<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 30, 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)
<PAGE>
On April 30, 1997, United Auto Group, Inc. ("UAG"), acquired 100% of the
capital stock of a group of companies which operate nine automobile dealerships
and related businesses (the "Staluppi Group"). The Staluppi Group operates
four dealerships on Long Island, New York, including two Nissan and two Toyota
franchises, and five dealerships in West Palm Beach, Florida, including
Chrysler-Plymouth, Infiniti, Jeep-Eagle, Nissan and Toyota. On May 15, 1997,
UAG filed a current report on Form 8-K (the "Original 8-K") disclosing
such acquisition.
This Amendment No. 1 to the Original 8-K is being filed for the purpose
of filing the financial statements and pro forma financial information required
to be disclosed under Item 7.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired:
Combined Balance Sheets as of December 31, 1996 and March 31,
1997, Combined Statements of Income for the year ended
December 31, 1996 and the three months ended March 31, 1997 and
March 31, 1996, Combined Statements of Stockholders' Equity for
the year ended December 31, 1996 and the three months ended
March 31, 1997 and Combined Statements of Cash Flows for the
year ended December 31, 1996 and the three months ended March 31,
1997 and March 31, 1996, with footnotes thereto.
(b) Pro Forma Financial Information:
Pro Forma Condensed Consolidated Balance Sheet as of
March 31, 1997 and Pro Forma Condensed Consolidated Statements
of Operations for the year ended December 31, 1996 and the three
months ended March 31, 1997, with footnotes thereto.
(c) Exhibits:
None.
-2-
<PAGE>
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: July 14, 1997 By: /s/ James R. Davidson
------------------------------
James R. Davidson
Senior Vice President - Finance
-3-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of
Staluppi Automotive Group:
We have audited the accompanying combined balance sheets of Staluppi
Automotive Group as of December 31, 1996 and the related combined statements
of income, stockholders' equity and cash flows for the year ended December
31, 1996. These combined financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
combined financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards 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.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the combined financial position of Staluppi
Automotive Group as of December 31, 1996, and the results of its combined
operations and its combined cash flows for the year ended December 31, 1996,
in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Princeton, New Jersey
June 6, 1997
1
<PAGE>
STALUPPI AUTOMOTIVE GROUP
COMBINED BALANCE SHEETS
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
--------------------------
(UNAUDITED)
DECEMBER 31, MARCH 31,
1996 1997
-------------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 2,206 $ --
Accounts receivable 12,991 11,302
Notes receivable--related parties 7,571 8,012
Due from related companies 498 1,478
Inventories 47,489 49,317
Other current assets 858 569
---------- ---------
TOTAL CURRENT ASSETS 71,613 70,678
Property and equipment, net 4,367 4,288
Intangible assets, net 3,177 3,154
Other assets 185 190
---------- ---------
TOTAL ASSETS $79,342 $78,310
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Floor plan notes payable $53,659 $49,684
Accounts payable 3,540 3,741
Cash overdraft -- 881
Accrued expenses 2,223 3,035
Due to related companies 1,164 1,705
Obligations under capital leases 290 290
Current portion of long-term debt 2,532 1,166
---------- ---------
TOTAL CURRENT LIABILITIES 63,408 60,502
Long-term debt 2,465 3,442
Obligations under capital leases 928 850
---------- ---------
TOTAL LIABILITIES 66,801 64,794
---------- ---------
Commitments and contingent liabilities
STOCKHOLDERS' EQUITY:
Common Stock, no par value, 10,250 shares authorized, 3,500
shares issued and outstanding 12,113 12,113
Retained earnings 428 1,403
---------- ---------
TOTAL STOCKHOLDERS' EQUITY 12,541 13,516
---------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $79,342 $78,310
========== =========
</TABLE>
See Notes to Combined Financial Statements.
2
<PAGE>
STALUPPI AUTOMOTIVE GROUP
COMBINED STATEMENTS OF INCOME
(Dollars in thousands)
<TABLE>
<CAPTION>
-----------------------------------
YEAR (UNAUDITED)
ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
1996 1997 1996
-------------- ---------- ---------
<S> <C> <C> <C>
Vehicle sales $384,716 $106,780 $87,523
Finance and insurance 8,053 2,072 2,292
Service and parts 32,852 9,941 8,126
------------ ---------- ---------
Total revenues 425,621 118,793 97,941
Cost of sales, including floor plan interest 377,556 106,556 86,816
------------ ---------- ---------
Gross profit 48,065 12,237 11,125
Selling, general and administrative expenses 41,517 11,085 9,787
------------ ---------- ---------
Operating income 6,548 1,152 1,338
Interest income (expense), net--other (633) (172) (153)
Interest income-related party 471 126 118
Other income (expense), net 663 323 273
------------ ---------- ---------
Net income $ 7,049 $ 1,429 $ 1,576
============ ========== =========
</TABLE>
See Notes to Combined Financial Statements.
3
<PAGE>
STALUPPI AUTOMOTIVE GROUP
COMBINED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in thousands)
<TABLE>
<CAPTION>
---------------------------------------
RETAINED
COMMON STOCK EARNINGS
SHARES AMOUNT (DEFICIT) TOTAL
-------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Balances, December 31, 1995 3,500 $12,113 $(1,551) $10,562
Distributions to stockholders (5,070) (5,070)
Net income for 1996 -- -- 7,049 7,049
-------- --------- --------- ---------
Balances, December 31, 1996 3,500 12,113 428 12,541
Distributions to stockholders
(unaudited) -- -- (454) (454)
Net Income for the three months
ended March 31, 1997
(unaudited) -- -- 1,429 1,429
-------- --------- --------- ---------
Balances, March 31, 1997
(unaudited) 3,500 $12,113 $ 1,403 $13,516
======== ========= ========= =========
</TABLE>
See Notes to Combined Financial Statements.
4
<PAGE>
STALUPPI AUTOMOTIVE GROUP
COMBINED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
----------------------------------
(UNAUDITED)
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
1996 1997 1996
-------------- --------- --------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 7,049 $ 1,429 $ 1,576
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 893 224 221
Changes in operating assets and liabilities:
Accounts receivable (3,349) 1,689 (526)
Inventories (8,748) (1,828) (4,262)
Other assets and prepaid expenses (685) 283 (240)
Floor plan notes payable 10,652 (3,975) 1,425
Accounts payable (115) 201 565
Accrued expenses 344 812 1,320
Loans due from (to) related companies 133 (439) (643)
--------- --------- ---------
Net cash provided by (used in) operating
activities 6,174 (1,604) (564)
--------- --------- ---------
INVESTING ACTIVITIES:
Purchases of equipment and improvements (1,020) (121) (161)
Capital contribution 316 -- --
Proceeds from sale of assets, net 3 -- --
--------- --------- ---------
Net cash used in investing activities (701) (121) (161)
--------- --------- ---------
FINANCING ACTIVITIES:
Cash overdraft, net -- 881 --
Payments of long-term debt and capitalized
lease obligations (782) (467) (451)
Proceeds from borrowings of long-term debt 115 -- 115
Payments of notes receivable--related parties (737) (441) (1,528)
Distributions to stockholders (5,070) (454) (328)
--------- --------- ---------
Net cash used in financing activities (6,474) (481) (2,192)
--------- --------- ---------
Net decrease in cash (1,001) (2,206) (2,917)
Cash, beginning of period 3,207 2,206 3,207
--------- --------- ---------
Cash, end of period $ 2,206 $ -- $ 290
========= ========= =========
Supplemental cash flow disclosure:
Interest paid $ 597 $ 128 $ 109
========= ========= =========
</TABLE>
See Notes to Combined Financial Statements.
5
<PAGE>
STALUPPI AUTOMOTIVE GROUP
(Information related to the three months ended March 31, 1997 and 1996 is
unaudited)
NOTES TO COMBINED FINANCIAL STATEMENTS
(Dollars in thousands)
1. ORGANIZATION:
The Staluppi Automotive Group (the "Combined Group" or the "Company"),
operating in the States of New York and Florida, is engaged in the sale of
new and used vehicles, as well as finance, insurance and service contracts
thereon.
The Company operates dealerships which hold franchise agreements with a
number of automotive manufacturers. In accordance with the individual
franchise agreement, each dealership is subject to certain rights and
restrictions typical of the industry. The ability of the manufacturers to
influence the operations of the dealerships, or the loss of a franchise
agreement, could have a negative impact on the operating results of the
Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Combination Policy -- Common Control
The accompanying combined financial statements include the following
automotive affiliated companies that are all under common control:
Amity Nissan of Massapequa, Ltd.
Amity Auto Plaza, Ltd. (d/b/a Amity Toyota)
Westbury Nissan, Ltd.
Westbury Superstore, Ltd. (Westbury Toyota)
J&S Auto Refinishing, Ltd. (d/b/a/ Premier Autobody)
Florida Chrysler Plymouth Jeep Eagle, Inc.
Palm Auto Plaza, Inc.
West Palm Infiniti, Inc.
West Palm Nissan, Inc.
North Lake Auto Finish, Inc.
West Palm Auto Mall Used Cars & Leasing, Inc.
Automall Payroll Services, Inc.
Certain Kia Dealership assets and liabilities
All significant intercompany transactions and balances have been eliminated.
Amounts related to vehicle sales by entities included in the Combined Group,
which were paid to a company controlled by a stockholder, have been included
as a $700 increase to gross profit in these financial statements.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Interim Financial Statements (Unaudited)
The interim information presented as of March 31, 1997 and for the three
month periods ended March 31, 1997 and 1996 is unaudited, but includes all
adjustments (consisting only of normal recurring accruals) which the Company
believes to be necessary for the fair presentation of results for the periods
presented.
6
<PAGE>
STALUPPI AUTOMOTIVE GROUP
(Information related to the three months ended
March 31, 1997 and 1996 is unaudited)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
Inventory Valuation
Inventories are stated at the lower of cost or market, with cost determined
by the following methods:
<TABLE>
<CAPTION>
---------------------------------
INVENTORY COMPONENT VALUATION METHOD
- --------------------------------- ---------------------------------
<S> <C>
New vehicles Last in, first out ("LIFO")
Used vehicles Specific identification
Parts, accessories, and other Factory list price
</TABLE>
New vehicle and parts inventories are purchased primarily from the related
vehicle manufacturer.
Revenue Recognition
Revenue is recognized by the Company when vehicles and parts are delivered to
consumers, or when service is performed. Finance and insurance revenues are
recognized upon the sale of the finance or insurance contracts.
Property and Equipment
Property and equipment are recorded at cost and depreciated over their
estimated useful lives, using the straight-line and accelerated methods.
Useful lives for purposes of computing depreciation and amortization are:
Buildings --20 years
Leasehold improvements --Economic life or life of the lease,
whichever is shorter.
Machinery and equipment, furniture and --5 to 7 years
fixtures, and company vehicles
Expenditures for repairs and maintenance which increase the useful life or
substantially increase serviceability of the asset are capitalized. All other
expenditures are charged to expense as incurred. When equipment is sold or
otherwise disposed, the cost and related accumulated depreciation are removed
from their respective accounts and any resulting gain or loss is included in
the statement of income.
Intangible Assets
Intangible assets consist primarily of excess of cost over net assets
acquired and covenants not to compete which are being amortized on a
straight-line basis over the estimated benefit period of 40 years and five
years, respectively. The Company periodically reviews these costs to assess
recoverability. Losses in value, if any, are charged to operations in the
period such losses are determined to be permanent. Amortization expense
related to intangible assets was $95 for the year ended December 31, 1996.
Accumulated amortization of intangible assets at December 31, 1996 was $569.
7
<PAGE>
STALUPPI AUTOMOTIVE GROUP
(Information related to the three months ended
March 31, 1997 and 1996 is unaudited)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
The Company's policy with respect to assessing whether there has been a
permanent impairment in the value of excess of cost over net assets is to
compare the carrying value of a business' excess of cost over net assets with
the anticipated undiscounted future cash flows from operating activities of
the business. Factors considered by the Company in performing this assessment
include current operating income, trends and other economic factors.
Reserve for Chargeback of Finance and Insurance Income
Provisions for chargebacks of finance and insurance income resulting from
customer prepayments and repossessions are recorded based on management's
estimates and historical experience.
Long-Lived Assets
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of"
("SFAS 121") requires that long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of the asset in question may not be recoverable. SFAS 121 was adopted 1996
and did not have an effect on the Company's results of operations, cash flows
or financial position.
Fair Value of Financial Instruments
The Company's financial instruments consist of cash, accounts receivable,
accounts payable, and debt. The carrying amount of these financial
instruments generally approximate fair value due either to length of maturity
or existence of variable interest rates that approximate prevailing market
rates.
Capital Stock
Each affiliate of the Company is an individual entity that issues stock for
that entity only, and at different and unrelated prices. The Company as a
single entity does not issue stock. For purposes of these financial
statements, the capital stock activity of the individual affiliates have been
accumulated to present combined totals.
Income Taxes
All the entities in the Combined Group have elected S Corporation status
under the provisions of the Internal Revenue Code. Accordingly, they are
generally not subject to federal and state income taxes. For income tax
reporting purposes, all profits and losses, and certain other items, pass
through to the stockholders of the Company, who report these items on their
individual income tax returns.
8
<PAGE>
STALUPPI AUTOMOTIVE GROUP
(Information related to the three months ended
March 31, 1997 and 1996 is unaudited)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands)
3. INVENTORIES:
Inventories consisted of the following items:
<TABLE>
<CAPTION>
--------------------------
(UNAUDITED)
DECEMBER 31, MARCH 31,
1996 1997
-------------- -----------
<S> <C> <C>
New vehicles $39,906 $42,993
Used vehicles 10,679 9,271
Parts, accessories and other 2,045 2,194
-------------- -----------
52,630 54,458
Cumulative LIFO reserve (5,141) (5,141)
-------------- -----------
Total Inventories $47,489 $49,317
============== ===========
</TABLE>
4. PROPERTY AND EQUIPMENT, NET:
Property and equipment, net consisted of the following items:
<TABLE>
<CAPTION>
--------------
DECEMBER 31,
1996
--------------
<S> <C>
Land $ 550
Buildings and leasehold improvements 3,494
Machinery and shop equipment 2,098
Furniture, fixtures, vehicles and other 3,252
Computer equipment and signs 1,306
--------------
Total 10,700
Less: Accumulated depreciation and amortization 6,333
--------------
Total property and equipment, net $ 4,367
==============
</TABLE>
Depreciation and amortization expense related to property and equipment for
the year ended December 31, 1996 was $798.
9
<PAGE>
STALUPPI AUTOMOTIVE GROUP
(Information related to the three months ended
March 31, 1997 and 1996 is unaudited)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands)
5. FLOOR PLAN NOTES PAYABLE:
The Company's automobile dealerships have "floor plan" agreements with
several finance companies to finance the purchase of their automobile
inventory.
Floor plan notes payable consisted of the following at:
<TABLE>
<CAPTION>
--------------
DECEMBER 31,
1996
--------------
<S> <C>
Primus Automotive Financial Services, Inc., interest--8.25% at December
31, 1996 $26,395
World Omni Corp., interest--9% at December 31, 1996 13,051
Nissan Motor Acceptance, interest--8.25% at December 31, 1996 7,364
Infiniti Financial Services, interest--7.75% at December 31, 1996 6,849
--------------
Total floor plan notes payable $53,659
==============
</TABLE>
Interest rates on the floor plan agreements are variable and increase or
decrease based on movements in prime or LIBOR borrowing rates.
The floor plan agreements grant a collateral interest in substantially all of
the dealerships assets and generally require the repayment of debt after a
vehicle's sale.
The weighted average interest rate on floor plan borrowings was approximately
9% for the year ended December 31, 1996.
10
<PAGE>
STALUPPI AUTOMOTIVE GROUP
(Information related to the three months ended
March 31, 1997 and 1996 is unaudited)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands)
6. LONG-TERM DEBT:
Long-term debt consisted of the following at:
<TABLE>
<CAPTION>
--------------
DECEMBER 31,
1996
--------------
<S> <C>
9.14% Term note payable to The Bank of New York, payable in monthly installments,
including interest, of $31 through May, 1999. $ 800
Capital loan payable to Primus Automotive Financial Services, Inc., payable in monthly
installments of $25 plus interest. Interest at prime plus 1.5% (9.75% at December 31,
1996) 1,199
9.8% demand mortgage (collateralized by the land and building of Loans of Masapequa)
payable to Primus Automotive Financial Services, Inc. 1,261
Capital loan payable to Primus Automotive Financial Services, Inc., payable in monthly
installments of $10 plus interest. Interest at prime plus 1.5% (9.75% at December 31,
1996) 155
7.5% Capital loan (collateralized by equipment) payable to Primus Automotive Financial
Services, Inc., payable in monthly installments, including interest, of $2. 100
Capital loan (collateralized by the assets of Palm Auto Plaza, Inc. and guaranteed by
a stockholder of the Company) payable to World Omni Financial Corp. Interest at prime
plus 1.0% (9.25% at December 31, 1996). 1,069
Other 413
--------------
4,997
--------------
Less--current maturities 2,532
--------------
Total Long-term debt $2,465
==============
</TABLE>
Maturities of long-term debt for each of the next five years and thereafter
are as follows:
<TABLE>
<CAPTION>
--------
AMOUNT
--------
<S> <C>
1997 $2,532
1998 853
1999 667
2000 556
2001 265
2002 and thereafter 124
--------
Total long-term debt $4,997
========
</TABLE>
The terms of certain financing agreements contain, among other provisions,
requirements for maintaining certain cash flows, current ratios and tangible
net worth ratios, as well as restrictions on incurring additional
indebtedness.
Interest expense related to long-term debt for the year ending December 31,
1996 amounted to $488.
11
<PAGE>
STALUPPI AUTOMOTIVE GROUP
(Information related to the three months ended
March 31, 1997 and 1996 is unaudited)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands)
7. COMMITMENTS:
The Company has entered into capital leases for certain computer and other
equipment. Assets under capital lease, at cost, amounted to $1,698 at
December 31, 1996 and are being amortized over the lives of the individual
leases. Accumulated amortization amounted to $570 at December 31, 1996.
At December 31, 1996, minimum future lease payments due under capital leases
are as follows:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 372
1998 359
1999 316
2000 273
2001 74
-------
Total minimum lease payments 1,394
Less: amount representing interest 176
-------
Net minimum lease payments 1,218
Less: current portion 290
-------
Long-term portion $ 928
=======
</TABLE>
Rent expense was $3,511 for the year ended December 31, 1996. The Company has
entered into operating leases for certain showroom and service facilities
which have minimum lease terms in excess of one year. Future annual minimum
rental payments for these operating leases are as follows for years ending
December 31:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 2,002
1998 2,002
1999 2,002
2000 2,002
2001 2,002
2002 and thereafter 9,620
--------
Total $19,630
========
</TABLE>
Included in the above operating lease amounts are certain amounts payable to
a related party. In addition, the Company leases certain showroom, service
and office facilities from related parties that are on a month to month
basis. See Note 9.
Certain employees of the Company, who are members of a union, are covered by
a union sponsored multi-employer pension plan to which the Company makes
specified contributions in accordance with the union contract. The amount of
accumulated benefits and net assets of the plan is not currently available to
the Company. Expense under the union administered plan amounted to
approximately $48 for the year ended 1996.
Certain assets of the Combined Group have been pledged as collateral against
personal loans of a stockholder.
12
<PAGE>
STALUPPI AUTOMOTIVE GROUP
(Information related to the three months ended
March 31, 1997 and 1996 is unaudited)
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
(Dollars in thousands)
8. RELATED PARTY TRANSACTIONS:
The Company leases two of its showrooms, service facilities, and the total
facility in West Palm Beach from a stockholder. Rent paid to the stockholder
totaled $2,160 in 1996. The Company also leases showrooms, office space, and
storage lots from companies under common control. Rent paid to these
companies in 1996 totaled $815.
The Company received rental income of $348 in 1996 from a related company for
the use of a portion of a lot and a showroom.
Management fees paid to a related company, consisting primarily of charges
for the salary of the principal owner and administrative services, totaled
approximately $2,500.
Notes receivable--related parties bear interest at 6.5% for 1996. Interest
income on these notes totalled $489 in 1996.
9. SUBSEQUENT EVENT (UNAUDITED):
In April 1997, the stockholders of the Company sold 100% of the stock of the
entities included in the Combined Group to United Auto Group, Inc.
13
<PAGE>
Item 7(b) Pro Forma Financial Information
UNITED AUTO GROUP, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
STALUPPI PRO FORMA
UAG GROUP ADJUSTMENTS(1) PRO FORMA
----------- ------- -------------- ---------
<S> <C> <C> <C> <C>
ASSETS
AUTO DEALERSHIPS
Cash and cash equivalents $ 36,083 $ 8,012 $ 18,045
(26,050)
Accounts receivable 61,314 12,780 74,094
Notes receivable -- related parties 8,012 (8,012)
Inventories 213,629 49,317 5,141 268,087
Other current assets 13,673 569 14,242
-------- ------- -------- --------
Total current assets 324,699 70,678 (20,909) 374,468
Property and equipment, net 24,859 4,288 (550) 28,597
Intangible assets, net 187,428 3,154 (3,154) 225,420
37,992
Other assets 11,244 190 11,434
-------- ------- -------- --------
TOTAL AUTO DEALERSHIP ASSETS 548,230 78,310 13,379 639,919
-------- ------- -------- --------
AUTO FINANCE
Cash and cash equivalents 3,569 3,569
Finance assets, net 17,870 17,870
Other assets 1,995 1,995
-------- ------- -------- --------
TOTAL AUTO FINANCE ASSETS 23,434 23,434
-------- ------- -------- --------
TOTAL ASSETS $571,664 $78,310 $ 13,379 $663,353
======== ======= ======== ========
</TABLE>
14
<PAGE>
UNITED AUTO GROUP, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
STALUPPI PRO FORMA
UAG GROUP ADJUSTMENTS(1) PRO FORMA
----------- ------- -------------- ---------
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
AUTO DEALERSHIPS
Floor plsn notes payable $215,409 $49,684 $265,093
Short-term debt 6,069 6,069
Accounts payable 21,411 6,327 27,738
Accrued expenses 18,319 3,035 21,354
Current portion of long-term debt 5,136 1,456 $ (25) 6,567
-------- ------- -------- --------
Total current liabilities 266,344 60,502 (25) 326,821
Long-term debt 11,777 4,292 21,864 37,933
Due to related party 1,428 1,428
Deferred income taxes 4,867 2,056 6,923
-------- ------- -------- --------
TOTAL AUTO DEALERSHIP LIABILITIES 284,416 64,794 23,895 373,105
-------- ------- -------- --------
AUTO FINANCE
Short-term debt 913 913
Accounts payable and other liabilities 2,872 2,872
-------- ------- -------- --------
TOTAL AUTO FINANCE LIABILITIES 3,785 3,785
-------- ------- -------- --------
STOCKHOLDERS' EQUITY
Voting Common Stock 2 12,113 (12,113) 2
Additional paid-in-capital 283,180 3,000 286,180
Retained earnings 281 1,403 (1,403) 281
-------- ------- -------- --------
TOTAL STOCKHOLDERS' EQUITY 283,463 13,516 (10,516) 286,463
-------- ------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $571,664 $78,310 $ 13,379 $663,353
======== ======= ======== ========
</TABLE>
- ------------
(1) Represents the acquisition of the Staluppi Group for cash, debt and stock,
including estimated expenses of $600, the related preliminary purchase
price allocations to assets and liabilities acquired, the elimination of
fixed assets and long term debt not acquired, and the elimination of
historical equity accounts.
15
<PAGE>
UNITED AUTO GROUP, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
CROWN STALUPPI PRO FORMA
UAG AUTOMOTIVE(1) GROUP(1) ADJUSTMENTS PRO FORMA
-------- ------------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Auto Dealerships
Total revenues $388,200 $12,573 $118,793 $519,566
Cost of sales, including floor plan interest 340,588 10,507 106,556 457,651
-------- ------- ------- --------
Gross profit 47,612 2,066 12,237 61,915
Selling, general and administrative expenses 41,756 1,552 11,085 150 (7) 53,858
(965)(8)
280 (9)
-------- ------- ------- ----- --------
Operating income 5,856 514 1,152 535 8,057
Other interest expense (469) (46) (421)(10) (1,062)
(126)(12)
Other income (expense), net 297 323 620
-------- ------- ------- ----- --------
Income before income taxes -- Auto Dealerships 5,684 514 1,429 (12) 7,615
Auto Finance
Loss before income taxes-Auto Finance (96) (96)
-------- ------- ------- ----- --------
Total Company
Income before minority interests and
provision for income taxes 5,588 514 1,429 (12) 7,519
Minority interests (36) (36)
Provision for income taxes (2,235) (773)(13) (3,008)
-------- ------- ------- ----- --------
Net income $ 3,317 $ 514 $ 1,429 $(785) $ 4,475
======== ======= ======= ===== ========
Net income per common share $0.19 $0.25
======== ========
Shares used in computing net income
per common share 17,758 441 (15) 18,199
======== ===== ========
</TABLE>
16
<PAGE>
UNITED AUTO GROUP, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SUN
UNITED PEACHTREE AUTOMOTIVE EVANS
UAG NISSAN (GA)(1) NISSAN (1) GROUP (1) GROUP (1)
---------- ------------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Auto Dealerships
Total revenues $1,302,031 $19,892 $41,320 $160,132 $81,016
Cost of sales, including floor plan interest 1,157,368 16,503 36,581 137,323 71,147
---------- ------------- ----------- ----------- ----------
Gross profit 144,663 3,389 4,739 22,809 9,869
Selling, general and administrative expenses 124,244 2,481 4,072 17,385 8,428
---------- ------------- ----------- ----------- ----------
Operating income 20,419 908 667 5,424 1,441
Other interest expense (4,398) (430)
Other income (expense), net 2,506 19 (664) 139
---------- ------------- ----------- ----------- ----------
Income before income taxes -- Auto Dealerships 18,527 908 686 4,330 1,580
Auto Finance
Loss before income taxes-Auto Finance (1,490)
---------- ------------- ----------- ----------- ----------
Total Company
Income before minority interests, provision
for income taxes and extraordinary item 17,037 908 686 4,330 1,580
Minority interests (3,306)
Provision for income taxes (6,270) (709)
---------- ------------- ----------- ----------- ----------
Income before extraordinary item 7,461 908 686 4,330 871
Extraordinary item (net of income tax benefit) (4,987)
---------- ------------- ----------- ----------- ----------
Net income $ 2,474 $ 908 $ 686 $ 4,330 $ 871
========== ============= =========== =========== ===========
Income before extraordinary item per
common share $ 0.69
=========
Net income per common share $ 0.23
=========
Shares used in computing net income
per common share 10,851
=========
</TABLE>
<PAGE>
UNITED AUTO GROUP, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
UNITED CROWN STALUPPI PRO FORMA
NISSAN (TN) (1) AUTOMOTIVE (1) GROUP (1) ADJUSTMENTS PRO FORMA
---------------- -------------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Auto Dealerships
Total revenues $56,704 $96,962 $425,621 $(61,869)(2) $2,121,809
Cost of sales, including floor plan interest 50,301 83,290 377,556 (53,492)(2) 1,876,100
(377)(3)
(100)(4)
---------------- -------------- --------- ----------- ----------
Gross profit 6,403 13,672 48,065 (7,900) 245,709
Selling, general and administrative expenses 5,233 10,549 41,517 (8,607)(2) 199,874
(200)(4)
(675)(5)
659 (6)
(584)(7)
(7,157)(8)
2,529 (9)
---------------- -------------- --------- ----------- ----------
Operating income 1,170 3,123 6,548 6,135 45,835
Other interest expense (162) (2,187)(10) (3,114)
4,534 (11)
(471)(12)
Other income (expense), net 336 663 (2,506)(6) 493
---------------- -------------- --------- ----------- ----------
Income before income taxes -- Auto Dealerships 1,506 3,123 7,049 5,505 43,214
Auto Finance
Loss before income taxes-Auto Finance (1,490)
---------------- -------------- --------- ----------- ----------
Total Company
Income before minority interests, provision
for income taxes and extraordinary item 1,506 3,123 7,049 5,505 41,724
Minority interests 3,269 (6) (37)
Provision for income taxes (95) (9,616)(13) (16,690)
---------------- -------------- --------- ----------- ----------
Income before extraordinary item 1,411 3,123 7,049 (842) 24,997
Extraordinary item (net of income tax benefit) 4,987 (14)
---------------- -------------- --------- ----------- ----------
Net income $ 1,411 $ 3,123 $ 7,049 $ 4,145 $ 24,997
================ ============== ========= =========== ==========
Income before extraordinary item per
common share $1.37
==========
Net income per common share $1.37
==========
Shares used in computing net income
per common share 7,348 (15) 18,199
=========== ==========
</TABLE>
17
<PAGE>
FOOTNOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(1) Represents the results of operations of such entities prior to their
respective dates of acquisition by UAG.
(2) Represents adjustments to eliminate the results of operations of
dealerships not acquired (Saab and Jaguar) and of dealerships transferred
due to failure to obtain manufacturer approval (Saturn).
(3) Represents reduction in floor plan interest expense to reflect lower floor
plan interest rates available to UAG subsequent to the date of acquisition
of the Staluppi Group.
(4) Represents reduction for management fees paid to owners or affiliated
entities of acquired dealerships.
(5) Represents final costs related to the restructuring of the DiFeo division.
(6) Represents adjustments that give effect to the acquisition of the minority
interest in each of the DiFeo Group, Landers Auto and Atlanta Toyota (the
"Minority Exchange") in exchange for common stock plus certain other
consideration. These adjustments include amortization expense for the
excess of cost over net assets acquired, the elimination of related
party interest income on assets to be exchanged, the elimination of
equity in operations of assets to be exchanged and the elimination of
minority interest in results of operations acquired.
(7) Represents net change in facility expenses at acquired dealerships due to
revised and terminated lease agreements upon acquisition.
(8) Represents reduction in compensation expense at acquired dealerships
related to former owners and employees to contractual amounts.
(9) Represents amortization of excess of cost over net assets acquired for
the acquired dealerships.
(10) Represents additional interest expense from the issuance of notes payable
to certain sellers as part of the acquisitions.
(11) Represents reduction in historical interest expense due to the repayment
of the Company's Series A and B Senior Notes due 2003 with a portion of
the net proceeds from the Company's initial public offering (the
"Offering").
(12) Represents reduction in related party interest income at acquired
dealerships.
(13) Represents the tax impact of pro forma adjustments at the statutory rate
adjusted for non-deductible items ($2,747 for the year ended December 31,
1996 and $5 for the three months ended March 31, 1997) and the impact of
the conversion of certain acquired entities from an S corporation to a
C corporation for tax purposes ($6,869 for the year ended December 31,
1996 and $778 for the three months ended March 31, 1997).
(14) Represents the elimination of the extraordinary item due to the early
extinguishment of the Company's Series A and B Senior Notes due 2003.
(15) Represents shares issued in connection with the Offering, the Minority
Exchange and certain acquisitions.
18
