TBC Reports Record Fourth Quarter and Year-End Results - Same Store
Sales Increase 4.5% During 4th Quarter - MEMPHIS, Tenn., Feb. 11
/PRNewswire-FirstCall/ -- TBC Corporation , one of the nation's
leading marketers of automotive replacement tires, today reported
record sales and earnings for the fourth quarter and year ended
December 31, 2003. It marks the eleventh consecutive quarter that
the Company has posted a year-over-year gain in earnings per share.
Net sales in the fourth quarter increased 33.5% to $370.7 million,
compared to $277.8 million in the prior-year period. Same store
sales for TBC's retail segment increased 4.5% in the fourth
quarter. TBC's total unit tire sales increased 10.7% in the fourth
quarter, compared to a 2.2% increase in unit shipments by tire
manufacturers based on preliminary reports. Net income increased
17.1% to $9.5 million, or $0.41 per diluted share, in the current
quarter, versus $8.1 million, or $0.37 per diluted share, in the
fourth quarter of 2002. Larry Day, TBC President and Chief
Executive Officer, commented, "During the fourth quarter, we
completed the acquisition of the 225 National Tire & Battery
(NTB) retail stores and in January 2004 began the process of
converting and integrating them intoour existing retail store
network. We are currently ahead of schedule with the conversion
effort and are delighted by the progress we have made. We are
dedicating significant management resources to ensure the success
of this endeavor and are confident that the conversion process will
be completed before the middle of the year. NTB's contribution to
TBC's 2003 results for the one month after the acquisition was
approximately $0.01 per diluted share and helped to partially
offset the impact of a fourth quarter charge of $0.02 per diluted
share associated with the Company's exit from a joint venture." For
the year ended December 31, 2003, net sales rose 18.8% to $1.3
billion compared to $1.1 billion in the prior year. Retail
same-store sales increased 2.1%, and total unit tire sales
increased 4.5%, compared to a 1.7% increase in unit shipments by
tire manufacturers. Net income in 2003 increased 21.8% to $33.4
million, or $1.47 per diluted share, versus $27.4 million, or $1.25
per diluted share, in 2002. In addition to the acquired NTB stores,
the Company added 24 new locations to its combined retail store
networks during the fourth quarter and ended 2003 with 591
Company-operated locations and 576 Big O franchised stores. The
total of 1,167 retail locations represented a 54% increase compared
to 758 which the Company had at the end of 2002. Included in the
Company-operated store system at the end of 2003 were 253 Tire
Kingdom stores, 113 Merchant's Tire locations, and 225 NTB stores.
In 2004, the Company expects to add approximately 20 stores to its
Company-operated retail system and another 25 to 30 locations to
its Big O franchised network. For 2004, the Company reiterates its
previous earnings guidance for the full year of $1.80to $1.90 per
diluted share, with first quarter earnings expected in the range of
$0.25 to $0.27 per diluted share. The Company expects to continue
generating solid cash flow in 2004, which will be used primarily to
reduce indebtedness. Mr. Day concluded, "In the second half of
2004, we expect a solid earnings contribution from the NTB stores
upon completion of the integration and conversion process and the
introduction of new products and services at all the NTB locations.
Many of the duplicate costs that we are now incurring will be
eliminated at that point and potential disruptions to Tire
Kingdom's existing operations will no longer be a factor. While we
are still very early in the store conversion and integration
process, we believe that weshould be able to meet or possibly
exceed our previously estimated 2004 earnings contribution from the
NTB stores of $0.15 per diluted share." TBC Corporation will host a
conference call on Thursday, February 12, 2004, at 10:00 a.m.
Eastern time / 9:00 a.m. Central time, to discuss fourth quarter
and year-end results. A live Webcast of the conference call will be
available by visiting the Company's Web site,
http://www.tbccorp.com/. The Webcast will be archived at TBC's Web
site until March 12, 2004. About TBC: TBC Corporation is one of the
nation's largest marketers of automotive replacement tires through
a multi-channel strategy. The Company's retail operations include
company-operated retail centers under the "Tire Kingdom",
"Merchant's Tire& Auto Centers" and "National Tire &
Battery" brands and franchised retail tire stores under the "Big O
Tires" brand. TBC markets on a wholesale basis to regional tire
chains and distributors serving independent tire dealers throughout
the United States and in Canada and Mexico. The Company's
proprietary brands of tires have a longstanding reputation for
quality, safety and value. TBC Corporation Safe Harbor Statement
This document contains "forward-looking statements," as that term
is defined under the Private Securities Litigation Reform Act of
1995, regarding expectations for future financial performance,
which involve uncertainty and risk. It is possible that the
Company's future financial performance may differ from expectations
due to a variety of factors including, but not limited to: changes
in economic and business conditions in the world; increased
competitive activity; consolidation within and among both
competitors, suppliers and customers; unexpected changes in the
replacement tire market; the Company's inability to attract as many
new franchisees or open as many distribution outlets as stated in
its goals; changes in the Company's ability to identify and acquire
additional companies in the replacement tire industry and
successfully integrate acquisitions and achieve anticipated
synergies or savings; fluctuations in tire prices charged by
manufacturers, including fluctuations due to changes in raw
material and energy prices, changes in interest and foreign
exchange rates; thecyclical nature of the automotive industry and
the loss of a major customer or program. It is not possible to
foresee or identify all such factors. Any forward-looking
statements in this release are based on certain assumptions and
analyses made by theCompany in light of its experience and
perception of historical trends, current conditions, expected
future developments and other factors it believes are appropriate
in the circumstances. Prospective investors are cautioned that any
such statements are not a guarantee of future performance and
actual results or developments may differ materially from those
projected. The Company makes no commitment to update any
forward-looking statement included herein, or to disclose any
facts, events or circumstances that may affect the accuracy of any
forward-looking statement. Additional information on factors that
could potentially affect the Company or its financial results may
be found in the Company's filings with the Securities and Exchange
Commission. TBC CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In
thousands, except per share amounts) Three Months Ended Years Ended
December 31, December 31, (Unaudited) 2003 2002 2003 2002 NET SALES
$370,742 $277,786 $1,318,531 $1,109,663 COST OF SALES 235,870
197,444 884,400 807,820 GROSS PROFIT 134,872 80,342 434,131 301,843
EXPENSES: Distribution expenses 16,765 13,816 61,356 53,136
Selling, administrative and retail store expenses 100,562 52,040
313,109 198,775 Interest expense - net 3,363 2,230 10,409 8,703
Other (income) expense - net (259) (458) (2,547) (2,411) Total
expenses 120,431 67,628 382,327 258,203 INCOME BEFORE INCOME TAXES
14,441 12,714 51,804 43,640 Provision for income taxes 4,942 4,600
18,445 16,258 NET INCOME $9,499 $8,114 $33,359 $27,382 EARNINGS PER
SHARE - Basic $0.43 $0.38 $1.54 $1.29 Diluted $0.41 $0.37 $1.47
$1.25 Weighted Average Common Shares and Equivalents Outstanding
23,270 21,886 22,743 21,966 TBC CORPORATION CONSOLIDATED BALANCE
SHEETS (In thousands) ASSETS December 31, December 31, 2003 2002
CURRENT ASSETS: Cash and cash equivalents $2,645 $2,319 Accounts
and notes receivable, less allowance for doubtful accounts of
$8,260 in 2003 and $8,701 in 2002: Related parties 12,535 16,507
Other 109,962 103,201 Total accounts and notes receivable 122,497
119,708 Inventories 265,317 170,867 Refundable income taxes 76 -
Deferred income taxes 11,359 12,364 Other current assets 11,136
12,515 Total current assets 413,030317,773 PROPERTY, PLANT AND
EQUIPMENT, AT COST: Land and improvements 12,100 6,068 Buildings
and leasehold improvements 100,379 28,795 Furniture and equipment
93,710 64,052 206,189 98,915 Less accumulated depreciation 56,618
42,993 Total property, plant and equipment 149,571 55,922
TRADEMARKS, NET 15,824 15,824 GOODWILL, NET 169,184 58,381 OTHER
ASSETS 34,368 25,971 TOTAL ASSETS $781,977 $473,871 TBC CORPORATION
CONSOLIDATED BALANCE SHEETS (In thousands) LIABILITIES AND
STOCKHOLDERS' EQUITY December 31, December 31, 2003 2002 CURRENT
LIABILITIES: Outstanding checks, net $11,411 $4,209 Notes payable
to banks 29,100 35,000 Current portion of long-term debt and
capital lease obligations 28,723 18,500 Accounts payable, trade
114,708 45,200 Income taxes payable - 767 Other current liabilities
91,730 47,481 Total current liabilities 275,672 151,157 LONG-TERM
DEBT AND CAPITAL LEASE OBLIGATIONS, LESS CURRENT PORTION 208,620
79,700 NONCURRENT LIABILITIES 26,400 14,243 DEFERRED INCOME TAXES
7,890 5,651 STOCKHOLDERS' EQUITY: Common stock, $.10 par value,
shares issued and outstanding - 21,905 in 2003 and 21,292 in 2002
2,190 2,129 Additional paid-in capital 23,898 16,687 Other
comprehensive income (loss) (1,637) (1,281) Retained earnings
238,944 205,585 Total stockholders' equity 263,395 223,120 TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY $781,977 $473,871 DATASOURCE:
TBC Corporation CONTACT: Thomas W. Garvey, Executive V.P. &
Chief Financial Officer of TBC Corporation, +1-901-363-8030;
Investors - Betsy Brod or Jonathan Schaffer of Brod & Schaffer,
LLC, +1-212-750-5800, for TBC Corporation Web site:
http://www.tbccorp.com/
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