-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T0XOIwXrNln4Pe6i+h6td3S2KTnvTmR4rmFHfGY1PaPZ/SlMvcLTVJQZYSQr7OPN nbGEmokCwzvWnSrcXMg7xw== 0000929624-98-000979.txt : 19980518 0000929624-98-000979.hdr.sgml : 19980518 ACCESSION NUMBER: 0000929624-98-000979 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRSTAMERICA AUTOMOTIVE INC /DE/ CENTRAL INDEX KEY: 0000766886 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MANAGEMENT SERVICES [8741] IRS NUMBER: 880206732 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 002-97254-NY FILM NUMBER: 98623588 BUSINESS ADDRESS: STREET 1: 601 BRANNAN STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94107 MAIL ADDRESS: STREET 1: 601 BRANNAN STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94107 FORMER COMPANY: FORMER CONFORMED NAME: PACIFIC NATIONAL VENTURE INC DATE OF NAME CHANGE: 19980501 10-Q 1 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission file number: 2-97254-NY FIRSTAMERICA AUTOMOTIVE, INC. (Exact name of registrant as specified in its charter) DELAWARE 88-0206732 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 601 Brannan Street San Francisco, California 94107 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (415) 284-0444 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of April 30, 1998. Class A Common stock, $0.00001 par value 11,179,092 Class B Common stock, $0.00001 par value 3,032,000 FIRSTAMERICA AUTOMOTIVE, INC. FORM 10-Q INDEX PART I - FINANCIAL INFORMATION Page Item 1. Financial Statements Condensed Consolidated Balance Sheets -March 31, 1998 and December 31, 1997 2 Condensed Consolidated Statements of Operations - Three Months Ended March 31, 1998 and 1997 4 Condensed Consolidated Statement of Stockholders' Equity - March 31, 1998 and December 31, 1997 5 Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 1998 and 1997 6 Notes to Condensed Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 13 Signatures 14
1 PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS FIRSTAMERICA AUTOMOTIVE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited)
March 31, December 31, 1998 1997 ------------ ------------ Assets ------ Cash and cash equivalents $ 2,001 $ 2,924 Contracts in transit 12,123 9,454 Accounts receivable, net of allowance for doubtful accounts of $320 in 1998 and $320 in 1997 12,617 10,328 Inventories: New vehicles 52,396 58,344 Used vehicles 16,206 14,027 Parts and accessories 4,963 5,223 ------------ ------------ Total inventories 73,565 77,594 Prepaid costs-extended warranty service contracts 803 848 Deferred income taxes 613 618 Deposits, prepaid expenses and other 2,733 2,779 ------------ ------------ Total current assets 104,455 104,545 Property and equipment, net of accumulated depreciation of $2,305 in 1998 and $2,133 in 1997 7,366 7,081 Other assets: Prepaid costs-extended warranty service contracts 1,292 1,287 Loan origination and other costs, net of amortization of $307 in 1998 and $195 in 1997 3,295 3,407 Other noncurrent assets 1,456 1,342 Goodwill, net of accumulated amortization of $174 in 1998 and $125 in 1997 6,291 6,340 ------------ ------------ Total assets $124,155 $124,002 ============ ============
See accompanying notes to condensed consolidated financial statements. 2 FIRSTAMERICA AUTOMOTIVE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS, CONTINUED (In thousands, except share data) (Unaudited)
March 31, December 31, 1998 1997 ------------ ------------ Liabilities and Stockholders' Equity ------------------------------------ Current liabilities: Accounts payable $ 7,926 $ 6,137 Accrued liabilities 9,846 8,804 Flooring notes payable 62,142 66,539 Secured lines of credit 4,600 4,000 Other notes payable 1,613 1,218 Deferred revenue-extended warranty service contracts 1,920 2,034 ------------ ------------ Total current liabilities 88,047 88,732 Long-term liabilities: Senior notes, net of discount of $2,013 in 1998 and $2,062 in 1997 21,987 21,938 Deferred income taxes 264 269 Deferred revenue-extended warranty service contracts 3,191 3,061 ------------ ------------ Total liabilities 113,489 114,000 ------------ ------------ Commitments and contingencies 8% cumulative redeemable preferred stock, $0.00001 par value; 3,500 shares issued and outstanding in 1998 and 1997 (net of discount of $509 and $526, liquidation preference of $3,500) 2,991 2,974 Redeemable preferred stock, $0.00001 par value; 500 shares issued and outstanding in 1998 and 1997 (net of discount of $73 and $75, liquidation preference of $560 and $540) 487 465 Stockholders' equity: Common stock, $0.00001 par value: Class A, 30,000,000 shares authorized, 11,179,029 shares issued and outstanding in 1998 and 11,201,152 in 1997 -- -- Class B, 5,000,000 shares authorized, 3,032,000 shares issued and outstanding in 1998 and 1997 -- -- Class C, 30,000,000 shares authorized, 0 issued and outstanding -- -- Additional paid-in capital 6,544 6,544 Retained earnings 644 19 ------------ ------------ Total stockholders' equity 7,188 6,563 ------------ ------------ $124,155 $124,002 ============ ============
See accompanying notes to condensed consolidated financial statements. 3 FIRSTAMERICA AUTOMOTIVE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share amounts) (Unaudited)
Three months ended March 31, ---------------------------- 1998 1997 ------------ ------------- Sales: Vehicle $ 136,740 $ 78,946 Service, parts and other 23,877 14,078 ------------ ------------- Total sales 160,617 93,024 Cost of sales: Vehicle 125,947 74,076 Service, parts and other 10,252 6,515 ------------ ------------- Total cost of sales 136,199 80,591 ------------ ------------- Gross profit 24,418 12,433 Operating expenses: Selling, general and administrative 21,057 10,656 Combination and related expenses - 684 ------------ ------------- Operating income 3,361 1,093 Other income (expense): Interest expense, floor plan (1,180) (822) Interest expense, other (891) - ------------ ------------- Income before income taxes 1,290 271 Income tax expense 555 237 ------------ ------------- Net income $ 735 $ 34 ============ ============= Basic earnings per share of common stock $ 0.04 $ 0.01 Weighted average common shares outstanding 14,224,845 7,841,092 Diluted earnings per share of common stock $ 0.04 $ 0.01 Weighted average common and common equivalent shares outstanding 14,634,763 7,841,092 ------------ -------------
See accompanying notes to condensed consolidated financial statements. 4 FIRSTAMERICA AUTOMOTIVE, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands) (Unaudited)
Common Stock ----------------------------------- Class A Class B ----------------------------------- Paid-in Retained Total Shares Amount Shares Amount capital earnings equity ------ ------ ------ ------ ------- -------- ------ Balance, December 31, 1997 11,201 $ -- 3,032 $ -- $6,544 $ 19 $6,563 Preferred dividend, liquidation preference, and discount amortization -- -- -- -- -- (110) (110) Retirement of shares 22 -- -- -- -- -- -- Net income -- -- -- -- -- 735 735 ------ ------ ------ ------ ------- -------- ------ Balance, March 31, 1998 11,179 $ -- 3,032 $ -- $6,544 $ 644 $7,188 ====== ====== ====== ====== ======= ======== ======
See accompanying notes to condensed consolidated financial statements. 5 FIRSTAMERICA AUTOMOTIVE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Three months ended March 31, ---------------------------- 1998 1997 ------------ ------------- Cash flows from operating activities: Net income $ 735 $ 34 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 381 79 Non-cash stock compensation - 184 Deferred income taxes - (214) Deferred warranty revenue 56 (38) Changes in operating assets and liabilities: Receivables and contracts in transit (4,958) (2,578) Inventories 4,029 (321) Deposits, prepaids and other assets (68) (86) Flooring notes payable (4,397) (405) Accounts payable and accrued liabilities 2,831 4,733 ------------ ------------- Net cash provided by (used in) operating activities (1,391) 1,388 Cash flows from investing activities: Capital expenditures (457) (150) ------------ ------------- Net cash used in investing activities (457) (150) ------------ ------------- Cash flows from financing activities: Borrowings on secured lines of credit 600 - Borrowings on notes payable 395 302 Preferred dividend (70) - Distributions to shareholders - (468) ------------ ------------- Net cash provided by (used in) financing activities 925 (166) ------------ ------------- Net increase (decrease) in cash and equivalents (923) 1,072 Cash at beginning of period $ 2,924 $ 668 ------------ ------------- Cash at end of period $ 2,001 $ 1,740 ============ ============= Cash paid during the period for: Interest $ 1,941 $ 818 Income taxes $ - $ 261 Non-cash activity was as follows: Common stock issued as compensation $ - $ 184
See accompanying notes to condensed consolidated financial statements. 6 FIRSTAMERICA AUTOMOTIVE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited) (1) BASIS OF PRESENTATION The financial information included herein for the three month periods ended March 31, 1998 and 1997 is unaudited; however, such information reflects all adjustments consisting only of normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. The financial information as of December 31, 1997 is derived from FirstAmerica Automotive, Inc.'s Annual Report on Form 10-K filed with the Securities and Exchange Commission on May 14, 1998. The interim consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and the notes thereto included in the Company's Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year. (a) Organization and Combination Effective July 11, 1997, FirstAmerica Automotive, Inc., a company with no significant assets or operations, combined (the "Combination") with a group of automobile dealership entities under common ownership and control (the "Price Dealerships"). The stockholders of the Price Dealerships received 5,526,000 shares of FirstAmerica Automotive, Inc.'s common stock, which represented a majority of the total outstanding shares of capital stock of FirstAmerica Automotive, Inc. immediately following the Combination. The Combination was accounted for as the acquisition of FirstAmerica Automotive, Inc. by the Price Dealerships, and accordingly, the financial statements for periods before the combination represent financial statements for periods before the FirstAmerica Automotive, Inc. and the Price Dealerships are collectively referred to as "FirstAmerica" or the "Company". (b) Business The Company's plan is to acquire and operate numerous automotive dealerships in the highly fragmented automotive retailing industry. The Company operates 14 dealerships in California, of which, 11 are in Northern California. The Company sells new vehicles, used vehicles, light trucks, replacement parts, provides vehicle maintenance and repair services, and arranges related financing and warranty products for its automotive customers. The Company offers, collectively, eleven makes of domestic and foreign vehicles including Buick, Dodge, GMC, Honda, Isuzu, Lexus, Mitsubishi, Nissan, Pontiac, Toyota and Volkswagen. (2) FLOORING NOTES PAYABLE AND SECURED LINES OF CREDIT At the time of the Combination, the Company entered into a three year $175 million Loan and Security Agreement (the "Loan Agreement") with a financial company, replacing an existing $37 million line of credit to the Company. The Loan Agreement permits the Company to borrow up to $115 million in flooring notes payable, restricted by new and certain used vehicle inventory and provides an additional line of credit up to $35 million ("Revolver Advances"), restricted by used vehicle and parts inventory. The Loan Agreement also provides a discretionary line up to $25 million ("Discretionary Advances") which the financial company makes at its absolute discretion upon request of the Company. 7 FIRST AMERICA AUTOMOTIVE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED As of March 31, 1998, the Company had flooring notes payable, Revolver Advances, and Discretionary Advances outstanding of $62.1 million, $4.6 million, and $0, respectively. Flooring notes payable are due when vehicles are sold, leased, or delivered. Revolver Advances are due whenever the borrowing base as defined in the Loan Agreement is exceeded and are included in secured lines of credit in the accompanying financial statements. The Loan Agreement grants a collateral interest in substantially all of the Company's assets. The Loan Agreement contains various financial covenants such as minimum interest coverage, working capital, and maximum debt to equity ratios. (3) COMPUTATION OF PER SHARE AMOUNTS In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 128, "Earnings Per Share" (SFAS No. 128) which is effective for fiscal years ending after December 15, 1997. The Company has adopted SFAS No. 128 in the accompanying financial statements. For purposes of calculating earnings per share for the three month period ending March 31, 1998, net income of $735,000 is reduced by cumulative redeemable preference dividends of $70,000, redeemable preferred stock liquidation preference accretion of $20,000, and preferred stock discount amortization of $20,000. This net income available to common stockholders of $625,000 is then divided by the applicable weighted average shares outstanding for basic and diluted. (4) NEW ACCOUNTING STANDARDS In June 1997, the Financial Accounting Standards Board issued Financial Accounting Standard No. 130, "Reporting Comprehensive Income." This statement establishes standards of reporting and presentation of comprehensive income and its components in a full set of general-purpose financial statements. This statement is effective for the fiscal years beginning after December 15, 1997. The Company has determined that net income and comprehensive income are the same for the periods presented and therefore no separate disclosure for comprehensive income is required. (5) SUBSEQUENT EVENTS In April 1998, the Company acquired substantially all of the operating assets of Beverly Hills BMW, Ltd., a BMW dealership located in Beverly Hills, California. The purchase price of $11.9 million included goodwill and operating assets, and was financed by the Company's available lines of credit. Beverly Hills BMW, Ltd. had unaudited revenues for the year ended December 31, 1997 of approximately $54 million. The Company has also entered into definitive agreements, subject to manufacturer approval, to acquire two automobile dealerships for an aggregated purchase price of $7.0 million plus new vehicle inventory. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD LOOKING STATEMENTS AND RISK FACTORS This Form 10-Q contains forward-looking statements. These statements are necessarily subject to risk and uncertainty. Actual results could differ materially from those projected in these forward looking statements as a result of certain risks including those set forth in the Company's 1997 Annual Report on Form 10-K. These risk factors include, but are not limited to, the cyclical nature of automobile sales, the intense competition in the automobile retail industry, and the Company's ability to obtain additional sources of capital, negotiate profitable acquisitions, and secure manufacturer approvals for such acquisitions. OVERVIEW FirstAmerica Automotive, Inc. (the "Company") is one of the largest automotive retailers in Northern California, operating, as of March 31, 1998, from twelve locations in Northern California, certain of which represent multiple new vehicle dealerships, and three locations in San Diego County. The Company plans to open a multi-brand, vehicle and repair service center in downtown San Francisco, in the second half of 1998. The Company sells new and used cars and light trucks, sells replacement parts, provides vehicle maintenance, warranty and repair services and arranges related financing and insurance products ("F&I") for its customers. At its fifteen locations, the Company offers eleven domestic and foreign product lines, which consist of Buick, Dodge, GMC, Honda, Isuzu, Lexus, Mitsubishi, Nissan, Pontiac, Toyota and Volkswagen. On a pro forma combined basis including the Company's 1997 dealership acquisitions, the Company had revenues of $604 million and retail unit sales of 18,027 new and 8,664 used vehicles in 1997. Based on statistical ranking information published by Automotive News, an industry trade publication, the Company believes that in 1997, it would have been the sixteenth largest dealer group nationwide, based on pro forma retail new vehicle unit sales, and the twenty-sixth largest dealer group nationwide based on pro forma gross revenues. In addition to its traditional dealership operations, the Company has (i) commenced development of a multi-brand, full service vehicle maintenance and repair center in the downtown San Francisco area, which is scheduled to open during the second half of 1998, (ii) developed a "Used Car Auto Factory" concept to centralize procurement, reconditioning and wholesale disposal of used cars, and (iii) obtained authorization from Nissan Motor Company ("Nissan") to form "Smart Nissan," a program to combine multiple Nissan dealerships with contiguous markets in the San Francisco Bay Area (including the Nissan dealerships owned by the Company) into a single regional dealership group that will have centralized pricing, inventory management, marketing and other economies of scale. All financial information contained herein represents the historical financial information of the Price Dealerships prior to July 1997 and the financial information of each other dealership from the respective dates of acquisition. The following table sets forth selected condensed financial data for the Company expressed as a percentage of total sales for the periods indicated below. 9 FIRSTAMERICA AUTOMOTIVE, INC. Three months ended March 31, 1998 1997 - ------------------------------------------------------------------------------- Sales: New vehicles 59.1% 61.2% Used vehicles 26.0% 23.6% Service, parts and other 14.9% 15.2% Total sales 100.0% 100.0% Gross profit 15.2% 13.4% Income before income taxes 0.8% 0.3% RESULTS OF OPERATIONS 1998 COMPARED TO 1997 Sales. Sales increased by $67.6 million, or 72.7%, to $160.6 million for the three month period ended March 31, 1998 from $93.0 million for the comparable period of 1997, due to sales contributed by dealerships the Company acquired during the last three quarters of 1997. The Company expects sales growth to continue as the Company executes its acquisition strategies. New Vehicles. The Company sells eleven domestic and imported brands ranging from economy to luxury vehicles, as well as sport utility vehicles, minivans and light trucks. The Company sold 4,336 and 2,886 new vehicles in the three month periods ending March 31, 1998 and 1997, respectively, generating revenues of $94.9 million and $57.0 million, which constituted 59.1% and 61.2% of the Company's total sales, respectively. New vehicle sales increased by $37.9 million, or 66.5%, due to a 50.2% increase in unit sales from dealerships acquired by the Company as well as increases in average unit prices which were consistent with manufacturers' price increases. Used Vehicles. The Company sells a variety of makes and models of used vehicles and light trucks of varying model years and prices. The Company sold 3,950 and 1,783 retail and wholesale used vehicles in the three month periods ending March 31, 1998 and 1997, respectively, generating revenues of $41.8 million and $22.0 million, which constituted 26.0% and 23.6% of the Company's total sales, respectively. The $19.8 million or 90.0% increase in used vehicle revenues is primarily due to a corresponding increase in used vehicle unit sales from dealerships acquired during 1997. Service, parts and other revenues. Service, parts and other revenues includes revenue from the sale of parts, accessories, maintenance and repair services, and from fees earned on the sale of vehicle financing notes and warranty service contracts. Finance fees are received for notes sold to finance companies for customer vehicle financing. Warranty service contract fees are earned on extended warranty service contracts that are sold on behalf of vehicle manufacturers or insurance companies. Service, parts and other revenue increased 70.0% or $9.9 million, from $14.0 million for the first three month period of 1997 to $23.9 million, for the comparable period in 1998, primarily due to dealerships acquired during 1997. GROSS PROFIT. Gross profit increased $12.0 million, or 96.4%, for the first three month period of 1997, from $12.4 million to $24.4 million for the three month periods ended March 31, 1998 and 1997, respectively. Gross profit margins on new vehicles increased from 6.3% to 7.6%, due to the Company's continued emphasis on profitability per unit sale. Gross profit margins on used vehicles increased from 5.8% to 8.7% for the first three month periods of 1998 and 1997, respectively, primarily due to the Company's emphasis on improving the used vehicle reconditioning process. Service, parts and other gross profit margins increased from 53.7% to 57.1% for the first three month periods of 1997 and 1998, respectively, primarily due to higher margins at dealerships acquired. 10 SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. During the three month period ended March 31, 1998, selling, general and administrative expense increased 97.6%, or $10.4 million, from $10.7 million in the same period in 1997. Expressed as a percentage of sales, selling, general and administrative expense increased to 13.1% from 11.5% in the three month period ended March 31, 1998 compared to the same period in the prior year. The increase was due primarily to an increase in compensation for additional personnel and management required as a result of dealership acquisitions and the activities associated with building a management structure for executing the Company's acquisition strategies. COMBINATION AND RELATED EXPENSES. During the three month period ended March 31, 1997, the Company incurred $0.7 million in certain legal, accounting, consulting and compensation expenses associated with the Combination and the development of the Company's organization and business plan. INTEREST EXPENSE. Floor plan interest expense increased $0.4 million or 43.6% to $1.2 million for the three month period ended March 31, 1998 versus the same three month period in 1997. The increase was due to increased floor plan debt in 1998 from the inventory associated with the acquired dealerships, partially offset by lower interest rates. Interest expense other than floor plan increased due to debt incurred for the combination and acquisition of additional dealerships during 1997. INCOME TAX EXPENSE. Income tax expense increased to $0.6 million from $0.2 million for the three months ended March 31, 1998 and 1997, respectively. The Company's effective tax rate for 1998 was 43.0% compared to 87.5% for 1997; the higher effective rate in the prior year is primarily due to certain non- deductible stock compensation expenses incurred in 1997 as well as the Company's change in tax status from an S corporation to a C corporation effective January 1, 1997. NET INCOME. Net income increased from $34,000 to $735,000 for the three month periods ending March 31, 1998 and 1997, respectively, primarily as a result of the individual items discussed above and dealerships acquired during the last three quarters of 1997. 11 LIQUIDITY AND CAPITAL RESOURCES The cash and liquidity requirements of the Company are primarily for acquisition of new dealerships, working capital, and expanding existing facilities. Historically, the Company has relied primarily upon cash flows from operations, floor plan financing, and other borrowings under its credit facility to finance its operations and the proceeds from its private debt placement with finance companies to finance its expansion. At March 31, 1998, the Company had working capital of $16.4 million including $2.0 million in cash. For the three month period ending March 31, 1998, operating activities resulted in net cash used in operations of $1.4 million, primarily due to an increase in accounts receivable and contracts in transit and a reduction in flooring notes payable, partially offset by a decrease in inventories and an increase in accounts payable and accrued liabilities. For the three month period ending March 31, 1997, cash provided by operations totaled $1.4 million, primarily due to an increase in accounts payable and accrued liabilities of $4.7 million, offset by increases in accounts receivable and contracts in transit of $2.6 million. Net cash used in investing activities totaled $0.5 million and $0.2 million for the three month periods ending March 31, 1998 and 1997, respectively which was used for capital expenditures and improvement of existing and acquired facilities. Cash provided by financing activities in the first three month period of 1998 totaled $0.9 million, which consisted of borrowings on secured lines of credit and notes payable. SEASONALITY AND QUARTERLY FLUCTUATIONS Historically, the Company's sales have been lower in the first and fourth quarters of each calendar year largely due to consumer purchasing patterns during the holiday season, inclement weather during the winter months, and the reduced number of business days during the holiday season. As a result, financial performance for the Company is generally lower during the first and fourth quarters than during the other quarters of each fiscal year. Management believes that interest rates, levels of consumer debt, consumer buying patterns and confidence, as well as general economic conditions also contribute to fluctuations in sales and operating results. The timing of acquisitions may also cause substantial fluctuations of operating results from quarter to quarter. 12 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits The exhibits filed as a part of this report are listed below. Exhibit No. ----------- 11.1 Calculations of Net Income Per Share 27 Financial Data Schedule (b) Reports on Form 8-K There were no reports on Form 8-K filed during the quarter ended March 31, 1998. 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 14, 1998 FIRSTAMERICA AUTOMOTIVE, INC. By /s/ THOMAS A. PRICE ----------------------------- Thomas A. Price President, Chief Executive Officer and Director (Principal Executive Officer) By /s/ DEBRA SMITHART ----------------------------- Debra Smithart Chief Financial Officer (Principal Financial and Accounting Officer) 14 EX-11.1 2 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11.1 FirstAmerica Automotive, Inc Statement of Computation of Per Share Earnings (in thousands, except share data)
Quarter Ended Quarter Ended March 31, 1998 March 31, 1997 ------------- ------------- Net income per income statement $735 $34 Less: Redeemable preference dividends (70) - Redeemable preferred stock liquidation preference accretion (20) - Preferred stock discount amortization (20) - ------------- ------------- Net income applicable to common stockholders $625 $34 ============= ============= BASIC Average common shares outstanding 14,224,845 7,841,092 ============= ============= Net income per common share, basic $0.04 $0.01 ============= ============= DILUTED Average common shares outstanding 14,224,845 7,841,092 Net effect of dilutive stock options 227,149 - Net effect of warrants 182,769 - ------------- ------------- Total 14,634,763 7,841,092 ============= ============= Net income per common share, diluted $0.04 $0.01 ============= =============
EX-27 3 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS YEAR DEC-31-1998 DEC-31-1997 JAN-01-1998 JAN-01-1997 MAR-31-1998 DEC-31-1997 2,001 2,924 0 0 25,060 20,102 (320) (320) 73,565 77,594 104,455 104,545 9,671 9,214 (2,305) (2,133) 124,155 124,002 88,047 88,732 0 0 3,478 3,439 0 0 0 0 7,188 6,563 124,155 124,002 160,617 474,048 160,617 474,048 136,199 407,074 136,199 407,074 0 0 0 0 2,071 5,340 1,290 510 (555) (446) 735 64 0 0 0 0 0 0 735 64 0.04 (0.01) 0.04 (0.01)
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