NEWS

FOR IMMEDIATE RELEASE                        CONTACT:WARREN HEIDBREDER
December 18, 1998                                    (319) 262-1260


                SETTLEMENT BRINGS END TO BANDAG--TREADCO DISPUTE

MUSCATINE, IOWA - Bandag, Incorporated (NYSE: BDG and BDGA) today announced that
it has reached a settlement of a dispute with Treadco,  Inc.  arising out of the
two companies'  former  business  relationship.  The  settlement  provides for a
one-time  payment by Bandag and resolves all  disputes and  liabilities  between
Treadco,  Inc.  and Bandag,  Incorporated  and certain of its current and former
employees.

The parties have agreed that all terms and conditions of the settlement  will be
kept confidential,  except as required to comply with reporting obligations. The
settlement  will not have any effect on  Bandag's  fourth  quarter and full year
1998 earnings as the Company had provided for the estimated  impact of resolving
this dispute in previous periods.

Bandag,  Incorporated  manufactures  retreading  materials and equipment for its
worldwide network of approximately 1,300 franchised  dealerships who produce and
market  retread  tires,   and  provide  tire   management   services.   Bandag's
wholly-owned subsidiary, Tire Distribution Systems, Inc., sells and services new
and retread tires.