EX-99 2 cmw1372a.htm PRESS RELEASE

Exhibit 99



NEWS RELEASE    
CONTACT:    Warren W. Heidbreder
FOR IMMEDIATE RELEASE PHONE:    563-262-1260
DATE: April 15, 2005 URL:    www.bandag.com

BANDAG, INCORPORATED REPORTS 1ST QUARTER EPS OF $0.30
Bandag, Inc. (NYSE: BDG and BDGA)

Flash Results

(Numbers in Millions, Except Per Share Data)

 		 Q1 2005 Q1 2004
Net sales     $186.6   $173.5  
Net earnings   $6.0   $4.0  
Diluted earnings per share   $0.30   $0.20  
Shares outstanding - diluted    19.7    19.7  

MUSCATINE, IOWA, April 15, 2005 — Bandag, Incorporated (NYSE:BDG and BDGA) today reported consolidated net earnings of $6.0 million, or $0.30 per diluted share, for first quarter 2005. This compares to first quarter 2004 consolidated net earnings of $4.0 million, or $0.20 per diluted share. Consolidated net sales for first quarter 2005 were $186.6 million, an increase of eight percent, compared to consolidated net sales of $173.5 million in first quarter 2004. Net sales were positively impacted by approximately $4.2 million due to the effect of translating foreign currency denominated net sales into U.S. dollars.

In announcing first quarter 2005 results, Martin G. Carver, Chairman of the Board and Chief Executive Officer of Bandag said, “First quarter results reflected growing strength in the North American trucking industry. Globally, high raw material and transportation costs pressured margins in our traditional business. Bandag continued to invest in Speedco’s expanding operations, building new on-highway truck lubrication and tire service locations as well as adding tire service lanes at existing locations. Tire Distribution Systems, Inc. (TDS) operating results improved by $1.7 million, largely attributable to strengthening demand and margin improvement.”

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BANDAG, Incorporated
2905 N. Hwy. 61, Muscatine, IA 52761-5886
Tel 563.262.1400 – Url www.bandag.com

Financial Highlights

  • Factors that affected consolidated net sales for first quarter 2005 were:
  o Speedco sales increased by $10.8 million compared to the prior year period. Sales in the first quarter of 2004 are included from February 13, 2004, the date Bandag acquired an 87.5% majority interest in Speedco.
  o TDS sales declined $8.3 million from the prior year period, reflecting the divestitures during 2004. The divested locations had net sales of approximately $15.0 million in the first quarter of 2004.
  o North America business unit volume increased five percent and net sales increased seven percent as compared to first quarter 2004. Net sales were positively impacted by a December 2004 price increase.
  o European business unit volume decreased seventeen percent and net sales decreased nine percent. Unit volume and net sales were negatively impacted by the loss of several dealers during 2004; however, net sales were positively impacted by approximately $1.3 million due to the effect of translating foreign currency denominated net sales into U.S. dollars.
  o International business unit volume increased six percent and net sales increased twenty-nine percent. Net sales were positively impacted by price increases and by approximately $2.2 million due to the effect of translating foreign currency denominated net sales into U.S. dollars.

  • First quarter 2005 consolidated gross margin declined by one percentage point. TDS gross margin increased approximately four percentage points, primarily due to higher selling prices. Traditional business gross margin declined three percentage points primarily due to higher raw material costs.

  • Consolidated operating and other expenses for first quarter 2005 were $0.5 million higher than the prior year period, primarily due to increased expenses related to Speedco expansion offset by the divestiture-related decrease at TDS.

  • Interest income increased $0.8 million, primarily due to an increase in cash and interest rates.

  • The effective tax rate increased to 41.8% from 36.5% in the prior year, largely attributable to an adjustment in the deferred tax balances.

Outlook

Commenting on the outlook for 2005, Mr. Carver said, “On the positive side, we believe continued strength in the trucking industry in our major markets will work to Bandag’s benefit as we continue delivering an expanded array of valued-added vehicle services, which complement our traditional business. At the same time, we recognize that continued increases in raw material and transportation costs will be a concern throughout 2005.”

Bandag, Incorporated manufactures retreading materials and equipment for its worldwide network of approximately 1,000 franchised dealers that produce and market retread tires and provide tire management services. Bandag’s traditional business serves end-users through a wide variety of products offered by dealers, ranging from tire retreading and repairing to tire management systems outsourcing for commercial truck fleets. TDS sells and services new and retread tires. In addition, Bandag has an 87.5% interest in Speedco, Inc., a provider of on-highway truck lubrication and routine tire services to commercial truck owner-operators and fleets.

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Bandag, Incorporated
Unaudited Financial Highlights
(In thousands, except per share data)

First Quarter
Ended March 31,
Consolidated Statements of Earnings
 2005
 2004

Income		            
Net sales   $ 186,617   $ 173,529  
Other    2,424    1,762  
     189,041    175,291  

Costs and expenses		  
Cost of products sold    123,294    112,803  
Operating & other expenses    57,072    56,556  
     180,366    169,359  

Income from operations		    8,675    5,932  
Interest income    1,813    1,050  
Interest expense    (456 )  (562 )
Earnings before income taxes and minority interest    10,032    6,420  
Income taxes    4,193    2,343  
Minority interest    (123 )  58  
  Net earnings   $ 5,962   $ 4,019  

Earnings per share		  
  Basic   $ 0.31    0.21  
  Diluted   $ 0.30    0.20  

Weighted average shares outstanding		  
  Basic    19,392    19,250  
  Diluted    19,707    19,655  

First Quarter
Ended March 31,
Segment Information
 2005
 2004
             
Net Sales  

North America		   $ 88,131   $ 82,217  
Europe    19,389    21,196  
International    28,869    22,443  
TDS    32,677    40,939  
Speedco    17,551    6,734  
  Total net sales   $ 186,617   $ 173,529  

Segment Operating Profit (Loss)		  

North America		   $ 8,605   $ 5,454  
Europe    921    1,690  
International    3,439    3,039  
TDS    (1,097 )  (2,841 )
Speedco    799    903  
Corporate expenses & other    (3,992 )  (2,313 )
Net interest income    1,357    488  
Earnings before income taxes and minority interest   $ 10,032   $ 6,420  

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Bandag, Incorporated
Unaudited Financial Highlights
(In thousands)

Condensed Consolidated Balance Sheets
 Mar. 31,
2005
 Dec. 31,
2004

Assets:		            
Cash and cash equivalents   $ 205,896   $ 202,761  
Accounts receivable - net    137,164    157,809  
Inventories    77,962    69,892  
Other current assets    55,078    55,793  
  Total current assets    476,100    486,255  

Property, plant, and equipment - net		    172,760    170,018  
Other assets    73,871    74,454  
  Total assets   $ 722,731   $ 730,727  

Liabilities & shareholders' equity:		  
Accounts payable   $ 29,454   $ 33,138  
Income taxes payable    6,315    2,995  
Accrued liabilities    95,197    104,580  
Short-term notes payable and current portion of other obligations    15,446    17,845  
  Total current liabilities    146,412    158,558  

Long-term debt and other obligations		    31,025    29,963  
Deferred income tax liabilities    7,203    7,502  
Minority interest    2,249    2,417  
Shareholders' equity  
  Common stock    19,573    19,452  
  Additional paid-in capital    32,297    28,839  
  Retained earnings    512,216    513,152  
  Accumulated other comprehensive loss    (28,244 )  (29,156 )
    Total shareholders' equity    535,842    532,287  
    Total liabilities & shareholders' equity   $ 722,731   $ 730,727  

Three Months
Ended March 31,
Condensed Consolidated Statements of Cash Flows
 2005
 2004
               
Operating Activities  
  Net earnings   $ 5,962   $ 4,019  
  Provision for depreciation    6,482    5,610  
  Decrease in operating assets and liabilities - net    7,408    20,402  
    Net cash provided by operating activities    19,852    30,031  
Investing Activities  
  Additions to property, plant and equipment    (8,893 )  (6,446 )
  Sales of investments - net    --    3,396  
  Payments for acquisitions of businesses    --    (52,959 )
  Proceeds from divestiture of businesses    --    862  
    Net cash (used in) investing activities    (8,893 )  (55,147 )
Financing Activities  
  Principal payments on short-term notes payable and other long-term liabilities    (1,886 )  (758 )
  Cash dividends    (6,418 )  (6,260 )
  Purchases of common stock    (481 )  (33 )
  Stock options exercised    699    1,129  
    Net cash used in financing activities    (8,086 )  (5,922 )
Effect of exchange rate changes on cash and cash equivalents    262    223  
    Increase (decrease) in cash and cash equivalents    3,135    (30,815 )
Cash and cash equivalents at beginning of year    202,761    189,976  
    Cash and cash equivalents at end of period   $ 205,896   $ 159,161  

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