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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, 2001                                              
| 
|  |  | OR                                                                                       
| 
|o |  | 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
incorporation or organization) |  | (I.R.S. Employer
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:

|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of each class |  | Name of each exchange
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  o

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

INDEX TO EXHIBITS at page 41 of this Report





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TABLE OF CONTENTS



|                                                 |                                                                                               |                                                 |  |  |  |  |  | 
|------------------------------------------------ | --------------------------------------------------------------------------------------------- | ----------------------------------------------- |  |  |  |  |  | 
|PART I                                          
|                                                 | Item 1. BUSINESS                                                                             
|                                                 | Item 2. PROPERTIES                                                                           
|                                                 | Item 3. LEGAL PROCEEDINGS                                                                    
|                                                 | Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|PART II                                         
|                                                 | Item 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                
|                                                 | Item 6. SELECTED FINANCIAL DATA                                                              
|                                                 | Item 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                                 | Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                          
|                                                 | Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                          
|                                                 |                                                                                               | CONSOLIDATED BALANCE SHEETS                    
|                                                 |                                                                                               | CONSOLIDATED STATEMENTS OF INCOME              
|                                                 |                                                                                               | CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
|                                                 |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS          
|                                                 |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS     
|                                                 | Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 
|PART III                                        
|                                                 | Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                  
|                                                 | Item 11. EXECUTIVE COMPENSATION                                                              
|                                                 | Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                      
|                                                 | Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                      
|PART IV                                         
|                                                 | Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K                    
|SIGNATURES                                      
|INDEX TO EXHIBITS                               
|AMENDMENT #1 AMENDED & RESTATED NOTE AGREEMENT  
|AMENDMENT #1 AMENDED & RESTATED CREDIT AGREEMENT
|AMENDMENT #2 AMENDED & RESTATED CREDIT AGREEMENT
|RESOLUTION ADOPTED                              
|FORM OF FRANCHISE AGREEMENT                     
|AGREEMENT BETWEEN THE COMPANY AND COOPER TIRE   
|LIST OF SUBSIDIARIES                            
|CONSENT OF PRICEWATERHOUSECOOPERS LLP           
|POWER OF ATTORNEY                               



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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, 2001 (for purposes of this
calculation, 1,790,561 shares beneficially owned by
directors and executive officers of the Company were
treated as being held by affiliates of the Company) |  | $ | 257,254,277 | 
|                                                                                                                                                                                                                                                                                                                           
|Number of shares of Common Stock, par value $.10,
outstanding at the close of business on December 31, 2001                                                                                                                                                                                                                 |  |   | 21,002,979  | 

DOCUMENT INCORPORATED BY REFERENCE

TBC Corporations Proxy Statement for its Annual Meeting of Stockholders to be
held on April 24, 2002. 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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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 13 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® and Sigma® 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, 2001, the Company
had a total of 504 Big O stores, including 482 franchisee-owned stores, 15
stores owned by joint ventures in which the Company has an equity interest, and
7 stores owned by the Company. Big O products are also sold by Big O to 35
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.

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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 2001, Tire Kingdom operated a total of 182 stores. 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.

Products and Suppliers

Sales of tires accounted for approximately 86% of the Companys total
sales in 2001, 89% in 2000, and 93% in 1999. The remainder of the Companys
sales include tubes, wheels, and other products for the automotive replacement
market, as well as tire and mechanical services rendered by Tire Kingdom since
being acquired in June 2000.

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 2001, 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 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 shortages existing in the industry.
Despite the Companys past experiences, if either of its two largest suppliers
significantly curtailed its manufacturing for the Company or if tires from
either supplier were unavailable, the Companys business would be adversely
affected pending the establishment of new, alternate suppliers. There are,
however, a number of other large tire manufacturers on a worldwide basis.

Trademarks

In addition to its Cordovan®, Multi-Mile®, Sigma®, 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®, 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.

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Customers

The Companys ten largest customers (all in its Wholesale Business)
accounted for 20% of the Companys consolidated sales in 2001, with no
individual customer accounting for 5% or more of the total. 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 2001, 95% in 2000, and 96% in 1999. The remainder of the Companys
sales was attributable to customers located outside the United States,
principally in Mexico and Canada.

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
2001, as well as during the five-year period since January 1, 1997, first
quarter sales have represented, on the average, approximately 22% of annual
sales; the second quarter and third quarters approximately 25% and 28%,
respectively; and the fourth quarter approximately 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 $175.6
million during 2001. The Companys inventory turn rate (cost of sales,
including the cost of direct shipments from manufacturers to customers, divided
by average inventory) was 4.2 for 2001.

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, its efficient distribution systems, its good relationships with
distributors, franchisees, and suppliers, and its established presence in the
markets it serves.

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In the case of the Companys Retail Business, competition is based
primarily upon market presence in a specific geographic area. Big Os 504
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 160 of its 182 total retail outlets being located in that state
at the end of 2001. Tire Kingdoms market position outside the state of
Florida varies depending upon the location. 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, 2001, the Company employed approximately 2,600 persons,
of which approximately 2,100 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 satisfactory.




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 35 warehouse distribution facilities, totaling approximately 3.6
million square feet, located in 16 states across the United States. The
Company owns its executive office building and two of its distribution
facilities. The remainder of the distribution facilities, totaling
approximately 3.1 million square feet, are leased.

Approximately 750,000 square feet of the Companys warehouse distribution
facilities are utilized for the Companys Retail Business. In addition, all of
the retail tire and service centers operated by the Company are leased.




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 repairs relative to its retail operations.




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

None.

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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
24, 2002) or until their respective successors are elected.

|                 |  |     |    |             |  |                                                                 |  | 
|---------------- |  | --- | -- | ----------- |  | --------------------------------------------------------------- |  | 
|                 |  |     |    |             |  | Capacities in which                                            
|                 |  |     |    |             |  | Individual Serves                                              
|Name             |  | Age |    | the Company
|                 |  |     |    |            
|Lawrence C. Day  |  |     | 52 |             |  | President and Chief Executive Officer                          
|Thomas W. Garvey |  |     | 47 |             |  | Executive Vice President, Chief Financial Officer and Treasurer
|Kenneth P. Dick  |  |     | 55 |             |  | President of TBC Private Brands Division                       
|Larry D. Coley   |  |     | 44 |             |  | Vice President, Corporate Controller and Assistant Secretary   

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, Chief Financial Officer and
Treasurer of the Company since January 2001. From 1993 to January 2001, Mr.
Garvey was Executive Vice President and Chief Financial Officer of Tire
Kingdom, which TBC acquired in June 2000. Prior to joining Tire Kingdom, Mr.
Garvey served as Audit Consultant for Phar-Mor, Inc. and 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. 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 April 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, 2001, the Company had approximately 3,600
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 Note 5 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
|              |  |            
|Quarter ended |  | High        |       | Low
|              |  |             |       |    
|03/31/00      |  | $           | 6.38  |     |  | $ | 4.56 | 
|06/30/00      |  |             | 6.25  |     |  |   | 4.50 | 
|09/30/00      |  |             | 6.25  |     |  |   | 4.25 | 
|12/31/00      |  |             | 5.00  |     |  |   | 3.88 | 
|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 | 

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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, 2001. 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, 2001.

|                                           |  |      |           |      |  |                         |         |      |  |      |         |  |  |   |         |  |  |   |         | 
|------------------------------------------ |  | ---- | --------- | ---- |  | ----------------------- | ------- | ---- |  | ---- | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                           |  |      |           |      |  | Year ended December 31, |         |      |  |     
|                                           |  |      |           |      |  |                        
|                                           |  | 2001 |           | 2000 |  | 1999                    |         | 1998 |  | 1997
|                                           |  |      |           |      |  |                         |         |      |  |     
|INCOME STATEMENT DATA (1):                 |  |      |           |      |  |                         |         |      |  |      |         |  |  |   |         |  |  |   |         | 
|Net sales                                  |  | $    | 1,009,278 |      |  | $                       | 902,740 |      |  | $    | 743,050 |  |  | $ | 646,135 |  |  | $ | 642,852 | 
|Gross profit                               |  |      | 264,977   |      |  |                         | 198,247 |      |  |      | 129,559 |  |  |   | 102,921 |  |  |   | 98,733  | 
|Net income                                 |  |      | 21,010    |      |  |                         | 18,724  |      |  |      | 17,939  |  |  |   | 16,894  |  |  |   | 19,700  | 
|Diluted Earnings per share                 |  |      | .98       |      |  |                         | .88     |      |  |      | .85     |  |  |   | .75     |  |  |   | .84     | 
|Average shares and
equivalents outstanding |  |      | 21,386    |      |  |                         | 21,191  |      |  |      | 21,189  |  |  |   | 22,481  |  |  |   | 23,571  | 
|                                          
|BALANCE SHEET DATA (1):                    |  |      |           |      |  |                         |         |      |  |      |         |  |  |   |         |  |  |   |         | 
|Total assets                               |  | $    | 462,960   |      |  | $                       | 451,567 |      |  | $    | 348,683 |  |  | $ | 333,790 |  |  | $ | 264,948 | 
|Working capital                            |  |      | 167,207   |      |  |                         | 156,644 |      |  |      | 113,669 |  |  |   | 108,251 |  |  |   | 130,414 | 
|Long-term debt                             |  |      | 101,000   |      |  |                         | 113,531 |      |  |      | 47,000  |  |  |   | 59,653  |  |  |   | 67,647  | 
|Stockholders equity                       |  |      | 194,319   |      |  |                         | 174,052 |      |  |      | 156,382 |  |  |   | 138,431 |  |  |   | 134,187 | 



---

|(1) |  | In thousands, except per share amounts.
|--- |  | ---------------------------------------

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

RESULTS OF OPERATIONS

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.

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 since it was acquired in June 2000. 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 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 the prior year was
greater than normal, due to certain recalls within the industry and because of
strong purchasing activity in the last quarter of 2000 in advance of announced
industry price increases. Industry demand in 2001 was affected somewhat by the
overall general economic slowdown in 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 increased proportion of sales attributable
to retail. Gross margin percentages on sales by the Companys retail segment
are significantly higher than on sales by the wholesale segment.

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.

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Selling, administrative and retail store expenses increased $60.8 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 termination of the Companys defined
benefit pension plan and a charge of approximately $1.2 million in 2000 related
to certain severance and management restructuring.

The provision for doubtful accounts and notes increased $1.1 million in
2001 compared to 2000, due largely to the full-year impact of Tire Kingdom and
to the overall increase in net sales during 2001. As a percentage of net
sales, the provision for doubtful accounts and notes was only 0.3% in 2001 and
0.2% in 2000.

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 share in 2001 totaled $0.98 and included a charge of $0.02 as
a result of the previously-noted pension plan termination and a credit of $0.02
related to interest on prior year amended tax returns. Earnings per 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
share in 2000.

2000 Compared to 1999:

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 2000 and 1999, since results in 2000 included Tire Kingdom for the
seven months following the acquisition.

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Net sales for 2000 increased 21.5% from the 1999 level. Sales of tires
accounted for approximately 89% of total sales in 2000 compared to 93% in 1999.
Unit tire volume increased 11.2% in 2000 and the average tire sales price
increased 4.4%, due largely to the addition of tire units sold by Tire Kingdom
and the higher percentage of volume represented by retail sales. The addition
of Tire Kingdom also led to a reduction in the percentage of total sales
attributable to tires in 2000, because the revenue from mechanical and
maintenance services performed by these company-owned retail stores is included
in non-tire sales. Excluding the results of Tire Kingdom, net sales increased
2.2%, due principally to a 1.5% increase in unit tire volume and a 1.0%
increase in the average tire sales price. Industrywide pricing pressures,
prevalent throughout most of the last several years, continued throughout 2000.

Gross profit as a percentage of net sales increased from 17.4% in 1999 to
22.0% in 2000, due primarily to the addition of Tire Kingdom and the associated
increased contribution by the retail segment. The gross margin percentages on
sales by the Companys retail segment are significantly higher than on
wholesale sales. Excluding the impact of Tire Kingdom, gross profit as a
percentage of net sales was relatively unchanged, at 17.6% in 2000 versus 17.4%
in 1999.

Distribution expenses as a percentage of net sales decreased from 6.2% in
1999 to 5.4% in 2000. Excluding Tire Kingdom, distribution expenses were 6.1%
of net sales in 2000. 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 1999 expenses included $1.2
million related to a revised logistics plan for the Companys Big O subsidiary
that involved the closing of one facility and the opening of four new
distribution facilities (see Note 4 to the consolidated financial statements).
Excluding the impact of the expenses related to the Big O logistical changes,
distribution expenses in 1999 were also 6.1% of net sales.

Selling, administrative and retail store expenses increased $62.0 million
in 2000 compared to 1999, due principally to the effect of the Tire Kingdom
acquisition. The expenses for Tire Kingdom totaled $59.9 million during the
period following the acquisition and included payroll, operating and
service-related costs for the retail stores, in addition to other selling and
administrative expenses. Excluding the expenses of Tire Kingdom, selling and
administrative expenses in 2000 increased only $2.1 million, or 4.6%, from the
1999 level. Expenses in 2000 included approximately $1.2 million related to
certain management restructuring.

The provision for doubtful accounts and notes in 1999 was greater than in
2000, due to a $4.6 million charge recorded in 1999 in conjunction with a note
receivable from a former distributor which had been the subject of litigation
since 1989 (see Note 14 to the consolidated financial statements). Excluding
that charge and the impact of Tire Kingdom on 2000 results, the provision for
doubtful accounts and notes was only 0.1% of net sales in 2000 and 1999.

Net interest expense increased $3.7 million from the 1999 level, due to
the combined effects of higher borrowing levels and higher interest rates, both
of which were significantly affected by borrowings to fund the Tire Kingdom
acquisition. Total average borrowings in 2000 were $137.2 million, compared to
$107.8 million in 1999. Weighted average interest rates, which were also
affected by overall economic conditions, increased from 7.0% in 1999 to 8.3% in
2000.

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Net other income in 2000 was $2.0 million less than in 1999. The 1999
total included a net gain of $2.6 million from the sale of a Big O distribution
center in conjunction with the previously-mentioned revised logistics plan.
(See Note 4 to the consolidated financial statements.) The 2000 total included
improved results from joint ventures in which the Company has equity interests.

The Companys effective tax rate increased from 38.7% in 1999 to 39.7% in
2000, due largely to the impact of non-deductible goodwill associated with the
Tire Kingdom acquisition.

Earnings per share in 2000 totaled $0.88 and included a net charge of
$0.04 as a result of the previously-noted management restructuring expenses.
Earnings per share in 1999 were $0.85, which included a net charge of $0.10 for
the aforementioned $4.6 million note receivable charge, the gain on the sale of
the Big O distribution facility and the costs of relocating to four new Big O
distribution centers. Excluding the effects of these items, earnings were
$0.92 per share in 2000 compared to $0.95 per share in 1999. The decline in
year-to-year adjusted earnings was largely associated with the higher interest
expense noted above.

LIQUIDITY AND CAPITAL RESOURCES

The Company had working capital of $167.2 million at December 31, 2001
compared to $156.6 million at the end of 2000. The Companys current ratio was
2.10 at the end of 2001 compared to 2.03 at December 31, 2000.

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, 2001, $34.2
million was borrowed under the bank revolving loan facility and $73 million was
outstanding under the bank term loan. The Companys long-term debt at the end
of 2001 also included borrowings of $40.5 million under Senior Notes as well as
a $4.0 million note payable to a supplier. Of the total $151.7 million
borrowed at December 31, 2001 under these credit arrangements, $50.7 million
was classified as current on the Companys balance sheet and the remainder was
considered noncurrent. The Company is subject to certain financial covenants
and other restrictions under its agreements with the respective lenders (see
Note 5 to the consolidated financial statements).

Cash generated by operations, together with the available credit
arrangements, enabled the Company to fund capital expenditures totaling $12.1
million in 2001, as well as the purchase of the net assets of certain retail
tire stores for $3.6 million. Additionally, the Company was able to fund net
investments in joint ventures and other entities during 2001 of $4.9 million,
as well as repurchases of common stock totaling $2.2 million in 2001. As of
December 31, 2001, the Company had an unused authorization from the Board of
Directors for the repurchase of 1,429,000 additional shares of common stock.

Capital expenditures, primarily for equipment and tire molds, totaled
$12.1 million in 2001 and $11.3 million in 2000. The Company had no material
commitments for capital expenditures at the end of 2001. The Company expects
to fund 2002 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 net assets, bank borrowing
facilities and expected funds from operations will be sufficient to operate on
both a short-term and long-term basis. The Companys future growth could
include additional strategic acquisitions such as the June 2000 acquisition of
Tire Kingdom. Additional acquisitions of that magnitude could require
additional capital resources and new or amended credit facilities.

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The $21.4 million decrease in trade accounts payable from December 31,
2000 to December 31, 2001 was principally related to an advance payment to a
supplier at the end of 2001. The $22.2 million increase in notes payable to
banks on the balance sheet was also largely associated with the advance
payment.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In July 2001, Statement of Financial Accounting Standards No. 141,
Business Combinations was issued. SFAS No. 141 requires that the purchase
method of accounting be used for all business combinations initiated after June
30, 2001. The Company made no acquisitions during the six month period from
July 1, 2001 to December 31, 2001, and therefore SFAS No. 141 had no effect on
the Companys consolidated financial statements.

In July 2001, Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets was issued. SFAS No. 142 changes the
accounting for goodwill and other indefinite-lived intangible assets from an
amortization method to an impairment-only approach. Amortization of goodwill
and other indefinite-lived intangible assets ceases upon adoption of this
statement. The Company, which had goodwill and other intangible assets
totaling over $67 million at December 31, 2001, is required to implement SFAS
No. 142 on January 1, 2002. If this pronouncement had been in effect during
2001, the Companys expenses would have been approximately $2.8 million less
than those reported in its statement of income and its net income would have
increased by approximately $2.5 million. The Company anticipates that the
impact of SFAS No. 142 on its results of operations during 2002 will have a
similar effect.

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 supersedes
SFAS 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of, but retains certain fundamental
provisions of SFAS 121 for recognition and measurement of any impairment of
long-lived assets. The new statement also requires that a long-lived asset
classified as held for sale be carried at the lower of its carrying value or
fair value, less cost to sell. The Company does not expect the impact of
adopting SFAS No. 144 to be material.

FORWARD-LOOKING STATEMENTS

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 future events and the future financial performance of the Company,
and involve known and unknown risks, uncertainties and other factors which may
cause the actual results or performance of the Company to be materially
different from the results expressed or implied by such forward-looking
statements.

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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, 2001, the Company owed $107.2 million to
banks under its credit facilities, of which $84.4 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 $211,000,
based on the outstanding balance which was not hedged at December 31, 2001.




Item  
8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary financial information required
by this Item 8 are included on the following 19 pages of this Report.

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PRICEWATERHOUSECOOPERS LOGO






| |  |                                                                                                                                                 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, 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.

PricewaterhouseCoopers LLP

February 8, 2002

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TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)

ASSETS

|                                        |                                                                                                          |                                     |         |              |         |      |         |         |         | 
|--------------------------------------- | -------------------------------------------------------------------------------------------------------- | ----------------------------------- | ------- | ------------ | ------- | ---- | ------- | ------- | ------- | 
|                                        |                                                                                                          |                                     |         | December 31,
|                                        |                                                                                                          |                                     |         |             
|                                        |                                                                                                          |                                     |         | 2001         |         | 2000
|                                        |                                                                                                          |                                     |         |              |         |     
|CURRENT ASSETS:                         |                                                                                                          |                                     |         |              |         |      |         |        
|                                        | Cash and cash equivalents                                                                                |                                     | $       | 2,298        |         |      | $       | 1,681   |        
|                                        | Accounts and notes receivable, less
allowance for doubtful accountsof $7,737 in 2001 and $7,831 in 2000: |                                     |         |              |         |      |         |         |        
|                                        |                                                                                                          | Related parties                     |         |              | 17,173  |      |         |         | 16,942  | 
|                                        |                                                                                                          | Other                               |         |              | 95,848  |      |         |         | 94,836  | 
|                                        |                                                                                                          |                                     |         |              |         |      |         |        
|                                        |                                                                                                          | Total accounts and notes receivable |         |              | 113,021 |      |         |         | 111,778 | 
|                                        | Inventories                                                                                              |                                     |         | 172,431      |         |      |         | 168,141 |        
|                                        | Refundable federal and state income taxes                                                                |                                     |         | 2,349        |         |      |         | 3,099   |        
|                                        | Deferred income taxes                                                                                    |                                     |         | 11,501       |         |      |         | 12,506  |        
|                                        | Other current assets                                                                                     |                                     |         | 16,999       |         |      |         | 11,528  |        
|                                        |                                                                                                          |                                     |         |              |         |      |         |        
|                                        |                                                                                                          | Total current assets                |         |              | 318,599 |      |         |         | 308,733 | 
|                                        |                                                                                                          |                                     |         |              |         |      |         |        
|PROPERTY, PLANT AND EQUIPMENT, AT COST: |                                                                                                          |                                     |         |              |         |      |         |        
|                                        | Land and improvements                                                                                    |                                     |         | 5,032        |         |      |         | 6,697   |        
|                                        | Buildings and leasehold improvements                                                                     |                                     |         | 22,948       |         |      |         | 26,557  |        
|                                        | Furniture and equipment                                                                                  |                                     |         | 52,591       |         |      |         | 48,066  |        
|                                        |                                                                                                          |                                     |         |              |         |      |         |        
|                                        |                                                                                                          |                                     | 80,571  |              |         |      | 81,320  |        
|                                        | Less accumulated depreciation                                                                            |                                     |         | 33,650       |         |      |         | 27,772  |        
|                                        |                                                                                                          |                                     |         |              |         |      |         |        
|                                        |                                                                                                          | Total property, plant and equipment |         |              | 46,921  |      |         |         | 53,548  | 
|                                        |                                                                                                          |                                     |         |              |         |      |         |        
|TRADEMARKS, NET                         |                                                                                                          |                                     | 15,824  |              |         |      | 15,987  |        
|                                        |                                                                                                          |                                     |         |              |         |      |         |        
|GOODWILL, NET                           |                                                                                                          |                                     | 51,291  |              |         |      | 50,760  |        
|                                        |                                                                                                          |                                     |         |              |         |      |         |        
|OTHER ASSETS                            |                                                                                                          |                                     | 30,325  |              |         |      | 22,539  |        
|                                        |                                                                                                          |                                     |         |              |         |      |         |        
|TOTAL ASSETS                            |                                                                                                          | $                                   | 462,960 |              |         | $    | 451,567 |        
|                                        |                                                                                                          |                                     |         |              |         |      |         |        

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

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TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)

LIABILITIES AND STOCKHOLDERS EQUITY

|                                                                   |                                                                                                 |                            |         |              |         |      |         |         |         | 
|------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------- | -------------------------- | ------- | ------------ | ------- | ---- | ------- | ------- | ------- | 
|                                                                   |                                                                                                 |                            |         | December 31,
|                                                                   |                                                                                                 |                            |         |             
|                                                                   |                                                                                                 |                            |         | 2001         |         | 2000
|                                                                   |                                                                                                 |                            |         |              |         |     
|CURRENT LIABILITIES:                                               |                                                                                                 |                            |         |              |         |      |         |        
|                                                                   | Outstanding checks, net                                                                         |                            | $       | 5,916        |         |      | $       | 10,037  |        
|                                                                   | Notes payable to banks                                                                          |                            |         | 34,200       |         |      |         | 11,993  |        
|                                                                   | Current portion of long-term debt
and capital lease obligations                                 |                            |         | 16,533       |         |      |         | 13,948  |        
|                                                                   | Accounts payable, trade                                                                         |                            |         | 53,227       |         |      |         | 74,673  |        
|                                                                   | Other current liabilities                                                                       |                            |         | 41,516       |         |      |         | 41,438  |        
|                                                                   |                                                                                                 |                            |         |              |         |      |         |        
|                                                                   |                                                                                                 | Total current liabilities  |         |              | 151,392 |      |         |         | 152,089 | 
|                                                                   |                                                                                                 |                            |         |              |         |      |         |        
|LONG-TERM DEBT AND CAPITAL LEASE
OBLIGATIONS,
LESS CURRENT PORTION |                                                                                                 |                            | 101,000 |              |         |      | 113,531 |        
|                                                                   |                                                                                                 |                            |         |              |         |      |         |        
|NONCURRENT LIABILITIES                                             |                                                                                                 |                            | 11,721  |              |         |      | 5,111   |        
|                                                                   |                                                                                                 |                            |         |              |         |      |         |        
|DEFERRED INCOME TAXES                                              |                                                                                                 |                            | 4,528   |              |         |      | 6,784   |        
|                                                                   |                                                                                                 |                            |         |              |         |      |         |        
|STOCKHOLDERS EQUITY:                                              |                                                                                                 |                            |         |              |         |      |         |        
|                                                                   | Common stock, $.10 par value,
shares issued and outstanding 
21,003 in 2001 and 20,939 in 2000 |                            |         | 2,100        |         |      |         | 2,094   |        
|                                                                   | Additional paid-in capital                                                                      |                            |         | 11,783       |         |      |         | 9,760   |        
|                                                                   | Other comprehensive income                                                                      |                            |         | (713         | )       |      |         |        |        
|                                                                   | Retained earnings                                                                               |                            |         | 181,149      |         |      |         | 162,198 |        
|                                                                   |                                                                                                 |                            |         |              |         |      |         |        
|                                                                   |                                                                                                 | Total stockholders equity |         |              | 194,319 |      |         |         | 174,052 | 
|                                                                   |                                                                                                 |                            |         |              |         |      |         |        
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                         |                                                                                                 | $                          | 462,960 |              |         | $    | 451,567 |        
|                                                                   |                                                                                                 |                            |         |              |         |      |         |        

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

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TBC CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)

|                           |                                                   |                |           |                          |         |      |         |         |         |   |         |        |         | 
|-------------------------- | ------------------------------------------------- | -------------- | --------- | ------------------------ | ------- | ---- | ------- | ------- | ------- | - | ------- | ------ | ------- | 
|                           |                                                   |                |           | Years ended December 31,
|                           |                                                   |                |           |                         
|                           |                                                   |                |           | 2001                     |         | 2000 |         | 1999   
|                           |                                                   |                |           |                          |         |      |         |        
|NET SALES*                 |                                                   | $              | 1,009,278 |                          |         | $    | 902,740 |         |         | $ | 743,050 |       
|COST OF SALES              |                                                   |                | 744,301   |                          |         |      | 704,493 |         |         |   | 613,491 |       
|                           |                                                   |                |           |                          |         |      |         |         |         |   |         |       
|GROSS PROFIT               |                                                   |                | 264,977   |                          |         |      | 198,247 |         |         |   | 129,559 |       
|                           |                                                   |                |           |                          |         |      |         |         |         |   |         |       
|EXPENSES:                  |                                                   |                |           |                          |         |      |         |         |         |   |         |       
|                           | Distribution expenses                             |                |           | 50,694                   |         |      |         | 49,144  |         |   |         | 46,313 |        
|                           | Selling, administrative and
retail store expenses |                |           | 168,492                  |         |      |         | 107,662 |         |   |         | 45,637 |        
|                           | Provision for doubtful accounts
and notes         |                |           | 2,607                    |         |      |         | 1,468   |         |   |         | 5,090  |        
|                           | Interest expense  net                            |                |           | 11,188                   |         |      |         | 11,391  |         |   |         | 7,676  |        
|                           | Other (income) expense  net                      |                |           | (2,968                   | )       |      |         | (2,465  | )       |   |         | (4,417 | )      
|                           |                                                   |                |           |                          |         |      |         |         |         |   |         |       
|                           |                                                   | Total expenses |           |                          | 230,013 |      |         |         | 167,200 |   |         |        | 100,299 | 
|                           |                                                   |                |           |                          |         |      |         |         |         |   |         |       
|INCOME BEFORE INCOME TAXES |                                                   |                | 34,964    |                          |         |      | 31,047  |         |         |   | 29,260  |       
|PROVISION FOR INCOME TAXES |                                                   |                | 13,954    |                          |         |      | 12,323  |         |         |   | 11,321  |       
|                           |                                                   |                |           |                          |         |      |         |         |         |   |         |       
|NET INCOME                 |                                                   | $              | 21,010    |                          |         | $    | 18,724  |         |         | $ | 17,939  |       
|                           |                                                   |                |           |                          |         |      |         |         |         |   |         |       
|EARNINGS
PER SHARE 
Basic |                                                   | $              | 1.00      |                          |         | $    | .88     |         |         | $ | .85     |       
|                           |                                                   |                |           |                          |         |      |         |         |         |   |         |       
|                           |  Diluted                                         |                | $         | .98                      |         |      | $       | .88     |         |   | $       | .85    |        
|                           |                                                   |                |           |                          |         |      |         |         |         |   |         |       



|* |  | Including sales to related parties of $92,813, $86,961 and $78,880 in
the years ended
December 31, 2001, 2000 and 1999, respectively.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------

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

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TBC CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(In thousands)

|                           |                                                                               |  |                                              |      |            |   |         |     |         |   |          |       |          |   |      |      |   |   |         |        |   |   |         |        |  
|-------------------------- | ----------------------------------------------------------------------------- |  | -------------------------------------------- | ---- | ---------- | - | ------- | --- | ------- | - | -------- | ----- | -------- | - | ---- | ---- | - | - | ------- | ------ | - | - | ------- | ------ | -
|                           |                                                                               |  | Years ended December 31, 1999, 2000 and 2001
|                           |                                                                               |  |                                             
|                           |                                                                               |  | Common Stock                                 |      |            |   |         |     | Other   |   |          |       |          |   |      |      |  
|                           |                                                                               |  |                                              |      | Additional |   | Compre- |     |         |   |          |       |          |   |     
|                           |                                                                               |  | Number of                                    |      |            |   |         |     | Paid-In |   | hensive  |       | Retained |   |      |      |  
|                           |                                                                               |  | Shares                                       |      | Amount     |   | Capital |     | Income  |   | Earnings |       | Total   
|                           |                                                                               |  |                                              |      |            |   |         |     |         |   |          |       |         
|BALANCE, JANUARY 1, 1999   |                                                                               |  | 21,172                                       |      |            | $ | 2,117   |     |         | $ | 9,540    |       |          | $ |     |      |   | $ | 126,774 |        |   | $ | 138,431 |       
|                           | Net income for 1999                                                           |  |                                              |      |            |   |         |     |         |   |          |       |          |   |      |      |   |   |         | 17,939 |   |   |         | 17,939 |  
|                           | Issuance of common stock under
stock option and incentive plans               |  |                                              | 23   |            |   |         | 2   |         |   |          | 95    |          |   |      |     |   |   |         |       |   |   |         | 97     |  
|                           | Repurchase and retirement
of common stock                                     |  |                                              | (13  | )          |   |         | (1  | )       |   |          | (6    | )        |   |      |     |   |   |         | (88    | ) |   |         | (95    | )
|                           | Tax benefit from exercise of
stock options                                    |  |                                             |      |            |   |        |     |         |   | 10       |       |          |   |     |      |   |   |        |        |   |   | 10      |       
|                           |                                                                               |  |                                              |      |            |   |         |     |         |   |          |       |          |   |      |      |   |   |         |        |   |   |         |       
|BALANCE, DECEMBER 31, 1999 |                                                                               |  | 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 income
associated with interest rate
swap agreements, net |  |                                              |     |            |   |         |    |         |   |          |      |          |   |      | (713 | ) |   |         |       |   |   |         | (713   | )
|                           |                                                                               |  |                                              |      |            |   |         |     |         |   |          |       |          |   |      |      |   |   |         |        |   |   |         |       
|BALANCE, DECEMBER 31, 2001 |                                                                               |  | 21,003                                       |      |            | $ | 2,100   |     |         | $ | 11,783   |       |          | $ | (713 | )    |   | $ | 181,149 |        |   | $ | 194,319 |       
|                           |                                                                               |  |                                              |      |            |   |         |     |         |   |          |       |          |   |      |      |   |   |         |        |   |   |         |       

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

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##### Table of Contents






TBC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

|                                    |                                                                                   |                                                                                                |                                                      |         |                          |         |      |         |         |         |      |         |        |        |  
|----------------------------------- | --------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ---------------------------------------------------- | ------- | ------------------------ | ------- | ---- | ------- | ------- | ------- | ---- | ------- | ------ | ------ | -
|                                    |                                                                                   |                                                                                                |                                                      |         | Years ended December 31,
|                                    |                                                                                   |                                                                                                |                                                      |         |                         
|                                    |                                                                                   |                                                                                                |                                                      |         | 2001                     |         | 2000 |         | 1999   
|                                    |                                                                                   |                                                                                                |                                                      |         |                          |         |      |         |        
|Operating Activities:               |                                                                                   |                                                                                                |                                                      |         |                          |         |      |         |         |         |      |        
|                                    | Net income                                                                        |                                                                                                | $                                                    | 21,010  |                          |         | $    | 18,724  |         |         | $    | 17,939  |       
|                                    | Adjustments to reconcile net income to net
cash
provided by operating activities: |                                                                                                |                                                      |         |                          |         |      |         |         |         |      |         |       
|                                    |                                                                                   | Depreciation                                                                                   |                                                      |         | 11,192                   |         |      |         | 9,036   |         |      |         | 6,624  |       
|                                    |                                                                                   | Amortization of intangible assets                                                              |                                                      |         | 2,801                    |         |      |         | 1,982   |         |      |         | 1,114  |       
|                                    |                                                                                   | Amortization of other comprehensive income                                                     |                                                      |         | 226                      |         |      |         |        |         |      |         |       |       
|                                    |                                                                                   | Provision for doubtful accounts and notes                                                      |                                                      |         | 2,607                    |         |      |         | 1,468   |         |      |         | 5,090  |       
|                                    |                                                                                   | (Gain) on sale of fixed assets                                                                 |                                                      |         | (485                     | )       |      |         | (109    | )       |      |         | (2,704 | )     
|                                    |                                                                                   | Deferred income taxes                                                                          |                                                      |         | (810                     | )       |      |         | 687     |         |      |         | 526    |       
|                                    |                                                                                   | Equity in (earnings) loss from joint ventures                                                  |                                                      |         | (364                     | )       |      |         | (462    | )       |      |         | (6     | )     
|                                    |                                                                                   | Changes in operating assets and liabilities, net
of effectsof assets and liabilities acquired: |                                                      |         |                          |         |      |         |         |         |      |         |        |       
|                                    |                                                                                   |                                                                                                | Receivables                                          |         |                          | (614    | )    |         |         | (17,647 | )    |         |        | (2,256 | )
|                                    |                                                                                   |                                                                                                | Inventories                                          |         |                          | (4,098  | )    |         |         | (903    | )    |         |        | (9,363 | )
|                                    |                                                                                   |                                                                                                | Other current assets                                 |         |                          | (7,762  | )    |         |         | 7,220   |      |         |        | (5,590 | )
|                                    |                                                                                   |                                                                                                | Other assets                                         |         |                          | (946    | )    |         |         | (296    | )    |         |        | (1,024 | )
|                                    |                                                                                   |                                                                                                | Accounts payable, trade                              |         |                          | (21,447 | )    |         |         | 11,149  |      |         |        | (3,119 | )
|                                    |                                                                                   |                                                                                                | Federal and state income taxes
refundable or payable |         |                          | 1,051   |      |         |         | 352     |      |         |        | (1,819 | )
|                                    |                                                                                   |                                                                                                | Other current liabilities                            |         |                          | (1,168  | )    |         |         | (1,972  | )    |         |        | 1,260  |  
|                                    |                                                                                   |                                                                                                | Noncurrent liabilities                               |         |                          | 1,260   |      |         |         | (405    | )    |         |        | (1,192 | )
|                                    |                                                                                   |                                                                                                |                                                      |         |                          |         |      |         |         |         |      |        
|                                    |                                                                                   | Net cash provided by operating activities                                                      |                                                      |         | 2,453                    |         |      |         | 28,824  |         |      |         | 5,480  |       
|                                    |                                                                                   |                                                                                                |                                                      |         |                          |         |      |         |         |         |      |        
|Investing Activities:               |                                                                                   |                                                                                                |                                                      |         |                          |         |      |         |         |         |      |        
|                                    | Purchase of property, plant and equipment                                         |                                                                                                |                                                      | (12,051 | )                        |         |      | (11,320 | )       |         |      | (14,864 | )     
|                                    | Acquisition of Tire Kingdom, Inc.,
net of cash acquired                           |                                                                                                |                                                      |        |                          |         |      | (43,471 | )       |         |      |        |       
|                                    | Purchase of net assets of retail tire
stores, net of cash acquired                |                                                                                                |                                                      | (3,644  | )                        |         |      | (3,861  | )       |         |      |        |       
|                                    | Investments in joint ventures and other entities,
net of distributions received   |                                                                                                |                                                      | (4,932  | )                        |         |      | 237     |         |         |      | (575    | )     
|                                    | Net proceeds from asset dispositions                                              |                                                                                                |                                                      | 10,808  |                          |         |      | 4,948   |         |         |      | 9,981   |       
|                                    | Other                                                                             |                                                                                                |                                                      | 114     |                          |         |      |        |         |         |      | 413     |       
|                                    |                                                                                   |                                                                                                |                                                      |         |                          |         |      |         |         |         |      |        
|                                    |                                                                                   | Net cash used in investing activities                                                          |                                                      |         | (9,705                   | )       |      |         | (53,467 | )       |      |         | (5,045 | )     
|                                    |                                                                                   |                                                                                                |                                                      |         |                          |         |      |         |         |         |      |        
|Financing Activities:               |                                                                                   |                                                                                                |                                                      |         |                          |         |      |         |         |         |      |        
|                                    | Net bank borrowings under short-term
borrowing arrangements                       |                                                                                                |                                                      | 22,207  |                          |         |      | 28,231  |         |         |      | 13,810  |       
|                                    | Increase (decrease) in outstanding checks, net                                    |                                                                                                |                                                      | (4,121  | )                        |         |      | 4,867   |         |         |      | (507    | )     
|                                    | Proceeds from long-term debt                                                      |                                                                                                |                                                      | 4,000   |                          |         |      |        |         |         |      |        |       
|                                    | Payments on long-term debt and capital
lease obligations                          |                                                                                                |                                                      | (13,855 | )                        |         |      | (6,733  | )       |         |      | (13,999 | )     
|                                    | Issuance of common stock under stock option
and incentive plans                   |                                                                                                |                                                      | 1,821   |                          |         |      |        |         |         |      | 67      |       
|                                    | Repurchase and retirement of common stock                                         |                                                                                                |                                                      | (2,183  | )                        |         |      | (1,314  | )       |         |      | (95     | )     
|                                    | Other                                                                             |                                                                                                |                                                      |        |                          |         |      |        |         |         |      | (137    | )     
|                                    |                                                                                   |                                                                                                |                                                      |         |                          |         |      |         |         |         |      |        
|                                    |                                                                                   | Net cash provided by (used in)
financing activities                                            |                                                      |         | 7,869                    |         |      |         | 25,051  |         |      |         | (861   | )     
|                                    |                                                                                   |                                                                                                |                                                      |         |                          |         |      |         |         |         |      |        
|Change in cash and cash equivalents |                                                                                   |                                                                                                | 617                                                  |         |                          |         | 408  |         |         |         | (426 | )      
|                                   
|Cash and cash equivalents:          |                                                                                   |                                                                                                |                                                      |         |                          |         |      |         |         |         |      |        
|                                    | Balance  Beginning of year                                                       |                                                                                                |                                                      | 1,681   |                          |         |      | 1,273   |         |         |      | 1,699   |       
|                                    |                                                                                   |                                                                                                |                                                      |         |                          |         |      |         |         |         |      |        
|                                    | Balance  End of year                                                             |                                                                                                | $                                                    | 2,298   |                          |         | $    | 1,681   |         |         | $    | 1,273   |       
|                                    |                                                                                   |                                                                                                |                                                      |         |                          |         |      |         |         |         |      |        

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TBC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)

|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |        |                          |        |      |        |         |        |   |       |  |        | 
|----------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------- | -------------- | ------ | ------------------------ | ------ | ---- | ------ | ------- | ------ | - | ----- |  | ------ | 
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |        | Years ended December 31,
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |        |                         
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |        | 2001                     |        | 2000 |        | 1999   
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |                |        |                          |        |      |        |        
|Supplemental Disclosures of Cash Flow Information:                      |                                                                                                                                                                                                                                                                 |                                         |                |        |                          |        |      |        |         |        |   |      
|                                                                        | Cash paid for  Interest                                                                                                                                                                                                                                        |                                         | $              | 11,578 |                          |        | $    | 11,417 |         |        | $ | 8,477 | 
|                                                                        |                                                                                                                                                                                                                                                                 |                                         |  Income Taxes |        |                          | 13,713 |      |        |         | 11,284 |   |       |  | 12,614 | 
|                                                                       
|Supplemental Disclosure of Non-Cash Financing Activity:                 |                                                                                                                                                                                                                                                                 |                                         |                |        |                          |        |      |        |         |        |   |      
|                                                                        | Tax benefit from exercise of stock options                                                                                                                                                                                                                      |                                         | $              | 301    |                          |        | $    |       |         |        | $ | 10    | 
|                                                                        | Issuance of restricted stock under stock incentive
plan, net ofshares received for tax withholding                                                                                                                                                              |                                         |                | 31     |                          |        |      | 260    |         |        |   | 30    | 
|                                                                        | 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 2001, the Company purchased the net assets
of certain retail stores located in the southeastern
United States 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 stores located in the southeastern
United States 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 financial statements.

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##### Table of Contents






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.

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 recorded value of such equity
investments totaled $14,803,000 and $9,302,000 at December 31, 2001 and 2000,
respectively, and approximated the Companys interest in the net asset values of
the related entities.

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.

Reclassifications  Certain reclassifications have been made in the
balance sheets and statements of cash flows for prior years, to conform to the
2001 presentation, with no effect on previously-reported net income.

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 $2,950,000 and $354,000 at
December 31, 2001 and 2000, respectively.

Concentrations of credit risk  The Company performs ongoing credit
evaluations of its 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

1. 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 2001 and 2000. Goodwill, trademarks and other intangible assets
have been amortized on a straight-line basis, over 20  40 years. Accumulated
amortization on intangible assets totaled $7,465,000 and $4,824,000 at December
31, 2001 and 2000, respectively.

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, 2001.

Revenue recognition  Sales are recognized upon shipment of
products. Estimated costs of returns and allowances 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 2001, 2000 and 1999 were
franchise and royalty fees of $11,619,000, $10,362,000 and $9,854,000,
respectively.

Warranty costs  The costs of anticipated adjustments for
workmanship and materials that are the responsibility of the Company are
estimated and charged to expense currently. Reserves for future warranty claims
and service of $8,762,000 and $9,265,000 were included in liabilities in the
balance sheets at December 31, 2001 and 2000, 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 1.2% of net sales during both 2001 and 2000, and 1.3% in 1999.

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):

|                                                           |  |      |        |      |  |      |        |  |  |  |        | 
|---------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ |  |  |  | ------ | 
|                                                           |  | 2001 |        | 2000 |  | 1999
|                                                           |  |      |        |      |  |     
|Weighted average common shares outstanding                 |  |      | 20,984 |      |  |      | 21,191 |  |  |  | 21,177 | 
|Common share equivalents                                   |  |      | 402    |      |  |      |       |  |  |  | 12     | 
|                                                           |  |      |        |      |  |      |        |  |  |  |        | 
|Weighted average common shares and
equivalents outstanding |  |      | 21,386 |      |  |      | 21,191 |  |  |  | 21,189 | 
|                                                           |  |      |        |      |  |      |        |  |  |  |        | 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

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, 2001. Sales to a
distributor represented on the Board, including affiliates of that distributor,
accounted for approximately 5% of the Companys net sales during 2001, 6% during
2000 and 7% in 1999. One major customer, unaffiliated with the board of
directors or the Company, accounted for approximately 4% of net sales in 2001,
7% of net sales in 2000, and 9% in 1999. Sales to joint ventures and entities in
which the Company has an ownership interest accounted for approximately 4% of
the Companys net sales during 2001 and 3% in 2000 and 1999. 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 information (adjusted for items
such as interest on required borrowings, estimated amortization of goodwill,
improved sourcing strength, and anticipated operating synergies) was prepared as
if the companies had been combined prior to 1999. The pro forma results for 2000
exclude an after-tax charge of $767,000, or $0.04 per share, related to certain
management restructuring. The pro forma results for 1999 exclude an after-tax
charge of $2.8 million, or $0.13 per share, related to the write-off of a note
receivable that had been the subject of litigation since 1989, as well as a net
gain of $700,000, or $0.03 per share related to the gain on the sale of a Big O
distribution facility and the costs of relocating to four new Big O distribution
centers. This unaudited pro forma information does not purport to present what
actual results of operations would have been or to project results for any
future period. Pro forma net sales were $998,402,000 and $966,978,000 for the
years ended December 31, 2000 and 1999, respectively. Pro forma net income was
$19,316,000 in 2000 and $19,837,000 in 1999. Pro forma earnings per share were
$.91 and $.94 in 2000 and 1999, respectively.

4. DISTRIBUTION CENTER SALE AND RELATED COSTS

During 1999, the Company sold a distribution center in Las Vegas,
Nevada and opened four new distribution facilities in the western United States
in conjunction with a revised logistics plan for Big O Tires, Inc. Proceeds from
the sale of the Las Vegas facility were used to retire debt, offset relocation
costs of $1,180,000 and provide additional working capital. The sale resulted in
a pre-tax gain of $2,618,000, which was included in net other income in the
consolidated statements of income. The relocation costs were included in
distribution expenses for the year 1999.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

5. 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. A total of $34,200,000 was borrowed under the bank
revolving loan facility and $73,000,000 was borrowed under the bank term loan
facility at December 31, 2001. The weighted average interest rate on short-term
borrowings at December 31, 2001 and 2000 was 4.60% and 8.46%, respectively.

In addition to bank loan facilities, the Company has borrowings
under Senior Notes as well as a note payable to a supplier. The Senior Notes 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. The supplier note
payable contains provisions for the payment of principal and interest which are
related to purchase commitments made by the Company. Interest based on the prime
rate is waived if such commitments are met, but is payable on a portion of the
loan together with principal if the purchase commitments are not met.

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

|                                                                    |                      |   |              |        |      |   |         |        | 
|------------------------------------------------------------------- | -------------------- | - | ------------ | ------ | ---- | - | ------- | ------ | 
|                                                                    |                      |   | December 31,
|                                                                    |                      |   |             
|                                                                    |                      |   | 2001         |        | 2000
|                                                                    |                      |   |              |        |     
|8.30% Series A Senior Note, due currently through 2003              |                      | $ | 13,000       |        |      | $ | 19,500  |       
|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 2002 through 2006 |                      |   | 73,000       |        |      |   | 80,000  |       
|Note Payable to Supplier, due in 2005                               |                      |   | 4,000        |        |      |   |        |       
|Capital lease obligations                                           |                      |   | 33           |        |      |   | 479     |       
|                                                                    |                      |   |              |        |      |   |         |       
|                                                                    |                      |   | 117,533      |        |      |   | 127,479 |       
|                                                                    | Less current portion |   |              | 16,533 |      |   |         | 13,948 | 
|                                                                    |                      |   |              |        |      |   |         |       
|                                                                    |                      | $ | 101,000      |        |      | $ | 113,531 |       
|                                                                    |                      |   |              |        |      |   |         |       

Maturities of long-term debt and capital lease obligations are as
follows: $16,533,000 due in 2002, $18,500,000 in 2003, $20,500,000 in 2004,
$21,500,000 in 2005, $29,500,000 in 2006 and $11,000,000 thereafter.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

6. 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, 2001, deferred losses on interest-rate swaps, net of deferred
taxes, totaled $713,000 and were included in other comprehensive income on the
balance sheet. At the end of 2001, interest expense of approximately $852,000
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.

7. 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, 2001,
$8,758,000 had been financed under the program, representing ten properties,
nine of which had been sublet to Big O franchisees. No properties can be added
to the program after December 31, 2001.

Rental expense of $29,441,000, $17,816,000 and $6,798,000 was
charged to operations in 2001, 2000 and 1999, respectively, after deducting
sublease income of $3,459,000 in 2001, $3,079,000 in 2000 and $1,841,000 in
1999. Minimum noncancelable real property lease commitments at December 31, 2001
were as follows (in thousands):

|                     |  |        |         |  
|-------------------- |  | ------ | ------- | -
|Year                 |  | Amount
|                     |  |       
|2002                 |  | $      | 33,983  |  
|2003                 |  |        | 39,463  |  
|2004                 |  |        | 27,613  |  
|2005                 |  |        | 24,799  |  
|2006                 |  |        | 23,467  |  
|Thereafter           |  |        | 129,170 |  
|                     |  |        |         |  
|                     |  |        | 278,495 |  
|Less sublease income |  |        | (28,887 | )
|                     |  |        |         |  
|                     |  | $      | 249,608 |  
|                     |  |        |         |  

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

8. 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, 2001,
2000 and 1999 were as follows (in thousands):

|         |         |   |        |        |      |   |        |        |  |   |        |       | 
|-------- | ------- | - | ------ | ------ | ---- | - | ------ | ------ |  | - | ------ | ----- | 
|         |         |   | 2001   |        | 2000 |   | 1999  
|         |         |   |        |        |      |   |       
|Current: |         |   |        |        |      |   |        |        |  |   |        |      
|         | Federal |   | $      | 12,539 |      |   | $      | 10,075 |  |   | $      | 9,554 | 
|         | State   |   |        | 2,225  |      |   |        | 1,561  |  |   |        | 1,241 | 
|         |         |   |        |        |      |   |        |        |  |   |        |      
|         |         |   | 14,764 |        |      |   | 11,636 |        |  |   | 10,795 |      
|Deferred |         |   | (810   | )      |      |   | 687    |        |  |   | 526    |      
|         |         |   |        |        |      |   |        |        |  |   |        |      
|         |         | $ | 13,954 |        |      | $ | 12,323 |        |  | $ | 11,321 |      
|         |         |   |        |        |      |   |        |        |  |   |        |      

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 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. Included in the assets of
Tire Kingdom which were acquired in June 2000 were deferred income tax assets
totaling $8,003,000.

The net deferred income tax asset in the financial statements at
December 31, 2001 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. At December 31, 2000, the net deferred income tax
asset included $2,389,000 related to the allowance for doubtful accounts and
notes, $2,473,000 for insurance-related accruals and $3,384,000 related to
warranty reserves. The net deferred income tax liability at December 31, 2001
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. At December 31, 2000, the net deferred income tax
liability included $5,190,000 for trademarks and intangible assets and
$3,043,000 attributable to depreciation, less $1,543,000 for lease accruals. At
December 31, 2001, the Company had available a minimum tax credit carryforward
of $363,000, which has an indefinite carryforward period and is subject to
certain limitations.

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

|                            |  |      |      |      |  |      |      |   |  |  |      |  
|--------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                            |  | 2001 |      | 2000 |  | 1999
|                            |  |      |      |      |  |     
|Statutory U.S. Federal rate |  |      | 35.0 | %    |  |      | 35.0 | % |  |  | 35.0 | %
|State income taxes          |  |      | 4.1  |      |  |      | 3.6  |   |  |  | 2.6  |  
|Other                       |  |      | .8   |      |  |      | 1.1  |   |  |  | 1.1  |  
|                            |  |      |      |      |  |      |      |   |  |  |      |  
|Effective tax rate          |  |      | 39.9 | %    |  |      | 39.7 | % |  |  | 38.7 | %
|                            |  |      |      |      |  |      |      |   |  |  |      |  

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

9. 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 $1,274,000 in 2001, $1,394,000 in 2000 and $1,030,000 in
1999.

The Company has a defined benefit pension plan which covered less
than 100 of its employees at the end of 2001. 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. In addition, a decision was made in early 2002 to
terminate the plan as soon as practicable in accordance with the requirements of
ERISA and the Pension Benefit Guaranty Corporation. In conjunction with the
intended plan termination, the Company wrote off the remaining balance of its
prepaid pension asset during 2001 and recorded an expense of $720,000.

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):

|                                                                              |                                                                  |   |        |        |      |   |        |      |  
|----------------------------------------------------------------------------- | ---------------------------------------------------------------- | - | ------ | ------ | ---- | - | ------ | ---- | -
|                                                                              |                                                                  |   | 2001   |        | 2000
|                                                                              |                                                                  |   |        |        |     
|Actuarial present value of projected benefit
obligations,at beginning of year |                                                                  | $ | (5,982 | )      |      | $ | (5,600 | )   
|                                                                              | Service cost                                                     |   |        | (250   | )    |   |        | (291 | )
|                                                                              | Interest cost                                                    |   |        | (422   | )    |   |        | (427 | )
|                                                                              | Actuarial gain (loss)                                            |   |        | (1,063 | )    |   |        | 76   |  
|                                                                              | Settlement gain                                                  |   |        |       |      |   |        | 33   |  
|                                                                              | Benefits paid                                                    |   |        | 1,060  |      |   |        | 169  |  
|                                                                              | Expenses paid                                                    |   |        | 74     |      |   |        | 58   |  
|                                                                              | Effect of plan termination                                       |   |        | 716    |      |   |        |     |  
|                                                                              |                                                                  |   |        |        |      |   |        |     
|Actuarial present value of projected benefit
obligations, at end of year      |                                                                  |   | (5,867 | )      |      |   | (5,982 | )   
|                                                                              |                                                                  |   |        |        |      |   |        |     
|Fair value of plan assets, at beginning of year                               |                                                                  |   | 7,155  |        |      |   | 6,392  |     
|                                                                              | Return on plan assets                                            |   |        | (275   | )    |   |        | 990  |  
|                                                                              | Benefits and expenses paid                                       |   |        | (1,134 | )    |   |        | (227 | )
|                                                                              | Effect of plan termination                                       |   |        | 121    |      |   |        |     |  
|                                                                              |                                                                  |   |        |        |      |   |        |     
|Fair value of plan assets, at end of year                                     |                                                                  |   | 5,867  |        |      |   | 7,155  |     
|                                                                              |                                                                  |   |        |        |      |   |        |     
|Funded Status   plan assets over projected
benefit obligation,at end of year |                                                                  |   |       |        |      |   | 1,173  |     
|                                                                              | Unrecognized net gain from experience
differentfrom that assumed |   |        |       |      |   |        | (498 | )
|                                                                              | Unrecognized net assets and prior service cost                   |   |        |       |      |   |        | 75   |  
|                                                                              |                                                                  |   |        |        |      |   |        |     
|Prepaid pension cost, at end of year                                          |                                                                  | $ |       |        |      | $ | 750    |     
|                                                                              |                                                                  |   |        |        |      |   |        |     

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

9. RETIREMENT PLANS (Continued)

The net expense for the defined benefit plan for 2001, 2000 and 1999
was comprised of the following (in thousands):

|                                                  |  |      |      |      |  |      |      |   |  |   |      |  
|------------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  | - | ---- | -
|                                                  |  | 2001 |      | 2000 |  | 1999
|                                                  |  |      |      |      |  |     
|Service cost                                      |  | $    | 250  |      |  | $    | 291  |   |  | $ | 379  |  
|Interest cost                                     |  |      | 422  |      |  |      | 427  |   |  |   | 438  |  
|Return on plan assets                             |  |      | 274  |      |  |      | (990 | ) |  |   | (952 | )
|Net amortization, deferral and
settlement charges |  |      | (916 | )    |  |      | 322  |   |  |   | 386  |  
|Effect of plan termination                        |  |      | 720  |      |  |      |     |   |  |   |     |  
|                                                  |  |      |      |      |  |      |      |   |  |   |      |  
|                                                  |  | $    | 750  |      |  | $    | 50   |   |  | $ | 251  |  
|                                                  |  |      |      |      |  |      |      |   |  |   |      |  

The discount rates used in determining the actuarial present values
of benefit obligations for the defined benefit plan were 5.48% in 2001 and 7.75%
in 2000. Estimated increases in future compensation levels were 5.0% for the
2000 projection but were not applicable to the 2001 projection due to the plan
amendment freezing participant benefits. The expected long-term rate of return
on assets was 10% in both the 2001 and 2000 projections. Actuarial present
values of accumulated benefit obligations were $5,867,000 at December 31, 2001
and $4,006,000 at December 31, 2000.

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
2001 expense for supplemental retirement benefits was $215,000. The 2000 expense
totaled $1,134,000, including settlement charges of $665,000. The 1999
supplemental retirement expense was $1,462,000 and included settlement charges
of $766,000. At December 31, 2001, the projected benefit obligation, computed
using a 7.0% discount rate and 5% expected increase in future compensation, was
$1,243,000. The accumulated benefit obligation, which was reflected as a
noncurrent liability at December 31, 2001, totaled $707,000.

10. 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, 2001 or
2000.

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 2001, 2000 and 1999, shares of the Companys common stock were
repurchased and retired under authorizations made by the Board of Directors. As
of December 31, 2001, the Company had unused authorizations from the Board for
the repurchase of approximately 1,429,000 additional shares.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

11. 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 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, 2001, 3,810,000 shares were reserved for
issuance under the 1989 and 2000 Plans.

A summary of stock option activity during 1999, 2000 and 2001 is
shown below:

|                                                     |                                                          |                   |           |           |          |              |               |               |                 |   |      |          |      | 
|---------------------------------------------------- | -------------------------------------------------------- | ----------------- | --------- | --------- | -------- | ------------ | ------------- | ------------- | --------------- | - | ---- | -------- | ---- | 
|                                                     |                                                          |                   |           |           |          |              |               |               |                 |   |      | Weighted
|                                                     |                                                          |                   |           |           |          |              |               |               |                 |   |      | Average 
|                                                     |                                                          |                   |           | Option    |          | Option Price |               | Exercise     
|                                                     |                                                          |                   |           | Shares    |          | Range        |               | Price        
|                                                     |                                                          |                   |           |           |          |              |               |              
|Outstanding
at January 1, 1999
(407,605 exercisable) |                                                          |                   | 1,076,963 |           |          | $            | 5.03 - $12.13 |               |                 | $ | 8.84 |         
|                                                     |                                                          | Granted in 1999   |           |           | 477,230  |              |               |               | 6.63 -     7.50 |   |      |          | 7.47 | 
|                                                     |                                                          | Exercised in 1999 |           |           | (32,897  | )            |               |               | 5.03 -     6.55 |   |      |          | 5.14 | 
|                                                     |                                                          | Forfeited in 1999 |           |           | (55,094  | )            |               |               | 7.50 -   12.13  |   |      |          | 8.59 | 
|                                                     |                                                          |                   |           |           |          |              |               |               |                 |   |      |         
|                                                     | Outstanding at December 31, 1999
(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     |     
|                                                     |                                                          |                   |           |           |          |              |               |               |                 |   |      |         

Additional information regarding stock options outstanding at
December 31, 2001 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 - $  6.50    |  |                     | 946,509   |                     |  | $         | 5.85 |          |  | 8.6 yrs  |  |  | 159,373 |          |           | $ | 5.65  | 
|$6.51 - $  8.50    |  |                     | 600,960   |                     |  |           | 7.61 |          |  | 6.2 yrs  |  |  | 446,583 |          |           |   | 7.70  | 
|$8.51 - $12.13     |  |                     | 670,672   |                     |  |           | 9.84 |          |  | 6.0 yrs  |  |  | 507,672 |          |           |   | 10.20 | 
|                   |  |                     |           |                     |  |           |      |          |  |          |  |  |         |          |           |   |       |  |  | 
|                   |  |                     | 2,218,141 |                     |  |           |      |          |  |          |  |  |         |          | 1,113,628 |   |       |  |  | 
|                   |  |                     |           |                     |  |           |      |          |  |          |  |  |         |          |           |   |       |  |  | 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

11. STOCK OPTION AND INCENTIVE PLANS (Continued)

As of December 31, 2001, 282,000 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 2001, 2000 or 1999. Using fair value assumptions
specified in SFAS No. 123, the weighted average per share value of options
granted during 2001, 2000 and 1999 was $2.81, $2.42 and $3.26, 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 $20,169,000 in
2001, $17,896,000 in 2000 and $16,947,000 in 1999, compared to reported net
income of $21,010,000 in 2001, $18,724,000 in 2000 and $17,939,000 in 1999. Pro
forma earnings per share would have been $0.94, $0.84 and $0.80 in 2001, 2000
and 1999, respectively, rather than the reported totals of $0.98 in 2001, $0.88
in 2000, and $0.85 in 1999.

The fair value of each option granted in 2001, 2000 and 1999 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 4.9 years in 2001 and 2000, and 4.8 years in 1999. The expected
volatility percentages used for options granted were 37.7% in 2001, 38.2% for
2000 and 43.4% for 1999.

12. 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,
2001. 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 $15,659,000 as of December 31, 2001, including $4,947,000
related to franchisee financing and $10,712,000 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.

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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

13. 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. During 2001, the Companys management redefined
the composition of these two segments to better monitor and assess their
respective operating performance. The retail segment now 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.

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 pension plan termination charge in
2001, a $1,233,000 charge in 2000 for management restructuring, charges totaling
$5,954,000 in 1999 for the write-off of an uncollectible note receivable and the
relocation of certain distribution facilities, and a gain of $2,618,000 in 1999
related to the sale of a distribution center. Segment information for the three
years ended December 31, 2001, 2000 and 1999 is as follows (in thousands):

|                             |                                 |  |   |         |  |           |   |         |  |  |   |           |  | 
|---------------------------- | ------------------------------- |  | - | ------- |  | --------- | - | ------- |  |  | - | --------- |  | 
|                             |                                 |  |   | Retail  |  | Wholesale |   | Total  
|                             |                                 |  |   |         |  |           |   |        
|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 | 
|                             | Inter-segment net sales         |  |   |        |  |           |   | 159,020 |  |  |   | 159,020   | 
|                             | 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   | 
|                             | Inter-segment net sales         |  |   |        |  |           |   | 121,627 |  |  |   | 121,627   | 
|                             | Operational EBITDA              |  |   | 24,602  |  |           |   | 30,087  |  |  |   | 54,689    | 
|                            
|Year ended December 31, 1999 |                                 |  |   |         |  |           |   |         |  |  |   |          
|                             | Total assets                    |  | $ | 128,551 |  |           | $ | 220,132 |  |  | $ | 348,683   | 
|                             | Operating results -             |  |   |         |  |           |   |         |  |  |   |           | 
|                             | Net sales to external customers |  |   | 174,274 |  |           |   | 568,776 |  |  |   | 743,050   | 
|                             | Inter-segment net sales         |  |   |        |  |           |   | 105,562 |  |  |   | 105,562   | 
|                             | Operational EBITDA              |  |   | 17,936  |  |           |   | 30,074  |  |  |   | 48,010    | 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED

14. PROVISION FOR DOUBTFUL ACCOUNTS AND NOTES

In 1999, the Companys provision for doubtful accounts and notes
included $4,589,000 associated with the write-off of a note receivable from a
former distributor. The Company had held written guarantees from the
distributors former owners and had filed suit in 1989 to recover under such
guarantees. The lawsuit was tried and a jury verdict was reached in July 1999 in
favor of the distributors former owners, which resulted in the charge to
earnings by the Company.

15. 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.

SUPPLEMENTARY DATA:

QUARTERLY FINANCIAL INFORMATION

Unaudited quarterly results for 2001 and 2000 are summarized as
follows:

|                     |          |   |                                          |     |         |   |         |     |         |   |         |     |  |   |         |     | 
|-------------------- | -------- | - | ---------------------------------------- | --- | ------- | - | ------- | --- | ------- | - | ------- | --- |  | - | ------- | --- | 
|                     |          |   | (In thousands, except per share amounts)
|                    
|                     |          |   | First                                    |     | Second  |   | Third   |     | Fourth 
|                     |          |   | Quarter                                  |     | Quarter |   | Quarter |     | Quarter
|                     |          |   |                                          |     |         |   |         |     |        
|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 | 
|                    
|2000                 |          |   |                                          |     |         |   |         |     |         |   |         |     |  |   |         |    
|Net sales            |          | $ | 177,389                                  |     |         | $ | 206,434 |     |         | $ | 267,883 |     |  | $ | 251,034 |    
|Gross profit         |          |   | 31,886                                   |     |         |   | 41,690  |     |         |   | 62,275  |     |  |   | 62,396  |    
|Net income           |          |   | 3,945                                    |     |         |   | 5,009   |     |         |   | 5,302   |     |  |   | 4,468   |    
|Earnings per share - |          |   |                                          |     |         |   |         |     |         |   |         |     |  |   |         |    
|                     | Basic*   |   |                                          | .19 |         |   |         | .24 |         |   |         | .25 |  |   |         | .21 | 
|                     | Diluted* |   | $                                        | .19 |         |   | $       | .24 |         |   | $       | .25 |  |   | $       | .21 | 



|* |  | The total of earnings per share for each of the quarters of 2000
does not equal earnings per share for the year ended December 31,
2000, due to the effect of rounding the individual quarters.
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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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 24, 2002, 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 24, 2002, 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.




Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The 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 24, 2002, 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 24, 2002, under the captions Election of Directors and Executive
Compensation, and is incorporated herein by this reference.

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PART IV




Item 14. 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, 2001, and 2000                                                                                                                                   
|        |  |  |  |  |  |                                                                                                                                                                                             
|        |  |  |  |  |  | Consolidated Statements of Income  Years ended December 31, 2001,
2000 and 1999                                                                                                            
|        |  |  |  |  |  |                                                                                                                                                                                             
|        |  |  |  |  |  | Consolidated Statements of Stockholders Equity 
Years ended December 31, 2001, 2000 and 1999                                                                                              
|        |  |  |  |  |  |                                                                                                                                                                                             
|        |  |  |  |  |  | Consolidated Statements of Cash Flows  Years ended
December 31, 2001, 2000 and 1999                                                                                                        
|        |  |  |  |  |  |                                                                                                                                                                                             
|        |  |  |  |  |  | Notes to Consolidated Financial Statements                                                                                                                                                  
|        |  |  |  |  |  |                                                                                                                                                                                             
|(a)
(2) |  |  |  |  |  | FINANCIAL STATEMENT SCHEDULES                                                                                                                                                               
|        |  |  |  |  |  |                                                                                                                                                                                             
|        |  |  |  |  |  | Report of Independent Certified Public Accountants (at p. 39 of this
Report)                                                                                                                
|        |  |  |  |  |  |                                                                                                                                                                                             
|        |  |  |  |  |  | Schedule II  Valuation and qualifying accounts (at p. 40 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. 41 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, 2001.                                                                                                

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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 on this 6th day of
March, 2002.

| |     |  |                                                                          
| | --- |  | -------------------------------------------------------------------------
| |     |  | TBC CORPORATION                                                          
|
| |     |  |                                                                          
|
| | By: |  | -s- LAWRENCE C. DAYLawrence C. Day
President  and
Chief Executive Officer

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 6, 2002
|                                                    
|                                                     |  |                                                                 |  |              
|                                                    
|-s- THOMAS W. GARVEYThomas W. Garvey                 |  | Executive Vice President,
Chief Financial Officer
and Treasurer |  | March 6, 2002
|                                                    
|                                                     |  |                                                                 |  |              
|                                                     | 
|                                                    
|* MARVIN E. BRUCEMarvin E. Bruce                     |  | Chairman of the Board
of Directors                              |  | March 6, 2002
|                                                    
|                                                     |  |                                                                 |  |              
|                                                    
|* ROBERT H. DUNLAPRobert H. Dunlap                   |  | Director                                                        |  | March 6, 2002
|                                                    
|                                                     |  |                                                                 |  |              
|                                                    
|* CHARLES A. LEDSINGER, JR.Charles A. Ledsinger, Jr. |  | Director                                                        |  | March 6, 2002
|                                                    
|                                                     |  |                                                                 |  |              

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|                                         |  |          |  |              
|---------------------------------------- |  | -------- |  | -------------
|Name                                     |  | Title    |  | Date         
|                                         |  |          |  |              
|                                        
|* WILLIAM J. McCARTHYWilliam J. McCarthy |  | Director |  | March 6, 2002
|                                        
|                                         |  |          |  |              
|                                        
|* RICHARD A. McSTAYRichard A. McStay     |  | Director |  | March 6, 2002
|                                        
|                                         |  |          |  |              
|                                        
|* DONALD RATAJCZAKDonald Ratajczak       |  | Director |  | March 6, 2002
|                                        
|                                         |  |          |  |              
|                                        
|* ROBERT R. SCHOEBERLRobert R. Schoeberl |  | Director |  | March 6, 2002
|                                        
|                                         |  |          |  |              
|                                        
|* RAYMOND E. SCHULTZRaymond E. Schultz   |  | Director |  | March 6, 2002
|                                        
|                                         |  |          |  |              

*     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. DAYLawrence C. Day
Attorney-in-Fact

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(PRICEWATERHOUSECOOPERS LOGO)






| |  |                                                                                                                                                 
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 8, 2002 appearing on page 16 of this Form 10-K also included an
audit of the financial statement schedule listed in Item 14(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 8, 2002

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##### Table of Contents



TBC CORPORATION

SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS

FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999

(In thousands)

|                                |  |            |       |          |  |           |       |            |              |   |       |     |  |   |       |     |  |   |       | 
|------------------------------- |  | ---------- | ----- | -------- |  | --------- | ----- | ---------- | ------------ | - | ----- | --- |  | - | ----- | --- |  | - | ----- | 
|                                |  |            |       |          |  | Additions |       |            |              |   |       |     |  |  
|                                |  |            |       |          |  |           |       |            |              |   |       |     |  |  
|                                |  |            |       |          |  | Charged   |       | Charged    |              |   |       |     |  |   |       |    
|                                |  |            |       |          |  | to Costs  |       | to         |              |   |       |     |  |   |       |    
|                                |  | Balance    |       | and      |  | Other     |       | Balance    |              |   |       |    
|                                |  | January 1, |       | Expenses |  | Accounts  |       | Deductions | December 31, |  
|                                |  |            |       |          |  |           |       |            |              |  
|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 | 
|                               
|1999                            |  |            |       |          |  |           |       |            |              |   |       |     |  |   |       |     |  |   |       | 
|Warranty reserve                |  |            | 8,025 |          |  |           | 4,881 |            |              |   |      |     |  |   | 5,420 | (2) |  |   | 7,486 | 
|Allowance for
doubtful accounts |  |            | 9,298 |          |  |           | 5,090 |            |              |   | 92    |     |  |   | 6,729 | (3) |  |   | 7,751 | 



---

|(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 atManuallyNumbered 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, 200                                                                                                                             |                                 | * 
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                 |   
|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)                                                                                                                                                   |                                 | 46
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                 |   
|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                                                       |  | 60 
|     |  |                                                                                                                                                                                                                                                                                                                                |  |    
|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                                                     |  | 75 
|     |  |                                                                                                                                                                                                                                                                                                                                |  |    
|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
April 23, 1997 was filed as Exhibit 10.1 to the TBC Corporation
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997                                                                                                                           |  | *  
|     |  |                                                                                                                                                                                                                                                                                                                                |  |    
|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                                                                                                             |  | 140

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|      |  |                                                                                                                                                                                                                                                                                                                                                              |  |    
|----- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---
|10.6  |  | Executive Employment Agreement between the Company and Lawrence C.
Day, amended and restated as of November 1, 2000 (without Exhibit A
thereto, which is substantially identical to the form of Trust
Agreement referenced in Exhibit 10.1) was filed as Exhibit 10.6 to
the TBC Corporation Annual Report on Form 10-K
for the year ended December 31, 2000 |  | *  
|      |  |                                                                                                                                                                                                                                                                                                                                                              |  |    
|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, was filed as Exhibit 10.1 to the TBC Corporation
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997                                                                                                                                                   |  | *  
|      |  |                                                                                                                                                                                                                                                                                                                                                              |  |    
|10.10 |  | TBC Corporation Executive Supplemental Retirement Plan, as amended
through August 1, 1997, was filed as Exhibit 10.3 to the TBC
Corporation Quarterly Report on Form 10-Q for the
quarter ended September 30, 1997                                                                                                                                           |  | *  
|      |  |                                                                                                                                                                                                                                                                                                                                                              |  |    
|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                                                                                                                                                      |  | *  
|      |  |                                                                                                                                                                                                                                                                                                                                                              |  |    
|      |  | Other Material
Contracts                                                                                                                                                                                                                                                                                                                                     |  |    
|      |  |                                                                                                                                                                                                                                                                                                                                                              |  |    
|10.13 |  | 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                                                                                                                                                                                   |  | *  
|      |  |                                                                                                                                                                                                                                                                                                                                                              |  |    
|10.14 |  | Form of Franchise Agreement in use by Big O Tires, Inc.                                                                                                                                                                                                                                                                                                      |  | 141

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|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |    
|----- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---
|10.15 |  | 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)                                                                                                                           |  | *  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |    
|10.16 |  | 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                                                                                                                                                            |  | *  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |    
|10.17 |  | 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                                                                                                                                                                                 |  | *  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |    
|10.18 |  | 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                                                                                                                                                                 |  | *  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |    
|10.19 |  | Agreement, effective January 1, 2002, between the Company and
Cooper Tire & Rubber Company                                                                                                                                                                                                                                                                                                    |  | 198
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |    
|(21)  |  | SUBSIDIARIES OF THE COMPANY:                                                                                                                                                                                                                                                                                                                                                                  |  |    
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |    
|21.1  |  | List of the names and jurisdictions of incorporation of the
subsidiaries of the Company                                                                                                                                                                                                                                                                                                       |  | 215
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |    
|(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) |  | 216
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |    
|(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                                                                                                                                                                                                                                                              |  | 217
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |    
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |    
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |    
|*   |  | 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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TBC CORPORATION

EXHIBITS

TO

FORM 10-K

FOR THE YEAR ENDEDDECEMBER 31, 2001

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