Exhibit 99.5 UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA The following unaudited pro forma consolidated statement of operations for the year ended December 31, 1997 reflects the historical accounts of the Company for that period, adjusted giving effect to the acquisitions of Lake Norman Dodge, Inc. and Affiliated Companies, Ken Marks Ford, Inc., Dyer & Dyer, Inc. and the Bowers Dealerships and Affiliated Companies in 1997 (the "1997 Acquisitions"), the acquisitions of Clearwater Dealerships and Affiliated Companies effective January 1, 1998 (the "Clearwater Acquisition" and, together with the 1997 Acquisitions, the "Completed Acquisitions"), and the Hatfield Acquisition (collectively, the "Acquisitions"), as if such acquisitions had occurred on the first day of the period presented. The following unaudited pro forma consolidated statement of operations for the three months ended March 31, 1998 reflects the historical accounts of the Company for that period, adjusted to give effect to the Hatfield Acquisition, as if such acquisition had occurred on the first day of the period presented. The following unaudited pro forma consolidated balance sheet as of March 31, 1998 reflects the historical accounts of the Company as of that date as adjusted to give effect to the Hatfield Acquisition as if such acquisition had occurred on March 31, 1998. The unaudited pro forma consolidated financial data and accompanying notes should be read in conjunction with the Consolidated Financial Statements and related notes of the Company as included in its Annual Report on Form 10-K dated March 31, 1998 and its Quarterly Report on Form 10-Q dated May 14, 1998, the financial statements and related notes of the Bowers Dealerships and Affiliated Companies, Lake Norman Dodge, Inc. and Affiliated Companies, Ken Marks Ford, Inc. and Dyer and Dyer, Inc. as included in the Company's Prospectus dated November 10, 1997, as well as the financial statements and related notes of the Hatfield Automotive Group as included herein by exhibit 99.3 and as incorporated by reference to exhibit 99.2 to the Company's Form 8-K dated July 9, 1998. The Company believes that the assumptions used in the following statements provide a reasonable basis on which to present the unaudited pro forma financial data. The unaudited pro forma consolidated financial data are provided for informational purposes only and should not be construed to be indicative of the Company's financial condition or results of operations had the transactions described above been consummated on the dates assumed, and are not intended to project the Company's financial condition on any future date or its results of operations for any future period. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS EXCEPT PER SHARE DATA)
COMPLETED ACQUISITIONS ------------------------------------------------------ PRO-FORMA ADJUSTMENTS PRO-FORMA 1997 FOR THE FOR THE ACQUISITIONS CLEARWATER COMPLETED COMPLETED ACTUAL (A) (B) ACQUISITION ACQUISITIONS ACQUISITIONS ----------- --------------------------------------- ------------ Revenues: Vehicle sales $ 467,858 $ 364,756 $ 108,812 $ - $ 941,426 Parts, service, and collision repair 57,537 42,164 10,500 110,201 Finance and insurance 10,606 7,723 2,587 346 (c) 21,262 ----------- ------------------------------------- ------------ Total Revenues 536,001 414,643 121,899 346 1,072,889 Cost of Sales 471,253 360,794 105,786 (371) (d) 937,462 ----------- ------------------------------------- ------------- Gross Profit 64,748 53,849 16,113 717 135,427 Selling, general & administrative expenses 48,520 41,909 12,226 (4,093) (e) 99,745 1,183 (f) Management bonus - Depreciation and amortization 1,322 914 390 (179) (f) 3,725 (303) (g) 1,581 (h) ----------- ------------------------------------- ------------ Operating income 14,906 11,026 3,497 2,528 31,957 Interest expense, floorplan 8,007 4,722 779 (1,864) (i) 11,644 Interest expense, other 1,199 234 721 (690) (f) 5,394 3,949 (j) 267 (k) (286) (l) Other income 298 180 194 672 ----------- ------------------------------------- ------------ Income (loss) before income taxes and minority interest 5,998 6,250 2,191 1,152 15,591 Provision for income taxes 2,249 178 - 627 (m) 5,979 2,925 (n) ----------- ------------------------------------- ------------ Income (loss) before minority interest 3,749 6,072 2,191 (2,400) 9,612 Minority interest in earnings of subsidiary 47 - - 47 ----------- ------------------------------------- ------------ Net Income (Loss) $ 3,702 $ 6,072 $ 2,191 $ (2,400) $ 9,565 =========== ===================================== ============ Basic net income per share (o) $ 0.53 =========== Weighted average shares outstanding (o) 6,949 =========== Diluted net income per share (o) $ 0.53 =========== Weighted average shares outstanding (o) 6,949 =========== HATFIELD ACQUISITION ------------------------ PRO-FORMA ADJUSTMENTS FOR THE PRO FORMA HATFIELD HATFIELD FOR THE DEALERSHIPS ACQUISITION ACQUISITIONS ----------- ------------- ------------ Revenues: Vehicle sales $ 251,981 $ - $ 1,193,407 Parts, service, and collision repair 16,400 126,601 Finance and insurance 6,899 28,161 ------------------------ ------------ Total Revenues 275,280 - 1,348,169 Cost of Sales 243,370 1,180,832 -------------------------- ------------ Gross Profit 31,910 - 167,337 Selling, general & administrative expenses 21,153 104 (e) 121,002 Management bonus 7,121 (7,121) (e) - Depreciation and amortization 221 4,865 (25) (g) 944 (h) ------------------------ ------------ Operating income 3,415 6,098 41,470 Interest expense, floorplan 3,663 (414) (i) 15,523 630 (j) Interest expense, other - 7,625 2,231 (j) Other income 224 896 ------------------------ ------------ Income (loss) before income taxes and minority interest (24) 3,651 19,218 Provision for income taxes - 1,583 (m) 7,552 (10) (n) ------------------------ ------------ Income (loss) before minority interest (24) 2,078 11,666 Minority interest in earnings of subsidiary - 47 ------------------------ ------------ Net Income (Loss) $ (24) $ 2,078 $ 11,619 ======================== ============ Basic net income per share (o) $ 1.03 ============ Weighted average shares outstanding (o) 11,250 ============ Diluted net income per share (o) $ 0.91 ============ Weighted average shares outstanding (o) 12,749 ============
(See accompanying notes to Unaudited Pro Forma Consolidated Statements of Operations) Unaudited Pro Forma Consolidated Statement of Operations Three Months Ended March 31, 1998 (in thousands except per share data)
PRO FORMA PRO FORMA HATFIELD ADJUSTMENTS FOR FOR THE ACTUAL (A) DEALERSHIPS THE ACQUISITION THE ACQUISITION --------------- -------------------------------- ----------------- Revenues: Vehicle sales $ 228,569 $ 57,661 $ - $ 286,230 Parts, service, and collision repair 28,965 4,255 - 33,220 Finance and insurance 6,247 1,747 - 7,994 --------------- -------------------------------- ----------------- Total Revenues 263,781 63,663 - 327,444 Cost of Sales 228,600 56,297 - 284,897 --------------- -------------------------------- ----------------- Gross Profit 35,181 7,366 - 42,547 Selling, general & administrative expenses 26,640 5,053 20 (e) 31,713 Management bonus - 1,700 (1,700) (e) - Depreciation and amortization 815 67 (6) (g) 1,112 236 (h) --------------- -------------------------------- ----------------- Operating income 7,726 546 1,450 9,722 Interest expense, floorplan 3,235 556 (59) (i) 3,889 157 (j) Interest expense, other 1,061 - 593 (j) 1,654 Other income 44 41 85 --------------- -------------------------------- ----------------- Income before income taxes and minority interest 3,474 31 759 4,264 Provision for income taxes 1,338 - 335 (m) 1,686 13 (n) --------------- -------------------------------- ----------------- Income before minority interest 2,136 31 411 2,578 Minority interest in earnings of subsidiary - - - - --------------- -------------------------------- ----------------- Net Income $ 2,136 $ 31 $ 411 $ 2,578 =============== ================================ ================= Basic net income per share $ 0.19 $ 0.23 =============== ================= Weighted average shares outstanding 11,250 11,250 =============== ================= Diluted net income per share (o) $ 0.19 $ 0.20 =============== ================= Weighted average shares outstanding (o) 11,374 12,843 =============== =================
(SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS) NOTES TO UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS DECEMBER 31, 1997 AND MARCH 31, 1998 (a)The actual consolidated statement of operations data for the Company for the year ended December 31, 1997 includes the results of operations of the following dealerships and dealership groups acquired during the year ended December 31, 1997 from their respective dates of acquisition: DEALERSHIP ACQUIRED DATE OF ACQUISITION - --------------------------- -------------------- Fort Mill Chrysler-Plymouth-Dodge June 3, 1997 Lake Norman Dealerships September 1, 1997 Ken Marks Ford October 1, 1997 Williams Motors October 10, 1997 Dyer Volvo November 1, 1997 Bowers Dealerships November 1, 1997 The actual consolidated statement of operations data for the Company for the three months ended March 31, 1998 includes the results of operations of the Clearwater Dealerships and Affiliated Companies from January 1, 1998, the date of the Clearwater Acquisition. (b)Reflects the results of operations of the 1997 Acquisitions for the period from January 1, 1997 to their respective dates of acquisition. Pro forma adjustments have not been presented to include the results of (i) Fort Mill Chrysler-Plymouth-Dodge for the period from January 1, 1997 to June 3, 1997, the date of the acquisition or (ii) Williams Motors for the period from January 1, 1997 to October 10, 1997, the date of acquisition, because management believes such results are not material. (c)Reflects finance and insurance revenues generated by the 1997 Acquisitions and the Clearwater Acquisition in the amounts of $252,000 and $94,000, respectively, for the year ended December 31, 1997 that were paid directly to the dealership owners or wholly-owned management companies and excluded from revenue in the historical financial statements of the acquired dealerships. (d)Adjustment reflects the conversion from the LIFO Method of inventory accounting to the FIFO Method of inventory accounting for the 1997 Acquisitions in the amount of $371,000 for the year ended December 31, 1997 to conform to the Company's method of accounting for vehicle inventories. (e)Reflects the net decrease in selling, general, and administrative expenses related to the net reduction in salaries, bonuses, and fringe benefits and related expenses of owners and officers of the acquired dealerships who have become or will become employees, consistent with reduced salaries pursuant to employment agreements with the Company, or whose positions have been or will be eliminated as part of the acquisitions. (f)Reflects the increase in rent expense related to lease agreements entered into with the sellers of certain dealerships acquired in the 1997 Acquisitions and the Clearwater Acquisition for such dealerships' real property that were not acquired by the Company, and the decreases in depreciation expense and interest expense related to mortgage indebtedness encumbering such property of approximately $1.8 million bearing interest at 9% and $5.9 million bearing interest at rates from 9% to 9.5% associated with the 1997 Acquisitions and the Clearwater Acquisition, respectively. (g)Reflects the elimination of amortization expense related to goodwill that arose in previous acquisitions in certain of the acquired dealerships from the date of the acquisitions. (h)Reflects the amortization over an assumed useful life of 40 years of intangible assets, consisting primarily of goodwill, resulting from the Acquisitions which were assumed to occur on January 1, 1997. In accordance with the purchase agreement associated with the Clearwater Acquisition, the Company will be required to make an additional payment, not to exceed $1.8 million, equal to 50% of the combined 1998 pre-tax earnings of the entities acquired. Amount includes amortization of the additional goodwill associated with this contingent purchase price, which has been estimated at approximately $1.7 million based on the estimated 1998 pre-tax earnings of the entities acquired. The amount of the contingent purchase price, and the corresponding goodwill, may actually be different from the amounts estimated here depending on the actual combined 1998 pre-tax earnings of the entities acquired. (i)Reflects the net decrease in interest expense, floor plan, resulting from the refinancing of the notes payable, floor plan arrangements of the Company and the dealerships being acquired, under a standardized floor plan credit facility with Ford Motor Credit which requires placement of acquired dealerships floor plan financing with Ford Motor Credit (the "Floor Plan Facility") as if such refinancing had occurred at the beginning of the period presented. The average interest rate under the Floor Plan Facility is approximately 7.6% compared to historical interest rates ranging from 8.1% to 9.5%. (j)Reflects the increase in interest expense associated with borrowings made under the Company's revolving credit facility with Ford Motor Credit bearing interest at 8.5% of $33.4 million, $11.4 million and $26.2 million used to finance the 1997 Acquisitions, the Clearwater Acquisition and the Hatfield Acquisition, respectively, and borrowings made under the Company's Floor Plan Facility bearing interest at 7.6% of approximately $8.3 million used to finance the Hatfield Acquisition. Amount includes estimated additional borrowings to be made under the Company's revolving facility of approximately $1.7 million used to finance the estimated contingent purchase price associated with the Clearwater Acquisition (see note (h)). (k)In connection with the acquisition of the Bowers Dealerships, the Company issued a promissory note to the former owner in the amount of $4.0 million bearing interest at NationsBank's prime rate less 0.5%. This adjustment reflects an increase in interest expense related to the promissory note assuming a prime rate of 8.5% as if the note was issued at the beginning of the period presented. (l)Reflects the decrease in interest expense related to debt, other than mortgage indebtedness, associated with the 1997 Acquisitions and the Clearwater Acquisition of approximately $1.6 million bearing interest at 8.5% and $1.8 million bearing interest at rates ranging from 9% to 10%, respectively, which has not been assumed. (m)Reflects the net increase in provision for income taxes resulting from pro forma adjustments above, computed using a combined statutory income tax rate of approximately 39%. (n)Certain of the acquired dealerships were not subject to federal and state income taxes because they were either S corporations, partnerships, or limited liability companies during the period indicated. Upon completion of these acquisitions, these dealerships will be subject to federal and state income tax as C corporations. This adjustment reflects the resulting increase in the federal and state income tax provision as if these entities had been taxable at the combined statutory income tax rate of approximately 39%. (o)Pro forma basic and diluted net income per share and the related weighted average shares outstanding for the year ended December 31, 1997 have been adjusted to reflect the issuance of 5 million shares of the Company's Class A Common Stock in connection with its initial public offering ("IPO") in November 1997 as if such shares had been issued on January 1, 1997. Pro forma diluted net income per share and the related weighted average shares outstanding for the year ended December 31, 1997 includes the dilutive effect of the issuance of 3,960 and 14,025 shares of the Company's Class A Preferred Stock in connection with the Clearwater Acquisition and the Hatfield Acquisitions, respectively. Warrants to purchase 44,391 shares of the Company's Class A Common Stock issued in January 1998 in connection with the consummation of the 1997 Acquisitions were not included in the reported amounts because they were anti-dilutive. Pro forma net income per share and the related weighted average shares outstanding for the three months ended March 31, 1998 includes the dilutive effect of the issuance of 3,960 and 14,025 share of the Company's Class A Preferred Stock in connection with the Clearwater Acquisitions and the Hatfield Acquisitions, respectively. The following is a reconciliation of the pro forma weighted average shares for the year ended December 31, 1998 and the three months ended March 31, 1998:
THREE MONTHS YEAR ENDED ENDED DECEMBER 31, 1997 MARCH 31, 1998 --------------- --------------- Weighted Average Shares - Basic (actual) 6,949 11,250 Issuance of Common Stock in connection with IPO 4,301 - --------------- --------------- Weighted Average Shares - Basic (pro forma) 11,250 11,250 =============== =============== Weighted Average Shares - Diluted (actual) 6,949 11,374 Issuance of Common Stock in connection with IPO 4,301 - Class A Convertible Preferred Stock 1,499 1,469 Warrants - - --------------- --------------- Weighted Average Shares - Diluted (pro forma) 12,749 12,843 =============== ===============
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 (IN THOUSANDS)
PRO FORMA ADJUSTMENTS FOR PRO FORMA HATFIELD THE HATFIELD FOR THE ACTUAL DEALERSHIPS ACQUISITION THE ACQUISITION -------------- -------------- --------------- -------------- ASSETS Current Assets: Cash & cash equivalents $ 23,391 $ 14,990 $ - (a)(b) $ 26,074 (12,307)(c) Marketable equity securities 247 247 Receivables 22,128 3,360 25,488 Inventories 150,819 34,395 185,214 Deferred Income Taxes 405 405 Due from affiliates 1,014 1,014 Other current assets 1,969 6,610 8,579 -------------- -------------- --------------- -------------- Total current assets 199,973 59,355 (12,307) 247,021 Property & equipment, net 19,796 1,003 20,799 Goodwill, net 86,072 977 39,406 (a) 125,478 (977)(d) Other assets 651 651 -------------- -------------- --------------- -------------- Total assets $ 306,492 $ 61,335 $ 26,122 $ 393,949 ============== ============== =============== ============== LIABILITIES & STOCKHOLDERS' EQUITY Current Liabilities: Notes payable-floor plan $ 128,152 $ 33,456 $ 8,283 (b) $ 169,891 Trade accounts payable 7,554 2,660 10,214 Accrued interest 1,445 1,445 Other accrued liabilities 12,893 1,132 14,025 Payable to affiliates 445 7,196 (7,196)(c) 445 Current maturities of long-term debt 584 584 -------------- -------------- --------------- -------------- Total current liabilities 151,073 44,444 1,087 196,604 Long-term debt 49,982 27,901 (b) 77,883 Payable to the Company's Chairman 5,500 5,500 Payable to affiliates 4,192 10,569 (10,569)(c) 4,192 Deferred income taxes 1,079 1,079 Income tax payable 4,822 4,822 Stockholders' equity Common stock of combined companies 2,825 (2,825)(a) - Preferred Stock 3,366 14,025 (a) 17,391 Class A Common Stock 50 50 Class B Common Stock 63 63 Paid-in capital 68,045 1,744 (1,744)(a) 68,045 Retained earnings 18,322 1,753 (6,234)(a) 18,322 5,458 (c) (977)(d) Unrealized loss on marketable equity securities (2) (2) -------------- -------------- --------------- -------------- Total stockholders' equity 89,844 6,322 7,703 103,869 ============== ============== =============== ============== Total liabilities & stockholders' equity $ 306,492 $ 61,335 $ 26,122 $ 393,949 ============== ============== =============== ==============
(SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET) NOTES TO UNAUDITED PRO FORMA BALANCE SHEET MARCH 31, 1998 (a)Reflects the preliminary allocation of the purchase price of the Hatfield Acquisition based on the estimated fair value of net assets acquired. Amount also reflects the allocation of the estimated contingent purchase price associated with the Clearwater Acquisition (see note (h) to the Notes to Unaudited Consolidated Statement of Operations). Because the carrying amount of the net assets acquired, which primarily consist of accounts receivable, inventory, equipment, and floor plan indebtedness, approximates their fair value, management believes the application of purchase accounting will not result in a significant adjustment to the carrying amount of those net assets. The amount of goodwill and the corresponding amortization actually recorded may ultimately be different from amounts estimated here, depending on the actual fair value of tangible net assets acquired, changes in the estimated fair value of the preferred stock issued as determined by an independent appraisal which has not yet been finalized, and the actual contingent purchase price associated with the Clearwater Acquisition. The estimated purchase price allocation consists of the following: HATFIELD CLEARWATER DEALERSHIPS ACQUISITION TOTAL ------------ ------------ ------------ Estimated total consideration: Cash $34,525 $1,659 $36,184 Preferred Stock 14,025 14,025 ------------ ------------ ------------ Total 48,550 1,659 50,209 Less: Estimated fair value of tangible Net assets acquired 10,803 - 10,803 ------------ ------------ ------------ Excess of purchase price over fair value Of net tangible assets acquired $37,747 $1,659 $39,406 ============ ============ ============ (b)Reflects borrowings made under the Company's Floor Plan Facility at 7.6% and the Company's revolving credit facility with Ford Motor Credit at 8.5% used to finance the Hatfield Acquisition. (c)Reflects the elimination of cash in the amount of $12.3 million that was not acquired in the Hatfield Acquisition and the elimination of the current and long term portions of payables to affiliates amounting to $7.2 million and $10.6 million, respectively, which were not assumed in the Hatfield Acquisition. (d)Reflects the elimination of goodwill that arose in previous acquisitions of the Hatfield dealerships.