Bandag Announces Cost Cutting Programme - Tire Review Magazine

Bandag Announces Cost Cutting Programme

(Clacton, U.K./Tyres & Accessories) Bandag Inc. announced that it has closed its pension plans to new hires in the U.S. and Canada, and will freeze the existing pension plans for U.S. employees and for salaried Canadian employees effective 31 December 2006.

The cost-cutting programme includes an early retirement programme and voluntary and involuntary redundancies for some U.S. employees.

Bandag also said it is considering terminating the pension plans within the next 18 months, although no definitive action has been taken. Bandag anticipates that freezing its pension plans will allow it to better control retirement benefit expenses going forward, while at the same time preserving employees’ retirement benefits earned to date.

The announcement is in addition to the closure of the company’s Shawinigan, Quebec. tread manufacturing facility.

Explaining the need for the changes, Bandag’s chairman and CEO Martin G Carver said: “The North American markets for commercial replacement tyres have changed irreversibly over the past several years, a situation exacerbated by record-high raw material prices and intensified competition. To stimulate growth in Bandag’s traditional retread business, we are taking steps to simplify our operations and lower our operating costs.”

Bandag estimates it will record a net curtailment pre-tax gain of $1.9 million, or $0.06 per diluted share, in the quarter ending 30 June 2006. For the year ended 31 December 31, 2005, Bandag recognized consolidated pre-tax pension expense of $5.3 million and is estimating 2006 pension expense to be $4.9 million.

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