[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-11579
4770 Hickory
Hill Road
Memphis, Tennessee
38141
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (901) 363-8030
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No
21,252,995 Shares of Common Stock were outstanding as of September 30, 2002.
TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
September 30, December 31,
2002 2001
---- ----
CURRENT ASSETS: (Unaudited)
Cash and cash equivalents $ 3,107 $ 2,298
Accounts and notes receivable, less allowance for
doubtful accounts of $8,085 on September 30, 2002
and $7,737 on December 31, 2001:
Related parties 20,391 17,173
Other 119,773 95,848
------- ------
Total accounts and notes receivable 140,164 113,021
Inventories 191,942 172,431
Refundable federal and state income taxes - 2,349
Deferred income taxes 11,222 11,501
Other current assets 16,744 16,999
------ ------
Total current assets 363,179 318,599
------- -------
PROPERTY, PLANT AND EQUIPMENT, AT COST:
Land and improvements 5,654 5,032
Buildings and leasehold improvements 27,315 22,948
Furniture and equipment 63,728 52,591
------ ------
96,697 80,571
Less accumulated depreciation 42,687 33,650
------ ------
Total property, plant and equipment 54,010 46,921
------ ------
TRADEMARKS, NET 15,824 15,824
------ ------
GOODWILL, NET 58,182 51,291
------ ------
OTHER ASSETS 27,504 30,325
------ ------
TOTAL ASSETS $518,699 $462,960
======== ========
See accompanying notes to consolidated financial statements.
-2-
TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
2002 2001
---- ----
CURRENT LIABILITIES: (Unaudited)
Outstanding checks, net $ 9,270 $ 5,916
Notes payable to banks 58,800 34,200
Current portion of long-term debt
and capital lease obligations 18,000 16,533
Accounts payable, trade 69,491 53,227
Federal and state income taxes payable 1,081 -
Other current liabilities 46,070 41,516
------ ------
Total current liabilities 202,712 151,392
------- -------
LONG-TERM DEBT, LESS CURRENT PORTION 83,110 101,000
------ -------
NONCURRENT LIABILITIES 13,090 11,721
------ ------
DEFERRED INCOME TAXES 4,818 4,528
----- -----
STOCKHOLDERS' EQUITY:
Common stock, $.10 par value,
shares issued and outstanding -
21,253 on September 30, 2002 and
21,003 on December 31, 2001 2,125 2,100
Additional paid-in capital 16,348 11,783
Other comprehensive income (974) (713)
Retained earnings 197,470 181,149
------- -------
Total stockholders' equity 214,969 194,319
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $518,699 $462,960
======== ========
See accompanying notes to consolidated financial statements.
-3-
TBC CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2002 2001 2002 2001
---- ---- ---- ----
NET SALES * $295,455 $278,875 $831,877 $761,554
COST OF SALES 216,106 208,712 610,376 562,739
------- ------- ------- -------
GROSS PROFIT 79,349 70,163 221,501 198,815
------ ------ ------- -------
EXPENSES:
Distribution expenses 13,881 13,600 39,320 38,342
Selling, administrative and
retail store expenses 51,960 44,552 146,735 127,490
Interest expense - net 2,139 2,798 6,473 9,056
Other (income) expense - net (912) (911) (1,953) (2,142)
---- ---- ------ ------
Total expenses 67,068 60,039 190,575 172,746
----- ------ ------- -------
INCOME BEFORE INCOME TAXES 12,281 10,124 30,926 26,069
PROVISION FOR INCOME TAXES 4,635 4,129 11,658 10,719
----- ----- ------ ------
NET INCOME $ 7,646 $ 5,995 $ 19,268 $ 15,350
======== ======== ======== ========
EARNINGS PER SHARE -
Basic $ .36 $ .29 $ .91 $ .73
======== ======== ======== ========
Diluted $ .35 $ .28 $ .88 $ .72
======== ======== ======== ========
* Including sales to related parties of $25,367 and $26,657 in the three months
ended September 30, 2002 and 2001, respectively and $77,449 and $69,993 in the
nine months ended September 30, 2002 and 2001, respectively.
See accompanying notes to consolidated financial statements.
-4-
TBC CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)
Common Stock Other
------------ Additional Compre-
Number of Paid-In hensive Retained
Shares Amount Capital Income Earnings Total
------ ------ ------- ------ -------- -----
Nine Months Ended
September 30, 2001
- ----------------------
BALANCE, JANUARY 1, 2001 20,939 $2,094 $ 9,760 $ - $162,198 $174,052
Net income for period 15,350 15,350
Issuance of common stock
under stock option and
incentive plans, net 139 14 851 - - 865
Repurchase and retirement
of common stock (101) (10) (50) - (869) (929)
Tax benefit from exercise of
stock options - - 101 - - 101
Other comprehensive income
associated with interest rate
swap agreements, net - - - (1,544) - (1,544)
------ ----- ------ ------ ------ ------
BALANCE, SEPTEMBER 30, 2001 20,977 $2,098 $10,662 $ (1,544) $176,679 $187,895
====== ====== ======= ======== ======== ========
Nine Months Ended
September 30, 2002
- ----------------------
BALANCE, JANUARY 1, 2002 21,003 $2,100 $11,783 $ (713) $181,149 $194,319
Net income for period 19,268 19,268
Issuance of common stock
under stock option and
incentive plans, net 480 48 3,828 - - 3,876
Repurchase and retirement
of common stock (230) (23) (138) - (2,947) (3,108)
Tax benefit from exercise of
stock options - - 875 - - 875
Change in other comprehensive
income associated with interest
rate swap agreements - - - (261) - (261)
---- ---- ---- ---- ---- ----
BALANCE, SEPTEMBER 30, 2002 21,253 $2,125 $16,348 $ (974) $197,470 $214,969
====== ====== ======= ======== ======== ========
See accompanying notes to consolidated financial statements.
-5-
TBC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
-------------
2002 2001
---- ----
Operating Activities:
Net income $19,268 $15,350
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 9,973 8,801
Amortization of intangible assets 13 2,083
Amortization of other comprehensive income 73 137
Provision for doubtful accounts and notes 1,699 1,726
(Gain) loss on sale of fixed assets (53) (228)
Deferred income taxes 715 346
Equity in (earnings) loss from joint ventures (345) (124)
Changes in operating assets and liabilities,
net of effect of assets acquired:
Receivables (27,223) (29,128)
Inventories (17,912) (22,397)
Other current assets (2,376) (6,066)
Other assets 1,923 (4,091)
Accounts payable, trade 16,264 4,788
Federal and state income taxes
refundable or payable 4,305 4,280
Other current liabilities 4,442 2,229
Noncurrent liabilities 898 47
--- --
Net cash provided by (used in) operating activities 11,664 (22,247)
------ -------
Investing Activities:
Purchase of property, plant and equipment (11,529) (7,847)
Purchase of net assets of retail tire stores (10,781) (3,644)
Investments in joint ventures and other entities,
net of distributions received 408 (5,045)
Proceeds from asset dispositions 526 7,012
Other - 85
--- --
Net cash used in investing activities (21,376) (9,439)
------- ------
Financing Activities:
Net bank borrowings under short-term
borrowing arrangements 24,600 38,007
Increase (decrease) in outstanding checks, net 3,354 931
Proceeds from long-term debt - 4,000
Reduction of long-term debt and capital lease obligations (18,033) (11,463)
Issuance of common stock under stock option
and incentive plans 3,708 834
Repurchase and retirement of common stock (3,108) (929)
------ ----
Net cash provided by financing activities 10,521 31,380
------ ------
Change in cash and cash equivalents 809 (306)
Cash and cash equivalents:
Balance - Beginning of year 2,298 1,681
----- -----
Balance - End of period $ 3,107 $ 1,375
======== ========
-6-
TBC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
-------------
2002 2001
---- ----
Supplemental Disclosures of Cash Flow Information:
Cash paid for - Interest $ 6,529 $ 8,167
- Income Taxes 6,638 6,093
Supplemental Disclosure of Non-Cash Financing Activity:
Tax benefit from exercise of stock options 875 101
Issuance of restricted stock under stock incentive plan,
net of shares received for tax withholding 168 31
Conversion of capital lease obligations - 91
Supplemental Disclosure of Non-Cash Investing
and Financing Activities:
In the first nine months of 2002, the Company purchased
the assets of certain retail tire stores located in the
midwestern United States. The transaction was accounted
for under the purchase method, as follows:
Estimated fair value of assets acquired 3,890
Goodwill 6,891
Cash paid (10,781)
-------
Liabilities assumed $ -
========
In the first nine months of 2001, the Company purchased
the assets of certain retail tire stores located in the
southeastern United States. The transaction was accounted
for under the purchase method, as follows:
Estimated fair value of assets acquired 708
Goodwill 2,936
Cash paid (3,644)
------
Liabilities assumed $ -
=======
See accompanying notes to consolidated financial statements.
-7-
The December 31, 2001 balance sheet was derived from audited financial statements.The consolidated balance sheet as of September 30, 2002, and the consolidated statements of income, stockholders' equity and cash flows for the periods ended September 30, 2002 and 2001, have been prepared by the Company, without audit. It is Management's opinion that these statements include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position, results of operations and cash flows as of September 30, 2002 and for all periods presented. The results for the periods presented are not necessarily indicative of the results that may be expected for the full year.
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as certain financial statement disclosures. Actual results could differ from those estimates.
The Company's 2001 Annual Report on Form 10-K includes a summary of the significant accounting policies used in the preparation of the consolidated financial statements. The summary of significant accounting policies, as well as certain other footnote disclosures and information normally included in financial statements prepared in accordance with generally accepted accounting principles, have been condensed or omitted for the purposes of this quarterly report. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's 2001 Form 10-K.
Certain reclassifications have been made in the statement of cash flows for the nine months ended September 30, 2001, to conform to the 2002 presentation, with no effect on previously reported net income.
Basic earnings per share have been computed by dividing net income by the weighted average number of shares of common stock outstanding. Diluted earnings per share have been computed by dividing net income by the weighted average number of common shares and equivalents outstanding. Common share equivalents, if any, represent shares issuable upon assumed exercise of stock options. The weighted average number of common shares and equivalents outstanding were as follows (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2002 2001 2002 2001
---- ---- ---- ----
Weighted average common
shares outstanding 21,243 21,004 21,164 20,984
Common share equivalents 682 637 829 299
--- --- --- ---
Weighted average common shares
and equivalents outstanding 21,925 21,641 21,993 21,283
====== ====== ====== ======
The Company is principally engaged in the marketing and distribution of tires in the automotive replacement market and has two operating segments: retail and wholesale. The retail segment includes the franchised retail tire business conducted by Big O Tires, Inc., as well as the operation of retail tire and service centers by Tire Kingdom, Inc. The wholesale segment markets and distributes the Company's proprietary brands of tires, as well as other tires and related products, on a wholesale basis to distributors who resell to or operate independent tire dealers.
The Company evaluates the performance of its two operating segments based on earnings before interest, taxes, depreciation, amortization and any special items (Operational EBITDA). There were no special items to consider in the periods ended September 30, 2002 or 2001. Segment information for the periods ended September 30, 2002 and 2001 is as follows (in thousands):
Retail Wholesale Total
------ --------- -----
Periods ended September 30, 2002
--------------------------------
Total assets $251,514 $267,185 $518,699
Operating results -
For the Three Months Ended:
Net sales to external customers 137,632 157,823 295,455
Inter-segment net sales - 50,515 50,515
Operational EBITDA 8,488 9,623 18,111
For the Nine Months Ended:
Net sales to external customers 379,982 451,895 831,877
Inter-segment net sales - 125,006 125,006
Operational EBITDA 24,511 22,874 47,385
Periods ended September 30, 2001
--------------------------------
Retail Wholesale Total
------ --------- -----
Total assets $233,164 $274,158 $507,322
Operating results -
For the Three Months Ended:
Net sales to external customers 117,238 161,637 278,875
Inter-segment net sales - 46,761 46,761
Operational EBITDA 8,401 8,179 16,580
For the Nine Months Ended:
Net sales to external customers 332,328 429,226 761,554
Inter-segment net sales - 123,818 123,818
Operational EBITDA 24,322 21,687 46,009
The Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142) effective January 1, 2002. Under SFAS No. 142, goodwill and other indefinite-lived intangible assets are no longer amortized but are tested for impairment, with charges being recorded only if impairment is found to exist. SFAS No. 142 requires the fair values of these intangible assets to be assigned to the Company's "reporting units" and tested accordingly, with a reporting unit being defined as an operating segment or one level below a segment if discrete financial information is prepared and reviewed regularly by management. No impairment to the recorded value of Company's indefinite-lived assets was found to exist as a result of the required testing.
Expenses for the three months and nine months ended September 20, 2001 included amortization of goodwill and trademarks of $717,000 and $2,083,000, respectively. If SFAS No. 142 had been in effect during 2001 and amortization had not been recorded, net income for the third quarter of 2001 would have been approximately $645,000 greater than the reported total of $5,995,000 and diluted earnings per share would have been $0.31 compared to the reported total of $0.28. For the first nine months of 2001, net income would have been approximately $1,875,000 greater than the reported total of $15,350,000 and diluted earnings per share would have been $0.81 compared to the reported total of $0.72, if SFAS No. 142 had been in effect.
The Company's financial position and liquidity continue to be strong. Working capital totaled $160.5 million at September 30, 2002 compared to $167.2 million at December 31, 2001.
Current accounts and notes receivable increased by $27.1 million and inventories increased by $19.5 million compared to the December 31, 2001 levels, due principally to seasonal fluctuations. A portion of the inventory increase was attributable to the purchase of assets of 19 retail tire stores during March 2002, which also affected the period-to-period comparison of property, plant and equipment and goodwill.
The net amount owed to banks and vendors (consisting of the combined balances of cash and cash equivalents, outstanding checks, notes and debt payable to banks, and accounts payable) increased by $27.0 million from December 31, 2001 to September 30, 2002. This increase, together with cash generated from operations, enabled the Company to fund the increased levels of receivables and inventories, as well as the above-noted purchase of retail tire store assets for a combined purchase price of $10.8 million. In addition, the Company was able to fund capital expenditures totaling $11.5 million during the first nine months of 2002.
Net sales increased 5.9% during the third quarter of 2002 compared to the year-earlier level, due primarily to a 3.6% increase in the average tire sales price and greater service revenues in Company-operated retail tire outlets. Unit tire sales in the third quarter of 2002 were relatively unchanged from the year-earlier level, declining 0.2%. In comparision, unit tire shipments for the replacement tire industry as a whole decreased approximately 3.8% during the same period (based on preliminary data). The percentage of total sales attributable to tires was 85% in the current quarter and 87% in the third quarter of 2001. Net sales by the Company's retail segment increased 17.4% compared to the year-earlier third quarter and included an 8.8% increase in unit tire volume, as well as the aforementioned higher average sales prices and service revenues. Sales by the retail segment were favorably affected by an increase in the number of Company-operated and franchised stores in the Company's retail systems. Third quarter net sales by the wholesale segment declined 2.4% compared to the year-earlier level, due principally to a 4.0% decrease in unit tire sales which outweighed the effect of higher average tire sales prices.
For the first nine months, net sales increased 9.2% over the 2001 level, including an
overall 5.3% gain in unit tire sales, a 2.1% increase in the average tire sales price and higher
retail revenues from tire and mechanical services. The Company's tire unit increase in the
first nine months is compared to an approximate 0.8% decrease for the replacement tire
industry during the same period. Tire sales comprised 84% of total sales in the first nine
months of 2002 and 86% in the year-earlier period. Year-to-date net sales by the retail
segment increased 14.3% and retail unit tire volume increased 7.3% compared to the year-
earlier levels. Net sales by the wholesale segment increased 5.3% in the year-to-date period,
due largely to a 4.4% gain in tire unit volume.
Gross profit as a percentage of net sales increased from 25.2% in the third quarter of 2001 to 26.9% in the current quarter and from 26.1% in the first nine months of 2001 to 26.6% in the current year-to-date period. Gross profit percentages were favorably affected by the increased contribution of sales from retail, which generally has higher margins than sales to the Company's wholesale customers. The improved retail mix was somewhat offset by reduced discounts on early payments to certain suppliers, due to lower discount rates and the Company's decision to forego certain advance payments as it managed its debt position.
Distribution expenses as a percentage of net sales declined from 4.9% in the third quarter of 2001 to 4.7% in the current quarter and from 5.0% in the first nine months of 2001 to 4.7% in the current year-to-date period. Increases in total sales helped to leverage the Company's warehousing and product delivery costs, since many of them, such as rent, do not vary in relation to sales.
Selling, administrative and retail store expenses increased by $7.4 million in the third quarter and $19.2 million in the first nine months of 2002 compared to the year-earlier levels, due principally to a greater number of company-operated retail stores. Expenses for such retail stores include payroll, operating and service-related costs, in addition to certain other selling and administrative expenses. Expenses in the third quarter and first nine months of 2001 included amortization of goodwill and trademarks totaling $717,000 and $2,083,000, respectively. No amortization of such assets was recorded in the current periods, under the provisions of Statement of Financial Accounting Standards No. 142 (SFAS No. 142), which was adopted by the Company on January 1, 2002 (see Note 4 to the consolidated financial statements.) Excluding the impact of the amortization in the prior year and the expenses associated with the new stores, selling, administrative and retail store expenses increased 3.1% in the third quarter and 4.4% in the first nine months of 2002 compared to the year- earlier levels.
Net interest expense decreased $659,000 in the third quarter and $2.6 million in the first nine months of 2002 compared to the year-earlier levels, due principally to the combined effects of lower overall borrowing rates and lower average borrowings. The decreased borrowing rates were a reflection of lower market interest rates, as well as efforts by the Company to better manage working capital and minimize interest rate spreads under its borrowing agreements. The reductions in average borrowing levels in the current quarter and first nine months of 2002 were principally the result of cash generated from operations and the above-mentioned management efforts which allowed the Company to reduce its debt to banks and other lenders.
Net other income was virtually unchanged in the current quarter and $189,000 less in the year-to-date period compared to the year-earlier levels. The year-to-date decline was primarily related to a decline in interest and service charge income from customers which more than offset an increase in the Company's equity in results from joint ventures.
The Company's effective tax rate was 37.7% in both the third quarter and first nine months of 2002, compared to 40.8% in the third quarter of 2001 and 41.1% in the first nine months of 2001. The lower effective rate in the current year is primarily related to the impact of SFAS No. 142, since the majority of goodwill amortized in prior years was not deductible for tax purposes. In addition, the current year effective tax rate reflects reduced provisions or state income taxes.
In June 2001, Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" was issued, effective for financial statements for fiscal years beginning after June 15, 2002. SFAS 143 requires entities to establish liabilities for legal obligations associated with the retirement of tangible long-lived assets. The Company will adopt this statement in 2003 as required, but does not expect it to have a material impact on its financial statements.
In October 2001, Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" was issued, effective for years beginning after December 15, 2001. SFAS No. 144 superseded SFAS 121 and addresses financial accounting and reporting for long-lived assets to be held and used, and of long-lived assets and components of an entity to be disposed of. The Company adopted this statement on January 1, 2002, as required, and it did not have a material effect on its financial statements.
In April 2002, Statement of Financial Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." was issued. SFAS No. 145 rescinded three previously issued statements and amended SFAS No. 13, "Accounting for Leases." The statement provides reporting standards for debt extinguishments and provides accounting standards for certain lease modifications that have economic effects similar to sale-leaseback transactions. The statement is effective for certain lease transactions occurring after May 15, 2002 and all other provisions of the statement shall be effective for financial statements issued on or after May 15, 2002. Adoption of this standard did not have any impact on the Company's financial statements.
In June 2002, Statement of Financial Accounting Standards No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" was issued, effective for such activities initiated after December 31, 2002. The statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3. SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred and establishes that fair value is the objective for initial measurement of the liability. The Company does not expect the adoption of SFAS No. 146 to have a material effect on its financial statements.
The Company is exposed to certain financial market risks. The most predominant of these risks is the fluctuation in interest rates associated with bank borrowings, since changes in interest expense affect the Company's operating results. At September 30, 2002, the Company owed $124.3 million to banks under its credit facilities, of which $103.8 million was not hedged by interest-rate swap agreements and was thus subject to market risk for a change in interest rates. If interest rates increase by 25 basis points, the Company's annual interest expense would increase by approximately $260,000 based on the outstanding balance which was not hedged at September 30, 2002.
Within 90 days prior to the filing date of this quarterly report, the Company's management, under the supervision and with the participation of the Company's Chief Executive Officer and its Chief Financial Officer, carried out an evaluation of the design and operation of the Company's disclosure controls and procedures. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective in alerting them on a timely basis to material information required to be included in reports filed with the Securities and Exchange Commission for the Company and its consolidated subsidiaries.
There have been no significant changes in the Company's internal controls or, to the knowledge of the Company's management, in other factors that could significantly affect those controls subsequent to the date of management's last evaluation.
(a) Exhibits - See Index to Exhibits.
(b) No reports on Form 8-K were filed during the three months ended September 30, 2002.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
TBC CORPORATION |
|
By /s/ Thomas W. Garvey Thomas W. Garvey Executive Vice President and Chief Financial Officer |
I, Lawrence C. Day, certify that:
1. I have reviewed this quarterly report on Form 10-Q of TBC Corporation (the "registrant");
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors:
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
November 11, 2002|
By /s/ Lawrence C. Day Lawrence C. Day President and Chief Executive Officer |
I, Thomas W. Garvey, certify that:
1. I have reviewed this quarterly report on Form 10-Q of TBC Corporation (the "registrant");
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors:
a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
November 11, 2002|
By /s/ Thomas W. Garvey Thomas W. Garvey Executive Vice President and Chief Financial Officer |
INDEX TO EXHIBITS
| Located at | ||
| Sequentially | ||
| Exhibit No. | Description | Numbered Page |
| (10) | MATERIAL CONRACTS | |
| Management Contracts and Compensatory Plans or Arrangements | ||
| 10.1 | TBC Corporation 1989 Stock Incentive Plan, as amended | |
| and restated August 9, 2002. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 18 | |
| 10.2 | Executive Employment Agreement between the Company | |
| and Lawrence C. Day, amended and restated as of | ||
| September 1, 2002 (without Exhibit A thereto, which is | ||
| substantially identical to the form of Trust Agreement filed as | ||
| Exhibit 10.3 to the TBC Corporation Quarterly Report on Form | ||
| 10-Q for the quarter ended March 31, 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 38 | |
| (99) | OTHER EXHIBITS | |
| 99.1 | Certification by Lawrence C. Day pursuant to 18 U.S.C. | |
| Section 1350, as adopted pursuant to Section 906 of the | ||
| Sarbanes-Oxley Act of 2002. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 49 | |
| 99.2 | Certification by Thomas W. Garvey pursuant to 18 U.S.C. | |
| Section 1350, as adopted pursuant to Section 906 of the | ||
| Sarbanes-Oxley Act of 2002. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | 50 |