TBC Corporation Announces Restatement of Accounting for Leases and Reiterates Its Second Quarter Earnings Guidance
July 25 2005 - 2:02PM
PR Newswire (US)
TBC Corporation Announces Restatement of Accounting for Leases and
Reiterates Its Second Quarter Earnings Guidance - Same Store Sales
up 4.1% for the Second Quarter - PALM BEACH GARDENS, Fla., July 25
/PRNewswire-FirstCall/ -- TBC Corporation (NASDAQ:TBCC), one of the
nation's leading marketers of automotive replacement tires,
announced today that following an analysis of its lease-related
accounting policies and in consultation with its Audit Committee
and Board of Directors, the Company will restate certain of its
prior period financial statements. All adjustments will be
non-cash, similar to those announced earlier this year by many
retail and restaurant companies and will not have any impact on: *
Previously reported cash flows, cash balances, sales or comparable
sales; * Timing or amount of any actual lease payment or tax
liability; * Compliance with any financial covenant under its
revolving credit facility or other debt instruments; * The current
economic value of the Company's leaseholds or the underlying value
of the Company's real estate assets. On July 21, 2005, after
consulting with its Audit Committee and Board of Directors, the
Company determined that its financial statements from 2000 to 2004
and the first quarter of 2005 can no longer be relied upon and
certain prior periods should be restated. The adjustments will
primarily affect the Company's balance sheet accounts for goodwill
and non-current liabilities; as well as rent expense in prior
periods. While the Company does not consider the impact of
correcting the previously issued financial statements to be
material with respect to any one period, the cumulative effect of
the changes would be material if recorded in the second quarter of
2005. Therefore, the Company believes that a restatement of prior
period financial statements is appropriate. As part of the
restatement, the Company will adjust its computation of
straight-line rent expense and the related deferred rent liability
on acquired leases. Historically, when accounting for acquired
leases, the Company evaluated the lease term in order to determine
the period over which to record straight-line rents. After
performing this assessment, the Company recorded a deferred rent
liability at the date of acquisition. Management has determined
that the Company should have eliminated the deferred rent liability
on its acquired leases upon acquisition. Consequently, the
Company's straight-line rent expense was understated. The Company
will report an increase in same-store sales of 4.1% for the second
quarter of 2005 and expects to report earnings in line with its
previously announced guidance of $.49 to $.53 per diluted share.
Once the Company and its Audit Committee finalizes the impact of
the restatement, the Company will release second quarter earnings
and hold a conference call to discuss the quarter and outlook for
the balance of the year. 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 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; the
cyclical 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 the Company 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. DATASOURCE: TBC Corporation
CONTACT: TBC Corporation - Thomas W. Garvey, Executive V.P. &
Chief Financial Officer, +1-561-227-0955; or Investors - Betsy
Brod/Jonathan Schaffer, both of Brod & Schaffer, LLC
+1-212-750-5800 Web site: http://www.tbccorp.com/
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