Bandag Announces First Quarter 2001 Results

Apr 25, 2001, 01:00 ET from Bandag, Incorporated

    MUSCATINE, Iowa, April 25 /PRNewswire/ --
     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 manufactures retreading materials and equipment for
 its worldwide network of nearly 1300 franchised dealers 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.
 
     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
 "continuing operating expense management" and "eventual global economic
 recovery."  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 Bandag's ability to continue to prudently manage its
 operating expenses under future unforeseeable market conditions and the
 uncertain timing of 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
 
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SOURCE Bandag, Incorporated
    MUSCATINE, Iowa, April 25 /PRNewswire/ --
     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 manufactures retreading materials and equipment for
 its worldwide network of nearly 1300 franchised dealers 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.
 
     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
 "continuing operating expense management" and "eventual global economic
 recovery."  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 Bandag's ability to continue to prudently manage its
 operating expenses under future unforeseeable market conditions and the
 uncertain timing of 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
 
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 SOURCE  Bandag, Incorporated