:
2017 Repurchase Program	986,935	$	29.74	$	29,355
2017 share repurchase activity:
2017 Repurchase Program	2,136,237	$	35.95	$	76,788
2016 Repurchase Program	383,690	$	36.70	14,080
Total 2017 share repurchases	2,519,927	$	36.06	$	90,868



	Cumulative Translation Adjustment			Derivative Instruments			Post-retirement Benefits			Total
Beginning balance, March 31, 2018	$	(19,015	)	$	1,901		$	(434,788	)	$	(451,902	)
Other comprehensive income (loss) before reclassifications	(30,768		)	2,062			—			(28,706		)
Foreign currency translation effect	—			—			4,082			4,082
Income tax effect	—			(285		)	—			(285		)
Amount reclassified from accumulated other comprehensive loss
Cash flow hedges	—			(1,592		)	—			(1,592		)
Amortization of prior service credit	—			—			(135		)	(135		)
Amortization of actuarial losses	—			—			9,320			9,320
Income tax effect	—			126			(2,206		)	(2,080		)
Other comprehensive income (loss)	(30,768		)	311			11,061			(19,396		)
Ending balance, June 30, 2018	$	(49,783	)	$	2,212		$	(423,727	)	$	(471,298	)




	Cumulative Translation Adjustment		Derivative Instruments		Post- retirement Benefits		Total
Beginning balance, December 31, 2017	(39,940	)	349		(438,887	)	(478,478	)
Other comprehensive income (loss) before reclassifications	(9,843	)	2,708		—		(7,135	)
Foreign currency translation effect	—		—		1,180		1,180
Income tax effect	—		(701	)	—		(701	)
Amount reclassified from accumulated other comprehensive loss
Cash flow hedges	—		(98	)	—		(98	)
Amortization of prior service credit	—		—		(270	)	(270	)
Amortization of actuarial losses	—		—		18,666		18,666
Pension settlement charge	—		—		—		—
Income tax effect	—		(46	)	(4,416	)	(4,462	)
Other comprehensive income (loss)	(9,843	)	1,863		15,160		7,180
Ending balance, June 30, 2018	(49,783	)	2,212		(423,727	)	(471,298	)


Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



Period ⁽¹⁾	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
April 1, 2018 through April 30, 2018	52,349	$	29.35	52,349	$	206,190
May 1, 2018 through May 31, 2018	159,909	$	25.50	159,909	$	202,117
June 1, 2018 through June 30, 2018	305,096	$	26.80	305,096	$	193,950
Total	517,354	$	26.66	517,354



10.1	Amendment No. 3 to Credit Agreement, dated June 27, 2019, by and among Cooper Tire & Rubber Company, the lenders party thereto, and JPMorgan Chase Bank, N.A. is incorporated by reference from Exhibit 10.1 of the Company's Form 8-K dated June 28, 2019
(31.1)	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(31.2)	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(32)	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(101.INS)	XBRL Instance Document
(101.SCH)	XBRL Taxonomy Extension Schema Document
(101.DEF)	XBRL Taxonomy Extension Definition Linkbase Document
(101.CAL)	XBRL Taxonomy Extension Calculation Linkbase Document
(101.LAB)	XBRL Taxonomy Extension Label Linkbase Document
(101.PRE)	XBRL Taxonomy Extension Presentation Linkbase Document