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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date to earliest event reported): March 24, 1998
SONIC AUTOMOTIVE, INC.
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(Exact name of registrant as Specified in Charter)
Delaware 1-13395 56-2010790
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
5401 East Independence Boulevard
P.O. Box 18747
Charlotte, North Carolina 28026
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (704) 532-3320
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OF DISPOSITION OF ASSETS
On March 24, 1998, Sonic Automotive, Inc. (the "Company") acquired certain
tangible and intangible assets, including machinery, equipment, furnishings,
automobiles, supplies, accounts and notes receivable, new and used vehicle
inventories, parts inventories and supplies, leases, contract rights, and
goodwill (the "Assets"), and assumed certain liabilities, including all current
liabilities, of M&S Auto Resources, Inc. (d/b/a Clearwater Toyota), Clearwater
Auto Resources, Inc. (d/b/a Clearwater Mitsubishi), and Clearwater Collision
Center, Inc. (collectively, the "Clearwater Dealerships") pursuant to an Asset
Purchase Agreement dated as of December 30, 1997 among the Company, as buyer,
the Clearwater Dealership as sellers, and Scott Fink, Michael Cohen, Jeffrey
Schuman, and Timothy McCabe as shareholders of the sellers, as amended, by
Amendment No. 1 and Supplement to Asset Purchase Agreement dated as of March 24,
1998 (as amended the "Agreement"). Other terms of the Agreement provide for the
leasing of the Clearwater Dealerships' real property for a period of ten years
from M&S Auto Resources, Inc. with the option to renew for two successive
periods of five years each.
The aggregate consideration for the acquisition was approximately $15
million, consisting of approximately $11.04 million in cash obtained from the
Company's Amended and Restated Credit Agreement dated December 15, 1997 with
Ford Motor Credit Company, and 3,960 shares of the Company's Class A Series III
Convertible Preferred Stock, par value $.01 per share, valued at approximately
$3.96 million as of their date of issuance on March 24, 1998. By April 30, 1999,
the Company will be required to make an additional payment, not to exceed $1.75
million, equal to 50% of the combined pre-tax earnings of the Clearwater
Dealerships for the fiscal year ended December 31, 1998. The amount of
consideration paid by the Company was determined through arms length
negotiations with the sellers.
The Assets were used in the operations of two automobile dealerships and a
collision repair center. Such operations consisted of selling new and used cars
and light trucks, selling replacement parts, providing vehicle maintenance,
warranty, paint, and repair services, and arranging financing and insurance. The
Company intends to continue such use.
For additional information concerning the transaction, reference is made to
the Agreement and to a press release issued as of January 6, 1998, copies of all
of which are attached as exhibits hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. Not required
(B) PRO FORMA FINANCIAL INFORMATION. Attached as an exhibit to this report on
Form 8-K are the following:
UNAUDITED PRO FORMA FINANCIAL STATEMENTS REFLECTING THE BUSINESS
COMBINATION OF SONIC AUTOMOTIVE, INC. AND CLEARWATER DEALERSHIPS
Description of Unaudited Pro Forma Financial Statements
Pro Forma Balance Sheet at December 31, 1997 (Unaudited) and Notes
thereto.
Pro Forma Statement of Income for the Year Ended December 31, 1997
(Unaudited) and Notes thereto.
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(C) EXHIBITS
Exhibit Number Description
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99.1 Asset Purchase Agreement dated December 30, 1997
between Sonic Automotive, Inc., as buyer, and M&S
Resources, Inc., Clearwater Auto Resources, Inc., and
Clearwater Collision Center, Inc., as sellers and Scott Fink,
Michael Cohen, Jeffrey Schuman, and Timothy McCabe as
shareholders of the sellers.
99.2 Amendment No. 1 and Supplement to
Asset Purchase Agreement dated as of
March 24, 1998 between Sonic
Automotive, Inc., as buyer, and M&S
Resources, Inc., Clearwater Auto
Resources, Inc., and Clearwater
Collision Center, Inc., as sellers
and Scott Fink, Michael Cohen,
Jeffrey Schuman, and Timothy McCabe
as shareholders of the sellers.
99.3 Press Release dated January 6, 1998
99.4 Unaudited Pro Forma Financial Statements Reflecting the
Business Combination of Sonic Automotive, Inc. and
Clearwater Dealerships for the year
ended December 31, 1997.
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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 hereunto duly authorized.
SONIC AUTOMOTIVE, INC.
Date: March 30, 1998 By: /s/ Theodore M. Wright
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Theodore M. Wright
Chief Financial Officer, Vice
President-Finance, Treasurer,
Secretary and Director
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