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: September 21, 1995
------------------
Date of Earliest Event Reported: July 7, 1995
------------
REPUBLIC AUTOMOTIVE PARTS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 38-1455545
------------------------ ------------------------------------
(State of incorporation) (I.R.S. Employer Identification No.)
500 Wilson Pike Circle, Suite 115, Brentwood, Tennessee 37027
-------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(615) 373-2050
----------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial statements of businesses acquired.
The financial statements of Beacon Auto Parts Company as of
December 31, 1994 and 1993 and for the years ended December 31, 1994 and
1993, together with the report of Arthur Anderson LLP with respect
thereto are filed as Exhibit 99.1 to this Current Report.
(b) Pro forma financial information.
The unaudited pro forma consolidated balance sheet of Republic
Automotive Parts, Inc. and Beacon Auto Parts Company as of June 30,
1995 and unaudited pro forma condensed consolidated statements of income
for the year ended December 31, 1994 and for the six months ended
June 30, 1995 are filed as Exhibit 99.2 to this Current Report.
(c) Exhibits.
Consent of Arthur Andersen LLP is filed as Exhibit 23 to this
Current Report.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
REPUBLIC AUTOMOTIVE PARTS, INC.
DATE: September 21, 1995 BY: \s\ Donald B. Hauk
------------------ -------------------------
Donald B. Hauk
Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBITS INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBIT
23 Consent of Arthur Andersen LLP.
99.1 Financial statements of Beacon Auto Parts
Company as of December 31, 1994 and 1993
and for the years ended December 31, 1994
and 1993, together with the report of
Arthur Andersen LLP.
99.2 Pro forma consolidated financial statements
of Republic Automotive Parts, Inc. and Beacon
Auto Parts Company as of June 30, 1995 and
for the year ended December 31, 1994 and for
the six months ended June 30, 1995.
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Form 8-K/A of our report dated March 31, 1995, related to the financial
statements of Beacon Auto Parts Company (the Company) as December 31, 1994
and 1993. It should be noted that we have not audited any financial
statements of the Company subsequent to December 31, 1994, or performed
any audit procedures subsequent to the date of our report.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennslyvania
September 21, 1995
BEACON AUTO PARTS COMPANY
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1994 AND 1993
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of
Beacon Auto Parts Company:
We have audited the accompanying balance sheets of Beacon Auto Parts Company
(a Delaware corporation) as of December 31, 1994 and 1993, and the related
statements of operations, shareholders' equity and cash flows for the years
then ended. These financial statements are the responsibility of the
Company's 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.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Beacon Auto Parts
Company as of December 31, 1994 and 1993, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
March 31, 1995
<PAGE>
BEACON AUTO PARTS COMPANY
BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
(NOTES 1 AND 2)
ASSETS
1994 1993
CURRENT ASSETS:
Cash $ 152,931 $ 104,880
Accounts receivable, less allowance for
uncollectible accounts of $80,000 and
$60,000 in 1994 and 1993, respectively 1,504,722 1,186,337
Inventories, net of LIFO reserve of
approximately $1,029,000 and $1,012,000
in 1994 and 1993, respectively 7,439,123 6,927,114
Prepaid expenses and other current assets
(Note 5) 227,569 74,632
--------- ---------
Total current assets 9,324,345 8,292,963
--------- ---------
PROPERTY AND EQUIPMENT, at cost:
Land 887,879 595,319
Building and improvements 3,133,416 2,681,263
Furniture, fixtures and office equipment 2,065,086 1,863,867
Shop equipment 359,594 358,374
Motor vehicles 591,429 489,558
--------- ---------
7,037,404 5,988,381
Less - Accumulated depreciation (2,153,876) (1,784,904)
--------- ---------
Net property and equipment 4,883,528 4,203,477
--------- ---------
OTHER ASSETS:
Notes receivable from shareholders (Note 5) 964,631 964,631
Deferred debt issuance costs and other
noncurrent assets, net of accumulated
amortization of $29,441 and $19,063 in
1994 and 1993, respectively 52,735 63,113
---------- ----------
$ 15,225,239 $ 13,524,184
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
BEACON AUTO PARTS COMPANY
BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
(NOTES 1 AND 2)
LIABILITIES AND SHAREHOLDERS' EQUITY
1994 1993
CURRENT LIABILITIES:
Current portion of long-term debt (Note 2) $ 864,135 $ 826,458
Accounts payable 1,726,346 2,379,330
Accrued liabilities 1,649,311 1,124,580
--------- ---------
Total current liabilities 4,239,792 4,330,368
--------- ---------
LONG-TERM DEBT, less current portion (Note 2) 7,647,933 6,613,060
COMMITMENTS (Notes 3 and 4)
SHAREHOLDERS' EQUITY:
Common stock, par value $0.10 per share-
Authorized, 2,000 shares Issued, 2,000 shares 200 200
Paid-in capital 501,465 501,465
Retained earnings 2,866,456 2,109,698
Less - Treasury shares, 76 shares at cost (30,607) (30,607)
--------- ---------
Total shareholders' equity 3,337,514 2,580,756
--------- ---------
$ 15,225,239 $ 13,524,184
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
BEACON AUTO PARTS COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
(Notes 1 and 2)
1994 1993
NET SALES $ 27,724,845 $ 24,287,206
COST OF GOODS SOLD 16,497,358 14,434,095
---------- ----------
Gross profit 11,227,487 9,853,111
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 9,441,947 8,588,873
---------- ----------
Income from operations 1,785,540 1,264,238
INTEREST EXPENSE, net 530,355 459,966
---------- ----------
NET INCOME $ 1,255,185 $ 804,272
========== ==========
The accompanying notes are an integral part of these financial statements.
<PAGE>
BEACON AUTO PARTS COMPANY
STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
(Notes 1 and 2)
<TABLE>
<CAPTION>
Common Stock Total
Par Paid-In Retained Treasury Stock Shareholders
Shares Value Capital Earnings Shares Amount Equity
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1992 2,000 $200 $501,465 $1,531,662 76 $(30,607) $2,002,720
Distributions - - - (226,236) - - (226,236)
Net income - - - 804,272 - - 804,272
----- --- ------- --------- -- ------ ---------
BALANCE, DECEMBER 31, 1993 2,000 200 501,465 2,109,698 76 (30,607) 2,580,756
Distributions - - - (498,427) - - (498,427)
Net income - - - 1,255,185 - - 1,255,185
----- --- ------- --------- -- ------ ---------
BALANCE, DECEMBER 31, 1994 2,000 200 $501,465 $2,866,456 76 $(30,607) $3,337,514
===== === ======= ========= == ====== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BEACON AUTO PARTS COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
(Notes 1 and 2)
1994 1993
CASH WAS PROVIDED BY (USED FOR):
OPERATIONS:
Net income $ 1,255,185 $ 804,272
Adjustments to reconcile net income
to cash provided by operations -
Depreciation and amortization 493,471 512,637
Net cash provided by operations
before changes in working capital items 1,748,656 1,316,909
Working capital items-
Accounts receivable (318,385) (172,370)
Inventories (512,009) (324,883)
Prepaid expenses and other current assets (152,937) (37,262)
Accounts payable (652,984) 861,116
Accrued liabilities 524,731 79,505
--------- ---------
Net cash (used for) provided by
working capital items (1,111,584) 406,106
--------- ---------
Net cash provided by operations 637,072 1,723,015
--------- ---------
INVESTING ACTIVITIES:
Purchases of property and equipment, net (1,163,144) (381,789)
Payments in exchange for notes receivable
from shareholders (Note 5) (964,631)
--------- ---------
Net cash used for investing activities (1,163,144) (1,346,420)
--------- ---------
FINANCING ACTIVITIES:
Dividends paid (498,427) (226,236)
Long-term debt borrowings 540,000
Payments on long-term debt (852,450) (824,861)
Net change in revolving line of credit 1,385,000 675,000
Organization, deferred financing costs
and other noncurrent assets (10,000)
--------- --------
Net cash provided by (used for)
financing activities 574,123 (386,097)
--------- --------
NET INCREASE (DECREASE) IN CASH 48,051 (9,502)
CASH, beginning of year 104,880 114,382
--------- --------
CASH, end of year $ 152,931 $ 104,880
========= ========
The accompanying notes are an integral part of these financial statements.
<PAGE>
BEACON AUTO PARTS COMPANY
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
(Notes 1 and 2)
1994 1993
SUPPLEMENTAL DATA:
Cash payments for interest expense $ 585,000 $ 503,000
======= =======
The accompanying notes are an integral part of these financial statements.
<PAGE>
BEACON AUTO PARTS COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1993
1. OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Beacon Auto Parts Copmany (the Company) owns and operates a chain of retail
and wholesale automobile parts and accessories stores in Southwestern
Pennsylvania. The Company grants credit to wholesale customers based on
management's assessment of their creditworthiness. Credit is not normally
granted to retail customers.
The accompanying financial statements reflect the application of the
following significant accounting policies:
Inventories
Inventories consist primarily of purchased automotive parts and accessories
held for resale and are stated at the lower of last-in, first-out (LIFO)
cost or market. The excess of current costs over inventories determined on
the LIFO basis was approximately $1,029,000 and $1,012,000 as of December 31,
1994 and 1993, respectively.
Depreciation
The Company uses the straight-line method to provide for depreciation in
amounts which allocate property and equipment over their estimated useful
lives, as follows:
Classification Estimated Useful Lives
Building and improvements 31.5-39.5 years
Furniture, fixtures and office equipment 3-5 years
Shop equipment 5 years
Motor vehicles 3-5 years
Amortization
The Company is amortizing deferred debt issuance costs using the
straight-line method over periods ranging from 3 to 15 years.
Income Taxes
The shareholders of the Company have elected for it to be taxed as an S
Corporation. Accordingly, the Company's taxable income is reported on the
individual income tax returns of its shareholders and no federal or state
income tax is included in the financial statements of the Company.
The Company makes distributions to shareholders in connection with the
shareholders' payment of individual income taxes attributable to their
proportionate shares of the Company's taxable income.
<PAGE>
2. LONG-TERM DEBT:
Long-term debt consists of the following:
1994 1993
Term loan with a bank, with interest at
prime, due in monthly installments of $4,000
through December 1996, $5,250 from January 1997
through December 2001, and $6,620 from January
2002 through December 2006. This debt is
secured by a first mortgage on certain land,
building and improvements of the Company. $ 807,712 $ 851,800
Pennsylvania Industrial Development
Authority note payable, with interest at 5%,
due in monthly principal and interest
installments of $5,109 through December 2006.
This debt is secured by a second mortgage on
certain land, building and improvements of the
Company and the personal guaranty of the
majority shareholder. 552,338 585,129
Mortgage note payable, with interest at 7-3/4%
through January 31, 2001, and prime plus 3/4%
for the remaining period, due in monthly
installments of $3,000 through February 1, 2004.
This note is secured by the related property. 510,000 -
Term loan with a bank, with interest at prime,
due in monthly installments of $1,192, with a
balloon payment of $72,652 due on September 15,
1999. This debt is secured by a substantial
portion of the Company's assets. 140,596 154,900
Term loan with a bank, with interst at prime,
due in monthly installments of $8,350 from
January 1993 through December 1, 1997. This
debt is secured by a substantial portion of the
Company's assets. 499,600 599,800
Mortgage note payable, with interest at prime
plus 1%, subject to a minimum of 8% and a
maximum of 14%, due in monthly installments
of $1,511 through March 1, 2007. This note is
secured by the related property. 222,133 240,267
Mortgage note payable, with interest at prime
plus 1%, subject to a minimum of 8% and a
maximum of 14%, due in monthly installments of
$2,222 through October 1, 2007. This note is
secured by the related property. 342,222 368,889
<PAGE>
1994 1993
Mortgage note payable, with interest at prime
plus 1%, subject to a minimum of 8% and a
maximum of 14%, due in monthly installments of
$467 through December 1, 2007. This note is
secured by the related property. 72,800 78,400
Mortgage note payable, with interest at prime
plus 1%, subject to a minimum of 8% and a
maximum of 14%, due in monthly installments of
$889 through December 1, 2007. This note is
secured by the related property. 138,667 149,333
Revolving credit agreement borrowings
(see below). 3,506,000 2,121,000
Subordinated notes due Seller (see below). 1,720,000 2,290,000
--------- ---------
8,512,068 7,439,518
Less - Current portion of long-term debt. 864,135 826,458
--------- ---------
$ 7,647,933 $ 6,613,060
========= =========
The Company has a revolving credit agreement with a bank which provides for
borrowings of up to $5,000,000 through March 31, 1997. Borrowings under the
revolving credit agreement bear interest at the prime rate, payable monthly,
and are subject to certain limitations based on the level of eligible accounts
receivable and inventories, as defined. Borrowings under the revolving credit
agreement are secured by substantially all of the Company's assets and the
personal guaranty of its majority shareholder.
Among other requirements and restricitions, the provisions of the revolving
credit and term loan agreements require the Company to maintain certain levels
of tangible net worth and ratios of current assets to current liabilities,
total liabilities to tangible net worth and operating income to interest
expense, all as defined, and restrict the annual capital expenditures and
distributions to shareholders that may be made.
The subordinated notes bear interest at the prime rate, subject to a minimum
of 7% and a maximum of 11%, payable quarterly, with the principal balance due
in annual installments of $570,000 from April 11, 1991, through April 11,
1996, with a final payment of $580,000 due on April 11, 1997.
The scheduled annual principal payments of long-term debt are as follows:
Year Amount
1995 $ 864,135
1996 865,900
1997 4,597,656
1998 214,406
1999 285,529
Thereafter 1,684,442
---------
Total $ 8,512,068
=========
<PAGE>
3. EMPLOYEE BENEFIT PLAN:
The Company maintains a qualified defined contribution profit-sharing plan
covering substantially all full-time employees. Contributions to the plan are
made at the discretion of the Company's Board of Directors and were
approximately $223,000 for fiscal 1994 and $212,000 for fiscal 1993.
4. COMMITMENTS:
The Company rents certain facilities under operating leases with approximate
minimum rentals due as follows:
Year Amount
1995 $ 328,538
1996 283,141
1997 239,855
1998 175,317
1999 119,401
Thereafter 37,174
---------
Total $ 1,183,426
=========
Rental expense was approximately $348,000 for fiscal 1994 and $395,000 for
fiscal 1993.
5. RELATED PARTY TRANSACTIONS:
In June 1993, several minority shareholders sold their shares to the
remaining shareholders and their dependents. The purchasing shareholders
financed this purchase by borrowing the necessary cash from the Company in
exchange for demand notes payable to the Company. The notes bear interest
at prime plus 1% and are callable upon demand. Since the Company has no
definitive plans to call these notes, they are classified as a noncurrent
asset in the accompanying balance sheets. The Company has advanced $88,000
to the majority shareholder for income taxes related to his interest in the
Company in exchange for a note receivable. This note is included with prepaid
expenses and other current assets in the accompanying balance sheet as of
December 31, 1994.
The Company leases certain land and buildings from BAP Realty, L.P.
(BAP Realty). Current shareholders of the Company own a similar interest in
BAP Realty. The future commitment under the lease with BAP Realty as of
0December 31, 1994, is included above with other operating leases and is
summarized as follows:
Year Amount
1995 $ 19,512
1996 19,512
1997 19,512
1998 5,420
------
Total $ 63,956
======
REPUBLIC AUTOMOTIVE PARTS, INC.
UNAUDITED PRO FORMA CONSOLIATED BALANCE SHEET
AS OF JUNE 30, 1995
<TABLE>
<CAPTION>
Republic Beacon
Automotive Auto
(Dollars in Thousands) Parts, Inc. Parts Pro Forma Pro Forma
As Reported Company Adjustments Total
ASSETS
<S> <C> <C> <C> <C> <C>
Current assets:
Cash $3,002 $61 ($61) (1) $3,002
Accounts and notes receivable, net 13,535 1,486 ($1,486) (1) 15,166
1,631 (1)
Inventories 41,530 7,686 (7,686) (1) 50,648
9,118 (1)
Prepaid expenses and other current assets 5,040 106 (106) (1) 5,081
41 (1)
------ ----- ----- ------
Total current assets 63,107 9,339 1,451 73,897
Property, plant and equipment, net 6,499 4,718 (4,718) (1) 8,001
1,502 (1)
Long-term notes receivables 877 965 (965) (1) 877
Deferred pension asset 3,230 3,230
Intangibles, net of amortization 6,431 4,258 (1) 10,689
Other assets 48 (48) (1)
------ ------ ----- ------
Total assets $80,144 $15,070 $1,480 $96,694
====== ====== ===== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $608 $865 ($865) (1) $608
Notes payable 962 (1) 962
Accounts payable 10,355 2,293 (2,293) (1) 12,856
2,501 (1)
Accrued compensation and employee benefits 1,714 1,714
Accrued taxes and other 5,277 1,378 (1,378) (1) 6,286
1,009 (1)
------ ----- ----- ------
Total current liabilities 17,954 4,536 (64) 22,426
Long-term debt 19,712 7,080 (7,080) (1) 30,372
10,660 (1)
Deferred income taxes 457 457
Other long-term liabilities 1,674 418 (1) 2,092
Stockholders' equity
Common stock 1,696 1 (1) (1) 1,731
35 (1)
Additional paid-in capital 23,948 501 (501) (1) 24,913
965 (1)
Retained earnings 15,508 2,983 (2,983) (1) 15,508
Treasury stock (805) (31) 31 (1) (805)
------ ------ ------ ------
40,347 3,454 (2,454) 41,347
------ ------ ------ ------
Total liabilities and stockholders' equity $80,144 $15,070 $1,480 $96,694
====== ====== ===== ======
</TABLE>
<PAGE>
REPUBLIC AUTOMOTIVE PARTS, INC.
UNAUDITED CONSOLIDATED PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Republic Beacon
Automotive Auto
(Dollars in Thousands Parts, Inc. Parts Pro Forma Pro Forma
except per share amounts) As Reported Company Adjustments Total
<S> <C> <C> <C> <C> <C>
Net sales $138,295 $27,725 ($141) (2) $165,879
------- ------ --- -------
Cost of products sold 87,691 16,497 (344) (2) 103,844
Selling, general and
administrative expense 43,142 9,442 229 (2) 52,818
(1,216) (3)
1,221 (4)
----- ----- ----- -----
Operating income 7,462 1,786 (31) 9,217
Interest expense (1,042) (531) 531 (5) (1,684)
(642) (5)
Interest and other income 488 26 (2) 514
----- ----- ----- -----
Income before income taxes 6,908 1,255 (99) 8,047
Provision for income taxes 2,660 456 (6) 3,116
----- ----- ----- -----
Net income $4,248 $1,255 ($572) $4,931
===== ===== ===== =====
Net income per share $1.39
=====
Weighted average common shares outstanding 3,548
=====
</TABLE>
<PAGE>
REPUBLIC AUTOMOTIVE PARTS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
Republic Beacon
Automotive Auto
(Dollars in Thousands Parts, Inc. Parts Pro Forma Pro Forma
except per share amounts) As Reported Company Adjustments Total
<S> <C> <C> <C> <C> <C>
Net sales $69,321 $13,571 - $82,892
------ ------ --- ------
Cost of products sold 43,658 7,667 51,325
Selling, general and
administrative expense 22,149 4,956 ($531) (7) 27,186
612 (8)
------ ----- ----- ------
Operating income 3,514 948 (81) 4,381
Interest expense (747) (352) 365 (9) (1,112)
(352) (9)
Interest income 192 192
Other income and expense (2,575) 16 (2,559)
----- ----- ----- -----
Income before income taxes 384 612 (94) 902
Provision for income taxes 152 207 (10) 359
---- ---- ---- ----
Net income $232 $612 ($301) $543
==== ==== ==== ====
Net income per share $0.15
=====
Weighted average common shares outstanding 3,562
=====
</TABLE>
<PAGE>
REPUBLIC AUTOMOTIVE PARTS, INC.
AND
BEACON AUTO PARTS COMPANY
NOTES TO THE UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma consolidated financial statements presented
herein are based on the historical financial statements of Republic
Automotive Parts, Inc. ("RAPI") and Beacon Auto Parts Company ("BAP"),
and reflect the pro forma effects of RAPI acquisition of BAP.
The acquisition has been accounted for as a purchase transaction with
the purchase price being allocated to the assets at estimated fair market
values at the date of the acquisition subject to adjustment based on the
results of an independent appraisal. The purchase price and estimated
fair market values are based, in part, on the value of net assets, as
defined in the Agreement of Purchase and Sale of Assets. The estimated
amounts recorded for assets and liabilities acquired from Beacon Auto
Parts Company, are not expected to differ materially from the final
assigned values.
The pro forma adjustments have been applied to the pro forma consolidated
balance sheet as if the transactions effected for the acquisition of BAP
had taken place on June 30, 1995, or as of January 1, 1994, in the case
of the pro forma consolidated statement of income for the year ended
December 31, 1994 and for the six months ended June 30, 1995. The
adjustments are based upon currently available information and certain
estimates and assumptions. However, management believes that the
assumptions provide a reasonable basis for presenting the significant
effects of the transactions as contemplated and that the pro forma
adjustments give appropriate effect to those assumptions and are properly
applied in the pro forma financial information.
The unaudited pro forma consolidated financial statements should be read
in conjunction with the historical financial statements and notes of RAPI
and BAP. This pro forma information is not necessarily indicative of the
results of operations of RAPI as if the transaction had occurred at the
beginning of the period, or of the results of future operations, nor do
they reflect expense reductions (other than those described in the notes
to the pro forma combined financial statements) and other changes that
might have resulted from management of BAP by RAPI throughout the
indicated period.
<PAGE>
Pro forma adjustments to give effect to the acquisition of Beacon Auto Parts
Company ("BAP") by Republic Automotive Parts, Inc. ("RAPI") are summarized
as follows:
(1) The purchase of Beacon Auto Parts Company was recorded for $12,622,000
at July 7, 1995, based on assumed levels and valuations of closing date
inventory and an estimated closing date statement of assets and
liabilities. In addition an estimated $3,341,000 of trade accounts
payable and accrued expenses were assumed. Direct acquisition costs
were also accrued. Such purchase price is subject to a definitive
post-closing calculation and adjustment under the terms of the
Agreement of Purchase and Sale of Assets to take place approximately
120 days after the closing date.
Of the purchase price, $1,000,000 was paid through the issuance of
69,232 shares of the Registrant's common stock and by the issuance of
a $2,000,000 subordinated promissory note, payable over four years in
equal annual installments and bearing interest at 7.055 percent
interest per annum payable quarterly. Of the balance of the purchase
price the sum of $8,659,000 was paid in cash at closing. The remainder
of the purchase price will paid following settlement. The sellers of
BAP entered into a non-competition undertaking providing for their
receipt of payments aggregating $500,000 payable in twenty equal
quarterly installments of $25,000 each.
The assets acquired were recorded at their estimated fair market values
of $9,118,000 for inventory, $1,631,000 for accounts receivable,
$418,000 for the non-competition undertaking, $1,502,000 for equipment,
furniture, fixtures and vehicles subject to adjustment based on the
results of an independent appraisal, $3,840,000 for goodwill and
$41,000 in prepaid expenses and supplies.
(2) Historic BAP net sales, cost of products sold and selling, general and
administrative expenses have been reclassified to conform with the
Registrant's classification.
(3) Certain expenses in the amount of $1,216,000 were eliminated from the
pro forma consolidated statement of income for the year ended
December 31, 1994. These expenses are not expected to be incurred
after the acquisition. They represent non-recurring wages paid to
former officer-stockholders of BAP retained as employees, depreciation
expense based on BAP's asset costs, various non-recurring general and
admistrative expenses.
(4) Certain selling, general and administrative expenses in the amount of
$1,221,000 were added to the pro forma consolidated statement of income
for the year ended December 31, 1994 which are expected to be incurred
by RAPI as a result of this acquisition. They primarily represent
depreciation expense based on RAPI's asset costs, rent expense paid to
the sellers for leased buildings and amortization of goodwill based on
a 15 year life and amortization of the non-competltion undertaking
based on a five year life.
<PAGE>
(5) Interest expense of $642,000 related to the financing of this
acquisition has been recorded in the pro forma consolidated statement
of income for the year ended December 31, 1994. Interest expense of
$531,000 incurred by BAP has been eliminated.
(6) Prior to the acquisition, BAP was taxed as a S corporation.
Accordingly, the Company's taxable income is reported on the
individual income tax returns of its shareholders and no federal or
state income is included in BAP's financial statements. Income tax
expense has been adjusted to reflect income taxes on pro forma
consolidated pre-tax income. The tax provision was recorded at
an effective tax rate of approximately forty percent (40%).
(7) Certain expenses in the amount of $531,000 were eliminated from the
pro forma consolidated statement ofincome for the six months ended
June 30, 1995. These expenses are not expected to be incurred after
the acquisition. They represent non-recurring wages paid to former
officer-stockholders of BAP retained as employees, depreciation expense
based on BAP's asset costs and various non-recurring general and
admistrative expenses.
(8) Certain selling, general and administrative expenses in the amount of
$612,000 were added to the pro forma consolidated statement of income
for the six months ended June 30, 1995 which are expected to be
incurred by RAPI as a result of this acquisition. They primarily
represent depreciation expense based on RAPI's asset costs, rent
expense paid to the sellers for leased buildings and amortization of
goodwill based on a 15 year life and amortization of the
non-competltion undertaking based on a five year life.
(9) Interest expense of $352,000 related to the financing of this
acquisition has been recorded in the pro forma consolidated statement
of income for the six months ended June 30, 1995. Interest expense of
$365,000 incurred by BAP has been eliminated.
(10) Prior to the acquisition, BAP was taxed as a S corporation.
Accordingly, the Company's taxable income is reported on the
individual income tax returns of its shareholders and no federal or
state income is included in BAP's financial statements. Income tax
expense has been adjusted to reflect income taxes on pro forma
consolidated pre-tax income. The tax provision was recorded at
an effective tax rate of approximately forty percent (40%).
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