CONFORMED COPY
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED COMMISSION FILE NUMBER
JUNE 30, 1995 0-11579
TBC CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 31-0600670
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4770 Hickory Hill Road
Memphis, Tennessee 38141
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (901) 363-8030
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by 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
24,783,834 Shares of Common Stock were outstanding as of June 30, 1995.
INDEX TO EXHIBITS at page 11 of this Report<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
ASSETS
June 30, December 31,
1995 1994
(Unaudited)
CURRENT ASSETS
Accounts and notes receivable, less
allowance for doubtful accounts
of $7,795 on June 30, 1995
and $7,069 on December 31, 1994:
Related parties $ 25,336 $ 13,557
Other 95,337 88,221
Total accounts and notes receivable 120,673 101,778
Inventories 57,348 39,754
Refundable federal and state income taxes - 383
Deferred federal income taxes 2,192 1,928
Other current assets 2,672 2,482
Total current assets 182,885 146,325
PROPERTY, PLANT AND EQUIPMENT, AT COST
Land and improvements 1,560 1,560
Buildings 8,440 8,438
Equipment 19,668 16,943
Furniture and fixtures 2,183 2,101
Leasehold improvements 600 600
32,451 29,642
Less accumulated depreciation 17,082 15,020
Total property, plant and equipment 15,369 14,622
OTHER ASSETS 9,853 8,735
TOTAL ASSETS $208,107 $169,682
See accompanying notes to consolidated financial statements.
-2-<PAGE>
TBC CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, December 31,
1995 1994
(Unaudited)
CURRENT LIABILITIES
Outstanding checks, net $ 6,151 $ 4,257
Notes payable to banks 56,694 25,780
Accounts payable, trade 32,560 20,763
Federal and state income taxes payable 362 -
Other current liabilities 4,026 4,246
Total current liabilities 99,793 55,046
NONCURRENT LIABILITIES 803 653
STOCKHOLDERS' EQUITY
Common stock, $.10 par value,
shares issued and outstanding -
24,784 on June 30, 1995 and
26,282 on December 31, 1994 2,478 2,628
Additional paid-in capital 9,945 10,391
Retained earnings 95,088 100,964
Total stockholders' equity 107,511 113,983
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $208,107 $169,682
See accompanying notes to consolidated financial statements.
-3-<PAGE>
TBC CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
1995 1994 1995 1994
NET SALES* $132,223 $132,925 $262,566 $266,705
COSTS AND EXPENSES:
Cost of sales 120,270 119,988 238,702 240,951
Distribution 2,041 2,080 3,968 4,059
Selling and administrative 3,323 5,530 6,650 8,628
Other (income) expense - net 80 (485) (159) (948)
Total costs and expenses 125,714 127,113 249,161 252,690
INCOME BEFORE INCOME TAXES 6,509 5,812 13,405 14,015
PROVISION FOR INCOME TAXES 2,474 2,209 5,094 5,326
NET INCOME $ 4,035 $ 3,603 $ 8,311 $ 8,689
Earnings per share $ .16 $ .13 $ .33 $ .31
Weighted average number of shares
and equivalents outstanding 24,994 28,374 25,348 28,444
* Including sales to related parties of $36,277 and $33,765 in the three
months ended June 30, 1995 and 1994, respectively, and $72,123 and $71,405
in the six months ended June 30, 1995 and 1994, respectively.
See accompanying notes to consolidated financial statements.
-4-<PAGE>
TBC CORPORATION
CONSOLIDATED STATEMENTS OF
STOCKHOLDERS' EQUITY
(In thousands)
(Unaudited)
Common Stock Additional
Number of Paid-In Retained
Shares Amount Capital Earnings Total
Six Months Ended
June 30, 1994
BALANCE, JANUARY 1, 1994 28,377 $2,838 $11,056 $102,656 $116,550
Net income for period 8,689 8,689
Issuance of common stock
under stock option and
incentive plans 21 2 144 - 146
Repurchase and retirement
of common stock (387) (39) (153) (4,802) (4,994)
Tax benefit from exercise
of stock options - - 41 - 41
BALANCE, JUNE 30, 1994 28,011 $2,801 $11,088 $106,543 $120,432
Six Months Ended
June 30, 1995
BALANCE, JANUARY 1, 1995 26,282 $2,628 $10,391 $100,964 $113,983
Net income for period 8,311 8,311
Issuance of common stock
under stock option and
incentive plans, net 19 2 132 - 134
Repurchase and retirement
of common stock (1,517) (152) (600) (14,187) (14,939)
Tax benefit from exercise
of stock options - - 22 - 22
BALANCE, JUNE 30, 1995 24,784 $2,478 $ 9,945 $ 95,088 $107,511
See accompanying notes to consolidated financial statements.
-5-<PAGE>
TBC CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months
Ended June 30,
1995 1994
OPERATING ACTIVITIES
Net income $ 8,311 $ 8,689
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 2,184 2,100
Amortization 8 46
Deferred federal income taxes (264) (881)
Changes in operating assets and liabilities:
Receivables (18,761) (15,623)
Inventories (17,594) (6,378)
Other current assets (190) (254)
Outstanding checks, net 1,894 4,082
Accounts payable, trade 11,797 3,420
Federal and state income taxes
refundable or payable 767 212
Other current liabilities (220) 1,926
Noncurrent liabilities 150 312
Net cash provided by (used in)
operating activities (11,918) (2,349)
INVESTING ACTIVITIES
Purchase of property, plant and equipment (2,931) (1,957)
Investment in joint venture (1,260) -
Other, net - 35
Net cash used in investing activities (4,191) (1,922)
FINANCING ACTIVITIES
Net bank borrowings (repayments) under
short-term borrowing arrangements 30,914 9,119
Issuance of common stock under stock option and
incentive plans 134 146
Repurchase and retirement of common stock (14,939) (4,994)
Net cash provided by (used in)
financing activities 16,109 4,271
Increase (decrease) in Cash and Cash Equivalents - -
CASH AND CASH EQUIVALENTS
Balance - Beginning of period - -
Balance - End of period $ - $ -
Supplemental Disclosures of Cash Flow Information:
Cash paid for - Interest $ 1,178 $ 462
- Income taxes 4,591 5,995
Supplemental Disclosure of Non-Cash Financing
Activity:
Tax benefit from exercise of stock options $ 22 $ 41
See accompanying notes to consolidated financial statements.
-6-<PAGE>
TBC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Financial Statement Presentation
The consolidated balance sheet as of June 30, 1995, the consolidated
statements of income for the three months and six months ended June 30, 1995
and 1994, and the consolidated statements of stockholders' equity and cash
flows for the six months ended June 30, 1995 and 1994, have been prepared by
the Company, without audit. It is Management's opinion that these
statements include all adjustments, consisting only of normal recurring
adjustments, necessary to present fairly the financial position, results of
operations and cash flows as of June 30, 1995 and for all periods presented.
The results for the periods presented are not necessarily indicative of the
results that may be expected for the full year.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that
these consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's 1994 Annual
Report.
2. Earnings Per Share
Earnings per share have been computed by dividing net income by the
weighted average number of common shares and equivalents outstanding.
Common share equivalents included in the computation represent shares
issuable upon assumed exercise of stock options, which would have a dilutive
effect in the respective periods. Fully diluted earnings per share did not
significantly differ from primary earnings per share in the periods
presented.
3. Other Assets
Other assets consist of the following (in thousands):
June 30, December 31,
1995 1994
Notes receivable $7,766 $7,900
Intangible assets, net of amortization 827 835
Investment in joint venture 1,260 -
$9,853 $8,735
The notes receivable totals include a note for $4,897,000 from a former
distributor. The maker of the note was discharged in a proceeding under
Chapter 11 of the Bankruptcy Code in 1991. The Company received
distributions totaling $290,000 from the bankruptcy proceeding. The Company
holds written guarantees of the distributor's account, absolute and
continuing in form, signed by the principal former owners and officers of
the distributor and their wives, upon which the Company filed suit in 1989.
The defendants have pleaded various defenses based on, among other things,
an alleged oral cancellation of the guarantees. The defendants have also
filed a third party complaint against the Company's former chief executive
officer in which they claim the right to recover against him for any
liability they may have to the Company. The Company believes, on the basis
of applicable Tennessee law, that those defenses are invalid and that there
is no merit to the third party complaint. In October 1994, the Court
granted the Company's motion to exclude evidence of any oral cancellation
of the guarantees. The Court's order has been appealed and no date for
trial has been scheduled. The Company knows of no reason to believe that
the defendants will be unable to pay any judgment that may be entered
against them in the action.
-7-<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Financial Condition
The Company's financial position and liquidity remain strong. Stock
repurchases during the first half led to a decline in working capital, from
$91.3 million at December 31, 1994 to $83.1 million at June 30, 1995.
Current accounts and notes receivable increased by $18.9 million and inventories
increased by $17.6 million, due principally to seasonal fluctuations. Other
assets increased $1.1 million due primarily to the Company's investment in a
joint venture in Mexico. The composite total owed to banks and vendors, in the
form of outstanding checks, notes payable to banks and accounts payable,
increased by $44.6 million from December 31, 1994 to June 30, 1995. This
increase, together with cash generated from operations, enabled the Company to
fund the above-noted increases in receivables and inventories, as well as the
repurchase of 1.5 million shares of common stock for $14.9 million and normally
recurring capital expenditures during the first six months of 1995.
Results of Operations
Net sales decreased 0.5% during the second quarter and 1.6% through the
first six months compared to the year-earlier levels. Sales of tires accounted
for approximately 88% of total sales in the second quarter and first six months
of both 1995 and 1994. Unit tire volume declined 2.2% in the current quarter
and 4.4% in the first half of 1995, compared with the same periods in 1994.
The average tire sales price increased 1.5% in the current quarter and 2.9% in
the first six months compared with the year-earlier levels, due primarily to
the effect of industry price increases.
Cost of sales as a percentage of net sales increased from 90.3% in the
second quarter of 1994 to 91.0% in the current quarter. For the year-to-date
period, cost of sales increased from 90.3% of net sales in 1994 to 90.9% in
1995. The fluctuations were due principally to the combined effects of higher
net product costs from suppliers and increased shipments to customers directly
from manufacturers rather than through the Company's distribution facilities.
Distribution expenses declined 1.9% in the current quarter and 2.2% in the
first six months of 1995 compared to the year-earlier levels due to reduced
operating expenses.
Selling and administrative expenses decreased $2.2 million in the second
quarter and $2.0 million in the first half of 1995, compared to the prior year
levels. The reductions were due to lower expenses for supplemental retirement
benefits, which were recorded for the first time in the second quarter of 1994.
The fluctuations in net other income/expense in the second quarter and first
six months were due principally to increased interest expenses associated with
higher interest rates and bank borrowing levels, compared to the year-earlier
levels.
-8-<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Stockholders held on April 20, 1995,
Messrs. Louis S. DiPasqua, Dwain W. Higginbotham and Nicholas F. Taubman were
elected as directors of the Company for a term expiring at the 1998 Annual
Meeting of Stockholders and stockholders approved the appointment of Coopers
& Lybrand as independent public accountants of the Company for the year ending
December 31, 1995.
The number of shares of Common Stock voted for each director elected at the
Annual Meeting and the number of shares with respect to which authority to vote
for each such director was withheld are as follows: 21,864,333 shares were voted
for Mr. DiPasqua and authority to vote 125,817 shares for Mr. DiPasqua was
withheld; 21,961,744 shares were voted for Mr. Higginbotham and authority to
vote 28,406 shares for Mr. Higginbotham was withheld; 21,961,914 shares were
voted for Mr. Taubman and authority to vote 28,236 shares for Mr. Taubman was
withheld. A total of 21,936,070 shares were voted for approval of the
appointment of Coopers & Lybrand, 33,813 shares were voted against approval, and
the holders of 20,267 shares abstained from voting on such approval.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - See Index to Exhibits
(b) No reports on Form 8-K were filed during the three months ended
June 30, 1995.
-9-<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TBC CORPORATION
July 24, 1995 By /s/ Ronald E. McCollough
Ronald E. McCollough
Senior Vice President Operations
(principal accounting and
financial officer)
-10-<PAGE>
INDEX TO EXHIBITS
Located at
Sequentially-
Exhibit No. Description Numbered Page
(10) MATERIAL CONTRACTS:
Management Contracts and Compensatory Plans
or Arrangements
10.1 TBC Corporation 1995 Management Incentive
Compensation Plan, effective for the calendar
year 1995 and thereafter ............................ 12
-11-<PAGE>
Exhibit 10.1
TBC CORPORATION
1995 MANAGEMENT INCENTIVE COMPENSATION PLAN
Section 1. Effective Date. TBC Corporation's 1995 Management Incentive
Compensation Plan (the "Plan"), as it may be amended from time to time,
shall be effective for the calendar year 1995 and thereafter. The Plan
replaces the TBC Corporation Management Incentive Compensation Plan
theretofore in effect (the "prior plan").
Section 2. Objectives. The objectives of the Plan are to:
a. Motivate participants to enhance shareholder value.
b. Motivate participants to achieve specific Company (or subsidiary),
unit and individual goals.
c. Provide participants a competitive compensation opportunity.
Section 3. Eligibility. All management employees of the Company and its
subsidiaries who have been designated by the Compensation Committee, upon the
recommendation of the Chief Executive Officer, shall be eligible to participate
in the Plan. All persons who were participants in the prior plan shall be
Participants unless otherwise determined by the Committee.
Section 4. Definitions. As used in the Plan, the following terms shall have
the following respective meanings:
a. "Award" means the amount of Incentive Compensation a Participant
earns under the Plan during an applicable Year. It is determined for each
Participant by (i) multiplying (aa) the Targets achieved by that Participant in
each of the Measurement Factors applicable to him or her (bb) by the weighting
assigned for that Participant to that Measurement Factor; (ii) aggregating the
results; and (iii) multiplying that aggregation of results by the applicable
percentage of the Participant's Base Salary determined from the Award
Opportunity for the Participant's Group, as shown on Schedule I to the Plan.
"Award Opportunity" means the range of Awards to which a Participant may become
entitled, commencing at the Target Threshold upon achievement of the Performance
Threshold and terminating at the Target Max upon achievement at or above the
Performance Max.
b. "Base Salary" means the base salary earned by a Participant from
employment with the Company and/or one or more of its subsidiaries during the
applicable Year, including amounts of Base Salary the payment of which a
Participant has elected to defer or to contribute to a flexible benefit or
retirement plan established by the Company. Base Salary shall not include any
amount payable pursuant to an employee benefit or incentive compensation plan
or any other compensation or fringe benefits in the nature of reimbursement of
moving expenses, excess life insurance premiums, overtime, or the like.
-12-<PAGE>
c. "Committee" means the Compensation Committee of the Company's Board
of Directors.
d. "Company" means TBC Corporation.
e. "Group" means the category of managers to which a Participant is
assigned by the Committee during an applicable Year. The Groups established by
the Plan are as follows: Group I, the Chief Executive Officer; Group II, the
Senior Vice Presidents; Group III, the other Vice Presidents; and Group IV,
other Participants.
f. "Incentive Compensation" means compensation payable to a
Participant under the provisions of the Plan.
g. "Measurement Factor" means one of the criteria by which the
eligibility of a Participant for an Award under the Plan, in respect of an
applicable Year, is to be determined. The standard Measurement Factors are
(i) Net Operating Income, (ii) the units representing the Company's share of
the replacement tire market and (iii) revenue derived by the Company from
sales of non-tire products (adjusted for inflation) for the applicable Year,
but other Measurement Factors may be prescribed for different Participants
depending on their respective responsibilities. The Committee, on the
recommendation of the Chief Executive Officer, will determine at the beginning
of each Year, as to each Participant, the Measurement Factors, the Performances
thereof, and their respective weightings to be applied in order to determine
the Participant's entitlement to an Award under the Plan for that Year;
provided, however, that Net Operating Income of the Company and its subsidiaries
(or such of them as may be specified) shall be a significant Measurement Factor
in determining the Award earned by each Participant.
h. "Net Operating Income" means, for any Year, net income derived from
the operation of the ordinary business of the Company and its subsidiaries (or
such of them as may be specified), exclusive of nonrecurring and extraordinary
items and the results of operation of any other business carried on by the
Company separate and apart from the ordinary business of the Company and its
subsidiaries (or such of them as may be specified), before taking into account
any Incentive Compensation payable or paid under the Plan and before taxes on
or measured by income.
i. "Participant" means a management or key staff employee of the
Company or a subsidiary of the Company who has been designated by the Committee,
upon the recommendation of the Chief Executive Officer, to participate in the
Plan.
j. "Performance" means the extent to which a Measurement Factor is
achieved during an applicable Year. A "Performance Threshold" means the lowest
level of Performance of a Measurement Factor at which a Participant may be
eligible for an Award. A "Performance Goal" means the level of Performance of
a Measurement Factor that a Participant is expected to achieve. A "Performance
Max" means the level of Performance of a Measurement Factor at or above which
the Participant may receive the highest Award available in respect of that
Measurement Factor.
-13-<PAGE>
k. "Target" means the Award Opportunity available to each Participant
with respect to each Measurement Factor applicable to the Participant during an
applicable Year. A "Target Threshold" means the lowest Award to which a
Participant may become entitled in respect of Performance of a particular
Measurement Factor. A "Target Goal" means the amount of Award a Participant is
expected to earn in respect of Performance of a particular Measurement Factor.
A "Target Max" means the highest Award that a Participant may receive in respect
of Performance of a particular Measurement Factor.
l. "Year" means a calendar year. "Current Year" means the Year for
which a determination of Incentive Compensation is to be made with respect to a
Participant under the Plan.
Section 5. Amount of Award.
a. The Plan affords every Participant an Award Opportunity which, if
earned, entitles the Participant to receive Incentive Compensation equal to a
percentage of the Participant's Base Salary. The percentage depends upon (i)
the Group to which the Participant is assigned, (ii) the Performance of the
Measurement Factors applicable to that Participant, and (iii) the respective
weightings of those Measurement Factors.
b. The Committee shall cause each Participant to be furnished with a
schedule ("Incentive Compensation Target") for the Current Year showing the
Measurement Factors applicable to that Participant, their respective weightings
and that Participant's Award Opportunity.
c. A Participant's Award shall be pro-rated in the event of
participation in the Plan for less than all of the Current Year or in the event
the Participant moves into a different Group. The Participant's Award shall
equal the sum of the partial Awards computed by multiplying (i) the Base Salary
earned by the Participant while covered under one Group by (ii) the percentage
of Base Salary for that Group.
d. Anything to the contrary in this Section 5 notwithstanding, a
Participant's Award may be reduced or cancelled by the Chief Executive Officer,
upon recommendation of the Participant's supervisor, on the basis of the
Participant's individual performance or in the event of conduct by the
Participant which they shall deem detrimental to the Company.
e. To receive any Award, a Participant must be an employee of the
Company or a subsidiary on December 31 of the Current Year unless employment was
terminated during the Current Year by reason of retirement in accordance with
Company policy, death or disability, in which cases the Award shall be prorated.
Section 6. Determination of Measurement Factors, etc.
a. During the first eight weeks of each Year following adoption of
the Plan, the Chief Executive Officer shall submit to the Committee, as to each
Participant for the Current Year, a statement of that Participant's Award
Opporunity and the Chief Executive Officer's recommendations as to the
Measurement Factors applicable to the Participant and their respective
-14-<PAGE>
weightings, with such explanations as the Chief Executive Officer may deem
appropriate or as the Committee shall request. The Committee shall act upon
those recommendations, with such changes as it may adopt, prior to the end of
the first calendar quarter of the Year. Such action by the Committee upon
those recommendations shall constitute direction to the Chief Executive Officer
to furnish to Participants, as promptly as reasonably possible, their
respective Incentive Compensation Targets.
b. To the extent practicable, determination of the Performance of
Measurement Factors shall be based upon the books and records of the Company
and its subsidiaries kept in the ordinary course of business, including their
audited financial statements and results of operations, and such official and
industry data as is generally available and relied upon by the Company and its
competitors and suppliers in the industry. Any questions or disputes regarding
the correctness, adequacy, definition or otherwise of such books, records and
data shall be finally determined for all purposes of the Plan by the Committee,
acting upon the recommendation of the Chief Executive Officer and such other
sources as the Committee shall determine.
c. Promptly after the public announcement of the Company's results for
the Current Year, the Chief Executive Officer shall certify to the Committee the
Award calculations for each Participant. The Committee shall act upon that
certification so as to permit payment of all Awards promptly thereafter and, in
any event, prior to the end of the first calendar quarter of the next succeeding
year.
d. In no event shall any Awards be payable to Participants unless the
Company's consolidated net income before taxes for the Current Year, after
taking into account the aggregate amount of the Awards, shall exceed the
Company's consolidated net income before taxes for the Year immediately
preceding the Current Year. In addition, the aggregate amount of Awards for
the Current Year shall not exceed the amount by which the Company's consolidated
net income before taxes for the Current Year, after taking into account the
aggregate amount of Awards for the Current Year, shall exceed the Company's
consolidated net income before taxes for the Year immediately preceding the
Current Year. For purposes of this Section 6(d), the Company's consolidated
net income before taxes for any year shall be determined from its audited
consolidated financial statements reduced by any expenditures chargeable against
such income made in connection with the issuance or repurchase of the Company's
shares in that year. The Committee may waive the provisions of this paragraph
in respect of any Current Year and any Participant or Group, in whole or in
part, upon the recommendation of the Chief Executive Officer.
Section 7. Election to take Common Stock.
a. Each Participant entitled to an Award may elect irrevocably to receive his
or her Award, in whole or in part, in the form of Restricted Shares of the
Company's Common Stock. A Participant who so elects shall be granted Restricted
Shares equal in value to the amount of the Award designated by the Participant
plus additional shares ("Bonus Shares") of such stock equal in value to one-half
of the designated amount, determined as of the close of business on the date
the Participant's Award is paid or would have been paid if the Participant
had not so elected. Such election must be made no later than June 30 of the
Current Year on a form
-15-<PAGE>
provided by the Company for the purpose. The designation may be made as a
percentage of any Award that may be earned by the Participant in the Current
Year or as a specified amount of such Award or any combination thereof, provided
that no election shall be made, or designation be effective, that would result
in the issuance of fewer than 21 shares.
b. Restricted Shares issued to a Participant pursuant to the Plan
shall vest, one-third on a date three years after the date of the Award,
one-third four years after the date of the Award, and the balance five years
after the date of the Award, and shall be subject in all respects to the
provisions contained in Section 7 of the Company's 1989 Stock Incentive Plan;
provided, however, that in any event of forfeiture referred to in said Section
7, only the Bonus Shares that have not yet vested shall be forfeited and all
other Restricted Shares then held for the account of the Participant under the
Plan shall then vest. (Among other things, said Section 7, as applicable to
Restricted Shares issued to a Participant under the Plan, provides, in
substance, that the Participant will possess beneficial ownership of the shares
and the right to vote them and receive any dividends payable on them but may
not assign or sell the shares; that the Company will retain the certificates
for the shares until the shares have vested; and the Bonus Shares will be
forfeited to the Company if the Participant leaves the employ of the Company
otherwise than by reason of death or disability before they have vested.)
Section 8. Withholding for Taxes. Cash payments pursuant to the Plan shall
be reduced by amounts sufficient to satisfy any Federal, state and/or local
tax withholding requirements. With respect to payments in the form of
restricted stock, a Participant shall enter into arrangements with the
Company sufficient to enable the Company to satisfy any such withholding
requirements.
Section 9. Designation of Beneficiary. A Participant may designate one or more
beneficiaries to receive any payment pursuant to the Plan that has not been made
prior to the Participant's death. Such designation must be submitted to the
Company on a form provided by the Company.
Section 10. Amendment and Termination of the Plan. The Plan shall be subject
to amendment or termination by the Committee at any time for any reason,
including perceived distortion of its objectives. In addition, the Chief
Executive Officer may amend the eligibility requirements and/or the schedules
of Awards under the Plan in connection with a reassessment of positions or
changes in organization or staffing. Termination of the Plan shall not preclude
the subsequent payment of Awards earned under the Plan.
-16-<PAGE>
SCHEDULE I TO THE PLAN
Award Opportunity
Performance of each Weighting (Percent of salary by group)
Measurement Factor (Percent) I II III IV
Threshold X % X 15% 9% 6% 4.5%
Goal X % X 50% 30% 20% 15%
Max X % X 75% 45% 30% 22.5%
Note: The Award will be determined by straight-line interpolation for
Performances between (a) the Threshold and the Goal and (b) the Goal
and the Max. The steps between gradations of Performance under (a)
and (b), respectively, may not be the same.
-17-<PAGE>
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> (6,151)<F1>
<SECURITIES> 0
<RECEIVABLES> 128,468
<ALLOWANCES> 7,795
<INVENTORY> 57,348
<CURRENT-ASSETS> 182,885
<PP&E> 32,451
<DEPRECIATION> 17,082
<TOTAL-ASSETS> 208,107
<CURRENT-LIABILITIES> 99,793
<BONDS> 0
<COMMON> 2,478
0
0
<OTHER-SE> 105,033
<TOTAL-LIABILITY-AND-EQUITY> 208,107
<SALES> 262,566
<TOTAL-REVENUES> 262,566
<CGS> 238,702
<TOTAL-COSTS> 238,702
<OTHER-EXPENSES> 10,459
<LOSS-PROVISION> 0<F2>
<INTEREST-EXPENSE> 0<F2>
<INCOME-PRETAX> 13,405
<INCOME-TAX> 5,094
<INCOME-CONTINUING> 8,311
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,311
<EPS-PRIMARY> .33
<EPS-DILUTED> 0<F2>
<FN>
<F1>THIS ITEM IS SHOWN UNDER THE CATEGORY "OUTSTANDING CHECKS, NET" ON THE
CONSOLIDATED BALANCE SHEETS.
<F2>THESE ITEMS ARE NOT SEPARATELY REPORTED ON TBC CORPORATION'S FORM 10-Q.
</FN>
</TABLE>
