Bandag Announces First Quarter 2001 Results
MUSCATINE, Iowa, April 25 Bandag, Incorporated (NYSE: BDG and BDGA) today announced consolidated net
earnings of $2.3 million, or $0.11 per diluted share, for the quarter ended
March 31, 2001, a decline of 77 percent compared to first quarter 2000 net
earnings of $10.0 million, or $.48 per diluted share. Consolidated net sales
for the first quarter 2001 were $209.2 million, a decline of 6.7 percent
compared to sales of $224.3 million in the same quarter of 2000.
The decline in consolidated net sales resulted from an approximate
10 percent decline in unit volume from first quarter 2000 and the lower
translated value of the Company's foreign-currency denominated sales.
However, the lower sales volume and negative translation effect were partially
offset by price increases. Consolidated gross profit margin for first quarter
2001 was 35.7 percent, 3.3 percentage points lower than 39.0 percent in the
first quarter 2000, reflecting higher raw material prices across all business
segments and geographic areas. Consolidated operating and other expenses for
first quarter 2001 of $70.6 million includes $4.0 million of legal fees
attributable to litigation involving Michelin North America. Exclusive of
these legal fees, the remaining $66.6 million reflects a decrease of 4 percent
from first quarter 2000.
Commenting on first quarter results, Martin G. Carver, Bandag Chairman and
Chief Executive Officer, said, "As expected, the first three months of 2001
were challenging. The decrease in traditional business tread volume reflects
the sluggish business conditions and more intense competition throughout the
truck tire industry worldwide. The slowing economies in our major markets
reduced demand for trucking services and, in turn, fleets looked to their
suppliers for price reductions in order to reduce costs. Both new and retread
tires have been affected. These market conditions were also evident in the
results of Tire Distribution Systems, Inc. (TDS), Bandag's tire distribution
subsidiary, which experienced a 7 percent decline in revenues from first
quarter 2000."
Noting that results are consistent with revised guidance issued a week
earlier, Mr. Carver said that high-energy prices have further complicated
conditions for the truck tire industry. "In addition to the impact on the
global economy in general, rising energy and raw material prices have put the
tire industry in a squeeze. As diesel fuel for trucks became more costly,
fleets became more adamant in lowering their operating costs, including
replacement tires. Yet those same rising energy prices increased the costs of
our oil-derived raw materials for tread rubber and pushed our production costs
higher." He added that Bandag has increased efforts to make fleets and
dealers aware of the higher value in Bandag's product offerings in order to
secure appropriate pricing under the current conditions.
In light of lower tread rubber volumes in most global markets, Bandag has
diligently managed operating expenses with the eventual business upturn in
mind. Mr. Carver said: "Bandag has not wavered from its long-term view of
capitalizing on the changing needs of customers in the evolving transportation
industry. Combined with the restructuring in 1999, our continuing operating
expense management has been prudent and focused on investing in critical
capabilities, products and programs which positions us well for the eventual
global economic recovery."
Bandag, Incorporated
Unaudited Financial Highlights
(In thousands, except per share data)
First Quarter
Ended March 31,
Consolidated Statements of Earnings 2001 2000
Net sales $ 209,242 $224,289
Interest income 1,844 1,579
Other income 2,436 2,289
Total income 213,522 228,157
Cost of products sold 134,487 136,841
Operating & other expenses 70,649 69,202
Goodwill amortization 2,523 2,411
Interest expense 1,884 2,289
Total expenses 209,543 210,743
Earnings before income taxes 3,979 17,414
Income taxes 1,651 7,401
Net earnings $2,328 $10,013
Earnings per share
Basic $0.11 $0.48
Diluted $0.11 $0.48
Weighted average shares outstanding
Basic 20,553 20,734
Diluted 20,689 20,781
First Quarter
Ended March 31,
TDS Financial Highlights 2001 2000
Net sales $83,400 $89,776
Other income 754 595
Total income 84,154 90,371
Cost of products sold 64,842 67,933
Operating & other expenses 22,209 22,960
Goodwill amortization 2,372 2,367
Total expenses 89,423 93,260
Loss before interest and income taxes $(5,269) $(2,889)
Intercompany sales from traditional retread
business to TDS which have been eliminated
in consolidation $13,874 $13,954
Bandag, Incorporated
Unaudited Financial Highlights
(In thousands)
March 31, Dec. 31,
Condensed Consolidated Balance Sheets 2001 2000
Assets:
Cash and cash equivalents $96,890 $86,008
Investments 10,766 7,377
Accounts receivable - net 144,835 177,103
Inventories 108,110 101,640
Other current assets 55,413 55,051
Total current assets 416,014 427,179
Property, plant, and equipment - net 173,834 177,156
Other assets 110,057 110,214
Total assets $ 699,905 $714,549
Liabilities & shareholders' equity:
Accounts payable $18,574 $18,294
Income taxes payable 14,798 13,037
Accrued liabilities 78,781 92,914
Short-term notes payable and current
portion of other obligations 8,146 8,490
Total current liabilities 120,299 132,735
Long-term debt and other obligations 104,790 105,163
Deferred income tax liabilities 2,583 2,494
Shareholders' equity
Common stock 20,640 20,562
Additional paid-in capital 10,513 8,256
Retained earnings 480,997 484,987
Equity adjustment from foreign
currency translation (39,917) (39,648)
Total shareholders' equity 472,233 474,157
Total liabilities & shareholders' equity $ 699,905 $714,549
Three Months
Ended March 31,
Condensed Consolidated Statements of Cash Flows 2001 2000
Operating Activities
Net earnings $2,328 $10,013
Provisions for depreciation and amortization 11,288 12,303
Increase in operating assets and liabilities
- net 12,524 12,338
Net cash provided by operating activities 26,140 34,654
Investing Activities
Additions to property, plant and equipment (5,515) (5,859)
Purchases of investments - net (3,389) (1,409)
Payments for acquisitions of businesses -- (1,613)
Net cash used in investing activities (8,904) (8,881)
Financing Activities
Principal payments on short-term notes
payable and other long-term liabilities (236) (222)
Cash dividends (6,272) (6,127)
Purchases of Common Stock (24) (50)
Net cash used in financing activities (6,532) (6,399)
Effect of exchange rate changes on cash
and cash equivalents 178 (434)
Increase in cash and cash equivalents 10,882 18,940
Cash and cash equivalents at beginning of year 86,008 50,633
Cash and cash equivalents at end of period $96,890 $69,573
