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

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

(Exact name of registrant as specified in its charter)

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

701 Lima Avenue, Findlay, Ohio 45840
(Address of principal executive offices)
(Zip code)

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

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 þ    No o

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

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

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

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

Yes o    No þ

Number of shares of common stock of registrant outstanding
at September 30, 2009: 60,497,721

 

 

Part I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

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

		December 31,				September 30,
		2008				2009
		(Note 1)				(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	247,672			$	409,543
Accounts receivable, less allowances of $10,680 in 2008 and $11,329 in 2009			318,109				431,354
Inventories at lower of cost or market:
Finished goods			247,187				205,553
Work in process			28,234				26,305
Raw materials and supplies			144,691				79,110
			420,112				310,968
Other current assets			58,290				44,877
Total current assets			1,044,183				1,196,742
Property, plant and equipment:
Land and land improvements			33,731				33,716
Buildings			319,025				324,498
Machinery and equipment			1,627,896				1,658,749
Molds, cores and rings			273,641				244,100
			2,254,293				2,261,063
Less accumulated depreciation and amortization			1,353,019				1,383,822
Net property, plant and equipment			901,274				877,241
Goodwill			—				—
Intangibles, net of accumulated amortization of $24,096 in 2008 and $22,827 in 2009			19,902				18,884
Restricted cash			2,432				2,270
Other assets			75,105				66,297
		$	2,042,896			$	2,161,434
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable		$	184,774			$	143,612
Accounts payable			248,637				302,602
Accrued liabilities			123,771				188,434
Income taxes			1,409				3,051
Liabilities related to the sale of automotive operations			1,182				35,517
Current portion of long-term debt			147,761				107,481
Total current liabilities			707,534				780,697
Long-term debt			325,749				329,943
Postretirement benefits other than pensions			236,025				247,577
Pension benefits			268,773				222,289
Other long-term liabilities			115,803				138,674
Long-term liabilities related to the sale of automotive operations			8,046				9,008
Stockholders’ equity:
Preferred stock, $1 par value; 5,000,000 shares authorized; none issued			—				—
Common stock, $1 par value; 300,000,000 shares authorized; 86,322,514 shares issued in 2008 and 87,850,292 in 2009			86,323				87,850
Capital in excess of par value			43,764				67,262
Retained earnings			1,106,344				1,100,330
Cumulative other comprehensive loss			(450,079	)			(433,277	)
			786,352				822,165
Less: 27,411,564 common shares in treasury in 2008 and 27,352,571 in 2009, at cost			(492,236	)			(491,051	)
Total parent stockholders’ equity			294,116				331,114
Noncontrolling shareholders’ interests in consolidated subsidiaries			86,850				102,132
Total stockholders’ equity			380,966				433,246
		$	2,042,896			$	2,161,434

See accompanying notes.

COOPER TIRE & RUBBER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2008 AND 2009
(UNAUDITED)
(Dollar amounts in thousands except per-share amounts)

		2008				2009
Net sales		$	793,751			$	802,794
Cost of products sold			793,888				662,277
Gross profit (loss)			(137	)			140,517
Selling, general and administrative			46,878				56,444
Restructuring			—				13,385
Operating profit (loss)			(47,015	)			70,688
Interest expense			(12,821	)			(11,440	)
Interest income			3,902				2,259
Debt extinguishment			(10	)			-
Other — net			(1,244	)			(1,047	)
Income (loss) from continuing operations before income taxes			(57,188	)			60,460
Income tax benefit (expense)			2,318				(2,628	)
Income (loss) from continuing operations			(54,870	)			57,832
Loss from discontinued operations, net of income taxes			(133	)			(337	)
Net income (loss)			(55,003	)			57,495
Net income attributable to noncontrolling shareholders’ interests			378				10,664
Net income (loss) attributable to Cooper Tire & Rubber Company		$	(55,381	)		$	46,831
Basic earnings (loss) per share:
Income (loss) from continuing operations attributable to Cooper Tire & Rubber Company		$	(0.94	)		$	0.79
Loss from discontinued operations			(0.00	)			(0.01	)
Net income (loss) attributable to Cooper Tire & Rubber Company		$	(0.94	)		$	0.79	*
Diluted earnings (loss) per share:
Income (loss) from continuing operations attributable to Cooper Tire & Rubber Company		$	(0.94	)		$	0.77
Loss from discontinued operations			(0.00	)			(0.01	)
Net income (loss) attributable to Cooper Tire & Rubber Company		$	(0.94	)		$	0.77	*
Weighted average number of shares outstanding (000s):
Basic			58,903				59,331
Diluted			58,903				61,050
Dividends per share		$	0.105			$	0.105

See accompanying notes.

COOPER TIRE & RUBBER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2009
(UNAUDITED)
(Dollar amounts in thousands except per-share amounts)

		2008				2009
Net sales		$	2,245,979			$	2,005,931
Cost of products sold			2,160,049				1,714,685
Gross profit			85,930				291,246
Selling, general and administrative			138,808				151,828
Restructuring			—				36,446
Settlement of retiree medical case			—				7,050
Operating profit (loss)			(52,878	)			95,922
Interest expense			(37,041	)			(36,192	)
Interest income			11,294				4,739
Debt extinguishment			(593	)			—
Dividend from unconsolidated subsidiary			1,943				—
Other — net			2,274				1,025
Income (loss) from continuing operations before income taxes			(75,001	)			65,494
Income tax benefit			1,947				178
Income (loss) from continuing operations			(73,054	)			65,672
Income (loss) from discontinued operations, net of income taxes			80				(37,786	)
Net income (loss)			(72,974	)			27,886
Net income attrubutable to noncontrolling shareholders’ interests			2,952				15,282
Net income (loss) attributable to Cooper Tire & Rubber Company		$	(75,926	)		$	12,604
Basic earnings (loss) per share:
Income (loss) from continuing operations attributable to Cooper Tire & Rubber Company		$	(1.29	)		$	0.85
Income (loss) from discontinued operations			0.00				(0.64	)
Net income (loss) attributable to Cooper Tire & Rubber Company		$	(1.28	)*		$	0.21
Diluted earnings (loss) per share:
Income (loss) from continuing operations attributable to Cooper Tire & Rubber Company		$	(1.29	)		$	0.84
Income (loss) from discontinued operations			0.00				(0.63	)
Net income (loss) attributable to Cooper Tire & Rubber Company		$	(1.28	)*		$	0.21
Weighted average number of shares outstanding (000s):
Basic			59,094				59,078
Diluted			59,094				60,095
Dividends per share		$	0.315			$	0.315

See accompanying notes.

COOPER TIRE & RUBBER COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2009
(UNAUDITED)
(Dollar amounts in thousands)

		2008				2009
Operating activities:
Net income (loss)		$	(72,974	)		$	27,886
Adjustments to reconcile net income (loss) to net cash provided by (used in) continuing operations:
Loss (income) from discontinued operations, net of income taxes			(80	)			37,786
Depreciation			103,887				90,968
Amortization			3,635				1,645
Deferred income taxes			2,066				(1,524	)
Stock based compensation			3,407				3,752
Change in LIFO inventory reserve			97,811				(117,874	)
Amortization of unrecognized postretirement benefits			9,692				25,843
Loss (gain) on sale of assets			2,039				248
Debt extinguishment costs			593				—
Changes in operating assets and liabilities of continuing operations:
Accounts receivable			(56,691	)			(108,170	)
Inventories			(293,367	)			230,999
Other current assets			(19,728	)			12,539
Accounts payable			61,416				52,079
Accrued liabilities			13,554				60,042
Other items			(10,559	)			9,734
Net cash provided by (used in) continuing operations			(155,299	)			325,953
Net cash used in discontinued operations			(1,274	)			(2,489	)
Net cash provided by (used in) operating activities			(156,573	)			323,464
Investing activities:
Property, plant and equipment			(100,592	)			(63,978	)
Proceeds from sale of Kumho investment			106,950				—
Proceeds from sale of available-for-sale debt securities			49,765				—
Investments in unconsolidated subsidiary			(25,528	)			(659	)
Acquisition of business, deferred payment			(5,956	)			—
Proceeds from the sale of assets			6,272				1,159
Net cash provided by (used in) investing activities			30,911				(63,478	)
Financing activities:
Issuance of (payments on) short-term debt			86,846				(39,607	)
Payments on long-term debt			(14,300	)			(36,086	)
Premium paid on debt repurchases			(552	)			—
Contributions of joint venture partner			4,250				—
Purchase of treasury shares			(13,853	)			—
Payment of dividends			(18,588	)			(18,573	)
Issuance of common shares and excess tax benefits on option exercises			297				84
Net cash provided by (used in) financing activities			44,100				(94,182	)
Effects of exchange rate changes on cash of continuing operations			(350	)			(3,933	)
Changes in cash and cash equivalents			(81,912	)			161,871
Cash and cash equivalents at beginning of year			345,947				247,672
Cash and cash equivalents at end of period		$	264,035			$	409,543

See accompanying notes.

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

1.		The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. There is a year-round demand for the Company’s passenger and truck replacement tires, but passenger replacement tires are generally strongest during the third and fourth quarters of the year. Winter tires are sold principally during the months of June through November. Operating results for the three-month and nine-month periods ended September 30, 2009 are not necessarily indicative of the results that may be expected for the year ended December 31, 2009.
		The balance sheet at December 31, 2008 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.
		For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, as updated by the Company’s current report on Form 8-K filed August 7, 2009.
		Principles of consolidation — The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. Acquired businesses are included in the consolidated financial statements from the dates of acquisition. All intercompany accounts and transactions have been eliminated.
		The equity method of accounting is followed for investments in 20 percent to 50 percent owned companies. The Company’s investment in the Mexican tire manufacturing facility represents an approximate 38 percent ownership interest.
		The cost method is followed in those situations where the Company’s ownership is less than 20 percent and the Company does not have the ability to exercise significant influence over the affiliate.
		The Company has entered into a joint venture with Kenda Tire Company to construct and operate a tire manufacturing facility in China which was completed and began production in 2007. Under the current agreement, until May 2012, all of the tires produced by this joint venture are required to be exported and sold by Cooper Tire & Rubber Company and its affiliates. The Company has also entered into a joint venture with Nemet International to market and distribute Cooper, Pneustone and associated brand tires in Mexico. At December 31, 2008, the Company has subordinated debt to the joint venture. The Company has determined that each of these entities is a Variable Interest Entity (VIE) and it is the primary beneficiary. As such, the Company has included their assets, liabilities and operating results in its consolidated financial statements. The Company has recorded the interest related to the joint venture partners’ ownership in noncontrolling shareholders’ interests in consolidated subsidiaries. The following table summarizes the balance sheets of these variable interest entities at December 31:

		December 31,				September 30,
		2008				2009
Assets
Cash and cash equivalents		$	4,911			$	11,465
Accounts receivable			11,607				10,324
Inventories			28,080				20,199
Prepaid expenses			3,221				5,087
Total current assets			47,819				47,075
Net property, plant and equipment			134,639				141,349
Intangibles and other assets			14,247				11,767
Total assets		$	196,705			$	200,191
Liabilities and stockholders’ equity
Notes payable		$	69,430			$	78,841
Accounts payable			8,478				13,607
Accrued liabilities			120				466
Current portion of long-term debt			11,428				10,520
Current liabilities			89,456				103,434
Long-term debt			10,500				—
Stockholders’ equity			96,749				96,757
Total liabilities and stockholders’ equity		$	196,705			$	200,191

		On January 1, 2009, the Company adopted the guidance of ASC 810-10 (SFAS No. 160) related to the reporting of noncontrolling interests in the consolidated statement of operations and the consolidated balance sheet. Certain amounts for the prior year have been reclassified to conform to 2009 presentations. On the Consolidated Statements of Operations, the 2009 caption “Net income (loss) attributable to Cooper Tire & Rubber Company” is comparable to the caption “Net income (loss)” used in prior years.
		The Company has evaluated subsequent events for recognition or disclosure through the time it filed this Form 10-Q with the Securities and Exchange Commission on November 2, 2009.
2.		Derivative financial instruments are utilized by the Company to reduce foreign currency exchange risks. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. The Company does not enter into financial instruments for trading or speculative purposes. The derivative financial instruments include fair value and cash flow hedges of foreign currency exposures. Exchange rate fluctuations on the foreign currency-denominated intercompany loans and obligations are offset by the change in values of the fair value foreign currency hedges. The Company presently hedges exposures in the Euro, Canadian dollar, British pound sterling, Swiss franc, Swedish kronar, Mexican peso and Chinese yuan generally for transactions expected to occur within the next 12 months. The notional amount of these foreign currency derivative instruments at December 31, 2008 and September 30, 2009 was $178,100 and $191,400, respectively. The counterparties to each of these agreements are major commercial banks. Management believes that the probability of losses related to credit risk on investments classified as cash and cash equivalents is unlikely.
		The Company uses foreign currency forward contracts as hedges of the fair value of certain non-U.S. dollar denominated asset and liability positions, primarily accounts receivable and debt. Gains and losses resulting from the impact of currency exchange rate movements on these forward contracts are recognized in the accompanying consolidated statements of income in the period in which the exchange rates change and offset the foreign currency gains and losses on the underlying exposure being hedged.
		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 $849 and $(4,529) as of December 31, 2008 and September 30, 2009, respectively) are

		recorded as a separate component of stockholders’ equity in the accompanying consolidated balance sheets and reclassified into earnings as the hedged transaction affects earnings.
		The Company assesses hedge ineffectiveness quarterly using the hypothetical derivative methodology. In doing so, the Company monitors the actual and forecasted foreign currency sales and purchases versus the amounts hedged to identify any hedge ineffectiveness. Any hedge ineffectiveness is recorded as an adjustment in the accompanying consolidated financial statements of operations in the period in which the ineffectiveness occurs The Company also performs regression analysis comparing the change in value of the hedging contracts versus the underlying foreign currency sales and purchases, which confirms a high correlation and hedge effectiveness.
		The following table presents the location and amounts of derivative instrument fair values in the Consolidated Balance Sheet:

(assets)/liabilities		December 31, 2008								September 30, 2009
Derivatives designated as hedging instruments		Accrued liabilities				$	(1,058	)		Accrued liabilities				$	4,715
Derivatives not designated as hedging instruments		Accrued liabilities				$	(194	)		Accrued liabilities				$	740

The following table presents the location and amount of gains and losses on derivative instruments in the consolidated statement of operations:

Amount of Gain (Loss)

Amount of Gain (Loss)

Recognized in Other

Reclassified from Cumulative

Amount of Gain (Loss)

Comprehensive Income on

Other Comprehensive Loss

Recognized in Other - net on

Derivative (Effective Portion)

into Net Sales (Effective Portion)

Derivative (Ineffective Portion)

Derivatives

Three

Nine

Three

Nine

Three

Nine

Designated as

Months

Months

Months

Months

Months

Months

Cash Flow

Ended

Ended

Ended

Ended

Ended

Ended

Hedges

Sept. 30, 2009

Sept. 30, 2009

Sept. 30, 2009

Sept. 30, 2009

Sept. 30, 2009

Sept. 30, 2009

Foreign exchange contracts

$

(2,183

)

$

(6,838

)

$

641

$

(1,460

)

$

(242

)

$

(530

)

						Amount of Gain (Loss) Recognized
		Location of				in Income on Derivatives
		Gain (Loss)				Three				Nine
Derivatives not		Recognized				Months				Months
Designated as		in Income on				Ended				Ended
Hedging Instruments		Derivatives				Sept. 30, 2009				Sept. 30, 2009
Foreign exchange contracts		Other - net				$	129			$	(800	)
Interest swap contracts		Interest expense				$	(142	)		$	1,855
						$	(13	)		$	1,055

		For effective designated foreign exchange hedges, the Company reclassifies the gain (loss) from Other Comprehensive Income into Net sales and the ineffective portion is recorded directly into Other — net.
		The Company has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into the three-level fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the financial instruments fall within the different levels of the hierarchy, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
		Financial assets and liabilities recorded on the Consolidated Balance Sheet are categorized based on the inputs to the valuation techniques as follows:
		Level 1. Financial assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company has the ability to access.
		Level 2. Financial assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 inputs include the following:

	a.		Quoted prices for similar assets or liabilities in active markets;
	b.		Quoted prices for identical or similar assets or liabilities in non-active markets;
	c.		Pricing models whose inputs are observable for substantially the full term of the asset or liability; 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.

		Level 3. Financial assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect management’s own assumptions about the assumptions a market participant would use in pricing the asset or liability.
		The following table presents the Company’s fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis as of September 30, 2009 and December 31, 2008:

Quoted Prices

Significant

Total

in Active Markets

Other

Significant

Derivative

for Identical

Observable

Unobservable

(Assets)

Assets

Inputs

Inputs

Derivative Contracts

Liabilities

Level (1)

Level (2)

Level (3)

September 30, 2009

$

5,455

$

5,455

December 31, 2008

$

(1,252

)

$

(1,252

)

The fair value of the Company’s debt is computed using discounted cash flow analyses based on the Company’s estimated current incremental borrowing rates. The carrying amounts and fair values of the Company’s financial instruments are as follows:

		December 31, 2008								September 30, 2009
		Carrying				Fair				Carrying				Fair
		Amount				Value				Amount				Value
Cash and cash equivalents		$	247,672			$	247,672			$	409,543			$	409,543
Notes payable			(184,774	)			(184,774	)			(143,612	)			(143,612	)
Current portion of long-term debt			(147,761	)			(142,161	)			(107,481	)			(107,081	)
Long-term debt			(325,749	)			(158,949	)			(329,943	)			(291,043	)
Derivative financial instruments			1,252				1,252				(5,455	)			(5,455	)

3.

The following table details information on the Company’s operating segments.

		Three months ended September 30								Nine months ended September 30
		2008				2009				2008				2009
Revenues:
North American Tire		$	586,188			$	573,886			$	1,631,373			$	1,440,536
International Tire			284,684				296,841				799,431				720,235
Eliminations			(77,121	)			(67,933	)			(184,825	)			(154,840	)
Net sales		$	793,751			$	802,794			$	2,245,979			$	2,005,931
Segment profit (loss):
North American Tire		$	(51,165	)		$	47,618			$	(64,927	)		$	71,949
International Tire			7,231				29,902				20,085				46,285
Eliminations			396				(520	)			113				(1,579	)
Unallocated corporate charges			(3,477	)			(6,312	)			(8,149	)			(20,733	)
Operating profit (loss)			(47,015	)			70,688				(52,878	)			95,922
Interest expense			(12,821	)			(11,440	)			(37,041	)			(36,192	)
Interest income			3,902				2,259				11,294				4,739
Debt extinguishment			(10	)			—				(593	)			—
Dividend from unconsolidated subsidiary			—				—				1,943				—
Other — net			(1,244	)			(1,047	)			2,274				1,025
Income (loss) from continuing operations before income taxes and noncontrolling shareholders’ interests		$	(57,188	)		$	60,460			$	(75,001	)		$	65,494

4.		At December 31, 2008, approximately 33 percent of the Company’s inventories had been valued under the LIFO method. With the decrease in inventory and lower raw material costs in the Company’s operations in China, approximately 58 percent of the Company’s inventories at September 30, 2009 have been valued under the LIFO method. The remaining inventories have been valued under the FIFO method or average cost method. All inventories are stated at the lower of cost or market.
		Under the LIFO method, inventories have been reduced by approximately $221,854 and $103,980 at December 31, 2008 and September 30, 2009, respectively, from current cost which would be reported under the first-in, first-out method.
5.		The following table discloses the amount of stock based compensation expense for the three-month and nine-month periods ended September 30, 2008 and 2009 relating to continuing operations:

		Stock Based Compensation
		Three months ended September 30								Nine months ended September 30
		2008				2009				2008				2009
Stock options		$	86			$	287			$	265			$	657
Restricted stock units			447				434				1,533				1,214
Performance based units			228				697				1,609				1,881
Total stock based compensation		$	761			$	1,418			$	3,407			$	3,752

		Executives participating in the Company’s Long-Term Incentive Plan for the plan year 2007 — 2009 and 2008 — 2010, earn performance based units based on the Company’s financial performance. As part of the 2007 — 2009 plan, the units earned in 2007 and any units earned in 2009 will vest in February 2010. As part of the 2008 — 2010 plan, any units earned in 2009 or 2010 will vest in February 2011. No units were earned in 2008 for either plan.
		In April 2009, executives participating in the 2009 — 2011 Long-Term Incentive Plan were granted 1,153,000 stock options which will vest one third each year through April 2012. The fair value of these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:

		2009
Risk-free interest rate			2.2	%
Dividend yield			2.7	%
Expected volatility of the Company’s common stock			0.570
Expected life in years			6.0

		The weighted-average fair value of options granted in April of 2009 was $2.08. The estimated fair value of options is amortized to expense over the options’ vesting period.
		The following table provides details of the restricted stock unit activity for the nine months ended September 30, 2009:

Restricted stock units outstanding at January 1, 2009			403,637
Restricted stock units granted			42,473
Accrued dividend equivalents			16,147
Restricted stock units settled			(40,564	)
Restricted stock units cancelled			(3,729	)
Restricted stock units outstanding at September 30, 2009			417,964

6.

The following tables disclose the amount of net periodic benefit costs for the three-month and nine-month periods ended September 30, 2008 and 2009 for the Company’s defined benefit plans and other postretirement benefits relating to continuing operations:

		Pension Benefits
		Three months ended September 30								Nine months ended September 30
		2008				2009				2008				2009
Components of net periodicbenefit cost:
Service cost		$	5,293			$	806			$	16,344			$	7,332
Interest cost			15,053				14,378				47,601				43,603
Expected return on plan assets			(19,156	)			(14,095	)			(60,183	)			(41,674	)
Amortization of prior service cost			104				(270	)			356				(803	)
Recognized actuarial loss			2,828				12,002				8,670				26,877
Net periodic benefit cost		$	4,122			$	12,821			$	12,788			$	35,335

		Other Postretirement Benefits
		Three months ended September 30								Nine months ended September 30
		2008				2009				2008				2009
Components of net periodicbenefit cost:
Service cost		$	1,244			$	828			$	3,731			$	2,728
Interest cost			3,871				3,501				11,617				10,901
Amortization of prior service cost			(77	)			(80	)			(231	)			(230	)
Recognized actuarial loss (gain)			300				(150	)			898				—
Net periodic benefit cost		$	5,338			$	4,099			$	16,015			$	13,399

Recognized actuarial loss of pension costs in 2009 has been increased by $1,102 and $3,915 for the nine and three-month periods, respectively, due to recognition of settlement losses partially offset by curtailment gains attributable to the Albany, Georgia plant closure which have been recorded within restructuring expense.

		On April 9, 2009, the Company announced pension benefits in the Spectrum (salaried employees) Plan would be frozen effective July 1, 2009. The impact of the pension freeze is estimated to be a reduction in pension expense for 2009 of $7,800, of which $3,900 has been recognized in the third quarter. In the second quarter, the Company recognized a pension curtailment gain of $10,100 related to the announced Spectrum Plan benefit freeze which was credited to cost of good sold ($8,000) and corporate selling, general and administrative expenses ($2,100) and is not reflected in the above table. Also effective July 1, 2009, the Company has instituted an enhanced matching feature in the Spectrum 401(K) plan at an estimated cost for 2009 of $2,800, of which $1,200 was recorded in the third quarter.
		In the third quarter of 2009, the Company contributed $22,000 of its common stock to its domestic retirement trust and thereby completed its minimum domestic plan funding requirements for 2009.
		During 2009, the Company plans global pension funding of between $50,000 and $55,000 of which $43,000 relates to its domestic plans where the funding requirements were completed as of September 30, 2009.

7.

On an annual basis, disclosure of comprehensive income (loss) is incorporated into the Statement of Shareholders’ Equity. This statement is not presented on a quarterly basis. Comprehensive income includes net income and components of other comprehensive income, such as foreign currency translation adjustments, unrealized gains or losses on certain marketable securities and derivative instruments and minimum pension liability adjustments.

The Company’s comprehensive income (loss) is as follows:

		Three months ended September 30								Nine months ended September 30
		2008				2009				2008				2009
Net income (loss) attributable to Cooper Tire & Rubber Company		$	(55,381	)		$	46,831			$	(75,926	)		$	12,604
Other comprehensive income (loss):
Currency translation adjustments			(12,238	)			(2,013	)			2,935				8,962
Unrealized net gains (losses) on derivative instruments and marketable securities, net of tax			6,203				(2,273	)			4,203				(6,886	)
Unrecognized postretirement benefit plans, net of tax			6,384				13,225				12,477				14,725
Comprehensive income (loss) attributable to Cooper Tire & Rubber Company			(55,032	)			55,770				(56,311	)			29,405
Net and comprehensive income attributable to noncontrolling shareholders’ interests			378				10,664				2,952				15,282
Total comprehensive income (loss)		$	(55,032	)		$	55,770			$	(56,311	)		$	29,405

8.		During the third quarter of 2009, the Company recorded restructuring expenses associated with three initiatives described below.
		Albany manufacturing facility closure
		The Albany manufacturing closure, announced December 17, 2008, is resulting in a workforce reduction of approximately 1,400 people and charges of between $120,000 and $145,000 for restructuring expense and asset impairment.
		The Company recorded $12,337 of net restructuring expense associated with this initiative during the third quarter of 2009. The Company recorded $9,055 of equipment relocation and other costs this period. The Company also recorded $5,741 of employee related costs. Included in employee related costs are severance costs of $755 and $3,915 of settlement losses partially offset by curtailment gains related to pension benefits. During the third quarter, the Company received $2,459 in government grants partially offsetting these restructuring costs.
		During the first nine months of 2009, the Company has recorded $34,654 of net restructuring expense related to the Albany closure. The Company has recorded $20,277 of equipment relocation and other costs during the first nine months of 2009. The Company also recorded $17,037 of employee related costs. Included in employee related costs are severance costs of $13,306 and $1,102 of settlement losses partially offset by curtailment gains related to pension benefits. The Company has received $2,660 in government grant receipts through the first nine months of 2009. Through September 30, 2009, the Company has recorded $113,298 of restructuring costs associated with this initiative partially offset by $2,660 of government grant receipts.
		At December 31, 2008, the accrued severance balance was $429 and the severance costs recorded during the first nine months of 2009 increased the balance to $13,735. During the first nine months, the Company made $9,106 of severance payments resulting in an accrued severance balance at September 30, 2009 of $4,629. The severance charges recorded represent the Company’s best estimate of future amounts to be paid and approximate fair value.
		Distribution center closures
		During 2009, the Company also recorded restructuring expenses associated with the closure of two distribution centers. The closure of the Dayton, New Jersey distribution center during 2008 impacted nine people at a total cost of $464, of which $46 was recorded in the first quarter of 2009.

		In June 2009, the Company announced the planned closure of its Moraine, Ohio distribution center. This initiative is expected to cost between $1,900 and $2,300. This amount includes personnel related costs of $1,100 and equipment related costs between $800 and $1,200. This initiative is expected to be completed by the end of the fourth quarter 2009 and will impact approximately 60 people. During the third quarter, the Company recorded $666 of employee related costs and $381 of equipment related costs. For the nine months ended September 30, 2009, the Company has recorded $960 of employee related costs and $381 of equipment related costs.
		The Company has recorded $900 of severance costs related to the closure of the Moraine distribution center and has made severance payments totaling $278, leaving an accrual balance of $622 at September 30, 2009. The severance charges recorded represent the Company’s best estimate of future amounts to be paid and approximate fair value.
		European headcount reduction
		In Cooper Tire Europe, a restructuring program to reduce headcount to align with production volume requirements was initiated during the second quarter of 2009. This initiative resulted in the elimination of 45 positions and was completed early in the third quarter. The Company recorded $405 of severance cost related to this initiative and all severance amounts have been paid.

9.

The Company provides for the estimated cost of product warranties at the time revenue is recognized based primarily on historical return rates, estimates of the eligible tire population, and the value of tires to be replaced. The following table summarizes the activity in the Company’s product warranty liabilities for 2008 and 2009:

		2008				2009
Reserve at January 1		$	16,510			$	18,244
Additions			17,506				14,757
Payments			(13,828	)			(11,949	)
Reserve at September 30		$	20,188			$	21,052

10.		The Company is a defendant in various products liability claims brought in numerous jurisdictions in which individuals seek damages resulting from automobile accidents allegedly caused by defective tires manufactured by the Company. Each of the products liability claims faced by the Company generally involve different types of tires, models and lines, different circumstances surrounding the accident such as different applications, vehicles, speeds, road conditions, weather conditions, driver error, tire repair and maintenance practices, service life conditions, as well as different jurisdictions and different injuries. In addition, in many of the Company’s products liability lawsuits the plaintiff alleges that his or her harm was caused by one or more co-defendants who acted independently of the Company. Accordingly, both the claims asserted and the resolutions of those claims have an enormous amount of variability. The aggregate amount of damages asserted at any point in time is not determinable since often times when claims are filed, the plaintiffs do not specify the amount of damages. Even when there is an amount alleged, at times the amount is wildly inflated and has no rational basis.
		The fact that the Company is a defendant in products liability lawsuits is not surprising given the current litigation climate which is largely confined to the United States. However, the fact that the Company is subject to claims does not indicate that there is a quality issue with the Company’s tires. The Company sells approximately 30 to 35 million passenger, light truck, SUV, high performance, ultra high performance and radial medium truck tires per year in North America. The Company estimates that approximately 300 million Cooper-produced tires — made up of thousands of different specifications — are still on the road in North America. While tire disablements do occur, it is the Company’s and the tire industry’s experience that the vast majority of tire failures relate to service-related conditions which are entirely out of the

		Company’s control — such as failure to maintain proper tire pressure, improper maintenance, road hazard and excessive speed.
		The Company’s exposure for each claim occurring prior to April 1, 2003 is limited by the coverage provided by its excess liability insurance program. The program for that period includes a relatively low per claim retention and a policy year aggregate retention limit on claims arising from occurrences which took place during a particular policy year. Effective April 1, 2003, the Company established a new excess liability insurance program. The new program covers the Company’s products liability claims occurring on or after April 1, 2003 and is occurrence-based insurance coverage which includes an increased per claim retention limit, increased policy limits and the establishment of a captive insurance company.
		The Company accrues costs for products liability at the time a loss is probable and the amount of loss can be estimated. The Company believes the probability of loss can be established and the amount of loss can be estimated only after certain minimum information is available, including verification that Company-produced products were involved in the incident giving rise to the claim, the condition of the product purported to be involved in the claim, the nature of the incident giving rise to the claim and the extent of the purported injury or damages. In cases where such information is known, each products liability claim is evaluated based on its specific facts and circumstances. A judgment is then made to determine the requirement for establishment or revision of an accrual for any potential liability. The liability often cannot be determined with precision until the claim is resolved.
		Pursuant to applicable accounting rules, the Company accrues the minimum liability for each known claim when the estimated outcome is a range of possible loss and no one amount within that range is more likely than another. The Company uses a range of settlements because an average settlement cost would not be meaningful since the products liability claims faced by the Company are unique and widely variable. The cases involve different types of tires, models and lines, different circumstances surrounding the accident such as different applications, vehicles, speeds, road conditions, weather conditions, driver error, tire repair and maintenance practices, service life conditions, as well as different jurisdictions and different injuries. In addition, in many of the Company’s products liability lawsuits the plaintiff alleges that his or her harm was caused by one or more co-defendants who acted independently of the Company. Accordingly, the claims asserted and the resolutions of those claims have an enormous amount of variability. The costs have ranged from zero dollars to $12 million in one case with no “average” that is meaningful. No specific accrual is made for individual unasserted claims or for premature claims, asserted claims where the minimum information needed to evaluate the probability of a liability is not yet known. However, an accrual for such claims based, in part, on management’s expectations for future litigation activity and the settled claims history is maintained. Because of the speculative nature of litigation in the United States, the Company does not believe a meaningful aggregate range of potential loss for asserted and unasserted claims can be determined. The Company’s experience has demonstrated that its estimates have been reasonably accurate and, on average, cases are settled at amounts close to the reserves established. However, it is possible an individual claim from time to time may result in an aberration from the norm and could have a material impact.
		The Company determines its reserves using the number of incidents expected during a year. During the third quarter of 2009, the Company increased its products liability reserve by $14,766. The addition of another quarter of self-insured incidents accounted for $9,578 of this increase and amounts on existing reserves increased by $5,188.
		During the first nine months of 2009, the Company increased its products liability reserve by $43,545. The addition of another nine months of self-insured incidents accounted for $28,566 of this increase. The Company revised its estimates of future settlements for unasserted and premature claims, which increased the reserve by $1,788. Finally, amounts on existing reserves increased by $13,191.
		The time frame for the payment of a products liability claim is too variable to be meaningful. From the time a claim is filed to its ultimate disposition depends on the unique nature of the case, how it is resolved — claim dismissed, negotiated settlement, trial verdict and appeals process — and is highly dependent on jurisdiction, specific facts, the plaintiff’s attorney, the court’s docket and other factors. Given that some

		claims may be resolved in weeks and others may take five years or more, it is impossible to predict with any reasonable reliability the time frame over which the accrued amounts may be paid.
		The Company paid $4,260 during the third quarter of 2009 to resolve cases and claims and has paid $21,320 through the first nine months of 2009. The Company’s products liability reserve balance at December 31, 2008 totaled $123,632 (current portion of $28,737) and the balance at September 30, 2009 totaled $145,857 (current portion of $30,737).

		The products liability expense reported by the Company includes amortization of insurance premium costs, adjustments to settlement reserves and legal costs incurred in defending claims against the Company offset by recoveries of legal fees. Legal costs are expensed as incurred and products liability insurance premiums are amortized over coverage periods. The Company is entitled to reimbursement, under certain insurance contracts in place for periods ending prior to April 1, 2003, of legal fees expensed in prior periods based on events occurring in those periods. The Company records the reimbursements under such policies in the period the conditions for reimbursement are met.
		For the three-month periods ended September 30, 2008 and 2009, products liability expenses totaled $14,934 and $20,968, respectively, and include recoveries of legal fees of $735 and $427 in the periods ended September 30, 2008 and 2009, respectively. For the nine-month periods ended September 30, 2008 and 2009, products liability expenses totaled $60,759 and $61,888, respectively, and include recoveries of legal fees of $4,903 and $2,368 in the periods ended September 30, 2008 and 2009, respectively. Policies applicable to claims occurring on April 1, 2003 and thereafter do not provide for recovery of legal fees.
11.		For the quarter ended September 30, 2009, the Company recorded an income tax expense for continuing operations of $2,628 which includes a tax benefit for discrete items of $1,212 relating primarily to the release of reserves resulting from the expiration of statutes of limitations during the quarter. The effective tax rate for the quarter and nine month period ended September 30, 2009 for continuing operations is 6.4 percent and -0.9 percent, respectively, exclusive of discrete items, using forecasted jurisdictional annual effective rates. For comparable periods in 2008, the effective tax rate for continuing operations, exclusive of discrete items, was -1.5 percent and -0.8 percent, respectively, using a forecasted jurisdictional annual effective tax rates. The change in the effective tax rate, exclusive of discrete items, relates primarily to the improvement in earnings, a “specified liability loss” carry back, and the mix of earnings or loss by jurisdiction as compared to 2008.
		The Company maintains a valuation allowance on its net U.S. and certain non-U.S. deferred tax asset positions. The valuation allowance will be maintained as long as it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are determined separately for each taxing jurisdiction in which the Company conducts its operations or otherwise generates taxable income or losses. In the U.S., the Company has recorded significant deferred tax assets, the largest of which relate to products liability, pension and other postretirement benefit obligations. These deferred tax assets are partially offset by deferred tax liabilities, the most significant of which relates to accelerated depreciation. Based upon this assessment, the Company maintains a $221,607 valuation allowance for the portion of U.S. deferred tax assets exceeding its U.S. deferred tax liabilities. In addition, the Company has recorded valuation allowances of $7,992 for deferred tax assets associated with losses in foreign jurisdictions.
		The Company maintains a liability for unrecognized tax benefits for permanent and temporary book/tax differences for continuing operations. At September 30, 2009, the Company’s liability, exclusive of interest, totals approximately $9,684. The Company accrued a net interest benefit for the quarter of $169 and net interest expense of $204 for the nine month period for uncertain tax positions. These have been recorded as discrete items in its tax provision.
		At September 30, 2009, the Company has approximately $23,374 of primarily U.S. cash tax refunds receivable. It is anticipated that these receivables will be collected after 2009.

		In 2003 the Company initiated bilateral Advance Pricing Agreement (“APA”) negotiations with the Canadian and U.S. governments to change its intercompany transfer pricing process between a formerly owned subsidiary, Cooper-Standard Automotive, Inc., and its Canadian affiliate. In 2009 the governments executed “mutual agreement” letters to settle the APA for periods 2000-2007. Under terms of the 2004 sale agreement for the subsidiary, the Company is responsible for all tax obligations and is entitled to receive all tax refunds for periods relating to its period of ownership ending December 23, 2004. The resulting cash impact to the Company of the above settlement consists of a refund of taxes paid in Canada, net of various offsets, of approximately $69,000 and a tax obligation in the U.S. of approximately $35,000. The net impact would be a gain of approximately $34,000. The Company’s U.S. tax obligation has been revised to incorporate the terms of the settlement. Under the terms of the sale agreement, the Company is entitled to the prompt remittance of all refunds of taxes imposed on the former Canadian affiliate relating to a pre-closing tax period. In the second quarter of 2009, the Company recorded a net charge of $35,000 to discontinued operations for the estimated U.S. tax obligation relating to the settlement. On July 27, 2009, the Canadian affiliate received a substantial portion of the anticipated refund. However, the refund was not remitted to the Company and on August 3, 2009, Cooper-Standard Holdings Inc., the company that acquired the former subsidiary, and its U.S. affiliates filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code and the Canadian affiliate filed for bankruptcy protection in Canada on August 4, 2009. The Company is pursuing all options to recover the tax refunds to which it is entitled under the sale agreement and has filed adversary proceedings in the Delaware Bankruptcy Court against Cooper-Standard Holdings Inc., Cooper-Standard Automotive Inc., and its Canadian affiliate. Based upon these facts, the Company does not believe the criteria for recognition of the receivable of the taxes paid during the Company’s ownership has been met and will not record a receivable until the certainty of realization is assured.
		The Company and its subsidiaries are subject to income taxes in the U.S. federal jurisdiction and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and foreign tax examinations by tax authorities for years prior to 2000.
12.		The Company and the United Steelworkers entered into a series of letter agreements beginning in 1991 establishing maximum annual amounts that the Company would contribute for funding the cost of health care coverage for certain union retirees who retired after specific dates. Prior to January 1, 2004, the maximum annual amounts had never been implemented. On January 1, 2004, however, the Company implemented the existing letter agreements according to its terms and began requiring these retirees and surviving spouses to make contributions for the cost of their health care coverage.
		On April 18, 2006, a group of the Company’s union retirees and surviving spouses filed a lawsuit in the U.S. District Court for the Northern District of Ohio on behalf of a purported class claiming that the Company was not entitled to impose any contribution requirement pursuant to the letter agreements and that Plaintiffs were promised lifetime benefits, at no cost, after retirement under the terms of the union-Company negotiated Pension and Insurance Agreements in effect at the time that they retired.
		On May 13, 2008, in the case of Cates, et al v. Cooper Tire & Rubber Company, the United States District Court for the Northern District of Ohio entered an order holding that a series of pension and insurance agreements negotiated by the Company and its various union locals over the years conferred vested lifetime health care benefits upon certain Company hourly retirees. The Court further held that these benefits were not subject to the caps on the Company’s annual contributions for retiree health care benefits that the Company had negotiated with the union locals. Subsequent to that order, the Court granted the Plaintiffs’ motion for class certification. The Company initiated the process of pursuing an appeal of the order to the Sixth Circuit Court of Appeals, while simultaneously reviewing other means of satisfactorily resolving the case through settlement discussions. As a result of the settlement discussions and in an attempt to resolve the claims relating to health care benefits for the Company’s hourly union-represented retirees, a related lawsuit, Johnson, et al v. Cooper Tire & Rubber Company, was filed on February 3, 2009, with the Court on behalf of a different, smaller group of hourly union-represented retirees. The second case was stayed pending the parties’ settlement discussions.

		In April, 2009, the parties negotiated a tentative agreement intended to resolve all related claims for these matters. Pursuant to the Court’s order, the parties submitted a proposed settlement agreement for approval. The proposed settlement agreement, which is subject to Court approvals, provides for 1) a cash payment of $7.05 million to the Plaintiffs for reimbursement of costs; and 2) modification to the Company’s approach and costs of providing future health care to specified current retiree groups which will result in an amendment to the Company’s retiree medical plan.
		Notices of the proposed settlement agreement were sent to class members on October 13, 2009. Objections by class members to the proposed settlement agreement must be filed with the Court no later than December 10, 2009. The Court will hold a Fairness Hearing, set for February 2, 2010 to consider whether the settlement is fair, reasonable and adequate.
		While the proposed settlement agreement could be modified before it becomes effective and the related cases are concluded, the Company believes it is probable that the related costs of resolving these cases will be close to the amounts in the proposed settlement agreement and, accordingly, has recorded $7.05 million of expense during the first quarter relating to the specified payments. The estimated present value of costs related to the plan amendment is expected to be approximately $7.7 million which has been reflected as an increase in the accrual for Other Post-employment Benefits with an offset to the Accumulated Other Comprehensive Income component of Shareholders’ Equity and will be amortized as a charge to operations over the remaining life expectancy of the affected plan participants beginning with the effective date of the changes.
13.		On July 3, 2009, the Company received notification from its noncontrolling shareholder in the Cooper Chengshan entity of its intention to exercise a portion of its put option after it receives related governmental approvals and satisfies other conditions. If the put option is exercised, the Company has the obligation to purchase the 14 percent share for $17,920.
14.		Certain operating leases related to property and equipment used in the operations of Cooper-Standard Automotive were guaranteed by the Company. These guarantees require the Company, in the event Cooper-Standard Automotive fails to honor its commitments, to satisfy the terms of the lease agreements. As part of the sale of the automotive segment, the Company is seeking releases of those guarantees, but to date has been unable to secure releases from certain lessors. The most significant of those leases is for a U.S. manufacturing facility with a remaining term of seven years and total remaining payments of approximately $8,700. Other leases cover two facilities in the United Kingdom. These leases have remaining terms of four years and remaining payments of approximately $2,600.
		During the third quarter, Cooper-Standard Holdings Inc., the company that acquired Cooper-Standard Automotive, and its United States and Canadian affiliates filed for bankruptcy protection. The Company does not believe it is presently probable that it will be called upon to make payments on any of the leases. Accordingly, no accrual for these guarantees has been recorded. If information becomes known to the Company at a later date which indicates its future performance under these guarantees is probable, accruals for the obligations will be required.

Item 2.		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 operations of the Company, a discussion of the past results and future outlook of each of the Company’s segments, and information concerning both the liquidity and capital resources of the Company. The Company has updated its listing of risk factors to be considered when making investment decisions with respect to the Company’s securities and this listing is included in Item 1A. Risk Factors.

Consolidated Results of Operations

(Dollar amounts in millions except per share amounts)		Three months ended September 30												Nine months ended September 30
		2008				Change				2009				2008				Change				2009
Revenues:
North American Tire		$	586.2				-2.1	%		$	573.9			$	1,631.4				-11.7	%		$	1,440.6
International Tire			284.7				4.3	%			296.8				799.4				-9.9	%			720.2
Eliminations			(77.1	)			-11.9	%			(67.9	)			(184.8	)			-16.2	%			(154.9	)
Net sales		$	793.8				1.1	%		$	802.8			$	2,246.0				-10.7	%		$	2,005.9
Segment profit (loss):
North American Tire		$	(51.1	)			n/m			$	47.6			$	(64.9	)			n/m			$	71.9
International Tire			7.2				n/m				29.9				20.1				n/m				46.3
Eliminations			0.4				n/m				(0.5	)			0.1				n/m				(1.6	)
Unallocated corporate charges			(3.5	)			80.0	%			(6.3	)			(8.2	)			n/m				(20.7	)
Operating profit (loss)			(47.0	)			n/m				70.7				(52.9	)			n/m				95.9
Interest expense			(12.8	)			-10.9	%			(11.4	)			(37.0	)			-2.2	%			(36.2	)
Debt extinguishment costs			—				n/m				—				(0.6	)			n/m				—
Interest income			3.9				-43.6	%			2.2				11.3				-57.5	%			4.8
Dividend from unconsolidated subsidiary			—								—				1.9				n/m				—
Other — net			(1.2	)			-8.3	%			(1.1	)			2.3				-56.5	%			1.0
Income (loss) from continuing operations before income taxes			(57.1	)							60.4				(75.0	)							65.5
Income tax benefit (expense)			2.3								(2.6	)			1.9								0.2
Income (loss) from continuing operations			(54.8	)							57.8				(73.1	)			—				65.7
Income (loss) from discontinued operations, net of income taxes			(0.2	)							(0.3	)			0.1								(37.8	)
Noncontrolling shareholders’ interests			(0.4	)							(10.7	)			(2.9	)							(15.3	)
Net income (loss) attributable to Cooper Tire & Rubber Company		$	(55.4	)						$	46.8			$	(75.9	)						$	12.6
Basic earnings (loss) per share		$	(0.94	)						$	0.79			$	(1.29	)						$	0.85
Diluted earnings (loss) per share		$	(0.94	)						$	0.77			$	(1.29	)						$	0.84

Consolidated net sales for the three-month period ended September 30, 2009 were $9.0 million higher than the comparable period one year ago. The increase in net sales for the third quarter of 2009 compared to the third quarter of 2008 was primarily the result of higher unit volumes in both the North American Tire Operations and International Tire Operations segments. Net sales for the quarter were negatively impacted by reduced pricing and mix in both segments.

Operating profit in the third quarter of 2009 increased by $117.7 million from the third quarter of 2008. The favorable impacts of lower raw material costs, higher sales volumes and improved manufacturing operations were offset by declining pricing and mix in both the North American and International Tire Operations segments, in addition to increases in selling, general and administrative costs driven by increased incentive compensation for significantly better performance and restructuring initiatives in the North American Tire Operations segment.

Consolidated net sales for the nine-month period ended September 30, 2009 were $240.1 million lower than the comparable period one year ago. The decrease in net sales for the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008 was primarily the result of lower unit volumes in the North American Tire Operations segment, reduced pricing and mix in the International Tire Operations segment and unfavorable foreign currency exchange rate changes. This decrease was partially offset during the period with a favorable impact to pricing and mix in the North American Tire Operations segment.

Operating profit in the first nine months of 2009 increased by $148.8 million from the first nine months of 2008. The favorable impacts of lower raw material costs and improved manufacturing operations were offset by lower

unit volumes in the North American Tire Operations segment, reduced pricing and mix in both segments, production curtailment costs, higher incentive-related compensation expense and restructuring initiatives primarily in the North American Tire segment.

After experiencing record high costs for raw materials in the second half of 2008, the Company’s nine-month period ended September 30, 2009 reflects significantly lower costs of certain of its principal raw materials. The principal raw materials for the Company include natural rubber, synthetic rubber, carbon black, chemicals and reinforcement components. Approximately 65 percent of the Company’s raw materials are petroleum-based and the recent decreases in those materials and natural rubber were the most significant drivers of lower raw material costs during the third quarter of 2009, which were down $184.1 million from the third quarter of 2008 and down $288.2 million for the nine-month period ended September 30, 2009.

The Company strives to assure raw material supply and to obtain the most favorable pricing. For natural rubber and natural gas, procurement is managed by the buying forward of production requirements and utilizing the spot market when advantageous. 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. These arrangements are typically used to assure adequate quantities of raw materials are available for production. They can also be used by the Company to address expectations of increasing raw material costs thereby reducing volatility of price.

Products liability expenses totaled $21.0 million and $14.9 million in the third quarter of 2009 and 2008, respectively, and included recoveries of legal fees of $0.4 million and $0.7 million in the third quarter of 2009 and 2008, respectively. Products liability expenses totaled $61.9 million and $60.8 million in the first nine months of 2009 and 2008, respectively, and included recoveries of legal fees of $2.4 million and $4.9 million in the first nine months of 2009 and 2008, respectively. Insurance policies applicable to claims occurring on April 1, 2003, and thereafter, do not provide for recovery of legal fees. Additional information related to the Company’s accounting for products liability costs appears in the Notes to Consolidated Financial Statements.

Selling, general and administrative expenses were $56.4 million in the third quarter of 2009 (7.0 percent of net sales) and $46.9 million in the third quarter of 2008 (5.9 percent of net sales). This increase was due primarily to higher incentive based compensation and increases in the accruals for stock-based liabilities. For the nine-month period ended September 30, 2009, selling, general and administrative expenses were $151.8 million (7.6 percent of net sales) compared to $138.8 million (6.2 percent of net sales) for the comparable period of 2008. This increase was due to the same reasons cited for the quarter increase.

During the third quarter and first nine months of 2009, the Company recorded restructuring charges of $13.4 million and $36.4 million, respectively, related to the initiatives described in the Notes to Consolidated Financial Statements.

As discussed in the Notes to the Consolidated Financial Statements, the Company recorded a $7.1 million charge during the first quarter related to the agreement reached in the Cates retiree medical case.

Interest expense decreased $1.4 million in the third quarter of 2009 from the third quarter of 2008 due to lower debt levels primarily in China. Interest income decreased $1.6 million and $6.6 million in the third quarter and first nine months of 2009, respectively, from comparable periods of 2008 as a result of lower interest rates.

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

For the quarter ended September 30, 2009, the Company recorded an income tax expense for continuing operations of $2.6 million which includes a tax benefit for discrete items of $1.2 million relating primarily to the release of reserves resulting from the expiration of statutes of limitations during the quarter. The effective tax rate for the quarter and nine month period ended September 30, 2009 for continuing operations is 6.4 percent and -0.9 percent, respectively, exclusive of discrete items, using forecasted jurisdictional annual effective rates. For comparable periods in 2008, the effective tax rate for continuing operations, exclusive of discrete items, was -1.5 percent and -0.8 percent, respectively, using a forecasted jurisdictional annual effective tax rates. The

change in the tax rate, exclusive of discrete items, relates primarily to the improvement in earnings, a “specified liability loss” carry back, and the mix of earnings or loss by jurisdiction as compared to 2008.

The Company maintains a valuation allowance on its net U.S. and certain non-U.S. deferred tax asset positions. The valuation allowance will be maintained as long as it is more likely than not that some portion of the deferred tax assets will not be realized. Deferred tax assets and liabilities are determined separately for each taxing jurisdiction in which the Company conducts its operations or otherwise generates taxable income or losses. In the U.S., the Company has recorded significant deferred tax assets, the largest of which relate to products liability, pension and other postretirement benefit obligations. These deferred tax assets are partially offset by deferred tax liabilities, the most significant of which relates to accelerated depreciation. Based upon this assessment, the Company maintains a $221.6 million valuation allowance for the portion of U.S. deferred tax assets exceeding its U.S. deferred tax liabilities. In addition, the Company has recorded valuation allowances of $8.0 million for deferred tax assets associated with losses in foreign jurisdictions.

As discussed in the Notes to Consolidated Financial Statements, during the second quarter of 2009, the Company recorded an income tax and interest obligation related to the Advance Pricing Agreement of $34.5 million. This was recorded as a current tax liability for discontinued operations. The Company is pursuing all options to recover approximately $69 million in tax refunds to which it is entitled under the 2004 Sale Agreement for the disposition of the Cooper-Standard Automotive group. During the third quarter, Cooper-Standard Holdings Inc., the company that acquired Cooper-Standard Automotive, and its United States and Canadian affiliates filed for bankruptcy protection and the Company has file adversary proceedings in the Delaware Bankruptcy Court.

North American Tire Operations Segment

		Three months ended September 30												Nine months ended September 30
(Dollar amounts in millions)		2008				Change				2009				2008				Change				2009
Sales		$	586.2				-2.1	%		$	573.9			$	1,631.4				-11.7	%		$	1,440.6
Operating profit (loss)		$	(51.1	)			n/m			$	47.6			$	(64.9	)			n/m			$	71.9
United States unit shipments changes:
Passenger tires
Segment							1.6	%											-12.5	%
RMA members							0.6	%											-7.7	%
Total Industry							3.2	%											-7.3	%
Light truck tires
Segment							4.2	%											-19.6	%
RMA members							3.8	%											-10.9	%
Total Industry							4.5	%											-12.4	%
Total light vehicle tires
Segment							2.0	%											-13.8	%
RMA members							1.0	%											-8.1	%
Total Industry							3.3	%											-7.9	%
Total segment unit sales changes							0.8	%											-12.0	%