<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to _______
COMMISSION FILE NUMBER: 0-9787
REPUBLIC INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 73-1105145
(State of Incorporation) (IRS Employer Identification No.)
450 EAST LAS OLAS BOULEVARD
FT. LAUDERDALE, FLORIDA 33301
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (954) 713-5200
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
On May 7, 1997, the registrant had 351,697,509 outstanding shares of
common stock, par value $.01 per share.
<PAGE> 2
REPUBLIC INDUSTRIES, INC.
INDEX
Page
PART I. Financial Information
ITEM 1. FINANCIAL STATEMENTS
Unaudited Condensed Consolidated Balance Sheets
as of March 31, 1997 and December 31, 1996 (Restated)......... 3
Unaudited Condensed Consolidated Statements
of Operations for the Three Months Ended
March 31, 1997 and 1996 (Restated) .......................... 4
Unaudited Condensed Consolidated Statement
of Shareholders' Equity for the Three Months
Ended March 31, 1997.......................................... 5
Unaudited Condensed Consolidated Statements of
Cash Flows for the Three Months Ended
March 31, 1997 and 1996 (Restated) ........................... 6
Notes to Unaudited Condensed Consolidated Financial
Statements ................................................... 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS .......................... 16
PART II. Other Information
ITEM 2. CHANGES IN SECURITIES ........................................... 25
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............. 26
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ................................ 26
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
REPUBLIC INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1997 1996
-------- -----------
(Restated)
<S> <C> <C>
Current assets:
Cash and cash equivalents .................................. $ 199.2 $ 299.5
Marketable securities ...................................... 375.0 --
Receivables, net............................................ 522.0 535.7
Revenue earning vehicles, net .............................. 3,923.7 3,495.2
Advances to affiliate ...................................... -- 247.5
Inventory .................................................. 493.7 185.4
Other current assets ....................................... 149.3 149.8
--------- ---------
Total current assets .............................. 5,662.9 4,913.1
Property and equipment, net .................................... 1,496.5 1,065.0
Intangible assets, net ......................................... 734.8 260.1
Investment in subscriber accounts, net ......................... 108.6 92.4
Other assets ................................................... 30.0 39.7
--------- ---------
$ 8,032.8 $ 6,370.3
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................................... $ 273.0 $ 270.7
Accrued liabilities ........................................ 292.2 200.0
Estimated liability insurance claims ...................... 222.3 222.2
Revenue earning vehicle debt ............................... 2,800.5 2,688.8
Notes payable and current maturities of long-term debt ..... 577.1 184.1
Other current liabilities .................................. 77.5 94.2
--------- ---------
Total current liabilities ......................... 4,242.6 3,660.0
Long-term debt, net of current maturities ...................... 320.4 348.0
Long-term revenue earning vehicle debt ......................... 799.7 799.6
Other liabilities .............................................. 203.3 210.7
Commitments and contingencies --------- ---------
Shareholders' equity:
Preferred stock, par value $.01 per share; 5,000,000 shares
authorized; none issued ........................... -- --
Common stock, par value $.01 per share; 500,000,000 and
350,000,000 shares authorized, respectively;
349,240,418 and 296,829,054 shares issued and
outstanding, respectively ......................... 3.5 3.0
Additional paid-in capital ................................. 2,393.8 1,343.0
Unrealized gain on marketable securities ................... 43.7 --
Retained earnings .......................................... 25.8 6.0
--------- ---------
Total shareholders' equity ........................ 2,466.8 1,352.0
--------- ---------
$ 8,032.8 $ 6,370.3
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
REPUBLIC INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
1997 1996
(Restated)
<S> <C> <C>
Revenue:
Vehicle sales ................................... $ 667.3 $ 308.6
Vehicle rentals ................................. 606.8 555.0
Solid waste services ............................ 203.3 136.9
Electronic security services .................... 26.6 15.4
--------- ---------
1,504.0 1,015.9
Expenses:
Cost of vehicle sales ........................... 590.2 270.5
Vehicle rental operating expenses ............... 484.8 436.9
Cost of solid waste services .................... 148.0 97.5
Cost of electronic security services ............ 11.6 6.1
Selling, general and administrative ............. 229.4 179.1
--------- ---------
Operating income .................................... 40.0 25.8
Interest income ..................................... 7.6 5.0
Interest expense .................................... (3.3) (8.4)
Other income, net ................................... 1.6 2.0
--------- ---------
Income before income taxes .......................... 45.9 24.4
Provision for income taxes .......................... 17.0 12.0
--------- ---------
Net income .......................................... $ 28.9 $ 12.4
========= =========
Net income per common and common
equivalent share ................................ $ .08 $ .04
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
REPUBLIC INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(In millions)
<TABLE>
<CAPTION>
Unrealized
Additional Gain on
Common Paid-In Marketable Retained
Stock Capital Securities Earnings
------ -------- ---------- --------
<S> <C> <C> <C> <C>
Balance at December 31, 1996 (Restated)......... $ 3.0 $1,343.0 $ -- $ 6.0
Sale of common stock ....................... .2 552.5 --
Exercise of stock options and warrants...... -- 16.0 -- --
Stock issued in acquisitions ............... .3 479.4 -- --
Unrealized gain on marketable securities,
net of income taxes .................... -- -- 43.7 --
Other ...................................... -- 2.9 -- (9.1)
Net income ................................. -- -- -- 28.9
------ -------- -------- -------
Balance at March 31, 1997 ...................... $ 3.5 $2,393.8 $ 43.7 $ 25.8
====== ======== ======== =======
</TABLE>
The accompanying notes are an integral part of this statement.
5
<PAGE> 6
REPUBLIC INDUSTRIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1997 1996
---- ----
(Restated)
<S> <C> <C>
CASH PROVIDED BY OPERATING ACTIVITIES:
Net income ..................................................... $ 28.9 $ 12.4
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .......................... 203.1 170.3
Changes in assets and liabilities, net of effects from
business acquisitions:
Receivables .................................... 84.3 (21.1)
Inventory ...................................... (26.5) 25.7
Other assets ................................... 33.4 (14.2)
Accounts payable and accrued liabilities ....... (89.4) 56.3
Other liabilities .............................. 14.9 21.3
-------- --------
248.7 250.7
-------- --------
CASH USED IN INVESTING ACTIVITIES:
Purchases of revenue earning vehicles .......................... (1,448.2) (1,468.1)
Sales of revenue earning vehicles .............................. 843.9 864.6
Purchases of property and equipment ............................ (114.9) (42.9)
Purchases of marketable securities ............................. (300.0) --
Advances to affiliate .......................................... (50.0) --
Cash used in business combinations ............................. (40.4) (2.2)
Other .......................................................... (13.1) (.1)
-------- -------
(1,122.7) (648.7)
-------- -------
CASH PROVIDED BY FINANCING ACTIVITIES:
Payments of revenue earning vehicle financing .................. (3,021.8) (3,441.9)
Proceeds from revenue earning vehicle financing ................ 3,142.8 3,772.0
Proceeds from notes payable and long-term debt ................. 861.1 126.0
Payments of notes payable and long-term debt ................... (769.8) (86.0)
Sale of common stock ........................................... 552.7 --
Exercise of stock options and warrants ......................... 16.0 4.3
Other ......................................................... (7.3) (1.6)
-------- --------
773.7 372.8
-------- --------
DECREASE IN CASH AND CASH EQUIVALENTS .............................. (100.3) (25.2)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD ........................................... 299.5 345.6
-------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.......................... $ 199.2 $ 320.4
======== =======
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
REPUBLIC INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tables in millions, except per share data)
1. INTERIM FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements
include the accounts of Republic Industries, Inc. and its subsidiaries (the
"Company") and have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. All significant
intercompany accounts and transactions have been eliminated. Certain information
related to the Company's organization, significant accounting policies and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. These unaudited condensed consolidated financial statements reflect, in
the opinion of management, all material adjustments (which include only normal
recurring adjustments) necessary to fairly state the financial position and the
results of operations for the periods presented and the disclosures herein are
adequate to make the information presented not misleading. Operating results for
interim periods are not necessarily indicative of the results that can be
expected for a full year. These interim financial statements should be read in
conjunction with the Company's audited consolidated financial statements and
notes thereto.
In order to maintain consistency and comparability between periods
presented, certain amounts have been reclassified from the previously reported
financial statements in order to conform with the financial statement
presentation of the current period.
The accompanying financial statements also include the financial position
and results of operations of National Car Rental System, Inc. ("National"),
Maroone Automotive Group ("Maroone"), Wallace Automotive Group ("Wallace") and
Taormina Industries, Inc. ("Taormina"), all of which the Company acquired in
February 1997 and Carlisle Motors, Inc. ("Carlisle") which the Company acquired
in January 1997. These business combinations have been accounted for under the
pooling of interests method of accounting and, accordingly, these financial
statements and notes thereto have been restated as if the Company and National,
Maroone, Wallace, Taormina and Carlisle had operated as one entity since
inception. See Note 2 for a further discussion of business combinations.
2. BUSINESS COMBINATIONS
Pending Acquisitions
In April 1997, the Company signed a definitive agreement to acquire De La
Cruz Auto Group ("De La Cruz"), which owns and operates four franchised
automotive dealerships. The Company will issue shares of its common stock, par
value $.01 per share ("Common Stock"), valued at approximately $40.0 million in
this transaction, which will be accounted for under the pooling of interests
method of accounting. The closing of the transaction is subject to customary
conditions, including manufacturer and regulatory approvals.
In March 1997, the Company signed a definitive agreement to acquire Tempe
Toyota and related entities ("Tempe"), which operate one franchised automotive
dealership and two used automotive dealerships. The Company will issue Common
Stock valued at approximately $48.0 million in this transaction, which will be
accounted for under the pooling of interests method of accounting. The closing
of the transaction is subject to customary conditions, including manufacturer
and regulatory approvals.
In March 1997, the Company signed a definitive agreement to acquire
Flemington Car and Truck Country and certain related dealerships ("Flemington"),
which own and operate 24 franchised automotive dealerships. The Company will
issue Common Stock valued at approximately $55.0 million in this transaction,
which will be accounted for under the pooling of interests method of accounting.
The closing of the transaction is subject to customary conditions, including
manufacturer and regulatory approvals.
In March 1997, the Company signed a definitive agreement to acquire
Bankston Enterprises ("Bankston"), which owns and operates six franchised
automotive dealerships. The Company will issue shares of Common Stock valued at
approximately $37.4 million in this transaction, which will be accounted for
under the purchase method of accounting. The closing of the transaction is
subject to customary conditions, including manufacturer and regulatory
approvals.
7
<PAGE> 8
REPUBLIC INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
In February 1997, the Company signed a definitive agreement to acquire Joe
Myers Automotive Group ("Joe Myers"), which owns and operates five franchised
automotive dealerships. The Company will issue Common Stock valued at
approximately $33.1 million in this transaction, which will be accounted for
under the pooling of interests method of accounting. The closing of the
transaction is subject to customary conditions, including manufacturer and
regulatory approvals.
In February 1997, the Company signed a definitive agreement to acquire
Courtesy Auto Group, Inc. ("Courtesy"), which owns and operates nine franchised
automotive dealerships. The Company will issue Common Stock valued at
approximately $31.1 million in this transaction, which will be accounted for
under the purchase method of accounting. The closing of the transaction is
subject to customary conditions, including manufacturer and regulatory
approvals.
Additionally, the Company has signed definitive agreements to acquire
various other businesses in the automotive retailing and solid waste services
industries which are not material to the Company. The Company will issue Common
Stock valued in the aggregate at approximately $34.7 million in such
transactions which will be accounted for under the purchase method of
accounting, and will issue Common Stock valued in the aggregate at approximately
$112.7 million in such transactions which will be accounted for under the
pooling of interests method of accounting. These transactions are subject to
customary conditions, including manufacturer and regulatory approvals, as
applicable.
Acquisitions Completed Subsequent to March 31, 1997
In May 1997, the Company acquired Spirit Rent-A-Car, Inc. ("Spirit"),
which operates a vehicle rental business. The Company issued 3.1 million shares
of Common Stock in this transaction, which has been accounted for under the
pooling of interests method of accounting.
In May 1997, the Company acquired Chesrown Automotive Group ("Chesrown"),
which owns and operates seven franchised automotive dealerships. The Company
issued approximately 2.5 million shares of Common Stock in this transaction,
which has been accounted for under the pooling of interests method of
accounting.
In May 1997, the Company acquired Bledsoe Dodge, Inc. ("Bledsoe"), which
operates three franchised automotive dealerships. The Company issued
approximately 1.7 million shares of Common Stock in this transaction, which has
been accounted for under the pooling of interests method of accounting.
The Company's unaudited pro forma consolidated results of operations
assuming the acquisitions of Spirit, Chesrown and Bledsoe had been consummated
as of March 31, 1997 are as follows:
Three Months Ended
March 31,
-------------------
1997 1996
---- ----
Revenue ........................ $1,620.6 $1,136.8
======== ========
Net income ..................... $ 32.2 $ 18.1
======== ========
Net income per common and
common equivalent share ...... $ .08 $ .06
======== ========
Additionally, subsequent to March 31, 1997, the Company has acquired
various other businesses in the automotive retailing and solid waste services
industries which were not material to the Company. The Company issued an
aggregate of approximately .9 million shares of Common Stock in such
transactions which have been accounted for under the purchase method of
accounting and .5 million shares in such transactions which have been accounted
for under the pooling of interests method of accounting.
8
<PAGE> 9
REPUBLIC INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Acquisitions Completed During the Three Months Ended March 31, 1997
Significant businesses acquired through March 31, 1997 and accounted for
under the pooling of interests method of accounting have been included
retroactively in the financial statements as if the companies had operated as
one entity since inception. Businesses acquired through March 31, 1997 and
accounted for under the purchase method of accounting are included in the
financial statements from the date of acquisition.
In February 1997, the Company acquired National, which operates a vehicle
rental business. The Company issued approximately 21.7 million shares of Common
Stock in this transaction, which has been accounted for under the pooling of
interests method of accounting.
In February 1997, the Company acquired Maroone, which owns and operates
seven franchised automotive dealerships. The Company issued approximately 6.1
million shares of Common Stock in this transaction, which has been accounted for
under the pooling of interests method of accounting.
In February 1997, the Company acquired Wallace, which owns and operates
six franchised automotive dealerships. The Company issued approximately 1.7
million shares of Common Stock in this transaction, which has been accounted for
under the pooling of interests method of accounting.
In February 1997, the Company acquired Taormina, which provides waste
collection services and owns and operates a materials recycling facility. The
Company issued approximately 7.4 million shares of Common Stock in this
transaction, which has been accounted for under the pooling of interests method
of accounting.
In February 1997, the Company acquired Kendall Automotive Group
("Kendall"), which owns and operates three franchised automotive dealerships.
The Company issued approximately 1.2 million shares of Common Stock in this
transaction, which has been accounted for under the purchase method of
accounting.
In January 1997, following approval by the Company's stockholders at a
special meeting, the Company acquired AutoNation Incorporated ("AutoNation"),
which is developing a chain of used vehicle megastores. The Company issued
approximately 17.5 million shares of Common Stock in this transaction, which has
been accounted for under the purchase method of accounting.
In January 1997, the Company acquired Carlisle which owns and operates
three franchised automotive dealerships. The Company issued approximately 1.0
million shares of Common Stock in this transaction, which has been accounted for
under the pooling of interests method of accounting.
In January 1997, the Company acquired Grubb Automotive ("Grubb"), which
owns and operates eight franchised automotive dealerships. The Company issued
approximately 4.0 million shares of Common Stock in this transaction, which has
been accounted for under the purchase method of accounting.
In January 1997, the Company acquired Ed Mullinax, Inc. and subsidiaries
("Mullinax"), which owns and operates five franchised automotive dealerships.
The Company issued approximately 3.6 million shares of Common Stock in this
transaction, which has been accounted for under the purchase method of
accounting.
In addition, during the three months ended March 31, 1997, the Company
acquired various other businesses in the automotive retailing, solid waste
services and electronic security services industries which were not material
to the Company. The Company issued an aggregate of approximately 1.9 million
shares of Common Stock and paid approximately $40.4 million of cash in such
transactions which will be accounted for under the purchase method of
accounting, and issued an aggregate of approximately 4.0 million shares of
Common Stock in such transactions which will be accounted for under the pooling
of interests method of accounting. These acquisitions accounted for under the
pooling of interests method of accounting were not material in the aggregate
and, consequently, prior period financial statements were not restated for such
acquisitions.
9
<PAGE> 10
REPUBLIC INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Details of the results of operations of the Company and National, Maroone,
Wallace, Taormina and Carlisle (the "Pooled Entities") for the periods before
the pooling of interests business combinations were consummated are as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1997 1996
---- ----
<S> <C> <C>
Revenue:
The Company ............................ $ 908.1 $ 446.1
Pooled Entities......................... 595.9 569.8
-------- --------
$1,504.0 $1,015.9
======== ========
Net income:
The Company ............................ $ 15.7 $ 3.5
Pooled Entities ........................ 13.2 8.9
-------- --------
$ 28.9 $ 12.4
======== ========
</TABLE>
The following summarizes the preliminary purchase price allocations for
business combinations (including historical accounts of immaterial acquisitions
accounted for under the pooling of interests method of accounting) consummated
during the three months ended March 31:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Property and equipment ......................... $ 350.7 $ 22.5
Investment in subscriber accounts .............. 6.9 3.3
Intangible assets .............................. 480.2 49.5
Working capital deficiency, net of cash
acquired .................................... (18.9) (7.9)
Long-term debt assumed ......................... (284.2) (11.7)
Other liabilities, net ......................... (14.6) (.7)
Common stock issued ............................ (479.7) (52.8)
-------- ------
Cash used in acquisitions....................... $ 40.4 $ 2.2
======== ======
</TABLE>
The Company's unaudited pro forma consolidated results of operations
assuming the acquisitions of Kendall, AutoNation, Grubb and Mullinax, all of
which have been accounted for under the purchase method of accounting, had
occurred on January 1, 1996 are as follows:
<TABLE>
<Capiton>
Three Months Ended
March 31,
----------------------
1997 1996
---- ----
<S> <C> <C>
Revenue ................................... $ 1,629.8 $1,384.4
========= ========
Net income ................................. $ 22.6 $ 13.6
========= ========
Fully diluted net income per common
and common equivalent share............ $ .06 $ .04
========= ========
</TABLE>
The unaudited pro forma results of operations are presented for
informational purposes only and may not necessarily reflect the future results
of operations of the Company or what the results of operations would have been
had the Company owned and operated these businesses as of January 1, 1996.
10
<PAGE> 11
REPUBLIC INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
3. RECEIVABLES
The components of receivables, net of allowance for doubtful accounts are
as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
<S> <C> <C>
Trade .......................................... $ 265.0 $286.3
Vehicle ........................................ 174.2 226.6
Contracts in transit ........................... 46.2 19.3
Other .......................................... 56.0 19.5
------- ------
Less: allowance for doubtful accounts ......... 541.4 551.7
(19.4) (16.0)
------- ------
$ 522.0 $535.7
======= ======
</TABLE>
4. MARKETABLE SECURITIES
Marketable securities at March 31, 1997 consist of 15.0 million common
shares of ADT Limited ("ADT") which were acquired in March 1997 upon exercise of
a warrant (the "ADT Warrant") to purchase such shares at a purchase price of $20
per share. The ADT Warrant, which was received in July 1996 upon execution of a
definitive agreement to acquire ADT, became exercisable upon termination of such
agreement in September 1996. The ADT shares are classified as available-for-sale
and are stated at fair value with unrealized gains, net of tax, reported as a
separate component of shareholders' equity. As of March 31, 1997, the cost,
unrealized gain and market value of the ADT common shares were $305.7 million,
$69.3 million and $375.0 million, respectively.
In May 1997, the Company sold the ADT common shares to certain
institutional investors for $27.50 per share resulting in gross proceeds of
approximately $412.5 million.
5. REVENUE EARNING VEHICLES
Revenue earning vehicles consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- -----------
<S> <C> <C>
Revenue earning vehicles ....................... $4,333.1 $3,906.4
Less: accumulated depreciation ................. (409.4) (411.2)
-------- --------
$3,923.7 $3,495.2
======== ========
</TABLE>
6. PROPERTY AND EQUIPMENT
A summary of property and equipment is shown below:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
<S> <C> <C>
Land, landfills and improvements ............... $ 621.3 $ 451.5
Furniture, fixtures and equipment .............. 760.4 657.1
Buildings and improvements ..................... 539.3 355.1
--------- --------
1,921.0 1,463.7
Less: accumulated depreciation and
depletion .................................. (424.5) (398.7)
--------- --------
$ 1,496.5 $1,065.0
========= ========
</TABLE>
11
<PAGE> 12
REPUBLIC INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7. INTANGIBLE ASSETS
Intangible assets consist primarily of the cost of acquired businesses in
excess of the fair value of net tangible assets acquired. The cost in excess of
the fair value of net tangible assets is amortized over forty years on a
straight-line basis.
Accumulated amortization of intangible assets at March 31, 1997 and
December 31, 1996 was $59.9 million and $47.6 million, respectively.
8. INVESTMENT IN SUBSCRIBER ACCOUNTS
Investment in subscriber accounts consists of capitalized costs associated
with new monitoring systems installed by the Company's electronic security
services business and the cost of acquired subscriber accounts. These costs are
amortized over ten years (based on historical customer attrition rates) on a
straight-line basis.
Accumulated amortization of investment in subscriber accounts at March 31,
1997 and December 31, 1996 was $30.2 million and $20.7 million, respectively.
9. REVENUE EARNING VEHICLE DEBT
Revenue earning vehicle debt consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
<S> <C> <C>
Amounts under $1.4 billion commercial paper
program terminating March 1998; secured by
eligible vehicle collateral and vehicle receivable
balances; interest based on market dictated
commercial paper rates .............................. $1,397.0 $ 1,396.9
Amounts under $1.1 billion commercial paper
program terminating May 1998; secured by
eligible vehicle collateral and vehicle receivable
balances; interest based on market dictated
commercial paper rates .............................. 963.0 856.3
Medium term notes payable; interest payable
monthly at floating or fixed rates; due
1999 - 2003......................................... 799.7 799.6
Amounts under various uncommitted revolving
lease facilities with financing institutions in
United Kingdom; secured by eligible vehicle
collateral; interest based on an as quoted basis
dictated by market competition; no stated
expiration dates, reviewed annually ................ 195.4 143.5
Other, including amounts to be financed after
period end, under various revolving credit
agreements and lease facilities .................... 245.1 292.1
-------- ---------
3,600.2 3,488.4
Less: long-term portion ............................... (799.7) (799.6)
-------- ---------
$2,800.5 $ 2,688.8
======== =========
</TABLE>
12
<PAGE> 13
REPUBLIC INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. LONG-TERM DEBT AND NOTES PAYABLE
Long-term debt and notes payable consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- -----------
<S> <C> <C>
$300.0 million unsecured credit facility; interest payable
quarterly at LIBOR plus 30 basis points; repaid in
April 1997................................................... $ 300.0 $ --
$250.0 million revolving credit facility; interest payable
monthly using either a competitive bid feature or LIBOR
based rate; matures December 1998; unsecured ................ 190.0 150.0
Vehicle inventory credit facilities secured by the Company's
vehicle inventory; interest at LIBOR plus 2.75% or 1%
above prime ................................................. 233.5 114.3
Bonds payable under loan agreements with California
Pollution Control Financing Authority; interest varies
weekly as determined by remarketing agent.................... 43.8 44.0
Notes to banks and financial institutions; secured by real
property, equipment and other assets; interest ranging from
2% to 14.5%; maturing through 2015 .......................... 77.3 184.9
Other notes; secured by equipment and other assets; interest
ranging from 4% to 11.8%; maturing through 2010 ............. 52.9 38.9
------- -------
897.5 532.1
Less: current maturities........................................ (577.1) (184.1)
------- -------
$ 320.4 $ 348.0
======= =======
</TABLE>
In April 1997, the Company replaced its existing $250.0 million credit
facility with a new $1.0 billion unsecured revolving credit facility (the
"Credit Facility") with certain banks for a term of five years. Outstanding
advances, if any, are payable at the expiration of the five year term. The
Credit Facility requires, among other items, that the Company maintain certain
financial ratios and comply with certain financial covenants. Interest is
determined using either a competitive bid feature or a LIBOR based rate.
In March 1997, the Company entered into a $300.0 million unsecured credit
facility with a bank. The proceeds from this facility were used to acquire 15.0
million common shares of ADT as discussed in Note 4. In April 1997, the Company
refinanced amounts borrowed under this facility with proceeds from the Credit
Facility.
11. INCOME TAXES
Income taxes have been provided for based upon the Company's anticipated
annual effective income tax rate.
12. STOCK OPTIONS AND WARRANTS
The Company has various stock option plans under which shares of Common
Stock may be granted to key employees and directors of the Company. Options
granted under the plans are non-qualified and are granted at a price equal to
the fair market value of the Common Stock at the date of grant. Generally,
options granted will have a term of ten years from the date of grant, and will
vest in increments of 25% per year over a four year period on the yearly
anniversary of the grant date.
13
<PAGE> 14
REPUBLIC INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
A summary of stock option and warrant transactions for the three months
ended March 31, 1997 is as follows:
<TABLE>
<CAPTION>
Weighted-Average
Shares Exercise Price
------ ----------------
<S> <C> <C>
Options and warrants outstanding at beginning
of year .............................................. 52.5 $ 7.63
Granted ................................................. 9.1 27.70
Exercised ............................................... (4.3) 3.87
Canceled ................................................ (.1) 18.16
----
Options and warrants outstanding at
March 31, 1997 ....................................... 57.2 11.26
====
Options and warrants exercisable at
March 31, 1997 ....................................... 36.4 5.33
Options available for future grants at
March 31, 1997 ....................................... 19.3 --
</TABLE>
The following table summarizes information about outstanding and
exercisable stock options and warrants at March 31, 1997:
<TABLE>
<CAPTION>
Outstanding Exercisable
----------------------------------------- -----------------------
Weighted-
Average Weighted- Weighted-
Remaining Average Average
Contractual Life Exercise Exercise
Range of Exercise Prices Shares (Years) Price Shares Price
- ------------------------ ------ ---------------- ------ ------ ---------
<S> <C> <C> <C> <C> <C>
$ 1.13 - $ 2.75............ 21.8 0.98 $ 2.39 21.1 $ 2.41
2.95 - 16.13............ 21.7 6.12 9.32 13.4 6.85
16.25 - 41.88............ 13.7 9.65 28.44 1.9 27.61
---- ----
57.2 5.02 11.26 36.4 5.33
==== ====
</TABLE>
13. INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Income per common and common equivalent share is based on the combined
weighted average number of common shares and common share equivalents
outstanding which include, where appropriate, the assumed exercise or conversion
of warrants and options. In computing income per common and common equivalent
share, the Company utilizes the modified treasury stock method.
14
<PAGE> 15
REPUBLIC INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The computation of weighted average common and common equivalent shares
used in the calculation of fully diluted income per share, which is
substantially the same as the computation used to calculate primary income per
share, is shown below:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1997 1996
---- ----
<S> <C> <C>
Common shares outstanding .................. 349.2 255.9
Common equivalent shares ................... 61.6 49.6
Weighted average treasury shares
purchased ................................ (22.6) (16.5)
Effect of using weighted average
common and common equivalent
shares outstanding ....................... (14.3) (5.7)
----- -----
373.9 283.3
===== =====
</TABLE>
In March 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share" which
establishes standards for computing and presenting earnings per share ("EPS").
This Statement replaces primary and fully diluted EPS with basic and diluted
EPS. Basic EPS excludes dilution and is computed by dividing net income by the
weighted average common shares outstanding during the period. Diluted EPS is
computed similarly to fully diluted EPS pursuant to Accounting Principles Board
Opinion No. 15. SFAS No. 128 is effective for both interim and annual periods
ending after December 15, 1997. Earlier application is not permitted. The
Company's pro forma basic and diluted EPS computed under SFAS No. 128 are as
follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1997 1996
---- ----
<S> <C> <C>
Basic ..................................... $.09 $.05
Diluted ................................... .08 .04
</TABLE>
14. SHAREHOLDERS' EQUITY
In January 1997, the Company sold 15.8 million shares of Common Stock in a
private placement transaction resulting in net proceeds of $552.7 million.
15. LEGAL MATTERS
The Company is subject to various lawsuits, claims and other legal matters
arising in the ordinary course of conducting its business. The Company believes
that such lawsuits, claims and other legal matters should not have a material
adverse effect on the Company's consolidated results of operations, financial
condition or cash flows.
15
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the unaudited
condensed consolidated financial statements and notes thereto included under
Item 1. In addition, reference should be made to the Company's audited
consolidated financial statements and notes thereto and related Management's
Discussion and Analysis of Financial Condition and Results of Operations. The
historical unaudited condensed consolidated financial statements of the Company
include the financial position and results of operations of National Car Rental
System, Inc. ("National"), Maroone Automotive Group ("Maroone"), Wallace
Automotive Group ("Wallace"), Taormina Industries, Inc. ("Taormina") and
Carlisle Motors, Inc. ("Carlisle") which the Company acquired during the three
months ended March 31, 1997. These transactions have been accounted for under
the pooling of interests method of accounting and, accordingly, the Company's
historical financial statements have been restated as if the companies had
operated as one entity since inception.
BUSINESS COMBINATIONS
The Company makes its decisions to acquire or invest in businesses based
on financial and strategic considerations.
Pending Acquisitions
In April 1997, the Company signed a definitive agreement to acquire De La
Cruz Auto Group ("De La Cruz"), which owns and operates four franchised
automotive dealerships. The Company will issue shares of its common stock, par
value $.01 per share ("Common Stock"), valued at approximately $40.0 million in
this transaction, which will be accounted for under the pooling of interests
method of accounting. The closing of the transaction is subject to customary
conditions, including manufacturer and regulatory approvals.
In March 1997, the Company signed a definitive agreement to acquire Tempe
Toyota and related entities ("Tempe"), which operate one franchised automotive
dealership and two used automotive dealerships. The Company will issue Common
Stock valued at approximately $48.0 million in this transaction, which will be
accounted for under the pooling of interests method of accounting. The closing
of the transaction is subject to customary conditions, including manufacturer
and regulatory approvals.
In March 1997, the Company signed a definitive agreement to acquire
Flemington Car and Truck Country and certain related dealerships ("Flemington"),
which own and operate 24 franchised automotive dealerships. The Company will
issue Common Stock valued at approximately $55.0 million in this transaction,
which will be accounted for under the pooling of interests method of accounting.
The closing of the transaction is subject to customary conditions, including
manufacturer and regulatory approvals.
In March 1997, the Company signed a definitive agreement to acquire
Bankston Enterprises ("Bankston"), which owns and operates six franchised
automotive dealerships. The Company will issue shares of Common Stock valued at
approximately $37.4 million in this transaction, which will be accounted for
under the purchase method of accounting. The closing of the transaction is
subject to customary conditions, including manufacturer and regulatory
approvals.
In February 1997, the Company signed a definitive agreement to acquire Joe
Myers Automotive Group ("Joe Myers"), which owns and operates five franchised
automotive dealerships. The Company will issue Common Stock valued at
approximately $33.1 million in this transaction, which will be accounted for
under the pooling of interests method of accounting. The closing of the
transaction is subject to customary conditions, including manufacturer and
regulatory approvals.
In February 1997, the Company signed a definitive agreement to acquire
Courtesy Auto Group, Inc. ("Courtesy"), which owns and operates nine franchised
automotive dealerships. The Company will issue Common Stock valued at
approximately $31.1 million in this transaction, which will be accounted for
under the purchase method of accounting. The closing of the transaction is
subject to customary conditions, including manufacturer and regulatory
approvals.
Additionally, the Company has signed definitive agreements to acquire
various other businesses in the automotive retail and solid waste services
industries which are not material to the Company. The Company will issue Common
Stock valued in the aggregate of approximately $34.7 million in such
transactions which will be accounted for under
16
<PAGE> 17
the purchase method of accounting, and will issue Common Stock valued in the
aggregate of approximately $112.7 million in such transactions which will be
accounted for under the pooling of interests method of accounting. These
transactions are subject to customary conditions, including manufacturer and
regulatory approvals, as applicable.
Acquisitions Completed Subsequent to March 31, 1997
In May 1997, the Company acquired Spirit Rent-A-Car, Inc. ("Spirit"),
which operates a vehicle rental business. The Company issued 3.1 million shares
of Common Stock in this transaction, which has been accounted for under the
pooling of interests method of accounting.
In May 1997, the Company acquired Chesrown Automotive Group ("Chesrown"),
which owns and operates seven franchised automotive dealerships. The Company
issued approximately 2.5 million shares of Common Stock in this transaction,
which has been accounted for under the pooling of interests method of
accounting.
In May 1997, the Company acquired Bledsoe Dodge, Inc. ("Bledsoe"), which
operates three franchised automotive dealerships. The Company issued
approximately 1.7 million shares of Common Stock in this transaction, which has
been accounted for under the pooling of interests method of accounting.
Additionally, subsequent to March 31, 1997, the Company acquired various
other businesses in the automotive retail and solid waste services industries
which were not material to the Company. The Company issued an aggregate of
approximately .9 million shares of Common Stock in such transactions which have
been accounted for under the purchase method of accounting and .5 million shares
in such transactions which have been accounted for under the pooling of
interests method of accounting.
Acquisitions Completed During the Three Months Ended March 31, 1997
Significant businesses acquired through March 31, 1997 and accounted for
under the pooling of interests method of accounting have been included
retroactively in the financial statements as if the companies had operated as
one entity since inception. Businesses acquired through March 31, 1997 and
accounted for under the purchase method of accounting are included in the
financial statements from the date of acquisition.
In February 1997, the Company acquired National, which operates a vehicle
rental business. The Company issued approximately 21.7 million shares of Common
Stock in this transaction, which has been accounted for under the pooling of
interests method of accounting.
In February 1997, the Company acquired Maroone, which owns and operates
seven franchised automotive dealerships. The Company issued approximately 6.1
million shares of Common Stock in this transaction, which has been accounted for
under the pooling of interests method of accounting.
In February 1997, the Company acquired Wallace, which owns and operates
six franchised automotive dealerships. The Company issued approximately 1.7
million shares of Common Stock in this transaction, which has been accounted for
under the pooling of interests method of accounting.
In February 1997, the Company acquired Taormina, which provides waste
collection services and owns and operates a materials recycling facility. The
Company issued approximately 7.4 million shares of Common Stock in this
transaction, which has been accounted for under the pooling of interests method
of accounting.
In February 1997, the Company acquired Kendall Automotive Group
("Kendall"), which owns and operates three franchised automotive dealerships.
The Company issued approximately 1.2 million shares of Common Stock in this
transaction, which has been accounted for under the purchase method of
accounting.
In January 1997, following approval by the Company's stockholders at a
special meeting, the Company acquired AutoNation Incorporated ("AutoNation"),
which is developing a chain of used vehicle megastores. The Company issued
approximately 17.5 million shares of Common Stock in this transaction, which has
been accounted for under the purchase method of accounting.
In January 1997, the Company acquired Carlisle which owns and operates
three franchised automotive dealerships. The Company issued approximately 1.0
million shares of Common Stock in this transaction, which has been accounted for
under the pooling of interests method of accounting.
17
<PAGE> 18
In January 1997, the Company acquired Grubb Automotive ("Grubb"), which
owns and operates eight franchised automotive dealerships. The Company issued
approximately 4.0 million shares of Common Stock in this transaction, which has
been accounted for under the purchase method of accounting.
In January 1997, the Company acquired Ed Mullinax, Inc. and subsidiaries
("Mullinax"), which owns and operates five franchised automotive dealerships.
The Company issued approximately 3.6 million shares of Common Stock in this
transaction, which has been accounted for under the purchase method of
accounting.
In addition, during the three months ended March 31, 1997, the Company
acquired various other businesses in the automotive retail, solid waste services
and electronic security services industries which were not material to the
Company. The Company issued an aggregate of approximately 1.9 million shares of
Common Stock and paid approximately $40.4 million of cash in such transactions
which will be accounted for under the purchase method of accounting, and issued
an aggregate of approximately 4.0 million shares of Common Stock in such
transactions which will be accounted for under the pooling of interests method
of accounting. These acquisitions accounted for under the pooling of interests
method of accounting were not material in the aggregate and, consequently, prior
period financial statements were not restated for such acquisitions.
BUSINESS SEGMENT INFORMATION
The following table sets forth revenue with percentages of total
revenue, and sets forth cost of operations, selling, general and administrative
expenses and operating income (loss) with percentages of the applicable segment
revenue, for each of the Company's various business segments for the three
months ended March 31 (in millions):
<TABLE>
<CAPTION>
1997 % 1996 %
---- - ---- -
<S> <C> <C> <C> <C>
Revenue:
Automotive retail........................... $ 667.3 44 $ 308.6 30
Automotive rental .......................... 606.8 40 555.0 55
Solid waste services ....................... 203.3 14 136.9 13
Electronic security services ............... 26.6 2 15.4 2
------- -------
1,504.0 1,015.9
Cost of Operations:
Automotive retail .......................... 590.2 88 270.5 88
Automotive rental .......................... 484.8 80 436.9 79
Solid waste services ....................... 148.0 73 97.5 71
Electronic security services ............... 11.6 44 6.1 40
------- -------
1,234.6 811.0
------- -------
Selling, General and Administrative:
Automotive retail .......................... 68.6 10 32.4 10
Automotive rental .......................... 121.6 20 120.3 22
Solid waste services ....................... 22.3 11 17.2 13
Electronic security services ............... 10.6 40 6.4 42
Corporate .................................. 6.3 -- 2.8 --
------- -------
229.4 179.1
------- -------
Operating Income (Loss):
Automotive retail .......................... 8.5 1 5.7 2
Automotive rental .......................... .4 -- (2.2) --
Solid waste services ....................... 33.0 16 22.2 16
Electronic security services ............... 4.4 17 2.9 19
Corporate .................................. (6.3) -- (2.8) --
------- -------
$ 40.0 $ 25.8
======= =======
</TABLE>
18
<PAGE> 19
CONSOLIDATED RESULTS OF OPERATIONS
The Company's consolidated revenue increased 48% to $1.5 billion for the
three months ended March 31, 1997 due to growth in all four of the Company's
business segments. Consolidated operating income was $40.0 million and $25.8
million for the three months ended March 31, 1997 and 1996, respectively. Net
income was $28.9 million and $12.4 million for the three months ended March 31,
1997 and 1996, respectively. Net income per common and common equivalent share
was $.08 and $.04 for the three months ended March 31, 1997 and 1996,
respectively.
AUTOMOTIVE RETAIL
The Company currently operates 50 franchised automotive dealerships
granted by various vehicle manufacturers, and has contracted to acquire 54
additional franchised automotive dealerships. The Company also operates ten used
vehicle megastores under the name AutoNation USA, three used vehicle retail
outlets under the names Valu Stop(sm) or Car Stop(sm) and two vehicle
reconditioning centers.
Revenue from the Company's automotive retail operations consists of sales
of new and used vehicles and related automotive services and products.
Automotive retail revenue was $667.3 million and $308.6 million for the three
months ended March 31, 1997 and 1996, respectively. The increase is a result of
the acquisitions of AutoNation, Mullinax, Grubb and Kendall during the first
quarter of 1997, all of which have been accounted for under the purchase method
of accounting. The Company has signed definitive agreements to acquire several
additional franchised automotive dealerships and currently plans to continue
this expansion for the remainder of 1997 and beyond.
Cost of operations of the Company's automotive retail operations consists
primarily of the cost of vehicles sold, including the cost of reconditioning
used vehicles, the cost of parts and accessories and interest expense related to
vehicle inventory financing. Cost of operations was $590.2 million and $270.5
million for the three months ended March 31, 1997 and 1996, respectively. The
increase in aggregate dollars is due primarily to the acquisitions described
above.
Selling, general and administrative expenses consist primarily of sales
salaries and commissions, marketing expenses and office salaries. Such expenses
were $68.6 million and $32.4 million for the three months ended March 31, 1997
and 1996, respectively. The increase in aggregate dollars is due to the
acquisitions described above. As previously discussed, AutoNation is in the
process of acquiring and/or developing numerous additional sites. As the Company
opens AutoNation stores and reconditioning centers during the remainder of 1997
and beyond, such operations will incur fixed operating and administrative costs
immediately while revenue volume will tend to grow more gradually. Consequently,
the Company anticipates it will take approximately nine months for an average
AutoNation store to generate operating income.
AUTOMOTIVE RENTAL
Revenue from the Company's automotive rental operations consists primarily
of rental fees and sales of related rental products from the leisure and
business travel segments. Rental revenue was $606.8 million and $555.0 million
for the three months ended March 31, 1997 and 1996, respectively. The increase
is primarily due to higher rental volume and, to a lesser extent, increases in
average daily rental rates.
Automotive rental operating expenses consist primarily of vehicle
depreciation, interest and lease expenses and other direct operating expenses
including personnel, insurance, fleet maintenance and rental location occupancy
costs. Such expenses were $484.8 million and $436.9 million for the three months
ended March 31, 1997 and 1996, respectively. The increase in aggregate dollars
is attributed to the increase in rental volume during the period.
Selling, general and administrative expenses related to the Company's
automotive rental operations consist primarily of administrative personnel,
marketing costs and agent and tour operator commissions. Such expenses were 20%
and 22% of automotive rental revenue for the three months ended March 31, 1997
and 1996, respectively. The decrease in selling, general and administrative
expenses as percentages of rental revenue is due to lower administrative
expenses for acquired businesses and overall growth in revenue.
19
<PAGE> 20
SOLID WASTE SERVICES
Revenue from the Company's solid waste services operations consists of
collection fees from residential, commercial and industrial customers and
landfill disposal fees charged to third parties. Solid waste revenue was $203.3
million and $136.9 million for the three months ended March 31, 1997 and 1996,
respectively. The increase is a result of acquisitions as well as the expansion
of the Company's existing business.
Cost of solid waste services includes disposal, labor and equipment
operating costs related to waste collection operations and the cost of operating
the Company's landfills which consist of daily operating expenses, legal and
administrative costs of ongoing environmental compliance and site closure and
post-closure costs. Certain direct landfill development costs, such as
engineering, upgrading cell construction and permitting costs are capitalized
and depleted based on consumed airspace. All indirect landfill development
costs, such as executive salaries, general corporate overhead, public affairs
and other corporate services are expensed as incurred. Cost of solid waste
services was $148.0 million and $97.5 million for the three months ended March
31, 1997 and 1996, respectively. The increase in aggregate dollars is a result
of the expansion of the Company's solid waste services operations through
acquisition and internal growth. Such expenses were 73% and 71% of solid waste
services revenue for the three months ended March 31, 1997 and 1996,
respectively. The increase in cost of solid waste services as percentages of
solid waste revenue is primarily a result of certain of the Company's acquired
collection companies which had higher levels of operating costs than the
Company's historical operations.
Selling, general and administrative expenses related to the Company's
solid waste services operations consist primarily of office salaries, supervisor
salaries and office expenses. Such expenses were $22.3 million and $17.2 million
for the three months ended March 31, 1997 and 1996, respectively. The increase
in aggregate dollars primarily reflects the growth of the Company's business
through acquisitions. Selling, general and administrative expenses were 11% and
13% of solid waste services revenue for the three months ended March 31, 1997
and 1996, respectively. The decrease in selling, general and administrative
expenses as percentages of solid waste services revenue is primarily due to the
reduction of administrative expenses for acquired businesses and growth in
revenue.
ELECTRONIC SECURITY SERVICES
Revenue from the Company's electronic security services operations results
from monitoring contracts for security systems and fees charged for the sale and
installation of such systems. Electronic security revenue was $26.6 million and
$15.4 million for the three months ended March 31, 1997 and 1996, respectively.
The increase is principally a result of acquisitions and the installation of new
monitoring systems during the period.
Cost of electronic security services primarily consists of the
amortization of capitalized labor and equipment associated with the sale and
installation of security systems and the cost of servicing and monitoring such
systems. Cost of electronic security services was $11.6 million and $6.1 million
for the three months ended March 31, 1997 and 1996, respectively. The increase
in aggregate dollars is a result of the installation of new monitoring systems
and acquisitions of subscriber accounts. Cost of electronic security services
was 44% and 40% of electronic security revenue for the three months ended March
31, 1997 and 1996, respectively. This increase is primarily a result of the
Company's expansion through the opening of additional branch offices which have
not yet reached the revenue volume of a mature branch office, yet have attained
a full level of operating costs and expenses.
Selling, general and administrative expenses related to the Company's
electronic security services operations consist primarily of office salaries,
office expenses and marketing expenses. Such expenses were $10.6 million and
$6.4 million for the three months ended March 31, 1997 and 1996, respectively.
The increase in aggregate dollars primarily reflects the Company's expanded
operations through the growth of its existing business. Selling, general and
administrative expenses were 40% and 42% of electronic security revenue for the
three months ended March 31, 1997 and 1996, respectively. The decrease is
primarily due to growth in revenue and the reduction of administrative expenses
for acquired businesses.
CORPORATE ACTIVITIES
Corporate selling, general and administrative expenses consist primarily
of office salaries for corporate employees, professional and regulatory fees,
office expenses and the cost of business travel. Such expenses were $6.3 million
and $2.8 million for the three months ended March 31, 1997 and 1996,
respectively. The increase is a result of the overall
20
<PAGE> 21
growth experienced by the Company.
INTEREST INCOME
Interest income was $7.6 million and $5.0 million for the three months
ended March 31, 1997 and 1996, respectively. The increase is primarily due to
interest income from the proceeds of the sale of Common Stock in January 1997.
INTEREST EXPENSE
Interest expense was incurred primarily on debt assumed in acquisitions.
Interest expense was $3.3 million and $8.4 million for the three months ended
March 31, 1997 and 1996, respectively. The decrease is primarily due to the
repayment of debt assumed in acquisitions. Interest expense related to revenue
earning vehicle financing in the Company's automotive rental operations is
included in vehicle rental operating expenses. Interest expense related to
the vehicle inventory financing in the Company's automotive retail operations is
included in cost of vehicle sales.
INCOME TAXES
Income tax expense was $17.0 million and $12.0 million for the three
months ended March 31, 1997 and 1996, respectively. The effective income tax
rate was 37% and 49% for the three months ended March 31, 1997 and 1996,
respectively. The decrease in the effective income tax rate for 1997 is
primarily due to varying historical effective income tax rates of acquired
businesses accounted for under the pooling of interests method of accounting.
LANDFILL AND ENVIRONMENTAL MATTERS
The Company provides for accrued landfill and environmental costs which
include landfill site closure and post-closure costs. Landfill site closure and
post-closure costs include estimated costs to be incurred for final closure of
the landfills and estimated costs for providing required post-closure monitoring
and maintenance of landfills. These costs are accrued based on consumed
airspace. The Company estimates its future cost requirements for closure and
post-closure monitoring and maintenance for its solid waste facilities based on
its interpretation of the technical standards of the EPA's Subtitle D
Regulations. These estimates do not take into account discounts for the present
value of such total estimated costs.
Environmental costs are accrued by the Company through a charge to income
in the period such liabilities become probable and can be reasonably estimated.
The Company periodically reassesses its methods and assumptions used to
estimate such accruals for landfill and environmental costs and adjusts such
accruals accordingly. Such factors considered are changing regulatory
requirements, the effects of inflation, changes in operating climates in regions
in which the Company's facilities are located and the expectations regarding
costs of securing environmental services.
FINANCIAL CONDITION
At March 31, 1997, the Company had $199.2 million in cash; approximately
$4.5 billion in total debt outstanding, $3.6 billion of which was secured by
revenue earning vehicles and $233.5 million of which was borrowed under vehicle
inventory financings secured by vehicle inventories; and approximately $60.0
million of availability under its $250.0 million revolving credit facility which
may be used for general corporate purposes. In April 1997, the Company replaced
its existing $250.0 million credit facility with a new $1.0 billion unsecured
revolving credit facility. The Company believes that its financial condition is
strong and that it has sufficient operating cash flow and other financial
resources necessary to meet its anticipated capital requirements and obligations
as they come due.
In connection with the Company's automotive rental operations, Alamo and
National, through separate special purpose entities, may issue up to $1.4
billion and $1.1 billion of commercial paper, respectively, the proceeds of
which may be used solely to purchase or finance rental fleet vehicles that are
subject to manufacturer repurchase programs or to refinance repurchase
receivables due from vehicle manufacturers under repurchase programs. National
has also issued $800.0 million of medium term notes, the proceeds of which were
used to finance rental fleet vehicles. The Company has various other credit
facilities to finance its current vehicle rental operations in Europe and other
foreign
21
<PAGE> 22
markets. In connection with the development of the AutoNation megastores, the
Company, through AutoNation, is the lessee under a $500.0 million operating
lease facility established to acquire and develop properties used in its
business. The Company has guaranteed the residual value of the properties under
this facility which guarantee totaled approximately $74.6 million at March 31,
1997.
Working Capital
Working capital at March 31, 1997 was $1.4 billion as compared to $1.3
billion at December 31, 1996. The increase in working capital primarily results
from the sale of Common Stock in January 1997 in a private placement transaction
resulting in net proceeds to the Company of approximately $552.7 million. Such
proceeds were used to repay a portion of revenue earning vehicle debt and other
debt assumed in acquisitions. The Company believes working capital may decline
during the remainder of 1997 and beyond to lower levels as additional capital is
used for the continued expansion of the Company's businesses including
acquisitions and the development of the AutoNation business.
Revenue earning vehicles, net consist of the Company's vehicle rental
fleet, net of accumulated depreciation, and were $3.9 billion at March 31, 1997
as compared to $3.5 billion at December 31, 1996. The increase is primarily due
to seasonality of fleet requirements.
Marketable securities at March 31, 1997 represent 15.0 million common
shares of ADT Limited ("ADT") acquired by the Company in March 1997. Such shares
were acquired pursuant to a warrant to acquire 15.0 million common shares of ADT
at $20 per share which became exercisable upon termination of the Company's
agreement to acquire ADT in September 1996. The Company financed the purchase of
the ADT shares through a $300.0 million unsecured credit facility bearing
interest at LIBOR plus 30 basis points. The Company refinanced this debt in
April 1997 upon closing the amendment to its revolving credit facility as
discussed above. In May 1997, the Company sold the ADT common shares to certain
institutional investors for $27.50 per share resulting in gross proceeds of
approximately $412.5 million.
Advances to affiliate at December 31, 1996 of $247.5 million includes
advances made to AutoNation and accrued interest thereon pursuant to a loan
agreement whereby the Company agreed to provide a line of credit to AutoNation
for the development of new and used vehicle megastores. The Company acquired
AutoNation in January 1997 and, therefore, such advances have been eliminated in
the condensed consolidated balance sheet at March 31, 1997.
Inventory was $493.7 million at March 31, 1997 as compared to $185.4
million at December 31, 1996. Inventory consists primarily of retail vehicles
held for sale valued using the specific identification method. The increase is
primarily attributed to various acquisitions related to the Company's automotive
retail business completed during the first quarter of 1997 accounted for under
the purchase method of accounting.
Accounts payable and accrued liabilities at March 31, 1997 were $565.2
million as compared to $470.7 million at December 31, 1996. The increase is
primarily attributed to various business acquisitions and expansion of the
Company's existing businesses.
Revenue earning vehicle debt consists of the Company's obligations to
various financial institutions secured by the Company's vehicle rental fleet.
The current maturities of such debt were $2.8 billion at March 31, 1997 and $2.7
billion at December 31, 1996. The Company expects to continue to fund its
purchases of revenue earning vehicles with secured vehicle financings.
Notes payable and current maturities of long-term debt was $577.1 million
at March 31, 1997 as compared to $184.1 million at December 31, 1996. Such
increase is primarily due to borrowings under the $300.0 unsecured credit
facility used to fund the purchase of the ADT common shares as discussed above.
Property and Equipment
Property and equipment increased $457.3 million during the three months
ended March 31, 1997 as a result of various business acquisitions and increased
capital expenditures resulting from expansion of the Company's existing
businesses.
22
<PAGE> 23
Intangible Assets
Intangible assets increased $487.0 million during the three months ended
March 31, 1997 as a result of the acquisition of various businesses accounted
for under the purchase method of accounting during the period.
Shareholders' Equity
Shareholders' equity increased $1.1 billion during the three months ended
March 31, 1997 primarily due to the January 1997 sale of approximately 15.8
million shares of Common Stock which resulted in aggregate net proceeds of
approximately $552.7 million and the acquisition of various businesses accounted
for under the purchase method of accounting.
CASH FLOWS
Cash and cash equivalents decreased by $100.3 million and $25.2 million
during the three months ended March 31, 1997 and 1996, respectively. The major
components of these changes are discussed below.
Cash Used in Investing Activities
Capital additions were approximately $719.2 million and $646.4 million
during the three months ended March 31, 1997 and 1996, respectively, which
included the purchase of revenue earning vehicles (net of sales) and property
and equipment. The increase is attributed primarily to the development of
AutoNation megastores, various business acquisitions and increased capital
expenditures resulting from expansion of the Company's existing businesses.
In March 1997, the Company exercised its warrant to acquire 15.0 million
common shares of ADT for $20 per share. The purchase of the ADT shares was
financed through borrowings under a credit facility as discussed above.
In addition, prior to consummation of the AutoNation acquisition, Republic
advanced an additional $50.0 million to AutoNation under the AutoNation Loan
Agreement as previously discussed.
The Company expects capital expenditures to increase substantially during
the remainder of 1997 and in the foreseeable future due to the development of
the AutoNation business as well as continued internal growth of existing
businesses and future acquisitions. The Company intends to finance capital
expenditures through cash on hand, revolving credit facilities, lease facilities
and other financings.
Cash Provided by Financing Activities
Cash provided by financing activities during the three months ended March
31, 1997 and 1996 resulted from revenue earning vehicle financing, commercial
bank borrowings, repayments of debt and issuances of Common Stock. In January
1997, the Company sold 15.8 million shares of Common Stock in a private
placement transaction resulting in net proceeds of approximately $552.7 million.
Proceeds from private placements combined with cash provided by operating
activities were used to fund capital additions and the expansion of the
Company's business during the periods.
SEASONALITY
The Company's automotive rental operations and particularly the leisure
travel segment is highly seasonal. In these operations, the third quarter, which
includes the peak summer travel months, has historically been the strongest
quarter of the year. During the peak season, the Company increases its rental
fleet and workforce to accommodate increased rental activity. As a result, any
occurrence that disrupts travel patterns during the summer period could have a
material adverse effect on the annual performance of this segment. The first
quarter for the Company's automotive rental operations is generally the weakest,
when there is limited leisure family travel and a greater potential for adverse
weather conditions. Many of the operating expenses such as rent, general
insurance and administrative personnel are fixed and cannot be reduced during
periods of decreased rental demand.
23
<PAGE> 24
FORWARD-LOOKING STATEMENTS
Certain statements and information included herein constitute
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance, or achievements of the Company to be materially
different from any future results, performance, or achievements expressed or
implied by such forward-looking statements. Such factors include, among other
things, the ability to develop and implement operational and financial systems
to manage rapidly growing operations; competition in the Company's lines of
business; the ability to integrate and successfully operate acquired businesses
and the risks associated with such businesses; the ability to obtain financing
on acceptable terms to finance the Company's growth strategy and for the Company
to operate within the limitations imposed by financing arrangements; the
Company's limited history of operations in automotive retailing; the dependence
on vehicle manufacturers to approve dealership acquisitions; the possibility of
unfavorable changes to the cost or financing of the Company's vehicle rental
fleet; the Company's dependence on key personnel; and other factors referenced
herein.
24
<PAGE> 25
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
(c) Sales of unregistered shares during the three months ended March
31, 1997:
All transactions listed below involve the issuance of shares of Common
Stock by the Company in reliance upon Section 4(2) of the Securities
Act of 1933, as amended.
On January 3, 1997, in connection with the acquisition of Ed Mullinax,
Inc. ("Mullinax"), the Company issued 3,633,189 shares of Common Stock
to the shareholders of Mullinax in exchange for all of the issued and
outstanding stock of Mullinax.
On January 16, 1997, in connection with the acquisition of AutoNation
Incorporated ("AutoNation"), the Company issued 17,467,217 shares of
Common Stock to the shareholders of AutoNation in exchange for all of
the issued and outstanding stock of AutoNation.
On January 21, 1997, in connection with the acquisition of Carlisle
Motors, Inc. and Credit Management Acceptance Corporation ("Carlisle"),
the Company issued 1,033,257 shares of Common Stock to the shareholders
of Carlisle in exchange for all of the issued and outstanding stock of
Carlisle.
On January 23, 1997, in connection with the acquisition of Lancaster
Alarm Company, Inc. d/b/a Commonwealth Security ("Commonwealth"), the
Company issued 865,068 shares of Common Stock to the shareholders of
Commonwealth in exchange for all of the issued and outstanding stock of
Commonwealth.
On January 31, 1997, in connection with the acquisition of Grubb
Automotive ("Grubb"), the Company issued 3,981,272 shares of Common
Stock to the shareholders of Grubb in exchange for all of the issued
and outstanding stock of Grubb.
On February 24, 1997, in connection with the acquisition of National
Car Rental System, Inc. ("National"), the Company issued 21,711,807
shares of Common Stock to the shareholders of National in exchange for
all of the issued and outstanding stock of National.
On February 27, 1997, in connection with the acquisition of Taormina
Industries, Inc. ("Taormina"), the Company issued 7,434,462 shares of
Common Stock to the shareholders of Taormina in exchange for all of the
issued and outstanding stock of Taormina.
On February 28, 1997, in connection with the acquisition of Maroone
Automotive Group ("Maroone"), the Company issued 6,104,116 shares of
Common Stock to the shareholders of Maroone in exchange for all of the
issued and outstanding stock of Maroone.
On February 28, 1997, in connection with the acquisition of The Wallace
Companies ("Wallace"), the Company issued 1,679,389 shares of Common
Stock to the shareholders of Wallace in exchange for all of the issued
and outstanding stock of Wallace.
On February 28, 1997, in connection with the acquisition of Champion
Chevrolet, Inc. ("Champion"), the Company issued 190,398 shares of
Common Stock to the shareholders of Champion in exchange for all of the
issued and outstanding stock of Champion.
On February 28, 1997, in connection with the acquisition of the AAA
Disposal Service Companies ("AAA Disposal"), the Company issued
2,916,670 shares of Common Stock to the shareholders of AAA Disposal in
exchange for all of the issued and outstanding stock of AAA Disposal.
On February 28, 1997, in connection with the acquisition of R & B
Holding Company, Inc. and GFB Enterprises, Inc. d/b/a Kendall Toyota
("Kendall"), the Company issued 1,216,360 shares of Common Stock to the
shareholders of Kendall in exchange for all of the issued and
outstanding stock of Kendall.
25
<PAGE> 26
On March 11, 1997, in connection with the acquisition of the assets of
Taylor Jeep Eagle, Inc. ("Taylor"), the Company issued 470,980 shares
of Common Stock to Taylor.
From time to time throughout the three months ended March 31, 1997, the
Company issued an aggregate of 3,543,100 shares of Common Stock to
certain warrant holders in connection with the exercise of warrants to
purchase shares of Common Stock at exercise prices ranging from $2.25
to $3.78.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Special Meeting of Shareholders held on January 16,
1997, the shareholders voted to approve and adopt a merger agreement,
dated as of May 8, 1996, as amended, by and among the Company, RI/ANI
Merger Corp., AutoNation Incorporated, H. Wayne Huizenga, Steven R.
Berrard and JM Family Enterprises and the transactions set forth
therein (155,399,057 votes were cast for this matter, 144,634 votes
were cast against this matter and there were 152,983 abstentions
and broker non-votes).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.1 Merger Agreement, dated as of February 3, 1997, among
Republic Industries, Inc., RI/T Merger Corp., Taormina
Industries, Inc., Taormina Revocable Inter Vivos Trust
U/A/D July 26, 1983, Vincent Cosmo Taormina Revocable
Inter Vivos Trust U/A/D May 14, 1984, the C.V. Taormina
Family Trust U/A/D September 16, 1980, William C.
Taormina and Vincent C. Taormina (incorporated by
reference to Exhibit 2.1 to Registrant's Current Report
on Form 8-K, dated February 27, 1997).
10.2 Merger Agreement, dated as of February 4, 1997 among
Republic Industries, Inc., certain wholly-owned
subsidiaries of Republic Industries, Inc., AAA Disposal
Service, Inc., AAA Commercial, Inc., AAA Recycling,
Inc., AAA Maintenance, Inc. and AAA Land and Building
Co., Inc., Larry E. Edwards, the Jeffrey L. Edwards
Trust U/T/A/D April 3, 1989, the Kevin S. Edwards Trust
U/T/A/D April 3, 1989, the Mitchell G. Edwards Trust
U/T/A/D April 3, 1989, the Troy L. Edwards Trust U/T/A/D
April 3, 1989, and the Samantha L. Edwards U/T/A/D April
3, 1989 (incorporated by reference to Exhibit 2.2 to
Registrant's Current Report on Form 8-K, dated February
27, 1997).
10.3 Merger and Reorganization Agreement, dated as of
February 2, 1997 among Republic Industries, Inc.,
certain wholly-owned subsidiaries of Republic
Industries, Inc., Wallace Ford, Inc., Wallace Nissan,
Inc., Wallace Dodge, Inc., Wallace Lincoln- Mercury,
Inc., Stuart Lincoln-Mercury, Inc., Bill Wallace
Enterprises, Inc. d/b/a Stuart Mitsubishi, Wallace
Imports, Inc., Mechanical Warranty Protection, Inc. and
William L. Wallace (incorporated by reference to Exhibit
2.3 to Registrant's Current Report on Form 8-K, dated
February 27, 1997).
10.4 Merger and Acquisition Agreement, dated as of
January 12, 1997 among Republic Industries, Inc.,
certain wholly-owned subsidiaries of Republic
Industries, Inc., Maroone Chevrolet, Inc., Maroone
Oldsmobile, Inc., Maroone Isuzu, Inc., Maroone Dodge,
Inc., Al Maroone Ford, Inc., Maroone Car & Truck Rental
Company, Empire Warranty Corporation, Empire Warranty
Holding Company, Empire Service Agency, Inc., Quantum
Premium Finance Corporation, Alkit Enterprises, Inc.,
Maroone Management Services, Limited, Maroone Dodge
Pompano, Limited, Maroone Chevrolet Ft. Lauderdale,
Limited, Albert E. Maroone, Michael E. Maroone,
Katherine C. Maroone, Kathleen Hoctor, Patricia
Damoorgian, Faisal Ahmed, Maroone Isuzu, Inc., Floyd
Clements and Curtis L. Rodman (incorporated by reference
to Exhibit 2.4 to Registrant's Current Report on Form
8-K, dated February 27, 1997).
10.5 Merger Agreement, dated as of November 15, 1996 among
Republic Industries, Inc., RI/RB Merger Corp., RI/GFB
Merger Corp., R&B Holding Company d/b/a Kendall Toyota
and Kendall KIA, G.F.B. Enterprises, Inc. d/b/a Lexus
of Kendall and Gerald F. Bean (incorporated by reference
to Exhibit 2.5 to Registrant's Current Report on Form
8-K, dated February 27, 1997).
10.6 Merger Agreement, dated as of February 4, 1997 among
Republic Industries, Inc., Republic Waste Companies
Holding Co., RI/YWD Merger Corp., York Waste Disposal,
Inc., Scott R. Wagner, Robert A. Kinsley, Patrick A.
Kinsley, Jonathan R. Kinsley, Christopher A. Kinsley,
Timothy J. Kinsley and Robert Anthony Kinsley
(incorporated by reference to Exhibit 2.6 to
Registrant's Current Report on Form 8-K, dated February
27, 1997).
27.1 Financial Data Schedule for the Three Months Ended
March 31, 1997 (For SEC use only)
27.2 Financial Data Schedule for the Three Months Ended
March 31, 1996 (Restated) (For SEC use only)
(b) Reports on Form 8-K :
Form 8-K dated January 3, 1997 reporting the acquisitions of
Mullinax and Bell Dodge, Inc.
Form 8-K dated January 5, 1997 reporting the agreement entered
into with National.
Form 8-K dated January 14, 1997 reporting the acquisition of
Maroone.
Form 8-K dated January 16, 1997 reporting the acquisition of
AutoNation.
Form 8-K/A dated January 16, 1997 reporting the acquisition of
AutoNation.
Form 8-K dated January 20, 1997 reporting the sale of 15.8
million shares of Common Stock.
Form 8-K dated January 27, 1997 reporting financial information
for consummated or probable acquisitions and National.
Form 8-K dated January 30, 1997 reporting fourth quarter
operating results.
Form 8-K dated February 4, 1997 reporting intent to acquire
Courtesy Automotive Group, Inc., Joe Myers Automotive, Mike Shad
Ford, Flemington Car and Truck, Chesrown Automotive, Bankston
Enterprises, Bledsoe Dodge and Tempe Toyota and related
entities.
Form 8-K dated February 24, 1997 reporting the acquisition of
National.
Form 8-K dated February 27, 1997 reporting the acquisitions of
Taormina, AAA Disposal, Wallace, Maroone, Kendall and York Waste
Disposal, Inc. and certain financial information for consummated
acquisitions.
26
<PAGE> 27
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant, Republic Industries, Inc., has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
REPUBLIC INDUSTRIES, INC.
Date: May 12, 1997 By: /s/ Michael S. Karsner
----------------------------
Michael S. Karsner
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
27
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 299,500
<SECURITIES> 0
<RECEIVABLES> 551,700
<ALLOWANCES> 16,000
<INVENTORY> 185,000
<CURRENT-ASSETS> 4,913,100
<PP&E> 1,463,700
<DEPRECIATION> 398,700
<TOTAL-ASSETS> 6,370,300
<CURRENT-LIABILITIES> 3,660,000
<BONDS> 1,147,600
0
0
<COMMON> 3,000
<OTHER-SE> 1,349,000
<TOTAL-LIABILITY-AND-EQUITY> 6,370,000
<SALES> 308,600
<TOTAL-REVENUES> 1,015,900
<CGS> 270,500
<TOTAL-COSTS> 811,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 84,000
<INCOME-PRETAX> 24,400
<INCOME-TAX> 12,000
<INCOME-CONTINUING> 12,400
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,400
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER>1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 199,200
<SECURITIES> 375,000
<RECEIVABLES> 541,400
<ALLOWANCES> 19,400
<INVENTORY> 493,700
<CURRENT-ASSETS> 5,662,900
<PP&E> 1,921,000
<DEPRECIATION> 424,500
<TOTAL-ASSETS> 8,032,800
<CURRENT-LIABILITIES> 4,242,600
<BONDS> 1,120,100
0
0
<COMMON> 3,500
<OTHER-SE> 2,463,300
<TOTAL-LIABILITY-AND-EQUITY> 8,032,800
<SALES> 667,300
<TOTAL-REVENUES> 1,504,000
<CGS> 590,200
<TOTAL-COSTS> 1,234,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,300
<INCOME-PRETAX> 45,900
<INCOME-TAX> 17,000
<INCOME-CONTINUING> 28,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,900
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
