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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): January 13, 1998
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UNITED AUTO GROUP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 1-12297 22-3086739
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(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
375 Park Avenue, New York, New York 10152
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(Address of principal executive offices) (Zip Code)
(212) 223-3300
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(Registrant's telephone number, including area code)
N/A
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(Former name or former address, if changed since last report)
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ITEM 5. Other Events.
On January 13, 1998, United Auto Group, Inc. (the "Company") announced
the naming of Samuel X. DiFeo, Jr. as President and Chief Operating Officer and
the realignment of certain of its operation resulting in a pre-tax charge in the
range of $28.0 - $32.0 million.
The Company also announced the acquisition of five franchises in
Memphis, TN. The dealerships include Covington Pike Toyota, Homer Skelton Mazda,
Hyundai, Covington Pike Dodge and Graceland Dodge. The aggregate consideration
for the Memphis acquisitions is approximately $28.0 million. The Company has
completed the acquisition of Covington Pike Dodge and expects to complete the
other Memphis dealership acquisitions this month.
In addition, the Company announced the consummation of the acquisition
of The Triangle Group, located in Puerto Rico. The Triangle Group operates
franchises representing the Acura, Chrysler, Daewoo, Honda, Suzuki and Toyota
brands. The aggregate consideration for the acquisition is $14.5 million.
For more information, please see the Company's press release filed as an
exhibit hereto, which is 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 management changes, realignment
of certain operations and announcing acquisitions, issued
January 13, 1998.
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SIGNATURES
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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: January 14, 1998 By: /s/ Philip N. Smith, Jr.
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Philip N. Smith, Jr.
Senior Vice President
and General Counsel
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EXHIBIT INDEX
Exhibit No. Document
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99.1 Press Release relating to management changes, realignment of
certain operations and announcing acquisitions, issued
January 13, 1998.
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United Auto Group, Inc. Press Release
Contact: Karl Winters Allison Wey/Stefanie King
Chief Financial Officer Edelman financial
212-223-3300 212 704-4424/212 704-8291
FOR IMMEDIATE RELEASE
UNITED AUTO ANNOUNCES ACTIONS TO REALIGN CERTAIN OPERATIONS;
ACQUISITIONS ANNOUNCED IN MEMPHIS AND PUERTO RICO
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Company to Take Pre-Tax Charge in the Range of $28.0 to $32.0 Million
Fourth Quarter 1997 Pre-Tax Loss in $39.0 to $45.0 Million Range Expected;
Loss to Include Results of Nine Franchises to be Divested
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Company Executive Samuel X. DiFeo, Jr. Named President and
Chief Operating Officer
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Company Enters Memphis and Puerto Rico Markets With Acquisitions Totaling
$480.0 Million in Revenues, Bringing Company Run Rate to $3.6 Billion
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NEW YORK, NEW YORK, January 13, 1998 -- The Board of Directors of United
Auto Group, Inc. (NYSE: UAG), the nation's second largest publicly-traded
automobile retailer, today announced actions to realign certain elements of the
Company's operations and the naming of Samuel X. DiFeo, Jr. as President and
Chief Operating Officer.
Mr. DiFeo, 48, has served as Executive Vice President of the DiFeo Group
since 1992 when United Auto acquired the DiFeo dealerships, which are located in
the New York metro area. Mr. DiFeo will be responsible for day-to-day operations
of United Auto's dealership network.
The actions announced result in a pre-tax charge in the range of $28.0
to $32.0 million ($16.8 to $19.2 million after-tax or $0.88 to $1.00 pct share
in the fourth quarter of 1997).
Marshall S. Cogan, Chairman and Chief Executive Officer, stated,
"Building and capitalizing on our auto retailing model has posed many challenges
for United Auto. We continue to believe that our business model is compelling,
and we will continue to focus on the new car dealership as the cornerstone for
higher margin used car sales, service and parts, and finance, insurance and
warranty businesses."
He added, "We made the decision to realign elements of our operations
and take full advantage of Sam DiFeo's nearly three decades of automotive
retailing experience in an effort to better position United Auto for the
future."
The Company also announced that James R. Davidson, Senior Vice President
of Finance, has been appointed Executive Vice President; he will work with Mr.
DiFeo and will add certain dealership operations to his responsibilities.
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Pre-Tax Charge of $28.0 to $32.0 Million
The pre-tax charge, relating principally to the Company's dealership and
corporate areas, will eliminate certain under-performing assets, enhance cash
flow and streamline the Company's corporate infrastructure.
The aggregate pre-tax charge relates to:
(i) Charges in the range of $23.0 to $25.0 million, principally for
the divestiture of nine franchises, subject to manufacturer
approval, as well as other realignment and real estate expenses
in the New York metropolitan, Arkansas and Atlanta areas; the
closure of three stand-alone used vehicle satellite locations in
Arkansas and the disposal of related inventory; and the
implementation of a new policy related to managing the Company's
working capital invested in retail inventory more efficiently.
(ii) $5.0 to $7.0 million related principally to certain corporate
activities, including the accrual for consulting agreements and
certain other items.
The Company said that it expects these actions to result in estimated
operating savings of approximately $6.0 million in 1998.
Including the pre-tax charge, the Company preliminarily expects to
record a pre-tax loss for the quarter ending December 31, 1997 in the range of
$39.0 to $45.0 million ($23.4 to $27.0 million after-tax or a loss of $1.22 to
$1.41 per share). The loss includes operating losses from the nine franchises
that will be divested, and also reflects continued weakness in
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its business during the fourth quarter in certain Atlanta dealerships. The
Company said that its Phoenix-based operations posted strong fourth quarter
results.
Mr. Cogan continued, "The initiatives announced today provide us with a
solid base from which to model future opportunities. We enter 1998 with a better
understanding of the forces that affect auto retailing and remain committed to
our concept."
Memphis, TN and Puerto Rico Acquisitions
The Company also announced today the acquisition of five franchises in
Memphis, TN. The dealerships, which create a new hub for the Company, had
estimated 1997 revenues totaling $320.0 million.
The dealerships include: Covington Pike Toyota, the nation's eighth
largest Toyota retailer; Homer Skelton Mazda, Hyundai; Covington Pike Dodge; and
Graceland Dodge. The aggregate consideration for the Memphis acquisitions is
approximately $28.0 million. The Company said that it had completed the
acquisition of Covington Pike Dodge and that it expects to complete the other
Memphis dealership acquisitions this month.
In addition, the Company said that it had completed the acquisition of
The Triangle Group, Puerto Rico's second largest automotive retailer. Triangle,
which operates franchises representing the Acura, Chrysler, Daewoo, Honda,
Suzuki and Toyota brands, had estimated 1997 revenues of $160.0 million. The
aggregate consideration for the acquisition is $14.5 million.
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All of the Memphis and Puerto Rico-based dealerships sell new and
previously-owned vehicles and offer a complete range of services, including
service and parts and the placement of financing and insurance. These
acquisitions are expected to bring the number of franchises that the Company
will own to 87, net of the announced divestitures, and increase United Auto's
annualized revenues to $3.6 billion.
Mr. Cogan said, "Our entry into the Memphis market complements our
existing hubs and expands United Auto's presence in the important Southeast
region; Triangle is a dominant player in the burgeoning Caribbean Basin market."
The Company said that it expects first quarter 1998 manufacturer
authorization to close the previously announced acquisitions of
Philadelphia-area Classic Auto Group and Young Automotive Group, which operates
franchises in the South and Midwest. These two dealership groups had estimated
1997 revenues of $750.0 million.
The Company also announced today that it does not expect to complete its
previously announced acquisition of the San Angelo, TX-based Lynn Alexander
dealerships. Aggregate consideration for the acquisition, as announced on July
31, 1997, was approximately $12.0 million, principally in cash.
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United Auto will host a conference call for securities analysts,
shareholders and bondholders at 5:15 PM EST on Tuesday, January 13 to discuss
this announcement. Those wishing to participate in the call should dial 1 800
633-8638. For more information, contact Crystal Howard at 212 230-0464.
United Auto, which has pursued a strategy based on internal growth from
its existing dealerships and from strategic acquisitions, operates franchises in
Arizona, Arkansas, Connecticut, Florida, Georgia, Louisiana, Nevada, New Jersey,
New York, North Carolina, Puerto Rico, 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 United Auto Finance, formerly Atlantic Auto Finance, 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 Prospectus
filed with the Securities and Exchange Commission on December 10, 1997.
Editors Note: United Auto's logo can be retrieved in digital form by
media without charge from Wieck Photo Database (972) 392-0888.
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