<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 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: 1-13107
REPUBLIC INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 73-1105145
(STATE OF INCORPORATION) (IRS EMPLOYER IDENTIFICATION NO.)
110 S.E. 6TH STREET
FT. LAUDERDALE, FLORIDA 33301
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (954) 769-7200
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 December 22, 1997, the registrant had 429,324,832 outstanding shares
of common stock, par value $.01 per share.
Explanatory Note: Republic Industries, Inc., (the "Company") is filing
this Quarterly Report on Form 10-Q/A for the Quarterly Period Ended September
30, 1997 to amend the disclosure under Note 11 to the financial statements
included therein and to correct certain errors in the Company's 1997 Proxy
Statement. See, Part II, Item 5. Other Information.
<PAGE> 2
REPUBLIC INDUSTRIES, INC.
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS
Unaudited Condensed Consolidated Balance Sheets as
of September 30, 1997 and December 31, 1996 (Restated).................................... 3
Unaudited Condensed Consolidated Statements of Operations
for the Three and Nine Months Ended September 30, 1997 and 1996 (Restated)................ 4
Unaudited Condensed Consolidated Statement of Shareholders'
Equity for the Nine Months Ended September 30, 1997...................................... 5
Unaudited Condensed Consolidated Statements of Cash Flows
for the Nine Months Ended September 30, 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................................................................ 17
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES...................................................................... 25
ITEM 5. OTHER INFORMATION.......................................................................... 25
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................................................... 25
</TABLE>
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>
September 30, December 31,
1997 1996
----------- ----------
(Restated)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ................................................. $ 206.2 $ 341.1
Receivables, net .......................................................... 819.2 576.0
Revenue earning vehicles, net ............................................. 4,317.6 3,583.0
Inventory ................................................................. 931.2 338.5
Other current assets ...................................................... 245.6 445.7
---------- ---------
Total current assets ................................................... 6,519.8 5,284.3
Property and equipment, net ................................................... 1,934.0 1,146.4
Intangible assets, net ........................................................ 1,211.4 263.7
Other assets .................................................................. 72.4 40.6
---------- ---------
$ 9,737.6 $ 6,735.0
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................................................... $ 261.1 $ 281.9
Accrued liabilities ........................................................ 570.8 229.5
Estimated liability insurance claims ....................................... 230.0 208.1
Revenue earning vehicle debt ............................................... 3,216.3 2,535.6
Notes payable and current maturities of long-term debt ..................... 555.9 334.0
Other current liabilities .................................................. 183.2 255.9
---------- ----------
Total current liabilities .............................................. 5,017.3 3,845.0
Long-term debt, net of current maturities ..................................... 359.0 393.6
Long-term revenue earning vehicle debt ........................................ 911.6 844.8
Other liabilities ............................................................. 387.1 238.6
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; 1,500,000,000
and 500,000,000, shares authorized,
respectively; 422,147,084 and 327,042,548
shares issued and outstanding, respectively ............................ 4.2 3.3
Additional paid-in capital ................................................. 2,827.3 1,377.4
Retained earnings .......................................................... 231.1 32.3
---------- ----------
Total shareholders' equity ...................................... 3,062.6 1,413.0
---------- ----------
$ 9,737.6 $ 6,735.0
========== ==========
</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 Nine Months Ended
September 30, September 30,
--------------------------- ----------------------------
1997 1996 1997 1996
---------- --------- ---------- ---------
(Restated) (Restated)
<S> <C> <C> <C> <C>
Revenue:
Automotive sales.................................. $ 1,918.1 $ 587.6 $ 4,256.8 $ 1,854.5
Automotive rentals................................ 905.3 809.0 2,286.1 2,064.2
Solid waste services.............................. 300.2 207.0 834.5 574.7
----------- ---------- ----------- -----------
3,123.6 1,603.6 7,377.4 4,493.4
Expenses:
Cost of automotive sales.......................... 1,713.3 522.3 3,793.3 1,644.5
Automotive rental operating expenses.............. 667.7 610.4 1,742.8 1,587.8
Cost of solid waste services...................... 210.9 156.7 603.1 422.0
Selling, general and administrative............... 337.0 226.7 891.8 661.3
Restructuring and non-recurring
expenses...................................... -- 7.6 94.1 7.6
----------- ---------- ----------- -----------
Operating income...................................... 194.7 79.9 252.3 170.2
Interest income....................................... 3.1 8.3 14.9 20.5
Interest expense...................................... (3.5) (12.0) (13.7) (32.9)
Other income, net..................................... 1.6 5.4 106.6 11.1
----------- ---------- ----------- -----------
Income from continuing operations before
income taxes.................................. 195.9 81.6 360.1 168.9
Provision for income taxes............................ 71.5 38.6 131.1 79.1
----------- ---------- ----------- -----------
Income from continuing operations..................... 124.4 43.0 229.0 89.8
Income from discontinued operations,
net of income taxes .......................... 3.2 2.1 9.5 5.9
----------- ---------- ----------- -----------
Net income ........................................... $ 127.6 $ 45.1 $ 238.5 $ 95.7
=========== ========== =========== ===========
Fully diluted income per common and common
equivalent share:
Continuing operations......................... $ .28 $ .12 $ .54 $ .27
Discontinued operations ...................... .01 .01 .02 .02
----------- ---------- ----------- -----------
Net income.................................... $ .29 $ .13 $ .56 $ .29
=========== ========== =========== ===========
</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>
Additional
Common Paid-in Retained
Stock Capital Earnings
------ ---------- --------
<S> <C> <C> <C>
Balance at December 31, 1996 (Restated)...................... $3.3 $1,377.4 $ 32.3
Sale of common stock..................................... .2 552.5 --
Exercise of stock options and warrants................... .2 51.5 --
Stock issued in acquisitions............................. .5 794.7 --
Other.................................................... -- 51.2 (39.7)
Net income............................................... -- -- 238.5
---- -------- -------
Balance at September 30, 1997................................ $4.2 $2,827.3 $ 231.1
==== ======== =======
</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>
Nine Months Ended
September 30,
------------------------
1997 1996
----------- -----------
(Restated)
<S> <C> <C>
CASH PROVIDED BY OPERATING ACTIVITIES OF
CONTINUING OPERATIONS:
Net income ............................................................... $ 238.5 $ 95.7
Adjustments to reconcile net income to net cash
provided by operating activities:
Non-cash restructuring and non-recurring expenses ............... 78.6 7.0
Depreciation and amortization ................................. 953.7 618.5
Gain on sale of marketable securities ........................... (102.3) --
Income from discontinued operations, net of income taxes ...... (9.5) (5.9)
Changes in assets and liabilities, net of effects from business
combinations:
Receivables ........................................... (96.6) (10.7)
Inventory ............................................. (115.9) 32.0
Other assets .......................................... 21.8 (74.1)
Accounts payable and accrued liabilities .............. (135.3) 118.5
Other liabilities ..................................... 208.9 134.3
----------- -----------
CASH PROVIDED BY OPERATING ACTIVITIES........................................ 1,041.9 915.3
----------- -----------
CASH USED IN DISCONTINUED OPERATIONS ........................................ (44.1) (43.3)
----------- -----------
CASH USED IN INVESTING ACTIVITIES:
Purchases of revenue earning vehicles .................................... (3,984.9) (3,669.2)
Sales of revenue earning vehicles ........................................ 2,578.8 2,085.6
Purchases of property and equipment ...................................... (324.6) (179.2)
Purchase of marketable securities ........................................ (300.0) --
Sale of marketable securities ............................................ 402.3 --
Cash used in business combinations ....................................... (76.4) (33.6)
Other .................................................................... (50.1) (119.7)
----------- -----------
(1,754.9) (1,916.1)
----------- -----------
CASH PROVIDED BY FINANCING ACTIVITIES:
Payments of revenue earning vehicle financing ............................ (10,877.0) (14,090.3)
Proceeds from revenue earning vehicle financing .......................... 11,344.7 14,932.3
Payments of notes payable and long-term debt ............................. (4,004.1) (117.4)
Proceeds from notes payable and long-term debt ........................... 3,592.9 199.8
Sale of common stock ..................................................... 552.7 199.1
Exercise of stock options and warrants ................................... 51.7 10.0
Other .................................................................... (38.7) (42.6)
----------- -----------
622.2 1,090.9
----------- -----------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ........................... (134.9) 46.8
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ............................ 341.1 377.9
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .................................. $ 206.2 $ 424.7
=========== ===========
</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 Silver State Disposal Service, Inc.
("Silver State"), which the Company acquired in August 1997; De La Cruz Auto
Group ("De La Cruz"), which the Company acquired in July 1997; The Pierce
Corporation ("Pierce"), which the Company acquired in June 1997; Flemington Car
and Truck Country and certain related dealerships ("Flemington"), Spirit
Rent-A-Car, Inc. ("Spirit"), Chesrown Automotive Group ("Chesrown") and Bledsoe
Dodge, Inc. ("Bledsoe"), all of which the company acquired in May 1997; 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, the financial statements and notes thereto for the
periods prior to the acquisition dates have been restated as if the Company and
Silver State, De La Cruz, Pierce, Flemington, Spirit, Chesrown, Bledsoe,
National, Maroone, Wallace, Taormina and Carlisle had operated as one entity
since inception. See Note 2 for a further discussion of business combinations.
In October 1997, the Company sold its electronic security services
division to Ameritech Corporation for approximately $610.0 million. Accordingly,
the operating results of the electronic security services segment have been
classified as discontinued operations for all periods presented in the
accompanying unaudited condensed consolidated financial statements. The Company
believes the sale will result in a gain of approximately $250.0 million net of
income taxes to be recorded in the fourth quarter of 1997. Revenue of the
discontinued operations was $83.8 million and $57.5 million for the nine months
ended September 30, 1997 and 1996, respectively. Net income of the discontinued
operations was $9.5 million and $5.9 million for the nine months ended September
30, 1997 and 1996, respectively.
2. BUSINESS COMBINATIONS
PENDING ACQUISITIONS
In November 1997, the Company signed a definitive agreement to acquire
the Gracely Automotive Group ("Gracely"), 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 $67.0
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 October 1997, the Company signed a definitive agreement to acquire
the John Elway Automotive Group ("Elway"), which owns and operates eight
franchised automotive dealerships. The Company will issue Common Stock valued at
approximately $82.5 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 October 1997, the Company signed a definitive agreement to acquire
Southern California Auto Group ("Southern"), which owns and operates twenty
franchised automotive dealerships. The Company will issue Common Stock valued at
approximately $113.0 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 September 1997, the Company signed a definitive agreement to acquire
the Sutherlin Automotive Group ("Sutherlin"), which owns and operates twelve
franchised automotive dealerships. The Company will issue Common Stock valued at
approximately $90.0 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 July 1997, the Company signed a definitive agreement to acquire
Dobbs Automotive Group ("Dobbs"), which owns and operates twenty franchised
automotive dealerships. The Company will issue Common Stock valued at
approximately $200.0 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 and/or cash valued in the aggregate at approximately $174.5 million in
such transactions which will be accounted for under the purchase method of
accounting. These transactions are subject to customary conditions, including
manufacturer and regulatory approvals, as applicable.
ACQUISITIONS COMPLETED SUBSEQUENT TO SEPTEMBER 30, 1997
In October 1997, the Company acquired the Emich Automotive Group
("Emich"), which owns and operates thirteen franchised automotive dealerships.
The Company issued 1.7 million shares of Common Stock in this transaction,
which will be accounted for under the purchase method of accounting.
In October 1997, the Company acquired the Appleway Automotive Group
("Appleway"), which owns and operates eight franchised automotive dealerships.
The Company issued 1.8 million shares of Common Stock in this transaction, which
will be accounted for under the purchase method of accounting.
In October 1997, the Company acquired EuroDollar Holdings plc
("EuroDollar"), which operates an automotive rental business primarily in the
United Kingdom. The Company paid approximately $150.0 million in cash and notes
in this transaction, which will be accounted for under the purchase method of
accounting.
Additionally, subsequent to September 30, 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 .7 million shares of Common Stock and paid
approximately $38.5 million in cash in such transactions which will be accounted
for under the purchase method of accounting.
ACQUISITIONS COMPLETED DURING THE NINE MONTHS ENDED SEPTEMBER 30, 1997
Significant businesses acquired through September 30, 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 September
30, 1997 and accounted for under the purchase method of accounting are included
in the financial statements from the date of acquisition.
In September 1997, the Company acquired Gulf Management, Inc. ("Gulf"),
which owns and operates two franchised automotive dealerships. The Company
issued approximately 1.8 million shares of Common Stock in this transaction,
which has been accounted for under the purchase method of accounting.
In August 1997, the Company acquired the net assets of Silver State
which provides waste collection services. The Company issued approximately 16.7
million shares of Common Stock in this transaction, which has been accounted for
under the pooling of interests method of accounting.
In August 1997, the Company acquired Snappy Car Rental, Inc.
("Snappy"), which operates an automotive rental business. The Company issued
approximately 1.0 million shares of Common Stock in this transaction, which has
been accounted for under the purchase method of accounting.
8
<PAGE> 9
REPUBLIC INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
In July 1997, the Company acquired Value Rent-A-Car ("Value"), which
operates an automotive rental business. The Company issued approximately 3.4
million shares of Common Stock in this transaction, which has been accounted for
under the purchase method of accounting.
In July 1997, the Company acquired Courtesy Auto Group ("Courtesy"),
which owns and operates eleven franchised automotive dealerships. The Company
issued approximately 1.4 million shares of Common Stock in this transaction,
which has been accounted for under the purchase method of accounting.
In July 1997, the Company acquired De La Cruz, which owns and operates
four franchised automotive dealerships. The Company issued approximately 1.8
million shares of Common Stock in this transaction, which has been accounted for
under the pooling of interests method of accounting.
In June 1997, the Company acquired Pierce, which owns and operates one
franchised automotive dealership and two used automotive dealerships. The
Company issued approximately 2.3 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 Flemington, which owns and operates
twenty-four franchised automotive dealerships. The Company issued approximately
2.3 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 Spirit, which operates an automotive
rental business. The Company issued approximately 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, 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, which owns and 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.
In May 1997, the Company acquired Bankston Automotive Group
("Bankston"), which owns and operates four franchised automotive dealerships.
The Company issued approximately 1.4 million shares of Common Stock in this
transaction, which has been accounted for under the purchase method of
accounting.
In February 1997, the Company acquired National, which operates an
automotive 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.
9
<PAGE> 10
REPUBLIC INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
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 five 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 nine months ended September 30, 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 8.8 million shares
of Common Stock and paid approximately $76.4 million of cash in such
transactions which have been accounted for under the purchase method of
accounting, and issued an aggregate of approximately 15.2 million shares of
Common Stock in such transactions which have been 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.
Details of the results of operations of the Company and Silver State,
De La Cruz, Pierce, Flemington, Spirit, Chesrown, Bledsoe, National, Maroone,
Wallace, Taormina and Carlisle (the "Pooled Entities") for the periods before
the pooling of interests business combinations were consummated are as follows:
Nine Months Ended
September 30,
------------------------
1997 1996
--------- ----------
Revenue:
The Company.................................... $ 5,998.8 $ 1,645.2
Pooled Entities................................ 1,378.6 2,848.2
--------- ----------
$ 7,377.4 $ 4,493.4
========= ==========
Net income:
The Company.................................... $ 190.6 $ 37.6
Pooled Entities................................ 47.9 58.1
--------- ----------
$ 238.5 $ 95.7
========= ==========
10
<PAGE> 11
REPUBLIC INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
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 nine months ended September 30:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Revenue earning vehicles...................................... $ 179.5 $ 75.5
Property and equipment........................................ 532.3 91.6
Intangible assets............................................. 935.4 99.2
Working capital (deficiency), net of cash acquired............ 46.3 (34.9)
Long-term debt assumed........................................ (817.6) (101.2)
Other liabilities, net........................................ (4.3) (5.2)
Common stock issued........................................... (795.2) (91.4)
-------- -------
Cash used in business combinations............................ $ 76.4 $ 33.6
======== =======
</TABLE>
In connection with the Company's preliminary purchase price allocations
for the acquisitions of Value and Snappy, the Company has recorded approximately
$70.0 million in liabilities related primarily to fleet consolidation, closure
of duplicate facilities and severance costs for terminated employees. Such
liabilities are a result of the Company's decision to integrate these businesses
into the Company's existing automotive rental operations upon consummation.
The Company's unaudited pro forma consolidated results of operations
assuming the acquisitions of Snappy, Value, Courtesy, Bankston, 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>
<CAPTION>
Nine Months Ended
September 30,
---------------------------
1997 1996
------------ ----------
<S> <C> <C>
Revenue............................................................................. $ 7,896.8 $ 6,253.1
Income from continuing operations .................................................. $ 216.2 $ 84.5
Fully diluted income from continuing operations per common and common
equivalent share.................................................................. $ .50 $ .23
</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.
3. RECEIVABLES
The components of receivables, net of allowance for doubtful accounts
are as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Trade............................................. $456.3 $301.2
Vehicle........................................... 251.7 228.1
Contracts in transit.............................. 84.7 35.3
Other............................................. 70.0 28.9
-------- --------
862.7 593.5
Less: allowance for doubtful accounts............. (43.5) (17.5)
-------- --------
$819.2 $576.0
======== ========
</TABLE>
11
<PAGE> 12
REPUBLIC INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
4. REVENUE EARNING VEHICLES
Revenue earning vehicles consist of the following:
September 30, December 31,
1997 1996
------------- ------------
Revenue earning vehicles..................... $4,817.0 $4,011.2
Less: accumulated depreciation............... (499.4) (428.2)
--------- ---------
$4,317.6 $3,583.0
======== ========
5. PROPERTY AND EQUIPMENT
A summary of property and equipment is shown below:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
---------- ---------
<S> <C> <C>
Land, landfills and improvements.............................. $ 838.4 $ 525.5
Furniture, fixtures and equipment............................. 954.5 659.5
Buildings and improvements.................................... 761.6 439.4
---------- ---------
2,554.5 1,624.4
Less: accumulated depreciation and depletion.................. (620.5) (478.0)
---------- ---------
$ 1,934.0 $ 1,146.4
========== =========
</TABLE>
6. 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 September 30, 1997 and
December 31, 1996 was $79.3 million and $52.4 million, respectively.
12
<PAGE> 13
REPUBLIC INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
7. REVENUE EARNING VEHICLE DEBT
Revenue earning vehicle debt consists of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Amounts under $1.4 billion commercial paper program terminating March 1998;
secured by eligible vehicle collateral; interest based on market
dictated commercial paper rates.................................................. $ 1,398.3 $ 1,396.8
Amounts under $1.1 billion commercial paper program
terminating May 1998; secured by eligible vehicle
collateral; interest based on market dictated commercial
paper rates...................................................................... 971.8 856.3
Medium term notes payable; secured by eligible vehicle
collateral; interest payable monthly at floating or
fixed rates; due 1999-2003....................................................... 911.6 799.6
Amounts under $700.0 million credit agreement;
secured by eligible vehicle collateral; interest based on LIBOR.................. 600.0 --
Other secured financings primarily with financing institutions in
the United Kingdom; secured by eligible vehicle
collateral; interest based on prevailing market rates;
no stated expiration dates, reviewed annually................................... 246.2 327.7
---------- ----------
4,127.9 3,380.4
Less: long-term portion............................................................ (911.6) (844.8)
---------- ----------
$ 3,216.3 $ 2,535.6
========== ==========
</TABLE>
In October 1997, the Company completed a refinancing program to
finance vehicle purchases for its automotive rental operations. The aggregate
program of $3.35 billion is comprised of a $2.3 billion commercial paper
program and three commercial paper conduit facilities totaling $1.05 billion.
Liquidity backup for the facilities terminates October 1998 and October 2000,
respectively. Borrowings under these programs are secured by eligible vehicle
collateral and bear interest based on market-dictated commercial paper rates.
The Company refinanced borrowings under its $1.4 and $1.1 billion commercial
paper programs and its $700.0 million credit agreement with borrowings under
this program.
8. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable and long-term debt consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C> <C>
$1.0 billion unsecured revolving credit facility; interest
payable monthly using either a competitive bid
feature or LIBOR based rate; matures 2002........................................ $ 220.0 $ 150.0
Vehicle inventory credit facilities secured by the
Company's vehicle inventory; interest at
varying rates.................................................................... 513.8 225.7
Bonds payable under loan agreements with California
Pollution Control Financing Authority; interest at
prevailing market rates ......................................................... 43.1 44.0
Other notes to banks and financial institutions at
varying rates; maturing through 2015............................................. 138.0 307.9
------- -------
914.9 727.6
Less: current maturities........................................................... (555.9) (334.0)
------- -------
$ 359.0 $ 393.6
======= =======
</TABLE>
13
<PAGE> 14
REPUBLIC INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
9. ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS
The Company utilizes interest protection agreements with several
counterparties to manage the impact of interest rate changes on the Company's
variable-rate revenue earning vehicle debt obligations. The Company does not use
derivative financial instruments for trading purposes. Under interest rate
swaps, the Company agrees with other parties to exchange, at specified
intervals, the difference between fixed-rate and floating-rate interest amounts
calculated by reference to an agreed notional principal amount. Income or
expense on derivative financial instruments used to manage interest rate
exposure is recorded on an accrual basis, as an adjustment to the yield of the
related exposures over the periods covered by the contracts. If an interest rate
swap is terminated early, any resulting gain or loss is deferred and amortized
as an adjustment of the yield on the underlying interest rate exposure position
over the remaining periods originally covered by the terminated swap. If all or
part of an underlying position is terminated, the related pro-rata portion of
any unrecognized gain or loss on the swap is recognized in income at that time
as part of the gain or loss on the termination.
10. INCOME TAXES
Income taxes have been provided for based upon the Company's
anticipated annual effective income tax rate.
11. STOCK OPTIONS AND WARRANTS
The Company has various stock option plans under which shares of Common
Stock may be granted to 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. On January 3, 1997, the Compensation Committee of the Company's
Board of Directors approved management's recommended 1997 annual employee stock
option grant of 6.7 million shares of Common Stock (2.0 million shares of which
were granted under the Company's 1997 Employee Stock Option Plan subject to
shareholder approval obtained in May 1997). These stock options were granted
using the quoted market price at the date of management's recommendation
($28.625 at December 31, 1996) as opposed to the quoted market price at the
grant date ($29.9375 at January 3, 1997). No compensation expense associated
with these grants has been recognized in the accompanying consolidated financial
statements as it would not be material to the consolidated financial position or
results of operations.
A summary of stock option and warrant transactions for the nine months
ended September 30, 1997 is as follows:
<TABLE>
<CAPTION>
Weighted-
Average
Exercise
Shares Price
------ -----
<S> <C> <C>
Options and warrants outstanding at beginning of year................................. 52.5 $ 7.63
Granted............................................................................... 13.5 28.39
Exercised............................................................................. (18.0) 2.90
Canceled.............................................................................. (.5) 23.16
--------
Options and warrants outstanding at September 30, 1997................................ 47.5 15.15
========
Options and warrants exercisable at September 30, 1997................................ 25.1 7.64
Options available for future grants at September 30, 1997 ............................ 15.3 N/A
</TABLE>
The following table summarizes information about outstanding and
exercisable stock options and warrants at September 30, 1997:
<TABLE>
<CAPTION>
Outstanding Exercisable
------------------------------------------ ----------------------------
Weighted-
Average
Remaining Weighted- Weighted-
Contractual Average Average
Range of Exercise Life Exercise Exercise
Prices Shares (Years) Price Shares Price
----------------- ------ ----------- -------- ------ ---------
<S> <C> <C> <C> <C> <C>
$ 1.13 - $ 3.50 16.5 1.54 $ 3.02 16.2 $ 3.04
3.78 - 24.62 16.5 7.99 14.48 7.1 12.99
24.63 - 41.88 14.5 9.28 29.22 1.8 28.68
---- ----
47.5 6.14 15.15 25.1 7.64
==== ====
</TABLE>
14
<PAGE> 15
REPUBLIC INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
12. 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 treasury stock method.
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 Nine Months Ended
September 30, September 30,
------------------------ ----------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Common shares outstanding.................................. 422.1 307.7 422.1 307.7
Common equivalent shares................................... 58.4 51.1 64.6 52.9
Weighted average treasury shares purchased................. (24.5) (13.4) (24.2) (12.7)
Effect of using weighted average common and
common equivalent shares outstanding................... (16.2) (.9) (35.7) (12.1)
----- ----- ----- -----
439.8 344.5 426.8 335.8
===== ===== ===== =====
</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 Nine Months Ended
September 30, September 30,
------------------------ -----------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic:
Continuing operations................ $ .30 $ .14 $ .58 $ .30
Discontinued operations ............. .01 .01 .02 .02
------ ------ ----- -----
Net income........................... $ .31 $ .15 $.60 $.32
===== ===== ==== ====
Diluted:
Continuing operations ............... $ .28 $ .12 $ .54 $ .27
Discontinued operations ............. .01 .01 .02 .02
------ ------ ------ ------
Net income .......................... $ .29 $ .13 $ .56 $ .29
===== ===== ===== =====
</TABLE>
13. RESTRUCTURING AND NON-RECURRING EXPENSES
During the second quarter of 1997, the Company recorded a pre-tax $94.1
million provision for restructuring and non-recurring expenses related to the
integration of the Company's automotive rental operations. The provision
includes costs related to fleet consolidation, closure or sale of duplicate
facilities, elimination of redundant information systems and certain other
non-recurring expenses. Through September 30, 1997, the Company has spent
approximately $15.5 million related to integration activities and has charged
certain assets totaling $20.7 million against this liability. As of September
30, 1997, $57.9 million associated with this provision remained in accrued
liabilities. The Company expects that the integration activities associated with
this provision will be substantially completed within one year.
15
<PAGE> 16
REPUBLIC INDUSTRIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)
14. OTHER INCOME, NET
Other income for the nine months ended September 30, 1997 includes a
$102.3 million pre-tax gain from the May 1997 sale of the Company's 15.0 million
shares of ADT Limited common stock, net of fees and expenses.
15. SHAREHOLDERS' EQUITY
In May 1997, the Company's Certificate of Incorporation was amended to
increase the number of authorized shares of Common Stock from 500.0 million to
1.5 billion shares.
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.
16. 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.
16
<PAGE> 17
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 Silver State
Disposal Service, Inc. ("Silver State"), De La Cruz Auto Group ("De La Cruz"),
The Pierce Corporation ("Pierce"), Flemington Car and Truck Country and certain
related dealerships ("Flemington"), Spirit Rent-A-Car, Inc. ("Spirit"),
Chesrown Automotive Group ("Chesrown"), Bledsoe Dodge, Inc. ("Bledsoe"),
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 nine months ended September 30, 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.
In October 1997, the Company sold its electronic security services
division to Ameritech Corporation for approximately $610.0 million. Accordingly,
the operating results of the electronic security services segment have been
classified as discontinued operations for all periods presented in the
accompanying unaudited condensed consolidated financial statements. The Company
believes that the sale will result in a gain of approximately $250.0 million net
of income taxes to be recorded in the fourth quarter of 1997.
BUSINESS COMBINATIONS
The Company makes its decisions to acquire or invest in businesses
based on financial and strategic considerations.
PENDING ACQUISITIONS
In November, 1997, the Company signed a definitive agreement to acquire
the Gracely Automotive Group ("Gracely"), 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 $67.0
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 October 1997, the Company signed a definitive agreement to acquire
the John Elway Automotive Group ("Elway"), which owns and operates eight
franchised automotive dealerships. The Company will issue Common Stock valued at
approximately $82.5 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 October 1997, the Company signed a definitive agreement to acquire
Southern California Auto Group ("Southern"), which owns and operates twenty
franchised automotive dealerships. The Company will issue Common Stock valued at
approximately $113.0 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 September 1997, the Company signed a definitive agreement to acquire
the Sutherlin Automotive Group ("Sutherlin"), which owns and operates twelve
franchised automotive dealerships. The Company will issue Common Stock valued at
approximately $90.0 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 July 1997, the Company signed a definitive agreement to acquire
Dobbs Automotive Group ("Dobbs"), which owns and operates twenty franchised
automotive dealerships. The Company will issue Common Stock valued at
approximately $200.0 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 and/or cash valued in the aggregate at approximately $174.5 million in
such transactions which will be accounted for under the purchase
17
<PAGE> 18
method of accounting. These transactions are subject to customary conditions,
including manufacturer and regulatory approvals, as applicable.
ACQUISITIONS COMPLETED SUBSEQUENT TO SEPTEMBER 30, 1997
In October 1997, the Company acquired the Emich Automotive Group
("Emich"), which owns and operates thirteen franchised automotive dealerships.
The Company issued 1.7 million shares of Common Stock in this transaction, which
will be accounted for under the purchase method of accounting.
In October 1997, the Company acquired the Appleway Automotive Group
("Appleway"), which owns and operates eight franchised automotive dealerships.
The Company issued 1.8 million shares of Common Stock in this transaction, which
will be accounted for under the purchase method of accounting.
In October 1997, the Company acquired EuroDollar Holdings plc
("EuroDollar"), which operates an automotive rental business primarily in the
United Kingdom. The Company paid approximately $150.0 million in cash and notes
in this transaction, which will be accounted for under the purchase method of
accounting.
Additionally, subsequent to September 30, 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 .7 million shares of Common Stock and paid
approximately $38.5 million in cash in such transactions which will be accounted
for under the purchase method of accounting.
ACQUISITIONS COMPLETED DURING THE NINE MONTHS ENDED SEPTEMBER 30, 1997
Significant businesses acquired through September 30, 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 September
30, 1997 and accounted for under the purchase method of accounting are included
in the financial statements from the date of acquisition.
In September 1997, the Company acquired Gulf Management, Inc. ("Gulf"),
which owns and operates two franchised automotive dealerships. The Company
issued approximately 1.8 million shares of Common Stock in this transaction,
which has been accounted for under the purchase method of accounting.
In August 1997, the Company acquired the net assets of Silver State
which provides waste collection services. The Company issued approximately 16.7
million shares of Common Stock in this transaction, which has been accounted for
under the pooling of interests method of accounting.
In August 1997, the Company acquired Snappy Car Rental, Inc.
("Snappy"), which operates an automotive rental business. The Company issued
approximately 1.0 million shares of Common Stock in this transaction, which has
been accounted for under the purchase method of accounting.
In July 1997, the Company acquired Value Rent-A-Car ("Value"), which
operates an automotive rental business. The Company issued approximately 3.4
million shares of Common Stock in this transaction, which has been accounted for
under the purchase method of accounting.
In July 1997, the Company acquired Courtesy Auto Group ("Courtesy"),
which owns and operates eleven franchised automotive dealerships. The Company
issued approximately 1.4 million shares of Common Stock in this transaction,
which has been accounted for under the purchase method of accounting.
In July 1997, the Company acquired De La Cruz, which owns and operates
four franchised automotive dealerships. The Company issued approximately 1.8
million shares of Common Stock in this transaction, which has been accounted for
under the pooling of interests method of accounting.
In June 1997, the Company acquired Pierce, which owns and operates one
franchised automotive dealership and two used automotive dealerships. The
Company issued approximately 2.3 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 Flemington, which owns and operates
twenty-four franchised automotive dealerships. The Company issued approximately
2.3 million shares of Common Stock in this transaction, which has been accounted
for under the pooling of interests method of accounting.
18
<PAGE> 19
In May 1997, the Company acquired Spirit, which operates an automotive
rental business. The Company issued approximately 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, 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, which owns and 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.
In May 1997, the Company acquired Bankston Automotive Group
("Bankston"), which owns and operates four franchised automotive dealerships.
The Company issued approximately 1.4 million shares of Common Stock in this
transaction, which has been accounted for under the purchase method of
accounting.
In February 1997, the Company acquired National, which operates an
automotive 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 nine months ended September 30, 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 8.8 million shares
of Common Stock and paid approximately $76.4 million of cash in such
transactions which have been accounted for under the purchase method of
accounting, and issued an aggregate of approximately 15.2 million shares of
Common Stock in such transactions which have been 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.
19
<PAGE> 20
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, restructuring and non-recurring expenses and operating income (loss)
with percentages of the applicable segment revenue, for each of the Company's
various business segments for the periods indicated (in millions):
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------- ---------------------------------------
1997 % 1996 % 1997 % 1996 %
---- - ---- - ---- - ---- -
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Automotive retail........................ $1,918.1 61 $ 587.6 37 $4,256.8 58 $1,854.5 41
Automotive rental........................ 905.3 29 809.0 50 2,286.1 31 2,064.2 46
Solid waste services..................... 300.2 10 207.0 13 834.5 11 574.7 13
---------- --- --------- --- ----------- --- ------------ ---
3,123.6 100 1,603.6 100 7,377.4 100 4,493.4 100
Cost of Operations:
Automotive retail........................ 1,713.3 90 522.3 89 3,793.3 89 1,644.5 89
Automotive rental........................ 667.7 74 610.4 76 1,742.8 76 1,587.8 77
Solid waste services..................... 210.9 70 156.7 75 603.1 72 422.0 73
---------- --------- ----------- ------------
2,591.9 1,289.4 6,139.2 3,654.3
Selling, General and Administrative:
Automotive retail........................ 177.2 9 56.2 9 408.5 10 179.4 9
Automotive rental........................ 122.6 13 140.3 17 382.0 17 401.2 19
Solid waste services..................... 28.8 10 25.9 13 79.8 10 71.6 13
Corporate................................ 8.4 -- 4.3 -- 21.5 -- 9.1 --
---------- --------- ----------- ------------
337.0 226.7 891.8 661.3
Restructuring and
Non-Recurring Expenses:
Automotive rental ....................... -- -- -- -- 94.1 4 -- --
Solid waste services..................... -- -- 7.6 4 -- -- 7.6 1
---------- --------- ----------- ------------
-- 7.6 94.1 7.6
Operating Income (Loss):
Automotive retail........................ 27.6 1 9.1 2 55.0 1 30.6 2
Automotive rental........................ 115.0 13 58.3 7 67.2 3 75.2 4
Solid waste services..................... 60.5 20 16.8 8 151.6 18 73.5 13
Corporate................................ (8.4) -- (4.3) -- (21.5) -- (9.1) --
---------- --------- ----------- ------------
$ 194.7 $ 79.9 $ 252.3 $ 170.2
========== ========= =========== ============
</TABLE>
CONSOLIDATED RESULTS OF OPERATIONS
The Company's consolidated revenue was $3.1 billion and $7.4 billion
for the three and nine months ended September 30, 1997, respectively versus $1.6
billion and $4.5 billion for the comparable 1996 periods. Consolidated operating
income was $194.7 million and $252.3 million for the three and nine months ended
September 30, 1997, respectively, versus $79.9 million and $170.2 million for
the comparable 1996 periods. Income from the Company's discontinued operations
was $3.2 million and $9.5 million for the three and nine months ended September
30, 1997, respectively, versus $2.1 million and $5.9 million for the comparable
1996 periods. Net income was $127.6 million and $238.5 million for the three and
nine months ended September 30, 1997, respectively, versus $45.1 million and
$95.7 million for the comparable 1996 periods. Net income per common and common
equivalent share was $.29 and $.56 for the three and nine months ended September
30, 1997, respectively, versus $.13 and $.29 for the comparable 1996 periods.
The operating results for each of the Company's various business segments are
discussed below.
AUTOMOTIVE RETAIL
The Company recently reorganized its automotive retail operations by
combining its franchised automotive dealerships and AutoNation USA megastore
operations into one automotive retail division. The Company currently operates
145 franchised automotive dealerships granted by various vehicle manufacturers,
and has contracted to acquire 83 additional franchised automotive dealerships.
The Company also currently operates 20 used vehicle megastores under the name
AutoNation USA (sm).
20
<PAGE> 21
Automotive retail revenue was $1.9 billion for the three months ended
September 30, 1997 versus $587.6 million for the comparable 1996 period, an
increase of 226%. Such increase is a result of acquisitions (185%), volume (36%)
and pricing (5%). Automotive retail revenue was $4.3 billion for the nine months
ended September 30, 1997 versus $1.9 billion for the comparable 1996 period, an
increase of 130%. Such increase is a result of acquisitions (108%), volume (15%)
and pricing (7%).
Cost of automotive retail operations was $1.7 billion and $3.8 billion
for the three and nine months ended September 30, 1997, respectively, versus
$522.3 million and $1.6 billion for the comparable 1996 periods. The increases
in aggregate dollars are due primarily to acquisitions and the opening of
AutoNation USA megastores.
Selling, general and administrative expenses were $177.2 million and
$408.5 million for the three and nine months ended September 30, 1997,
respectively, versus $56.2 million and $179.4 million for the comparable 1996
periods. The increases in aggregate dollars are due to acquisitions and the
opening of additional AutoNation USA megastores.
Operating income as a percentage of automotive retail revenue was 1%
for both the three and nine months ended September 30, 1997, respectively,
versus 2% for both 1996 periods. Such decreases are attributed to operating
losses incurred by the Company's used vehicle megastore operations totaling
$18.4 million and $44.7 million for the three and nine months ended September
30, 1997. Such operating losses are attributed to start-up costs associated with
the Company's development of these operations. The average age of existing
AutoNation USA megastores is six months. The Company is in the process of
acquiring and/or developing additional sites. As the Company opens new
AutoNation USA megastores and reconditioning centers such operations will incur
fixed operating and administrative costs immediately while revenue volume will
tend to grow more gradually.
AUTOMOTIVE RENTAL
Automotive rental revenue was $905.3 million and $2.3 billion for the
three and nine months ended September 30, 1997, respectively, versus $809.0
million and $2.1 billion for the comparable 1996 periods. The increase for the
three months ended September 30, 1997 versus the same period in 1996 is
primarily due to increases in rental rates, acquisitions and higher rental
volume. The increase for the nine months ended September 30, 1997 versus the
same period in 1996 is due to increases in rental rates, higher rental volume
and acquisitions.
Automotive rental operating expenses were $667.7 million and $1.7
billion for the three and nine months ended September 30, 1997, respectively,
versus $610.4 million and $1.6 billion for the comparable 1996 periods. The
increase in aggregate dollars for the three months ended September 30, 1997 is
attributed to acquisitions and volume. The increase in aggregate dollars for
the nine months ended September 30, 1997 is attributed to volume, acquisitions
and maintaining a larger fleet. Automotive rental operating expenses were 74%
and 76% of automotive rental revenue for the three and nine months ended
September 30 ,1997, respectively, versus 76% and 77% for the comparable 1996
periods. The decreases as percentages of revenue are a result of revenue
improvement from rental rate increases partially offset by higher fleet costs.
Selling, general and administrative expenses were $122.6 million and
$382.0 million during the three and nine months ended September 30, 1997,
respectively, versus $140.3 million and $401.2 million for the comparable 1996
periods. Such expenses were 13% and 17% of automotive rental revenue for the
three and nine months ended September 30, 1997, respectively, versus 17% and 19%
for the comparable 1996 periods. The decreases in selling, general and
administrative expenses in aggregate dollars and as percentages of rental
revenue are due to lower selling and administrative expenses for acquired
businesses.
During the second quarter of 1997, the Company recorded a $94.1 million
pre-tax provision for restructuring and non-recurring expenses related to the
integration of the Company's automotive rental operations. The provision
includes costs related to fleet consolidation, closure or sale of duplicate
facilities, elimination of redundant information systems and certain other
non-recurring expenses. Through September 30, 1997, the Company has spent
approximately $15.5 million related to integration activities and has charged
certain assets totaling $20.7 million against this liability. As of September
30, 1997, $57.9 million of this provision remained in accrued liabilities. The
Company expects that the integration activities associated with this provision
will be substantially completed within one year.
SOLID WASTE SERVICES
Solid waste revenue was $300.2 million and $834.5 million for the three
and nine months ended September 30, 1997, respectively, versus $207.0 million
and $574.7 million for the comparable 1996 periods. Such increases are primarily
a result of acquisitions as well as increases in volume.
Cost of solid waste services was $210.9 million and $603.1 million for
the three and nine months ended September 30, 1997, respectively, versus $156.7
million and $422.0 million for the comparable 1996 periods. The increases in
aggregate dollars are a result of the expansion of the Company's solid waste
services operations primarily through acquisitions and increases in volume. Such
expenses were 70% and 72% of solid waste services revenue for the three and nine
months ended September 30, 1997, respectively, versus 75% and 73% for the
comparable 1996 periods. The decreases in cost of solid waste services as
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percentages of solid waste services revenue are primarily a result of
improvements in overall operating efficiency achieved through reductions in
operating costs of acquired businesses.
Selling, general and administrative expenses related to the Company's
solid waste services operations were $28.8 million and $79.8 million for the
three and nine months ended September 30, 1997, respectively, versus $25.9
million and $71.6 million for the comparable 1996 periods. The increases in
aggregate dollars primarily reflect the growth of the Company's business through
acquisitions. Selling, general and administrative expenses were 10% of solid
waste services revenue for both the three and nine months ended September 30,
1997, versus 13% for both 1996 periods. The decreases in selling, general and
administrative expenses as percentages of solid waste services revenue are
primarily due to cost savings from centralizing administrative functions in
certain regions as well as the reduction of administrative expenses for acquired
businesses.
CORPORATE
Corporate selling, general and administrative expenses were $8.4
million and $21.5 million for the three and nine months ended September 30,
1997, respectively, versus $4.3 million and $9.1 million for the comparable 1996
periods. The increases are a result of the overall growth experienced by the
Company.
INTEREST INCOME
Interest income was $3.1 million and $14.9 million for the three and
nine months ended September 30, 1997, respectively, versus $8.3 million and
$20.5 million for the comparable 1996 periods. Such decreases are primarily due
to lower cash balances on hand during the periods.
INTEREST EXPENSE
Interest expense was incurred primarily on borrowings under the
Company's revolving credit facility as well as debt assumed in acquisitions.
Interest expense was $3.5 million and $13.7 million for the three and nine
months ended September 30, 1997, respectively, versus $12.0 million and $32.9
million for the comparable 1996 periods. Such decreases are primarily due to the
repayment of debt. Interest expense related to revenue earning vehicle financing
and vehicle inventory financing is included in automotive rental operating
expenses and cost of automotive sales, respectively.
OTHER INCOME, NET
Other income for the nine months ended September 30, 1997 includes a
$102.3 million pre-tax gain from the May 1997 sale of the Company's 15.0 million
shares of ADT Limited common stock, net of fees and expenses.
INCOME TAXES
Income tax expense was $71.5 million and $131.1 million for the three
and nine months ended September 30, 1997, respectively, versus $38.6 million and
$79.1 million for the comparable 1996 periods. The effective income tax rates
were 36.5% and 36.4% for the three and nine months ended September 30, 1997,
respectively, versus 47.3% and 46.8% for the comparable 1996 periods. The
decreases in the effective income tax rates for the three and nine months ended
September 30, 1997 are primarily due to varying historical effective income tax
rates of acquired businesses accounted for under the pooling of interests method
of accounting.
FINANCIAL CONDITION
At September 30, 1997, the Company had $206.2 million in cash and
approximately $702.8 million of availability under its $1.0 billion unsecured
revolving credit facility which may be used for general corporate purposes. The
Company believes that it has sufficient operating cash flow and other financial
resources available to meet its anticipated capital requirements and obligations
as they come due.
In October 1997, the Company completed a refinancing program to finance
vehicle purchases for its automotive rental operations. The aggregate program of
$3.35 billion is comprised of a $2.3 billion commercial paper program and three
commercial paper conduit facilities totaling $1.05 billion. Liquidity backup for
the facilities terminates October 1998 and October 2000, respectively.
Borrowings under these programs are secured by eligible vehicle collateral and
bear interest based on market-dictated commercial paper rates. The Company
refinanced borrowings under its $1.4 and $1.1 billion commercial paper programs
and its $700.0 million credit agreement with borrowings under this program. The
Company has also issued $950.0 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 markets.
In connection with the development of the AutoNation USA megastores,
the Company 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 $244.6 million at September 30, 1997.
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WORKING CAPITAL
Working capital was $1.5 billion at September 30, 1997 as compared to
$1.4 billion at December 31, 1996. 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 opening of AutoNation USA megastores.
Receivables, net were $819.2 million at September 30, 1997 as compared
to $576.0 million at December 31, 1996. The increase is primarily attributed to
acquisitions.
Revenue earning vehicles consist of the Company's vehicle rental fleet,
net of accumulated depreciation, and were $4.3 billion at September 30, 1997 as
compared to $3.6 billion at December 31, 1996. The increase is primarily due to
seasonality of fleet requirements and acquisitions.
Inventory was $931.2 million at September 30, 1997 as compared to
$338.5 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 acquisitions as well as the opening of new
AutoNation USA megastores.
Accounts payable and accrued liabilities at September 30, 1997 were
$831.9 million as compared to $511.4 million at December 31, 1996. The increase
is primarily attributed to 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 portion of such debt was $3.2 billion at September 30, 1997 and $2.5
billion at December 31, 1996. The increase is primarily due to seasonality of
fleet requirements and acquisitions.
PROPERTY AND EQUIPMENT
Property and equipment increased $930.1 million during the nine months
ended September 30, 1997 as a result of acquisitions and increased capital
expenditures resulting from expansion of the Company's existing businesses.
INTANGIBLE ASSETS
Intangible assets increased $974.6 million during the nine months ended
September 30, 1997 as a result of acquisitions accounted for under the purchase
method of accounting during the period.
SHAREHOLDERS' EQUITY
Shareholders' equity increased by $1.6 billion during the nine months
ended September 30, 1997 primarily due to acquisitions accounted for under the
purchase method of accounting as well as the January 1997 sale of approximately
15.8 million shares of Common Stock which resulted in aggregate net proceeds of
approximately $552.7 million.
CASH FLOWS
Cash and cash equivalents decreased by $134.9 million and increased by
$46.8 million during the nine months ended September 30, 1997 and 1996,
respectively. The major components of these changes are discussed below.
CASH PROVIDED BY OPERATING ACTIVITIES
The Company's net cash flows from operating activities increased by
$126.6 million during the nine months ended September 30, 1997 primarily as a
result of acquisitions and internal growth.
CASH USED IN INVESTING ACTIVITIES
Purchases of revenue earning vehicles (net of sales) were approximately
$1.4 billion and $1.6 billion during the nine months ended September 30, 1997
and 1996, respectively. Capital additions were $324.6 million and $179.2 million
during the nine months ended September 30, 1997 and 1996, respectively. The
increase in capital additions is attributed primarily to business acquisitions
and the expansion of the Company's business and the development of AutoNation
USA Megastores.
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 $300.0 million unsecured credit
facility. In April 1997, the Company refinanced this debt with borrowings under
the Company's revolving credit facility. In May 1997, the Company sold the 15.0
million ADT common shares for $27.50 per share to certain institutional
investors.
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The Company expects capital expenditures to increase substantially
during the remainder of 1997 and in the foreseeable future due to expansion of
the Company's 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 nine months ended
September 30, 1997 and 1996 resulted from revenue earning vehicle financings,
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.
In May 1996, the Company sold 9.9 million shares of Common Stock in a private
placement transaction resulting in net proceeds of approximately $197.6 million.
Proceeds from private placements combined with cash provided by operating
activities were used to fund capital additions, to repay debt assumed in
acquisitions and to expand 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 and
fourth quarters for the Company's automotive rental operations are 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.
ACCOUNTING CHANGES
Statement of Financial Accounting Standards No. 130 ("SFAS 130"),
"Reporting Comprehensive Income", was issued by the Financial Accounting
Standards Board in June 1997. This Statement requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. The Company will adopt SFAS
130 beginning January 1, 1998. The effect of adopting this standard is not
expected to be material.
Statement of Financial Accounting Standards No. 131 ("SFAS 131"),
"Disclosures about Segments of an Enterprise and Related Information", was
issued by the Financial Accounting Standards Board in June 1997. This Statement
establishes standards for reporting information about operating segments in
annual financial statements and requires reporting of selected information about
operating segments in interim financial reports issued to stockholders. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. The Company will adopt SFAS 131 beginning
January 1, 1998. The effect of adopting this standard is not expected to be
material.
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.
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PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
(c) Sales of unregistered shares during the three months ended
September 30, 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 July 3, 1997, in connection with the acquisition of Courtesy Auto
Group, Inc. ("Courtesy"), the Company issued 1,380,744 shares of Common Stock to
the shareholders of Courtesy in exchange for all of the issued and outstanding
stock of Courtesy.
On July 11, 1997, in connection with the acquisition of De La Cruz Auto
Group ("De La Cruz"), the Company issued 1,752,914 shares of Common Stock to the
shareholders of De La Cruz in exchange for all of the issued and outstanding
stock of De La Cruz.
On August 27, 1997, in connection with the acquisition of the assets of
Silver State Disposal Service, Inc. and Affiliates ("Silver State"), the Company
issued 16,670,342 shares of Common Stock to Silver State.
On August 27, 1997, in connection with the acquisition of Powell Ford
("Powell"), the Company issued 1,408,160 shares of Common Stock to the
shareholders of Powell in exchange for all of the issued and outstanding stock
of Powell.
On September 5, 1997, in connection with the acquisition of
Libertyville Enterprises, Inc. ("Libertyville"), the Company issued 1,252,284
shares of Common Stock to the shareholders of Libertyville in exchange for all
of the issued and outstanding stock of Libertyville.
On September 29, 1997, in connection with the acquisition of Desert
Buick-GMC Automotive Group ("Desert"), the Company issued 1,392,451 shares of
Common Stock to the shareholders of Desert in exchange for all of the issued and
outstanding stock of Desert.
From time to time throughout the three months ended September 30, 1997,
the Company issued an aggregate of 12,729,200 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 $3.50.
ITEM 5. OTHER INFORMATION
Corrected Proxy Disclosure
The Company has determined that certain information reported under the
heading "Proposal 3 - Approval of Republic 1997 Employee Stock Option Plan" set
forth in the Company's 1997 Proxy Statement ("Proxy Statement"), under the
subheading "Options Granted Under the Plan," was incorrect. The error resulted
from inadvertent delays in entering all of the stock option grant information in
the Company's computer system by the time the Proxy Statement was prepared. The
Company has taken steps to prevent such delays and errors from recurring. The
Proxy Statement incorrectly reported that, as of April 4, 1997, the Company had
granted options to purchase an aggregate of 475,160 shares of Common Stock at
prices ranging from $28.625 to $36.00 per share to certain employees (none of
whom are executive officers or directors of the Company) under its 1997 Employee
Stock Option Plan (the "Plan"), contingent upon approval of the Plan by the
Company's stockholders. The correct information is that, as of April 4, 1997,
the Company had granted options to purchase an aggregate of 4,483,010 shares of
Common Stock at prices ranging from $28.625 to $39.75 per share to certain
employees (none of whom are executive officers or directors of the Company)
under the Plan, contingent upon approval of the Plan by the Company's
stockholders. Included in these grants are options to purchase approximately
2.0 million shares at a price of $28.625 per share granted on January 3, 1997,
as is further discussed in Note 11 to the Financial Statements included in Item
1 of this Form 10-Q/A.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.1 Asset Purchase Agreement dated as of September 26, 1997 among
Republic Industries, Inc., Republic Security Companies Holding
Company, Inc., Republic Security Companies Holding Company II Inc.,
Ameritech Corporation and Ameritech Monitoring Services, Inc.
(Incorporated by reference from Exhibit 2.1 to the Company's Current
Report on Form 8-K dated October 3, 1997).
10.2 1997 Employee Stock Option Plan (Incorporated by reference from
Appendix B filed as part of the Company's Proxy Statement in
connection to its Annual Meeting held on May 13, 1997).
10.3 Amendment No. 1 to the 1997 Employee Stock Option Plan. (Incorporated
by reference from Exhibit 10.3 to the Company's Quarterly Report on
Form 10-Q for the Quarterly Period Ended September 30, 1997).
27.1 Financial Data Schedule for the Nine Months Ended September 30, 1997
(For SEC use only) (Incorporated by reference from Exhibit 27.1 to
the Company's Quarterly Report on Form 10-Q for the Quarterly Period
Ended September 30, 1997).
27.2 Financial Data Schedule for the Nine Months Ended September 30, 1996
(Restated) (For SEC use only) (Incorporated by reference from Exhibit
27.2 to the Company's Quarterly Report on Form 10-Q for the Quarterly
Period Ended September 30, 1997).
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(b) Reports on Form 8-K:
Form 8-K dated August 19, 1997, Item 5 reporting certain
financial information for consummated acquisitions.
Form 8-K dated September 15, 1997, Item 5 reporting certain
financial information for consummated acquisitions.
Form 8-K dated September 29, 1997, Item 5 reporting the
Company's intention to sell substantially all of the assets of
the Company's security monitoring division to Ameritech
Corporation.
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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.
By: /s/ Michael S. Karsner
-----------------------
Michael S. Karsner
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER)
Date: December 23, 1997
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