Bandag Reports 3Q Results
MUSCATINE, Iowa, Oct. 19 ;Bandag, Incorporated today announced consolidated net
earnings of $14.6 million for the quarter ended September 30, 2001, a decrease
of 18 percent compared to third quarter 2000 net earnings of $17.9 million.
Consolidated net sales for the third quarter 2001 declined 3 percent to
$261.7 million from net sales of $269.9 million in the same quarter of 2000.
Third quarter 2001 earnings per share were $0.71 per diluted share, compared
to $0.86 per diluted share for the quarter ended September 30, 2000.
Corporate expenses increased significantly due largely to higher legal
expenses related to the ongoing Michelin litigation. Expenses for that
litigation in the quarter ended September 30, 2001 amounted to approximately
$4.5 million, which was in line with the Company's estimates. This compares
to $1.6 million for the prior year quarter.
Year to date, consolidated net earnings declined to $26.5 million, or
$1.28 per diluted share, on net sales of $715.7 million from earnings of
$45.6 million, or $2.19 per diluted share, on net sales of $743.3 million in
the first nine months of 2000.
Reviewing Bandag's overall third quarter performance, Martin G. Carver,
Chairman and Chief Executive Officer, said, "Given the severity of the
economic slowdown in most major commercial truck tire markets, Bandag
performed reasonably well and remained solidly profitable. Overall, we saw a
slight reduction in gross margins to 36.9 percent from 37.5 percent in the
prior year third quarter, a reflection of both the economic slowdown in
Bandag's major markets and higher raw material costs. However, retreading
equipment sales remained exceptionally strong, clear evidence of continued
confidence at the dealer level."
Commenting specifically on Bandag's retread business, Mr. Carver said:
"While we found declining volumes in most markets because of the global
economic slowdown, we were able to maintain margins except in Europe where
market pressures were more severe."
Describing the performance of Tire Distribution Systems, Inc. (TDS),
Bandag's tire distribution subsidiary, Mr. Carver said: "TDS' sales increased
in comparison to the prior year period; however, competitive conditions
continued to adversely affect margins, which limited profitability."
Looking forward, Mr. Carver said: "Given the uncertainties of the economic
slowdown and the aftermath of the terrible events of September 11, we don't
anticipate any significant recovery in the commercial truck tire business
before the second half of 2002. Nevertheless, Bandag is currently
well-positioned to help fleets and our dealers manage their businesses during
these difficult times."
Bandag, Incorporated manufactures retreading materials and equipment for
its worldwide network of nearly 1,300 franchised dealerships that produce and
market retread tires and provide tire management services. Bandag's wholly
owned subsidiary, Tire Management Solutions, Inc. (TMS) provides tire
management systems outsourcing for commercial truck fleets. Tire Distribution
Systems, Inc. (TDS), also a wholly owned subsidiary, sells and services new
and retread tires.
Bandag, Incorporated
Unaudited Financial Highlights
(In thousands, except per share data)
Third Quarter Nine Months
Consolidated Statements of Ended September 30, Ended September 30,
Earnings 2001 2000 2001 2000
Net sales $261,712 $269,905 $715,712 $743,310
Interest income 1,720 1,396 5,383 4,368
Other income 3,375 2,353 8,471 6,978
Total income 266,807 273,654 729,566 754,656
Cost of products sold 165,081 168,803 454,147 459,795
Operating & other expenses 72,193 69,457 216,624 202,726
Goodwill amortization 2,526 2,635 7,568 7,763
Interest expense 1,809 2,137 5,616 6,476
Total expenses 241,609 243,032 683,955 676,760
Earnings before income taxes 25,198 30,622 45,611 77,896
Income taxes 10,584 12,708 19,157 32,327
Net earnings $14,614 $17,914 $26,454 $45,569
Earnings per share
Basic $0.71 $0.87 $1.29 $2.20
Diluted $0.71 $0.86 $1.28 $2.19
Weighted average shares
outstanding
Basic 20,578 20,697 20,570 20,721
Diluted 20,681 20,793 20,679 20,782
Third Quarter Nine Months
Ended September 30, Ended September 30,
Segment Information 2001 2000 2001 2000
Net Sales
North America $97,104 $99,203 $264,261 $264,435
Europe 17,340 20,599 50,975 62,681
International 25,768 31,104 78,995 92,025
TDS 114,952 112,537 302,063 305,743
Other 6,548 6,462 19,418 18,426
Total net sales $261,712 $269,905 $715,712 $743,310
Segment Operating Profit
(Loss)
North America $30,958 $30,602 $68,279 $71,533
Europe (40) 1,251 1,252 9,531
International 2,588 2,987 8,169 12,577
TDS 785 2,627 (5,386) 1,616
Corporate expenses & other (9,004) (6,104) (26,470) (15,253)
Net interest (expense) income (89) (741) (233) (2,108)
Earnings before income taxes $25,198 $30,622 $45,611 $77,896
Bandag, Incorporated
Unaudited Financial Highlights
(In thousands)
Sept. 30, Dec. 31,
Condensed Consolidated Balance Sheets 2001 2000
Assets:
Cash and cash equivalents $120,336 $86,008
Investments 7,162 7,377
Accounts receivable - net 174,938 177,103
Inventories 103,723 101,640
Other current assets 52,645 55,051
Total current assets 458,804 427,179
Property, plant, and equipment - net 162,500 177,156
Other assets 108,512 110,214
Total assets $729,816 $714,549
Liabilities & shareholders' equity:
Accounts payable $23,872 $18,294
Income taxes payable 26,038 13,037
Accrued liabilities 82,240 92,914
Short-term notes payable and current portion
of other obligations 8,602 8,490
Total current liabilities 140,752 132,735
Long-term debt and other obligations 104,474 105,163
Deferred income tax liabilities 5,826 2,494
Shareholders' equity
Common stock 20,640 20,562
Additional paid-in capital 10,513 8,256
Retained earnings 492,533 484,987
Equity adjustment from foreign currency
translation (44,922) (39,648)
Total shareholders' equity 478,764 474,157
Total liabilities & shareholders' equity $729,816 $714,549
Nine Months
Ended September 30,
Condensed Consolidated Statements of Cash Flows 2001 2000
Operating Activities
Net earnings $26,454 $45,569
Provisions for depreciation and amortization 32,717 37,297
Increase in operating assets and
liabilities - net 8,585 (10,818)
Net cash provided by operating activities 67,756 72,048
Investing Activities
Additions to property, plant and equipment (15,246) (15,364)
Sale (purchases) of investments - net 215 (481)
Payments for acquisitions of businesses -- (4,632)
Net cash used in investing activities (15,031) (20,477)
Financing Activities
Principal payments on short-term notes
payable and other long-term liabilities (375) (692)
Cash dividends (18,862) (18,398)
Purchases of Common Stock (24) (1,725)
Net cash used in financing activities (19,261) (20,815)
Effect of exchange rate changes on cash and
cash equivalents 864 (2,116)
Increase in cash and cash equivalents 34,328 28,640
Cash and cash equivalents at beginning of year 86,008 50,633
Cash and cash equivalents at end of period $120,336 $79,273
