Bandag and Yellow Roadway End Roadway Express Outsourcing Relationship - aftermarketNews

Bandag and Yellow Roadway End Roadway Express Outsourcing Relationship

Yellow Roadway Corp. has said it will not renew its existing agreement with Bandag for the outsourcing of Roadway Express tire and wheel services. The agreement has been in place since 1999. Under the existing agreement Yellow Roadway is obligated to repurchase all tires and wheels owned by Bandag and used on the Roadway Express fleet by Aug. 1. Bandag estimates the value of the tires and wheels to be approximately $37 million.

MUSCATINE, IA — Yellow Roadway Corp. has said it will not renew its existing agreement with Bandag for the outsourcing of Roadway Express tire and wheel services. The agreement has been in place since 1999.

Under the existing agreement Yellow Roadway is obligated to repurchase all tires and wheels owned by Bandag and used on the Roadway Express fleet by Aug. 1. Bandag estimates the value of the tires and wheels to be approximately $37 million.

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. The company estimates that the agreement contributed approximately $4 million to consolidated net income in 2003, or approximately $.21 per diluted share.

Bandag Chairman and CEO Martin Carver, said that while he is disappointed that the relationship is ending, the company understands that philosophically Yellow prefers to in-source services, such as tire and wheel maintenance.

“Bandag is just as committed to continuing to provide the strategic outsourcing offering for customers today as we were last year and last week,” Carver said. “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.”

For more information about Bandag, go to: www.bandag.com.

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