MUSCATINE, Iowa (July 25, 2002) – Bandag Inc. reported a 23-percent increase in net income for the second quarter on 4-percent lower sales.
The company does not anticipate any near-term growth for retread products, but CEO Martin G. Carver said the settlement of the company's lawsuits with Michelin Retread Technologies Inc. “should contribute to continued improvement in Bandag performance,” because of the reduced legal expenses.
Bandag's Tire Distribution Systems subsidiary reported a $1.4 million loss for the quarter and 5-percent lower sales of $98.8 million. The company blamed the loss in part on higher operating expenses in the areas of health insurance, workers' compensation costs, vehicle expense and lower purchase discounts from suppliers.
For the remainder of 2002, TDS management will rationalize operations to “significantly improve long-term performance.” The company did not release details the program.
For the period ended June 30, Bandag reported net income of $11.7 million on sales of $231.1 million. For the first six months of fiscal 2002, Bandag reported consolidated net income of $12.9 million before an accounting change that required the firm to take a write-off of $47.3 million, leaving the net loss at $34.4 million.
Bandag's tread rubber volume in the U.S., which accounts for the majority of North America's revenues, was down less than 1 percent for the year to date. The company called that “favorable” in comparison with estimated U.S. industry shipments—down nearly 4 percent.
Bandag said it spent $5.7 million in the second quarter and $9.7 million for the first six months of 2002, respectively, on legal costs related to its lawsuits with MRTI and Michelin North America Inc. This was on top of $18.3 million spent in 2001.