Bandag Announces Fourth Quarter and Full Year
2000 Results
MUSCATINE, Iowa, Jan. 26 Bandag, Incorporated (NYSE: BDG and BDGA) today announced consolidated net
earnings of $14.8 million, or $.71 per diluted share, for the quarter ended
December 31, 2000, which compares to fourth quarter 1999 net earnings of
$8.1 million, or $.38 per diluted share. Fourth quarter 1999 results included
non-recurring charges, net of tax benefits, of approximately $7.7 million, or
$.36 per diluted share for restructuring costs, principally in the North
American operations of Bandag's retread business. Fourth quarter 2000
benefited by $.16 per diluted share from the favorable resolution of tax
issues which resulted in a lower estimated effective tax rate for the year.
Repurchases of the company's outstanding common stock had a favorable impact
on fourth quarter 2000 diluted earnings per share of $.03. Consolidated net
sales for fourth quarter 2000 declined 4% to $252.7 million, which compares to
$263.2 million in the same quarter of 1999.
For the full year, Bandag reported consolidated 2000 net earnings of
$60.3 million, or $2.90 per diluted share, on consolidated net sales of
$996.1 million. This compares to 1999 net earnings of $52.3 million, or $2.40
per diluted share, including the net non-recurring charges of $.36 per diluted
share. Full year 2000 results benefited by approximately $3.9 million or $.19
per diluted share, as a result of the lower effective tax rate noted above.
The company's repurchases of outstanding common stock favorably impacted
diluted earnings per share by $.12 for full year 2000. Consolidated net sales
for 1999 were $1,012.7 million.
Commenting on fourth quarter and 2000 results, Martin G. Carver, Bandag
Chairman and Chief Executive Officer, said, "North American retread volume in
the fourth quarter continued the trend established early in the year,
declining by approximately 7 percent for the quarter and 8 percent for the
full year, reflecting the highly competitive replacement tire market. The
market saw a glut of new tires caused by an influx of imported tires and a
decline in new medium-duty and heavy-duty truck demand, which has adversely
impacted the demand for retreads. Additionally, sales softened significantly
late in the fourth quarter, in part, as a consequence of what appears to be
the result of slowing U.S. economic activity.
"Globally, tread volume was down by 5 percent in the fourth quarter and
for full year 2000 reflecting difficult conditions in the company's other
world markets similar to what was experienced in North America," said Mr.
Carver.
Commenting on Tire Distribution Systems, Inc. (TDS), the company's
distribution subsidiary, Mr. Carver said, "While net sales increased
$9.0 million to $402.1 million in 2000 compared to $393.1 million in 1999,
including the effect of acquisitions in both years, fourth quarter 2000 net
sales of $94.0 million declined $4.3 million compared to fourth quarter 1999
net sales of $98.3 million. The operational improvements achieved in the
second and third quarters of 2000 helped soften the financial impact of the
fourth quarter's sales decline. Nonetheless, TDS's loss before interest and
income taxes for the fourth quarter increased to $4.1 million compared to
$3.2 million in the 1999 period. For the year, the loss before interest and
income taxes was approximately flat at $2.5 million in both 2000 and 1999."
Mr. Carver said that Tire Management Solutions, Inc. (TMS), the company's
tire management outsourcing initiative, continues to successfully service its
initial tire management fleet and is in active negotiations for additional
fleet customers. In addition to TMS's tire management services, the company
has plans to leverage TMS's capabilities with those of Bandag's retread
business to address customer needs across a broader range of fleets.
Mr. Carver noted that the company's continuing commitment to improve the
package of value offered to its distribution network is being well received at
the dealer level. During the year the company introduced new best-in-class
fuel efficient tread products, the industry's most innovative retreading
equipment, and began installing SystemBandag, the company's proprietary tire
information management system.
Mr. Carver said, "Bandag fared well in the face of difficult market
conditions in 2000 benefiting from continued prudent use of resources, and
strong strategic alliance with dealers worldwide. However, today's challenging
market conditions, in conjunction with higher raw material and energy costs,
will make it difficult for us to achieve comparable results in 2001. We,
nonetheless, are fully engaged and focused on the achievement of Bandag's
long-term vision and believe it will serve our shareholders well."
Bandag, Incorporated manufactures retreading materials and equipment for
its worldwide network of nearly 1300 franchised dealerships, which produce and
market retread tires and provide tire management services. Bandag's wholly
owned subsidiary, TMS, provides tire management systems outsourcing for
commercial truck fleets. TDS, also a wholly owned subsidiary, sells and
services new and retread tires.
This press release contains certain "forward-looking" statements that are
made pursuant to the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements, which are based on
certain assumptions, describe future plans, strategies and expectations of
Bandag, and are identifiable in this press release by the use of the words
"will make it difficult" and "believe it will serve." These statements are
based on management's current projections, beliefs and opinions at the date of
this press release. They involve known and unknown risks and uncertainties,
which may cause the actual results in the future to differ materially from
expected results. The Company's ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors which
could affect the "forward-looking" statements include: the degree to which
the current difficult competitive conditions in the replacement tire market
continue or improve, the duration and severity of the economic slowdown in the
United States, the loss of one or more significant dealers and the cost of
petroleum-based raw materials and energy.
Bandag, Incorporated
Financial Highlights
(In thousands, except per share data)
Fourth Quarter Year-to-Date
Ended December 31, Ended December 31,
Consolidated Financial
Highlights 2000 1999 2000 1999
Net Sales $252,749 $263,167 $996,059 $1,012,665
Interest Income 3,152 1,535 7,520 6,098
Other Income 2,869 4,155 9,847 8,005
Total Income 258,770 268,857 1,013,426 1,026,768
Cost of Products Sold 161,560 161,278 621,355 619,926
Operating & Other Expense 70,903 73,886 273,972 281,611
Non-recurring Charges -- 13,500 -- 13,500
Goodwill Amortization 2,572 2,516 9,992 9,914
Interest Expense 2,256 2,489 8,732 9,727
Total Expenses 237,291 253,669 914,051 934,678
Earnings Before Income Taxes 21,479 15,188 99,375 92,090
Income Taxes 6,715 7,077 39,042 39,760
Net Earnings $14,764 $8,111 $60,333 $52,330
Earnings Per Share
Basic $0.72 $0.38 $2.92 $2.41
Diluted $0.71 $0.38 $2.90 $2.40
Weighted Average Shares
Outstanding
Basic 20,605 21,302 20,693 21,707
Diluted 20,751 21,342 20,778 21,764
TDS Financial Highlights Fourth Quarter Year-to-Date
Ended December 31, Ended December 31,
2000 1999 2000 1999
Net Sales $93,999 $98,252 $402,125 $393,114
Other Income 770 376 3,543 1,398
Total Income 94,769 98,628 405,668 394,512
Cost of Products Sold 73,621 75,363 308,144 300,988
Operating & Other Expense 22,849 23,965 90,467 86,295
Goodwill Amortization 2,387 2,472 9,529 9,739
Total Expenses 98,857 101,800 408,140 397,022
Loss Before Interest and Income
Taxes ($4,088) ($3,172) ($2,472) ($2,510)
Intercompany sales from traditional
retread business
to TDS which have been eliminated
in consolidation $13,680 $15,619 $57,258 $56,811
