Bandag and Yellow Roadway end outsourcing relationship

Bandag announced that Yellow Roadway Corporation elected on April 30, 2004 not to renew the existing Bandag outsourcing agreement for Roadway Express tire and wheel services in place since 1999. Under the existing agreement Yellow Roadway is obligated, by August 1, 2004, to repurchase all tires and wheels owned by Bandag and used on the Roadway Express fleet. Bandag estimates the value of the tires and wheels to be approximately $37.0 million. The definitive purchase price is subject to an inventory and valuation pursuant to the terms of the existing agreement.

Bandag’s annual revenues under this contract in 2003, including revenue derived from sales of retread materials to dealers performing services under the agreement, were approximately $27.5 million. Bandag estimates that the agreement contributed approximately $4.0 million to consolidated net income in 2003, or approximately $.21 per diluted share. The foregoing discussion concerning the economic contribution attributable to the Roadway Express agreement in 2003 overstates the potential financial impact to Bandag on the termination of the agreement since it does not take into account or reflect the contribution to earnings which Bandag will recognize upon the investment of the proceeds derived from the sale of the tires and wheels to Yellow Roadway Corporation on August 1, 2004.

Bandag Chairman and CEO Martin G. Carver, said, “While we’re disappointed that Roadway Express will no longer be a partner in one of the trucking industry’s most innovative outsourcing agreements, we understand that philosophically Yellow prefers to in-source services, such as tire and wheel maintenance.”

Commenting on Bandag’s continuing commitment to strategic outsourcing, Carver said, “Bandag is just as committed to continuing to provide the strategic outsourcing offering for customers today as we were last year and last week. We’re very proud of our outsourcing work on behalf of Roadway. We deliver exceptional value to fleets that make the strategic decision to outsource their tire and vehicle maintenance needs. That won’t change. We are continuing to work with several fleets to develop future outsourcing partnerships.”