<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 30, 1999
FIRSTAMERICA AUTOMOTIVE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 2-297254-NY 88-0206732
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
601 BRANNAN STREET
SAN FRANCISCO, CA 94107
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 284-0444
(Former name, former address and former fiscal year, if changed
since last report)
1
<PAGE>
FIRSTAMERICA AUTOMOTIVE, INC.
FORM 8-K/A
INDEX
Item Description Page
- ---- ----------- ----
Item 7 Financial Statements and Exhibits 2
Signatures 3
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF THE BUSINESS ACQUIRED.
This amendment to the Company's Form 8-K that was filed on October 15, 1999
contains at page F-1 the financial statements of Certain Dealerships, Assets
and Liabilities of Lucas Dealership Group, Inc. required pursuant to Rule 3-05
of Regulation S-X.
(b) PRO FORMA FINANCIAL INFORMATION.
This amendment to the Company's Form 8-K that was filed on October 15, 1999
contains at page F-12 the unaudited pro forma financial statements required
pursuant to Article 11 of Regulation S-X.
(c) EXHIBITS
Exhibit No. Description
- ----------- -------------
2.1* Agreement and Plan of Merger, dated as of September 10, 1999, by and
among FirstAmerica Automotive, Inc., Lucas Dealership Group, Inc., a
Texas Corporation, the Lucas Business Continuation Trust, a trust settled
under the laws of the State of California, Patricia A. Yates, an
individual resident in the State of California, Donald L. Lucas, an
individual resident in the State of California, and Lucas Acquisition
Corp, a Texas corporation and a wholly-owned subsidiary of FirstAmerica
Automotive, Inc.
23.2 Consent of Deloitte & Touche LLP
- ------------------------
* Filed previously as an exhibit to the company's Form 8-K filed with the
Securities and Exchange Commission on October 15, 1999.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Date: November 12, 1999 FIRSTAMERICA AUTOMOTIVE, INC.
By: /s/ David J. Moeller
-------------------------------------
David J. Moeller
Vice President of Finance
Acting Principal Financial and
Accounting Officer
4
<PAGE>
Certain Dealerships, Assets and Liabilities of
Lucas Dealership Group, Inc.
Independent Auditors' Report
and
Combined Financial Statements
Contents
<TABLE>
<CAPTION>
Page
<S> <C>
Independent Auditors' Report F-2
Combined Financial Statements
Combined Statements of Assets and Liabilities as of December 31, 1998
and 1997 and June 30, 1999 (unaudited) F-3
Combined Statements of Sales, Cost of Sales and Direct Operating Expenses
for the years ended December 31, 1998, 1997 and 1996 and the six
months ended June 30, 1999 and 1998 (unaudited) F-4
Combined Statements of Cash Flows for the years ended December 31,
1998, 1997 and 1996 and the six months ended June 30, 1999 and 1998 F-5
(unaudited)
Notes to Combined Financial Statements F-6
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
LUCAS DEALERSHIP GROUP, INC.:
We have audited the accompanying combined statements of assets and
liabilities of Certain Dealerships, Assets and Liabilities of Lucas Dealership
Group, Inc. which are enumerated in Note 1 to the accompanying financial
statements, as of December 31, 1998 and 1997, and the related combined
statements of sales, cost of sales and direct operating expenses and of cash
flows for each of the three years in the period ended December 31, 1998. These
financial statements are the responsibility of Lucas Dealership Group, Inc.
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
The accompanying combined financial statements were prepared to present
the assets and liabilities of Certain Dealerships, Assets and Liabilities of
Lucas Dealership Group, Inc., and the related statements of sales, cost of
sales and direct operating expenses and cash flows, and are not intended to be
a complete presentation of Lucas Dealership Group, Inc.'s financial position,
results of operations and cash flows.
In our opinion, the combined financial statements referred to above,
present fairly, in all material respects, the assets and liabilities of Certain
Dealerships, Assets and Liabilities of Lucas Dealership Group, Inc. which are
enumerated in Note 1 to the accompanying financial statements, as of December
31, 1998 and 1997, and the related sales, cost of sales, direct operating
expenses and cash flows for each of the three years in the period ended
December 31, 1998 in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
May 21, 1999
San Jose, California
F-2
<PAGE>
CERTAIN DEALERSHIPS, ASSETS AND LIABILITIES OF
LUCAS DEALERSHIP GROUP, INC.
COMBINED STATEMENTS OF ASSETS AND LIABILITIES
(IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, -----------------------
1999 1998 1997
------------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and equivalents .................................... $19,825 $12,286 $13,364
Receivables, net ........................................ 11,994 12,032 12,548
Inventories ............................................. 25,187 27,647 22,546
Other current assets .................................... 798 1,556 1,270
------- ------- -------
Total current assets ................................. 57,805 53,521 49,728
Rental vehicles, net ..................................... 1,262 1,243 1,203
Property and equipment, net .............................. 2,947 3,299 3,900
Other assets ............................................. 581 713 996
------- ------- -------
Total assets ............................................. $62,594 $58,776 $55,827
======= ======= =======
LIABILITIES
Current liabilities
Notes payable -- direct inventory financing ............. $23,424 $24,434 $19,487
Accounts payable ........................................ 2,432 2,654 2,361
Accrued and other liabilities ........................... 5,935 6,182 5,822
------- ------- -------
Total current liabilities ............................ 31,791 33,270 27,670
Deferred income taxes .................................... 12 477 430
------- ------- -------
Total liabilities ........................................ 31,803 33,747 28,100
------- ------- -------
Net assets ............................................... $30,791 $25,029 $27,727
======= ======= =======
</TABLE>
See notes to combined financial statements.
F-3
<PAGE>
CERTAIN DEALERSHIPS, ASSETS AND LIABILITIES OF
LUCAS DEALERSHIP GROUP, INC.
COMBINED STATEMENTS OF SALES, COST OF SALES AND
DIRECT OPERATING EXPENSES
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED
JUNE 30, DECEMBER 31,
----------------------- -----------------------------------
1999 1998 1998 1997 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Sales:
New and used vehicle sales ................................ $158,944 $146,057 $293,645 $258,989 $214,279
Parts and service ......................................... 24,660 23,444 46,265 42,146 38,995
Finance income ............................................ 1,568 1,339 3,398 3,146 2,288
-------- -------- -------- -------- --------
Total ................................................... 185,172 170,840 343,308 304,281 255,562
-------- -------- -------- -------- --------
Cost of sales:
New and used vehicles ..................................... 145,057 133,227 268,665 237,309 196,466
Parts and service ......................................... 12,289 11,866 22,633 20,499 19,490
-------- -------- -------- -------- --------
Total ................................................... 157,346 145,093 291,298 257,808 215,956
-------- -------- -------- -------- --------
Gross profit ............................................... 27,826 25,747 52,010 46,473 39,606
-------- -------- -------- -------- --------
Other operating income:
Interest income ........................................... 728 590 1,234 1,161 853
Other ..................................................... 1,542 916 2,287 2,697 1,687
-------- -------- -------- -------- --------
Total ................................................... 2,270 1,506 3,521 3,858 2,540
-------- -------- -------- -------- --------
Other operating expenses:
Selling and administrative ................................ 25,187 22,867 47,484 43,337 37,710
Interest .................................................. 357 669 1,359 1,218 1,402
-------- -------- -------- -------- --------
Total ................................................... 25,544 23,536 48,843 44,555 39,112
-------- -------- -------- -------- --------
Income before income taxes ................................. 4,552 3,717 6,688 5,776 3,034
Provision for income taxes ................................. 1,887 1,647 2,883 2,592 1,500
-------- -------- -------- -------- --------
Net income ................................................. 2,665 2,070 3,805 3,184 1,534
Net assets, beginning of period ............................ 25,029 27,727 27,727 23,968 21,406
Dividend distribution from unconsolidated subsidiaries ..... 801 600 1,113 400 900
Investment in unconsolidated subsidiary .................... -- (2,300) (3,270) -- --
Net change in shareholder receivable/payable ............... 2,296 1,900 (4,346) 175 128
-------- -------- -------- -------- --------
Net assets, end of period .................................. $ 30,791 $ 29,997 $ 25,029 $ 27,727 $ 23,968
======== ======== ======== ======== ========
</TABLE>
See notes to combined financial statements.
F-4
<PAGE>
CERTAIN DEALERSHIPS, ASSETS AND LIABILITIES OF
LUCAS DEALERSHIP GROUP, INC.
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED
JUNE 30, DECEMBER 31,
----------------------- -----------------------------------
1999 1998 1998 1997 1996
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income .................................................... $ 2,665 $ 2,070 $ 3,805 $ 3,184 $ 1,534
Adjustments to reconcile net income to net cash provided by
(used for) operating activities:
Depreciation and amortization ............................... 636 344 1,406 1,389 1,300
Deferred income taxes ....................................... 140 (54) (156) (146) (9)
(Gain) loss on dispositions of property and equipment and
rental and leased vehicles ................................ (10) (86) 2 (300) 151
Changes in assets and liabilities:
Receivables ............................................... 38 1,090 516 (747) (1,143)
Inventories ............................................... 2,460 (1,730) (5,102) (1,737) (4,834)
Other current assets ...................................... 153 (762) 247 160 606
Notes payable--direct inventory financing ................. (1,010) 1,760 4,947 230 2,151
Accounts payable .......................................... (222) 53 293 (153) 406
Accrued and other liabilities ............................. (247) 1,225 32 1,700 (714)
------- ------- ------- ------- -------
Net cash provided by (used for) operating activities .... 4,603 3,910 5,990 3,580 (552)
------- ------- ------- ------- -------
Cash flows from investing activities:
Proceeds from dispositions of property and equipment and
rental and leased vehicles ................................. 507 452 562 1,238 176
Purchases of property and equipment and rental and leased
vehicles ................................................... (658) (900) (1,127) (2,473) (2,057)
Other assets ................................................. (10) 263 -- -- (224)
------- ------- ------- ------- -------
Net cash used for investing activities ................. (161) (185) (565) (1,235) (2,105)
------- ------- ------- ------- -------
Cash flows from financing activities:
Long-term debt borrowings .................................... -- -- -- -- 139
Repayment of long-term debt and capital leases ............... -- -- -- (139) (9)
Net change in shareholder receivable/payable ................. 2,296 1,900 (4,346) 175 128
Dividends from affiliates .................................... 801 600 1,113 400 900
Investment in unconsolidated subsidiaries .................... -- (2,300) -- -- --
Investment in affiliates ..................................... -- -- (3,270) -- --
------- ------- ------- ------- -------
Net cash provided by (used for) financing activities ... 3,097 200 (6,503) 436 1,158
------- ------- ------- ------- -------
Net increase (decrease) in cash and equivalents ................ 7,539 3,925 (1,078) 2,781 (1,499)
Cash and equivalents at beginning of period .................... 12,286 13,364 13,364 10,583 12,082
------- ------- ------- ------- -------
Cash and equivalents at end of period .......................... $19,825 $17,289 $12,286 $13,364 $10,583
======= ======= ======= ======= =======
Supplemental cash flows information --
Cash paid during the period for interest ..................... $ 483 $ 702 $ 1,018 $ 1,077 $ 1,263
======= ======= ======= ======= =======
</TABLE>
See notes to combined financial statements.
F-5
<PAGE>
CERTAIN DEALERSHIPS, ASSETS AND LIABILITIES OF LUCAS DEALERSHIP GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
(INFORMATION AS OF JUNE 30, 1999 AND FOR THE SIX MONTHS ENDED
JUNE 30, 1999 AND 1998 IS UNAUDITED)
(1) BACKGROUND AND BASIS OF PRESENTATION
The accompanying combined financial statements have been prepared for the
purpose of presenting Certain Dealerships, Assets and Liabilities of Lucas
Dealership Group, Inc. ("Lucas"). The combined financial statements represent
certain assets and liabilities of six dealerships, doing business as, Autobahn
Motors, Hayward Honda, Saint Claire Cadillac/Oldsmobile, Stevens Creek BMW
Motorsport, Stevens Creek Honda, and Golden Gate Cadillac/Acura as well as
certain other assets and liabilities of Lucas (collectively the "Certain
Dealerships"). The combined financial statements exclude the results of
businesses previously distributed to the Lucas shareholders or expected to be
distributed prior to the completion of the merger described in Note 2,
including Autocorp (a leasing and fleet sales business) and six Saturn
dealerships. The combined financial statements also exclude certain personal
assets (shareholder receivables and payables and certain nonbusiness assets).
The statement of sales, cost of sales and direct operating expenses, and
cash flows for the periods indicated exclude the effects of the changes in the
assets not included in these financial statements and include allocations of
certain corporate expenses to the Certain Dealerships based upon estimates of
actual corporate services performed on behalf of the Certain Dealerships. The
allocations effectively allocate all of the expenses of the corporate offices
to the dealerships. The amount of corporate expenses pertaining to the Certain
Dealerships (including salaries, bonuses, rent, professional services, and
other expenses) reflected in these financial statements is based primarily on a
flat fee which varies per dealership plus a percentage of the dealerships' net
income, which management of Lucas believes to be a reasonable allocation
method.
The accompanying combined financial statements are derived from the
historical accounting records of Lucas. These historical financial statements
are not intended to be a complete presentation of the financial position,
results of operations and cash flows related to the Certain Dealerships, Assets
and Liabilities of Lucas Dealership Group, Inc. The historical operating
results may not be indicative of future results.
(2) PENDING ACQUISITION
On May 3, 1999 Lucas entered into an Agreement and Plan of Merger (the
"Agreement") with FirstAmerica Automotive, Inc. Under the terms of the
Agreement, Lucas will sell the six dealerships listed in Note 1 above, as well
as as certain other assets and liabilities and all of the stock of Lucas, for
consideration of approximately $65 million, subject to certain adjustments.
On May 4, 1999 Lucas sold the Cadillac franchise right which was owned by
Golden Gate Cadillac/Acura. Lucas continues to operate the related Acura
franchise. The cash purchase price was approximately $600,000 and Lucas recorded
a gain of $450,000 on this transaction, which is recorded in other operating
income (unaudited). The accompanying financial statements include the results of
the franchise sold for all periods presented, through the date of sale.
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONCENTRATION OF CREDIT RISK -- At December 31, 1998, substantially all of
the Certain Dealerships' business activities are located in Northern
California. The Certain Dealerships perform credit evaluations of their
customers and maintain reserves for potential credit losses.
The Certain Dealerships purchase substantially all of their new vehicles
and parts and accessories inventories from General Motors Corporation, American
Honda Motors Corporation, Mercedes Benz of North America Incorporated and BMW
of North America. There are receivables and payables in the normal course of
business with these companies.
ESTIMATES -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses as of the dates and for the periods presented. Actual
results could differ from those estimates. Significant estimates include
depreciable lives, income taxes and accrued liabilities.
F-6
<PAGE>
CERTAIN DEALERSHIPS, ASSETS AND LIABILITIES OF LUCAS DEALERSHIP GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (Continued)
CASH AND EQUIVALENTS include highly liquid debt investments with
maturities of three months or less when purchased.
INVENTORIES include new vehicles and demonstrators, used vehicles and
parts and accessories which are stated at cost, determined using the last-in,
first-out (LIFO) method, which is not in excess of market. Other inventories
consist primarily of gasoline, tires and oil and are stated at cost, on a
first-in, first-out (FIFO) basis, which is not in excess of market.
RENTAL VEHICLES are stated at specifically identified cost. Rental
vehicles are used as short-term rentals for customers. They are depreciated
straight-line over 36 months but are typically sold during the model year.
PROPERTY AND EQUIPMENT are stated at cost. Depreciation and amortization
are provided on a straight-line basis over the estimated useful lives of the
respective assets, principally three to seven years.
INTANGIBLE ASSETS relate to the purchase of two dealerships and are
included in other assets. The excess of costs over net tangible assets acquired
is amortized over periods ranging from five to ten years. At December 31, 1998,
1997 and 1996, the net book value of intangible assets was $713,000, $996,000
and $1,278,000, respectively (net of accumulated amortization of $2,110,000,
$1,827,000 and $1,545,000, respectively). Amortization expense was $283,000,
$282,000, and $281,000 in 1998, 1997 and 1996, respectively.
INCOME TAXES are accounted for using an asset and liability approach.
Deferred income taxes result from temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. Such differences relate primarily to
accelerated depreciation for tax return purposes. Income tax amounts herein
represent allocations computed as if the Certain Dealerships had filed a tax
return on a combined basis.
RECENTLY ISSUED ACCOUNTING STANDARD -- In June 1997, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income," which requires an enterprise to
report, by major components and as a single total, the change in net assets
during the period from nonowner sources. For the periods presented, net income
is equivalent to comprehensive income, as the Certain Dealerships had no items
of other comprehensive income.
UNAUDITED FINANCIAL STATEMENTS -- The accompanying unaudited combined
financial statements as of June30, 1999 and for the six-month periods ended
June 30, 1999 and 1998 have been prepared by Lucas pursuant to the rules of the
Securities and Exchange Commission ("SEC") and, in the opinion of Lucas,
include all adjustments (consisting of normal recurring accruals) necessary for
a fair presentation of the Certain Dealerships, Assets and Liabilities of Lucas
Dealership Group and the related sales, cost of sales and direct operating
expenses and cash flows. Certain information and footnote disclosure normally
included in combined financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
SEC rules. Lucas believes that the disclosures made are adequate to keep the
information presented from being misleading. The results of operations for the
six months ended June 30, 1999, are not necessarily indicative of the results
to be expected for the full year.
F-7
<PAGE>
CERTAIN DEALERSHIPS, ASSETS AND LIABILITIES OF LUCAS DEALERSHIP GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(4) RECEIVABLES
Receivables at December 31 consist of (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Contracts in transit .................... $ 3,926 $ 4,008
Vehicles, service and parts ............. 3,828 4,405
Factory ................................. 1,518 1,182
Dealer trade ............................ 1,036 907
Other accounts receivable................ 1,109 1,429
Warranty claims ......................... 378 323
Due from finance companies .............. 250 307
------- -------
Total ................................... 12,045 12,561
Allowance for doubtful accounts ......... (13) (13)
------- -------
Net ..................................... $12,032 $12,548
======= =======
</TABLE>
(5) INVENTORIES
Inventories consist of (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
JUNE 30, ---------------------
1999 1998 1997
------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C>
New vehicles and demonstrators . $15,982 $18,507 $14,149
Used vehicles .................. 6,501 6,295 5,827
Parts and accessories .......... 2,431 2,549 2,328
Other .......................... 273 296 242
------- ------- -------
Total .......................... $25,187 $27,647 $22,546
======= ======= =======
</TABLE>
If the FIFO method of inventory accounting had been used to value all
inventories, inventories would have been $6,139,000, $6,092,000 and $5,880,000
higher than reported at June 30, 1999, December 31, 1998 and 1997, respectively.
For the six-month periods ended June 30, 1999 and 1998 and the years ended
December 31, 1998 and 1997, the LIFO valuation method had the effect of
(increasing) decreasing income before income taxes by approximately $47,000,
$(118,000), $212,000 and $100,000 and net income by approximately $28,000,
$(71,000), $127,000 and $60,000, respectively.
(6) PROPERTY AND EQUIPMENT
Property and equipment at December 31 consist of (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Leasehold improvements ...................... $ 3,324 $ 3,393
Furniture and office equipment .............. 3,922 3,852
Machinery and equipment ..................... 2,603 2,647
Company vehicles ............................ 659 652
-------- --------
Total ....................................... 10,508 10,544
Accumulated depreciation and amortization ... (7,209) (6,644)
-------- --------
Net ......................................... $ 3,299 $ 3,900
======== ========
</TABLE>
F-8
<PAGE>
CERTAIN DEALERSHIPS, ASSETS AND LIABILITIES OF LUCAS DEALERSHIP GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(7) NOTES PAYABLE -- DIRECT INVENTORY FINANCING
New vehicles, demonstrators and rental vehicles are financed under notes
payable bearing interest generally at the bank's reference rate (7.75% at
December 31, 1998). The notes are collateralized by such vehicles and are due
when the related vehicles are sold. The notes require each dealership to
maintain specific financial covenants. At December 31, 1998, the dealerships
were in compliance with these covenants.
(8) ACCRUED AND OTHER LIABILITIES
Accrued and other liabilities at December 31 consist of (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1998 1997
----------- -----------
<S> <C> <C>
Sales and property taxes ............... $1,983 $1,892
Salaries, wages and commissions ........ 1,111 1,005
Vehicle deposits ....................... 583 742
Bonuses -- officers and employees ...... 756 509
Interest ............................... 175 141
Income taxes payable ................... 225 155
Other accrued liabilities .............. 1,349 1,378
------ ------
Total .................................. $6,182 $5,822
====== ======
</TABLE>
(9) INCOME TAXES
The provisions for income taxes (which represent allocations computed as
if the Certain Dealerships had filed a tax return on a combined basis) consist
of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Current:
Federal ......................... $2,376 $2,186 $1,127
State ........................... 663 552 382
------ ------ ------
Total ............................. 3,039 2,738 1,509
------ ------ ------
Deferred:
Federal ......................... (124) (163) 9
State ........................... (32) 17 (18)
------ ------ ------
Total ............................. (156) (146) (9)
------ ------ ------
Total provision for income taxes .. $2,883 $2,592 $1,500
====== ====== ======
</TABLE>
The effective tax rate differs from the federal statutory rate as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Statutory rate ......................... 35.0% 35.0% 35.0%
State taxes, net of federal effect ..... 6.0 6.0 6.0
Non-deductible insurance premium ....... 2.0 1.2 4.3
Imputed interest expense ............... 0.5 1.4 2.2
Meals and entertainment ................ 0.3 1.2 2.0
Other .................................. (0.7) 0.1 (0.1)
---- ---- ----
Total .................................. 43.1% 44.9% 49.4%
==== ==== ====
</TABLE>
F-9
<PAGE>
CERTAIN DEALERSHIPS, ASSETS AND LIABILITIES OF LUCAS DEALERSHIP GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(9) INCOME TAXES -- (Continued)
The items giving rise to deferred taxes were as follows:
<TABLE>
<CAPTION>
1998 1997
------ -------
<S> <C> <C>
Deferred tax assets:
Reserves not recognized for tax purposes ..... $508 $375
Capitalized inventory ........................ 114 97
State taxes .................................. 225 187
Other ........................................ 32 17
---- ----
Total deferred tax assets ...................... 879 676
---- ----
Deferred tax liabilities:
Accelerated depreciation and amortization..... 448 398
Other ........................................ 29 32
---- ----
Total deferred tax liabilities ................. 477 430
---- ----
$402 $246
==== ====
</TABLE>
(10) RETIREMENT PLAN
Lucas contributes to various union-sponsored pension plans (defined
contribution plans), covering all union mechanics and service personnel. The
related pension expense for the Certain Dealerships for these plans in 1998,
1997 and 1996 was $479,000, $387,000 and $343,000, respectively.
Nonunion employees may participate in the Lucas Dealership Group Savings
and Investment and Profit-Sharing Plan (the Plan). The Plan has two components.
The first is the 401(k) component, whereby employees may contribute up to 15%
of their annual compensation. Lucas matches one-half of the employee's
contribution, limited to $50 per employee per month, and may make additional
contributions at the discretion of the Board of Directors. Cash contributions
for the Certain Dealerships were $107,000, $103,000 and $89,000 for 1998, 1997
and 1996, respectively. All participating employees are 100% vested. Nonunion
employees are also eligible to participate in the second component of the Plan,
the profit-sharing component. Contributions are made at the discretion of the
Board of Directors and vest over a seven-year period, beginning after the third
year. Cash contributions were $242,000, $192,400 and $173,000 for 1998, 1997
and 1996, respectively.
(11) COMMITMENTS
The Certain Dealerships lease five facilities from Lucas' majority
shareholder under agreements which expire in 2005. The other facility lease,
leased from an unrelated party, expires in 2000. Future minimum rental payments
at December 31, 1998 are as follows (in thousands):
<TABLE>
<CAPTION>
RELATED
PARTY OTHER TOTAL
---------- ------- ---------
<S> <C> <C> <C>
1999 .......................... $ 3,136 $264 $ 3,400
2000 .......................... 3,136 -- 3,136
2001 .......................... 3,136 -- 3,136
2002 .......................... 3,136 -- 3,136
2003 .......................... 3,136 -- 3,136
Thereafter .................... 6,272 -- 6,272
------- ---- -------
Total ......................... $21,952 $264 $22,216
======= ==== =======
</TABLE>
Rental expense for 1998, 1997 and 1996 was $3,621,000, $3,367,000 and
$3,269,000, respectively.
F-10
<PAGE>
CERTAIN DEALERSHIPS, ASSETS AND LIABILITIES OF LUCAS DEALERSHIP GROUP, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(12) RELATED PARTY
The Certain Dealerships' sales to, purchases from, and balances with their
unconsolidated subsidiaries are as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Revenue from vehicle, parts, or service sales .......... $221 $324 $123
Cost of vehicle, parts, or services purchased .......... 219 306 120
Balance at year end:
Receivable ............................................ 327 956
Payable ............................................... 10 36
</TABLE>
In addition, the Certain Dealerships paid fees for fixed asset purchases
from a related party in the amounts of $620,000, $222,000, and $55,000 in
December 31, 1998, 1997, and 1996, respectively.
(13) PENDING LITIGATION
The Company is involved in various legal proceedings. Management, after
reviewing these proceedings with legal counsel, believes the aggregate
liability, if any, will not materially affect the combined financial condition
or results of operations of the Certain Dealerships.
F-11
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The accompanying unaudited pro forma consolidated financial data of
FirstAmerica Automotive, Inc. (the Company) and of Certain Dealerships, Assets
and Liabilities of Lucas Dealership Group, Inc. present the effect of the
Company's acquisition of Certain Dealerships, Assets and Liabilities of Lucas
Dealership Group, Inc. as if such acquisition had occurred at the beginning of
the respective periods presented.
The unaudited pro forma consolidated balance sheet as of June 30, 1999
reflects the historical accounts of the Company as of that date as adjusted to
give effect to the acquisition of Certain Dealerships, Assets and Liabilities
of Lucas Dealership Group, Inc. as if such acquisition had occurred on June
30, 1999.
The unaudited pro forma consolidated statement of operations for the six months
ended June 30, 1999 consists of the Company's unaudited consolidated statement
of operations, and of the combined statement of sales, cost of sales, and direct
operating expenses for the six months ended June 30, 1999 of Certain
Dealerships, Assets and Liabilities of Lucas Dealership Group, Inc., together
with unaudited pro forma adjustments that are considered necessary to present
fairly the unaudited pro forma results of operations of both entities as if such
acquisition had occurred on the first day of the period presented.
The unaudited pro forma consolidated statement of operations for the year
ended December 31, 1998 consists of the Company's audited consolidated
statement of operations, and of the audited combined statements of sales, cost
of sales, and direct operating expenses, each for the year ended December 31,
1998, of Certain Dealerships, Assets and Liabilities of Lucas Dealership
Group, Inc., together with unaudited pro forma adjustments that are necessary
to present fairly the unaudited pro forma consolidated results of operations
of both entities as if the acquisition had occurred on the first day of the
period presented. Such unaudited pro forma adjustments are based on the terms
and structure of the transaction, and include operating adjustments such as
goodwill amortization, interest expense and income taxes.
The following unaudited pro forma financial data may not be indicative of the
results of operations that would have actually occurred had the transaction been
in effect as of the beginning of the respective periods, nor do they purport to
indicate the Company's future results of operations. This information and
accompanying notes should be read in conjunction with the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission on March
31, 1999, the Company's Quarterly Report on Form 10-Q filed on August 16, 1999,
and the audited financial statements of Certain Dealerships, Assets and
Liabilities of Lucas Dealership Group, Inc., which are included elsewhere in
this report on Form 8-K/A.
Certain financial data of Certain Dealerships, Assets and Liabilities of Lucas
Dealership Group, Inc. have been reclassified to conform to the Company's
current financial statement presentation.
F-12
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
Lucas
FirstAmerica Dealership Pro Forma
Assets Automotive, Inc. Group, Inc. Adjustments Pro Forma
- ------ ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 2,339 $19,825 $(19,825) (a) $ 2,339
Contracts in transit 18,667 3,845 - 22,512
Accounts receivable, net 16,020 8,149 - 24,169
Inventories, net 120,919 26,449 6,139 (b) 153,507
Deposits, prepaid expenses and other 5,713 798 - 6,511
---------------------------------------------------------------------
Total current assets 163,658 59,066 (13,686) 209,038
Property and equipment 12,137 2,947 385 (c) 15,469
Other assets:
Loan origination and other costs, net 2,815 - - 2,815
Other noncurrent assets 1,452 - - 1,452
Goodwill and other intangible assets 40,499 581 56,709 (d) 97,789
---------------------------------------------------------------------
Total assets $220,561 $62,594 $ 43,408 $326,563
=====================================================================
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial data.
F-13
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET (CON'T)
AS OF JUNE 30, 1999
(IN THOUSANDS EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Lucas
FirstAmerica Dealership Pro Forma
Liabilities and Stockholders' Equity Automotive, Inc. Group, Inc. Adjustments Pro Forma
- ------------------------------------ -----------------------------------------------------------------
<S> <C> <C> <C> <C>
Current liabilities:
Floor plan $110,048 $23,424 $ - $133,472
Accounts payable and accrued liabilities 19,589 8,367 2,893 (e) 30,849
Notes payable and secured lines of credit 30,003 - 69,464 (f) 99,467
Deferred income taxes - - 1,842 (g) 1,842
Deferred revenue 1,640 - - 1,640
-----------------------------------------------------------------
Total current liabilities 161,280 31,791 74,199 267,270
Long-term liabilities:
Senior notes, net 33,321 - - 33,321
Deferred income taxes 1,055 12 - 1,067
Deferred revenue 1,762 - - 1,762
Capital lease obligations and other long-term notes 5,361 - - 5,361
-----------------------------------------------------------------
Total liabilities 202,779 31,803 74,199 308,781
Redeemable preferred stock:
Cumulative redeemable preferred stock 3,079 - - 3,079
Redeemable preferred stock 560 - - 560
Stockholders' equity:
Common stock - - - -
Additional paid-in capital 8,571 - - 8,571
Retained earnings 6,425 30,791 (30,791) (h) 6,425
-----------------------------------------------------------------
Total stockholders' equity 14,996 30,791 (30,791) 14,996
-----------------------------------------------------------------
$220,561 $62,594 $43,408 $326,563
=================================================================
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial data.
F-14
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Lucas
FirstAmerica Dealership Pro Forma
Automotive, Inc. Group, Inc. Adjustments Pro Forma
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales:
Vehicle $433,228 $154,906 $ - $588,134
Service, parts and other 72,476 27,997 - 100,473
---------------------------------------------------------------------------
Total sales 505,704 182,903 - 688,607
Cost of sales 427,610 153,755 (47) (b) 581,318
---------------------------------------------------------------------------
Gross profit 78,094 29,148 47 107,289
Operating expenses:
Selling, general and administrative 64,633 24,285 (3,275) (i) 85,643
Depreciation and amortization 2,172 636 575 (j) 3,383
---------------------------------------------------------------------------
Operating income 11,289 4,227 2,747 18,263
Other (income)/expenses:
Interest expense, floor plan 3,158 853 (138) (k) 3,873
Interest expense, other 3,719 - 2,674 (l) 6,393
Other (income)/expense (1,253) (1,178) 1,178 (m) (1,253)
---------------------------------------------------------------------------
Income before income taxes 5,665 4,552 (967) 9,250
Income tax expense 2,436 1,887 (253) (n) 4,070
---------------------------------------------------------------------------
Net income $3,229 $ 2,665 $ (714) $ 5,180
===========================================================================
Basic earnings per share $0.20 $0.33
Weighted average shares outstanding 15,145 15,145
Diluted earnings per share $0.19 $0.32
Weighted average shares outstanding 15,842 15,842
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial data.
F-15
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Lucas
FirstAmerica Dealership Pro Forma
Automotive, Inc. Group, Inc. Adjustments Pro Forma
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales:
Vehicle $667,676 $286,581 $ - $ 954,257
Service, parts and other 115,395 53,031 - 168,426
---------------------------------------------------------------------
Total sales 783,071 339,612 - 1,122,683
Cost of sales 663,902 285,121 (212) (b) 948,811
---------------------------------------------------------------------
Gross profit 119,169 54,491 212 173,872
Operating expenses:
Selling, general and administrative 99,603 47,723 (7,461) (i) 139,865
Depreciation and amortization 1,952 1,406 1,135 (j) 4,493
---------------------------------------------------------------------
Operating income 17,614 5,362 6,538 29,514
Other (income)/expenses:
Interest expense, floor plan 5,521 1,688 (252) (k) 6,957
Interest expense, other 5,432 - 5,696 (l) 11,128
Other (income)/expense - (3,014) 3,014 (m) -
---------------------------------------------------------------------
Income before income taxes 6,661 6,688 (1,920) 11,429
Income tax expense 2,864 2,883 (718) (n) 5,029
---------------------------------------------------------------------
Net income $ 3,797 $ 3,805 $(1,202) $ 6,400
=====================================================================
Basic earnings per share $0.24 $0.42
Weighted average shares outstanding 14,341 14,341
Diluted earnings per share $0.23 $0.40
Weighted average shares outstanding 14,928 14,928
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial data.
F-16
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
(a) Reflects the elimination of cash and cash equivalents not acquired.
(b) Reflects the change in accounting for inventories from Lucas Dealership
Group, Inc.'s last-in, first-out method to the Company's specific
identification method.
(c) Reflects the write-up of property and equipment acquired to fair market
value.
(d) Reflects the excess of the net goodwill adjustment resulting from
allocating the purchase price to the net assets acquired based on their
relative fair value.
(e) Reflects a contingent purchase price adjustment, accrued direct acquisition
costs, and accrued taxes resulting from changing the method of accounting
for inventories and from assets held for sale.
(f) Reflects the funding of the acquisition from Ford Motor Credit Corporation.
(g) Represents deferred income taxes resulting from changing the method of
accounting for inventories.
(h) Reflects the elimination of historical retained earnings as a result of the
purchase method of accounting.
(i) Primarily reflects the decrease in selling, general and administrative
expenses related to the reduction in salaries, fringe benefits, and related
expenses of owners, officers and employees who will not become employees of
the Company pursuant to the acquisition and who will not be replaced. Also
reflects a net decrease in rent and expenses related to facilities not
acquired and to other expenses relating to operations that will not be
acquired.
(j) Reflects the incremental increase in amortization of goodwill.
(k) Reflects the reduction of approximately 125 basis points in the historical
annual floor plan interest rate applied to the average outstanding debt of
$20 million as of December 31, 1998 and $22 million as of June 30, 1999 as
if the refinancing occurred at the beginning of the period.
(l) Reflects the incremental interest expense associated with debt of $69
million used to finance the acquisition.
(m) Reflects the elimination of management fees earned, the elimination of
gains on sales of unacquired assets, and the elimination of pre-acquisition
interest income earned on investments of cash and cash equivalents not
acquired.
(n) Reflects the net increase in the provision for income taxes resulting from
the pro forma adjustments above, primarily goodwill amortization not
deductible for income tax purposes, computed using a combined statutory
income tax rate of 44%.
F-17
<PAGE>
EXHIBIT 23.2
CONSENT OF DELOITTE & TOUCHE LLP
We consent to the incorporation by reference in Registration Statement No.
333-74505 of FirstAmerica Automotive, Inc. on Form S-8 of our report dated May
21, 1999, with respect to the combined statements of assets and liabilities of
Certain Dealerships, Assets and Liabilities of Lucas Dealership Group, Inc. as
of December 31, 1998 and 1997, and the related combined statements of sales,
costs of sales and direct operating expenses and of cash flows for each of the
three years in the period ended December 31, 1998 appearing in this Form 8-K/A
of FirstAmerica Automotive, Inc.
DELOITTE & TOUCHE LLP
San Jose, California
November 9, 1999
