Bandag reported fourth quarter 2001 net earnings of $17.4 million, compared to $14.8 million for the fourth quarter 2000.

Fourth quarter 2001 results included net non-recurring pretax charges of $3.4 million primarily for closure of a manufacturing facility in Chino, Calif., realignment of the company’s North American sales force, and a provision for certain post-retirement health care costs for terminated employees, partially offset by the reduction of other accrued expenses. Consolidated net sales for the quarter were $249.2 million, down 1.4 percent from fourth quarter 2000.
For the full year, Bandag reported consolidated 2001 net earnings of $43.8 million on consolidated net sales of $964.9 million. This compares to 2000 net earnings of $60.3 million on $996.1 million consolidated net sales.
Martin G. Carver, Chairman and Chief Executive Officer, said fourth quarter sales in Bandag’s North American traditional business were up 5 percent from a year ago, but were offset by weak performance in its offshore operations. “Gross margin improved by 6 percentage points, but this was largely offset by operating expense increases due primarily to changes in provisions relating to litigation,” he said.
Carver added that he was encouraged by the level of business activity at Bandag dealers during the fourth quarter, even though there appears to have been some fourth quarter hedge-buying by North American dealers as a result of a dealer incentive program which cannot be estimated, which could result in reduced first quarter 2002 purchases. He also noted that the offshore operations continued to experience difficult economic conditions as well as strong competitive pressures.
Fourth quarter sales for Tire Distribution Systems Inc. (TDS), Bandag's tire distribution subsidiary, were 4 percent higher than fourth quarter 2000. Gross margins increased by 0.5 percentage point, but operating and other expenses increased by 12 percent.
"While there still exists a high degree of uncertainty in the economic outlook for 2002, by December, it appeared from several indicators that the recent oversupply of new replacement tires was beginning to work its way through the distribution channel,” Carver noted. “New tire producers, which had cut production capacity throughout 2001, announced new tire price increases, indicating reduced supply. In addition, we began to see some of the lowest casing prices in several years, which indicated a coming influx of tire casings readily available for retreading, along with initial signs of improvement in the retread vs. new tire sales mix at the dealer level during the fourth quarter.”