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TBC Revises Outlook for Third Quarter Earnings

26 September 2000

TBC Revises Outlook for Third Quarter Earnings

    MEMPHIS, Tenn.--Sept. 26, 2000--TBC Corporation today indicated that it expects to report earnings per share for the third quarter of approximately $0.25 per share. For the third quarter of 1999, the Company reported net income of $6.6 million, or $0.31 per diluted share.
    Larry Day, President and Chief Executive Officer, commented, "Although the period has not ended, we do not expect earnings for the current quarter to match the year-earlier level. Our retail and franchise operations, Tire Kingdom and Big O Tires, are reporting solid progress. This in fact will be the first full quarter for the inclusion of Tire Kingdom, and we are very pleased with the positive impact it is having. These gains are being offset, however, by the performance of our wholesale tire marketing operations. We had anticipated some improvement in industry-wide pricing, but conditions have remained extremely competitive. Our margins this quarter are also being affected by the actions we are taking to lower inventories, which on a temporary basis has reduced our purchasing economics with suppliers. This program, which is targeted to reduce our inventories by about $15 million, should be substantially completed by the end of this year."
    Day added, "Although our fourth quarter is not typically our strongest quarter for seasonal reasons, we are optimistic that earnings in the final quarter this year can approximate the level expected for the third period. We believe that the industry environment is likely to remain challenging, but our retail and franchise operations are benefiting from the shortage in certain sizes that has led many consumers to seek dealers who can meet their needs, providing us the opportunity to broaden our customer base. We recognize that this short-term impact will ease, but we believe that there will be a lasting effect to TBC in showing more motorists the value and service that is available through independent tire dealers."