Back to GetFilings.com



Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

     
þ
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
    For the quarterly period ended September 30, 2004
 
or
 
o
   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 1-12297

United Auto Group, Inc.

(Exact name of registrant as specified in its charter)
     
Delaware
   22-3086739
(State or other jurisdiction of
incorporation or organization)		   (I.R.S. Employer
Identification No.)
 
2555 Telegraph Road,
Bloomfield Hills, Michigan
(Address of principal executive offices)		   48302-0954
(Zip Code)

Registrant’s telephone number, including area code:

(248) 648-2500

     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 þ          No o

     Indicate by check mark whether the registrant is an accelerated filer (as defined Rule 12b-2 of the Exchange Act)     Yes þ          No o

     As of November 2, 2004, there were 46,450,354 shares of voting common stock outstanding.

TABLE OF CONTENTS

         
Page
PART I
Financial Statements and Supplementary Data
       
    2  
    3  
    4  
    5  
    6  
    21  
    40  
    41  
 
 PART II
    41  
    42  
    43  
 Certification
 Certification
 Certification

1

Table of Contents

UNITED AUTO GROUP, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS
                   
September 30, December 31,
2004 2003
(Unaudited)
(In thousands, except per share
amounts)
ASSETS
Cash and cash equivalents
  $ 17,681     $ 13,439  
Accounts receivable, net
    388,689       342,446  
Inventories
    1,196,659       1,166,756  
Other current assets
    52,486       43,090  
     
     
 
 
Total current assets
    1,655,515       1,565,731  
Property and equipment, net
    453,865       368,504  
Goodwill
    1,056,368       991,314  
Franchise value
    177,616       93,720  
Other assets
    78,250       89,968  
Assets of discontinued operations
    —       27,944  
     
     
 
 
Total Assets
   $ 3,421,614     $ 3,137,181  
     
     
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Liabilities
                
Floor plan notes payable
  $ 1,090,476     $ 1,122,065  
Accounts payable
    243,664       162,404  
Accrued expenses
    196,065       184,694  
Current portion of long-term debt
    952       8,574  
     
     
 
 
Total current liabilities
    1,531,157       1,477,737  
Long-term debt
    682,052       643,145  
Other long-term liabilities
    177,124       168,111  
Liabilities of discontinued operations
    —       19,776  
     
     
 
 
Total Liabilities
     2,390,333       2,308,769  
Commitments and Contingent Liabilities
                
Stockholders’ Equity
                
Preferred stock, $0.0001 par value; 100 shares authorized; none issued and outstanding at September 30, 2004 and December 31, 2003
    —       —  
Common stock, $0.0001 par value, 80,000 shares authorized; 51,258 shares issued, including 4,850 treasury shares, at September 30, 2004; 46,552 shares issued, including 4,830 treasury shares at December 31, 2003
    5       4  
Non-voting common stock, $0.0001 par value, 7,125 shares authorized; none issued and outstanding at September 30, 2004 and December 31, 2003
    —       —  
Class C common stock, $0.0001 par value, 20,000 shares authorized; none issued and outstanding at September 30, 2004 and December 31, 2003
    —       —  
Additional paid-in-capital
    714,870       582,104  
Retained earnings
    284,839       212,605  
Unearned compensation
    (5,637 )     (2,616 )
Accumulated other comprehensive income
    37,204       36,315  
     
     
 
 
Total Stockholders’ Equity
     1,031,281       828,412  
     
     
 
 
Total Liabilities and Stockholders’ Equity
   $ 3,421,614     $ 3,137,181  
     
     
 

See Notes to Consolidated Condensed Financial Statements

2

Table of Contents

UNITED AUTO GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                     
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
(Unaudited)
(In thousands, except per share amounts)
New vehicle sales
  $ 1,567,701     $ 1,388,131     $ 4,284,668     $ 3,745,448  
Used vehicle sales
    566,394       488,035       1,623,136       1,386,581  
Finance and insurance
    59,596       57,329       165,961       156,557  
Service and parts
    265,883       217,489       750,737       606,509  
Fleet sales
    39,102       25,102       106,007       87,523  
Wholesale vehicle sales
    189,313       137,910       534,266       376,661  
     
     
     
     
 
   
Total revenues
    2,687,989       2,313,996       7,464,775       6,359,279  
Cost of sales
    2,308,273       1,981,820       6,388,234       5,439,118  
     
     
     
     
 
 
Gross profit
    379,716       332,176       1,076,541       920,161  
Selling, general and administrative expenses
    296,595       258,878       848,432       722,140  
Depreciation and amortization
    14,686       8,106       32,609       22,644  
     
     
     
     
 
 
Operating income
    68,435       65,192       195,500       175,377  
Floor plan interest expense
    (12,261 )     (11,053 )     (36,766 )     (31,201 )
Other interest expense
    (10,470 )     (11,114 )     (31,287 )     (32,206 )
Other income
    4,858       —       11,469       —  
     
     
     
     
 
 
Income from continuing operations before minority interests, income taxes and cumulative effect of accounting change
    50,562       43,025       138,916       111,970  
Minority interests
    (676 )     (655 )     (1,504 )     (1,706 )
Income taxes
    (17,393 )     (16,995 )     (51,674 )     (44,231 )
     
     
     
     
 
 
Income from continuing operations before cumulative effect of accounting change
    32,493       25,375       85,738       66,033  
Income (loss) from discontinued operations, net of tax
    (128 )     (120 )     (166 )     (123 )
     
     
     
     
 
 
Income before cumulative effect of accounting change
    32,365       25,255       85,572       65,910  
Cumulative effect of accounting change, net of tax
    —       —       —       (3,058 )
     
     
     
     
 
 
Net income
  $ 32,365     $ 25,255     $ 85,572     $ 62,852  
     
     
     
     
 
Basic earnings per share:
                                
 
Continuing operations
  $ 0.71     $ 0.62     $ 1.92     $ 1.62  
 
Discontinued operations
    —       —       —       —  
 
Cumulative effect of accounting change
    —       —       —       (0.08 )
     
     
     
     
 
 
Net income
  $ 0.70     $ 0.62     $ 1.92     $ 1.54  
     
     
     
     
 
 
Shares used in determining basic earnings per share
    46,016       40,818       44,554       40,682  
     
     
     
     
 
Diluted earnings per share:
                                
 
Continuing operations
  $ 0.70     $ 0.61     $ 1.90     $ 1.60  
 
Discontinued operations
    —       —       —       —  
 
Cumulative effect of accounting change
    —       —       —       (0.07 )
     
     
     
     
 
 
Net income
  $ 0.70     $ 0.61     $ 1.89     $ 1.52  
     
     
     
     
 
 
Shares used in determining diluted earnings per share
    46,567       41,637       45,198       41,258  
     
     
     
     
 

See Notes to Consolidated Condensed Financial Statements

3

Table of Contents

UNITED AUTO GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                   
Nine Months Ended
September 30,
2004 2003
(Unaudited)
(In thousands)
Operating activities:
                
Net income
  $ 85,572     $ 62,852  
Adjustments to reconcile net income to net cash from operating activities:
               
 
Depreciation and amortization
    32,609       22,644  
 
Amortization of unearned compensation
    1,778       784  
 
Gain on sale of investment
    (11,469 )     —  
 
Cumulative effect of accounting change
    —       3,058  
 
Minority interests and other
    2,395       2,380  
 
Changes in operating assets and liabilities:
               
 
Accounts receivable
    (36,716 )     (37,244 )
 
Inventories
    44,259       (26,361 )
 
Floor plan notes payable
    (74,818 )     (27,847 )
 
Accounts payable and accrued expenses
    88,706       103,604  
 
Other
    (12,933 )     (21,466 )
     
     
 
Net cash from operating activities
    119,383       82,404  
     
     
 
Investing activities:
                
Purchase of equipment and improvements
    (150,002 )     (137,408 )
Proceeds from sale-leaseback transactions
    43,941       12,443  
Dealership acquisitions, net
    (167,932 )     (99,496 )
Proceeds from sale of investment
    13,566       —  
     
     
 
Net cash from investing activities
    (260,427 )     (224,461 )
     
     
 
Financing activities:
                
Net borrowings (repayments) of long-term debt
    22,779       111,531  
Proceeds from issuance of common stock
    127,969       6,195  
Dividends
    (13,338 )     —  
     
     
 
Net cash from financing activities
    137,410       117,726  
     
     
 
Net cash from discontinued operations
    7,876       24,789  
     
     
 
Net increase in cash and cash equivalents
    4,242       458  
Cash and cash equivalents, beginning of period
    13,439       9,844  
     
     
 
Cash and cash equivalents, end of period
  $ 17,681     $ 10,302  
     
     
 
Supplemental disclosures of cash flow information:
                
Cash paid for:
               
 
Interest
  $ 75,163     $ 71,099  
 
Income taxes
    11,202       13,279  
 
Acquisition costs financed with assumed debt
    5,790       —  

See Notes to Consolidated Condensed Financial Statements

4

Table of Contents

UNITED AUTO GROUP, INC.

CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME
                                                                 
Common Stock Accumulated
Additional Other Total
Issued Paid-In Retained Unearned Comprehensive Stockholders’ Comprehensive
Shares Amount Capital Earnings Compensation Income Equity Income
(Unaudited)
(Dollars in thousands)
Balance — January 1, 2004