Bandag reports Q2 results

July 26, 2002

Bandag Inc.'s consolidated net income for the second quarter totaled $11.7 million, a 23% increase over the same period last year.

Bandag's consolidated net sales for Q2 2002 were $231.1 million, a 4% drop from Q2 2001.

For the first six months of 2002, Bandag reported a net loss of $47.3 million. Consolidated first half income was $12.9 million.

"On a consolidated basis, gross profit for the second quarter increased by 5% over the prior year period," according to Bandag officials.

"The improvement in gross margin was mainly attributable to lower raw material costs in the traditional business, particularly in North America, which had a 15% improvement in operating profit."

Bandag's operating expenses rose during Q2, which the company blames on "higher costs of doing business at (its) Tire Distribution Systems (subsidiary)" and litigation costs stemming from its lawsuit against Michelin North America Inc. (Bandag and Michelin unexpectedly dropped charges against each other shortly after they went to court in May.)

Bandag reports that TDS' second quarter sales of $98.8 million were down 5% from Q2 2001.

"We don't anticipate a near-term increase in global demand for retread products," says Martin Carver, Bandag CEO, "but the elimination of the distractions caused by the Michelin litigation, and the related legal expenses, should contribute to continued improvement in Bandag performance.

"At TDS, management is in the process of implementing a plan to rationalize operations with the objective of significantly improving long-term performance. In the broader economy, U.S. trucking activity appears to be improving in some segments, but has yet to gain any sustained traction overall."