UNITED STATES
Form 10-Q
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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended September 30, 2002 | ||
| or | ||
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o
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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.
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Delaware
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22-3086739 | |
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
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2555 Telegraph Road Bloomfield Hills, Michigan (Address of principal executive offices) |
48302-0954 (Zip Code) |
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Registrant’s telephone number, including area code
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
As of November 12, 2002, there were 38,839,026 shares of voting common stock outstanding and 1,758,784 shares of non-voting common stock outstanding.
TABLE OF CONTENTS
| Page | ||||||
| PART I | ||||||
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1.
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Financial Statements and Supplementary Data (unaudited) | |||||
| Consolidated Condensed Balance Sheets as of September 30, 2002 and December 31, 2001 | 2 | |||||
| Consolidated Condensed Statements of Income for the three and nine months ended September 30, 2002 and 2001 | 3 | |||||
| Consolidated Condensed Statements of Cash Flow for the nine months ended September 30, 2002 and 2001 | 4 | |||||
| Consolidated Condensed Statement of Stockholders’ Equity and Comprehensive Income for the three and nine months ended September 30, 2002 | 5 | |||||
| Notes to Consolidated Condensed Financial Statements | 6 | |||||
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2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18 | ||||
| PART II | ||||||
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1.
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Legal Proceedings | 31 | ||||
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6.
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Exhibits, Financial Statement Schedules and Reports on Form 8-K | 31 | ||||
| Signatures | 32 | |||||
1
UNITED AUTO GROUP, INC.
| September 30, | December 31, | ||||||||
| 2002 | 2001 | ||||||||
| (In Thousands) | |||||||||
| (Unaudited) | |||||||||
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ASSETS
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|||||||||
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Cash and cash equivalents
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$ | 685 | $ | 2,952 | |||||
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Accounts receivable, net
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305,313 | 239,610 | |||||||
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Inventories
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885,805 | 611,889 | |||||||
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Other current assets
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33,821 | 16,081 | |||||||
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Total current assets
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1,225,624 | 870,532 | |||||||
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Property and equipment, net
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274,259 | 181,290 | |||||||
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Intangible assets, net
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957,390 | 772,737 | |||||||
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Assets of discontinued operations
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34,193 | 66,624 | |||||||
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Other assets
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63,020 | 55,393 | |||||||
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Total Assets
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$ | 2,554,486 | $ | 1,946,576 | |||||
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LIABILITIES AND STOCKHOLDERS’
EQUITY
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|||||||||
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Liabilities
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|||||||||
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Floor plan notes payable
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$ | 790,850 | $ | 586,620 | |||||
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Accounts payable
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138,540 | 73,781 | |||||||
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Accrued expenses
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161,701 | 83,949 | |||||||
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Current portion of long-term debt
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9,217 | 4,202 | |||||||
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Total current liabilities
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1,100,308 | 748,552 | |||||||
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Long-term debt
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646,793 | 551,648 | |||||||
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Other long-term liabilities
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96,703 | 92,774 | |||||||
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Liabilities of discontinued operations
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21,281 | 37,919 | |||||||
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Total liabilities
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1,865,085 | 1,430,893 | |||||||
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Stockholders’ Equity
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|||||||||
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Series A Preferred Stock, $0.0001 par value;
liquidation preference $10 per share; 10 shares authorized; none
issued and outstanding at September 30, 2002; 9 issued and
outstanding at December 31, 2001
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— | — | |||||||
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Series B Preferred Stock, $0.0001 par value;
liquidation preference $10 per share; 10 shares authorized; none
issued and outstanding at September 30, 2002; 1 issued and
outstanding at December 31, 2001
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— | — | |||||||
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Common stock, $0.0001 par value, 80,000 shares
authorized; 43,667 shares issued, including 4,830 treasury
shares, at September 30, 2002; 23,540 shares issued,
including 3,821 treasury shares, at December 31, 2001
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4 | 2 | |||||||
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Non-voting Common Stock, $0.0001 par value, 7,125
shares authorized; 1,759 issued and outstanding at
September 30, 2002; none issued and outstanding at
December 31, 2001
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— | — | |||||||
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Class C Common Stock, $0.0001 par value,
20,000 shares authorized; none issued and outstanding at
September 30, 2002 and December 31, 2001
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— | — | |||||||
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Additional paid-in-capital
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564,632 | 445,311 | |||||||
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Retained earnings
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133,142 | 78,750 | |||||||
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Accumulated other comprehensive loss
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(8,377 | ) | (8,380 | ) | |||||
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Total stockholders’ equity
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689,401 | 515,683 | |||||||
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Total Liabilities and Stockholders’ Equity
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$ | 2,554,486 | $ | 1,946,576 | |||||
See Notes to Consolidated Condensed Financial Statements
2
UNITED AUTO GROUP, INC.
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | ||||||||||||||
| (In Thousands, Except per Share Amounts) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
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New vehicle sales
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$ | 1,227,100 | $ | 914,577 | $ | 3,303,753 | $ | 2,618,117 | |||||||||
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Used vehicle sales
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411,161 | 272,765 | 1,106,603 | 807,329 | |||||||||||||
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Finance and insurance
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49,920 | 38,306 | 133,283 | 106,705 | |||||||||||||
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Service and parts
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207,586 | 152,247 | 565,221 | 435,614 | |||||||||||||
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Fleet sales
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32,604 | 37,097 | 93,355 | 119,061 | |||||||||||||
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Wholesale vehicle sales
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131,232 | 91,059 | 355,422 | 263,463 | |||||||||||||
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Total revenues
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2,059,603 | 1,506,051 | 5,557,637 | 4,350,289 | |||||||||||||
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Cost of sales
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1,771,953 | 1,294,050 | 4,767,825 | 3,745,316 | |||||||||||||
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Gross profit
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287,650 | 212,001 | 789,812 | 604,973 | |||||||||||||
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Selling, general and administrative expenses
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229,803 | 171,411 | 631,596 | 487,364 | |||||||||||||
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Operating income
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57,847 | 40,590 | 158,216 | 117,609 | |||||||||||||
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Floor plan interest expense
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(9,082 | ) | (8,998 | ) | (26,023 | ) | (31,577 | ) | |||||||||
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Other interest expense
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(9,990 | ) | (7,992 | ) | (27,834 | ) | (27,217 | ) | |||||||||
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Income from continuing operations before minority
interests and income taxes
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38,775 | 23,600 | 104,359 | 58,815 | |||||||||||||
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Minority interests
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(458 | ) | (66 | ) | (1,383 | ) | (364 | ) | |||||||||
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Income taxes
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(15,704 | ) | (10,266 | ) | (42,035 | ) | (25,583 | ) | |||||||||
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Income from continuing operations
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22,613 | 13,268 | 60,941 | 32,868 | |||||||||||||
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Income (loss) from discontinued operations,
net of tax
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(624 | ) | 220 | 648 | 595 | ||||||||||||
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Net income
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21,989 | 13,488 | 61,589 | 33,463 | |||||||||||||
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Preferred dividends
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(92 | ) | (1,641 | ) | (6,293 | ) | (6,338 | ) | |||||||||
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Income available to common stockholders
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$ | 21,897 | $ | 11,847 | $ | 55,296 | $ | 27,125 | |||||||||
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Shares used in computing basic per share data
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40,849 | 23,433 | 36,582 | 23,092 | |||||||||||||
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Shares used in computing diluted per share data
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41,733 | 35,418 | 41,168 | 33,550 | |||||||||||||
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Basic income from continuing operations per
common share
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$ | 0.55 | $ | 0.50 | $ | 1.49 | $ | 1.15 | |||||||||
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Basic net income per common share
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$ | 0.54 | $ | 0.51 | $ | 1.51 | $ | 1.17 | |||||||||
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Income from continuing operations per diluted
common share
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$ | 0.54 | $ | 0.37 | $ | 1.48 | $ | 0.98 | |||||||||
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Net income per diluted common share
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$ | 0.53 | $ | 0.38 | $ | 1.50 | $ | 1.00 | |||||||||
See Notes to Consolidated Condensed Financial Statements
3
UNITED AUTO GROUP, INC.
| Nine Months Ended | ||||||||||
| September 30, | ||||||||||
| 2002 | 2001 | |||||||||
| (In Thousands) | ||||||||||
| (Unaudited) | ||||||||||
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Operating activities:
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||||||||||
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Net income
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$ | 61,589 | $ | 33,463 | ||||||
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Adjustments to reconcile net income to net cash
provided by operating activities:
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Depreciation and amortization
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15,761 | 24,246 | ||||||||
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Minority interests
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1,383 | 364 | ||||||||
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Changes in operating assets and liabilities
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Accounts receivable
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(20,339 | ) | (25,274 | ) | ||||||
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Inventories
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(118,089 | ) | 112,642 | |||||||
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Floor plan notes payable
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79,178 | (79,540 | ) | |||||||
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Accounts payable and accrued expenses
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52,066 | 3,224 | ||||||||
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Other
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(27,294 | ) | 11,687 | |||||||
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Net cash provided by operating activities
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44,255 | 80,812 | ||||||||
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Investing activities:
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||||||||||
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Purchase of equipment and improvements
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(140,049 | ) | (65,939 | ) | ||||||
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Proceeds from sale-leaseback transactions
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80,000 | — | ||||||||
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Dealership acquisitions, net
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(191,631 | ) | (105,756 | ) | ||||||
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Net cash used in investing activities
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(251,680 | ) | (171,695 | ) | ||||||
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Financing activities:
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Proceeds from borrowings of long-term debt
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632,800 | 97,405 | ||||||||
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Payments of long-term debt and capital leases
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(561,173 | ) | (23,426 | ) | ||||||
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Proceeds from issuance of common stock
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135,318 | 14,835 | ||||||||
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Repurchase of common stock
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(16,000 | ) | (2,402 | ) | ||||||
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Net cash provided by financing activities
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190,945 | 86,412 | ||||||||
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Net cash distributed by discontinued operations
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14,213 | 802 | ||||||||
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Net decrease in cash and cash equivalents
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(2,267 | ) | (3,669 | ) | ||||||
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Cash and cash equivalents, beginning of period
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2,952 | 5,090 | ||||||||
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Cash and cash equivalents, end of period
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$ | 685 | $ | 1,421 | ||||||
See Notes to Consolidated Condensed Financial Statements
4
UNITED AUTO GROUP, INC.
| Class A | Class B | |||||||||||||||||||||||||||||||
| Convertible | Convertible | Voting and Non-voting | ||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||
| Additional | ||||||||||||||||||||||||||||||||
| Issued | Issued | Issued | Paid-in | Retained | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Earnings | |||||||||||||||||||||||||
| (Dollars In Thousands) | ||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||
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Balances, January 1, 2002
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8,794 | — | 649 | — | 23,540,231 | $ | 2 | $ | 445,311 | $ | 78,750 | |||||||||||||||||||||
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Issuance of common stock
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(1,913 | ) | — | — | — | 9,936,812 | 1 | 124,184 | — | |||||||||||||||||||||||
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Exercise of options
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— | — | — | — | 167,778 | — | 2,627 | — | ||||||||||||||||||||||||
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Payment of preferred stock dividends
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— | — | — | — | — | — | — | (2,719 | ) | |||||||||||||||||||||||
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Fair value of interest rate swap agreement
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— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
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Foreign currency translation
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— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
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Net income
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