Bandag Inc. reported consolidated net income of $60.2 million on consolidated net sales of $900.5 million for 2003. That compares to net income of $2.8 million on net sales of $816.4 million (down 9%) in 2002.
Net income in 2002 included a $47.3 million write-off of goodwill, primarily of the company's Tire Distribution Systems (TDS)subsidiary. The write-off was related to the adoption of Statement of Financial Accounting Standards No. 142 as of Jan. 1, 2002.
For the fourth quarter ended Dec. 31, 2003, Bandag posted consolidated net income of $29.1 million (up 66%) on consolidated net sales of $225.7 million (down 2%).
Bandag largely attributed the decline in net sales for both the year and the fourth quarter to its strategy of shifting sales from TDS to independent dealers. Divestitures and closures within its TDS subsidiary have been going on for two years.
"Bandag improved its margins in both the traditional business and TDS during the final three months of 2003," said Martin Carver, Bandag's chairman and CEO. "Our investments in capabilities to provide customized solutions to our customers served us well during a year that proved to be challenging for the transportation industry."
Bandag's fourth-quarter financial highlights broken down by market are as follows:
North America. Unit volume was 2% below the previous year, although net sales were up approximately $14 million, primarily due to a price increase implemented Jan. 1, 2003. Operating and other expenses in North America were negatively impacted by $2.1 million of increased pension expense. Operating income for North America was "generally comparable" to the previous year (despite the decrease in volume).
Europe. Unit volume in the European business unit decreased 1%. Operating income increased $4.2 million compared to 4Q 2002, when $3.5 million in restructuring charges were recorded.
International. Unit volume in the International business unit increased 3%, while operating income increased by $5 million.
Taking monitary exchange rates into account, the weaker U.S. dollar had a favorable impact of $10.9 million on consolidated net sales.
"Financial results have improved at our European, international and, most particularly, our TDS operations for the fourth quarter of 2003," said Carver. "Even though economic recovery remains in the early stages, our progress during 2003 positions Bandag well to benefit from new revenue opportunities and continued economic improvement."
