Bandag Inc. reports consolidated net income of $20 million on consolidated net sales of $211.4 million for the third quarter ended Sept. 30, 2003. That compares to income of $19.6 million on sales of $245.9 million for the same period last year.
The 14% decline in sales was largely attributable to lower sales at Bandag's distribution subsidiary, Tire Distribution Systems Inc. (TDS). TDS sold and closed locations in 2002 and 2003.
"Overall, third quarter net income showed improvement compared to the first six months of the year," says Chairman and CEO Martin Carver. "Although the North America business unit volume was 4% below the previous year, the U.S. economy appears to be improving, and we are cautiously optimistic we will begin to see sustainable sales improvement at the business unit level in the months ahead.
"Bandag experienced a small unit volume decrease in European markets, which remained soft. Unit volumes in the international markets experienced greater declines due in large part to difficult business climates in those areas."
Carver says TDS' results "were gratifying, with improvement in both sales and operating margins after eliminating sales affected by divestitures and closings. We are pleased that our independent dealers who acquired TDS locations are having success in integrating those operations into their businesses."
For the first nine months of 2003, Bandag reported consolidated net income of $31.1 million on consolidated net sales of $590.7 million. Net income was up compared to the first nine months of 2002, when Bandag recorded a net loss of 14.7 million. Financial results from the first nine months of 2002 were impacted by:
* the write-off of goodwill of $47.3 million net of income tax related to the adoption of SFAS 142 as of January 1, 2002.
* charges of approximately $10.7 million ($6.7 million after tax) related to litigation expense.
* charges of $2.2 million ($1.4 million after tax) related to converting SystemBandag users to the RoadWare software system.
Consolidated net sales for the first nine months were down close to 12% compared to 2002.
"To say that we're confident of an economic rebound in the U.S. for the remainder of the year may overstate the case, given that there are many mixed signals coming from the marketplace," says Carver. "Nonetheless, we are hopeful that positive indicators will lead to sustained improvement in the business climate, attesting to the arrival of economic recovery."
