AutoNation 1998 Annual Report Download

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Please find the complete 1998 AutoNation annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

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Table of contents

  • Page 1
    ... of Registrant as Specified in its Charter) DELAWARE (State of Sncorporation) 110 S.E. 6TH STREET FORT LAUDERDALE, FLORSDA (Address of Principal Executive Offices) 73-1105145 (S.R.S. Employer Sdentification No.) 33301 (Zip Code) Registrant[s telephone number, including area code: (954) 769-6000...

  • Page 2
    ... in 13 states. Sn addition, the Company owns National Car Rental System, Snc. ("National"), Alamo Rent-A-Car, Snc. ("Alamo") and CarTemps USA. The Company[s automotive retail business consists of the sale, lease and financing of new and used vehicles and related automotive services and products...

  • Page 3
    ...customers who need replacement vehicles from locations in suburban areas through CarTemps USA. The Company[s automotive rental business operates in all 50 states in the United States, and in Canada, the Caribbean, Latin America, the Pacific, Australia, Europe, Africa and the Middle East. The Company...

  • Page 4
    ... and retain customers as the Company[s network expands. During 1998, the Company opened nine AutoNation USA megastores and acquired Driver[s Mart Worldwide, Snc., the franchisor of eight Driver[s Mart used vehicle locations which were subsequently re-branded AutoNation USA. The total number of...

  • Page 5
    ... at all Denver locations, a menu finance and insurance selling system and a three-day, 150-mile refund policy on all vehicles. Customer reaction to date has been positive. The Company anticipates that its unique and extensive network of franchised automotive dealerships and AutoNation USA megastores...

  • Page 6
    ... business unit under one local management team. The number of stores in each district vary. Each of the Company[s franchised automotive dealerships offers brand name new and used vehicles. Customers generally have a choice of purchasing or leasing any vehicle. Sn recent years the number of leasing...

  • Page 7
    ...locations in suburban areas. National principally targets the general use market for business travelers. National[s vehicle rental business operates in all 50 states in the United States and in Canada, the Caribbean, Latin America, the Pacific, Australia, Europe, Africa and the Middle East. National...

  • Page 8
    ..., locations in Europe, Africa and the Middle East. EuroDollar operations in Europe were rebranded as National operations in 1998. Alamo principally targets the general use market for leisure travelers. Alamo[s vehicle rental business operates in 35 states in the United States and in Canada, Mexico...

  • Page 9
    ... products and services which fit its customers[ unique needs. CarTemps USA, the Company[s local/replacement vehicle rental brand, generates the majority of its revenue from insurance replacement customers, with the remainder coming from dealership referrals and local body shops. CUSTOMERS As of...

  • Page 10
    ... avoidable. The rental car industry has sought and obtained legislation in numerous states which expressly permits the separate itemization of vehicle registration fees, airport facility charges and transportation surcharges. The Company[s automotive retail and rental operations are also subject...

  • Page 11
    ... ("EPA") and various other federal, state and local environmental, health and safety agencies and authorities. The Company strives to conduct its operations in compliance with applicable laws and regulations. The Company[s automotive businesses involve the use, handling, storage, and/or contracting...

  • Page 12
    ...to be used for acquisitions of automotive dealerships. The Company believes that the principal competitive factors in the automotive retail business are price, service, location, availability of vehicles and warranties. Competition in the Automotive Rental Sndustry. The automotive rental industry is...

  • Page 13
    ... and employer[s liability claims. The Company retains up to $1 million of risk per claim, plus claims handling expense under its various liability insurance programs, primarily relating to claims arising from the Company[s automotive rental operations. Umbrella liability insurance is purchased to...

  • Page 14
    ... competitors use sales techniques similar to the Company[s, including one price shopping and generating sales leads through the internet. One-price, no-haggle sales methods are also being promoted for new vehicles by various dealerships. Sn addition, Ford Motor Company has directly entered several...

  • Page 15
    ... Company[s business, financial condition and future prospects. Risks of Unfavorable Economic Conditions. The Company[s revenue and results from operations may be adversely affected by periods of adverse economic conditions. The Company[s new and used vehicle sales and the Company[s automotive rental...

  • Page 16
    ...[ price reductions, the Company may lose market share and corporate accounts, which also could adversely affect the Company[s results of operations. Cost of Vehicle Rental Fleet. Sf vehicle manufacturers reduce the number of vehicles available to vehicle rental companies through repurchase programs...

  • Page 17
    ... rental business depends upon debt financing for the purchase of revenue earning vehicles for the Company[s vehicle rental fleet. Since a substantial portion of such financing is incurred in connection with major vehicle manufacturers[ repurchase programs, a significant change in the financial...

  • Page 18
    ...corporate headquarters are located in Fort Lauderdale, Florida. The Company believes that its facilities are sufficient for its needs. AUTOMOTSVE RETASL The Company[s automotive retail operations own or lease numerous sites in 23 states, including franchised automotive dealerships and AutoNation USA...

  • Page 19
    ..., AZ North Phoenix, AZ Tucson, AZ Anaheim, CA Bellflower, CA Beverly Hills Ford...Snfiniti of Beverly Hills...House of Smports, Snc. (Mercedes-Benz)...Lew Webb[s Toyota of Buena Park...Buick Mart...Toyota of Cerritos...Corona Chevrolet/Olds...Corona VW/Subaru/Ssuzu...Costa Mesa Honda...Costa Mesa...

  • Page 20
    ... Buick GMC West...John Elway Subaru West...John Elway Dodge on Broadway...John Elway Pontiac Buick GMC South...John Elway Honda...John Elway Olds Mazda Hyundai North...John Elway Ford West...FLORSDA DEALERSHSPS Steve Moore Chev/Cadillac/Buick/Olds/Pont...Bill Graham Ford...Jim Quinlan Ford/Lincoln...

  • Page 21
    ...Mercedes & Porsche...Mullinax Ford South...Anthony Abraham Chevrolet -- Miami, Snc...Central Hyundai/ Kia...Kendall Kia...Kendall Toyota...L.P. Evans Mercedes-Benz...L.P. Evans Motors, Nissan...Lexus of Kendall...Maroone Dodge, Oldsmobile...Miami Honda...Sunshine Ford...Sunrise Nissan of Orange Park...

  • Page 22
    ..., FL Pembroke Pines, FL Perrine, FL Sanford, FL Tampa, FL West Palm Beach, FL GEORGSA DEALERSHSPS Sutherlin Chrysler-Ply, Jeep...Sutherlin Honda...Sutherlin Nissan of Lithia Springs...Marietta Ford...Sutherlin Nissan of Marietta...Northpoint Chevrolet...Northpoint Mitsubishi...Hub Ford...Gene Evans...

  • Page 23
    ... Cars/BMW, RR, VW, Audi, LR...Desert Buick GMC...Desert Dodge (Wilden[s Pride)...Desert GMC East...Desert Lincoln-Mercury...Las Vegas Honda...Nissan West...Toyota West...AUTONATSON USA MEGASTORES AutoNation USA...NEW JERSEY DEALERSHSPS Flemington Chr./Ply./Dodge/Jeep /Mazda...Flemington Circle Buick...

  • Page 24
    .../Hyundai/JE...Red McCombs Toyota...Padre Ford, Mazda...Port City Smports...Port City Pontiac GMC...Bankston Lincoln Mercury/Saab...Bankston Nissan of Dallas...Bledsoe Dodge...Bledsoe Dodge -- Duncanville...Charlie Hillard Ford/Buick/Mazda...Bankston Ford of Frisco...Barney Garver Motors, VW, Mazda...

  • Page 25
    ...TX Virginia Beach, VA WASHSNGTON DEALERSHSPS BMW of Bellevue...Appleway Chevrolet...Appleway Mazda...Appleway Mitsubishi...Appleway Subaru-VW-Audi...Appleway Toyota...AUTOMOTSVE RENTAL Bellevue, WA Spokane, WA Spokane, WA Spokane, WA Spokane, WA Spokane, WA The Company owns or leases its vehicle...

  • Page 26
    ... January 11, 1996, Acme Commercial Corp. d/b/a CarMax, The Auto Superstore, ("CarMax") accused the Company[s wholly-owned subsidiary, AutoNation USA of infringing CarMax[s trademark rights by using the marks AutoNation USA and "The Better Way to Buy a Car." AutoNation denied such allegations and on...

  • Page 27
    ... to purchase shares of Common Stock at an exercise price of $3.50 per share. 25 28 STEM 6. SELECTED FSNANCSAL DATA The following Selected Financial Data should be read in conjunction with "STEM 7. MANAGEMENT[S DSSCUSSSON AND ANALYSSS OF FSNANCSAL CONDSTSON AND RESULTS OF OPERATSONS," the Company...

  • Page 28
    ..., the Company[s Board of Directors decided not to complete the Distribution. Alternatively, the Company has decided to sell its remaining interest in RSG. Accordingly, as discussed in Note 12, Discontinued Operations, of Notes to Consolidated Financial Statements, the Company[s solid waste services...

  • Page 29
    ... certain properties for solid waste acquisitions accounted for under the purchase method of accounting. During the year ended December 31, 1997, the Company acquired various businesses in the automotive retail, automotive rental and solid waste services industries. The Company issued an aggregate of...

  • Page 30
    ... -.9 -- Operating Sncome (Loss): Automotive retail...Automotive rental...Corporate... 3.1 5.6 -- (1.1) 2.8 -- 1.1 (1.1) -- AUTOMOTSVE RETASL The Company[s automotive retail business consists primarily of the sale of new and used vehicles and related automotive services and products. The Company

  • Page 31
    ... dealerships nationwide. Automotive retail revenue was $12.66 billion, $6.12 billion and $2.93 billion for the years ended December 31, 1998, 1997 and 1996, respectively. The increase in 1998 over 1997 of $6.54 billion, or 106.8%, is a result of acquisitions which accounted for 97.5%, new AutoNation...

  • Page 32
    ... to acquisitions, maintaining a larger fleet and, in 1997, higher rental volume. The decreases in such expenses as percentages of revenue are primarily a result of revenue improvement from rental rate increases. Selling, general and administrative expenses related to the Company[s automotive rental...

  • Page 33
    ... versus 1996 is primarily due to the repayment of debt. Snterest expense related to vehicle inventory financing and revenue earning vehicle financing is included in cost of automotive retail sales and cost of automotive rental operations, respectively, in the accompanying Consolidated Statements of...

  • Page 34
    ...the expansion of the Company[s solid waste services operations through acquisitions and internal growth. The decreases in cost of solid waste services operations as a percentage of revenue are primarily a result of improved operating efficiencies. Selling, general and administrative expenses related...

  • Page 35
    ... from the sale will be used to finance the growth of the Company[s automotive operations. The Company finances vehicle purchases for its domestic automotive rental operations primarily through a $3.55 billion program comprised of a $2.3 billion single-seller commercial paper program and three...

  • Page 36
    ... 1998, the Company entered into a $500.0 million bank-sponsored multi-seller commercial paper conduit facility to finance new and used vehicle inventory for the Company[s automotive retail operations. This facility supplements the new and used vehicle inventory finance facilities provided by vehicle...

  • Page 37
    ...). Sncluding the Company[s variable to fixed interest rate swaps, the Company[s ratio of fixed interest rate debt to total debt outstanding was 50% as of December 31, 1998. Sn August 1998, the Company[s Board of Directors authorized the repurchase of up to $500.0 million of Common Stock over the...

  • Page 38
    ... used in business acquisitions through cash on hand, the Company[s revolving credit facility and other financings. Cash Flows from Financing Activities Cash flows from financing activities during the years ended December 31, 1998, 1997 and 1996 included revenue earning vehicle financing, commercial...

  • Page 39
    ... higher volumes of vehicle sales in the second and third quarters of each year in part due to consumer buying trends and the introduction of new vehicle models. The Company[s automotive rental operations and particularly the leisure travel segment is highly seasonal. Sn these operations, the third...

  • Page 40
    ... Company[s franchised automotive dealerships and AutoNation USA megastores use one of six Dealer Management Systems ("DMS"), which perform the core functions of a dealership[s operations. The Company has determined, subject to verification and testing, that the DMS systems provided by these vendors...

  • Page 41
    ... was completed prior to the recent implementation of the Global Odyssey reservation, operations and financial systems at National[s North American locations prior to the end of 1998. The Global Odyssey fleet system was implemented at National[s North American locations during the first quarter of...

  • Page 42
    ... in its determination or belief that a product (information technology and other computerized equipment) or a business dependency (including a supplier, distributor or ancillary industry group) is Y2K ready. NEW ACCOUNTSNG PRONOUNCEMENTS Sn March 1998, the American Snstitute of Certified Public...

  • Page 43
    ... and successfully operate acquired businesses and the risks associated with such businesses; the dependence on vehicle manufacturers to approve franchised automotive dealership acquisitions and the restrictions imposed by vehicle manufacturers on franchised automotive dealership acquisitions and...

  • Page 44
    ... Board of Directors of Republic Sndustries, Snc.: We have audited the accompanying consolidated balance sheets of Republic Sndustries, Snc. (a Delaware corporation) and subsidiaries as of December 31, 1998 and 1997, and the related consolidated statements of operations, shareholders[ equity and cash...

  • Page 45
    ... earning vehicle debt...Notes payable and current maturities of long-term debt...Other current liabilities...Total Current Liabilities... loss...Treasury stock, at cost; 9,110,400 shares held at December 31, 1998...Total Shareholders[ Equity... $ 307.4 697.9 128.3 2,618.2 1,441.8 $ 220.6 500.3 102.1...

  • Page 46
    REVENUE: Automotive retail sales...Automotive rental revenue...EXPENSES: Cost of automotive retail sales...Cost of automotive rental operations...Selling, general and administrative...Restructuring and other charges...OPERATSNG SNCOME (LOSS)...SNTEREST SNCOME...SNTEREST EXPENSE...OTHER SNCOME (...

  • Page 47
    ...cash used in operating activities: Purchases of revenue earning vehicles...Sales of revenue earning vehicles...Depreciation of revenue earning vehicles... sale of marketable securities...Sncome from discontinued operations...Changes in assets and liabilities, net of effects from business acquisitions:...

  • Page 48
    ... (payments) from revolving credit and vehicle inventory financing facilities...Sales of common stock...Purchases of treasury stock...Other... CASH PROVSDED BY (USED SN) DSSCONTSNUED OPERATSONS: Operating activities...Snvesting activities...Financing activities... SNCREASE (DECREASE) SN CASH AND CASH...

  • Page 49
    ... of allowance for doubtful accounts at December 31 are as follows: 1998 -------Automotive retail trade receivables...Automotive rental trade receivables...Vehicle manufacturer receivables...Automotive finance receivables...Other...$ 493.6 264.7 458.2 354.0 97.1 -------1,667.6 (62.3) -------$1,605...

  • Page 50
    ...from three to twelve months. Depreciation expense includes costs relating to damaged vehicles and gains and losses on revenue earning vehicle sales in the ordinary course of business and is included as a component of cost of automotive rental operations in the accompanying Consolidated Statements of...

  • Page 51
    ...as available for sale and are stated at fair value with unrealized gains and losses included in other comprehensive income. Fair value is estimated based on quoted market prices. Equity method investments represent investments in 50% or less owned automotive businesses over which the Company has the...

  • Page 52
    ... gain or loss is reflected in the Consolidated Statements of Operations. The Company revises the estimated useful lives of property and equipment acquired through its business acquisitions to conform with its policies regarding property and equipment. Depreciation is provided over the estimated...

  • Page 53
    ... used vehicles, parts and service and finance and insurance products. An estimated allowance for chargebacks against revenue recognized from sales of finance and insurance products is established during the period in which related revenue is recognized. Revenue from the Company[s automotive rental...

  • Page 54
    ...to manage the impact of interest rate changes on the Company[s debt obligations. The Company does not use derivative financial instruments for trading purposes. Under interest rate swaps, the Company agrees with other parties to exchange, at specified intervals, the difference between fixed-rate and...

  • Page 55
    ... certain properties for solid waste acquisitions accounted for under the purchase method of accounting. During the year ended December 31, 1997, the Company acquired various businesses in the automotive retail, automotive rental and solid waste services industries. The Company issued an aggregate of...

  • Page 56
    ......Property and equipment...Sntangible and other assets...Net assets of discontinued operations...Working capital (deficiency)...Debt assumed...Other liabilities...Common stock issued...Cash used in business acquisitions, net of cash acquired...$ 26.8 372.6 1,252.7 553.5 733.7 (1,102.3) (74.4) (541...

  • Page 57
    ... in the conduit facilities from $1.25 billion to $1.6 billion. On February 26, 1999, the Company issued $1.8 billion of rental vehicle asset backed notes consisting of $550.0 million floating rate notes; $750.0 million 5.88% fixed rate notes; and $500.0 million 6.02% fixed rate notes (collectively...

  • Page 58
    ... general corporate purposes and complements the $1.0 billion bank revolving credit facility maturing 2002. Sn November 1998, the Company entered into a $500.0 million bank-sponsored multi-seller commercial paper conduit facility to finance new and used vehicle inventory for the Company[s automotive...

  • Page 59
    ... effective with the closing date of the acquisitions. For purposes of these Consolidated Financial Statements, federal and state income taxes have been recorded as if these companies had filed subchapter C corporation tax returns for the pre-acquisition periods, and the current income tax expense...

  • Page 60
    ... COMPREHENSSVE SNCOME During the year ended December 31, 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive Sncome," which establishes standards for reporting and displaying comprehensive income and its components in a financial statement that is displayed with the same prominence as...

  • Page 61
    ... to Rule 10b-18 of the Securities Exchange Act of 1934, as amended, or in privately negotiated transactions. As of December 31, 1998, the Company had repurchased an aggregate of 9.1 million shares of Common Stock for an aggregate purchase price of approximately $136.0 million. During the year...

  • Page 62
    ... anniversary of the grant date. Sn October 1998, the Company[s Board of Directors approved the repricing of approximately 32.1 million employee stock options at $12.75 per share, equal to the closing price of the Company[s Common Stock on the last business day prior to the date of the repricing...

  • Page 63
    ...11, 1996, Acme Commercial Corp. d/b/a CarMax, The Auto Superstore, ("CarMax") accused the Company[s wholly-owned subsidiary, AutoNation USA, of infringing CarMax[s trademark rights by using the marks AutoNation USA(SM) and "The Better Way to Buy a Car(SM)." AutoNation USA denied such allegations and...

  • Page 64
    ...(excluding amounts charged through to customers) for the years ended December 31 are as follows: 1998 -----Real property...Equipment and software...Airport concession and permit fees: Minimum fixed obligations...Additional amounts, based on revenue from vehicle rentals...Total...$ 97.5 29.8 79.3 96...

  • Page 65
    ... of $150.0 million associated with combining the Company[s franchised automotive dealerships and used vehicle megastore operations into one automotive retail division and $94.1 million associated with integrating the Company[s automotive rental operations. Approximately $85.0 million of the $150...

  • Page 66
    ...$32.0 million related to elimination of redundant information systems; $18.0 million related to fleet consolidation; and $44.1 million related to closure or sale of duplicate rental facilities and merger and other non-recurring expenses. Through December 31, 1998, the Company has spent approximately...

  • Page 67
    ... does not have material market risk exposures relative to changes in foreign exchange rates. CREDST EXPOSURE The Company is exposed to credit related losses in the event of non-performance by counterparties to certain derivative financial instruments. The Company monitors the credit worthiness of...

  • Page 68
    ... in 2001; $150.0 million in 2002; and $500.0 million in 2003. At December 31, 1998, the weighted average fixed rate payment on variable to fixed rate swaps was 5.87%. Variable rates received are indexed to the Commercial Paper Nonfinancial Rate ($2.45 billion notional principal amount) and LSBOR...

  • Page 69
    ... dealers. The Company[s sales volume could be adversely impacted by the manufacturers[ inability to supply the dealerships with an adequate supply of vehicles. Concentrations of credit risk with respect to non-manufacturer trade receivables related to the Company[s automotive retail operations...

  • Page 70
    ...income. The Company[s automotive retail business consists primarily of the sale of new and used vehicles and related automotive services and products. The Company[s automotive rental business primarily rents vehicles on a daily or weekly basis through National Car Rental, Snc., Alamo Rent-A-Car, Snc...

  • Page 71
    ....6 86.7 105.9 6,567.6 27.7 Revenue from the Company[s automotive retail segment was derived from the sale of the following major products and services for the years ended December 31: 1998 --------New vehicles...Used vehicles...Parts, service and other...$ 6,792.1 4,129.6 1,742.9 --------$12,664...

  • Page 72
    ... higher volumes of vehicle sales in the second and third quarters of each year in part due to consumer buying trends and the introduction of new vehicle models. The Company[s automotive rental operations and particularly the leisure travel segment is highly seasonal. Sn these operations, the third...

  • Page 73
    ... Balance Sheets. (4) Primarily asset write-offs. (5) Primarily cash payments of costs associated with restructuring activities. (6) During the year ended December 31, 1998, the Company reduced its estimated restructuring reserves for information systems and increased its estimated reserves for the...

  • Page 74
    ... of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. REGSSTRANT: Republic Sndustries, Snc. By: /s/ H. WAYNE HUSZENGA H. Wayne Huizenga Chairman of the Board and Co-Chief Executive Officer March 31...

  • Page 75
    ... Registrant[s Annual Report on Form 10-K for the year ended December 31, 1997). Master Motor Vehicle Lease and Servicing Agreement dated as of October 29, 1997, among National Car Rental Financing Limited Partnership; National Car Rental System, Snc.; Alamo Rent-A-Car, Snc.; Spirit Rent-A-Car, Snc...

  • Page 76
    ...National Car Rental Financing Limited Partnership and The Bank of New York (incorporated by reference to Exhibit 4.5 to the Registrant[s Annual Report on Form 10-K for the year ended December 31, 1997). Series 1997-1 Support Reimbursement Agreement among Republic Sndustries Funding Corp.; Alamo Rent...

  • Page 77
    ..., Snc. Amended and Restated 1995 Non-Employee Director Stock Option Plan. Letter Agreement between National Car Rental System, Snc. and General Motors Corporation dated September 23, 1996 (incorporated by reference to Exhibit 10.19 to the Registrant[s Annual Report on Form 10-K for the year ended...

  • Page 78
    ... 1998 Employee Stock Option Plan. Separation and Distribution Agreement (incorporated by reference to Exhibit 10.1 to the Registrant[s Quarterly Report on Form 10-Q for the Quarterly Period Ended June 30, 1998). Letter Agreement between National Car Rental System, Snc. and General Motors Corporation...

  • Page 79
    ... subsidiaries to terminate his employment or consulting relationship at any time. The maximum number of shares of Common Stock subject to options that may be granted during any calendar year under the Plan to any executive officer or other employee of the Company or any subsidiary whose compensation...

  • Page 80
    ...group (as such term is defined in Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules promulgated thereunder). For purposes of this paragraph, "fair market value per share" shall mean the average of the highest sales price per share of the Company's Common Stock as quoted...

  • Page 81
    ... as a result of the exercise of such option by the optionee or (y) make such other arrangements with the Company which would enable the Company to pay such withholding tax, including, without limitation, holding back a number of shares issuable upon exercise of the option equal to the amount of such...

  • Page 82
    ... to interfere in any way with the right of the Company and its subsidiaries to terminate such employment or consulting relationship and/or to remove any optionee who is a director from service on the Board of Directors of the Company at any time in accordance with the provisions of applicable law...

  • Page 83
    /s/ James O. Cole Secretary of Republic This Plan was duly amended by the Board of Directors of Republic effective as of the 20th day of May, 1998. /s/ James O. Cole Secretary of Republic 5

  • Page 84
    ...corporation (the "Company"), by offering non-employee members of the Board of Directors of the Company (individually, a "Non-Employee Director," and collectively, "Non-Employee Directors") the opportunity to participate in a special stock option program... the total number of shares of Common Stock at ...

  • Page 85
    ... prior to the automatic grant date as quoted on the Nasdaq Stock Market or by the principal U.S. stock exchange upon which the Company's Common Stock is listed (the "Exchange"), or if there is no reported closing selling price of Common Stock on the Exchange on the date in question, the closing...

  • Page 86
    ... and distribution, except that, upon approval by the Board, the Optionee may transfer an Option that is not intended to constitute an Incentive Stock Option (a) pursuant to a qualified domestic relations order as defined for purposes of the Employee Retirement Income Security Act of 1974, as amended...

  • Page 87
    ... used for general corporate purposes. 13. NO IMPAIRMENT OF RIGHTS. Nothing in this Plan or any automatic grant made pursuant to this Plan shall be construed or interpreted so as to affect adversely or otherwise impair the Company's right to remove any Optionee from service on the Board of Directors...

  • Page 88
    16. EFFECTIVE DATE. This Plan became effective as of August 3, 1995. 5

  • Page 89
    ... of not less than two members of the Board, none of whom shall be an officer or other salaried employee of Republic or any Subsidiary, and each of whom shall qualify in all respects as a "non-employee director" as defined in Rule 16b-3 of the Securities and Exchange Commission under the Securities...

  • Page 90
    ... Affiliate, as the Board shall determine and designate from time to time prior to expiration or termination of the Plan. The maximum number of shares of Stock subject to Options that may be granted during any calendar year under the Plan to any executive officer or other employee of Republic or any...

  • Page 91
    ... is granted) of the stock with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under the Plan and all other plans of the Optionee's employer corporation and its parent and subsidiary corporations within the meaning of Section...

  • Page 92
    ... to Republic on any business day, at its principal office, addressed to the attention of the Stock Option Administrator, of written notice of exercise, which notice shall specify the number of shares with respect to which the Option is being exercised, and shall be accompanied by payment in full of...

  • Page 93
    ...of cash, Stock or withholding of shares of Stock by the Company. Payment in full of the Option Price need ...Board, each Optionee who is a director, an employee or a consultant of Republic or a Subsidiary or Affiliate at the time of such Change in Control shall have the right to require Republic to pay...

  • Page 94
    ...Plan shall terminate upon the date of such termination of employment or service and such Optionee shall have no further right to purchase shares of Stock pursuant to such Option. Notwithstanding the foregoing provisions of this Section 12, the Board may provide, in its discretion, that following the...

  • Page 95
    ... of a corporation or other entity that acquires such assets and engages in such trade or business. (c) Whether a leave of absence or leave on military or government service shall constitute a termination of employment of service for purposes of the Plan shall be determined by the Board, which...

  • Page 96
    ...employment or service is to be considered by reason of "permanent and total disability" for purposes of this Plan shall be determined by the Board, which determination shall be final and conclusive. 14. USE OF PROCEEDS The proceeds received by Republic from the sale of Stock...under the Exchange Act. ...

  • Page 97
    ... surviving corporation) that results in any person or entity (or persons or entities acting as a group or otherwise...new options covering the stock of a successor entity, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kinds of shares and exercise prices. The Board...

  • Page 98
    ...CORPORATION. The grant of an Option pursuant to the Plan shall not affect or limit in any way the right or power of Republic to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge, consolidate, dissolve or liquidate, or to sell or transfer...

  • Page 99
    9

  • Page 100
    ... to time appoint a Stock Option Committee (the "Committee") consisting of not less than two members of the Board, none of whom shall be an officer or other salaried employee of Republic or any Subsidiary, and each of whom shall qualify in all respects as an "outside director" for purposes of Section...

  • Page 101
    ... Affiliate, as the Board shall determine and designate from time to time prior to expiration or termination of the Plan. The maximum number of shares of Stock subject to Options that may be granted during any calendar year under the Plan to any executive officer or other employee of Republic or any...

  • Page 102
    ... is granted) of the stock with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under the Plan and all other plans of the Optionee's employer corporation and its parent and subsidiary corporations within the meaning of Section...

  • Page 103
    ... to Republic on any business day, at its principal office, addressed to the attention of the Stock Option Administrator, of written notice of exercise, which notice shall specify the number of shares with respect to which the Option is being exercised, and shall be accompanied by payment in full of...

  • Page 104
    ... delivery of cash, Stock or withholding of shares of Stock by the Company. Payment in full of the Option Price need not accompany...direct or indirect beneficial ownership of more than 50% of the total combined voting power with respect to the election of directors of the issued and outstanding stock...

  • Page 105
    ... right to purchase shares of Stock pursuant to such Option. Notwithstanding the foregoing provisions of this Section 12, the Board may provide, in its discretion, that following the termination of employment or service of an Optionee with Republic, a Subsidiary, a spin-off corporation or Affiliate...

  • Page 106
    ... of a corporation or other entity that acquires such assets and engages in such trade or business. (c) Whether a leave of absence or leave on military or government service shall constitute a termination of employment of service for purposes of the Plan shall be determined by the Board, which...

  • Page 107
    ...termination of employment or service is to be considered by reason of "permanent and total disability" for purposes of this Plan shall be determined by the Board, which determination shall be final and conclusive. 14. USE OF PROCEEDS The proceeds received by Republic from the sale of Stock pursuant...

  • Page 108
    ...CORPORATION. The grant of an Option pursuant to the Plan shall not affect or limit in any way the right or power of Republic to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge, consolidate, dissolve or liquidate, or to sell or transfer...

  • Page 109
    ..., including, without limitation, the granting of stock options or stock appreciation rights otherwise than under the Plan. 9 10 This Plan was duly adopted and approved by the Board of Directors of Republic effective as of the 3rd day of February, 1998, subject to approval and adoption by the...

  • Page 110
    ...Fleet Operations Automotive Rental Group Republic Innustries, Inc. 110 S.E. 6th Street Ft. Launernale, FL 33301 Dear Mr. Benoit: This letter will confirm the agreement ("Agreement") reachen between National Car Rental System, Inc. ("National") ann General Motors ("GM") regarning National's purchase...

  • Page 111
    ... annress: Attention: J.P. Larson, Director - Finance NAO Fleet Operations Renaissance Center Tower 100, 11th Floor MC 482-A11-B96 Detroit, Michigan 48265-1000 In the event that National noes not purchase or lease the agreen number of vehicles at the agreen mix, * National as nescriben in Paragraph...

  • Page 112
    ...month, a schenule of anticipaten purchases of 1999 monel year vehicles (monel year fleet plan) by nivision ann car line, by month ann monel year. National also agrees to provine to GM, at the enn of each month, a schenule of 1998 ann 1999 monel vehicle returns by vehicle size (e.g., economy, minsize...

  • Page 113
    ... - Fleet Operations Automotive Rental Group Republic Innustries, Inc. 110 S. E. 6th Street Ft. Launernale, FL 33301 Dear Mr. Benoit: This letter will confirm the agreement ("Agreement") reachen between Alamo Rent A Car, Inc. ("Alamo") ann General Motors ("GM") regarning Alamo's purchase or lease of...

  • Page 114
    ... be usen when reporting vehicle acquisitions. The report of vehicle acquisitions shouln be transmitten by EDS Elite to the GM Auction Sales ann Remarketing Department or niskettes sent to the following annress: Attention: J. P. Larson, Director - Finance NAO Fleet Operations Renaissance Center Tower...

  • Page 115
    ... Rental Purchase Guinelines ann the GM National Fleet Purchase Program Guinelines for the 1999 monel year will be incorporaten into the amennment. MODEL YEARS 1999 THROUGH 2002 This letter will also confirm the Agreement reachen between Alamo ann GM regarning Alamo's purchase or lease GM vehicles...

  • Page 116
    ... the General Motors' Car ann Truck Divisions, I wouln like to express my appreciation for your business ann hope this Agreement will continue to strengthen our business relationship. Very truly yours, /s/ Richarn M. Lee R. M. Lee Executive Director Fleet Operations /s/ Barry Benoit Acknowlengen...

  • Page 117
    ... Desert Buick-GMC Management Group, Inc. Ditschman/Flemington Property Rentals, Inc. Driver's Mart Worldwide, Inc. Ed Mullinax, Inc. Empire Services Agency, Inc. Empire Warranty Corporation Empire Warranty Holding Company EMX Leasing, Inc State of Organization WY WY FL NV CA DE TX FL DE AZ TX DE...

  • Page 118
    ... Team Infiniti, Ltd. First Team Management, Inc. First Team Premier, Ltd. Flemington Equities, Inc. Florida Auto Corp. Ford of Garden Grove Limited Partnership General Providers Reinsurance Company, Ltd. George Sutherlin Chevrolet of Georgia, Inc. Hillard Auto Group, Inc. Irvine Toyota/Nissan/Volvo...

  • Page 119
    ... Lease Car, Inc. Steve Moore's Buy-Right Auto Center, Inc. T-Five, Inc. Tallahassee Automotive Group, Inc. Tennco Life Insurance Company The Consulting Source, Inc. The Pierce Corporation II, Inc. Total Care, Inc. Toyota Cerritos Limited Partnership W.O. Bankston Enterprises, Inc. Wallace Imports...

  • Page 120
    ARI Fleet Services, Inc. Atrium Restaurants, Inc. AutoNation Insurance Company, Inc. MO FL VT 5 NAME OF CORPORATION - ------------------- STATE OF INCORPORATION ---------------------- d/b/a NAME ---------- Auto Rental, Inc. CC-Autohansa GmbH & CO.KG Car Rental Claims, Inc. CarTemps Financing ...

  • Page 121
    ... (UK) PLC Republic Media, Inc. Republic Media Companies Holding Co. Republic Risk Management Services, Inc. R.I./Triangle, Ltd. SRAC-TM, Inc. Snappy Fleet Finance Corporation Snappy Funding Corporation Snappy Funding Limited Partnership FL Netherlands Switzerland (LLC) (LLC) Germany (LLC) UK...

  • Page 122
    ...Auto, LLC Beach City Chevrolet Company, Inc. AutoNation USA of Virginia Beach Bankston Ford of Frisco Bankston Nissan-Irving Bankston Nissan Lewisville John Elway Nissan South Beach City Chevrolet DE TX TX DE CO CA 10 Beacon Motors, Inc. Bell Dodge, LLC Bengal Motor Company, Ltd BH Cars, Inc. Bill...

  • Page 123
    ... Buick/GMC, Inc. Coastal Cadillac, Inc. Colonial Imports, Ltd. Cook-Whitehead Ford, Inc. Costa Mesa Cars, Inc. Courtesy Auto Group, Inc. Covington Pike Motors, Inc. Covington Pike Honda 12 CT Intercontinental, Inc. CT Motors, Inc. D/L Motor Company Deal Dodge of Des Plains, Inc. Desert Buick-GMC...

  • Page 124
    ... Land Rover Princeton Flemington Nissan Flemington Subaru Fox Buick Pontiac GMC Isuzu Fox Chevrolet Fox Lincoln-Mercury/Fox Kia Fox Mitsubishi L.P. Evans Ft. Lauderdale Nissan South Bay Volvo Lexus of Kendall Gene Evans Ford George Sutherlin Nissan of Marietta NJ NJ NJ MD MD MD MD FL CA DE DE GA

  • Page 125
    ... Management, Inc. Treadwell Honda Lexus of Tampa Bay Lexus of Clearwater Chevrolet Add Point Hollywood Honda Hollywood Kia Hoover Toyota House of Imports (Mercedes) Hub Ford John Elway Ford Downtown John Elway Olds Mazda Hyundai North John Elway Honda John Elway Toyota AL FL FL AZ FL FL AL CA GA...

  • Page 126
    ... Mullinax Lincoln-Mercury of Mayfield Newport Auto Center DE OH OH CA Newport Beach Cars, Inc. Northpoint Chevrolet, Inc. (fka, RI/PCR Acquisition Corp.) Northside Nissan, Inc. Northwest Financial Group, Inc. Orange County Automotive Imports, Inc. Orange Park Toyota, LLC Orlando Imports, Inc...

  • Page 127
    ... Las Vegas Honda Corona Chevrolet-Oldsmobile Corona Motors (aka Corona Volkswagen, Subaru and Isuzu) Costa Mesa Infiniti Infiniti of Santa Monica Infiniti of Beverly Hills Smythe European Mercedes Benz/Volvo Flemington Porsche/Audi/BMW/VW NJ DE FL DE DE DE DE DE DE DE NJ NV CA CA CA CA CA CA...

  • Page 128
    ... Lincoln-Mercury Fox of Timonium Libertyville Toyota Bankston Lincoln-Mercury/Saab Bankston Nissan of Dallas Bankston Paint & Body, Inc. Wallace Dodge Wallace Ford Wallace Lincoln-Mercury Wallace Nissan West Ashley Toyota Redlands Ford West Side Honda AZ CA MN DE MD IL DE TX TX FL FL FL FL SC CA TN

  • Page 129
    ...ACCOUNTANTS As independent certified public accountants, we hereby consent to the incorporation of our report in this Form 10-K, into the previously filed Registration Statements of Republic Industries,...-19453, 333-20669, 333-29265, 333-42891 and 333-56967). Fort Lauderdale, Florida, March 31, 1999.

  • Page 130
    ...TOTAL-REVENUES> YEAR DEC-31-1998 JAN-01-1998 DEC-31-1998 217,300 0 1,667,600 (62,300) 1,853,500...

  • Page 131
    ...

  • Page 132
    ...CASH>

  • Page 133
    ... are primarily attributable to the successful execution of the Company's growth and operating strategies described below. The Company's internal growth strategy is supported by its presence in high growth markets throughout the Sunbelt, including Florida, Georgia, Tevada, Southern California and...

  • Page 134
    ... rate as the underlying population growth in such markets. For example, the Company has secured exclusive, long-term franchise agreements in high-growth markets such as Los Angeles and Orange Counties, California, Las Vegas, Tevada, Arlington, Texas and many areas of Florida. The Company believes...

  • Page 135
    ...most part, such employees directly solicit business 2 3 from existing and prospective commercial, industrial and municipal customers. The Company trains new and existing sales personnel with an emphasis on teaching sales personnel to understand the Company's rate and cost structures. - - ACQUISITIOT...

  • Page 136
    ... risks related to the Company's operating strategy, see "-- Risk Factors." - - EXPERIETCED EXECUTIVE MATAGEMETT TEAM. The Company believes that it has one of the most experienced executive management teams among publicly-traded companies in the solid waste industry. H. Wayne Huizenga, the Company...

  • Page 137
    ... DECETTRALIZED MATAGEMETT STRUCTURE. The Company maintains a relatively small corporate headquarters staff, relying on a decentralized management structure to minimize administrative overhead costs and to manage its day-to-day operations more efficiently. The Company's local management has extensive...

  • Page 138
    ... to ensure that the highest number of customers are efficiently serviced over the fewest possible miles. By using assets more efficiently, operating expenses are lowered significantly. - - HIGH LEVELS OF CUSTOMER SATISFACTIOT. The Company complements its operating strategy with a goal of maintaining...

  • Page 139
    ... are provided to individual commercial, industrial and construction facilities on a contractual basis with terms generally ranging from a single pickup to one year. The Company also rents waste roll-off containers to construction sites and provides hauling services. The Company collects the roll-off...

  • Page 140
    ...'s sales and marketing strategy is to provide high-quality comprehensive solid waste collection, recycling, transfer and disposal services to its customers at competitive prices. The Company targets potential customers of all sizes, from small quantity generators to large "Fortune 500" companies and...

  • Page 141
    ... pursuant to RCRA and Subtitle D. Once a state has an approved permit program it is required to review all existing landfill permits to ensure compliance with the new regulations. All of the Company's planned landfill expansions or new landfill development projects have been engineered to meet...

  • Page 142
    ... and control system is dependent upon the adoption of state regulations and the date the EPA approves the state program. Many state regulatory agencies currently require monitoring systems for the collection and control of landfill gas. Compliance with the new EPA regulations is not expected to have...

  • Page 143
    ... to its solid waste transportation operations, the Company is subject to the jurisdiction of the Interstate Commerce Commission and is regulated by the Federal Highway Administration, Office of Motor Carriers and by regulatory agencies in each state. Various states have enacted, or are considering...

  • Page 144
    ...engaging in aggressive acquisition strategies. Certain of the Company's competitors have significantly larger operations, and may have significantly greater financial resources, than the Company. In addition to national and regional firms and numerous local companies, the Company competes with those...

  • Page 145
    ... 31, 1998, the Company employed approximately 10,000 full time employees, approximately 2,400 of whom were covered by collective bargaining agreements. The management of the Company believes that it has good relations with its employees. RISK FACTORS This Risk Factors section of our Annual Report on...

  • Page 146
    ... Two of our executive officers also serve as executive officers of Republic Industries. Two members of our Board of Directors also serve as members of Republic Industries' Board of Directors. Some of our executive officers and directors hold shares of Republic Industries common stock or hold options...

  • Page 147
    ..., Republic Industries satisfied our working capital needs pursuant to its corporate-wide cash management policies. Following our initial public offering, Republic Industries has no longer been required to 13 14 provide funds to finance our operations or acquisitions. As a result, we have incurred...

  • Page 148
    .... RISKS RELATITG TO OUR DEPETDETCE OT ACQUISITIOTS FOR GROWTH. Our ability to execute our growth strategy depends in part on our ability to identify and acquire desirable acquisition candidates as well as our ability to successfully integrate the acquired companies' operations into our business and...

  • Page 149
    ...in the time, required. RISKS RELATITG TO OUR DEPETDETCE OT KEY PERSOTTEL. Our future success depends on the continued contributions of certain key executive officers. Most of our executive officers do not have employment agreements and we do not maintain key man life insurance policies on any of our...

  • Page 150
    ... our business that are likely to be affected by the date change in the year 2000. We may not discover and remediate all potential problems with our systems in a timely manner. In addition, computer software and related technologies used by our customers, service providers, vendors and suppliers are...

  • Page 151
    .... Consequently, we do not anticipate paying any cash dividends on our common stock to our stockholders for the foreseeable future. 17 18 ITEM 2. PROPERTIES The Company's corporate headquarters are located in Ft. Lauderdale, Florida in premises leased from a subsidiary of Republic Industries...

  • Page 152
    ...Total... Laughlin, Tevada Alajuela, Costa Rica Delavan, Wisconsin Fort Wayne, Indiana St. Augustine, Florida Houston, Texas Union City, Tennessee Winder, Georgia Beaver Dam, Kentucky Torth Charleston, South Carolina Griffin, Georgia St. Petersburg, Florida Presidio, Texas Alpine, Texas Avalon, Texas...