Treadco, Inc. Reports 1998 4Q and Year-End Operating Results
22 January 1999
Treadco, Inc. Reports 1998 Fourth Quarter and Year-End Operating Results
FORT SMITH, Ark., Jan. 22 -- Treadco, Inc.
today reported net income of $5.5 million, or $1.08 per common share (basic
and diluted), for the 1998 fourth quarter. This compares to a net loss of
$983,000, or a loss of $0.19 per common share (basic and diluted), for the
fourth quarter of 1997. For the 1998 year, Treadco reported net income of
$6.4 million, or $1.25 per diluted share, compared to a net loss of
$2.5 million, or a loss of $0.49 per diluted share, during 1997.
In the 1998 fourth quarter, Treadco received $9,995,000 in settlement of a
dispute between Treadco and Bandag, Incorporated, and certain of Bandag's
current and former employees arising out of the two companies' former
franchise relationship. This settlement resulted in other non-operating
income of $9.1 million in the fourth quarter. On an after-tax basis, this
item increased Treadco's fourth quarter net income by approximately
$5.4 million or $1.06 per share.
"During the quarter, Treadco reported operating income of $161,000, a
significant improvement over a 1997 fourth quarter loss of $1.2 million," said
John R. Meyers, President and Chief Executive Officer. "For the year,
operating income improved to $2.5 million compared to a $2.5 million operating
loss last year.
"Year-over-year sales remained strong with an 11.0% increase during the
fourth quarter and a 12.4% increase for the year," said Meyers. "These
increases were achieved despite a pricing environment which remains very
competitive."
For the 1998 fourth quarter, same store sales increased 9.5% and new store
sales accounted for 1.5% of the increase from the 1997 fourth quarter. Same-
store retread units sold increased 1.7% and new tire units sold increased
14.9% from the 1997 fourth quarter. Same-store sales include locations that
have been in operation for the entire periods compared.
The foregoing release contains forward-looking statements that are based
on current expectations and are subject to a number of risks and
uncertainties. Actual results could differ materially from current
expectations due to a number of factors, including general economic
conditions; competitive initiatives and pricing pressures; availability and
cost of capital; shifts in market demand; weather conditions; government
regulations; the performance and needs of industries served by Treadco; actual
future costs of operating expenses such as the price of oil; self-insurance
claims and employee wages and benefits; and the timing and amount of capital
expenditures.
The following table provides a breakdown of sales by category:
Three Months Ended
December 31
%
1998 1997 Increase
SALES
Retread $ 17,187,248 $ 16,295,613 5.5%
New tires 22,660,897 20,127,786 12.6
Service 4,709,969 3,736,413 26.1
$ 44,558,114 $ 40,159,812 11.0%
Year Ended
December 31
%
1998 1997 Increase
SALES
Retread $ 70,832,211 $ 65,325,556 8.4%
New tires 91,560,346 81,008,925 13.0
Service 18,900,651 14,941,730 26.5
$ 181,293,208 $161,276,211 12.4%
TREADCO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Year Ended
December 31 December 31
1998 1997 1998 1997
SALES
Non-affiliates $ 43,937,702 $ 39,635,514 $179,046,969 $158,912,429
Affiliates 620,412 524,298 2,246,239 2,363,782
44,558,114 40,159,812 181,293,208 161,276,211
COSTS AND EXPENSES
Materials and
cost of new
tires 28,487,583 27,397,720 118,223,620 109,821,411
Salaries and
wages 8,573,166 7,411,321 31,845,776 27,551,473
Depreciation and
amortization 1,652,854 1,464,584 6,266,151 5,610,647
Administrative
and general 5,683,835 5,133,700 22,465,951 20,801,826
44,397,438 41,407,325 178,801,498 163,785,357
OPERATING
INCOME (LOSS) 160,676 (1,247,513) 2,491,710 (2,509,146)
OTHER INCOME
Settlement of
litigation 9,124,227 --- 9,124,227 ---
Interest income 9,337 12,276 39,479 43,682
Gain on asset
sales 17,638 30,816 447,734 276,570
Other 817 133,742 131,511 290,649
9,152,019 176,834 9,742,951 610,901
OTHER EXPENSES
Interest 285,507 282,430 1,125,026 1,256,452
Amortization
of goodwill 115,497 115,497 461,989 461,989
Amortization
of noncompete
agreements --- 65,313 174,167 261,250
401,004 463,240 1,761,182 1,979,691
INCOME (LOSS)
BEFORE INCOME
TAXES 8,911,691 (1,533,919) 10,473,479 (3,877,936)
FEDERAL AND
STATE INCOME
TAXES (CREDIT) 3,424,228 (551,200) 4,092,247 (1,373,560)
NET INCOME (LOSS)$ 5,487,463 $ (982,719) $ 6,381,232 $ (2,504,376)
INCOME (LOSS)
PER COMMON
SHARE:
Basic $ 1.08 $ (0.19) $ 1.26 $ (0.49)
Diluted $ 1.08 $ (0.19) $ 1.25 $ (0.49)
CASH DIVIDENDS
PAID PER COMMON
SHARE $ --- $ --- $ --- $ 0.12
TREADCO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
December 31 December 31
1998 1997
ASSETS
Current assets $ 59,565,917 $ 55,644,791
Property, plant and
equipment (net) 34,313,351 31,329,068
Deferred income taxes 145,526 ---
Other assets 1,113,431 790,170
Goodwill (less
amortization) 12,232,164 12,694,153
$107,370,389 $100,458,182
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities $ 35,892,840 $ 28,372,288
Long-term debt (less
current portion) 6,159,351 12,883,763
Other liabilities 102,398 89,860
Deferred income taxes --- 277,703
Stockholders' equity 65,215,800 58,834,568
$107,370,389 $100,458,182
TREADCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Year Ended
December 31
1998 1997
OPERATING ACTIVITIES:
Net cash provided by
operating activities $ 13,314,695 $ 10,012,272
INVESTING ACTIVITIES:
Purchases of property,
plant and equipment
less capitalized leases (10,577,501) (2,015,325)
Proceeds from asset sales 656,546 856,129
Acquisition (1,275,759) ---
Net cash used in investing
activities (11,196,714) (1,159,196)
FINANCING ACTIVITIES:
Borrowings under revolving
credit facility 53,825,000 33,885,000
Payments under revolving
credit facilities (56,575,000) (40,185,000)
Payments on long-term debt (2,279,565) (2,085,358)
Dividends paid --- (608,670)
Net increase in cash overdrafts 2,911,584 125,148
Net cash used in financing
activities (2,117,981) (8,868,880)
NET DECREASE IN CASH AND
CASH EQUIVALENTS --- (15,804)
Cash and cash equivalents at
beginning of period --- 15,804
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ --- $ ---