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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 31, 1997
UNITED AUTO GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-12297 22-3086739
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
375 Park Avenue, New York, New York 10152
(Address of principal executive offices) (Zip Code)
(212) 223-3300
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
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ITEM 5. Other Events.
On July 31, 1997, United Auto Group, Inc. (the "Company") signed a
definitive agreement to acquire Lynn Alexander, Inc. ("Lynn Alexander"), located
in San Angelo, Texas. Lynn Alexander operates All American Chevrolet, Inc. and
Lynn Alexander Chrysler Plymouth Jeep Eagle Dodge Nissan. The aggregate
consideration for the acquisition is approximately $12.0 million, consisting of
approximately $10.5 million in cash and a $1.5 million promissory note.
Also on July 31, 1997, the Company signed a definitive agreement to
acquire Classic Auto Group ("Classic Auto"), located in the Philadelphia
metropolitan area. Classic Auto operates Classic Honda, Classic Acura, Classic
Nissan, Classic Chevrolet, Classic Buick and Classic BMW in Turnersville,
Classic Saab Buick in Cherry Hill, and Classic Chevrolet in Moorestown, New
Jersey. The aggregate consideration for the acquisition is approximately $30.0
million, consisting of approximately $28.0 million in cash and a $2.0 million
promissory note.
On August 6, 1997, the Company announced several new management
appointments. Marshall S. Cogan, Chairman and Chief Executive Officer, took on
the additional title of President. Robert H. Nelson, formerly Executive Vice
President and Chief Financial Officer, was named Executive Vice President -
Operations. Richard Sinkfield, a director of the Company since December 1993,
was also named Executive Vice President Administration. Karl H. Winters,
formerly Treasurer, was named Executive Vice President and Chief Financial
Officer. James R. Davidson, Senior Vice President - Finance, was also named
Treasurer and Chief Accounting Officer.
For more information, please see the Company's press releases filed as
exhibits hereto, which are incorporated herein by reference.
ITEM 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired: N/A
(b) Pro Forma Financial Information: N/A
(c) Exhibits:
99.1 Press Release relating to acquisitions of Lynn
Alexander, Inc. and Classic Auto Group, issued
July 31, 1997.
99.2 Press Release announcing second quarter 1997 results
and new management appointments, issued August 6, 1997.
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SIGNATURES
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.
UNITED AUTO GROUP, INC.
DATE: August 7, 1997 By: /s/ Philip N. Smith, Jr.
--------------------------
Philip N. Smith, Jr.
Vice President, Secretary
and General Counsel
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EXHIBIT INDEX
Exhibit No. Document
- ----------- --------
99.1 Press Release relating to acquisitions of Lynn Alexander, Inc.
and Classic Auto Group, issued July 31, 1997.
99.2 Press Release announcing 1997 second quarter results and
new management appointments, issued August 6, 1997.
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UNITED AUTO GROUP, INC. PRESS RELEASE
Contact: Robert Nelson Bob Amen
Chief Financial Officer Amen & Associates
Karl Winters 212 448-4200
Treasurer
212 223-3300
FOR IMMEDIATE RELEASE
UNITED AUTO TO BUY TWO DEALERSHIPS GROUPS
WITH REVENUES TOTALING $330 MILLION
---------------------
Company Enters West Texas Market With Acquisition of Lynn Alexander, Inc.
And Expands Presence in East Through New Jersey-based Classic Auto Group
----------------------
NEW YORK, NEW YORK, July 31, 1997 - United Auto Group, Inc. (NYSE: UAG), the
nation's second largest publicly-traded automobile retailer, has signed
definitive agreements to acquire 100% of the capital stock of two dealership
groups, Lynn Alexander, Inc. and Classic Auto Group located in San Angelo, Texas
and the Philadelphia metropolitan area, respectively. The acquisitions are
expected to bring the number of franchises it will own up to 71.
Aggregate consideration for the two acquisitions is
approximately $42.0 million, which the Company expects to fund principally in
cash.
The acquisitions, which do not include real estate, represent
the first use of funds from the Company's recently completed placement of $150.0
million of 11% Senior Subordinated Notes due 2007 in the Rule 144A market. The
Notes were issued at 98.529% of their principal amount and will pay interest
semi-annually a final maturity on July 15, 2007.
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Marshall S. Cogan, Chairman and Chief Executive Officer,
estimates that the dealerships would add approximately $330.0 million in annual
revenues, bringing the Company's run rate to approximately $2.9 billion for 1997
from the total of 71 dealerships, including the announced acquisitions, which
sell new and used vehicles and offer a complete range of financing and
aftermarket products and services.
The Lynn Alexander, Inc. dealerships, located in San Angelo,
Texas are owned principally by R. Lynn Alexander. The dealerships, which have
estimated 1997 revenues of approximately $90.0 million, include: All American
Chevrolet, Inc.; and Lynn Alexander Chrysler Plymouth Jeep Eagle Dodge Nissan.
The aggregate consideration for the Lynn Alexander acquisition
is approximately $12.0 million, including approximately $10.5 million in cash
and a $1.5 million promissory note.
The Classic Auto Group dealerships, which are owned
principally by Tom Hessert, Jr. and have estimated 1997 revenues of
approximately $240.0 million, include locations in New Jersey towns of
Turnersville, Cherry Hill, and Holly and Moorestown.
The Classic Auto dealerships, located in Turnersville, NJ,
are: Classic Honda, Classic Acura, Classic Nissan, Classic Chevrolet, Classic
Buick and Classic BMW. The dealership located in Cherry Hill is Classic Saab
Buick. Classic Chevrolet is located in Moorestown, NJ.
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The aggregate consideration for the Classic Auto acquisition
is approximately $30.0 million, including approximately $28.0 million in cash
and a $2.0 million promissory note.
The Lynn Alexander and Classic Auto dealerships also sell
previously-owned vehicles and offer a complete range of services including
service and parts, and the placement of financing and insurance. The
transactions are expected to close by September 30, 1997 and are subject to
manufacturer approvals as well as other conditions. Messrs. Alexander and
Hessert will continue their executive responsibilities with United Auto.
United Auto, which has pursued a strategy based on internal
growth from its existing dealerships and from strategic acquisitions, operates
55 franchises in Arizona, Arkansas, Connecticut, Florida, Georgia, New Jersey,
North Carolina, Nevada, New York, South Carolina, Tennessee and Texas. United
Auto dealerships sell new and used vehicles and market a complete line of
aftermarket automotive products and services through United AutoCare. The
Company also owns Atlantic Auto Finance Corporation, a finance company engaged
in the purchase, sale and servicing of primarily prime credit quality automobile
loans.
The Company will release results for the second quarter of
1997 on August 6, 1997.
This press release contains forward-looking information, and
actual results may vary from those expressed or implied herein. Factors that
could affect these results include
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those mentioned in the Company's prospectus dated October 23, 1996.
This press release shall not constitute an offer to sell or
the solicitation of an offer to buy the securities offered by United Auto in the
Rule 144A Offering Memorandum.
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UNITED AUTO GROUP, INC. PRESS RELEASE
Contact: Karl H. Winters Bob Amen
Chief Financial Officer Amen & Associates
212 230-0400 212 448-4200
FOR IMMEDIATE RELEASE
UNITED AUTO GROUP REPORTS SECOND QUARTER 1997 RESULTS
- --------------------------------------------------------------------------------
Company Reports Net Income of $7.6 Million or $0.42 Per Share
on Revenues of $527.0 Million
- --------------------------------------------------------------------------------
Company Announces Appointments Designed To Strengthen Senior Management Team
- --------------------------------------------------------------------------------
NEW YORK, NEW YORK, August 6, 1997 - United Auto Group, Inc. (NYSE:UAG), the
nation's second largest publicly-traded automotive retailer, today announced a
20.8% increase in revenues and an 10.9% increase in net income for the second
quarter of 1997 versus pro forma amounts for the comparable 1996 period.
These results reflect the net addition of 29 dealership
franchises over the past year.
For the quarter ended June 30, 1997, revenues were $527.0
million as compared to $436.2 million of pro forma revenues and $336.2 million
of actual revenues in the comparable prior year period.
Gross profit margin for the quarter improved to 13.0% from
11.6% on a pro forma basis in the comparable prior year period.
Second quarter net income was $7.6 million as compared to $6.9
million of pro forma net income, or $3.7 million on an actual basis, in 1996.
Earnings per share were $0.42 versus
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$0.38 per share pro forma, or $0.42 per share on an actual basis, for the
comparable prior year period.
Weighted average shares outstanding were 18,144,000 in the
second quarter 1997 compared to 17,872,000 and 8,878,000 on a pro forma and
actual basis, respectively, in the comparable prior year period.
Of the $527.0 million in dealership revenues, vehicle sales
represented approximately 88%, or $463.4 million of the total; finance and
insurance revenues represented approximately 3% or $18.0 million of the total;
and service and parts revenues of $45.5 million represented the remaining 9%.
Marshall S. Cogan, United Auto's Chairman and Chief Executive
Officer, who will take on the additional title of President as part of other
senior management appointments announced today, said, "We continue to be pleased
by the consistent progress of our business plan and the momentum for our
company. Our internal operations strengthened in the quarter, with increases in
all lines of dealership business." He noted that United Auto achieved a 28.4%
increase in finance and insurance revenue and a 36.5% increase in service and
parts revenue for the quarter, over pro forma amounts in the prior year
comparable period.
The Company said that it sold 13,006 new and 7,994 used
vehicles during the second quarter versus 11,650 new and 6,228 used vehicles on
a pro forma basis for the comparable 1996 period.
For the six months ended June 30, 1997, revenues were $915.2
million as compared to $800.6 million of pro forma revenues and actual revenues
of $597.9 million in the comparable prior year period.
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Net income for the first half of 1997 was $10.9 million as
compared to $10.5 million pro forma, or $3.9 million on an actual basis, in
1996. Earnings per share were $0.61 versus $0.59 per share pro forma, or $0.46
per share on an actual basis, for the comparable prior year period. Weighted
average shares outstanding were 18,023,000 in the first half 1997 compared to
17,872,000 and 8,500,000 on a pro forma and actual basis, respectively, in the
comparable prior year period.
Of the $915.2 million in dealership revenues, vehicle sales
represented approximately 88%, or $804.2 million of the total; finance and
insurance revenues represented approximately 3% or $31.5 million of the total;
and service and parts revenues of $79.4 million represented the remaining 9%.
The Company said that it sold 22,757 new and 13,943 used
vehicles during the first half of 1997 versus 21,180 new and 12,292 used
vehicles on a pro forma basis for the comparable 1996 period.
Mr. Cogan also recapped the Company's other recent accomplishments:
o The completion of the acquisitions of the nine Staluppi dealerships in
West Palm Beach and Long Island, and three General Motors Corporation
dealerships in the Carolinas.
o The placement of $150.0 million principal amount of Senior Subordinated
Notes due 2007 in the Rule 144A market for working capital and general
corporate purposes, including acquisitions.
o Agreements to buy two dealership groups, Lynn Alexander, Inc. and
Classic Auto Group, with revenues totaling $330.0 million, bringing the
Company's run rate to approximately $2.9 billion for 1997 with total of
71 dealerships, including the pending
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acquisitions. These transactions are expected to close by September 30, 1997.
Mr. Cogan added that the Company aims to achieve a $4.0 billion run rate in
early 1998.
New Management Appointments Also Announced
The Company's Board of Directors announced today management
appointments designed to strengthen the Company's senior management structure
and ensure efficiency in integrating acquisitions into United Auto. The Board
noted that in naming Mr. Cogan as President it had terminated its search for
that position and had expanded Mr. Cogan's role from strategic and
acquisitions-related matters to include a range of operational issues.
o Robert H. Nelson will become Executive Vice President,
Operations; he will work closely with the Company's four
senior dealership operators to identify and implement "best
practices" related to operational strategies. Mr. Nelson
served previously as Executive Vice President, Chief Financial
Officer.
o Richard Sinkfield, an attorney and a Director since December
1993, will become Executive Vice President, Administration. He
will be responsible for manufacturer relations, human
resources and training. Mr. Sinkfield will also work closely
with Mr. Cogan on acquisitions.
o Karl H. Winters, who had been the Company's Treasurer, will
become Executive Vice President and Chief Financial Officer.
o James R. Davidson, Senior Vice President of Finance, will also
serve as Treasurer and Chief Accounting Officer.
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Mr. Cogan said that James B. Brew, the recently appointed
Chairman of Atlantic Auto Finance, who served previously as President of Chase
Automotive Finance Corporation, will join the Chairman's Committee. The
Committee now consists of Messrs. Brew, Cogan, Nelson and the Company's four
senior dealership operators, Sam DiFeo, Jr., Steven Knappenberger, Steve Landers
and John Smith. Mr. Cogan added that the Company has initiated a search for a
senior marketing executive who will lead the Company's commitment to a branding
strategy and will develop programs to build customer loyalty and retention.
United Auto, which has pursued a strategy based on internal
growth from its existing dealerships and from strategic acquisitions, operates
55 franchises in Arizona, Arkansas, Connecticut, Florida, Georgia, Nevada, New
Jersey, New York, North Carolina and South Carolina, Tennessee and Texas. United
Auto dealerships sell new and used vehicles and market a complete line of
aftermarket automotive products and services through United AutoCare. The
Company also owns Atlantic Auto Finance Corporation, a finance company engaged
in the purchase, sale and servicing of primarily prime credit quality automobile
loans.
This press release contains forward-looking information, and
actual results may materially vary from those expressed or implied herein.
Factors that could affect these results include those mentioned in the Company's
IPO Prospectus filed with the Securities and Exchange Commission on October 23,
1996.
Editors Note: United Auto's logo and executive photos can be
retrieved in digital form by media without charge from Wieck Photo Database
(972) 392-0888.
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UNITED AUTO GROUP, INC.
Consolidated Statements of Operations (unaudited)
($ Thousands, except EPS data)
<TABLE>
<CAPTION>
Second Quarter
1997 1996 1996
Actual Pro Forma(a) Actual
------ -------------- ------
<S> <C> <C> <C>
Auto Dealerships
Vehicle Sales $463,381 $388,766 $302,034
Finance and Insurance 18,029 14,046 12,397
Service and Parts 45,548 33,371 21,789
------ ------ ------
Total Revenues 526,958 436,183 336,220
Cost of Sales, including floor plan interest 458,308 385,502 299,058
------- ------- -------
Gross Profit 68,650 50,681 37,162
Selling, General and Administrative 53,967 37,984 29,357
Expenses ------ ------ ------
Operating Income 14,683 12,697 7,805
Other Interest Expense (1,777) (611) (868)
Other Income (Expense), Net --- (48) 570
--- ---- ---
Income Before Income Taxes - Auto 12,906 12,038 7,507
Dealerships
Auto Finance
Revenues 1,100 617 617
Interest Expense (116) (90) (90)
Operating and Other Expenses (1,087) (612) (612)
------- ----- -----
Loss Before Income Taxes - (103) (85) (85)
Auto Finance ----- ---- ----
Total Company
Income before minority interests and 12,803 11,953 7,422
provision for income taxes
Minority Interests (61) --- (1,234)
Provision for Income Taxes (5,143) (5,103) (2,461)
------- ------- -------
Net Income $7,599 $6,850 $3,727
======================= ==================== =====================
Earnings Per Share $0.42 $0.38 $0.42
======================= ==================== =====================
Weighted Average Shares Outstanding 18,144 $17,872 8,878
- ------------------------------------------------- ----------------------- -------------------- ---------------------
EBITDA(b) $17,050 $14,789 $9,820
</TABLE>
(a) The Pro Forma Consolidated Statement of Operations for 1996 reflects the
Company's completion of its initial public offering of 6,250,000 shares on
October 28, 1996 and the 1996 acquisitions and other transactions related to the
Company's IPO.
(b) EBITDA is defined as income (loss) before minority interests,
(provision) benefit for income taxes, extraordinary item, interest expense
(exclusive of interest expense relating to floor plan notes payable) and
depreciation and amortization.
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UNITED AUTO GROUP, INC.
Consolidated Statements of Operations (unaudited)
($ Thousands, except EPS data)
<TABLE>
<CAPTION>
First Half Comparative
1997 1996 1996
Actual Pro Forma(a) Actual
------ ---------------------- ------
<S> <C> <C> <C>
Auto Dealerships
Vehicle Sales $804,214 $711,569 $535,173
Finance and Insurance 31,512 28,462 22,339
Service and Parts 79,432 60,599 40,427
------ ------ ------
Total Revenues 915,158 800,630 597,939
Cost of Sales, including floor plan interest 798,896 705,954 531,560
------- ------- -------
Gross Profit 116,262 94,676 66,379
Selling, General and Administrative 95,723 75,096 56,975
Expenses ------ ------ ------
Operating Income 20,539 19,580 9,404
Other Interest Expense (2,246) (806) (2,005)
Other Income (Expense), Net 297 (62) 1,579
--- ---- -----
Income Before Income Taxes - 18,590 18,836 8,978
Auto Dealerships
Auto Finance
Revenues 2,085 1,029 1,029
Interest Expense (260) (176) (176)
Operating and Other Expenses (2,024) (1,202) (1,202)
------- ------- -------
Income (Loss) Before Income Taxes - Auto (199) (349) (349)
Finance ----- ----- -----
Total Company
Income before minority interests and
provision for income taxes 18,391 18,487 8,629
Minority Interests (97) --- (1,734)
(Provision) for Income Taxes (7,378) (7,967) (2,997)
------- ------- -------
Net Income $10,916 $10,520 $3,898
======================= ==================== =======================
Earnings Per Share $0.61 $0.59 $0.46
======================= ==================== =======================
Weighted Average Shares Outstanding 18,023 $17,872 8,500
- ------------------------------------------------------------------------- -------------------- -----------------------
EBITDA(b) $24,996 $23,413 $13,315
</TABLE>
(a) The Pro Forma Consolidated Statement of Operations for 1996 reflects the
Company's completion of its initial public offering of 6,250,000 shares on
October 28, 1996 and the 1996 acquisitions and other transactions related to the
Company's IPO.
(b) EBITDA is defined as income (loss) before minority interests,
(provision) benefit for income taxes, extraordinary item, interest expense
(exclusive of interest expense relating to floor plan notes payable) and
depreciation and amortization.
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