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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

|      |    |                                                                                          
|----- | -- | -----------------------------------------------------------------------------------------
|[X]   |    | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934    
|      |    |                                                                                          
|      |    | FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002                                              
|      |    |                                                                                          
|      | OR
|      |    |                                                                                          
|[   ] |    | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 0-11579

TBC CORPORATION

---

(Exact name of registrant as specified in its charter)


|                                         |  |                    
|---------------------------------------- |  | -------------------
|DELAWARE                                 |  | 31-0600670         
|                                         |  |                    
|(State or other jurisdiction of          |  | (I.R.S. Employer   
|incorporation or organization)           |  | Identification No.)
|                                         |  |                    
|4770 Hickory Hill Road                   |  |                    
|Memphis, Tennessee                       |  | 38141              
|                                         |  |                    
|(Address of principal executive offices) |  | (Zip Code)         

Registrants telephone number, including area code: (901) 363-8030

Securities registered pursuant to Section 12(b) of the Act:

|                    |  |                      
|------------------- |  | ---------------------
|                    |  | Name of each exchange
|Title of each class |  | on which registered  
|                    |  |                      
|None                |  | None                 

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK

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   [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.      [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act):      Yes   [X]      No   [   ]

INDEX TO EXHIBITS at page 43 of this Report





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|                                                                                                                                                                                                                                                                                                                            |  |   |             | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - | ----------- | 
|Aggregate market value of outstanding shares of Common Stock,
par value $.10, held by non-affiliates of the Company on
December 31, 2002 (for purposes of this calculation, 1,875,154
shares beneficially owned by directors and executive officers of
the Company were treated as being held by affiliates of the Company) |  | $ | 233,200,224 | 
|                                                                                                                                                                                                                                                                                                                            |  |   |             | 
|Number of shares of Common Stock, par value $.10, outstanding
at the close of business on December 31, 2002                                                                                                                                                                                                                 |  |   | 21,292,325  | 

DOCUMENT INCORPORATED BY REFERENCE

TBC Corporations Proxy Statement for its Annual Meeting of Stockholders to be
held on April 30, 2003. Definitive copies of the Proxy Statement will be filed
with the Commission within 120 days after the end of the Companys fiscal year.
Only such portions of the Proxy Statement as are specifically incorporated by
reference under Part III of this Report shall be deemed filed as part of this
Report.



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TABLE OF CONTENTS



|                                                   |                                                                   |  |  |  |  |  |  | 
|-------------------------------------------------- | ----------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                            
|PART II                                           
|                                                   | Report of Independent Accountants                                
|CONSOLIDATED BALANCE SHEETS                       
|CONSOLIDATED STATEMENTS OF INCOME                 
|CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY   
|CONSOLIDATED STATEMENTS OF CASH FLOWS             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        
|PART III                                          
|PART IV                                           
|SIGNATURES                                        
|CERTIFICATIONS                                    
|                                                   | Report of Independent Accountants on Financial Statement Schedule
|SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS   
|INDEX TO EXHIBITS                                 
|TBC CORP MANAGEMENT INCENTIVE COMPENSATION PLAN   
|TBC CORP EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN   
|RESOLUTIONS ESTABLISHING FEES PAYABLE TO DIRECTORS
|CONSENT OF PRICEWATERHOUSE COOPERS LLP            
|POWER OF ATTORNEY                                 
|SECTION 906 CERTIFICATION OF THE CEO              
|SECTION 906 CERTIFICATION OF THE CFO              



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PART I

|        |  |         
|------- |  | --------
|Item 1. |  | BUSINESS

TBC Corporations business began in 1956 under the name Cordovan
Associates, Incorporated. The Company was incorporated in Delaware in 1970
under the name THE Tire and Battery Corporation. In 1983, the Company changed
its name to TBC Corporation.

TBC and its wholly-owned subsidiaries are principally engaged in the
marketing and distribution of tires in the automotive replacement market. The
Company believes it is the largest independent marketer/distributor of private
brand replacement tires in the United States. The Company has two operating
segments: wholesale and retail. (See Note 12 to the consolidated financial
statements included in this Report for financial information about each of the
reportable segments.) Unless the context indicates otherwise, the term
Company refers to TBC Corporation and its subsidiaries, taken as a whole.

Wholesale Business

The wholesale segment of the Companys business (the Wholesale Business)
consists of those operations which market and distribute the Companys
proprietary brands of tires, as well as other tires and related products, on a
wholesale basis. These products are marketed through a network of distributors
located throughout the United States and in Canada and in Mexico. These
distributors operate under written distributor agreements with the Company and
resell the Companys products to retailers or through retail outlets primarily
consisting of independent tire dealers. The Wholesale Business operates a
total of 27 warehouse distribution centers, all of which are located in the
United States.

Tires marketed under the Companys proprietary brand trademarks are
manufactured for the Company by leading manufacturers. The Companys
Cordovan®, Multi-Mile®, Sigma® and Vanderbilt® lines of tires are among the
most complete lines in the replacement tire market for automobiles, light
trucks and sport utility vehicles. The Company also distributes tires under
other brands for automobile, truck, sport utility vehicle, farm, industrial,
recreational and other applications.

Retail Business

The retail segment of the Companys business (the Retail Business)
consists of both the franchised retail tire business conducted by the Companys
Big O Tires, Inc. subsidiary (Big O), as well as the retail tire stores
operated by the Companys Tire Kingdom, Inc. subsidiary (Tire Kingdom).

Big O franchises retail tire and automotive service stores located
primarily in the western and midwestern United States and sells Big O® brand
tires and other tires to these franchisees. At December 31, 2002, the Company
had a total of 536 Big O stores, serviced by 7 distribution centers. Included
in the 536 total outlets were 511 franchisee-owned stores, 18 stores owned by
joint ventures in which the Company has an equity interest, and 7 stores
operated by the Company. Big O products are also sold by Big O to 34
unaffiliated retail stores in British Columbia, Canada. Big O franchise
agreements grant a ten-year license to sell Big O brand tires and to use Big O
trademarks and trade secrets in the operation of a retail store at a specific
location within a defined trade area. With the exception of retail tire stores
converting to the Big O franchise system, each franchisee is required to pay an
initial franchise fee. All franchisees are required to pay monthly royalty
fees.

Tire Kingdom, which the Company acquired in June 2000, operates retail
tire and automotive service centers primarily in the southeastern United
States. At the end of 2002, Tire Kingdom operated a total of 222 stores,
serviced by 2 distribution centers. Tire Kingdom markets a broad selection of
tires under nationally-advertised brands and private brands, including the
Companys own Sigma® brand. Tire Kingdoms retail centers provide full service
tire replacement including tire balancing, wheel alignment, extended service
programs and warranties, and also perform maintenance
and mechanical services such as brake repairs, suspension system
replacement, and oil changes.

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Products and Suppliers

Sales of tires accounted for approximately 85% of the Companys total
sales in 2002, 86% in 2001, and 89% in 2000. Tire and mechanical services
performed by Company-operated retail stores represented approximately 12%, 10%
and 5% of total sales in 2002, 2001 and 2000, respectively. The remainder of
the Companys sales include tubes, wheels, and other products for the
automotive replacement market.

The Company purchases its products, in finished form, from a number of
major rubber companies and other suppliers to the automotive replacement
market. In the case of tires bearing the Companys trademarks, the Company
owns many of the molds in which they are made.

The Goodyear Tire & Rubber Company manufactured more than half of the
tires purchased by the Company in 2002, pursuant to a supply agreement entered
into in 1977 and a 10-year commitment signed in 1994. This ongoing supply
relationship began in 1963 with The Kelly-Springfield Tire Company as the
supplier. Kelly-Springfield later became a wholly-owned subsidiary of Goodyear
and was ultimately merged into Goodyear in December 1996. The Company also has
a supply agreement with Cooper Tire and Rubber Company, its second-largest
supplier, which extends until June 2011. In addition, the Company has written
contracts with certain other suppliers.

From time to time, the tire industry has faced shortages and supply
disruptions affecting the availability of particular sizes of tires, for
reasons such as production difficulties, labor unrest, and recalls. While the
Company has not been immune from difficulties in purchasing products in
quantities desired, the Company believes that its long-term relationships with
its primary suppliers have been beneficial in minimizing the impact of any
industry shortages or supply disruptions. In the event that any of its primary
suppliers curtail their manufacturing or otherwise encounter difficulties in
meeting the Companys production requirements, the Companys business would be
adversely affected pending the implementation of contingency plans. Such
contingency plans, which are continually updated to reflect changing industry
conditions, are designed to mitigate any long-term adverse effect of a
significant supply disruption and include the use of alternate suppliers. In
addition to the Companys current suppliers, there are a number of other large
tire manufacturers on a worldwide basis that have the desire and capacity to
meet the Companys needs for its proprietary lines of tires.

Trademarks

In addition to its Cordovan®, Multi-Mile®, Sigma®, Vanderbilt®, Big O® and
Tire Kingdom® trademarks, the Company also holds federal registrations for
trademarks such as Grand Prix®, Grand Am, Grand Spirit®, Wild Spirit®, Aqua
Flow®, Wild Country®, Wild Trac®, Turbo-Tech®, Supreme, Stampede®, Power
King®, Harvest King®, Big Foot®, Legacy®, Prestige®, and Sun Valley®.

The ability to offer products and services under established trademarks
represents an important marketing advantage in the automotive replacement
industry, and the Company regards its trademarks as valuable assets of its
business.

Customers

The Companys ten largest customers in its Wholesale Business accounted
for approximately 34% of total wholesale sales and 19% of the Companys total
consolidated sales in 2002. No individual customer accounted for more than 5%
of total sales. The loss of a major customer in the Wholesale Business could
have a material adverse effect upon this segment and the Companys business as
a whole, pending the establishment of a replacement customer to market the
Companys products. See Note 2 to the consolidated financial statements and
Item 13 of this Report for additional information concerning major customers.

Sales to domestic customers represented 94% of the Companys consolidated
sales in 2002 and 2001, and 95% in 2000. The remainder of the Companys sales
was attributable to customers located outside the United States, principally in
Mexico and Canada. The Company has no significant foreign currency translation
risks, since its sales to customers located outside the United States are made
and settled in U.S. dollars.

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Seasonality and Inventory

The Company normally experiences its highest level of sales in the third
quarter of each year, with the first quarter exhibiting the lowest level. In
2002, first quarter sales represented approximately 22% of total sales, the
second quarter 26%, the third quarter 27%, and the fourth quarter 25%. During
the five-year period from January 1, 1998 through December 31, 2002, first
quarter sales have represented, on the average, approximately 22% of annual
sales; the second quarter and third quarters 25% and 28%, respectively; and the
fourth quarter 25%.

Orders for the Companys products, except for those sold directly to
consumers in the Retail Business segment, are usually placed with the Company
by computer, facsimile, or telephone. These orders are filled either out of
the Companys inventory or by direct shipment to the customer from the
manufacturers plants at the Companys request.

Since customers look to the Company to fulfill their needs on short
notice, the Company maintains a large inventory of tires and other products,
both for its Wholesale Business and its Retail Business segments. Average
inventories, based on quarter-end levels on hand and in transit, were $181.4
million during 2002. The Companys inventory turn rate (cost of sales,
including the cost of direct shipments from manufacturers to customers, divided
by average inventory) was 4.5 for 2002.

Competition

The industry in which the Company operates is highly competitive. In the
case of the Companys Wholesale Business, many of the Companys competitors are
significantly larger and have greater financial and other resources than the
Company. These competitors include the Companys own suppliers and other tire
manufacturers, other wholesale tire distributors, as well as mass merchandisers
and retailers with sufficient purchasing power to command wholesale prices.

The Company believes its Wholesale Business is able to compete
successfully because of its ability to offer quality products under proprietary
brand names at competitive prices, its efficient distribution systems, its good relationships with
customers and suppliers, and its established presence in the markets it serves.

In the case of the Companys Retail Business, competition is based
primarily upon market presence in a specific geographic area. Big Os 536
franchised retail outlets are primarily concentrated in western and midwestern
states, which gives Big O a significant market share in many of the retail
markets it serves. Tire Kingdom is one of the leading tire retailers in
Florida, with 165 of its 222 total retail outlets being located in that state
at the end of 2002. Tire Kingdoms market position outside the state of
Florida varies depending upon the city or region. Competitors include stores
operated by tire manufacturers, other retail outlets such as warehouse clubs,
chains and mass merchandisers, and other independent tire dealers, some of whom
are customers or who buy from customers of the Companys Wholesale Business.

Employees

As of December 31, 2002, the Company employed approximately 3,200 persons,
of which approximately 2,700 were in its Retail Business. None of the
Companys employees are represented by a union, and the Company considers its
employee relations to be excellent.

Internet Website Address and Availability of SEC Filings

The Company maintains an internet website, www.tbccorp.com. The Company
makes its SEC filings, including its Annual Report on Form 10-K, Quarterly
Reports on Form 10-Q, and Current Reports on Form 8-K, immediately available on
its website after filing, via an electronic link from the Companys website to
the SECs EDGAR database. Paper copies of such SEC filings are also available
free of charge from the Company, upon request.

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|        |  |           
|------- |  | ----------
|Item 2. |  | PROPERTIES

TBC Corporations executive offices are located in Memphis, Tennessee,
along with two of its warehouse distribution facilities. The Company has a
total of 36 warehouse distribution facilities, totaling approximately 3.7
million square feet, located in 17 states across the United States.
Approximately 2.9 million square feet of the Companys warehouse distribution
facilities are utilized for the Companys Wholesale Business and approximately
800,000 square feet are utilized for the Retail Business.

The Company owns its executive office building and two of its distribution
facilities. The remainder of the distribution facilities, totaling
approximately 3.2 million square feet, are leased under operating leases, as
are all of the retail tire and service centers operated by the Company. See
Note 6 to the consolidated financial statements for information regarding the
Companys operating lease commitments.

|        |  |                  
|------- |  | -----------------
|Item 3. |  | LEGAL PROCEEDINGS

The Company is involved in various legal proceedings which are routine to
the conduct of its business, none of which is believed to be material to the
Company. Some of these proceedings involve personal injury lawsuits based upon
alleged defects in products sold by the Company. The Company believes that in
substantially all such product liability cases, it is covered by its
manufacturers indemnity agreements or product liability insurance. The
Company also maintains its own product liability insurance, as well as coverage
for damages, workmanship and claims relating to repairs and services performed
by its Retail Business.

|        |  |                                                    
|------- |  | ---------------------------------------------------
|Item 4. |  | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

EXECUTIVE OFFICERS OF THE REGISTRANT

The table which follows presents certain information concerning the
executive officers of the Company. The term of office of all executive
officers of the Company is until the next Annual Meeting of Directors (April
30, 2003) or until their respective successors are elected.

|                 |  |     |    |                    |  |                                                              |  | 
|---------------- |  | --- | -- | ------------------ |  | ------------------------------------------------------------ |  | 
|                 |  |     |    |                    |  | Capacities in which Individual                              
|Name             |  | Age |    | Serves the Company
|                 |  |     |    |                   
|Lawrence C. Day  |  |     | 53 |                    |  | President and Chief Executive Officer                       
|Thomas W. Garvey |  |     | 48 |                    |  | Executive Vice President and Chief Financial Officer        
|Kenneth P. Dick  |  |     | 56 |                    |  | President of TBC Private Brands Division                    
|J. Glen Gravatt  |  |     | 51 |                    |  | Senior Vice President Purchasing                            
|William M. Potts |  |     | 50 |                    |  | Vice President Human Resources                              
|Larry D. Coley   |  |     | 45 |                    |  | Vice President, Corporate Controller and Assistant Secretary

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Mr. Day has been the Companys Chief Executive Officer since October 1999
and President since October 1998. Mr. Day served as the Companys Chief
Operating Officer from the time he joined the Company in April 1998 until his
election as Chief Executive Officer. Mr. Day was an Executive Vice President
of the Company prior to his election as President. Mr. Day was President and
Chief Executive Officer of Monro Muffler Brake, Inc. from 1995 to 1998. Prior
to joining Monro in 1993, Mr. Day was Vice President of Montgomery Wards Auto
Express Division. His experience in the tire industry includes 13 years in a
series of managerial positions with the Firestone Tire & Rubber Company.

Mr. Garvey has been Executive Vice President and Chief Financial Officer
of the Company since January 2001 and also served as Treasurer from January
2001 to August 2002. From 1993 to January 2001, Mr. Garvey was Executive Vice
President and Chief Financial Officer of Tire Kingdom, which TBC acquired in
June 2000. From 1987 to 1992, Mr. Garvey served as Executive Vice President and Chief
Financial Officer of Fisher Scientific Company.

Mr. Dick has been President of the TBC Private Brands Division since its
formation in July 2001 and prior to that was the Companys Executive Vice
President of Sales. From 1988 until his election as Executive Vice President
in April 2000, Mr. Dick served as Senior Vice President Sales of the Company.
From 1982 until 1988, Mr. Dick was the Companys Vice President of Sales. Mr.
Dick joined the Company in 1971 and served in a number of sales management
positions prior to his election as Vice President.

Mr. Gravatt has been the Companys Senior Vice President of Purchasing
since August 1999. From 1987 until his election as Senior Vice President, Mr.
Gravatt was a Vice President of the Company. Mr. Gravatt joined the Company in
1984 as Manager of Purchasing and served in that role until his election as a
Vice President.

Mr. Potts has been a Vice President since joining the Company in April
1998. From 1994 until joining the Company, Mr. Potts was Vice President, Human
Resources of Millard Refrigerated Services, Inc., and from 1988 to 1994 was
Corporate Director of Human Resources for Griffin Industries, Inc.

Mr. Coley has been a Vice President of the Company since 1993 and
Corporate Controller and Assistant Secretary since April 1999. Mr. Coley was
Controller of the Company from 1989 to 1999. Mr. Coley joined the Company in
1984 and served in a number of financial management positions prior to his
election as Controller.

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PART II

|        |  |                                                                      
|------- |  | ---------------------------------------------------------------------
|Item 5. |  | MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

The Common Stock of the Company is traded on The Nasdaq Stock Market under
the symbol TBCC. As of December 31, 2002, the Company had approximately 3,500
stockholders based on the number of holders of record and an estimate of the
number of individual participants represented by security position listings.
Historically, the Company has not paid cash dividends and the Company has no
intention to do so in the foreseeable future. In addition, the Companys
short-term and long-term credit facilities restrict its ability to declare cash
dividends (see the Liquidity and Capital Resources section of Managements
Discussion and Analysis of Financial Condition and Results of Operations, and
Note 4 to the consolidated financial statements).

The following table sets forth for the periods indicated the high and low
sale prices for the Companys Common Stock on the Nasdaq National Market
System.

|              |          |  |             |       |     |  |  |       | 
|------------- | -------- |  | ----------- | ----- | --- |  |  | ----- | 
|              |          |  | Price Range
|              |          |  |            
|              |          |  | High        |       | Low
|              |          |  |             |       |    
|Quarter ended |          |  |             |       |     |  |  |      
|              | 03/31/01 |  | $           | 7.38  |     |  |  | 4.63  | 
|              | 06/30/01 |  |             | 9.75  |     |  |  | 5.54  | 
|              | 09/30/01 |  |             | 11.94 |     |  |  | 8.15  | 
|              | 12/31/01 |  |             | 13.50 |     |  |  | 8.53  | 
|              | 03/31/02 |  |             | 16.20 |     |  |  | 10.46 | 
|              | 06/30/02 |  |             | 16.80 |     |  |  | 12.06 | 
|              | 09/30/02 |  |             | 16.00 |     |  |  | 9.46  | 
|              | 12/31/02 |  |             | 13.00 |     |  |  | 9.80  | 

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|        |  |                        
|------- |  | -----------------------
|Item 6. |  | SELECTED FINANCIAL DATA

Set forth below is selected financial information of the Company for each
year in the five-year period ended December 31, 2002. The selected financial
information should be read in conjunction with the consolidated financial
statements of the Company and notes thereto which appear elsewhere in this
Report. Specific reference should be made to the discussion of the 2000
acquisition of Tire Kingdom, Inc. in Note 3 to the consolidated financial
statements. Information regarding the 1998 acquisition of Carrolls, Inc. was
included in Note 4 to the consolidated financial statements included in Form
10-K for the year ended December 31, 2000. The Company did not declare any
cash dividends during the five-year period ended December 31, 2002.

|                                           |  |                         |           |      |  |      |           |      |  |      |         |  |  |   |         |  |  |   |         | 
|------------------------------------------ |  | ----------------------- | --------- | ---- |  | ---- | --------- | ---- |  | ---- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                           |  | Year ended December 31,
|                                           |  |                        
|                                           |  | 2002                    |           | 2001 |  | 2000 |           | 1999 |  | 1998
|                                           |  |                         |           |      |  |      |           |      |  |     
|INCOME STATEMENT DATA (a):                 |  |                         |           |      |  |      |           |      |  |      |         |  |  |   |         |  |  |   |         | 
|Net sales (b)                              |  | $                       | 1,109,663 |      |  | $    | 1,009,278 |      |  | $    | 902,740 |  |  | $ | 743,050 |  |  | $ | 646,135 | 
|Gross profit                               |  |                         | 301,843   |      |  |      | 264,977   |      |  |      | 198,247 |  |  |   | 129,559 |  |  |   | 102,921 | 
|Net income                                 |  |                         | 27,382    |      |  |      | 21,010    |      |  |      | 18,724  |  |  |   | 17,939  |  |  |   | 16,894  | 
|Diluted earnings per share                 |  |                         | 1.25      |      |  |      | .98       |      |  |      | .88     |  |  |   | .85     |  |  |   | .75     | 
|Average shares and
equivalents outstanding |  |                         | 21,966    |      |  |      | 21,386    |      |  |      | 21,191  |  |  |   | 21,189  |  |  |   | 22,481  | 
|BALANCE SHEET DATA (a):                    |  |                         |           |      |  |      |           |      |  |      |         |  |  |   |         |  |  |   |         | 
|Total assets                               |  | $                       | 473,871   |      |  | $    | 462,960   |      |  | $    | 451,567 |  |  | $ | 348,683 |  |  | $ | 333,790 | 
|Working capital                            |  |                         | 166,616   |      |  |      | 167,207   |      |  |      | 156,644 |  |  |   | 113,669 |  |  |   | 108,251 | 
|Long-term debt                             |  |                         | 79,700    |      |  |      | 101,000   |      |  |      | 113,531 |  |  |   | 47,000  |  |  |   | 59,653  | 
|Stockholders equity                       |  |                         | 223,120   |      |  |      | 194,319   |      |  |      | 174,052 |  |  |   | 156,382 |  |  |   | 138,431 | 



---

|(a) |  | In thousands, except per share amounts.                                                                                                
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Net sales include sales to related parties of $100,406 in 2002, $92,813
in 2001, $86,961 in 2000,
$78,880 in 1999 and $133,170 in 1998.

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|        |  |                                                                                      
|------- |  | -------------------------------------------------------------------------------------
|Item 7. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

2002 Compared to 2001:

The Company 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.

Net sales for 2002 increased 9.9% from the 2001 level, due
principally to the combined effects of a 5.4% gain in total unit tire
volume, a 2.7% increase in the average tire sales price and greater
service revenues in Company-operated retail tire outlets. In comparison,
unit tire shipments for the U.S. replacement tire industry as a whole
declined approximately 0.3% during 2002 (based on preliminary data). The
percentage of total Company sales attributable to tires was 85% in 2002
compared to 86% in 2001. Net sales by the Companys retail segment
increased 14.8% compared to the 2001 level, including a 7.7% increase in
unit tire volume, a 2.6% increase in the average retail tire sales price
and the previously-mentioned increase in 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.
At the end of 2002, the Company had a total of 758 stores in its two
retail systems compared to 686 stores at December 31, 2001. Net sales by
the wholesale segment increased 6.1% over the 2001 level, due principally
to a 4.4% increase in unit tire sales and a 2.4% increase in average tire
sales prices.

Gross profit as a percentage of net sales increased from 26.3% in
2001 to 27.2% in 2002. The improved overall gross profit percentage was
largely due to the increased contribution from the retail segment. In
addition, the Companys increased overall unit volume led to greater
purchasing leverage with suppliers and a resulting improvement in net
purchase prices. Gross margin percentages on sales by the Companys
retail segment increased to 42.5% in 2002 from 41.7% in 2001, while
wholesale margins were 14.1% in 2002 compared to 14.0% in 2001.

Distribution expenses as a percentage of net sales decreased from
5.0% in 2001 to 4.8% in 2002. 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 $27.7
million in 2002 compared to 2001, 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 2001 included
amortization of goodwill and trademarks of $2.8 million. No amortization
of such assets was recorded in 2002, 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 1 to the consolidated
financial statements.) Expenses in 2001 also included $720,000 related to
the writeoff of a prepaid pension asset. Excluding the impact of the
amortization and pension charge in the prior year and the expenses
associated with the new stores, selling, administrative and retail store
expenses increased only 4.5% in 2002 compared to the 2001 level,
while net sales (excluding the new stores) increased 5.7%.

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Net interest expense decreased $2.5 million in 2002 compared to 2001
level, due principally to the combined effects of lower overall borrowing rates
and lower average borrowings. The Companys average borrowing rate in 2002 was
approximately 16% lower than in 2001, which was a reflection of lower market
interest rates as well as efforts by the Company to better manage receivables,
inventories and other key components of working capital and thereby minimize
interest rate spreads under its borrowing agreements. Average borrowings
declined 12% from the 2001 level, principally as a 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 interest expense in
2001 included interest income of $606,000 related to refunds on amended tax
returns filed in prior years.

Net other income in 2002 was $557,000 less than in 2001, due primarily to
a decline in interest and service charge income from customers as well as a
decrease in the Companys equity in operating results from joint ventures.

The Companys effective tax rate was 37.3% in 2002 compared to 39.9% in
2001. The lower effective rate in 2002 was due to reduced provisions for state
income taxes as well as the impact of SFAS No. 142, since the majority of
goodwill amortized in prior years was not deductible for tax purposes.

Earnings per diluted share were $1.25 in 2002 and $0.98 in 2001. Earnings
per diluted share in 2001 included a charge of $0.02 as a result of the
previously-noted writeoff of a prepaid pension asset and a credit of $0.02
related to interest on prior year amended tax returns, in addition to the
approximate $0.12 charge related to the amortization of goodwill and certain
other intangible assets prior to the adoption of SFAS No. 142. Excluding the
effects of these items, earnings in 2001 would have been approximately $1.10
per diluted share.

2001 Compared to 2000:

As a result of the Companys acquisition of Tire Kingdom, Inc. (Tire
Kingdom) in June 2000 (see Note 3 to the consolidated financial statements),
there were a number of significant changes in income statement items between
the years 2001 and 2000, since results in 2000 only included Tire Kingdom for
the seven months following the acquisition.

Net sales for 2001 increased 11.8% from the 2000 level, due principally to
the combined effects of a 6.1% increase in the average tire sales price and a
0.9% gain in unit tire volume. The increased unit tire volume was due
principally to the inclusion of tire units sold by Tire Kingdom during all of
2001. The increase in the average tire sales price was due to the increased
proportion of sales attributable to retail, as well as the effect of industry
price increases during 2001. Net sales also benefited from the inclusion of
revenue from mechanical and maintenance services performed by Tire Kingdoms
retail stores during the entire year of 2001. The revenue from such services,
which is included in non-tire sales, caused the percentage of total sales
attributable to tires to shift from 89% in 2000 to 86% in 2001. Excluding the
impact of Tire Kingdom, unit tire volume declined 7.2% compared to the 2000
level, while the average tire sales price increased 4.1%. The decline in unit
tire volume after excluding Tire Kingdom was largely reflective of a
fluctuation in industry demand from year to year. Demand in 2000 was greater
than normal, due to certain recalls within the industry and because of strong
purchasing activity in the fourth quarter in advance of announced industry
price increases effective January 1, 2001. Industry demand in 2001 was
affected somewhat by the overall general economic slowdown during the last half
of the year.

Gross profit as a percentage of net sales increased from 22.0% in 2000 to
26.3% in 2001, due primarily to the significantly increased proportion of sales
attributable to the retail segment. Gross margin percentages on sales by the
Companys retail segment increased from 36.1% in 2000 to 41.7% in 2001, due
principally to the inclusion of Tire Kingdom for the full year in 2001.
Wholesale margins were relatively unchanged, at 14.0% in 2001 compared to 14.3%
in 2000.

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Distribution expenses as a percentage of net sales decreased from 5.4% in
2000 to 5.0% in 2001, due largely to the inclusion of Tire Kingdom for the
entire year in 2001. As an operator of retail stores, Tire Kingdom generally
experiences lower warehousing and product delivery costs as a percentage of its
sales than the Company experiences on sales to its other customers. The
Company also benefited in 2001 from improved operating efficiencies by its
wholesale segment, which led to reduced warehousing and product delivery
expenses as a percentage of sales.

Selling, administrative and retail store expenses increased $62.0 million
in 2001 compared to 2000, due principally to the inclusion of Tire Kingdoms
expenses for the full year of 2001 and to a greater number of retail stores in
operation. In addition, an increase in market development expenses and store
conversion costs in conjunction with the expansion of the Companys franchised
retail system caused expenses in 2001 to be greater than in 2000. Expenses for
the retail segment, particularly those associated with the operation of the
Companys own retail stores, are substantially higher as a percentage of sales
than for the wholesale segment. Expenses of a non-recurring nature included a
charge of $720,000 in 2001 related to the writeoff of a prepaid pension asset
and a charge of approximately $1.2 million in 2000 related to certain severance
and management restructuring.

Net interest expense in 2001 declined $203,000 from the 2000 level and
included lower average borrowing rates and higher average borrowing levels. In
addition, the net expense in 2001 included interest income of $606,000 related
to refunds on amended tax returns filed in prior years. The higher average
borrowings during 2001 were principally associated with the borrowings made to
fund the Tire Kingdom acquisition in June 2000. The structure of the Companys
borrowing agreements was changed as a result of the acquisition to include
somewhat higher interest rate spreads based upon the Companys leverage ratio.
This change led to a 4.2% decline in total average borrowing rates in 2001,
even though market interest rates experienced a much sharper decrease compared
to 2000.

Net other income in 2001 was $503,000 greater than in 2000, due in part to
improved results from real estate transactions associated with franchised store
development and to increased interest and service charge income from customers.

The Companys effective tax rate was relatively unchanged, at 39.9% in
2001 compared to 39.7% in 2000.

Earnings per diluted share in 2001 totaled $0.98 and included a charge of
$0.02 as a result of the previously-noted writeoff of a prepaid pension asset
and a credit of $0.02 related to interest on prior year amended tax returns.
Earnings per diluted share in 2000 totaled $0.88 and included a net charge of
$0.04 as a result of the previously-noted management restructuring expenses.
Excluding the effects of these items, earnings were $0.98 (as reported) in
2001 compared to $0.92 per diluted share in 2000.

LIQUIDITY AND CAPITAL RESOURCES

The Company had working capital of $166.6 million at December 31, 2002,
relatively unchanged from $167.2 million at the end of 2001. The Companys
current ratio was 2.10 at the end of both 2002 and 2001.

In January 2001, the Company entered into a borrowing agreement with a
group of 11 banks which included an $80 million, three-year revolving loan
facility and an $80 million, five-year term loan. At December 31, 2002, $35.0
million was borrowed under the bank revolving loan facility and $63 million was
outstanding under the bank term loan. The Companys long-term debt at the end
of 2002 also included $34.0 million in Senior Notes. Of the total $132.0
million borrowed at December 31, 2002 under these credit arrangements, $53.5
million was classified as current on the Companys balance sheet and the
remaining $78.5 million was considered noncurrent. The Company is subject to
certain financial covenants and other restrictions under its agreements with
the respective lenders (see Note 4 to the consolidated financial statements).
The Company was in compliance with all of its borrowing covenants as of
December 31, 2002 and for the year then ended. The current revolving loan
facility is scheduled to expire in January 2004. The Company began discussions
with lenders in early 2003 to restructure its borrowing agreements, to provide
financial resources to help meet the Companys capital needs as it plans for
continued future growth.

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Cash generated by operations, together with the available credit
arrangements, enabled the Company to fund capital expenditures totaling $15.2
million in 2002, as well as the purchase of the net assets of certain retail
tire stores for $11.2 million. Additionally, the Company was able to reduce
its total funded debt by a total of $19.7 million during 2002 and fund
repurchases of common stock totaling $3.1 million. As of December 31, 2002,
the Company had an unused authorization from the Board of Directors for the
repurchase of 1,199,000 additional shares of common stock.

Capital expenditures in 2002 and 2001 were primarily for equipment and
tire molds. The Company had no material commitments for capital expenditures
at the end of 2002. The Company expects to fund 2003 day-to-day operating
expenses and normally recurring capital expenditures out of operating funds and
its present financial resources. The Company believes that the combination of
its bank borrowing facilities and expected funds from operations will be
sufficient to operate on both a short-term and long-term basis.

In 2002, managements strong emphasis on managing working capital and the
balance sheet resulted in cash from operations of over $45 million. Accounts
receivable and inventory turnover both improved significantly in 2002 compared
to the 2001 rates. The Company was able to reduce its investment in franchise
stores under development (included in other current assets on the balance
sheet) by $4.6 million compared to the December 31, 2001 level. The balance in
other noncurrent assets was also significantly reduced, primarily as a result
of collections of noncurrent notes receivable.

The Company expects its future growth to include additional strategic
acquisitions such as the June 2000 acquisition of Tire Kingdom. It is likely
that at least one such acquisition will be made in 2003. Significant future
acquisitions could require additional capital resources and would involve new
or amended credit facilities. See Forward-Looking Statements and Risks
below, which identifies certain risks associated with the Companys acquisition
strategy, as well as many of the other factors which influence the Companys
operating results, its future growth potential and the industry in which it
operates.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States 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. Significant
accounting policies employed by the Company, including the use of estimates and
assumptions, are presented in the Notes to Consolidated Financial Statements.
Management bases its estimates on its historical experience, together with
other relevant factors, in order to form the basis for making judgements, which
will affect the carrying values of assets and liabilities. On an ongoing
basis, management evaluates its estimates and makes revisions as deemed
necessary. The following areas are considered to be of critical importance:

Inventories- Inventories, consisting of tires and other automotive
products held for resale, are valued at the lower of cost or market. Certain
inventories are valued using the last in-first out method.

Revenue recognition- Sales are recognized upon shipment of products.
Estimated costs of returns, allowances and customer rebates are accrued at the
time products are shipped.

Franchise fees- Each Big O franchisee is required to pay an initial
franchise fee as well as monthly royalty fees of 2% of gross sales. Initial
franchise fees are deferred and recognized when all material services or
conditions relating to the sale or transfer of the franchise have been
substantially completed.

Retirement plan obligations- The values of certain assets and liabilities
associated with the Companys retirement plan obligations are determined on an
actuarial basis and include estimates and assumptions such as the expected
return on plan assets and discount rates. Discount rates are determined based
on rates of high quality, fixed income investments. Actual changes in the fair
market value of plan assets, differences between the actual return and the
expected return on plan assets and changes in the discount rate affect the
amount of the pension expense recognized.

Long-lived assets- The Company periodically reviews the recoverability of
its long-lived assets. If facts or circumstances support the possibility of
impairment, the Company will prepare a projection of the undiscounted future
cash flows of the specific assets and determine if the assigned value is
recoverable or if an adjustment to the carrying value of the assets is
necessary. There were no facts or circumstances which
indicated an impairment of recorded assets as of December 31, 2002 or
2001.

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Goodwill, Trademarks and Other Intangible Assets- Goodwill represents the
excess of cost over the fair value of identifiable net assets acquired. Under
the provisions of SFAS No. 142, goodwill and other indefinite-lived intangible
assets ceased the amortization of goodwill effective January 1, 2002, with
charges being recorded only if impairment is found to exist. At least
annually, the Company compares the carrying values of its reporting units to
their fair value, 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. If the carrying value of a reporting unit
exceeds its fair value, an impairment loss is required to be recognized. No
impairment to the recorded value of Companys indefinite-lived assets was found
to exist as a result of the required testing.

Warranty costs- The costs of anticipated adjustments for workmanship and
materials that are the responsibility of the Company are estimated and charged
against earnings currently. Reserves for future warranty claims and service are
included in liabilities in the balance sheets.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

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 was
effective for certain lease transactions occurring after May 15, 2002 and all
other provisions of the statement were 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.

In December 2002, Statement of Financial Accounting Standards No. 148,
Accounting for Stock-Based Compensation-Transition and Disclosure was issued.
SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation,
and provides alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based compensation. SFAS No.
148 also amends the disclosure requirements of SFAS No. 123 to require more
prominent and frequent disclosures in financial statements about the effects of
stock-based compensation. The Company will adopt the disclosure provisions of
SFAS No. 148 beginning in 2003 and therefore does not expect the statement to
have any impact on its financial position or results of operations.

In November 2002, FASB Interpretation No. 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including indirect Guarantees of
Indebtedness of Others, was issued. FIN 45
elaborates on the financial statement disclosures to be made by a
guarantor about its obligations under certain guarantees. It also clarifies
that a guarantor is required to recognize, at inception of a guarantee, a
liability for

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the fair value of the obligation undertaken in
issuing the guarantee. The initial recognition and initial measurement provisions of this interpretation are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002. The disclosure
requirements in the interpretation are effective for financial statements of
interim or annual periods ending after December 15, 2002 and the Company has
included such disclosures in Note 11 to the consolidated financial statements.
The Company does not expect adoption of the liability recognition provisions to
have a material impact on its financial position or results of operations.

In January 2003, FASB Interpretation No. 46, Consolidation of Variable
Interest Entities, was issued. This interpretation provides guidance on how
to identify a variable interest entity (VIE) and determine when the assets,
liabilities, noncontrolling interests, and results of operations of a VIE need
to be included in a companys consolidated financial statements. A company
that holds variable interests in an entity must consolidate the entity if the
companys interest in the VIE is such that the company will absorb a majority
of the VIEs expected losses and/or receive a majority of the entitys expected
residual returns, if they occur. FIN 46 also requires additional disclosures
by primary beneficiaries and other significant variable interest holders. The
provisions of this interpretation apply immediately to VIEs created after
January 31, 2003. For VIEs created prior to February 1, 2003, the Company
must apply FIN 46 to financial statements for periods beginning July 1, 2003.
The Company has certain synthetic lease agreements that may be affected by the
provisions of FIN 46, but the Company does not expect this interpretation to
have a material impact on its financial position or results of operations.

FORWARD-LOOKING STATEMENTS AND RISKS

This Managements Discussion and Analysis of Financial Condition and
Results of Operations contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Act of 1934, as amended, including, without limitation,
statements containing the words believes, expects, anticipates,
estimates and words of similar import. Such forward-looking statements
relate to expectations for future financial performance, which involve known
and unknown risks, uncertainties and other factors. Such factors include, but
are 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 company-operated retail outlets as planned; changes in the Companys
ability to identify and acquire additional companies in the replacement tire
industry and the failure to achieve synergies or savings anticipated in such
acquisitions; fluctuations in tire prices charged by manufacturers, including
fluctuations due to changes in raw material and energy prices; product
shortages and supply disruptions; 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 report 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. Such statements are not a guarantee of future performance and
actual results or developments may differ materially from those projected.

|         |  |                                                           
|-------- |  | ----------------------------------------------------------
|Item 7A. |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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 December 31, 2002, the Company owed $98.0 million to
banks under its credit facilities, of which $78.3 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 $196,000,
based on the outstanding balance which was not hedged at December 31, 2002.
See Note 5 to the consolidated financial statements for information regarding
the Companys interest rate swap agreements.

The Company has no significant foreign currency translation risks, since
its sales to customers located outside the United States are made and settled
in U.S. dollars.

|        |  |                                            
|------- |  | -------------------------------------------
|Item 8. |  | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary financial information required
by this Item 8 are included on the following 20 pages of this Report.

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PRICEWATERHOUSECOOPERS

| |  |                           
| |  | --------------------------
| |  | PricewaterhouseCoopers LLP
| |  | 1000 Morgan Keegan Tower  
| |  | Fifty North Front Street  
| |  | Memphis, TN 38103         
| |  | Telephone (901) 522 2000  
| |  | Facsimile (901) 523 2045  




Report of Independent Accountants

To the Board of Directors and Stockholders of
TBC Corporation

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income, stockholders equity and cash
flows present fairly, in all material respects, the financial position of
TBC Corporation and its subsidiaries at December 31, 2002 and 2001, and the
results of their operations and their cash flows for each of the three
years in the period ended December 31, 2002, in conformity with accounting
principles generally accepted in the United States of America. These
financial statements are the responsibility of the Companys management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these statements in
accordance with auditing standards generally accepted in the United States
of America, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.

As discussed in Note 1 to the consolidated financial statements, the
Company adopted FASB Statement No. 142, Goodwill and Other Intangible
Assets, during 2002.

PricewaterhouseCoopers LLP

February 7, 2003

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TBC CORPORATION




CONSOLIDATED BALANCE SHEETS
(In thousands)

ASSETS

|                                        |                                                                                                           |                                     |         |              |         |      |         |         |         | 
|--------------------------------------- | --------------------------------------------------------------------------------------------------------- | ----------------------------------- | ------- | ------------ | ------- | ---- | ------- | ------- | ------- | 
|                                        |                                                                                                           |                                     |         | December 31,
|                                        |                                                                                                           |                                     |         |             
|                                        |                                                                                                           |                                     |         | 2002         |         | 2001
|                                        |                                                                                                           |                                     |         |              |         |     
|CURRENT ASSETS:                         |                                                                                                           |                                     |         |              |         |      |         |        
|                                        | Cash and cash equivalents                                                                                 |                                     | $       | 2,319        |         |      | $       | 2,298   |        
|                                        | Accounts and notes receivable, less
allowance for doubtful accounts of
$8,701 in 2002 and $7,737 in 2001: |                                     |         |              |         |      |         |         |        
|                                        |                                                                                                           | Related parties                     |         |              | 16,507  |      |         |         | 17,173  | 
|                                        |                                                                                                           | Other                               |         |              | 103,201 |      |         |         | 95,848  | 
|                                        |                                                                                                           |                                     |         |              |         |      |         |        
|                                        |                                                                                                           | Total accounts and notes receivable |         |              | 119,708 |      |         |         | 113,021 | 
|                                        | Inventories                                                                                               |                                     |         | 170,867      |         |      |         | 172,431 |        
|                                        | Refundable federal and state income taxes                                                                 |                                     |         |             |         |      |         | 2,349   |        
|                                        | Deferred income taxes                                                                                     |                                     |         | 12,364       |         |      |         | 11,501  |        
|                                        | Other current assets                                                                                      |                                     |         | 12,515       |         |      |         | 16,999  |        
|                                        |                                                                                                           |                                     |         |              |         |      |         |        
|                                        |                                                                                                           | Total current assets                |         |              | 317,773 |      |         |         | 318,599 | 
|                                        |                                                                                                           |                                     |         |              |         |      |         |        
|PROPERTY, PLANT AND EQUIPMENT, AT COST: |                                                                                                           |                                     |         |              |         |      |         |        
|                                        | Land and improvements                                                                                     |                                     |         | 6,068        |         |      |         | 5,032   |        
|                                        | Buildings and leasehold improvements                                                                      |                                     |         | 28,795       |         |      |         | 22,948  |        
|                                        | Furniture and equipment                                                                                   |                                     |         | 64,052       |         |      |         | 52,591  |        
|                                        |                                                                                                           |                                     |         |              |         |      |         |        
|                                        |                                                                                                           |                                     | 98,915  |              |         |      | 80,571  |        
|                                        | Less accumulated depreciation                                                                             |                                     |         | 42,993       |         |      |         | 33,650  |        
|                                        |                                                                                                           |                                     |         |              |         |      |         |        
|                                        |                                                                                                           | Total property, plant and equipment |         |              | 55,922  |      |         |         | 46,921  | 
|                                        |                                                                                                           |                                     |         |              |         |      |         |        
|TRADEMARKS, NET                         |                                                                                                           |                                     | 15,824  |              |         |      | 15,824  |        
|                                        |                                                                                                           |                                     |         |              |         |      |         |        
|GOODWILL, NET                           |                                                                                                           |                                     | 58,381  |              |         |      | 51,291  |        
|                                        |                                                                                                           |                                     |         |              |         |      |         |        
|OTHER ASSETS                            |                                                                                                           |                                     | 25,971  |              |         |      | 30,325  |        
|                                        |                                                                                                           |                                     |         |              |         |      |         |        
|TOTAL ASSETS                            |                                                                                                           | $                                   | 473,871 |              |         | $    | 462,960 |        
|                                        |                                                                                                           |                                     |         |              |         |      |         |        

The accompanying notes are an integral part of the consolidated financial statements.

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TBC CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands)

LIABILITIES AND STOCKHOLDERS EQUITY

|                                                                   |                                                                                                 |                            |         |              |         |      |         |         |         | 
|------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------- | -------------------------- | ------- | ------------ | ------- | ---- | ------- | ------- | ------- | 
|                                                                   |                                                                                                 |                            |         | December 31,
|                                                                   |                                                                                                 |                            |         |             
|                                                                   |                                                                                                 |                            |         | 2002         |         | 2001
|                                                                   |                                                                                                 |                            |         |              |         |     
|CURRENT LIABILITIES:                                               |                                                                                                 |                            |         |              |         |      |         |        
|                                                                   | Outstanding checks, net                                                                         |                            | $       | 4,209        |         |      | $       | 5,916   |        
|                                                                   | Notes payable to banks                                                                          |                            |         | 35,000       |         |      |         | 34,200  |        
|                                                                   | Current portion of long-term debt
and capital lease obligations                                 |                            |         | 18,500       |         |      |         | 16,533  |        
|                                                                   | Accounts payable, trade                                                                         |                            |         | 45,200       |         |      |         | 53,227  |        
|                                                                   | Federal and state income taxes payable                                                          |                            |         | 767          |         |      |         |        |        
|                                                                   | Other current liabilities                                                                       |                            |         | 47,481       |         |      |         | 41,516  |        
|                                                                   |                                                                                                 |                            |         |              |         |      |         |        
|                                                                   |                                                                                                 | Total current liabilities  |         |              | 151,157 |      |         |         | 151,392 | 
|                                                                   |                                                                                                 |                            |         |              |         |      |         |        
|LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS, LESS CURRENT PORTION |                                                                                                 |                            | 79,700  |              |         |      | 101,000 |        
|                                                                   |                                                                                                 |                            |         |              |         |      |         |        
|NONCURRENT LIABILITIES                                             |                                                                                                 |                            | 14,243  |              |         |      | 11,721  |        
|                                                                   |                                                                                                 |                            |         |              |         |      |         |        
|DEFERRED INCOME TAXES                                              |                                                                                                 |                            | 5,651   |              |         |      | 4,528   |        
|                                                                   |                                                                                                 |                            |         |              |         |      |         |        
|STOCKHOLDERS EQUITY:                                              |                                                                                                 |                            |         |              |         |      |         |        
|                                                                   | Common stock, $.10 par value,
shares issued and outstanding -
21,292 in 2002 and 21,003 in 2001 |                            |         | 2,129        |         |      |         | 2,100   |        
|                                                                   | Additional paid-in capital                                                                      |                            |         | 16,687       |         |      |         | 11,783  |        
|                                                                   | Other comprehensive income (loss)                                                               |                            |         | (1,281       | )       |      |         | (713    | )      
|                                                                   | Retained earnings                                                                               |                            |         | 205,585      |         |      |         | 181,149 |        
|                                                                   |                                                                                                 |                            |         |              |         |      |         |        
|                                                                   |                                                                                                 | Total stockholders equity |         |              | 223,120 |      |         |         | 194,319 | 
|                                                                   |                                                                                                 |                            |         |              |         |      |         |        
|TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY                         |                                                                                                 | $                          | 473,871 |              |         | $    | 462,960 |        
|                                                                   |                                                                                                 |                            |         |              |         |      |         |        

The accompanying notes are an integral part of the consolidated financial statements.

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TBC CORPORATION




CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

|                           |                                                   |                |           |                          |         |      |           |         |         |   |         |         |         | 
|-------------------------- | ------------------------------------------------- | -------------- | --------- | ------------------------ | ------- | ---- | --------- | ------- | ------- | - | ------- | ------- | ------- | 
|                           |                                                   |                |           | Years ended December 31,
|                           |                                                   |                |           |                         
|                           |                                                   |                |           | 2002                     |         | 2001 |           | 2000   
|                           |                                                   |                |           |                          |         |      |           |        
|NET SALES*                 |                                                   | $              | 1,109,663 |                          |         | $    | 1,009,278 |         |         | $ | 902,740 |        
|COST OF SALES              |                                                   |                | 807,820   |                          |         |      | 744,301   |         |         |   | 704,493 |        
|                           |                                                   |                |           |                          |         |      |           |         |         |   |         |        
|GROSS PROFIT               |                                                   |                | 301,843   |                          |         |      | 264,977   |         |         |   | 198,247 |        
|                           |                                                   |                |           |                          |         |      |           |         |         |   |         |        
|EXPENSES:                  |                                                   |                |           |                          |         |      |           |         |         |   |         |        
|                           | Distribution expenses                             |                |           | 53,136                   |         |      |           | 50,694  |         |   |         | 49,144  |        
|                           | Selling, administrative and
retail store expenses |                |           | 198,775                  |         |      |           | 171,099 |         |   |         | 109,130 |        
|                           | Interest expense  net                            |                |           | 8,703                    |         |      |           | 11,188  |         |   |         | 11,391  |        
|                           | Other (income) expense  net                      |                |           | (2,411                   | )       |      |           | (2,968  | )       |   |         | (2,465  | )      
|                           |                                                   |                |           |                          |         |      |           |         |         |   |         |        
|                           |                                                   | Total expenses |           |                          | 258,203 |      |           |         | 230,013 |   |         |         | 167,200 | 
|                           |                                                   |                |           |                          |         |      |           |         |         |   |         |        
|INCOME BEFORE INCOME TAXES |                                                   |                | 43,640    |                          |         |      | 34,964    |         |         |   | 31,047  |        
|PROVISION FOR INCOME TAXES |                                                   |                | 16,258    |                          |         |      | 13,954    |         |         |   | 12,323  |        
|                           |                                                   |                |           |                          |         |      |           |         |         |   |         |        
|NET INCOME                 |                                                   | $              | 27,382    |                          |         | $    | 21,010    |         |         | $ | 18,724  |        
|                           |                                                   |                |           |                          |         |      |           |         |         |   |         |        
|EARNINGS PER SHARE -       |                                                   |                |           |                          |         |      |           |         |         |   |         |        
|                           | Basic                                             |                | $         | 1.29                     |         |      | $         | 1.00    |         |   | $       | .88     |        
|                           |                                                   |                |           |                          |         |      |           |         |         |   |         |        
|                           | Diluted                                           |                | $         | 1.25                     |         |      | $         | .98     |         |   | $       | .88     |        
|                           |                                                   |                |           |                          |         |      |           |         |         |   |         |        

|  |  |                                                                                                                                       
|- |  | --------------------------------------------------------------------------------------------------------------------------------------
|* |  | Including sales to related parties of $100,406, $92,813 and $86,961 in
the years ended December 31, 2002, 2001 and 2000, respectively.

The accompanying notes are an integral part of the consolidated financial statements.

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TBC CORPORATION




CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

(In thousands)

|                           |                                                                                              |  |                                              |      |            |   |         |     |         |   |          |       |          |   |        |      |   |   |         |        |   |   |         |        |  
|-------------------------- | -------------------------------------------------------------------------------------------- |  | -------------------------------------------- | ---- | ---------- | - | ------- | --- | ------- | - | -------- | ----- | -------- | - | ------ | ---- | - | - | ------- | ------ | - | - | ------- | ------ | -
|                           |                                                                                              |  | Years ended December 31, 2000, 2001 and 2002
|                           |                                                                                              |  |                                             
|                           |                                                                                              |  |                                              |      |            |   |         |     |         |   |          |       |          |   | Other  |      |   |   |         |        |   |   |        
|                           |                                                                                              |  | Common Stock                                 |      |            |   |         |     | Compre- |   |          |       |          |   |        |      |  
|                           |                                                                                              |  |                                              |      | Additional |   | hensive |     |         |   |          |       |          |   |       
|                           |                                                                                              |  | Number of                                    |      |            |   |         |     | Paid-In |   | Income   |       | Retained |   |        |      |  
|                           |                                                                                              |  | Shares                                       |      | Amount     |   | Capital |     | (Loss)  |   | Earnings |       | Total   
|                           |                                                                                              |  |                                              |      |            |   |         |     |         |   |          |       |         
|BALANCE, JANUARY 1, 2000   |                                                                                              |  | 21,182                                       |      |            | $ | 2,118   |     |         | $ | 9,639    |       |          |   |       |      |   | $ | 144,625 |        |   | $ | 156,382 |       
|                           | Net income for 2000                                                                          |  |                                              |      |            |   |         |     |         |   |          |       |          |   |        |      |   |   |         | 18,724 |   |   |         | 18,724 |  
|                           | Issuance of common stock
under stock option and
incentive plans, net                         |  |                                              | 47   |            |   |         | 5   |         |   |          | 255   |          |   |        |     |   |   |         |       |   |   |         | 260    |  
|                           | Repurchase and retirement
of common stock                                                    |  |                                              | (290 | )          |   |         | (29 | )       |   |          | (134  | )        |   |        |     |   |   |         | (1,151 | ) |   |         | (1,314 | )
|                           |                                                                                              |  |                                              |      |            |   |         |     |         |   |          |       |          |   |        |      |   |   |         |        |   |   |         |       
|BALANCE, DECEMBER 31, 2000 |                                                                                              |  | 20,939                                       |      |            |   | 2,094   |     |         |   | 9,760    |       |          |   |       |      |   |   | 162,198 |        |   |   | 174,052 |       
|                           | Net income for 2001                                                                          |  |                                              |      |            |   |         |     |         |   |          |       |          |   |        |      |   |   |         | 21,010 |   |   |         | 21,010 |  
|                           | Issuance of common stock
under stock option and
incentive plans, net                         |  |                                              | 269  |            |   |         | 27  |         |   |          | 1,825 |          |   |        |     |   |   |         |       |   |   |         | 1,852  |  
|                           | Repurchase and retirement
of common stock                                                    |  |                                              | (205 | )          |   |         | (21 | )       |   |          | (103  | )        |   |        |     |   |   |         | (2,059 | ) |   |         | (2,183 | )
|                           | Tax benefit from exercise of
stock options                                                   |  |                                              |     |            |   |         |    |         |   |          | 301   |          |   |        |     |   |   |         |       |   |   |         | 301    |  
|                           | Other comprehensive loss
associated with interest rate
swap agreements, net of tax           |  |                                              |     |            |   |         |    |         |   |          |      |          |   |        | (713 | ) |   |         |       |   |   |         | (713   | )
|                           |                                                                                              |  |                                              |      |            |   |         |     |         |   |          |       |          |   |        |      |   |   |         |        |   |   |         |       
|BALANCE, DECEMBER 31, 2001 |                                                                                              |  | 21,003                                       |      |            |   | 2,100   |     |         |   | 11,783   |       |          |   | (713   | )    |   |   | 181,149 |        |   |   | 194,319 |       
|                           | Net income for 2002                                                                          |  |                                              |      |            |   |         |     |         |   |          |       |          |   |        |      |   |   |         | 27,382 |   |   |         | 27,382 |  
|                           | Issuance of common stock
under stock option and
incentive plans, net                         |  |                                              | 519  |            |   |         | 52  |         |   |          | 4,084 |          |   |        |     |   |   |         |       |   |   |         | 4,136  |  
|                           | Repurchase and retirement
of common stock                                                    |  |                                              | (230 | )          |   |         | (23 | )       |   |          | (139  | )        |   |        |     |   |   |         | (2,946 | ) |   |         | (3,108 | )
|                           | Tax benefit from exercise of
stock options                                                   |  |                                              |     |            |   |         |    |         |   |          | 959   |          |   |        |     |   |   |         |       |   |   |         | 959    |  
|                           | Change in other comprehensive loss
associated with interest rate swap
agreements, net of tax |  |                                              |     |            |   |         |    |         |   |          |      |          |   |        | (177 | ) |   |         |       |   |   |         | (177   | )
|                           | Minimum pension liability
adjustment, net of tax                                             |  |                                              |     |            |   |         |    |         |   |          |      |          |   |        | (391 | ) |   |         |       |   |   |         | (391   | )
|                           |                                                                                              |  |                                              |      |            |   |         |     |         |   |          |       |          |   |        |      |   |   |         |        |   |   |         |       
|BALANCE, DECEMBER 31, 2002 |                                                                                              |  | 21,292                                       |      |            | $ | 2,129   |     |         | $ | 16,687   |       |          | $ | (1,281 | )    |   | $ | 205,585 |        |   | $ | 223,120 |       
|                           |                                                                                              |  |                                              |      |            |   |         |     |         |   |          |       |          |   |        |      |   |   |         |        |   |   |         |       

The accompanying notes are an integral part of the consolidated financial statements.

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TBC CORPORATION




CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)

|                                      |                                                                                   |                                                                                                 |                                                      |         |                          |        |      |         |        |         |     |         |         |         |  
|------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ---------------------------------------------------- | ------- | ------------------------ | ------ | ---- | ------- | ------ | ------- | --- | ------- | ------- | ------- | -
|                                      |                                                                                   |                                                                                                 |                                                      |         | Years ended December 31,
|                                      |                                                                                   |                                                                                                 |                                                      |         |                         
|                                      |                                                                                   |                                                                                                 |                                                      |         | 2002                     |        | 2001 |         | 2000  
|                                      |                                                                                   |                                                                                                 |                                                      |         |                          |        |      |         |       
|Operating Activities:                 |                                                                                   |                                                                                                 |                                                      |         |                          |        |      |         |        |         |     |        
|                                      | Net income                                                                        |                                                                                                 | $                                                    | 27,382  |                          |        | $    | 21,010  |        |         | $   | 18,724  |        
|                                      | Adjustments to reconcile net income to net
cash provided by operating activities: |                                                                                                 |                                                      |         |                          |        |      |         |        |         |     |         |        
|                                      |                                                                                   | Depreciation                                                                                    |                                                      |         | 12,665                   |        |      |         | 11,192 |         |     |         | 9,036   |        
|                                      |                                                                                   | Amortization of intangible assets                                                               |                                                      |         | 24                       |        |      |         | 2,801  |         |     |         | 1,982   |        
|                                      |                                                                                   | Amortization of other comprehensive income                                                      |                                                      |         | 83                       |        |      |         | 226    |         |     |         |        |        
|                                      |                                                                                   | Provision for doubtful accounts and notes                                                       |                                                      |         | 2,861                    |        |      |         | 2,607  |         |     |         | 1,468   |        
|                                      |                                                                                   | (Gain) on sale of fixed assets                                                                  |                                                      |         | (14                      | )      |      |         | (485   | )       |     |         | (109    | )      
|                                      |                                                                                   | Deferred income taxes                                                                           |                                                      |         | 169                      |        |      |         | (810   | )       |     |         | 687     |        
|                                      |                                                                                   | Equity in (earnings) loss from joint ventures                                                   |                                                      |         | 24                       |        |      |         | (364   | )       |     |         | (462    | )      
|                                      |                                                                                   | Changes in operating assets and liabilities, net
of effects of assets and liabilities acquired: |                                                      |         |                          |        |      |         |        |         |     |         |         |        
|                                      |                                                                                   |                                                                                                 | Receivables                                          |         |                          | (7,329 | )    |         |        | (614    | )   |         |         | (17,647 | )
|                                      |                                                                                   |                                                                                                 | Inventories                                          |         |                          | 3,338  |      |         |        | (4,098  | )   |         |         | (903    | )
|                                      |                                                                                   |                                                                                                 | Other current assets                                 |         |                          | (426   | )    |         |        | (7,762  | )   |         |         | 7,220   |  
|                                      |                                                                                   |                                                                                                 | Other assets                                         |         |                          | 2,320  |      |         |        | (946    | )   |         |         | (296    | )
|                                      |                                                                                   |                                                                                                 | Accounts payable, trade                              |         |                          | (8,027 | )    |         |        | (21,447 | )   |         |         | 11,149  |  
|                                      |                                                                                   |                                                                                                 | Federal and state income taxes
refundable or payable |         |                          | 4,488  |      |         |        | 1,051   |     |         |         | 352     |  
|                                      |                                                                                   |                                                                                                 | Other current liabilities                            |         |                          | 5,301  |      |         |        | (1,168  | )   |         |         | (1,972  | )
|                                      |                                                                                   |                                                                                                 | Noncurrent liabilities                               |         |                          | 2,564  |      |         |        | 1,260   |     |         |         | (405    | )
|                                      |                                                                                   |                                                                                                 |                                                      |         |                          |        |      |         |        |         |     |        
|                                      |                                                                                   | Net cash provided by operating activities                                                       |                                                      |         | 45,423                   |        |      |         | 2,453  |         |     |         | 28,824  |        
|                                      |                                                                                   |                                                                                                 |                                                      |         |                          |        |      |         |        |         |     |        
|Investing Activities:                 |                                                                                   |                                                                                                 |                                                      |         |                          |        |      |         |        |         |     |        
|                                      | Purchase of property, plant and equipment                                         |                                                                                                 |                                                      | (15,155 | )                        |        |      | (12,051 | )      |         |     | (11,320 | )      
|                                      | Acquisition of Tire Kingdom, Inc.,
net of cash acquired                           |                                                                                                 |                                                      |        |                          |        |      |        |        |         |     | (43,471 | )      
|                                      | Purchase of net assets of retail tire
stores, net of cash acquired                |                                                                                                 |                                                      | (11,154 | )                        |        |      | (3,644  | )      |         |     | (3,861  | )      
|                                      | Investments in joint ventures and other entities,
net of distributions received   |                                                                                                 |                                                      | 466     |                          |        |      | (4,932  | )      |         |     | 237     |        
|                                      | Net proceeds from asset dispositions                                              |                                                                                                 |                                                      | 1,022   |                          |        |      | 10,808  |        |         |     | 4,948   |        
|                                      | Other                                                                             |                                                                                                 |                                                      |        |                          |        |      | 114     |        |         |     |        |        
|                                      |                                                                                   |                                                                                                 |                                                      |         |                          |        |      |         |        |         |     |        
|                                      |                                                                                   | Net cash used in investing activities                                                           |                                                      |         | (24,821                  | )      |      |         | (9,705 | )       |     |         | (53,467 | )      
|                                      |                                                                                   |                                                                                                 |                                                      |         |                          |        |      |         |        |         |     |        
|Financing Activities:                 |                                                                                   |                                                                                                 |                                                      |         |                          |        |      |         |        |         |     |        
|                                      | Net bank borrowings under short-term
borrowing arrangements                       |                                                                                                 |                                                      | 800     |                          |        |      | 22,207  |        |         |     | 28,231  |        
|                                      | Increase (decrease) in outstanding checks, net                                    |                                                                                                 |                                                      | (1,707  | )                        |        |      | (4,121  | )      |         |     | 4,867   |        
|                                      | Proceeds from long-term debt                                                      |                                                                                                 |                                                      |        |                          |        |      | 4,000   |        |         |     |        |        
|                                      | Payments on long-term debt and capital
lease obligations                          |                                                                                                 |                                                      | (20,533 | )                        |        |      | (13,855 | )      |         |     | (6,733  | )      
|                                      | Issuance of common stock under stock option
and incentive plans                   |                                                                                                 |                                                      | 3,967   |                          |        |      | 1,821   |        |         |     |        |        
|                                      | Repurchase and retirement of common stock                                         |                                                                                                 |                                                      | (3,108  | )                        |        |      | (2,183  | )      |         |     | (1,314  | )      
|                                      |                                                                                   |                                                                                                 |                                                      |         |                          |        |      |         |        |         |     |        
|                                      |                                                                                   | Net cash provided by (used in)
financing activities                                             |                                                      |         | (20,581                  | )      |      |         | 7,869  |         |     |         | 25,051  |        
|                                      |                                                                                   |                                                                                                 |                                                      |         |                          |        |      |         |        |         |     |        
|Increase in cash and cash equivalents |                                                                                   |                                                                                                 | 21                                                   |         |                          |        | 617  |         |        |         | 408 |        
|Cash and cash equivalents:            |                                                                                   |                                                                                                 |                                                      |         |                          |        |      |         |        |         |     |        
|                                      | Balance  Beginning of year                                                       |                                                                                                 |                                                      | 2,298   |                          |        |      | 1,681   |        |         |     | 1,273   |        
|                                      |                                                                                   |                                                                                                 |                                                      |         |                          |        |      |         |        |         |     |        
|                                      | Balance  End of year                                                             |                                                                                                 | $                                                    | 2,319   |                          |        | $    | 2,298   |        |         | $   | 1,681   |        
|                                      |                                                                                   |                                                                                                 |                                                      |         |                          |        |      |         |        |         |     |        

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##### Table of Contents



TBC CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In thousands)

|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |       |         |                          |   |        |        |        |   |        |         |        |  | 
|----------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------- | -------------- | ----- | ------- | ------------------------ | - | ------ | ------ | ------ | - | ------ | ------- | ------ |  | 
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |       |         | Years ended December 31,
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |       |         |                         
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |       |         | 2002                     |   | 2001   |        | 2000  
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |       |         |                          |   |        |        |       
|Supplemental Disclosures of Cash Flow Information:                      |                                                                                                                                                                                                                                                                 |                                         |                |       |         |                          |   |        |        |        |   |       
|                                                                        | Cash paid for  Interest                                                                                                                                                                                                                                        |                                         | $              | 8,589 |         |                          | $ | 11,578 |        |        | $ | 11,417 |        
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |  Income Taxes |       |         | 11,601                   |   |        |        | 13,713 |   |        |         | 11,284 | 
|Supplemental Disclosure of Non-Cash Financing Activity:                 |                                                                                                                                                                                                                                                                 |                                         |                |       |         |                          |   |        |        |        |   |       
|                                                                        | Tax benefit from exercise of stock options                                                                                                                                                                                                                      |                                         | $              | 959   |         |                          | $ | 301    |        |        | $ |       |        
|                                                                        | Issuance of restricted stock under stock incentive
plan, net of shares received for tax withholding                                                                                                                                                             |                                         |                | 169   |         |                          |   | 31     |        |        |   | 260    |        
|                                                                        | Conversion of capital lease obligations                                                                                                                                                                                                                         |                                         |                |      |         |                          |   | 91     |        |        |   |       |        
|                                                                        | Refinancing of short-term borrowings to long-term debt                                                                                                                                                                                                          |                                         |                |      |         |                          |   |       |        |        |   | 80,000 |        
|Supplemental Disclosure of Non-Cash Investing
and Financing Activities: |                                                                                                                                                                                                                                                                 |                                         |                |       |         |                          |   |        |        |        |   |       
|                                                                        | In 2002, the Company purchased the net assets of
certain retail tire stores at a combined cash purchase
price of $11,154. The transaction was accounted for
under the purchase method, as follows:                                                              |                                         |                |       |         |                          |   |        |        |        |   |        |        
|                                                                        |                                                                                                                                                                                                                                                                 | Estimated fair value of assets acquired |                | $     | 4,166   |                          |   |        |        |        |   |        |         |       
|                                                                        |                                                                                                                                                                                                                                                                 | Goodwill                                |                |       | 7,090   |                          |   |        |        |        |   |        |         |       
|                                                                        |                                                                                                                                                                                                                                                                 | Cash paid, net of cash acquired         |                |       | (11,154 | )                        |   |        |        |        |   |        |         |       
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |       |         |                          |   |        |        |        |   |       
|                                                                        |                                                                                                                                                                                                                                                                 | Liabilities assumed                     |                | $     | 102     |                          |   |        |        |        |   |        |         |       
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |       |         |                          |   |        |        |        |   |       
|                                                                        | In 2001, the Company purchased the net assets of
certain retail tire stores at a combined cash purchase
price of $3,644. The transactions were accounted for
under the purchase method, as follows:                                                             |                                         |                |       |         |                          |   |        |        |        |   |        |        
|                                                                        |                                                                                                                                                                                                                                                                 | Estimated fair value of assets acquired |                |       |         |                          |   | $      | 708    |        |   |        |         |       
|                                                                        |                                                                                                                                                                                                                                                                 | Goodwill                                |                |       |         |                          |   |        | 2,936  |        |   |        |         |       
|                                                                        |                                                                                                                                                                                                                                                                 | Cash paid, net of cash acquired         |                |       |         |                          |   |        | (3,644 | )      |   |        |         |       
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |       |         |                          |   |        |        |        |   |       
|                                                                        |                                                                                                                                                                                                                                                                 | Liabilities assumed                     |                |       |         |                          |   | $      |       |        |   |        |         |       
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |       |         |                          |   |        |        |        |   |       
|                                                                        | Effective June 1, 2000, the Company completed the
acquisition of Tire Kingdom, Inc. for a total purchase
price of $45,000, less certain adjustments and plus
applicable closing costs. The acquisition was accounted
for under the purchase method, as follows: |                                         |                |       |         |                          |   |        |        |        |   |        |        
|                                                                        |                                                                                                                                                                                                                                                                 | Estimated fair value of assets acquired |                |       |         |                          |   |        |        |        |   | $      | 61,881  |       
|                                                                        |                                                                                                                                                                                                                                                                 | Goodwill                                |                |       |         |                          |   |        |        |        |   |        | 31,224  |       
|                                                                        |                                                                                                                                                                                                                                                                 | Cash paid, net of cash acquired         |                |       |         |                          |   |        |        |        |   |        | (43,471 | )     
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |       |         |                          |   |        |        |        |   |       
|                                                                        |                                                                                                                                                                                                                                                                 | Liabilities assumed                     |                |       |         |                          |   |        |        |        |   | $      | 49,634  |       
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |       |         |                          |   |        |        |        |   |       
|                                                                        | In 2000, the Company purchased the net assets of
certain retail tire stores at a combined cash purchase
price of $3,863. The transactions were accounted for
under the purchase method, as follows:                                                             |                                         |                |       |         |                          |   |        |        |        |   |        |        
|                                                                        |                                                                                                                                                                                                                                                                 | Estimated fair value of assets acquired |                |       |         |                          |   |        |        |        |   | $      | 1,928   |       
|                                                                        |                                                                                                                                                                                                                                                                 | Goodwill                                |                |       |         |                          |   |        |        |        |   |        | 2,980   |       
|                                                                        |                                                                                                                                                                                                                                                                 | Cash paid, net of cash acquired         |                |       |         |                          |   |        |        |        |   |        | (3,861  | )     
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |       |         |                          |   |        |        |        |   |       
|                                                                        |                                                                                                                                                                                                                                                                 | Liabilities assumed                     |                |       |         |                          |   |        |        |        |   | $      | 1,047   |       
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |       |         |                          |   |        |        |        |   |       

The accompanying notes are an integral part of the consolidated financial statements.

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TBC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Operations

The Company is principally engaged in the marketing and distribution of
tires in the automotive replacement market, through both wholesale and retail
channels. The Companys wholesale customers include retailers and other
wholesalers, primarily in the United States, Canada and Mexico. Through Tire
Kingdom, Inc., acquired in June 2000, the Company operates retail tire and
automotive service centers primarily in the southeastern United States. Through
its subsidiary Big O Tires, Inc., the Company also acts as a franchisor of
independent retail tire and automotive service stores located primarily in the
western and midwestern United States.

Significant Accounting Policies

Principles of consolidation- The accompanying financial statements
include the accounts of TBC Corporation and its wholly-owned subsidiaries. All
significant intercompany transactions and balances have been eliminated.

Accounting estimates- The financial statements are prepared in conformity
with accounting principles generally accepted in the United States of America.
The preparation of such financial statements 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.

Equity investments- The Company has invested in certain tire distributors
and independent tire dealers. The investments in these 50% or less-owned
entities are accounted for using the equity method and are included in other
assets on the balance sheets. The carrying value of such equity investments
totaled $13,982,000 and $14,803,000 at December 31, 2002 and 2001,
respectively.

Cash equivalents- Cash equivalents consist of short-term, highly liquid
investments which are readily convertible into cash.

Inventories- Inventories, consisting of tires and other automotive
products held for resale, are valued at the lower of cost or market. Certain
inventories are valued using the last in-first out method and the current costs
of those inventories exceeded the LIFO value by $1,389,000 and $2,950,000 at
December 31, 2002 and 2001, respectively.

Concentrations of credit risk- The Company performs ongoing credit
evaluations of its franchisees and wholesale customers and typically requires
some form of security, including collateral, guarantees or other documentation.
The Company maintains allowances for potential credit losses. The Company
maintains cash balances with financial institutions with high credit ratings.
The Company has not experienced any losses with respect to bank balances in
excess of government-provided insurance.

Property, plant and equipment- Depreciation is computed principally using
the straight-line method, over estimated lives of 3-15 years for furniture and
equipment and 20-40 years for buildings and leasehold improvements. Amounts
expended for maintenance and repairs are charged to operations, and
expenditures for major renewals and betterments are capitalized. When
property, plant and equipment is retired or otherwise disposed of, the related
gain or loss is included in the results of operations.

Acquisitions- The Company accounts for asset and business acquisitions
using the purchase method, under the provisions of Statement of Financial
Accounting Standards No. 141, Business Combinations. Assets acquired and
liabilities assumed are recorded at their fair value on the date of purchase.
Purchase cost in excess of the fair value of the net assets acquired is
allocated to identifiable intangibles, to the extent of their fair value. Any
remaining excess cost is allocated to goodwill.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Goodwill, Trademarks and Other Intangible Assets- Goodwill represents the
excess of cost over the fair value of identifiable net assets acquired.
Goodwill was recorded as a result of the Companys acquisition of Tire Kingdom
in June 2000, as well as the purchase of the net assets of retail tire stores
during 2002, 2001 and 2000. Effective January 1, 2002, the Company adopted
Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets (SFAS No. 142). 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 years ended December 31, 2001 and 2000 included
amortization of goodwill and trademarks of $2,755,000 and $1,913,000
respectively. If SFAS No. 142 had been in effect during 2001 and amortization
had not been recorded, net income would have been approximately $2,480,000
greater than the reported total of $21,010,000 and diluted earnings per share
would have been approximately $1.10 compared to the reported total of $0.98.
For 2000, net income would have been approximately $1,720,000 greater than the
reported total of $18,724,000 and diluted earnings per share would have been
approximately $0.96 compared to the reported total of $0.88, had SFAS No. 142
been in effect.

Long-lived assets- The Company periodically reviews the recoverability of
intangible and other long-lived assets. If facts or circumstances support the
possibility of impairment, the Company will prepare a projection of the
undiscounted future cash flows of the specific assets and determine if the
assigned value is recoverable or if an adjustment to the carrying value of the
assets is necessary. The Company does not believe that there were any facts or
circumstances which indicated an impairment of recorded assets as of December
31, 2002 or 2001.

Revenue recognition- Sales are recognized upon shipment of products.
Estimated costs of returns, allowances and customer rebates are accrued at the
time products are shipped.

Franchise fees- Each Big O franchisee is required to pay an initial
franchise fee as well as monthly royalty fees of 2% of gross sales. Initial
franchise fees are deferred and recognized when all material services or
conditions relating to the sale or transfer of the franchise have been
substantially completed. Included in net sales in 2002, 2001 and 2000 were
franchise and royalty fees of $12,412,000, $11,619,000 and $10,362,000,
respectively.

Warranty costs- The costs of anticipated adjustments for workmanship and
materials that are the responsibility of the Company are estimated and charged
against earnings currently. Reserves for future warranty claims and service of
$10,997,000 and $8,762,000 were included in liabilities in the balance sheets
at December 31, 2002 and 2001, respectively.

Interest on early payments to suppliers for product- Interest income
associated with early payments to suppliers for product is recorded as a
reduction to cost of sales in the statements of income. This interest income
represented 1.0% of net sales during 2002 and 1.2% in both 2001 and 2000.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings per share- Earnings per share have been calculated according to
Statement of Financial Accounting Standards No. 128, Earnings per share.
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 represent shares issuable upon assumed exercise of stock options.
Average common shares and equivalents outstanding were as follows (in
thousands):

|                                                           |  |      |        |      |  |      |        |  |  |  |        | 
|---------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                                                           |  | 2002 |        | 2001 |  | 2000
|                                                           |  |      |        |      |  |     
|Weighted average common shares outstanding                 |  |      | 21,191 |      |  |      | 20,984 |  |  |  | 21,191 | 
|Common share equivalents                                   |  |      | 775    |      |  |      | 402    |  |  |  |       | 
|                                                           |  |      |        |      |  |      |        |  |  |  |        | 
|Weighted average common shares and equivalents outstanding |  |      | 21,966 |      |  |      | 21,386 |  |  |  | 21,191 | 
|                                                           |  |      |        |      |  |      |        |  |  |  |        | 

Recent Accounting Pronouncements

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 was
effective for certain lease transactions occurring after May 15, 2002 and all
other provisions of the statement were 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.

In December 2002, Statement of Financial Accounting Standards No. 148,
Accounting for Stock-Based Compensation-Transition and Disclosure was issued.
SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation,
and provides alternative methods of transition for a voluntary change to the
fair value based method of accounting for stock-based compensation. SFAS No.
148 also amends the disclosure requirements of SFAS No. 123 to require more
prominent and frequent disclosures in financial statements about the effects of
stock-based compensation. The Company will adopt the disclosure provisions of
SFAS No. 148 beginning in 2003 and therefore does not expect the statement to
have any impact on its financial position or results of operations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

In November 2002, FASB Interpretation No. 45, Guarantors Accounting and
Disclosure Requirements for Guarantees, Including indirect Guarantees of
Indebtedness of Others, was issued. FIN 45 elaborates on the financial
statement disclosures to be made by a guarantor about its obligations under
certain guarantees. It also clarifies that a guarantor is required to
recognize, at inception of a guarantee, a liability for the fair value of the
obligation undertaken in issuing the guarantee. The initial recognition and
initial measurement provisions of this interpretation are applicable on a
prospective basis to guarantees issued or modified after December 31, 2002.
The disclosure requirements in the interpretation are effective for financial
statements of interim or annual periods ending after December 15, 2002 and the
Company has included such disclosures in Note 11 to the consolidated financial
statements. The Company does not expect adoption of the liability recognition
provisions to have a material impact on its financial position or results of
operations.

In January 2003, FASB Interpretation No. 46, Consolidation of Variable
Interest Entities, was issued. This interpretation provides guidance on how
to identify a variable interest entity (VIE) and determine when the assets,
liabilities, noncontrolling interests, and results of operations of a VIE need
to be included in a companys consolidated financial statements. A company
that holds variable interests in an entity must consolidate the entity if the
companys interest in the VIE is such that the company will absorb a majority
of the VIEs expected losses and/or receive a majority of the entitys expected
residual returns, if they occur. FIN 46 also requires additional disclosures
by primary beneficiaries and other significant variable interest holders. The
provisions of this interpretation apply immediately to VIEs created after
January 31, 2003. For VIEs created prior to February 1, 2003, the Company
must apply FIN 46 to financial statements for periods beginning July 1, 2003.
The Company has certain synthetic lease agreements that may be affected by the
provisions of FIN 46, but the Company does not expect this interpretation to
have a material impact on its financial position or results of operations.

2. TRANSACTIONS WITH RELATED PARTIES AND MAJOR CUSTOMERS

The Companys operations are managed through its Board of Directors,
members of which owned or are affiliated with companies which owned
approximately 8% of the Companys common stock at December 31, 2002. Sales to
a distributor represented on the Board, including affiliates of that
distributor, accounted for approximately 4% of the Companys net sales during
2002, 5% during 2001 and 6% in 2000. One major customer, unaffiliated with the
board of directors or the Company, accounted for approximately 5% of net sales
in 2002, 4% of net sales in 2001, and 7% in 2000. Sales to joint ventures and
entities in which the Company has an ownership interest accounted for
approximately 5% of the Companys net sales during 2002, 4% in 2001 and 3% in
2000. Accounts receivable resulting from transactions with related parties are
presented separately in the balance sheets.

3. ACQUISITION OF TIRE KINGDOM, INC. IN JUNE 2000

On June 5, 2000, the Company acquired Tire Kingdom, Inc. (Tire Kingdom),
which was a privately-owned company operating retail tire centers in the
southeastern United States. The acquisition, which was effective June 1, 2000
and accounted for as a purchase, was made with cash, for a total purchase
price of $45,000,000 less certain adjustments. The Companys consolidated
financial statements include the operating results of Tire Kingdom since June
1, 2000.

The following unaudited pro forma results for 2000 (adjusted for items
such as interest on required borrowings, estimated amortization of goodwill,
improved purchasing leverage with suppliers, and anticipated operating
synergies) were prepared as if the companies had been combined prior to 2000.
Such pro forma results, which exclude an after-tax charge of $767,000, or $0.04
per share, in 2000 related to certain management restructuring, do not purport
to present what actual results of operations would have been or to project
results for any future period. On a pro forma basis, net sales were
$998,402,000, net income was $19,316,000 and earnings per share were $.91 for
the year ended December 31, 2000.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

4. NOTES PAYABLE TO BANKS AND LONG-TERM DEBT

The Company has borrowing agreements with a group of 11 banks, which
include an $80 million, three-year revolving loan facility and a five-year term
loan facility. Interest under both of the facilities is at the eurodollar or
federal funds rate plus a variable rate between 1.75% and 3.0% dependent on the
Companys leverage ratio. The bank credit facilities are collateralized by
substantially all of the Companys assets and contain certain cross-default
provisions in conjunction with the long-term Senior Notes described below. The
credit facilities require the payment of certain commitment and administrative
fees and contain certain financial covenants dealing with, among other things,
the Companys net worth, total liabilities, funded indebtedness, leverage,
fixed charge coverage ratio, accounts receivable and inventories. The credit
facilities also include certain restrictions which affect the Companys ability
to incur additional debt, acquire other companies, make certain investments,
repurchase its own common stock, sell or place liens upon assets, provide
guarantees and pay dividends. The Company was in compliance with all of its
borrowing covenants as of December 31, 2002 and for the year then ended. A
total of $35,000,000 was borrowed under the bank revolving loan facility and
$63,000,000 was borrowed under the bank term loan facility at December 31,
2002. The weighted average interest rate on short-term borrowings at December
31, 2002 and 2001 was 4.03% and 4.60%, respectively.

In addition to bank loan facilities, the Company has borrowings under
Senior Notes, which are collateralized by substantially all of the Companys
assets and incorporate all of the financial covenants and restrictions
contained in the bank credit facilities noted above. Principal payments under
the Senior Notes are required to be made semi-annually and interest is payable
quarterly.

Long-term debt and capital lease obligations on the balance sheet are
summarized as follows (in thousands):

|                                                                     |                      |              |        |        |      |   |         |        | 
|-------------------------------------------------------------------- | -------------------- | ------------ | ------ | ------ | ---- | - | ------- | ------ | 
|                                                                     |                      | December 31,
|                                                                     |                      |              |       
|                                                                     |                      |              | 2002   |        | 2001
|                                                                     |                      |              |        |        |     
|8.30% Series A Senior Note, due through 2003                         |                      | $            | 6,500  |        |      | $ | 13,000  |       
|8.62% Series B Senior Note, due from 2004 through 2005               |                      |              | 11,000 |        |      |   | 11,000  |       
|8.81% Series C Senior Note, due from 2006 through 2008               |                      |              | 16,500 |        |      |   | 16,500  |       
|Variable-Rate Term Loan Payable to Banks, due from 2003 through 2006 |                      |              | 63,000 |        |      |   | 73,000  |       
|Note Payable to Supplier, due in 2005                                |                      |              |       |        |      |   | 4,000   |       
|Capital lease obligations                                            |                      |              | 1,200  |        |      |   | 33      |       
|                                                                     |                      |              |        |        |      |   |         |       
|                                                                     |                      |              | 98,200 |        |      |   | 117,533 |       
|                                                                     | Less current portion |              |        | 18,500 |      |   |         | 16,533 | 
|                                                                     |                      |              |        |        |      |   |         |       
|                                                                     |                      | $            | 79,700 |        |      | $ | 101,000 |       
|                                                                     |                      |              |        |        |      |   |         |       

Maturities of long-term debt and capital lease obligations are as follows:
$18,500,000 due in 2003, $21,700,000 in 2004, $17,500,000 in 2005, $29,500,000
in 2006 $5,500,000 in 2007 and $5,500,000 in 2008.

The current revolving loan facility is scheduled to expire in January
2004. The Company began discussions with lenders in early 2003 to restructure
its borrowing agreements, to provide financial resources to help meet the
Companys capital needs as it plans for continued future growth.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

5. INTEREST RATE SWAP AGREEMENTS

The Company has certain interest-rate swap agreements which are hedge
instruments accounted for under Statement of Financial Accounting Standards No.
133, adopted by the Company on January 1, 2001. SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, as amended, requires the
recognition of all derivative instruments on the balance sheet at fair value.
The Companys interest-rate swap agreements expire over periods of five years
or less and are cash-flow hedges since they are used to convert a portion of
the Companys variable-rate bank debt to fixed rates and thereby minimize
earnings fluctuations caused by interest rate volatility. Changes in the fair
value of interest-rate swaps are recorded in other comprehensive income, until
earnings are affected by the variability of actual cash flows. As of December
31, 2002, deferred losses on interest-rate swaps, net of deferred taxes,
totaled $890,000 and were included in other comprehensive income (loss) on the
balance sheet. At the end of 2002, interest expense of approximately
$1,043,000 was expected to be recorded within the next twelve months, in
conjunction with the realization of assumed interest rates. For the year ended
December 31, 2001, amounts included in the statement of income associated with
the adoption and provisions of SFAS No. 133 were not material.

6. OPERATING LEASES

The Companys commitments under operating leases relate substantially to
distribution facilities and retail store locations. In addition to rental
payments, the Company is obligated in some instances to pay real estate taxes,
insurance and certain maintenance costs.

The Company, through its Big O subsidiary, also has agreements with a bank
and a third party which provide financing for the development and leasing of
retail stores. Under the financing program, the third party entity leases the
properties to the Company at a variable rate for an initial period of up to
five years, renewable for a total period up to 15 years. At any time during
the lease term, the Company has the option to purchase individual sites subject
to certain limitations and at the end of the term may purchase all sites,
request a five-year extension or terminate the lease. The Company has
guaranteed that the residual value of the property at the end of the original
lease term will be no less than 85% of the remaining balance financed. The
Company accounts for such leases as operating leases and subleases the sites to
Big O franchisees subject to the terms and conditions of the agreements. As of
December 31, 2002, $8,758,000 had been financed under the program, representing
ten properties, nine of which had been sublet to Big O franchisees. Properties
can no longer be added to this program.

Rental expense of $35,623,000, $29,441,000 and $17,816,000 was charged to
operations in 2002, 2001 and 2000, respectively, after deducting sublease
income of $4,429,000 in 2002, $3,459,000 in 2001 and $3,079,000 in 2000.
Minimum noncancelable lease commitments, principally for real property, were as
follows at December 31, 2002 (in thousands):

|                     |  |        |         |  
|-------------------- |  | ------ | ------- | -
|Year                 |  | Amount
|                     |  |       
|2003                 |  | $      | 48,462  |  
|2004                 |  |        | 36,770  |  
|2005                 |  |        | 34,147  |  
|2006                 |  |        | 32,215  |  
|2007                 |  |        | 28,416  |  
|Thereafter           |  |        | 163,896 |  
|                     |  |        |         |  
|                     |  |        | 343,906 |  
|Less sublease income |  |        | (26,767 | )
|                     |  |        |         |  
|                     |  | $      | 317,139 |  
|                     |  |        |         |  

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

7. INCOME TAXES

The Company records income taxes using the liability method prescribed by
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes. Income taxes provided for the years ended December 31, 2002, 2001 and
2000 were as follows (in thousands):

|         |         |   |        |        |      |   |        |        |  |   |        |        | 
|-------- | ------- | - | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ------ | 
|         |         |   | 2002   |        | 2001 |   | 2000  
|         |         |   |        |        |      |   |       
|Current: |         |   |        |        |      |   |        |        |  |   |        |       
|         | Federal |   | $      | 15,440 |      |   | $      | 12,539 |  |   | $      | 10,075 | 
|         | State   |   |        | 649    |      |   |        | 2,225  |  |   |        | 1,561  | 
|         |         |   |        |        |      |   |        |        |  |   |        |       
|         |         |   | 16,089 |        |      |   | 14,764 |        |  |   | 11,636 |       
|Deferred |         |   | 169    |        |      |   | (810   | )      |  |   | 687    |       
|         |         |   |        |        |      |   |        |        |  |   |        |       
|         |         | $ | 16,258 |        |      | $ | 13,954 |        |  | $ | 12,323 |       
|         |         |   |        |        |      |   |        |        |  |   |        |       

The provision for deferred income taxes represents the change in the
Companys net deferred income tax asset or liability during the year, excluding
deferred taxes related to other comprehensive income or loss and including the
effect of any tax rate changes. Deferred income taxes arise from temporary
differences between the tax basis of the Companys assets and liabilities and
their reported amounts in the financial statements. Deferred income tax assets
of $8,003,000 were recorded in connection with the acquisition of Tire Kingdom
in June 2000.

The net deferred income tax asset in the financial statements at December
31, 2002 included $3,285,000 related to the allowance for doubtful accounts and
notes, $2,841,000 for insurance-related accruals, and $3,982,000 for
warranty-related reserves. At December 31, 2001, the net deferred income tax
asset included $2,997,000 related to the allowance for doubtful accounts and
notes, $2,409,000 for insurance-related accruals, and $3,247,000 for
warranty-related reserves. The net deferred income tax liability at December
31, 2002 included $6,261,000 related to trademarks and intangible assets and
$3,017,000 for depreciation differences, partially offset by a noncurrent
deferred tax asset of $2,460,000 associated with lease accruals and
sale/leaseback arrangements and $582,000 related to other comprehensive income
or loss. At December 31, 2001, the net deferred income tax liability included
$5,535,000 related to trademarks and intangible assets and $2,377,000 for
depreciation differences, partially offset by a noncurrent deferred tax asset
of $2,186,000 associated with lease accruals and sale/leaseback arrangements,
$521,000 for deferred revenues and $440,000 related to other comprehensive
income or loss.

The difference between the Companys effective income tax rate and the
statutory U. S. Federal income tax rate is reconciled as follows:

|                            |  |      |      |      |  |      |      |   |  |  |      |  
|--------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                            |  | 2002 |      | 2001 |  | 2000
|                            |  |      |      |      |  |     
|Statutory U.S. Federal rate |  |      | 35.0 | %    |  |      | 35.0 | % |  |  | 35.0 | %
|State income taxes          |  |      | 2.2  |      |  |      | 4.1  |   |  |  | 3.6  |  
|Other                       |  |      | .1   |      |  |      | .8   |   |  |  | 1.1  |  
|                            |  |      |      |      |  |      |      |   |  |  |      |  
|Effective tax rate          |  |      | 37.3 | %    |  |      | 39.9 | % |  |  | 39.7 | %
|                            |  |      |      |      |  |      |      |   |  |  |      |  

-29-



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

8. RETIREMENT PLANS

The Company maintains employee savings plans under Section 401(k) of the
Internal Revenue Code. Contributions by the Company to the 401(k) plans
include those based on a specified percentage of employee contributions, as
well as discretionary contributions. Expenses recorded for the Companys
contributions totaled $1,807,000 in 2002, $1,274,000 in 2001 and $1,394,000 in
2000.

The Company has a defined benefit pension plan which covered less than 100
of its employees at the end of 2002. The benefits are based on years of
service and the employees final compensation. The plan is funded by
contributions by the Company, not to exceed the maximum amount that can be
deducted for federal income tax purposes. The plan was amended as of December
31, 2001 to freeze accrued participant benefits by providing that years of
service and compensation after that date shall not be taken into account in the
calculation of plan benefits. Although no decision has been made to terminate
the plan, it may be terminated at some point in the future (in accordance with
the requirements of ERISA and the Pension Benefit Guaranty Corporation). The Company wrote off the
remaining balance of its prepaid pension asset during 2001 and recorded an
expense of $720,000. In 2002, the Company recorded a minimum pension liability
adjustment of $624,000 as required by Statement of Financial Accounting
Standards No. 87. The adjustment, which represented the excess of the
accumulated benefit obligation over the underlying plan assets, was reflected
in other comprehensive income or loss on the balance sheet, net of deferred income taxes of
$233,000.

The table which follows sets forth the defined benefit pension plans
changes in projected benefit obligations for service rendered to date, changes
in the fair value of plan assets, the funded status and amounts recognized in
the Companys balance sheets (in thousands):

|                                                                                |                                                                                |   |        |        |      |   |        |        |   |  | 
|------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | - | ------ | ------ | ---- | - | ------ | ------ | - |  | 
|                                                                                |                                                                                |   |        |        | 2002 |   | 2001  
|                                                                                |                                                                                |   |        |        |      |   |       
|                                                                                | Actuarial present value of projected benefit
obligations, at beginning of year |   | $      | (5,867 | )    |   | $      | (5,982 | )
|                                                                                | Service cost                                                                   |   |        |       |      |   |        | (250   | )
|                                                                                | Interest cost                                                                  |   |        | (383   | )    |   |        | (422   | )
|                                                                                | Actuarial gain (loss)                                                          |   |        | (61    | )    |   |        | (1,063 | )
|                                                                                | Settlement gain                                                                |   |        | 318    |      |   |        |       |  
|                                                                                | Benefits paid                                                                  |   |        | 86     |      |   |        | 1,060  |  
|                                                                                | Expenses paid                                                                  |   |        | 89     |      |   |        | 74     |  
|                                                                                | Writeoff of prepaid pension asset                                              |   |        |       |      |   |        | 720    |  
|                                                                                | Amendments and other                                                           |   |        | (76    | )    |   |        | (4     | )
|                                                                                |                                                                                |   |        |        |      |   |        |       
|Actuarial present value of projected benefit
obligations, at end of year        |                                                                                |   | (5,894 | )      |      |   | (5,867 | )     
|                                                                                |                                                                                |   |        |        |      |   |        |       
|Fair value of plan assets, at beginning of year                                 |                                                                                |   | 5,867  |        |      |   | 7,155  |       
|                                                                                | Return on plan assets                                                          |   |        | (107   | )    |   |        | (275   | )
|                                                                                | Benefits and expenses paid                                                     |   |        | (175   | )    |   |        | (1,134 | )
|                                                                                | Settlements and other                                                          |   |        | (401   | )    |   |        | 121    |  
|                                                                                |                                                                                |   |        |        |      |   |        |       
|Fair value of plan assets, at end of year                                       |                                                                                |   | 5,184  |        |      |   | 5,867  |       
|                                                                                |                                                                                |   |        |        |      |   |        |       
|Funded Status   plan assets under projected
benefit obligation, at end of year |                                                                                |   | (710   | )      |      |   |       |       
|                                                                                | Unrecognized net loss from experience
different from that assumed              |   |        | 548    |      |   |        |       |  
|                                                                                | Unrecognized prior service cost                                                |   |        | 76     |      |   |        |       |  
|                                                                                | Minimum pension liability adjustment                                           |   |        | (624   | )    |   |        |       |  
|                                                                                |                                                                                |   |        |        |      |   |        |       
|Accrued benefit liability, at end of year                                       |                                                                                | $ | (710   | )      |      | $ |       |       
|                                                                                |                                                                                |   |        |        |      |   |        |       

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

8. RETIREMENT PLANS (Continued)

The net expense for the defined benefit plan for 2002, 2001 and 2000 was
comprised of the following (in thousands):

|                                                  |  |      |      |      |  |      |      |   |  |   |      |  
|------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  | - | ---- | -
|                                                  |  | 2002 |      | 2001 |  | 2000
|                                                  |  |      |      |      |  |     
|Interest cost                                     |  | $    | 383  |      |  | $    | 422  |   |  | $ | 427  |  
|Service cost                                      |  |      |     |      |  |      | 250  |   |  |   | 291  |  
|Expected return on plan assets                    |  |      | (340 | )    |  |      | (647 | ) |  |   | (990 | )
|Net amortization, deferral and
settlement charges |  |      | 43   |      |  |      | 5    |   |  |   | 322  |  
|Writeoff of prepaid pension asset                 |  |      |     |      |  |      | 720  |   |  |   |     |  
|                                                  |  |      |      |      |  |      |      |   |  |   |      |  
|                                                  |  | $    | 86   |      |  | $    | 750  |   |  | $ | 50   |  
|                                                  |  |      |      |      |  |      |      |   |  |   |      |  

The discount rates used in determining the actuarial present values of
benefit obligations for the defined benefit plan were 6.50% in 2002 and 5.48%
in 2001. Estimated increases in future compensation levels were not applicable
due to the plan amendment freezing participant benefits. The expected
long-term rate of return on assets was 6% in 2002 and 10% in 2001. Actuarial
present values of accumulated benefit obligations were $5,894,000 at December
31, 2002 and $5,867,000 at December 31, 2001.

The Company also has unfunded supplemental retirement plans for certain of
its key executives, to provide benefits in excess of amounts permitted to be
paid by its other retirement plans under current tax law. The 2002 expense for
supplemental retirement benefits was $387,000 and the 2001 expense totaled
$215,000. The 2000 expense was $1,134,000 and included settlement charges of
$665,000. At December 31, 2002, the projected benefit obligation, computed
using a 6.5% discount rate and 5% expected increase in future compensation, was
$1,755,000. The accumulated benefit obligation, which was reflected as a
noncurrent liability at December 31, 2002, totaled $1,090,000.

9. STOCKHOLDERS EQUITY

The Company is authorized to issue 50,000,000 shares of $.10 par value
common stock. In addition, 2,500,000 shares of $.10 par value preferred stock
are authorized, none of which were outstanding at December 31, 2002 or 2001.

The Company has a Stockholder Rights Plan whereby outstanding shares of
the Companys common stock are accompanied by preferred stock purchase rights.
The rights become exercisable ten days after a public announcement that a
person or group has acquired 20% or more of the Companys common stock or any
earlier date designated by the Board of Directors. Under defined
circumstances, the rights allow TBC stockholders (other than the 20% acquiror)
to purchase common stock in the Company at a price which may be substantially
less than the market price. The rights expire on July 31, 2008 unless redeemed
at an earlier date.

In 2002, 2001 and 2000, shares of the Companys common stock were
repurchased and retired under authorizations made by the Board of Directors.
As of December 31, 2002, the Company had unused authorizations from the Board
for the repurchase of approximately 1,199,000 additional shares.

-31-



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

10. STOCK OPTION AND INCENTIVE PLANS

The Company has a 1989 stock incentive plan (1989 Plan) and a 2000 stock
option plan (2000 Plan). The plans provide for the grant of options to
purchase shares of the Companys common stock to officers and other key
employees upon terms and conditions determined by a committee of the Board of
Directors. Options typically are granted at the fair market value of the stock
on the date of grant, vest ratably over a three-year period and expire in ten
years.

The committee is authorized under the 1989 Plan to grant performance
awards and restricted stock awards to officers and other key employees.
Additionally, the 1989 Plan provides for the annual grant of restricted stock
with a market value of $5,000 ($10,000 in 2003 and thereafter) to each
non-employee director of the Company. Each of these shares of restricted stock
is accompanied by four options, which are only exercisable under certain
conditions and the exercise of which results in the forfeiture of the
associated share of restricted stock. The options expire in one-third
increments as the associated restricted stock vests. Such tandem options are
not included in the totals shown below for outstanding options. At December
31, 2002, 3,285,000 shares were reserved for issuance under the 1989 and 2000
Plans.

A summary of stock option activity during 2000, 2001 and 2002 is shown
below:

|                                 |                         |                   |  |           |          |              |   |          |       |   |       |       |  |   |          |       | 
|-------------------------------- | ----------------------- | ----------------- |  | --------- | -------- | ------------ | - | -------- | ----- | - | ----- | ----- |  | - | -------- | ----- | 
|                                 |                         |                   |  |           |          |              |   |          |       |   |       |       |  |   | Weighted
|                                 |                         |                   |  |           |          |              |   |          |       |   |       |       |  |   | Average 
|                                 |                         |                   |  | Option    |          | Option Price |   | Exercise
|                                 |                         |                   |  | Shares    |          | Range        |   | Price   
|                                 |                         |                   |  |           |          |              |   |         
|Outstanding at January 1, 2000   |                         |                   |  |           |          |              |   |          |       |   |       |       |  |   |         
|                                 | (631,590 exercisable)   |                   |  | 1,466,202 |          |              | $ | 5.72     | -     | $ | 12.13 |       |  | $ | 8.49     |      
|                                 |                         | Granted in 2000   |  |           | 620,867  |              |   |          | 4.63  | - |       | 6.00  |  |   |          | 5.64  | 
|                                 |                         | Exercised in 2000 |  |           |         |              |   |          |       |   |       |      |  |   |          |      | 
|                                 |                         | Forfeited in 2000 |  |           | (195,077 | )            |   |          | 5.75  | - |       | 9.88  |  |   |          | 7.37  | 
|                                 |                         |                   |  |           |          |              |   |          |       |   |       |      
|Outstanding at December 31, 2000 |                         |                   |  |           |          |              |   |          |       |   |       |       |  |   |         
|                                 | (902,139 exercisable)   |                   |  | 1,891,992 |          |              | $ | 4.63     | -     | $ | 12.13 |       |  | $ | 7.67     |      
|                                 |                         | Granted in 2001   |  |           | 640,500  |              |   |          | 5.63  | - |       | 8.70  |  |   |          | 6.78  | 
|                                 |                         | Exercised in 2001 |  |           | (268,302 | )            |   |          | 5.72  | - |       | 9.75  |  |   |          | 6.91  | 
|                                 |                         | Forfeited in 2001 |  |           | (46,049  | )            |   |          | 4.63  | - |       | 9.75  |  |   |          | 6.40  | 
|                                 |                         |                   |  |           |          |              |   |          |       |   |       |      
|Outstanding at December 31, 2001 |                         |                   |  |           |          |              |   |          |       |   |       |       |  |   |         
|                                 | (1,113,628 exercisable) |                   |  | 2,218,141 |          |              | $ | 4.63     | -     | $ | 12.13 |       |  | $ | 7.53     |      
|                                 |                         | Granted in 2002   |  |           | 539,490  |              |   |          | 11.59 | - |       | 13.05 |  |   |          | 13.03 | 
|                                 |                         | Exercised in 2002 |  |           | (501,673 | )            |   |          | 4.69  | - |       | 12.13 |  |   |          | 7.86  | 
|                                 |                         | Forfeited in 2002 |  |           | (34,723  | )            |   |          | 4.69  | - |       | 13.05 |  |   |          | 9.62  | 
|                                 |                         |                   |  |           |          |              |   |          |       |   |       |      
|Outstanding at December 31, 2002 |                         |                   |  |           |          |              |   |          |       |   |       |       |  |   |         
|                                 | (1,116,947 exercisable) |                   |  | 2,221,235 |          |              | $ | 4.63     | -     | $ | 13.05 |       |  | $ | 8.76     |      
|                                 |                         |                   |  |           |          |              |   |          |       |   |       |      

Additional information regarding stock options outstanding at December 31,
2002 is shown below:

|                   |  |                     |           |                     |  |           |       |          |  |          |  |  |         |          |           |   |       |  |  | 
|------------------ |  | ------------------- | --------- | ------------------- |  | --------- | ----- | -------- |  | -------- |  |  | ------- | -------- | --------- | - | ----- |  |  | 
|                   |  | Outstanding Options |           | Exercisable Options
|                   |  |                     |           |                    
|                   |  |                     |           |                     |  | Weighted  |       | Weighted |  |          |  |  |         | Weighted
|                   |  |                     |           |                     |  | Average   |       | Average  |  |          |  |  |         | Average 
|                   |  | Option              |           | Exercise            |  | Remaining |       | Option   |  | Exercise
|Option Price Range |  | Shares              |           | Price               |  | Term      |       | Shares   |  | Price   
|                   |  |                     |           |                     |  |           |       |          |  |         
|$  4.63
- $  7.00  |  |                     | 863,581   |                     |  | $         | 5.89  |          |  | 7.6 yrs  |  |  | 408,099 |          |           | $ | 5.81  | 
|$  7.01 - $10.00   |  |                     | 673,727   |                     |  |           | 8.59  |          |  | 5.8 yrs  |  |  | 546,320 |          |           |   | 8.61  | 
|$10.01 - $13.05    |  |                     | 683,927   |                     |  |           | 12.55 |          |  | 7.7 yrs  |  |  | 162,528 |          |           |   | 11.03 | 
|                   |  |                     |           |                     |  |           |       |          |  |          |  |  |         |          |           |   |       |  |  | 
|                   |  |                     | 2,221,235 |                     |  |           |       |          |  |          |  |  |         |          | 1,116,947 |   |       |  |  | 
|                   |  |                     |           |                     |  |           |       |          |  |          |  |  |         |          |           |   |       |  |  | 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

10. STOCK OPTION AND INCENTIVE PLANS (Continued)

As of December 31, 2002, 496,157 of the outstanding options contained a
reload feature. Options granted by the committee with a reload feature
provide for the grant of a new option, called a reload option, for a number
of shares equal to the number of shares delivered by the optionee to pay the
exercise price of the original option and to pay any tax withholding payments
associated with the exercise of the original option.

The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation. Accordingly, no compensation expense has been recognized for
the stock options granted in 2002, 2001 or 2000. Using fair value assumptions
specified in SFAS No. 123, the weighted average per share value of options
granted during 2002, 2001 and 2000 was $5.16, $2.81 and $2.42, respectively.
Had compensation cost for such option grants been determined using such
assumptions, the Companys net income on a pro forma basis would have been
$26,192,000 in 2002, $20,169,000 in 2001 and $17,896,000 in 2000, compared to
reported net income of $27,382,000 in 2002, $21,010,000 in 2001 and
$18,724,000 in 2000. Pro forma earnings per share would have been $1.19, $0.94
and $0.84 in 2002, 2001 and 2000, respectively, rather than the reported totals
of $1.25 in 2002, $0.98 in 2001, and $0.88 in 2000.

The fair value of each option granted in 2002, 2001 and 2000 was estimated
on the date of grant using the Black-Scholes option-pricing model using the
following weighted-average assumptions: dividend yield of 0%; risk-free
interest rates equal to zero-coupon governmental issues; and expected lives of
5.0 years in 2002 and 4.9 years in 2001 and 2000. The expected volatility
percentages used for options granted were 36.3% in 2002, 37.7% for 2001 and
38.2% for 2000.

11. FINANCIAL GUARANTEES AND CREDIT RISKS

The Companys Big O Tires, Inc. subsidiary has provided certain financial
guarantees associated with real estate leases and financing of its franchisees.
Although the guarantees were issued in the normal course of business to meet
the financing needs of its franchisees, they represent credit risk in excess of
the amounts reported on the balance sheet as of December 31, 2002. The
contractual amounts of the guarantees, which represent the Companys maximum
exposure to credit loss in the event of non-performance by the franchisees,
totaled $14,587,000 as of December 31, 2002, including $4,514,000 related to
franchisee financing and $10,073,000 related to store and real estate leases.

Most of the guarantees related to franchisee financing and leases extend
for more than five years and expire in decreasing amounts through 2009. The
credit risk associated with these guarantees is essentially the same as that
involved in extending loans to the franchisees. Big O evaluates each
franchisees creditworthiness and requires that sufficient collateral
(primarily inventories and equipment) and security interests be obtained by the
third party lenders or lessors, before the guarantees are issued. There are no
cash requirements associated with the guarantees, except in the event that an
actual financial loss is subsequently incurred due to non-performance by the
franchisees.

12. SEGMENT INFORMATION

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, which was acquired by the Company in
June 2000. Both of these retail systems have similar marketing concepts,
distribution methods and customers and are evaluated using similar operating
measurements. 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

12. SEGMENT INFORMATION (Continued)

Accounting policies of both the retail and wholesale segments are the same
as those described in the summary of significant accounting policies. The
Company evaluates the performance of its two segments based on earnings before
interest, taxes, depreciation, amortization and any special items (Operational
EBITDA). Special items considered in the determination of Operational EBITDA
included the $720,000 writeoff of a prepaid pension plan asset in 2001 and a
$1,233,000 charge during 2000 for management restructuring. Net sales by the
wholesale segment to the retail segment are eliminated in consolidation and
totaled $164,899,000, $159,020,000 and $121,627,000 in 2002, 2001 and 2000
respectively. Such intersegment sales had no effect on the Operational EBITDA
of the individual reporting segments.

Segment information for the three years ended December 31, 2002, 2001 and
2000 is as follows (in thousands):

|                             |                     |                                 |   |         |         |           |   |         |         |  |   |         |           | 
|---------------------------- | ------------------- | ------------------------------- | - | ------- | ------- | --------- | - | ------- | ------- |  | - | ------- | --------- | 
|                             |                     |                                 |   | Retail  |         | Wholesale |   | Total  
|                             |                     |                                 |   |         |         |           |   |        
|Year ended December 31, 2002 |                     |                                 |   |         |         |           |   |         |         |  |   |        
|                             | Total assets        |                                 | $ | 238,678 |         |           | $ | 235,193 |         |  | $ | 473,871 |          
|                             | Operating results - |                                 |   |         |         |           |   |         |         |  |   |         |          
|                             |                     | Net sales to external customers |   |         | 511,925 |           |   |         | 597,738 |  |   |         | 1,109,663 | 
|                             |                     | Operational EBITDA              |   |         | 33,592  |           |   |         | 31,440  |  |   |         | 65,032    | 
|Year ended December 31, 2001 |                     |                                 |   |         |         |           |   |         |         |  |   |        
|                             | Total assets        |                                 | $ | 221,104 |         |           | $ | 241,856 |         |  | $ | 462,960 |          
|                             | Operating results - |                                 |   |         |         |           |   |         |         |  |   |         |          
|                             |                     | Net sales to external customers |   |         | 445,746 |           |   |         | 563,532 |  |   |         | 1,009,278 | 
|                             |                     | Operational EBITDA              |   |         | 32,810  |           |   |         | 28,055  |  |   |         | 60,865    | 
|Year ended December 31, 2000 |                     |                                 |   |         |         |           |   |         |         |  |   |        
|                             | Total assets        |                                 | $ | 207,400 |         |           | $ | 244,167 |         |  | $ | 451,567 |          
|                             | Operating results - |                                 |   |         |         |           |   |         |         |  |   |         |          
|                             |                     | Net sales to external customers |   |         | 317,844 |           |   |         | 584,896 |  |   |         | 902,740   | 
|                             |                     | Operational EBITDA              |   |         | 24,602  |           |   |         | 30,087  |  |   |         | 54,689    | 

13. LEGAL PROCEEDINGS

The Company is involved in various legal proceedings which are routine to
the conduct of its business. The Company does not believe that any such
routine litigation will have a material adverse effect on its consolidated
financial position, results of operations or cash flows.

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SUPPLEMENTARY DATA:

QUARTERLY FINANCIAL INFORMATION

Unaudited quarterly results for 2002 and 2001 are summarized as follows:

|                     |      |         |         |                                          |     |         |         |         |     |         |         |   |     |   |         |   |     | 
|-------------------- | ---- | ------- | ------- | ---------------------------------------- | --- | ------- | ------- | ------- | --- | ------- | ------- | - | --- | - | ------- | - | --- | 
|                     |      |         |         | (In thousands, except per share amounts)
|                     |      |         |         | First                                    |     | Second  |         | Third   |     | Fourth 
|                     |      |         |         | Quarter                                  |     | Quarter |         | Quarter |     | Quarter
|                     |      |         |         |                                          |     |         |         |         |     |        
|                     |      | 2002    |         |                                          |     |         |         |         |     |         |         |   |     |   |         |   |     | 
|Net sales            |      | $       | 249,704 |                                          |     | $       | 286,718 |         |     | $       | 295,455 |   |     | $ | 277,786 |  
|Gross profit         |      |         | 66,222  |                                          |     |         | 75,930  |         |     |         | 79,349  |   |     |   | 80,342  |  
|Net income           |      |         | 4,807   |                                          |     |         | 6,815   |         |     |         | 7,646   |   |     |   | 8,114   |  
|Earnings per share - |      |         |         |                                          |     |         |         |         |     |         |         |   |     |   |         |  
|                     |      | Basic   |         |                                          | .23 |         |         |         | .32 |         |         |   | .36 |   |         |   | .38 | 
|                     |      | Diluted |         | $                                        | .22 |         |         | $       | .31 |         |         | $ | .35 |   |         | $ | .37 | 
|                     | 2001 |         |         |                                          |     |         |         |         |     |         |         |   |     |   |         |   |    
|Net sales            |      | $       | 227,193 |                                          |     | $       | 255,486 |         |     | $       | 278,875 |   |     | $ | 247,724 |  
|Gross profit         |      |         | 61,728  |                                          |     |         | 66,924  |         |     |         | 70,163  |   |     |   | 66,162  |  
|Net income           |      |         | 3,830   |                                          |     |         | 5,525   |         |     |         | 5,995   |   |     |   | 5,660   |  
|Earnings per share - |      |         |         |                                          |     |         |         |         |     |         |         |   |     |   |         |  
|                     |      | Basic   |         |                                          | .18 |         |         |         | .26 |         |         |   | .29 |   |         |   | .27 | 
|                     |      | Diluted |         | $                                        | .18 |         |         | $       | .26 |         |         | $ | .28 |   |         | $ | .26 | 

|        |  |                                                                                     
|------- |  | ------------------------------------------------------------------------------------
|Item 9. |  | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.




PART III

|         |  |                                                   
|-------- |  | --------------------------------------------------
|Item 10. |  | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Except for information concerning executive officers of the Company
which is set forth in Part I of this Report, the information required by this
Item 10 is set forth in the Companys Proxy Statement for its Annual Meeting
of Stockholders to be held April 30, 2003, under the captions Election of
Directors and Section 16(a) Beneficial Ownership Reporting Compliance, and
is incorporated herein by this reference.

|         |  |                       
|-------- |  | ----------------------
|Item 11. |  | EXECUTIVE COMPENSATION

The information required by this Item 11 is set forth in the Companys
Proxy Statement for its Annual Meeting of Stockholders to be held April 30,
2003, under the captions Election of Directors and Executive
Compensation, and, with the exception of the information disclosed in the
Proxy Statement pursuant to Item 402(k) or 402(l) of Regulation S-K, is
incorporated herein by this reference.

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|         |  |                                                                                               
|-------- |  | ----------------------------------------------------------------------------------------------
|Item 12. |  | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

Equity Compensation Plan Information

The following table shows certain information as of December 31, 2002 with
respect to compensation plans under which shares of common stock of the Company
are authorized for issuance:

|                                                       |  |                     |           |                     |  |                      |      |                       |  |                      |           | 
|------------------------------------------------------ |  | ------------------- | --------- | ------------------- |  | -------------------- | ---- | --------------------- |  | -------------------- | --------- | 
|                                                       |  |                     |           |                     |  |                      |      |                       |  | Number of           
|                                                       |  |                     |           |                     |  |                      |      |                       |  | shares remaining    
|                                                       |  |                     |           |                     |  |                      |      |                       |  | available for future
|                                                       |  | Number of           |           |                     |  |                      |      | issuance under equity
|                                                       |  | shares to be issued |           | Weighted average    |  | compensation plans  
|                                                       |  | upon exercise of    |           | exercise price of   |  | (excluding shares in
|                                                       |  | outstanding options |           | outstanding options |  | column (a) )        
|Plan category                                          |  | ( a )               |           | ( b )               |  | (c)                 
|                                                       |  |                     |           |                     |  |                     
|Equity compensation
plans approved by
stockholders     |  |                     | 2,221,235 |                     |  | $                    | 8.76 |                       |  |                      | 1,063,304 | 
|                                                       |  |                     |           |                     |  |                      |      |                       |  |                      |           | 
|Equity compensation
plans not approved
by stockholders |  | None                |           | None                |  | None                

|      |  |                                                                                                                                                                                                                                                                                                                 
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note: |  | The above number of shares to be issued upon exercise of outstanding options does not include 79,504 outstanding tandem options
issued to directors in conjunction with 19,876 outstanding shares of restricted stock. One share of restricted stock would be
forfeited for every four tandem options exercised.

The remaining information required by this Item 12 is set forth in the
Companys Proxy Statement for its Annual Meeting of Stockholders to be held
April 30, 2003, under the caption Security Ownership of Management and
Principal Stockholders, and is incorporated herein by this reference.

|         |  |                                               
|-------- |  | ----------------------------------------------
|Item 13. |  | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item 13 is set forth in the Companys
Proxy Statement for its Annual Meeting of Stockholders to be held April 30,
2003, under the captions Election of Directors and Executive Compensation,
and is incorporated herein by this reference.

|         |  |                        
|-------- |  | -----------------------
|Item 14. |  | CONTROLS AND PROCEDURES

Within 90 days prior to the filing date of this annual 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.

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PART IV

|         |  |                                                                 
|-------- |  | ----------------------------------------------------------------
|Item 15. |  | EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
|         |  |                                                                 
|         |  | (a) (1) FINANCIAL STATEMENTS                                    



| |  | The following items, including consolidated financial statements of
the Company, are set forth at Item 8 of this Report:
| |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | Report of Independent Certified Public Accountants                                            
| |  |  | ----------------------------------------------------------------------------------------------
|
| |  |  | Consolidated Balance Sheets  December 31, 2002, and 2001                                     
|
| |  |  | Consolidated Statements of Income  Years ended December 31,
2002, 2001 and 2000              
|
| |  |  | Consolidated Statements of Stockholders Equity  Years ended
December 31, 2002, 2001 and 2000
|
| |  |  | Consolidated Statements of Cash Flows  Years ended December 31,
2002, 2001 and 2000          
|
| |  |  | Notes to Consolidated Financial Statements                                                    



| |  | (a) (2) FINANCIAL STATEMENT SCHEDULES
| |  | -------------------------------------



| |  |  | Report of Independent Certified Public Accountants (at p. 41 of
this Report)                                                                                                                
| |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Schedule II   Valuation and qualifying accounts (at p. 42 of this Report)                                                                                                                  
|
| |  |  | All other schedules are omitted because they are not applicable,
or not required, or because the required information is included
in the consolidated financial statements or notes thereto.



| |  | (a) (3) EXHIBITS
| |  | ----------------



| |  |  | See INDEX to EXHIBITS included at p. 43 of this Report
| |  |  | ------------------------------------------------------



| |  | (b) REPORTS ON FORM 8-K
| |  | -----------------------



| |  |  | The Company did not file any Reports on Form 8-K during the
quarter ended December 31, 2002.
| |  |  | --------------------------------------------------------------------------------------------




SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, TBC Corporation has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.

|               |  |                 |  |                                      
|-------------- |  | --------------- |  | -------------------------------------
|               |  | TBC CORPORATION
|               |  |                 |  |                                      
|March 11, 2003 |  | By:             |  | /s/ LAWRENCE C. DAY                  
|               |  |                 |  |                                      
|               |  |                 |  | Lawrence C. Day                      
|               |  |                 |  | President and Chief Executive Officer

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Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of TBC
Corporation and in the capacities and on the dates indicated:

|                                                     |  |                                                      |  |                
|---------------------------------------------------- |  | ---------------------------------------------------- |  | ---------------
|Name                                                 |  | Title                                                |  | Date           
|                                                     |  |                                                      |  |                
|/s/ LAWRENCE C. DAYLawrence C. Day                   |  | President, Chief Executive Officer
and Director      |  | March 11, 2003 
|                                                    
|/s/ THOMAS W. GARVEYThomas W. Garvey                 |  | Executive Vice President and
Chief Financial Officer |  | March 11, 2003 
|                                                    
|* MARVIN E. BRUCEMarvin E. Bruce                     |  | Chairman of the Board of Directors                   |  | March 11, 2003 
|                                                    
|* GEORGE W. BRYANGeorge W. Bryan                     |  | Director                                             |  | March 11, 2003 
|                                                    
|* ROBERT H. DUNLAPRobert H. Dunlap                   |  | Director                                             |  | March 11, 2003 
|                                                    
|* CHARLES A. LEDSINGER, JR.Charles A. Ledsinger, Jr. |  | Director                                             |  | March 11, 2003 
|                                                    
|* WILLIAM J. McCARTHYWilliam J. McCarthy             |  | Director                                             |  | March 11, 2003 
|                                                    
|* RICHARD A. McSTAYRichard A. McStay                 |  | Director                                             |  | March 11 , 2003
|                                                    
|* DONALD RATAJCZAKDonald Ratajczak                   |  | Director                                             |  | March 11, 2003 
|                                                    
|* ROBERT R. SCHOEBERLRobert R. Schoeberl             |  | Director                                             |  | March 11, 2003 
|                                                    
|* RAYMOND E. SCHULTZRaymond E. Schultz               |  | Director                                             |  | March 11, 2003 

*     The undersigned by signing his name hereto does sign and execute this
Report on Form 10-K on behalf of each of the above-named directors of TBC
Corporation pursuant to a power of attorney executed by each such director and
filed with the Securities and Exchange Commission as an exhibit to this Report.

| |  |                    
| |  | -------------------
| |  | /s/ LAWRENCE C. DAY
| |  |                    
| |  | Lawrence C. Day    
| |  | Attorney-in-Fact   

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##### Table of Contents






CERTIFICATIONS

I, Lawrence C. Day, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of TBC Corporation (the
registrant);                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual 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 annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual
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
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 annual
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 annual report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this annual 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 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
annual report whether 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.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|               |  |                                      
|-------------- |  | -------------------------------------
|March 11, 2003 |  | /s/ LAWRENCE C. DAY                  
|               |  |                                      
|               |  | Lawrence C. Day                      
|               |  | President and Chief Executive Officer

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I, Thomas W. Garvey, certify that:



|1. |  | I have reviewed this annual report on Form 10-K of TBC Corporation (the
registrant);                                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual 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 annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual
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
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 annual
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 annual report (the Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this annual 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 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
annual report whether 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.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|               |  |                                                     
|-------------- |  | ----------------------------------------------------
|March 11, 2003 |  | /s/ THOMAS W. GARVEY                                
|               |  |                                                     
|               |  | Thomas W. Garvey                                    
|               |  | Executive Vice President and Chief Financial Officer

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PRICEWATERHOUSECOOPERS

| |  |                           
| |  | --------------------------
| |  | PricewaterhouseCoopers LLP
| |  | 1000 Morgan Keegan Tower  
| |  | Fifty North Front Street  
| |  | Memphis, TN 38103         
| |  | Telephone (901) 522 2000  
| |  | Facsimile (901) 523 2045  




Report of Independent Accountants on
Financial Statement Schedule

To the Board of Directors and
     Stockholders of TBC Corporation

Our audits of the consolidated financial statements referred to in our report
dated February 7, 2003 appearing on page 16 of this Form 10-K also included an
audit of the financial statement schedule listed in Item 15(a) (2) of this Form
10-K. In our opinion, the financial statement schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements.

PricewaterhouseCoopers LLP

February 7, 2003

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TBC CORPORATION




SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS

FOR THE YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

(In thousands)

|                                |  |            |       |          |  |           |       |            |  |              |       |         |  |   |       |     |  |   |        | 
|------------------------------- |  | ---------- | ----- | -------- |  | --------- | ----- | ---------- |  | ------------ | ----- | ------- |  | - | ----- | --- |  | - | ------ | 
|                                |  |            |       |          |  | Additions |       |            |  |              |       |         |  |  
|                                |  |            |       |          |  |           |       |            |  |              |       |         |  |  
|                                |  |            |       |          |  | Charged   |       | Charged    |  |              |       |         |  |   |       |    
|                                |  |            |       |          |  | to Costs  |       | to         |  |              |       |         |  |   |       |    
|                                |  | Balance    |       | and      |  | Other     |       |            |  |              |       | Balance
|                                |  | January 1, |       | Expenses |  | Accounts  |       | Deductions |  | December 31,
|                                |  |            |       |          |  |           |       |            |  |             
|2002                            |  |            |       |          |  |           |       |            |  |              |       |         |  |   |       |     |  |   |        | 
|Warranty reserve                |  | $          | 8,762 |          |  | $         | 7,854 |            |  | $            |      |         |  | $ | 5,619 | (2) |  | $ | 10,997 | 
|Allowance for
doubtful accounts |  |            | 7,737 |          |  |           | 2,861 |            |  |              |      |         |  |   | 1,897 | (3) |  |   | 8,701  | 
|2001                            |  |            |       |          |  |           |       |            |  |              |       |         |  |   |       |     |  |   |        | 
|Warranty reserve                |  |            | 9,265 |          |  |           | 3,834 |            |  |              |      |         |  |   | 4,337 | (2) |  |   | 8,762  | 
|Allowance for
doubtful accounts |  |            | 7,831 |          |  |           | 2,607 |            |  |              |      |         |  |   | 2,701 | (3) |  |   | 7,737  | 
|2000                            |  |            |       |          |  |           |       |            |  |              |       |         |  |   |       |     |  |   |        | 
|Warranty reserve                |  |            | 7,486 |          |  |           | 3,850 |            |  |              | 2,125 | (1)     |  |   | 4,196 | (2) |  |   | 9,265  | 
|Allowance for
doubtful accounts |  |            | 7,751 |          |  |           | 1,468 |            |  |              | 785   | (1)     |  |   | 2,173 | (3) |  |   | 7,831  | 



---

|(1) |  | Includes amounts for Tire Kingdom, Inc. as of the June 1, 2000 effective
date of the acquisition.  
|--- |  | ---------------------------------------------------------------------------------------------------
|   
|(2) |  | Amounts added during current year and payable at year end less amount
payable at beginning of year.
|   
|(3) |  | Accounts written off during year, net of recoveries.                                               

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INDEX TO EXHIBITS

|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |   |               |  | 
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | - | ------------- |  | 
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |   | Located at   
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |   | Manually     
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |   | Numbered Page
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |   |              
|(2) |  | PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR SUCCESSION:                                                                                                                                                                                                                                                                                                                                                                       |  |  |   |              
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |   |               |  | 
|2.1 |  | Agreement and Plan of Merger, dated as of June 2, 2000, by and among TBC Corporation, TBC Retail Enterprises, Inc., TKI Holdings, Inc. and Certain Stockholders of TKI Holdings, Inc., was filed as Exhibit 2.1 to TBC's Current Report of Form 8-K,  dated June 5, 2000 and filed June 20, 2000                                                                                                                                                   |  |  | * |              
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |   |               |  | 
|(3) |  | ARTICLES OF INCORPORATION AND BY-LAWS:                                                                                                                                                                                                                                                                                                                                                                                                             |  |  |   |              
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |   |               |  | 
|3.1 |  | Certificate of Incorporation of TBC Corporation, restated as of August 6, 1987, as amended by Certificate of Amendment to Restated Certificate of Incorporation dated April 24, 1992, was filed as Exhibit 4.1 to the TBC Corporation Registration Statement on Form S-8 (Reg. No. 333-48802) filed on October 27, 2000                                                                                                                            |  |  | * |              
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |   |               |  | 
|3.2 |  | By-Laws of TBC Corporation as amended through April 22, 1998, were filed as Exhibit 3.1 to the TBC Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 1998                                                                                                                                                                                                                                                                   |  |  | * |              
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |   |               |  | 
|(4) |  | INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES:                                                                                                                                                                                                                                                                                                                                                                         |  |  |   |              
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |   |               |  | 
|4.1 |  | Amended and Restated Note Agreement, dated as of January 31, 2001, between TBC Corporation and The Prudential Insurance Company of America (including exhibits containing the forms of Amended and Restated Series A, Series B, and Series C Senior Notes thereto), was filed as Exhibit 4.1 to the TBC Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 2001                                                             |  |  | * |              
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |   |               |  | 
|4.2 |  | Amendment No. 1, dated as of October 22, 2001, to the Amended and Restated Note Agreement between TBC Corporation and The Prudential Insurance Company of America (without schedules and exhibits thereto, which are substantially identical in form to those previously filed with Exhibit 4.1) was filed as Exhibit 4.2 to the TBC Corporation Annual Report on Form 10-K for the year ended December 31, 2001                                   |  |  | * |              
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |  |   |               |  | 
|4.3 |  | Amended and Restated
Credit Agreement, dated as of January 5, 2001, among TBC Corporation, the lenders party thereto, First Tennessee Bank National Association, as Administrative Agent, and The Chase Manhattan Bank, as Co-Administrative Agent, (including exhibits containing the forms of notes issued pursuant thereto), was filed as Exhibit 4.2 to the TBC Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 |  |  | * |              

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|     |  |                                                                                                                                                                                                                                                                                                                                                                                             |  |  |   |  |  | 
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | - |  |  | 
|4.4  |  | Amendment No. 1, dated as of April 20, 2001, to the Amended and Restated Credit Agreement among TBC Corporation, the lenders party thereto, First Tennessee Bank National Association, as Administrative Agent, and The Chase Manhattan Bank, as Co-Administrative Agent, was filed as Exhibit 4.4 to the TBC Corporation Annual Report on Form 10-K for the year ended December 31, 2001   |  |  | * | 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                             |  |  |   |  |  | 
|4.5  |  | Amendment No. 2, dated as of October 22, 2001, to the Amended and Restated Credit Agreement among TBC Corporation, the lenders party thereto, First Tennessee Bank National Association, as Administrative Agent, and The Chase Manhattan Bank, as Co-Administrative Agent, was filed as Exhibit 4.5 to the TBC Corporation Annual Report on Form 10-K for the year ended December 31, 2001 |  |  | * | 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                             |  |  |   |  |  | 
|4.6  |  | Amended and Restated Rights Agreement, dated as of July 23, 1998, between TBC Corporation and BankBoston, N.A., as Rights Agent, including as Exhibit A thereto the form of Rights Certificate, was filed as Exhibit 4.1 to the TBC Corporation Form 8-A/A-1 Registration Statement filed with the Commission on July 30, 1998                                                              |  |  | * | 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                             |  |  |   |  |  | 
|4.7  |  | Other long-term debt instruments                                                                                                                                                                                                                                                                                                                                                            |  |  | # | 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                             |  |  |   |  |  | 
|(10) |  | MATERIAL CONTRACTS:                                                                                                                                                                                                                                                                                                                                                                         |  |  |   | 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                             |  |  |   |  |  | 
|     |  | Management Contracts and Compensatory Plans or Arrangements                                                                                                                                                                                                                                                                                                                                 |  |  |   | 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                             |  |  |   |  |  | 
|10.1 |  | Form of Trust
Agreement (between the Company and certain  executive officers - 1/1/98 version) was filed as Exhibit 10.3 to the TBC Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 1998                                                                                                                                                                          |  |  | * | 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                             |  |  |   |  |  | 
|10.2 |  | TBC Corporation 2000 Stock Option Plan was filed as Exhibit 4.3 to the TBC Corporation Registration Statement on Form S-8 (Reg. No. 333-48802) filed on October 27, 2000                                                                                                                                                                                                                    |  |  | * | 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                             |  |  |   |  |  | 
|10.3 |  | TBC Corporation 1989 Stock Incentive Plan, as amended and restated August 9, 2002 was filed as Exhibit 10.1 to the TBC Corporation Quarterly Report on Form 10-Q for the quarter ended September 30, 2002                                                                                                                                                                                   |  |  | * | 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                             |  |  |   |  |  | 
|10.4 |  | TBC Corporation Deferred Compensation Plan for Directors was filed as Exhibit 10.4 to the TBC Corporation Annual Report on Form 10-K for the year ended December 31, 2000                                                                                                                                                                                                                   |  |  | * | 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                             |  |  |   |  |  | 
|10.5 |  | Resolution adopted by the Compensation Committee of the TBC Corporation Board of Directors, September 26, 1996,  relating to interest payable on deferred compensation of officers and directors of TBC Corporation was filed as Exhibit 10.5 to the TBC Corporation Annual Report on Form 10-K for the year ended December 31, 2001                                                        |  |  | * | 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                             |  |  |   |  |  | 
|10.6 |  | 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 referenced in Exhibit 10.1) was filed as Exhibit 10.2 to the TBC Corporation Quarterly Report on Form 10-Q for the quarter ended September 30, 2002                       |  |  | * | 

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|                         |  |                                                                                                                                                                                                                                                                                                                                                    |  |  |    |  |  | 
|------------------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | -- |  |  | 
|10.7                     |  | Executive Employment Agreement, dated as of October 31, 2000, between the Company and Kenneth P. Dick (without Exhibit A thereto, which is substantially identical to the form of Trust Agreement referenced in Exhibit 10.1) was filed as Exhibit 10.7 to the TBC Corporation Annual Report on Form 10-K for the year ended December 31, 2000     |  |  | *  | 
|                         |  |                                                                                                                                                                                                                                                                                                                                                    |  |  |    |  |  | 
|10.8                     |  | Executive Employment Agreement, dated as of January 19, 2001, between the Company and Thomas W. Garvey (without Exhibit A thereto, which is substantially identical to the form of Trust Agreement referenced in Exhibit 10.1) was filed as Exhibit 10.1 to the TBC Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 |  |  | *  | 
|                         |  |                                                                                                                                                                                                                                                                                                                                                    |  |  |    |  |  | 
|10.9                     |  | TBC Corporation Management Incentive Compensation Plan, effective January 1, 1997                                                                                                                                                                                                                                                                  |  |  | 48 | 
|                         |  |                                                                                                                                                                                                                                                                                                                                                    |  |  |    |  |  | 
|10.10                    |  | TBC Corporation Executive Supplemental Retirement Plan, as amended through August 1, 1997                                                                                                                                                                                                                                                          |  |  | 55 | 
|                         |  |                                                                                                                                                                                                                                                                                                                                                    |  |  |    |  |  | 
|10.11                    |  | TBC Corporation Executive Retirement Plan was filed as Exhibit 10.1 to the TBC Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 1998                                                                                                                                                                                       |  |  | *  | 
|                         |  |                                                                                                                                                                                                                                                                                                                                                    |  |  |    |  |  | 
|10.12                    |  | TBC Corporation Executive Deferred Compensation Plan, effective August 1, 1999, was filed as Exhibit 10.6 to the TBC Corporation Quarterly Report on Form 10-Q for the quarter ended September 30, 1999                                                                                                                                            |  |  | *  | 
|                         |  |                                                                                                                                                                                                                                                                                                                                                    |  |  |    |  |  | 
|10.13                    |  | TBC Corporation Long Term Incentive Plan, effective January 1, 2002, was filed as Exhibit 10.1 to the TBC Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 2002                                                                                                                                                           |  |  | *  | 
|                         |  |                                                                                                                                                                                                                                                                                                                                                    |  |  |    |  |  | 
|10.14                    |  | Resolutions establishing fees payable to directors of TBC Corporation, as adopted by TBC Corporation Board of Directors on August 9, 2002                                                                                                                                                                                                          |  |  | 60 | 
|                         |  |                                                                                                                                                                                                                                                                                                                                                    |  |  |    |  |  | 
|Other Material Contracts |  |                                                                                                                                                                                                                                                                                                                                                    |  | 
|                         |  |                                                                                                                                                                                                                                                                                                                                                    |  |  |    |  |  | 
|10.15                    |  | Form of TBC Corporation's standard Distributor Agreement was filed as Exhibit 10.13 to the TBC Corporation Annual Report on Form 10-K for the year ended December 31, 2000                                                                                                                                                                         |  |  | *  | 
|                         |  |                                                                                                                                                                                                                                                                                                                                                    |  |  |    |  |  | 
|10.16                    |  | Form of Franchise Agreement in use by Big O Tires, Inc. was filed as Exhibit 10.14 to the TBC Corporation Annual Report on Form 10-K for the year ended December 31, 2001                                                                                                                                                                          |  |  | *  | 
|                         |  |                                                                                                                                                                                                                                                                                                                                                    |  |  |    |  |  | 
|10.17                    |  | Agreement, dated October 1, 1977, between TBC Corporation and The Kelly-Springfield Tire Company, including letter dated June 30, 1978, was filed as Exhibit 10.6 to TBC Corporation Registration statement on Form S-1, filed on April 21, 1983 (Reg. No. 2-83216)                                                                                |  |  | *  | 
|                         |  |                                                                                                                                                                                                                                                                                                                                                    |  |  |    |  |  | 
|10.18                    |  | Ten-Year Commitment Agreement, dated March 21, 1994, between the Company and The Kelly-Springfield Tire Company, was filed as Exhibit 10.16 to the TBC Corporation Annual Report on Form 10-K for the year ended December 31, 2000                                                                                                                 |  |  | *  | 

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|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |    |  |  | 
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | -- |  |  | 
|10.19 |  | Agreement, effective January 1, 1994, between the Company and Cooper Tire & Rubber Company, was filed as Exhibit 10.17 to the TBC Corporation Annual Report on Form 10-K for the year ended December 31, 2000                                                                                                                                                                                  |  |  | *  | 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |    |  |  | 
|10.20 |  | Amendment, effective May 17, 2000, to Agreement between the Company and Cooper Tire & Rubber Company, was filed as Exhibit 10.1 to the TBC Corporation Quarterly Report on Form 10-Q for the quarter ended September 30, 2001                                                                                                                                                                  |  |  | *  | 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |    |  |  | 
|10.21 |  | Agreement, effective January 1, 2002, between the Company and Cooper Tire & Rubber Company was filed as Exhibit 10.19 to the TBC Corporation Annual Report on Form 10-K for the year ended December 31, 2001                                                                                                                                                                                   |  |  | *  | 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |    |  |  | 
|(21)  |  | SUBSIDIARIES OF THE COMPANY:                                                                                                                                                                                                                                                                                                                                                                   |  |  |    | 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |    |  |  | 
|21.1  |  | List of the names and jurisdictions of incorporation of the subsidiaries of  the Company was filed as Exhibit 21.1 to the TBC Corporation Annual Report on Form 10-K for the year ended December 31, 2001                                                                                                                                                                                      |  |  | *  | 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |    |  |  | 
|(23)  |  | CONSENTS OF EXPERTS AND COUNSEL:                                                                                                                                                                                                                                                                                                                                                               |  |  |    | 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |    |  |  | 
|23.1  |  | Consent of PricewaterhouseCoopers LLP, Independent Accountants,  to incorporation by reference of their reports dated February 8, 2002 in Post-Effective Amendment No. 1 to the Registration Statement on Form S-8 for the Company's 1989 Stock Incentive Plan (Reg. No. 33-43166) and in the Registration Statement on Form S-8 for the Company's 2000 Stock Option Plan (Reg. No. 333-48802) |  |  | 61 | 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |    |  |  | 
|(24)  |  | POWER OF ATTORNEY:                                                                                                                                                                                                                                                                                                                                                                             |  |  |    | 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |    |  |  | 
|24.1  |  | Power of attorney of each person who signed this Annual Report on Form 10-K on behalf of another pursuant to a power of attorney                                                                                                                                                                                                                                                               |  |  | 62 | 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |    |  |  | 
|(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                                                                                                                                                                                                                                                      |  |  | 71 | 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |    |  |  | 
|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                                                                                                                                                                                                                                                     |  |  | 72 | 



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|* |  | Indicates that the Exhibit is incorporated by reference into this Annual Report on
Form 10-K from a previous filing with the Commission.                                                                                                                                                                                                     
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|#   |  | With respect to any other instrument defining the rights of holders of long-term
debt, the amount of securities authorized under any such instrument does
not exceed 10% of the total assets of TBC Corporation and its subsidiaries on a
consolidated basis. A copy of any such instrument will be furnished to the Commission upon
request.

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##### Table of Contents



TBC CORPORATION

EXHIBITS

TO

FORM 10-K

FOR THE YEAR ENDED
DECEMBER 31, 2002



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