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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K



(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
Commission file number: 0-9787


REPUBLIC INDUSTRIES, INC.
(Exact Name of Registrant as Specified in its Charter)



DELAWARE 73-1105145
(State of Incorporation) (I.R.S. Employer Identification No.)

450 EAST LAS OLAS BOULEVARD 33301
FORT LAUDERDALE, FLORIDA (Zip Code)
(Address of Principal Executive Offices)


Registrant's telephone number, including area code: (954) 713-5200

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of class)

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 by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

As of February 24, 1997, the registrant had 324,853,016 shares of Common
Stock outstanding and, at such date, the aggregate market value of the shares of
Common Stock held by non-affiliates of the registrant was approximately
$9,195,030,500.

DOCUMENTS INCORPORATED BY REFERENCE



Part III Portions of the Registrant's Proxy Statement relative to the
1997 Annual Meeting of Stockholders.
Part IV Portions of previously filed reports and registration
statements.


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PART I

ITEM 1. BUSINESS

INTRODUCTION

Republic Industries, Inc. (the "Company") is a diversified holding company
with subsidiaries operating in the solid waste services, electronic security
services, automotive rental and automotive retailing industries. The Company is
aggressively building its existing lines of business through internal growth and
acquisitions. During 1996, the Company expanded its operations into the
automotive rental and automotive retailing industries. The Company is actively
negotiating to acquire additional companies in its existing and complementary
lines of business.

The Company's solid waste services business provides integrated solid waste
services, which consists of waste collection, disposal and recycling. The
Company owns or operates 36 solid waste landfills in 12 states. These landfills
have an aggregate of approximately 4,221 permitted acres with a total available
permitted disposal capacity of approximately 267.3 million in-place cubic yards.
The Company also owns or operates 43 transfer stations, and provides collection
and recycling services to municipal, residential, commercial and industrial
customers, primarily in areas surrounding its landfill sites and other areas in
18 states.

The Company's electronic security services business involves the sale,
installation and maintenance of electronic security systems for commercial and
residential use as well as the continuous electronic monitoring of installed
security systems. The Company owns and operates nine central monitoring stations
from which it monitors businesses and residences predominantly in six states.

The Company's automotive rental business involves the rental of vehicles on
a daily or weekly basis to leisure and business travelers principally from
on-airport or near airport locations through Alamo Rent-A-Car, Inc. ("Alamo")
and through National Car Rental System, Inc. ("National"). The Company acquired
Alamo in November 1996. Alamo's vehicle rental business operates in 45 states in
the United States, and in Canada and in nine European countries. Alamo owns and
operates 210 rental locations in the United States and Canada, and 63 locations
in Europe, and licenses to third party operators another 120 locations in
Europe. In 1996, Alamo and its licensees operated an average fleet of
approximately 158,000 vehicles. The Company acquired National in February 1997.
National's vehicle rental business operates in all 50 states in the United
States, and in Canada, the Caribbean, Latin America and the Pacific. National
owns and operates 804 rental locations in the United States and Canada, and
licenses to third party operators another 164 locations in the United States,
the Caribbean, Latin America and the Pacific. In 1996, National and its
licensees operated an average fleet of approximately 145,000 vehicles.

The Company's automotive retailing business involves the sale of both new
and used vehicles and related automotive services and products. According to
Automotive News, an industry trade publication, upon completion of the Company's
pending acquisitions of franchised automotive dealerships, the Company will be
the single largest automotive retailer in the United States as measured by total
annual revenue. The Company currently operates 19 franchised automotive
dealerships, and has contracted to acquire 21 additional franchised automotive
dealerships, which operate a total of 55 franchises granted by the manufacturers
of the Acura, Buick, Chevrolet/Geo, Chrysler, Dodge, Ford, Hyundai, Isuzu,
Jeep/Eagle, Kia, Lexus, Lincoln-Mercury, Mazda, Mitsubishi, Nissan, Oldsmobile,
Plymouth, Pontiac, Saturn, Suzuki and Toyota brands of cars and light trucks, in
seven states. The Company also operates, in four states, seven used vehicle
megastores under the name AutoNation USA(SM), three used vehicle retail outlets
under the names Valu Stop(SM) or CarStop(SM), and two vehicle reconditioning
centers. AutoNation is in various stages of acquiring and/or developing numerous
additional sites for AutoNation USA megastores, reconditioning centers and other
used vehicle facilities.

The Company was incorporated in Oklahoma in 1980 and reincorporated in
Delaware in 1991. In 1995, the Company changed its name to Republic Industries,
Inc. from Republic Waste Industries, Inc. The Company's common stock, par value
$.01 per share ("Common Stock"), trades on The Nasdaq Stock

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Market -- National Market ("Nasdaq") under the symbol "RWIN." In May 1996, the
Company declared a two-for-one stock split in the form of a 100% stock dividend,
which was distributed in June 1996 (the "Stock Split"). All references herein to
historical share and per share data have been retroactively adjusted to reflect
the Stock Split. For information concerning revenue and related financial data
and business segment information, see "ITEM 7. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS." For certain risk
factors related to the Company's business, operations and financial performance,
see "-- Risk Factors."

BUSINESS STRATEGY

The Company's business strategy is (i) to continue to expand its current
operations in its existing lines of business through internal growth and
acquisitions, and (ii) to enhance and broaden its operations by entering into
complementary lines of business, particularly in the automotive industry. For
certain risks involved with the Company's business strategy, see "-- Risk
Factors."

In expanding its solid waste operations, the Company has acquired companies
which have solid waste collection and hauling services in high growth markets,
which it expects will experience stable internal growth. The Company generally
operates waste collection companies that are in markets served by the Company's
existing landfill facilities, and in markets with attractive third party
disposal fees. In making acquisitions, the Company principally targets waste
collection companies which have long term collection contracts with
municipalities. The Company also may consider acquiring companies which own or
operate landfills with significant permitted disposal capacity and appropriate
levels of waste volume. The Company generally targets acquisitions in markets
where it will be, or will have favorable prospects of becoming, a significant
provider of integrated waste services in that market. However, the Company is
not limited to these target criteria for acquisitions, and may acquire
additional solid waste operations as opportunities arise.

In expanding its electronic security operations, the Company's primary goal
is to grow its customer base in the residential segment of the business. The
Company generally operates in high growth markets where it will be, or will have
favorable prospects of becoming, a significant provider of electronic security
services. The Company has developed marketing programs which have enabled it to
generate significant numbers of new installations and monitoring accounts each
month. The Company also seeks to acquire security companies in high growth
markets with strong recurring monthly revenue derived from monitoring services.
In addition, the Company will seek to achieve economies of scale by acquiring
security companies with accounts that can be monitored through the Company's
existing central monitoring stations. However, the Company is not limited to
these target criteria for acquisitions, and may acquire additional electronic
security operations as opportunities arise.

In building its automotive operations, the Company's goal is to become the
premiere national provider for consumers' automotive needs. According to
industry analysts, the automotive industry as a consumer market generates over
$800 billion in annual revenue. In 1996, this market encompassed retail sales of
new vehicles (approximately $310 billion), retail sales of used vehicles
(approximately $365 billion), retail sales of vehicle parts and
maintenance/repair services (approximately $128 billion), and rental of vehicles
(approximately $17 billion). In addition, consumers financed approximately $450
billion of vehicle purchases and leases in 1996. At the end of 1996, industry
analysts estimate that there were more than 22,000 franchised automotive
dealerships and 61,000 independent used vehicle retailers in operation in the
United States. Notwithstanding the tremendous size of this market and of each of
its individual components, the Company believes that the automotive consumer
market generally suffers from high degrees of inefficiency, fragmentation, and
consumer dissatisfaction.

For example, in the used vehicle sector, even though there is growing
demand for used vehicles as new vehicle prices increase, consumers are generally
dissatisfied with the service, pricing and quality offered by existing used
vehicle retailers. As a result, according to industry estimates approximately
30% of the total number of used vehicle sales each year are made through casual
private transactions between individuals rather than through an established
retailer. The Company believes that this lack of consumer confidence in the
existing used vehicle retail market is due to the absence of a nationally
branded retailer. In addition, the

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Company believes that consumers generally are unable to find used vehicles that
have been extensively reconditioned, to obtain comprehensive warranties on used
vehicles, to see and test drive a broad selection of used vehicles in one
location, or to be offered a convenient and pleasant, no pressure, "no haggle"
shopping environment.

The Company believes the inefficiency, fragmentation and consumer
dissatisfaction in the retail of used vehicles is also present in other segments
in the automotive industry. The Company's strategy is to capitalize on these
opportunities by becoming a nationally recognized retailer and provider of
products and services to automotive consumers.

In the used vehicle segment, the Company has targeted sites in major
domestic markets for the development of its AutoNation USA used vehicle
megastores. Each megastore maintains an inventory of up to 1,000
Reconditioned-To-Perform-Like-New(SM), late model, low mileage vehicles
featuring "no-haggle" prices with limited warranties and return policies. Each
megastore is highly visible with convenient access and provides exceptional
customer service and other amenities. At present, the Company has opened seven
AutoNation USA megastores, plans on opening approximately 13 more in 1997 and
plans on having a total of approximately 86 by the end of the year 2000. The
Company is also developing vehicle reconditioning centers to serve markets in
which it will be operating AutoNation USA megastores.

In addition, the Company is developing smaller used vehicle retail stores,
operating under the Valu Stop and CarStop brand names. These stores feature
older-model, higher mileage vehicles than those offered in AutoNation USA
megastores. They offer the same "no-haggle" prices on vehicles with exceptional
customer service, but shorter warranty and return policies. The Company
anticipates that many of the vehicles offered by these stores will be trade-ins
received at AutoNation USA megastores. At present, the Company has opened three
Valu Stop and CarStop stores and plans on opening additional stores in markets
where AutoNation USA megastores are being developed.

In the new vehicle segment, the Company has acquired, or has contracted to
acquire, an aggregate of 40 franchised automotive dealerships which operate a
total of 55 franchises granted by the manufacturers of 24 brands of vehicles. In
making these acquisitions, the Company has sought dealerships with popular
brands and well established reputations for quality service, competitive pricing
and programs which are designed to improve customer convenience and
satisfaction. The Company anticipates that franchised automotive dealerships
will provide AutoNation USA megastores with access to used vehicles which are
traded-in or off-lease and allow for servicing of used vehicles under
manufacturers' warranties. They will also provide the Company with additional
volume for its reconditioning centers, enabling them to operate at a greater
capacity, thereby reducing reconditioning costs per vehicle. The Company intends
to continue to acquire franchised automotive dealerships in markets where it is
developing AutoNation USA megastores.

In the vehicle rental segment, the Company has acquired Alamo and National,
two of the five largest companies in the industry. Alamo has a strong presence
in the leisure segment of the vehicle rental market and National has a strong
presence in the business travel segment. By owning both companies, the Company
anticipates that it will be able to serve a wider customer base, obtain greater
utilization of its vehicle rental fleets and achieve economies of scale in fleet
purchasing, management and financing. In addition, Alamo and National provide
the Company with greater access to used vehicles for AutoNation USA megastores
and additional sources of vehicles for the Company's reconditioning centers,
enabling such centers to operate at a greater capacity thereby reducing
reconditioning costs per vehicle.

The Company also plans to establish a captive finance company and enter
into an arrangement with a leading finance company to service its operations.
The Company believes that its own finance company will give its automotive
retailing operations a competitive advantage by being able to offer unique
financing alternatives to consumers. The Company is exploring additional
opportunities in related complimentary automotive businesses. Such businesses
may be developed through acquisitions, joint ventures, affiliations and other
means.

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The Company intends to develop AutoNation USA into a national brand for its
new and used vehicle operations while building upon the strong recognition of
Alamo and National. In the process, the Company will seek to offer the consumer
value, convenience and high quality service. In doing so, the Company will have
the opportunity to profit from multiple transactions with many consumers in
fulfilling their automotive transportation needs. In addition, the Company
anticipates that it will have the ability to profit from each stage of a
vehicle's life: first, from its sale or lease and related financing as a new
vehicle at one of the Company's franchised automotive dealerships, then, upon
its return off-lease or as a trade-in, from its rental at Alamo or National, and
finally, from the sale or lease and related financing of the same used vehicle
at an AutoNation USA megastore, Valu Stop or CarStop location.

By owning national chains of franchised automotive dealerships, used
vehicle stores, vehicle rental companies and other complimentary businesses, the
Company anticipates that it will also be able to achieve certain economies of
scale. For example, as one of the largest advertisers in a particular market,
advertising expenses can be lowered through volume purchases of broadcast time,
newspaper advertising and other media. In addition, the Company will have the
opportunity to consolidate financial and other administrative functions to
reduce fixed costs and achieve greater efficiencies in operations.

Although management believes that the Company currently has sufficient
resources, including cash on hand, cash flow from operating activities, credit
facilities and access to the financial markets, to fund current and planned
operations, service its outstanding debt and make certain acquisitions, there
can be no assurance that additional financing will be available on a timely
basis, if at all, or that it will be available on terms acceptable to the
Company for such purposes. See "-- Risk Factors" and "ITEM 7. MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."

ACQUISITIONS

The Company uses internal acquisition teams, supplemented as needed by
outside advisors, and its contacts in the solid waste services, electronic
security services and automotive industries, to identify, evaluate and acquire
solid waste services, electronic security services and automotive businesses.
Acquisition candidates are evaluated based on stringent criteria in a
comprehensive process which includes operational, legal and financial due
diligence reviews.

The Company expects to continue to pursue acquisitions in the solid waste
services, electronic security services, automotive and other related industries,
and anticipates financing acquisitions with cash, issuances of Common Stock
and/or borrowings under lines of credit.

Pending Acquisitions

In February 1997, the Company signed a definitive agreement to acquire
Taormina Industries, Inc. ("Taormina"), which provides waste collection services
and owns and operates a materials recycling facility. The Company will issue
approximately 7.3 million shares of Common Stock in this transaction, which will
be accounted for under the pooling of interests method of accounting. The
closing of the transaction is subject to customary conditions, including
regulatory approvals.

In February 1997, the Company signed a definitive agreement to acquire AAA
Disposal Services, Inc. ("AAA Disposal"), which provides waste collection and
recycling services. The Company will issue approximately 2.9 million shares of
Common Stock in this transaction, which will be accounted for under the pooling
of interests method of accounting. The closing of the transaction is subject to
customary conditions, including regulatory approvals.

In February 1997, the Company signed a definitive agreement to acquire
Wallace Automotive Group ("Wallace"), which owns and operates three franchised
automotive dealerships. The Company will issue approximately 1.7 million shares
of Common Stock in this transaction, which will be accounted for under the
pooling of interests method of accounting. The closing of the transaction is
subject to customary conditions, including manufacturer and regulatory
approvals.

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In January 1997, the Company signed a definitive agreement to acquire
Maroone Automotive Group ("Maroone"), which owns and operates five franchised
automotive dealerships. The Company will issue approximately 6.1 million shares
of Common Stock in this transaction, which will be accounted for under the
pooling of interests method of accounting. The closing of the transaction is
subject to customary conditions, including manufacturer and regulatory
approvals.

In addition, in January and February 1997, the Company signed definitive
agreements to acquire other businesses in the solid waste services and
automotive retailing industries which are not material to the Company. The
Company will issue an aggregate of approximately 2.5 million shares of Common
Stock in such transactions, which will be accounted for under the purchase
method of accounting, and will issue an aggregate of approximately 1.1 million
shares of Common Stock in such transactions, which will be accounted for under
the pooling of interests method of accounting. These transactions are subject to
customary conditions, including manufacturer and regulatory approvals, as
applicable.

Acquisitions Completed Subsequent to December 31, 1996

In February 1997, the Company acquired National, which operates a vehicle
rental business. The Company issued approximately 21.7 million shares of Common
Stock in this transaction, which is being accounted for under the pooling of
interests method of accounting.

In January 1997, the Company acquired AutoNation Incorporated
("AutoNation"), which is developing a chain of used vehicle megastores. The
Company issued approximately 17.5 million shares of Common Stock in this
transaction, which is being accounted for under the purchase method of
accounting.

In January 1997, the Company acquired Carlisle Motors, Inc. ("Carlisle"),
which owns and operates three franchised automotive dealerships. The Company
issued approximately 1.0 million shares of Common Stock in this transaction,
which is being accounted for under the pooling of interests method of
accounting.

In addition, in January and February 1997, the Company acquired various
other businesses in the solid waste services, electronic security services and
automotive retailing industries which were not material to the Company. The
Company issued an aggregate of approximately 9.1 million shares of Common Stock
and paid approximately $56.5 million of cash in such transactions, which is
being accounted for under the purchase method of accounting, and issued an
aggregate of approximately .9 million shares of Common Stock in such
transactions, which is being accounted for under the pooling of interests method
of accounting.

Acquisitions Completed During 1996

In December 1996, the Company acquired Addington Resources, Inc.
("Addington"), which primarily provides solid waste disposal services. The
Company issued approximately 13.7 million shares of Common Stock in this
transaction, which has been accounted for under the pooling of interests method
of accounting.

In December 1996, the Company acquired Continental Waste Industries, Inc.
("Continental"), which provides integrated solid waste services. The Company
issued approximately 12.4 million shares of Common Stock in this transaction,
which has been accounted for under the pooling of interests method of
accounting.

In November 1996, the Company acquired Alamo, which operates a vehicle
rental business. The Company issued approximately 22.6 million shares of Common
Stock in this transaction, which has been accounted for under the pooling of
interests method of accounting.

In August 1996, the Company acquired substantially all of the assets of
CarChoice, Inc. ("CarChoice"), which operated used vehicle superstores similar
to those being developed by AutoNation. The Company issued approximately 3.9
million shares of Common Stock in this transaction, which has been accounted for
under the pooling of interests method of accounting.

In February 1996, the Company acquired Incendere, Inc. ("Incendere"), which
provides solid waste collection, recycling and medical waste hauling services.
In February 1996, the Company acquired The Denver Fire Reporter & Protective Co.
("Denver Alarm"), which provides electronic security services. The

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Company issued an aggregate of approximately 5.8 million shares of Common Stock
in these transactions, which have been accounted for under the pooling of
interests method of accounting.

During the year ended December 31, 1996, the Company also acquired various
other businesses in the solid waste services, electronic security services and
automotive retailing industries which were not material to the Company. The
Company issued an aggregate of approximately 9.1 million shares of Common Stock
and paid $23.4 million of cash in such transactions which have been accounted
for under the purchase method of accounting, and issued an aggregate of
approximately 13.0 million shares of Common Stock in such transactions which
have been accounted for under the pooling of interests method of accounting.

Vehicle Manufacturer Agreements and Policies Related to Acquisitions

In furtherance of the Company's strategy to expand its automotive retailing
operations, the Company has entered into agreements with certain major vehicle
manufacturers to facilitate the acquisition of automotive dealerships operating
under franchises granted by such manufacturers.

General Motors. In January 1997, the Company entered into an agreement
establishing a framework with General Motors Corporation ("General Motors") for
the acquisition by the Company of automotive dealerships operating Buick,
Cadillac, Chevrolet, Oldsmobile and Pontiac-GMC franchises. The agreement with
General Motors contains certain provisions relating to the Company's
acquisition, ownership structure, management, and operation of automotive
dealerships franchised by General Motors, which will allow the Company to
implement its strategy of acquiring automotive dealerships in markets where it
has existing and planned AutoNation USA megastores. In addition, the General
Motors agreement provides that General Motors will have the right to acquire,
for fair market value, any General Motors franchised automotive dealership
operated by the Company if any person or persons acting as a group acquires more
than 20% of the Company's voting stock with the intent to acquire more than 50%
of the Company's voting stock, to engage in an extraordinary corporate
transaction with the Company such as a merger or to change the majority of the
Company's existing Board of Directors, provided that such actions, in General
Motors' judgment, could have a material or adverse affect on General Motors'
image or reputation, or materially and adversely affect the operations of
General Motors franchised dealerships or could be materially incompatible with
General Motors' interests.

Ford Motor. In December 1996, the Company entered into an agreement
establishing a framework with the Ford Motor Company ("Ford Motor") for the
acquisition by the Company of automotive dealerships operating Ford and
Lincoln-Mercury franchises. The agreement with Ford Motor contains certain
provisions relating to the Company's acquisition, ownership structure,
management, and operation of automotive dealerships franchised by Ford Motor,
which will allow the Company to implement its strategy of acquiring automotive
dealerships in markets where it has existing and planned AutoNation USA
megastores. In addition, the Ford Motor agreement provides that Ford Motor will
have the right to acquire, for fair market value, any Ford Motor franchised
automotive dealership operated by the Company if either (i) any person or
persons acting as a group acquires more than 50% of the Company's voting stock
or (ii) the Company proposes to engage in an extraordinary corporate transaction
such as a merger or sale of all of its assets or to change the majority of the
Company's existing Board of Directors, provided that such actions, in Ford
Motor's judgment, could have a material and adverse affect on Ford Motor's image
or reputation or could be materially incompatible with Ford Motor's interests.

Other Manufacturers. Other automobile manufacturers generally have
policies regarding the acquisition, ownership structure, management, and
operation of their franchised automotive dealerships, some of which may include
limitations on franchised automotive dealerships acquired by a publicly-owned
corporation. The Company believes that its strategy of acquiring franchised
automotive dealerships will be aided by various federal and state laws that
generally protect franchisees, which include statutes that may prohibit an
automobile manufacturer from unreasonably withholding approval of a proposed
change of ownership of a franchised automotive dealership.

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OPERATIONS

The Company's operations are organized primarily into four general industry
segments: (1) solid waste services, (2) electronic security services, (3)
automotive rental and (4) automotive retailing.

Solid Waste Services

The Company's solid waste services operations primarily consist of
collection, disposal and recycling services.

Collection Services. The Company's solid waste collection operations are
of two types: industrial and commercial/residential. As of December 31, 1996,
the Company provided collection services to municipal, residential, commercial
and industrial customers in 18 states.

In its industrial collection operations, the Company supplies its customers
with waste containers known as "roll-off" containers. The Company collects the
roll-off containers and transports them to a landfill where the waste is
deposited. Waste collection services are provided to individual facilities on a
contractual basis with terms generally ranging from a single pickup to a
one-year term.

The Company's commercial and residential collection operations involve the
curbside collection of refuse from small containers into collection vehicles for
transport to transfer stations or directly to landfills. Commercial collection
services are generally performed under one to three-year service agreements, and
fees are determined by such considerations as market factors, collection
frequency, type of equipment furnished, the type and volume or weight of the
waste collected, the distance to the disposal facility and cost of disposal.
Residential solid waste collection services are typically performed under
contracts with municipalities, generally secured by competitive bid, which give
the Company exclusive rights to service all or a portion of the homes in their
respective jurisdictions. Such contracts or franchises usually range in duration
from one to five years, although some are for as long as 20 years. Residential
solid waste collection services may also be performed on a subscription basis,
in which individual households contract directly with the Company. The fees
received for residential collection are based primarily on market factors,
frequency and type of service, the distance to the disposal facility and cost of
disposal. Residential collection fees are paid by the residential customers
receiving the service.

The Company also owns or operates 43 transfer stations. Waste is collected
and deposited at these stations by the Company and other private haulers for
compaction and transfer to trailers for transport to landfills, incinerators,
recycling facilities or other disposal sites.

Disposal Services. The Company owns or operates 36 solid waste landfills
with approximately 4,221 permitted acres and total available permitted disposal
capacity of approximately 267.3 million cubic in-place yards as of December 31,
1996. See "ITEM 2. PROPERTIES -- Solid Waste Services." The in-place capacity of
the Company's landfills is subject to change based on engineering factors and
requirements of regulatory authorities. Certain of the landfills accept
nonhazardous special waste, including utility ash, asbestos and contaminated
soils. The majority of the Company's landfill revenue are derived from long-term
integrated waste disposal and collection contracts with industrial customers and
municipalities, and disposal contracts with certain third party collection
companies.

Most of the Company's existing landfill sites have the potential for
expanded disposal capacity beyond the currently permitted acreage. The Company
monitors the availability of permitted disposal capacity at each of its
landfills and evaluates whether to pursue expansion at a given landfill based on
estimated future waste volumes, remaining capacity and likelihood of obtaining
expansion. Each of the Company's landfills currently has adequate permitted
capacity. The Company is currently seeking to expand permitted capacity at
certain of its landfills in connection with favorable design modifications.

Recycling Services. Management believes that recycling has become an
increasingly important component of most major markets' solid waste management
plans as a result of the public's increasing environmental

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awareness and expanding federal and state regulations pertaining to waste
recycling. The Company currently provides recycling services through most of its
collection subsidiaries and has recycling facilities or other recycling
operations in 17 states. The services provided by the Company's collection
subsidiaries include the curbside collection of recyclable waste and the
provision of a variety of recycling services, including the collection of
segregated cardboard boxes and construction debris for resale to paper
manufacturers and others. In certain areas, the Company receives certain types
of commercial and industrial solid waste which is sorted at its facilities into
recyclable materials and nonrecyclable waste; the recyclable materials are
salvaged, repackaged and sold to third parties and the non-recyclable waste is
disposed of at landfills or incinerators.

Electronic Security Services

The Company is engaged in the electronic security services business, which
consists of the sale, installation and maintenance of electronic security
systems for commercial and residential use, as well as the continuous electronic
monitoring of installed security systems. The Company sells and installs modern
electronic devices in its customers' businesses and residences to provide
detection of events, such as intrusion or fire. The Company purchases from
various manufacturers the components of the systems it sells, installs and
maintains. The products and services marketed in the electronic security
services industry by the Company and others range from basic residential systems
that provide entry and fire detection to sophisticated commercial systems
incorporating closed circuit television and access control systems. Detection
systems may be continuously monitored by centralized monitoring stations which
are linked to the customer through telephone lines or via radio transceiver.
Currently, the Company operates nine central monitoring stations in six states
from which it monitors businesses and residences. Upon detecting an intrusion or
certain other occurrences at a customer's business or residence, the central
monitoring station calls the customer and, if necessary, the local police
department, fire department, ambulance or other authorities.

Automotive Rental

The automotive rental industry is composed of three principal markets: the
general use market for business travelers, the general use market for leisure
travelers and the local/replacement market. The general use markets consist of
the rental of vehicles principally from on-airport or near-airport locations,
and the local/replacement market consists of the rental of vehicles to
individuals who have lost the use of their vehicles through accident, theft or
breakdown and generally are located near downtown or suburban areas. Vehicle
rentals are generally made on a daily or weekly basis. Rates vary at different
locations depending on the type of vehicle, competitive market conditions and
cost factors.

In general, concession fees for airport locations are based on a percentage
of total revenue (as determined by each airport), subject to a minimum
guaranteed amount. Concessions are typically awarded by airport authorities
every three to five years based upon competitive bids. As a result of minimum
guaranteed fees, most smaller rental companies are not located at airports.
Concession arrangements with the various airport authorities usually include
minimum requirements for vehicle age, operating hours, employee conduct, and
provide for relocation in the event of future construction and abatement of fees
in the event of extended low passenger volume. At near-airport locations,
airport authorities generally charge permit fees for the privilege of customer
pick-up and drop-off at terminals by courtesy vans or buses. Unlike on-airport
concessions, most often there is no limit to the number of ground transportation
permits available for issuance by the airport authority and a minimum guaranteed
fee is not required. Generally, on-airport locations have greater high-yielding
walk-up rentals (i.e., customers without reservations) and fewer no-shows (i.e.,
customers with reservations who fail to rent).

Alamo principally targets the general use market for leisure travelers.
Alamo's vehicle rental business operates in 45 states in the United States, and
in Canada and in nine European countries. Alamo owns and operates 210 rental
locations in the United States and Canada, and 63 locations in Europe, and
licenses to third party operators another 120 locations in Europe. In 1996,
Alamo and its licensees operated an average

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fleet of approximately 158,000 vehicles. Of the rental locations owned and
operated by Alamo and its licensees, 121 are on-airport locations, 183 are
near-airport locations, and 89 are downtown or suburban locations.

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 and the Pacific. National
owns and operates 804 rental locations in the United States and Canada, and
licenses to third party operators another 164 locations in the United States,
the Caribbean, Latin America and the Pacific. In 1996, National and its
licensees operated an average fleet of approximately 145,000 vehicles. Of the
rental locations owned and operated by National in the U.S. and Canada, 345 are
on-airport locations, and 459 are downtown or suburban locations. National
serves its customers in other markets around the world through marketing
affiliations in Europe, Africa and the Middle East with Europcar/Interrent, and
in Japan and the Pacific with Nippon/Interrent.

Both Alamo and National offer a wide variety of automobiles, minivans and
sport/utility vehicles, most of which are either the current or immediately
preceding model years. Alamo and National are each in many cases one of several
vehicle rental concessionaires at the airports at which they operate. Both Alamo
and National generally offer their customers the convenience of leaving a rental
vehicle at a rental location in a city other than the one in which it was
rented, typically subject to a drop-off charge or special inter-city rate.
Historically, rental charges have included unlimited mileage, although Alamo has
tested fees in certain markets for mileage above specific allowances.

Both Alamo and National use proprietary integrated fleet management systems
to efficiently utilize their rental fleets and price their rental vehicles.
These systems provide for the identification and status of every vehicle in the
fleet every day on a real-time basis, and enables Alamo and National to evaluate
fleet needs based on market demands and reservation projections on a daily basis
and to optimize their ability to rent each available vehicle in their fleets
each day at the highest possible rate. These fleet management systems perform,
among other functions, vehicle purchase ordering (including vehicle
specifications), in-fleeting, registration, invoice and dealer payment and title
control, fleet movement tracking, physical inventory and inactive vehicle
management, fleet cost allocation (both purchased and leased), maintenance
record keeping, grounding and vehicle sales. These systems also take into
account the present bookings, factor in the traditional no-show percentage and
compare historical data for walk-ups and incoming reservations. These systems
are upgraded from time to time.

The Company operates five state-of-the-art reservations centers. Alamo's
three vehicle rental reservation centers collectively handle an average of
68,000 telephone calls per weekday, with up to 96,000 calls per weekday during
peak periods, and are linked to allow for the rerouting of calls among the
centers depending on operational needs. National's two vehicle rental
reservation centers collectively handle an average of 45,000 telephone calls per
weekday, with up to 65,000 calls per weekday during the peak periods, while the
majority of bookings are received via automated global distribution systems with
corporate accounts.

In addition to basic vehicle rental charges, the sale of rental related
products generates approximately 23% of Alamo's revenue in the United States,
Canada and Europe, and approximately 4.9% of National's revenue in the United
States and Canada, as of December 31, 1996. Such rental related products include
collision damage waivers, additional liability protection, personal accident and
personal effects protection, other travel related insurance coverages and travel
related products, such as vehicle upgrades, gasoline sales, inter-city drop-off
charges, and miscellaneous items such as baby seats, ski racks, cellular phones
and additional driver fees. The Company also earns a small percentage of its
overall rental revenue from its airport parking operations.

In the United States, all of Alamo's rental locations and most of
National's rental locations are corporate-owned. National licenses a number of
locations to third party operators, generally in smaller markets, which provide
greater depth of coverage for customers, while also offering effective sizing of
operations and other efficiencies. The relationship between National and its
licensees is generally governed by certain license agreements. Licensees receive
in-depth training, and their policies and procedures, which mirror corporate
requirements, are monitored regularly. National intends to continue to emphasize
its licensee programs,

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working closely with existing licensees to grow their businesses, while also
actively seeking new franchise owners in a variety of markets. There are also
various federal and state laws that govern the relationship between National and
its licensees, which generally protect the licensee. These include statutes that
prohibit a rental company from terminating or failing to renew a franchise
without good cause and statutes that prohibit a franchisor from unreasonably
withholding approval of a proposed change in ownership. Under such statutes a
franchisor may disapprove of a proposed change of control for certain enumerated
reasons involving the character, financial ability or business experience of the
proposed transferree.

General Motors has been the principal supplier of rental vehicles to Alamo
since the 1980's, and to National since the 1960's. The number of vehicles
purchased from General Motors varies from year to year. In model years 1996,
1995 and 1994, Alamo's operations purchased approximately 65%, 68% and 78%,
respectively, and National's operations purchased approximately 87%, 91% and
99%, respectively, of their respective North American rental fleets from General
Motors. A model year in the United States generally commences September 1 and
ends August 31. In addition, the Company's North American operations purchase or
lease vehicles manufactured by, among others, Chrysler Corporation, Ford Motor,
Mazda Motor of America, Inc., Mitsubishi Motor Sales of America, Inc., Nissan
Motor Corporation in U.S.A., Subaru of America, Inc. and Toyota Motor Sales,
U.S.A., Inc. (including its Lexus division).

During model year 1996, Alamo purchased approximately 97% of its U.S.
rental fleet, and National purchased approximately 99.5% of its U.S. rental
fleet, pursuant to vehicle manufacturers' repurchase programs, pursuant to which
the manufacturers agree to repurchase program vehicles during allowable
repurchase periods at determinable prices, subject to certain terms and
conditions ("Repurchase Programs"). Repurchase Programs allow the Company to
maintain program vehicles in its fleet for varying maximum periods. The Company
may, at its option, require the manufacturer to repurchase program vehicles at
any time during the allowable program term. At the time of repurchase by the
manufacturer, the Company receives a price based on either (i) a predetermined
percentage of a vehicle's original capitalized cost and the month of return or
(ii) the original capitalized cost less a set monthly depreciation amount, and
is thus protected from fluctuation in the prices of used vehicles in the
wholesale market at the time of disposition. If vehicles subject to Repurchase
Programs are returned earlier than anticipated at the time of purchase, then the
depreciation expense for the period such vehicles were in service is usually
increased. Repurchase Programs also impose return conditions, including mileage
limitations and varying damage limitations and may provide significant monetary
incentives for advertising. Vehicles acquired under Repurchase Programs in the
United States are purchased through franchised automotive dealerships of the
applicable manufacturer.

Most manufacturers renew their Repurchase Programs annually, at which time
the parties negotiate the vehicle mix, cost and repurchase price. Under the
Repurchase Programs with General Motors, the Company's rental fleets must
consist of specified minimum percentages of General Motors vehicles (at least
51% for Alamo and at least 85% for National) during model years 1996 through
2000 in order to receive certain discounts and incentives, and General Motors
has agreed to make available to the Company a specified minimum number of
vehicles each model year. Prior to each new model year the Company and General
Motors negotiate the amount and mix of vehicles being purchased and certain
other terms which can affect the overall cost for the model year. In addition to
the Repurchase Programs with General Motors, the Company maintains fleet
financing support agreements with General Motors for the benefit of certain of
the Company's lenders pursuant to which General Motors provides a limited
guarantee to certain of the Company's lenders to pay up to a specified
percentage of the original purchase price of General Motors vehicles in the
event that the Company is unable to meet its obligations and such lenders must
repossess such vehicles and dispose of them at a net loss.

The Company also purchases vehicles for its rental fleet that are not
subject to Repurchase Programs. The Company is responsible for the disposition
of such vehicles. During model year 1996, Alamo purchased approximately 3% of
its North American rental fleet outside Repurchase Programs, and National had
minimal purchases outside of Repurchase Programs. Such purchases are made from a
number of sources, including private and public auctions, wholesalers,
automotive dealerships and vehicle manufacturers. In the future, the number of
vehicles purchased outside Repurchase Programs may increase or decrease based on
a number of factors, including a determination by the Company of the acceptable
level of residual risk related to the

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disposition of vehicles in the used vehicle market. The Company believes that
acquiring vehicles outside Repurchase Programs enables it to (i) better match
fleet size to seasonal needs by giving it the flexibility to acquire vehicles
for relatively short periods of time, (ii) better match vehicle type/model mix
to customer demand, and (iii) reduce overall fleet cost. Alamo also acquires
vehicles pursuant to short term leases, the term of which is generally less than
one year. The number of vehicles which Alamo leases depends upon a number of
factors, including price, term and availability.

The age of vehicles in the Company's rental fleets, whether acquired
through Repurchase Programs or outside such programs, generally has not exceeded
two model years. The Company disposes of its rental vehicles primarily pursuant
to the repurchase provisions of the Repurchase Programs. Vehicles that are not
subject to Repurchase Programs are disposed of through private and public
auctions and resales to wholesalers and automotive dealerships, among other
methods. The Company anticipates that it also will dispose of a certain number
of rental vehicles that are not subject to Repurchase Programs through
AutoNation USA megastores and other franchised or used vehicle stores operated
by the Company.

The Company performs routine maintenance on its rental fleet. The Company
utilizes computerized maintenance systems which identify the vehicles due for
maintenance and the type of maintenance required based on mileage and the
in-service period. The systems track the maintenance history of each vehicle
from the date it becomes part of the fleet to the date that it is removed from
the fleet, including any repairs or body work performed on the vehicle, where
the work was performed and the cost. The Company's vehicle rental facilities
typically include maintenance areas, and trained employees dedicated to fleet
maintenance. Vehicles are cleaned between rental transactions and are regularly
inspected as part of the Company's routine maintenance program.

In foreign countries, given local customs and language barriers, the
foreign vehicle rental operations of Alamo and National utilize licensee
operations and international affiliations in addition to owned and operated
facilities. License agreements require the licensee to maintain certain quality
and price standards so that Alamo and National can ensure that customers receive
equivalent service and prices at all of their international locations. Alamo's
license agreements are generally for a term of one to five years, and National's
license agreements are generally for a longer term. The license agreements and
affiliation agreements provide the right to use certain service marks, as well
as access to Alamo's or National's computer reservation systems. Certain license
agreements require the licensees to provide reciprocal services to other
licensees, such as vehicle replacement. Licensees typically pay a percentage of
revenue as a licensing fee and, in certain cases, an additional advertising or
management fee. National's affiliation agreements with Europcar/Interrent and
Nippon/Interrent, however, do not provide for a payment of a percentage of
revenue. Certain license agreements provide the licensors with the right of
first refusal to purchase the licensee.

Internationally, vehicle acquisition is generally negotiated on an
individual country basis or an individual licensee basis. Alamo's Repurchase
Programs are sponsored by automotive dealerships, in contrast to its North
American Repurchase Programs which are sponsored by automobile manufacturers.
While National's North American Repurchase Programs are similar to Alamo's, each
of National's international licensees and affiliates has its own purchasing
arrangements. During model year 1996, Alamo purchased less than half of its
European fleet outside of Repurchase Programs. Alamo's European vehicle rental
operations purchase or lease vehicles manufactured by affiliates of General
Motors, Daimler-Benz AG, Renault Osterreich Automobilvertriebs AG, Renault
Nederland NV, Renault Zurich SA and Volkswagon AG.

National has marketing affiliations in Europe, Africa and the Middle East
through Europcar/Interrent, and in Japan and the Pacific through
Nippon/Interrent. These agreements offer National customers access to nearly
2,000 vehicle rental locations in Europe, Africa and the Middle East, and to
more than 700 locations in Japan, served by a fleet of nearly 200,000 vehicles.
In addition, National serves Europcar/Interrent and Nippon/Interrent customers
in the United States and Canada, as well as in the Caribbean, Latin America and
the Pacific through a series of licensee and joint venture agreements.

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Automotive Retailing

Automobile sales represent the largest consumer retail market segment in
the United States. According to Automotive News and reports of various financial
analysts, in 1996, new vehicle sales were estimated to be approximately $310
billion and used vehicle sales were estimated to be approximately $365 billion.
In addition, according to such sources, at year end 1996, there were over 22,000
franchised automotive dealerships and over 61,000 used-only vehicle retailers in
operation in the United States. Vehicles, both new and used, are being retailed
through a decreasing number of outlets. Excluding the relatively new brands of
vehicles (Acura, Hyundai, Infiniti, Isuzu, Kia, Lexus and Saturn) that
automobile manufacturers have started distributing in the United States, since
1970 the number of franchised automotive dealerships operating in the United
States has decreased by more than 40%. This rapid consolidation of the
automotive retailing industry is due to a number of factors including, but not
limited to, increased consumer information, aging dealership principals,
declining new vehicle gross margins, high-cost distribution systems, vehicle
manufacturer programs to reduce the number of franchises, the advent and growth
of specialty retailers for used vehicles, parts and service, the increasing
acceptance of public ownership of franchised automotive dealerships by
automobile manufacturers and the changing retailing environment.

Used Vehicle Retailing. In January 1997, the Company acquired AutoNation.
AutoNation is developing a chain of used vehicle megastores, under the
AutoNation USA brand name, for the sale of "Reconditioned-To-Perform-Like-New"
vehicles in a customer friendly, "no haggle" environment and is exploring other
opportunities in other automotive businesses. AutoNation commenced operations of
its first AutoNation USA megastore in October 1996 and the Company currently
operates seven AutoNation USA megastores. AutoNation is in various stages of
acquiring and/or developing 65 additional sites for AutoNation USA megastores,
vehicle reconditioning centers and other used vehicle facilities.

Each AutoNation USA megastore maintains an inventory of up to 1,000
"Reconditioned-To-Perform-Like-New" late model, low mileage vehicles featuring
low, "no-haggle" prices. Every vehicle sold at AutoNation must pass a 165-point
reconditioning process in which technicians inspect, adjust, clean, repaint,
repair or replace mechanical, cosmetic and safety features of the vehicle to
ensure the vehicle meets AutoNation standards. Each vehicle is sold with a
99-day bumper-to-bumper limited warranty, a seven-day/300-mile money-back
guarantee and 24-hour free roadside assistance for a full year. The AutoNation
USA megastores also offer financing, service centers and automotive accessory
sales. Each AutoNation USA megastore is located on an approximately 20-acre site
with high-visibility and convenient access and provides exceptional customer
service and amenities. AutoNation also has smaller used vehicle retail stores,
operating under the Valu Stop and CarStop brand names, which feature
older-model, higher mileage vehicles than those offered in AutoNation USA
megastores.

As each AutoNation USA megastore site is being developed, AutoNation hires
a general manager for that retail site approximately 60 days prior to the
store's anticipated opening date. All other employees for the store are hired by
the general manager approximately 30 days prior to the store's anticipated
opening date. All retail staff receive extensive training in the period prior to
the store opening. Such training is conducted by professional instructors
employed by AutoNation. Training focuses on AutoNation's "no haggle" one-price
policy for vehicles, high quality customer service, state-of-the-art computer
systems, warranty and financing plans, and other systems and procedures. A
sufficient inventory of used vehicles is purchased, reconditioned, and delivered
to the store prior to its opening date in order to stock the store with a broad
selection of high quality used vehicles.

Sales Guides at AutoNation USA megastores are salaried, not commissioned,
so that customers can shop in a no-pressure environment. Using computer kiosks,
shoppers can browse the complete inventory at each location. Every AutoNation
USA megastore features a fully equipped and supervised ChildPlay Center(SM),
eating area, community room and a retail showroom with more than 2,000
automotive accessories.

AutoNation has several sources of supply for its used vehicles. To date,
AutoNation has acquired most of its inventory of used vehicles by purchasing
them from auctions, automotive dealerships and corporate accounts. AutoNation
employs wholesale buyers who regularly attend auctions. At the auctions, used
vehicles are offered for sale through competitive bidding on behalf of
automotive dealerships (consisting, primarily, of

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trade-in and off-lease vehicles), banks and finance companies (consisting of
off-lease and repossessed vehicles), and rental companies, government agencies,
corporations and other entities which own and periodically dispose of vehicle
fleets. AutoNation's corporate accounts include banks, and rental and other
companies with leased and fleet vehicles, from which AutoNation directly
purchases. In addition, AutoNation anticipates that in the future it will obtain
a significant quantity of its used vehicles from (i) the Company's franchised
automotive dealer operations, as permitted by manufacturer policies, by virtue
of customer trade-ins and off-lease vehicles, (ii) its AutoNation USA
megastores, by virtue of customer trade-ins and off-lease vehicles, and (iii)
the Company's Alamo and National automotive rental operations, by virtue of
vehicles purchased outside manufacturer Repurchase Programs which otherwise
would be sold at auction.

All used vehicles acquired from any source by AutoNation for retail sale
are transported to a reconditioning center. AutoNation owns and operates its own
reconditioning centers, and also subcontracts reconditioning centers from
vehicle auctions and other third parties. At the reconditioning centers, the
mechanical, safety and cosmetic condition of each vehicle is thoroughly
inspected by certified technicians, and the vehicles are repaired, serviced,
painted, cleaned and processed, as necessary, prior to being delivered to
AutoNation's stores.

New Vehicle Retailing. The Company has acquired and operates 19 franchised
automotive dealerships, and has contracted to acquire 21 additional franchised
automotive dealerships, which operate a total of 55 franchises granted by the
manufacturers of the Acura, Buick, Chevrolet/Geo, Chrysler, Dodge, Ford,
Hyundai, Isuzu, Jeep/Eagle, Kia, Lexus, Lincoln-Mercury, Mazda, Mitsubishi,
Nissan, Oldsmobile, Plymouth, Pontiac, Saturn, Suzuki and Toyota brands of cars
and light trucks, in seven states. A central element of the Company's strategy
is to change customer perceptions of the vehicle buying experience and to create
a pleasant shopping environment in retail outlets with convenient hours of
operation which are staffed by courteous and knowledgeable personnel and which
offer competitive pricing. The Company has acquired, and intends to continue to
acquire, automotive dealerships with well established reputations for quality
service, competitive pricing and programs designed to improve customer
convenience and satisfaction. In that regard, the Company generally intends to
retain each automotive dealership's principal management in order to benefit
from their years of automotive retailing experience.

Each of the Company's franchised automotive dealerships offers brand name
new and used vehicles. New vehicles are generally acquired directly from the
manufacturer and the mix of vehicles is generally determined by the manufacturer
based on several factors including the size and location of the dealership and
the dealer's sales record and customer satisfaction rating. Used vehicles are
generally acquired from customer trade-ins and off-lease vehicles. Customers
generally have a choice of purchasing the vehicle or leasing the vehicle, in
which case the vehicle is actually purchased by a leasing company. In recent
years the number of leasing transactions has increased due to the rising prices
of new vehicles and the support of vehicle manufacturers. Through the use of
captive leasing companies, manufacturers have supported the residual values of
leased vehicles which in turn has lowered the monthly payments on leased
vehicles relative to purchased vehicles that are financed by the consumer. Each
of the Company's automotive dealerships also offers aftermarket products such as
cellular phones, radios, alarms, and extended service contracts. Finally, the
Company's automotive dealerships have service facilities which are capable of
providing a wide range of vehicle repairs.

Each of the Company's automotive dealerships operates under a franchise
agreement with the applicable vehicle manufacturer. Such franchise agreements
generally grant the franchised automotive dealership a non-exclusive right to
sell the applicable manufacturer's brand of vehicles and offer related parts and
service within a specified market area, although generally a manufacturer will
retain the discretion to allocate the mix of vehicles among its franchised
dealerships within a given market area. Such agreements also grant the
dealership the right to use the manufacturer's trade names in connection with
the sale of its vehicles. Franchise agreements generally impose operational
requirements and restrictions on the automotive dealership relating to such
things as inventory levels, working capital requirements, showroom and service
facilities, personnel and monthly financial reporting. Franchise agreements
generally provide for termination of the agreement by the manufacturer or
non-renewal for a variety of causes including changes of ownership without

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prior approval, certain bankruptcy related events, the death, disability or
conviction of the dealer principal, the failure to maintain certain customer
satisfaction ratings, or any material breach of the franchise agreement.

There are also various federal and state laws that govern the franchise
relationship which generally protect the franchised automotive dealership. These
include statutes that prohibit a manufacturer from terminating or failing to
renew a franchise without good cause and statutes that prohibit a manufacturer
from unreasonably withholding approval of a proposed change in ownership. Under
such statutes a vehicle manufacturer may disapprove of a proposed change in
ownership for certain enumerated reasons involving the character, financial
ability or business experience of the proposed transferee.

SALES AND MARKETING

The Company believes in providing quality services which will enable it to
maintain high levels of satisfaction from its customers in all business
segments. The Company derives its business from a broad customer base which the
Company believes will enable it to experience stable growth. Marketing efforts
focus on continuing and increasing business with existing customers as well as
attracting new customers.

Solid Waste Services. The Company's sales and marketing strategy is to
provide high quality comprehensive solid waste management 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
municipalities.

Electronic Security Services. In expanding its electronic security
operations, the Company's primary goal is to grow its customer base in the
residential market. The Company uses various forms of broadcast and print
advertising to market its electronic security business. The Company has
developed marketing programs which have enabled it to generate significant
numbers of new installations and monitoring accounts each month. The Company
will target those markets where it will be, or will have favorable prospects of
becoming, a significant provider of electronic security services.

Automotive Rental. The Company's sales and marketing strategy for Alamo
and National is to maintain their brand identification as value service
providers through a variety of media, cooperative advertising relationships with
airlines, hotels and others in the travel industry, and building and maintaining
close relationships with the travel agent community, tour operators and major
corporate customers. Alamo principally targets leisure travelers and
cost-conscious business travelers. National principally targets business
travelers who are typically covered under corporate travel contracts which
establish specific rates for various categories of vehicle classes, locations
and travel periods. Alamo's objective is to be the low-cost provider of quality
vehicle rental service and to increase customer satisfaction and retention by
developing innovative, time saving options for customers and other quality
services based on the customer's specific needs. National's objective is to be
the global service company of choice, to enhance customer loyalty and
satisfaction and to be the value leader in selected market segments.

Automotive Retailing. With respect to the Company's used vehicle retailing
operations, the Company expects to engage in mass marketing and advertising in
various media to attract a broad retail customer base in the markets in which it
will operate, and to make AutoNation USA a nationally-recognized brand name. The
Company seeks to attract customers through "no haggle" car pricing, an extensive
inventory of low mileage, late model used vehicles that have been
"Reconditioned-To-Perform-Like-New", high quality service, warranties, and
attractive facilities.

With respect to the Company's franchised automotive dealership operations,
the Company intends in the near future to retain each dealership's principal
trade name in order to take advantage of the established goodwill and community
involvement which had been developed by such dealer in its local market. The
Company will seek to attract customers to its franchised automotive dealerships
by offering quality service, competitive pricing, a pleasant shopping
environment, convenient hours of operation and knowledgeable personnel.

The Company's marketing and advertising activities vary among its
franchised automotive dealerships and its markets. The Company advertises
primarily through newspapers, radio and television in each franchised automotive
dealership's local market. Under certain arrangements with certain vehicle
manufactur-

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ers, the Company's franchised automotive dealerships may receive a subsidy for
their advertising expenses incurred in connection with that manufacturer's
vehicles. The Company expects to realize cost savings and efficiencies with
respect to advertising expenses as it acquires multiple automotive dealerships
and opens AutoNations USA megastores within particular markets, due to volume
discounts and other concessions.

CUSTOMERS

As of December 31, 1996, no one customer individually comprised more than
10% of the total revenue of any business segment of the Company.

REGULATIONS

Environmental Regulations

The operation of the Company's businesses are subject to a variety of
federal, state and local requirements which regulate health, safety, the
environment, zoning and land-use. Operating and other permits are generally
required for landfills, certain waste collection vehicles, fuel storage tanks,
and other facilities owned or operated by the Company, and these permits are
subject to revocation, modification and renewal. Federal, state and local
regulations vary, but generally govern disposal activities and the location and
use of facilities and also impose restrictions to prohibit or minimize air and
water pollution. In addition, governmental authorities have the power to enforce
compliance with these regulations and to obtain injunctions or impose fines in
the case of violations, including criminal penalties. These regulations are
administered by the Environmental Protection Agency ("EPA") and various other
federal, state and local environmental, health and safety agencies and
authorities, including the Occupational Safety and Health Administration of the
U.S. Department of Labor ("OSHA").

The Company strives to conduct its operations in compliance with applicable
laws and regulations, but believes that in the existing climate of heightened
environmental concerns, companies in the waste management and environmental
services industry, including the Company, may be faced with citations or notices
from governmental authorities and the need to expend funds for remedial work and
related activities at landfills and other facilities. The Company has
established a reserve, which it believes will be adequate, to cover any
potential regulatory costs.

Federal Regulation. The following summarizes the primary environmental and
safety-related federal statutes of the United States of America affecting the
business of the Company:

(l) The Solid Waste Disposal Act ("SWDA") as amended by the Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"). SWDA and its
implementing regulations establish a frame-work for regulating the
handling, transportation, treatment and disposal of hazardous and
nonhazardous solid wastes, and require states to develop programs to ensure
the safe disposal of solid wastes in sanitary landfills.

Subtitle D of RCRA establishes a framework for regulating the disposal
of municipal solid wastes. Regulations under Subtitle D now include minimum
federal comprehensive solid waste management criteria and guidelines,
including location restrictions, facility design and operating criteria,
closure and post-closure requirements, financial assurance standards,
groundwater monitoring requirements and corrective action standards, many
of which have not commonly been in effect or enforced in the past in
connection with municipal solid waste landfills.

All Subtitle D regulations are now in effect, except for the financial
assurance requirements which the EPA has deferred to April 1997. All of the
Company's planned landfill expansions or new landfill development projects
have been engineered to meet or exceed Subtitle D requirements. Operating
and design criteria for existing operations have been modified to comply
with these new regulations. Compliance with the Subtitle D regulations has
resulted in increased costs and may in the future require expenditures in
addition to other costs normally associated with the Company's waste
management activities.

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(2) The Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended ("CERCLA"). CERCLA, among other things,
provides for the cleanup of sites from which there is a release or
threatened release of a hazardous substance into the environment. CERCLA
imposes liability for the costs of cleanup and for damages to natural
resources upon: (a) any person who currently owns or operates a facility or
site from which there is a release or threatened release of hazardous
substances; (b) any person who owned or operated such a facility or site at
the time hazardous substances were disposed of; (c) any person who by
contract, agreement or otherwise, arranged for the disposal or treatment
(or for transport for disposal or treatment) of hazardous substances owned
or processed by such person at such facility or site; and (d) any person
who accepts or accepted hazardous substances for transport for treatment or
disposal at such a facility or site selected by such person. Under the
authority of CERCLA and its implementing regulations, detailed requirements
apply to the manner and degree of remediation of facilities and sites where
hazardous substances have been or are threatened to be released into the
environment.

Among other things, CERCLA authorizes the federal government either to
remediate sites at which hazardous substances were disposed of any have
been or are threatened to be released into the environment, or to order (or
offer an opportunity to) persons potentially liable for the cleanup of the
hazardous substances to do so. In addition, CERCLA requires the EPA to
establish a National Priorities List ("NPL") of sites at which hazardous
substances have been or are threatened to be released and which require
investigation or cleanup.

Liability under CERCLA is not dependent upon the intentional disposal
of hazardous wastes. It can be founded upon the release or threatened
release, even as a result of unintentional and non-negligent action, of
thousands of hazardous substances, including very small quantities of such
substances. More than 20% of the sites on the NPL are solid waste landfills
which ostensibly never received any hazardous wastes. Thus, even if the
Company's landfills have never received hazardous wastes as such, it is
possible that one or more hazardous substances may have come to be located
or "released" at its landfills or at other properties which the Company may
have owned or operated. The Company could thus be liable under CERCLA for
the cost of cleaning up such hazardous substances at the sites and for
damages to natural resources, even if those substances were deposited at
the Company's facilities before the Company acquired or operated them. As
is the case with automotive dealerships and vehicle rental operations
generally, and service, parts and body shop operations in particular, the
Company's automotive businesses involve the use, handling, storage,
manifesting and contracting for recycling or disposal of hazardous or toxic
substances or waste, including environmentally sensitive materials such as
motor oil, waste motor oil and filters, transmission fluid, antifreezes,
freon, waste paint and lacquer thinner, batteries, solvents, lubricants,
degreasing agents, gasoline and diesel fuels. The costs of a CERCLA cleanup
can be very expensive. Given the difficulty of obtaining insurance for
environmental impairment liability, such liability could have a material
impact on the Company's business and financial condition. For a further
discussion, see "-- Liability Insurance and Bonding."

(3) The Federal Water Pollution Control Act of 1972 (the "Clean Water
Act"). The Clean Water Act regulates the discharge of pollutants into
streams, rivers and other waters. Point source runoff from the Company's
landfills that is discharged into surface waters must be covered by
discharge permits, that generally require the Company to conduct sampling
and monitoring and, under certain circumstances, reduce the quantity of
pollutants in those discharges. Storm water discharge regulations under the
Clean Water Act require a permit for certain construction activities, which
may affect the Company's operations. If a landfill or transfer station
discharges wastewater through a sewage system to a publicly-owned treatment
works ("POTW"), the facility must comply with discharge limits imposed by
the POTW. In addition, states may adopt groundwater protection programs
under the Clean Water Act or Safe Drinking Water Act that could affect
solid waste landfills.

(4) The Clean Air Act. The Clean Air Act imposes limitations on
emissions from various sources, including landfills. On March 12, 1996, the
EPA enacted rules which require large municipal solid waste landfills to
install landfill gas monitoring systems. These EPA regulations apply to
landfills which have been operating since November 8, 1987, and which can
accommodate 2.5 million cubic meters or more of municipal solid waste. The
regulations apply whether the landfill is active or closed. The date by
which

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each affected landfill must have the required gas collection and control
system is dependent upon the adoption of state regulations and the date 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 a material
effect on the Company.

(5) The Occupational Safety and Health Act of 1970 (the "OSH
Act"). The OSH Act authorizes OSHA to promulgate occupational safety and
health standards. Various of these standards, including standards for
notices of hazardous chemicals and the handling of asbestos, apply to the
Company's operations.

State Regulation. Each state in which the Company operates has its own
laws and regulations governing solid waste disposal, water and air pollution
and, in most cases, releases and cleanup of hazardous substances and liability
for such matters. The states also have adopted regulations governing the design,
operation, maintenance and closure of landfills and transfer stations. The
Company's facilities and operations are likely to be subject to these types of
requirements. In addition, the Company's collection and landfill operations may
be affected by the trend in many states toward requiring the development of
waste reduction and recycling programs. For example, several states have enacted
laws that require counties or municipalities to adopt comprehensive plans to
reduce, through waste planning, composting, recycling or other programs, the
volume of solid waste deposited in landfills. Additionally, laws and regulations
restricting the disposal of yard waste in solid waste landfills have been
promulgated in several states. Legislative and regulatory measures to mandate or
encourage waste reduction at the source and waste recycling also are under
consideration by Congress and the EPA.

In order to construct, expand and operate a landfill, one or more
construction or operating permits, as well as zoning approvals, must be
obtained. These are difficult and time-consuming to obtain, are often opposed by
neighboring landowners and citizens' groups, may be subject to periodic renewal
and are subject to modification and revocation by the issuing agency. In
connection with the Company's acquisition of existing landfills, it may be
necessary to expend considerable time, effort and money to bring the acquired
facilities into compliance with applicable requirements and to obtain the
permits and approvals necessary to increase their capacity.

Many of the Company's facilities own and operate underground storage tanks
("USTs") which are generally used to store petroleum based products. USTs are
generally subject to federal, state and local laws and regulations which mandate
periodic testing and upgrading of UST's and which, in the event of leaks from
USTs, require that polluted groundwater and soils be remediated. If USTs owned
or operated by the Company leak, and such leakage migrates onto the property of
others, the Company could be subject to civil liability for response costs and
other damages to third parties. Compliance with regulations related to USTs is
not expected to have a material adverse affect on the Company.

Finally, with regard 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 enacting, laws and regulations that would restrict the interstate
transportation and processing of solid waste. In 1978, the United States Supreme
Court held similar laws and regulations unconstitutional, however, states have
attempted to distinguish proposed laws and regulations from the laws and
regulations involved in that ruling. In May 1994, the Supreme Court ruled that
state and local flow control laws and ordinances (which attempt to restrict
waste from leaving its place of generation) were an impermissible burden on
interstate commerce, and therefore, were unconstitutional. In response to these
Supreme Court rulings, Congress has considered passing legislation authorizing
states and local governments to restrict the free movement of solid waste in
interstate commerce. In 1994, the House and Senate each passed separate bills
relating to interstate transportation and processing of solid waste. In 1995,
the Senate passed a joint flow control and interstate transportation bill, and
in early 1996, the House considered, but rejected a bill authorizing flow
control. To date, none of these bills has been enacted into law. If federal
legislation authorizing state and local governments to restrict the free
movement of solid waste in interstate commerce is enacted, such legislation
could adversely affect the Company's waste collection, transportation and
treatment and disposal operations.

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Automotive Regulations

The Company's automotive operations are subject to various federal, state
and local laws and regulations including those relating to taxing and licensing
of vehicles, consumer protection, insurance, advertising, currency controls,
used vehicle sales, zoning and land use, and labor matters.

The Company's vehicle rental operations, as well as those of its
competitors, could be affected by any limitation in the fuel supply or by any
imposition of mandatory fuel allocation or rationing regulations. In the event
of a severe disruption of fuel supplies, the operations of all vehicle rental
companies could be adversely affected.

Up to 9% of the Company's total U.S. revenue from its vehicle rental
operations in the last three years was generated from the sale of collision
damage waivers. The United States House of Representatives has from time to time
contemplated, but never adopted, legislation that would regulate the conditions
under which collision damage waivers may be sold by rental companies. In
addition, approximately 40 states have considered legislation affecting the
collision damage waiver product. To date, 18 of those states have enacted
legislation requiring disclosure to each customer at the time of rental that
damage to the rented vehicle may be covered by the customer's personal
automobile insurance and that a collision damage waiver may not be necessary. In
addition, in the late 1980's, New York and Illinois enacted legislation which
eliminated rental companies' right to offer collision damage waivers for sale
and limited potential customer liability to $100 and $200, respectively.
Moreover, California, Nevada and Indiana have capped the rates that may be
charged for collision damage waivers to $9.00, $10.00 and $5.00 per day,
respectively. In addition, Texas requires the rates charged for this protection
to be reasonable in relation to costs. Adoption of national or additional state
legislation limiting the sale, or capping the rates, of collision damage waivers
could further restrict sales of this product and additional limitations on
potential customer liability could increase the costs of the Company's vehicle
rental operations.

A number of states currently make vehicle owners, including rental
companies, vicariously liable, regardless of fault, for the actions of any
person lawfully driving such owned vehicle. Recently, limits on such liability
were enacted in Michigan and Minnesota. The State of Florida, where a
substantial portion of Alamo's rental transactions occur, is a vicarious
liability state. In 1995, legislation was passed by both the United States
Senate and House of Representatives which could effectively eliminate such
vicarious liability. Subsequently, the legislation was vetoed.

The Company's vehicle rental operations are also subject to various
federal, state and local consumer protection laws and regulations including
those relating to advertising and disclosure of charges to customers. The
National Association of Attorneys General has promulgated suggested guidelines
for vehicle rental advertisements. Alamo and two other industry participants are
subject to substantially similar consent decrees resulting from Federal Trade
Commission inquiries initiated in 1989, which consent decrees require certain
disclosures to customers at each stage of the rental transaction, including in
advertisements, of charges that are mandatory and not otherwise reasonably
avoidable. The Company believes that the practices mandated by the consent
decrees have been adopted uniformly by the industry.

The Company is subject to the National Traffic and Motor Vehicle Safety Act
(the "Act"), Federal Motor Vehicle Safety Standards promulgated by the United
States Department of Transportation ("DOT") and various state motor vehicle
regulatory agencies.

Electronic Security Services Regulations

The Company's electronic security services operations are subject to
various federal, state and local laws and regulations including those relating
to taxing and licensing of the installation and monitoring of security systems,
and licensing of security system installers.

Industry statistics suggest that approximately 95% of alarm activations
that result in the dispatch of police or fire department personnel are not
emergencies, and thus are "false" alarms. Significant concern has arisen in
certain municipalities about this high incidence of "false" alarms. Recently, a
trend has emerged on the part of local governmental authorities to address such
concern by adopting various measures aimed at reducing the

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number of "false" alarms. Such measures include: (i) subjecting alarm monitoring
companies to fines or penalties for transmitting "false" alarms; (ii) licensing
individual alarm systems and the revocation of such licenses following a
specified number of "false" alarms; (iii) imposing fines on alarm subscribers
for "false" alarms; (iv) imposing limitations on the number of times the police
will respond to alarms at a particular location after a specified number of
"false" alarms; and/or (v) requiring further verification of an alarm signal
before the police will respond. Enactment of such measures could adversely
affect the electronic security services business and operations of the Company.
In addition, as a result of high incidence of "false" alarms, the police may, in
general, become less responsive to alarm activations. The continuation of such
trend, or perception by the public of such trend, may make home security systems
less attractive to consumers, which could, in turn, have an adverse effect on
the electronic security services business and operations of the Company.

COMPETITION

All of the Company's businesses operate in highly competitive and highly
fragmented industries. In addition, the solid waste services, electronic
security services, automotive rental and automotive retailing industries are
each changing as a result of rapid consolidation. Entry into any of the
Company's lines of business and the ability to operate profitably in such
industries requires substantial amounts of capital and managerial experience.

Competition in the Solid Waste Industry. The solid waste industry in North
America is currently dominated by two solid waste companies: WMX Technologies,
Inc. and Browning-Ferris Industries, Inc. Competition in the solid waste
industry also comes from a number of large second tier national companies as
well as numerous regional solid waste companies, some of which are also engaging
in aggressive acquisition strategies. Some of the Company's competitors have
significantly larger operations than the Company. In each market in which it
owns or operates a landfill, the Company competes for landfill business on the
basis of disposal fees (commonly known as "tipping fees"), geographical location
and quality of operations. The Company's ability to obtain landfill business may
be limited by the fact that some major collection companies also own or operate
landfills to which they send their waste. Further, alternatives to landfill
disposal (such as recycling, composting and incinerating) are increasingly
competing with landfills. There also has been an increasing trend at the state
and local levels to mandate waste reduction at the source and to prohibit the
disposal of certain types of wastes, such as yard wastes, at landfills. This may
result in the volume of waste going to landfills being reduced in certain areas,
which may affect the Company's ability to operate its landfills at their full
capacity and/or affect the prices that can be charged for landfill disposal
services. In addition, most of the states in which the Company operates
landfills have adopted plans or requirements which set goals for specified
percentages of certain solid waste items to be recycled. To the extent these are
not yet in place, it is anticipated that these recycling goals will be phased in
over the next few years. In its waste collection business, in addition to
national and regional firms and numerous local companies, the Company may
compete with those municipalities that maintain waste collection or disposal
operations. These municipalities may have financial advantages due to the
availability of tax revenues and tax-exempt financing. The Company competes for
collection accounts primarily on the basis of price and the quality of its
services. From time to time, competitors may reduce the price of their services
in an effort to expand market share or to win a competitively bid municipal
contract.

Competition in the Electronic Security Services Industry. The Company's
electronic security services operations compete with several large national
companies, including ADT Limited, as well as smaller regional and local
companies. The Company competes for installation of systems and monitoring
accounts primarily on the basis of price and quality of its services. Certain of
the Company's competitors have significantly larger operations than the Company.
Furthermore, new competitors are continuing to enter the industry and the
Company may encounter additional competition from such future industry entrants.

Competition in the Automotive Rental Industry. The automotive rental
industry is characterized by intense price and service competition. In any given
location, the Company's vehicle rental business may encounter competition from
national, regional and local vehicle rental companies, some of which are owned
by or affiliated with the major automobile manufacturers. The Company's main
domestic competitors for car

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rentals are Avis, Inc., Budget Rent A Car Corporation, The Hertz Corporation,
and, in certain locations, Dollar Rent A Car and Enterprise Rent-A-Car Company.
In Europe, the Company's vehicle rental business competes with the companies
listed above, as well as with their international affiliates and licensees and
other national and local vehicle rental companies. At times, the major vehicle
rental companies have been adversely affected by industry-wide price pressures,
and the Company's vehicle rental business has, on such occasions, priced its
product in response to such pressures. Moreover, at times when the vehicle
rental industry has experienced vehicle oversupply, there has been intensified
competitive pressure. This oversupply has had a negative impact on the
industry's ability to raise rental rates. The Company's vehicle rental business
has taken steps to address its fixed cost structure to improve its overall
competitive position; however, future oversupply or other factors affecting
competition could still adversely affect the Company's business, financial
condition and future prospects.

Competition in the Automotive Retailing Industry. According to Automotive
News and reports of various financial analysts, the automotive retailing
industry is served by over 22,000 franchised automotive dealerships, most of
which also have significant used vehicle retailing operations, by an additional
61,000 independent used vehicle dealers, and by individual consumers who sell
over 11.0 million used vehicles per year in casual private transactions
primarily through classified ads and by word of mouth. The Company believes that
there is no used vehicle retailer currently operating a national chain of
locations. In addition to the Company, several other companies have announced
plans to roll out national chains of used vehicle megastores over the next few
years. In addition, several franchised automotive dealers, with significant used
vehicle operations, have recently conducted initial public offerings of their
securities, with proceeds targeted to be used for acquisitions of other
automotive dealerships. Some of these competitors in the automotive retailing
industry may have more established market positions than the Company. There can
be no assurance that the Company will be able to compete effectively in the
automotive retailing industry or related automotive businesses.

LIABILITY INSURANCE AND BONDING

Solid Waste Services. The nature of the Company's solid waste management
business exposes it to the risk of liability for damages arising out of its
operations. Such potential liability could involve, for example, claims for
cleanup costs, personal injury, property damage or damage to the environment in
cases where the Company may be held responsible for the escape of harmful
materials; claims of employees, customers or third parties for personal injury
or property damage occurring in the course of the Company's operations; or
claims alleging negligence or professional errors or omissions in the planning
or performance of work. The Company could also be subject to fines and civil and
criminal penalties in connection with alleged violations of regulatory
requirements. Because of the nature and scope of the possible damages,
liabilities imposed in environmental litigation can be significant. Although the
Company strives to operate safely and prudently and has substantial general and
vehicle liability insurance coverage, no assurance can be given that the Company
will not be exposed to uninsured liabilities which would have a material adverse
effect on its financial condition. The majority of the Company's solid waste
operations have environmental liability insurance, subject to certain
limitations and exclusions, with limits in excess of those required by permit
regulations; however, there is no assurance that such limits would be adequate
in the event of a major loss, nor is there assurance that the Company will
continue to carry environmental liability insurance should market conditions in
the insurance industry make such coverage cost prohibitive. The Company carries
commercial general liability insurance, car liability insurance, workers'
compensation and employer's liability insurance, as well as umbrella policies to
provide excess coverage over the underlying limits contained in these primary
policies. The Company also carries property insurance.

In the normal course of business, the Company may be required to post a
performance bond or a bank letter of credit in connection with municipal
residential collection contracts, the operation, closure or post-closure of
landfills, certain remediation contracts and certain environmental permits.
Bonds issued by surety companies operate as a financial guarantee of the
Company's performance. To date, the Company has satisfied financial
responsibility requirements for regulatory agencies by making cash deposits,
obtaining bank letters of credit or by obtaining surety bonds.

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Automotive Rental Industry. For its domestic vehicle rental operations,
Alamo and National are state qualified self-insurers for the financial
responsibility resulting from accidents with their vehicles in most states in
which their vehicles are registered. All general liability claims are retained
up to a limit of $1.0 million, plus the cost of adjustment and settlement, for
each accident. Umbrella coverage is maintained for the cost of claims in excess
of retained limits, up to such umbrella policy limits. For its foreign vehicle
rental operations, Alamo does not act as a self-insurer. Instead, insurance is
purchased to comply with local legal requirements. Alamo and National also
assume responsibility for up to $0.2 million and $1.0 million, respectively, per
loss under their property insurance policies for their vehicle rental
operations. Insurance policies are purchased for protection above these retained
or self-insured amounts.

Provisions for retained or self-insured claims are made by charges to
expense based upon periodic evaluations of the estimated ultimate liabilities on
reported and unreported claims. At December 31, 1996, Alamo's liability was
estimated at approximately $137.0 million, against which Alamo maintained
approximately $30.1 million of letters of credit and surety bonds. Alamo's
letter of credit requirements are set by insurance companies which underwrite
Alamo's self-insurance program. Alamo's letter of credit requirements may change
from time to time based on, among other things, Alamo's claims experience. Alamo
believes its insurance policies are adequate to meet its vehicle rental
operation needs.

As of December 31, 1996, National's liability was estimated at
approximately $62.0 million. The amount of self-insurance reserves relates to
estimated losses incurred subsequent to June 9, 1995, the date General Motors
sold National. National periodically analyzes its reserve requirements for
public liability and property damage liability and adjusts such reserves
accordingly. Pursuant to an agreement with General Motors, National continues to
administer claims for public liability and property damage relating to periods
prior to June 9, 1995. In exchange for such services National will receive an
annual fee of $3.0 million through fiscal 1998 and an annual fee of $1.0 million
for fiscal 1999 through 2001.

EMPLOYEES

As of February 24, 1997, the Company employed approximately 30,300 full
time employees, approximately 2,100 of whom were covered by collective
bargaining agreements. The management of the Company believes that it has good
relations with its employees.

SEASONALITY

The Company's solid waste operations can be adversely affected by extended
periods of inclement weather, such as rain or snow, which could delay the
collection and disposal of waste, reduce the volume of waste generated or delay
the expansion of the Company's landfill sites.

The automotive rental industry is highly seasonal, particularly the leisure
travel segment. Historically, the third quarter, which includes the peak summer
travel months, has been the strongest quarter for Alamo's and National's rental
operations. During the peak summer travel months, the Company increases its
rental fleet and workforce to accommodate increased rental activity.

The Company's automotive retailing operations can be adversely affected by
extended periods of inclement weather by deterring customers from visiting
retail stores (which have large open-air lots) or test driving vehicles. Vehicle
dealers generally experience a higher volume of new and used vehicle sales in
the second and third quarters of each year, in part due to
manufacturer-sponsored or subsidized marketing programs and incentives near the
end of each model year.

TRADEMARKS

The Company owns a number of registered service marks and trademarks which
are used in its used vehicle retailing operations, including "AUTOWAY(R)" and
"CARSTOP(R)", and also has a number of pending applications to register
"AUTONATION USA", "RECONDITIONED-TO-PERFORM-LIKE-NEW",

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"THE BETTER WAY TO BUY A CAR", "AMERICA'S BEST AUTOMOTIVE VALUE", and "VALU
STOP".

Pursuant to its franchise agreements, the Company has the non-exclusive
right to use and display vehicle manufacturers' trademarks, service marks and
designs in the form and manner approved by the applicable manufacturers.

The Company owns a number of registered trademarks and service marks which
are used in its vehicle rental operations, including "ALAMO(R)", "ALAMO
EXPRESS(R)", "NATIONAL CAR RENTAL(R)" and "EMERALD CLUB(R)" and has applications
pending to register "JUST ASK ALAMO(SM)" and "QUICKSILVER(SM)".

The Company owns a number of registered service marks and trademarks which
are used in its electronic security services operations, including "SCOTT
ALARM", and also has a pending application to register "SCOTT FREE".

The current registrations of the Company's service marks and trademarks in
the United States and foreign countries are effective for varying periods of
time, and may be renewed periodically provided that the registered owner
complies with all applicable laws. For a description of certain challenges to
the Company's marks, see "ITEM 3. LEGAL AND ADMINISTRATIVE
PROCEEDINGS -- General Corporate Proceedings."

RISK FACTORS

The business, financial condition, results of operations and future
prospects of the Company, and the prevailing market price and performance of the
Company's Common Stock, may be adversely affected by a number of factors,
including the matters discussed below. Certain statements and information
contained herein constitute "forward-looking statements" within the meaning of
the Federal Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance, or achievements
of the Company to be materially different from any future results, performance,
or achievements expressed or implied by such forward-looking statements. Such
factors include, among other things:

Limited Operations and Operating Losses in Automotive Retailing
Business. Prior to its acquisition of CarChoice (the operations of which have
been converted to AutoNation facilities) in August 1996, the Company had no
history of operations in automotive retailing and related businesses. The
Company currently anticipates that it will, through acquisitions of numerous
franchised automotive dealerships and the development of AutoNation USA
megastores, rapidly expand its operations in automotive retailing and related
businesses. AutoNation has incurred losses from operations since inception and
is expected to continue to incur losses in the foreseeable future. The success
of the Company's aggressive development plans in the automotive retailing
business is dependent on a number of factors including, but not limited to,
economic conditions, competitive environment, adequate capital, accurate site
selection, construction schedules, supply of new and used vehicles, consumer
acceptance of the megastore concept in automotive retailing, vehicle
manufacturers' approval and control over dealership franchises, and the building
of brand recognition. There can be no assurance that the Company will be
successful in the automotive retailing industry or in any related automotive
industries which it enters.

Need for Substantial Additional Capital. Additional capital will be
necessary to continue the Company's rapid expansion in its capital intensive
lines of business and to fully capitalize on acquisition and expansion
opportunities that may become available to the Company. There can be no
assurance that sufficient financing will be available on a timely basis, if at
all, or on terms acceptable to the Company. In the event that financing is not
available or is not available in the amounts or on terms acceptable to the
Company, the implementation of the Company's business strategy could be impeded
and the Company's ability to react to changes in the industries in which it does
business could be limited, which could have a material adverse effect on the
Company's business, financial condition and future prospects.

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Uncertainties in Integrating Operations and Achieving Cost Savings. Many
of the companies that the Company has recently acquired, such as Alamo,
National, Addington, Continental and AutoNation, and companies that the Company
plans to acquire, are large enterprises with operations in different markets.
The success of any business combination is in part dependent on management's
ability following the transaction to consolidate operations, integrate
departments, systems and procedures and thereby obtain business efficiencies,
economies of scale and related cost savings. The challenges posed to the
Company's management may be particularly significant because integrating the
recently acquired companies must be addressed contemporaneously. There can be no
assurance that future consolidated results will improve as a result of cost
savings and efficiencies from any such acquisitions or proposed acquisitions, or
as to the timing or extent to which cost savings and efficiencies will be
achieved.

Dependence on Vehicle Manufacturers. Automotive dealerships operate
pursuant to franchise agreements with vehicle manufacturers. In connection with
the Company's acquisition of franchised automotive dealerships, prior approval
of the applicable vehicle manufacturer may be required under the franchise
agreement of each franchised automotive dealership to be acquired, subject to
state laws protecting a franchisee's right to transfer such franchise. Although
the Company has established framework agreements with certain manufacturers to
facilitate the acquisition of dealerships operating their franchises, no
assurance can be given that such manufacturers or any other manufacturers will
approve of any particular franchised automotive dealership acquisition by the
Company or will not otherwise seek to impose restrictions on the Company's
future acquisitions, operations or capital structure as a condition to granting
such approval. In addition, once the Company has acquired a franchised
automotive dealership, the Company must operate the dealership in accordance
with the applicable franchise agreement. Franchise agreements generally provide
the manufacturers with considerable influence over the operations of the
dealership and generally provide for termination of the franchise agreement for
a variety of causes. Finally, the success of any franchised automotive
dealership is dependent, to a large extent, on the success of the vehicle
manufacturer. Therefore, the success of the Company's automotive dealerships is
dependent on the financial condition, management, marketing, production and
distribution capabilities of the vehicle manufacturers of which the Company
holds franchises. Any event that may have a material adverse effect on a vehicle
manufacturer, such as labor strikes or adverse publicity, may have a material
adverse effect on the Company's business, financial condition and future
prospects.

Cost of Vehicle Rental Fleet. Vehicle depreciation is one of the single
largest cost components of the Company's vehicle rental business, and it is
materially affected by vehicle manufacturers' Repurchase Programs. Repurchase
prices under Repurchase Programs are based on either (i) a predetermined
percentage of a vehicle's original capitalized cost and the month in which the
vehicle is returned or (ii) the original capitalized cost less a set monthly
depreciation amount. Repurchase Programs limit the risk of market value decline
at the time of vehicle disposition and enable vehicle rental companies to
accurately project their vehicle depreciation expense. The Company currently has
Repurchase Programs with General Motors, Chrysler Corporation, Ford Motor, Mazda
Motor of America, Inc., Nissan Motor Corporation U.S.A., Subaru of America, Inc.
and Toyota Motor Sales U.S.A., Inc. (including its Lexus division). During model
year 1996, Alamo and National purchased approximately 97% and 99.5%,
respectively, of their U.S. vehicle fleets and a majority of their European
vehicle fleets under Repurchase Programs. If vehicle manufacturers reduce the
number or mix of vehicles available to vehicle rental companies through
Repurchase Programs or increase vehicle costs under Repurchase Programs, there
can be no assurance that the Company will be able to control its rental fleet
costs or selection, or to pass on any increases in vehicle cost to rental
customers, which could have a material adverse effect on the Company's business,
financial condition and future prospects.

Dependence on Vehicle Manufacturer's Credit. The Company's vehicle rental
business depends upon third-party financing to purchase its revenue earning
vehicles for its 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 conditions of the vehicle
manufacturers, particularly General Motors, impairing their ability to
repurchase vehicles or their investment grade rating could significantly affect
the Company's ability to obtain such financing on as favorable terms. In such an
event, the Company may be prohibited from borrowing additional amounts under
such financing facilities for the purchase of vehicles from

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such repurchase party, the Company may be required to repay a portion of the
indebtedness outstanding under such facilities based on the vehicles to be
repurchased by such repurchase party, and the Company may be required to remove
the vehicles of such repurchase party from the applicable collateral pool for
such facilities, which could have a material adverse effect on the Company's
business, financial condition and future prospects.

Dependence on Principal Rental Fleet Supplier. General Motors has been the
principal supplier of rental fleet vehicles to the Company's vehicle rental
business. Under the terms of the Company's Repurchase Programs with General
Motors, the Company's vehicle rental fleets must consist of specified minimum
percentages of General Motors vehicles (at least 51% for Alamo and at least 85%
for National) during model years 1996 through 2000 in order to receive certain
discounts and other incentives. Given the volume of vehicles purchased from
General Motors, shifting significant portions of the fleet purchases to other
manufacturers would require significant lead time. As a result, if General
Motors were unable to supply the Company's vehicle rental operations with the
planned number and type of vehicles, it could have a material adverse effect on
the Company's business, financial condition and future prospects.

Interest Rates and Restrictive Covenants. A substantial portion of the
Company's outstanding indebtedness is at floating interest rates. At times, the
Company uses interest rate swaps to manage the risk of interest rate
fluctuations. However, a substantial increase in interest rates could adversely
affect the Company's cost of indebtedness for borrowed money. In addition, most
of the Company's debt instruments contain covenants establishing certain
financial and operating restrictions. A failure to comply with any covenant or
any obligation contained in any credit agreement could result in an event of
default which could accelerate debt under certain other credit agreements.

Regulation of Collision Damage Waivers. Adoption of national or additional
state legislation limiting or eliminating the sale, or capping the rates, of
collision damage waivers, which constitute a significant percentage of the
Company's revenue from vehicle rental operations, could further restrict sales
of this product, and additional limitations on potential customer liability
could increase the Company's costs in its vehicle rental business.

Environmental Regulation. It may be necessary to expend considerable time,
effort and money to keep the Company's existing or acquired facilities in
compliance with applicable federal, state and local requirements which regulate
health, safety, environment, zoning and land use, and as to which there may not
be adequate insurance coverages or reserves. See
"-- Regulations -- Environmental Regulations" and "-- Liability Insurance and
Bonding." In addition, certain of the Company's waste disposal operations that
traverse state boundaries could be adversely affected if the federal government
or the state in which a landfill is located limits or prohibits, imposes
discriminatory fees on, or otherwise seeks to discourage the disposal, within
state boundaries, of waste collected outside of the state. If environmental laws
become more stringent, the Company's environmental capital expenditures and
costs for environmental compliance may increase in the future. In addition, due
to the possibility of unanticipated factual or regulatory developments, the
amounts and timing of future environmental expenditures could vary substantially
from those currently anticipated.

Risks of Legal Proceedings. The Company generally will continue to be
involved in legal proceedings in the ordinary course of business. Citizen's
groups have become increasingly active in challenging the grant or renewal of
permits and licenses for landfills and other waste facilities, as well as for
automotive retailing megastores and related facilities, and responding to such
challenges has further increased the costs associated with establishing new
facilities or expanding current facilities. A significant judgment against the
Company, the loss of a significant permit or license or the imposition of a
significant fine could have a material adverse effect on the Company's business,
financial condition and future prospects. The Company is currently a party to
various legal proceedings, particularly in its automotive rental business, as
well as environmental proceedings which have arisen in the ordinary course of
its business. No assurance can be given with respect to the outcome of these
legal and environmental proceedings and the effect such outcomes may have on the
Company.

Seasonality; Dependence on Travel Industry and Fuel Supply. There can be
no assurance that protracted periods of inclement weather, decrease in air
travel or any other occurrence that disrupts travel

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patterns, disruption of fuel supplies or increases in fuel prices will not have
a material adverse effect on the Company's business, financial condition and
future prospects.

Competitive Environment. All of the Company's businesses operate in highly
competitive environments. In addition, the solid waste industry, the electronic
security services industry and the automotive retailing industry are each
changing as a result of rapid consolidation. The future success of the Company
will be affected by such changes, the nature of which cannot be forecast with
certainty. There can be no assurance that such developments will not create
additional competitive pressures on some or all of the Company's businesses.

Acquisition Strategy. The Company has an aggressive acquisition strategy
that has involved, and is expected to continue to involve, the acquisition of a
significant number of additional companies. There can be no assurance, however,
that significant acquisitions will continue to occur at the same pace or be
available to the Company on favorable terms, if at all, or that acquired
companies will be effectively integrated to realize expected efficiencies and
economies of scale.

Possible Depressing Effect of Future Sales of Common Stock. Since August
1995 and as of the date hereof, the Company has registered for sale, from time
to time on a continuous basis under several shelf registration statements, by
certain selling stockholders, an aggregate of 268.7 million shares of Common
Stock. Future sales of such shares, or the perception that such sales could
occur, could adversely affect the market price of Common Stock. There can be no
assurance as to when, and how many of, such shares will be sold and the effect
such sales may have on the market price of Common Stock. In addition, the
Company intends to continue to issue Common Stock in connection with certain of
its acquisitions or in other transactions. Such securities may be subject to
resale restrictions in accordance with the Securities Act and the regulations
promulgated thereunder. As such restrictions lapse or if such shares are
registered for sale to the public, such securities may be sold to the public. To
facilitate the issuance of Common Stock in making acquisitions, the Company has
recently registered an additional 41.2 million shares of Common Stock pursuant
to an acquisition shelf registration statement. In the event of the issuance and
subsequent resale of a substantial number of shares of Common Stock, or a
perception that such sales could occur, there could be a material adverse effect
on the prevailing market price of Common Stock.

Dependence on Key Personnel. The Company's future success depends to a
significant extent on certain key executive officers, the loss of whom (whether
such loss is through resignation or other causes) could have a material adverse
effect on the Company's business and future prospects and the prevailing market
price of the Company's Common Stock.

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ITEM 2. PROPERTIES

INTRODUCTION

The Company's corporate headquarters are located in Fort Lauderdale,
Florida in leased premises. Certain of the property and equipment of the Company
and its subsidiaries are subject to liens securing payment of portions of the
Company's and its subsidiaries' indebtedness. The Company and its subsidiaries
also lease certain of their offices and equipment. The Company believes that all
of its facilities are sufficient for its needs.

SOLID WASTE SERVICES

The following table provides certain information regarding the landfills
owned or operated by the Company as of December 31, 1996:



UNUSED
TOTAL PERMITTED PERMITTED
LANDFILL NAME MARKETS SERVED ACREAGE ACREAGE ACREAGE
- ------------- -------------- ------- --------- ---------

Anderson................. Northern California 1,200 150 100
Broadhurst Landfill...... Wayne County, Georgia 900 80 64
C&T Regional............. Rio Grande Valley, Texas 194 94 45
Charter Waste............ West Texas 396 396 300
City of Rotterdam........ Albany, New York 33 5 --
Cleveland Container...... Southwest North Carolina 169 116 86
CWI Florida (f/k/a
Schofield)............. Winter Haven, Florida 80 60 55
Dozit Landfill........... Union County, Kentucky 232 47 37
East Carolina Landfill... Bertie County, North Carolina 729 103 75
Epperson Landfill........ Grant County, Kentucky 699 100 58
Forest Lawn.............. Three Oaks, Michigan 141 126 48
Green Valley Landfill.... Greenup County, Kentucky 263 37 12
Holland Excavating....... DeLand, Florida 31 21 16
Los Mangos............... Alajuela, Costa Rica 41 16 --
Mid-State Landfill....... Bibb County, Georgia 792 73 73
Nine Mile Road........... Northeast Florida 145 25 17
Northeast Sanitary....... Eastover, South Carolina 73 42 15
Northwest Tennessee...... Union City, Tennessee 386 157 122
Oak Grove................ North Georgia 117 61 53
Ohio County Landfill..... Ohio County, Kentucky 908 178 149
Pepperhill............... Southeast South Carolina 117 22 17
Pine Ridge............... South Atlanta, Georgia 862 207 207
Pinellas................. Central Florida 733 478 200
Presidio................. West Texas 10 10 6
Republic/CSC............. North Central Texas 289 254 195
Republic/Imperial........ Southern California 160 120 89
Republic/Maloy........... East Central Texas 389 270 204
San Angelo............... West Texas 283 283 133
Southern Illinois
Regional............... DeSoto, Illinois 147 113 41
Springfield
Environmental.......... Mt. Vernon, Indiana 54 34 22
Taymouth................. Central Michigan 138 43 19
Tri-K Landfill........... Lincoln County, Kentucky 582 64 55
United Refuse............ Fort Wayne, Indiana 305 62 --


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Uwharrie Landfill.............. Montgomery County, North Carolina 531 58 49
Victory Environmental.......... Terre Haute, Indiana 461 260 149
Wabash Valley.................. Northeast Indiana 103 56 16
--------- --------- ---------
Total.......................................................... 12,693 4,221 2,727
========= ========= =========


The Company has recently obtained a permit to construct a landfill in
Person County, North Carolina, which is expected to have a disposal capacity of
approximately 8.5 million cubic in-place yards, on a site consisting of
approximately 583 total acres of which approximately 70 acres are permitted for
waste disposal. The Company anticipates that the Person County Landfill may be
operating in mid-1997.

ELECTRONIC SECURITY SERVICES

The Company's electronic security services business leases 54 sales offices
in 13 states and operates nine central monitoring stations in six states.

AUTOMOTIVE RENTAL

The Company owns or leases its vehicle rental facilities. The facilities
serving airport locations are located on airport property or near the airport in
locations convenient for bus transport of customers to the airport. Almost all
of the airport locations are leased from governmental authorities charged with
the operation of such airports under arrangements generally providing for either
the payment of a fixed rent or the payment of rent based on a percentage of
revenues at a location with a guaranteed annual minimum, while most of the
Company's other facility leases provide for fixed rental payments. The Company's
airport facility in each metropolitan area includes, in addition to concession
space, vehicle storage and maintenance areas, as well as rental and return
facilities. The typical airport facility leases are not necessarily coterminous
with the Company's local airport concession agreement. Most of the Company's
airport facility leases expire at varying times over the next ten years. Certain
of such leases also have purchase options at the end of their terms.

Alamo owns its corporate headquarters facility in Fort Lauderdale, Florida,
which consists of approximately 382,000 square feet of space. Alamo occupies a
substantial portion of such facility, with the remainder leased to non-Company
tenants. Alamo currently owns its car rental reservation and data center in Fort
Lauderdale, Florida and leases its reservation centers in Charlotte, North
Carolina and Salt Lake City, Utah. The Fort Lauderdale reservation center shares
a 60,000 square foot facility which houses Alamo's fleet control and data
processing departments.

National owns its corporate headquarters facility in Minneapolis,
Minnesota, which consists of 335,755 square feet of space. National occupies a
substantial portion of such facility, with the remainder leased to non-Company
tenants. National occupies an 83,000 square foot service center in Charleston,
S.C., which houses a new state-of-the-art reservations center.

AUTOMOTIVE RETAILING

The Company's used vehicle operations own or lease 33 sites in eight
states, which it operates or is developing as AutoNation USA megastores, vehicle
reconditioning centers and smaller retail locations. AutoNation is in various
stages of evaluating, contracting and closing on purchases or leases of
approximately 65 additional sites which it plans to develop into retail stores
and reconditioning centers. The Company owns or leases 19 sites for its
franchised automotive dealerships in five states.

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ITEM 3. LEGAL AND ADMINISTRATIVE PROCEEDINGS

GENERAL CORPORATE PROCEEDINGS

By letter dated January 11, 1996, Acme Commercial Corp. dba CarMax, The
Auto Superstore, ("CarMax") accused AutoNation 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 February 5, 1996, filed suit in the
U.S. District Court for the Southern District of Florida seeking a declaratory
judgment that AutoNation's use and registration of such marks do not violate any
of the rights of CarMax. On or about October 11, 1996, CarMax filed a
counterclaim against AutoNation seeking unspecified damages and an order
enjoining AutoNation from using certain marks, including the marks AutoNation
USA and "The Better Way to Buy a Car." On February 4, 1997, AutoNation filed a
motion for partial summary judgment on CarMax's dilution claim under Florida
law. A trial has been set for May 1997. Although it is impossible to predict the
outcome of this litigation, the Company believes that AutoNation has a valid
basis for its complaint and that CarMax's allegations and counterclaims are
without merit.

The Company is also a party to various other general corporate legal
proceedings which have arisen in the ordinary course of its business. While the
results of these matters, as well as matters described above, cannot be
predicted with certainty, the Company believes that losses, if any, resulting
from the ultimate resolution of these matters will not have a material adverse
effect on the Company's business.

ENVIRONMENTAL MATTERS

Imperial Landfill Filter Waste Issue. In 1992, the Company received
notices from Imperial County, California (the "County") and the Department of
Toxic Substances Control ("DTSC"), a department under the California
Environmental Protection Agency, alleging that spent filter elements (the
"Filters") from geothermal power plants which had been deposited at the
Company's Imperial Landfill for approximately five years were classified as
hazardous waste under California environmental regulations. Under United States
EPA regulations, the Filters are not deemed hazardous waste because waste
associated with the production of geothermal energy is exempt from the federal
classification of hazardous waste under federal regulations.

The Company is currently conducting active discussions with all appropriate
California regulatory agencies in order to obtain a variance under California
regulations to reclassify the Filters as a special waste so that such Filters
may remain in the landfill. In the event that the variance is not granted,
remedial measures may be required based on the Filters' classification as a
California hazardous waste. One of those measures could include the removal of
the Filters or the closure of a portion of the landfill. The Company is
currently unable to determine (i) whether the waste will ultimately be
classified as hazardous, (ii) what action, if any, will be required if the waste
is ultimately classified as hazardous, or (iii) what liability, if any, the
Company will have as a result of this inquiry.

In January 1994, the Company filed suit in the United States District Court
for the Southern District of California against the known past and present
owners and operators of the geothermal power plants, the Ormesa I, IE, IH and II
plants in Holtville, California, for all losses, fines and expenses incurred by
the Company in connection with the resolution of this matter, including loss of
airspace at the landfill. The suit alleges claims for (i) CERCLA response costs
recovery, (ii) intentional misrepresentation, (iii) negligent misrepresentation,
(iv) negligence, (v) strict liability, (vi) continuing trespass, (vii) nuisance,
(viii) breach of contract and (ix) breach of implied covenant of good faith and
fair dealing. The Company seeks to recover actual expenses and punitive damages.
Discovery in this matter has been stayed pending the outcome of settlement
discussions that commenced in November 1996. The Company believes it will
prevail, however, no amounts have been accrued for any recovery of damages.

Imperial Landfill Permit. The Imperial Landfill currently exceeds its
permitted daily tonnage capacity and the Company is involved in negotiations
with the California Integrated Waste Management Board regarding expansion of its
daily tonnage capacity. The Company received a notice of violation regarding the
Imperial Landfill capacity in late 1989 and has since applied for a modification
of its permit to increase the allowed daily tonnage from 50 tons up to a maximum
of 1,000 tons. Temporary written approval has been

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30

given by Imperial County, California and the California Integrated Waste
Management Board for the Company to operate the landfill and for the landfill to
receive in excess of 50 tons per day while the permit modification is being
reviewed.

The Company is also a party to various other environmental proceedings
related to its solid waste services operations which have arisen in the ordinary
course of its business. Although it is possible that losses exceeding amounts
already recorded may be incurred upon the ultimate resolution of these matters,
as well as the matters described above, management believes that such losses, if
any, will not have a material adverse effect on the Company's business or
consolidated financial position; however, unfavorable resolution of each matter
individually or in the aggregate could affect the consolidated results of
operations for the quarterly periods in which they are resolved.

AUTOMOTIVE RENTAL LITIGATION

The Company's automotive rental operations are subject to routine
litigation incidental to its business, including various claims and legal
actions involving automobile liability and personal injury, employee grievances,
environmental matters, trade practices and other matters, some of which seek
punitive damages. The Company's automotive rental operations are not currently
involved in any legal proceeding which the Company believes would, if determined
adversely, have a material adverse effect upon the Company's business, financial
condition or future prospects.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the stockholders of the Company
during the fourth quarter of the fiscal year ended December 31, 1996.

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31

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

MARKET INFORMATION, HOLDERS AND DIVIDENDS

The Common Stock is listed on Nasdaq and is traded under the symbol "RWIN."
The following table sets forth, for the periods indicated, the high and low
closing prices per share of the Common Stock as reported by Nasdaq. All prices
presented herein have been adjusted to reflect the Stock Split.



HIGH LOW
---- ---

1995
First Quarter............................................... $ 2 1/8 $ 1 9/16
Second Quarter.............................................. 7 3/16 1 1/2
Third Quarter............................................... 13 3/8 6 7/16
Fourth Quarter.............................................. 18 1/16 9 15/16
1996
First Quarter............................................... $17 15/16 $13 3/16
Second Quarter.............................................. 34 1/8 15
Third Quarter............................................... 31 19 1/4
Fourth Quarter.............................................. 34 5/8 27 3/8


On February 24, 1997, the closing price of the Common Stock was $35.125 per
share as reported by Nasdaq. On February 24, 1997, there were approximately
4,379 holders of record of the Common Stock.

Since December 1989, the Company has not declared or paid any cash
dividends on the Common Stock. The Company currently intends to retain its
earnings for future growth and, therefore, does not anticipate paying cash
dividends in the foreseeable future.

SALES OF UNREGISTERED SECURITIES DURING 1996

All transactions listed below involve the issuance of shares of Common
Stock by the Company in reliance upon Section 4(2) of the Securities Act of
1933, as amended. All share and per share data has been retroactively adjusted
to reflect the Stock Split.

On January 30, 1996, in connection with the acquisition of Charleston
Disposal Systems, Inc. and its affiliates ("CDS"), the Company issued 600,000
shares of Common Stock to the shareholders of CDS in exchange for all of the
issued and outstanding stock of CDS.

On February 27, 1996, in connection with the acquisition of Denver Alarm,
the Company issued 3,263,504 shares of Common Stock to the shareholders of
Denver Alarm in exchange for all of the issued and outstanding stock of Denver
Alarm.

On February 29, 1996, in connection with the acquisition of Incendere, the
Company issued 2,565,400 shares of Common Stock to the shareholders of Incendere
in exchange for all of the issued and outstanding stock of Incendere.

On March 1, 1996, in connection with the acquisition of A.J. Panzarella and
Co., Inc. ("Panzarella"), the Company issued 332,792 shares of Common Stock to
the shareholders of Panzarella in exchange for all of the issued and outstanding
stock of Panzarella.

On May 16, 1996, in connection with the acquisition of certain companies
doing business as Rapidway Disposal and Recycling Services ("Rapidway"), the
Company issued 1,529,640 shares of Common Stock to the shareholders of Rapidway
in exchange for all of the issued and outstanding stock of Rapidway.

On May 20, 1996, the Company issued and sold 9,878,400 shares of Common
Stock in a private placement to institutional and other accredited investors,
for a purchase price of $20.25 per share resulting in net proceeds of
approximately $197.5 million.

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32

On May 28, 1996, in connection with the acquisition of Austronics Security
Systems, Inc. ("Austronics"), the Company issued 278,243 shares of Common Stock
to the shareholders of Austronics in exchange for all of the issued and
outstanding stock of Austronics.

On May 29, 1996, in connection with the acquisition of Forest Security
Systems, Inc. ("Forest Security"), the Company issued 591,676 shares of Common
Stock to the shareholders of Forest Security in exchange for all of the issued
and outstanding stock of Forest Security.

On May 31, 1996, in connection with the acquisition of M-G Disposal
Service, Inc. ("M-G Disposal"), the Company issued 1,426,358 shares of Common
Stock to the shareholders of M-G Disposal in exchange for all of the issued and
outstanding stock of M-G Disposal.

On May 31, 1996, in connection with the acquisition of Hyder Waste
Container, Inc. ("Hyder Waste"), the Company issued 687,756 shares of Common
Stock to the shareholders of Hyder Waste in exchange for all of the issued and
outstanding stock of Hyder Waste.

On June 27, 1996, in connection with the acquisition of Charter Waste
Management Corporation ("Charter Waste"), the Company issued 882,495 shares of
Common Stock to the shareholders of Charter Waste in exchange for all of the
issued and outstanding stock of Charter Waste.

On June 28, 1996, in connection with the acquisition of Burgess Refuse
Removal Service, Inc. ("Burgess"), the Company issued 135,752 shares of Common
Stock to the shareholders of Burgess in exchange for all of the issued and
outstanding stock of Burgess.

On July 18, 1996, in connection with the acquisition of ECO Services of
S.C., Inc. ("ECO Services"), the Company issued 99,999 shares of Common Stock to
the shareholders of ECO Services in exchange for all of the issued and
outstanding stock of ECO Services.

On August 1, 1996, in connection with the acquisition of substantially all
of the assets of CarChoice, the Company issued 3,878,760 shares of Common Stock
to CarChoice.

On August 1, 1996, in connection with the acquisition of substantially all
of the assets of A&G Disposal Services, Inc. ("A&G Disposal"), the Company
issued 368,239 shares of Common Stock to A&G Disposal.

On August 2, 1996, in connection with the acquisition of Sunbelt Waste
Services, Inc. ("Sunbelt Waste"), the Company issued 130,484 shares of Common
Stock to the shareholders of Sunbelt Waste in exchange for all of the issued and
outstanding stock of Sunbelt Waste.

On October 18, 1996, in connection with the acquisition of Suburban
Disposal Services, Inc. ("Suburban"), the Company issued 177,778 shares of
Common Stock to the shareholders of Suburban in exchange for all of the issued
and outstanding stock of Suburban.

On November 8, 1996, the Company issued and sold 12,079,915 shares of
Common Stock in a private placement to institutional and other accredited
investors, for a purchase price of $29.50 per share resulting in net proceeds of
approximately $353.0 million.

On November 20, 1996, in connection with the acquisition of Rainbow
Industries, Inc. ("Rainbow"), the Company issued 1,057,475 shares of Common
Stock to the shareholders of Rainbow in exchange for all of the issued and
outstanding stock of Rainbow.

On November 25, 1996, in connection with the acquisition of Alamo, the
Company issued 22,572,180 shares of Common Stock to the shareholders of Alamo in
exchange for all of the issued and outstanding stock of Alamo.

On November 25, 1996, in connection with the acquisition of Triple C
Disposal Service, Inc. ("Triple C"), the Company issued 80,227 shares of Common
Stock to the shareholders of Triple C in exchange for all of the issued and
outstanding stock of Triple C.

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33

On November 26, 1996, in connection with the acquisition of Meyer Waste
Systems, Inc. ("Meyer Waste"), the Company issued 850,000 shares of Common Stock
to the shareholders of Meyer Waste in exchange for all of the issued and
outstanding stock of Meyer Waste.

On November 25, 1996, in connection with the acquisition of substantially
all of the assets of Acadiana Alarm Systems, Inc. ("Acadiana"), the Company
issued 343,056 shares of Common Stock to Acadiana.

On November 26, 1996, in connection with the acquisition of Monarch
Environmental, Inc. ("Monarch"), the Company issued 613,772 shares of Common
Stock to the shareholders of Monarch in exchange for all of the issued and
outstanding stock of Monarch.

On November 26, 1996, in connection with the acquisition of Bell Dodge,
Inc. ("Bell Dodge"), the Company issued 976,174 shares of Common Stock to the
shareholders of Bell Dodge in exchange for all of the issued and outstanding
stock of Bell Dodge.

From time to time throughout 1996, the Company issued an aggregate of
4,079,800 shares of Common Stock to certain warrant holders in connection with
the exercise of warrants to purchase shares of Common Stock at exercise prices
ranging from $1.13 to $3.50.

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ITEM 6. SELECTED FINANCIAL DATA

The following Selected Financial Data should be read in conjunction with
"ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS," the Company's Consolidated Financial Statements and Notes
thereto and other financial information included elsewhere in this Form 10-K.



AS OF AND FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Revenue.............................. $2,365,520 $1,791,446 $1,595,880 $1,370,497 $1,133,034
Income (loss) from continuing
operations before extraordinary
charge............................. (27,905) (1,463) 29,952 14,406 36,293
Income (loss) from continuing
operations......................... (59,497) (1,463) 29,952 14,406 36,293
Income (loss) from continuing
operations per common and common
equivalent share................... (.25) (.01) .21 .10 .27
Total assets......................... 3,776,062 2,829,795 2,824,777 2,475,901 2,064,142
Revenue earning vehicle debt......... 1,720,166 1,546,122 1,794,802 1,490,316 1,118,075
Long-term debt, net of current
maturities......................... 170,578 149,580 186,140 169,130 165,480
Shareholders' equity................. 1,276,218 642,499 355,621 313,275 354,116


See Notes 2, 4, 6 and 10 of Notes to Consolidated Financial Statements for
discussion of business combinations, the extraordinary charge, various equity
transactions and restructuring, merger and other non-recurring expenses and
their effect on comparability of year-to-year data. See "ITEM 5. MARKET FOR THE
REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS" for a discussion of
the Company's dividend policy.

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35

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion should be read in conjunction with the
Consolidated Financial Statements and Notes thereto of Republic Industries, Inc.
(the "Company") which are included elsewhere herein. The historical financial
statements of the Company include the financial position and results of
operations of Addington Resources, Inc. ("Addington"), Continental Waste
Industries, Inc. ("Continental"), Alamo Rent-A-Car, Inc. ("Alamo"), CarChoice,
Inc. ("CarChoice"), Incendere, Inc. ("Incendere") and the Denver Fire Reporter
and Protective Co., Inc. ("Denver Alarm") which the Company acquired during
1996. These transactions have been accounted for under the pooling of interests
method of accounting and, accordingly, these historical financial statements
have been restated as if the companies had operated as one entity since
inception. All references to historical share and per share data of the
Company's common stock, par value $.01 per share ("Common Stock"), have been
retroactively adjusted to reflect the two-for-one stock split that occurred in
June 1996, which is more fully described in Note 6, Shareholders' Equity, of
Notes to Consolidated Financial Statements.

BUSINESS COMBINATIONS

The Company makes its decisions to acquire or invest in businesses based on
financial and strategic considerations.

Pending Acquisitions

In February 1997, the Company signed a definitive agreement to acquire
Taormina Industries, Inc. ("Taormina"), which provides waste collection services
and owns and operates a materials recycling facility. The Company will issue
approximately 7.3 million shares of Common Stock in this transaction, which will
be accounted for under the pooling of interests method of accounting. The
closing of the transaction is subject to customary conditions, including
regulatory approvals.

In February 1997, the Company signed a definitive agreement to acquire AAA
Disposal Services, Inc. ("AAA Disposal"), which provides waste collection and
recycling services. The Company will issue approximately 2.9 million shares of
Common Stock in this transaction, which will be accounted for under the pooling
of interests method of accounting. The closing of the transaction is subject to
customary conditions, including regulatory approvals.

In February 1997, the Company signed a definitive agreement to acquire
Wallace Automotive Group ("Wallace"), which owns and operates three franchised
automotive dealerships. The Company will issue approximately 1.7 million shares
of Common Stock in this transaction, which will be accounted for under the
pooling of interests method of accounting. The closing of the transaction is
subject to customary conditions, including manufacturer and regulatory
approvals.

In January 1997, the Company signed a definitive agreement to acquire
Maroone Automotive Group ("Maroone"), which owns and operates five franchised
automotive dealerships. The Company will issue approximately 6.1 million shares
of Common Stock in this transaction, which will be accounted for under the
pooling of interests method of accounting. The closing of the transaction is
subject to customary conditions, including manufacturer and regulatory
approvals.

In addition, in January and February 1997, the Company signed definitive
agreements to acquire other businesses in the solid waste services and
automotive retailing industries which are not material to the Company. The
Company will issue an aggregate of approximately 2.5 million shares of Common
Stock in such transactions which will be accounted for under the purchase method
of accounting, and will issue an aggregate of approximately 1.1 million shares
of Common Stock in such transactions which will be accounted for under the
pooling of interests method of accounting. These transactions are subject to
customary conditions, including manufacturer and regulatory approvals, as
applicable.

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36

Acquisitions Completed Subsequent to December 31, 1996

In February 1997, the Company acquired National Car Rental System, Inc.
("National"), which operates a vehicle rental business. The Company issued
approximately 21.7 million shares of Common Stock in this transaction, which
will be accounted for under the pooling of interests method of accounting.

In January 1997, following approval by the Company's stockholders at a
special meeting, the Company acquired AutoNation Incorporated ("AutoNation"),
which is developing a chain of used vehicle megastores. The Company issued
approximately 17.5 million shares of Common Stock in this transaction, which
will be accounted for under the purchase method of accounting.

In January 1997, the Company acquired Carlisle Motors, Inc. ("Carlisle"),
which owns and operates three franchised automotive dealerships. The Company
issued approximately 1.0 million shares of Common Stock in this transaction,
which will be accounted for under the pooling of interests method of accounting.

In addition, in January and February 1997, the Company acquired various
other businesses in the solid waste services, electronic security services and
automotive retailing industries which were not material to the Company. The
Company issued an aggregate of approximately 9.1 million shares of Common Stock
and paid approximately $56.5 million of cash in such transactions which will be
accounted for under the purchase method of accounting, and issued an aggregate
of approximately .9 million shares of Common Stock in such transactions which
will be accounted for under the pooling of interests method of accounting.

Acquisitions Completed During 1996

Significant businesses acquired through December 31, 1996 and accounted for
under the pooling of interests method of accounting have been included
retroactively in the Consolidated Financial Statements as if the companies had
operated as one entity since inception. Businesses acquired through December 31,
1996 and accounted for under the purchase method of accounting are included in
the Consolidated Financial Statements from the date of acquisition.

In December 1996, the Company acquired Addington, which primarily provides
solid waste disposal services. The Company issued approximately 13.7 million
shares of Common Stock in this transaction, which has been accounted for under
the pooling of interests method of accounting.

In December 1996, the Company acquired Continental, which provides
integrated solid waste services. The Company issued approximately 12.4 million
shares of Common Stock in this transaction, which has been accounted for under
the pooling of interests method of accounting.

In November 1996, the Company acquired Alamo, which operates a vehicle
rental business. The Company issued approximately 22.6 million shares of Common
Stock in this transaction, which has been accounted for under the pooling of
interests method of accounting.

In August 1996, the Company acquired substantially all of the assets of
CarChoice, which operated used vehicle superstores similar to those being
developed by AutoNation. The Company issued approximately 3.9 million shares of
Common Stock in this transaction, which has been accounted for under the pooling
of interests method of accounting.

In February 1996, the Company acquired Incendere, which provides solid
waste collection, recycling and medical waste hauling services. In February
1996, the Company acquired Denver Alarm, which provides electronic security
services. The Company issued an aggregate of approximately 5.8 million shares of
Common Stock in these transactions, which have been accounted for under the
pooling of interests method of accounting.

During the year ended December 31, 1996, the Company also acquired various
other businesses in the solid waste services, electronic security services and
automotive retailing industries which were not material to the Company. The
Company issued an aggregate of approximately 9.1 million shares of Common Stock
and paid $23.4 million of cash in such transactions which have been accounted
for under the purchase method of accounting, and issued an aggregate of
approximately 13.0 million shares of Common Stock in such

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37

transactions which have been accounted for under the pooling of interests method
of accounting. These acquisitions accounted for under the pooling of interests
method of accounting were not material in the aggregate and, consequently, prior
period financial statements were not restated for such acquisitions.

In November 1995, the Company acquired J.C. Duncan Company, Inc.
("Duncan"), Garbage Disposal Service, Inc. ("GDS"), Fennell Container Co., Inc.
("Fennell") and Scott Security Systems ("Scott"). Duncan provides solid waste
collection and recycling services and also operates two landfills. GDS provides
solid waste collection and recycling services. Fennell provides solid waste
collection and recycling services and also owns a landfill. Scott provides
electronic security services. In October 1995, the Company acquired United Waste
Service, Inc. ("United") and Southland Environmental Services, Inc.
("Southland"). United provides solid waste collection, transfer and recycling
services. Southland provides solid waste collection services. In August 1995,
the Company acquired Kertz Security Systems, Inc. ("Kertz"), which provides
electronic security services. The Company issued an aggregate of approximately
36.3 million shares of Common Stock for the above acquisitions. These
acquisitions have been accounted for under the pooling of interests method of
accounting and, accordingly, the Consolidated Financial Statements have
previously been restated as if the Company and Duncan, GDS, Fennell, Scott,
United, Southland and Kertz had operated as one entity since inception.

In August 1995, the Company acquired Hudson Management Corporation and
Envirocycle, Inc. (collectively, "HMC"). HMC provides solid waste collection and
recycling services. The Company issued 16.0 million shares of Common Stock to
acquire HMC which has been accounted for under the purchase method of
accounting. During the years ended December 31, 1995 and 1994, the Company
entered into several other business combinations which have been accounted for
under the purchase method of accounting, and which were not material to the
Company.

Termination of ADT Agreement

In September 1996, the Agreement and Plan of Amalgamation, dated as of July
1, 1996 and amended as of July 15, 1996 (the "ADT Agreement") by and among the
Company, R.I./Triangle, Ltd. and ADT Limited, a Bermuda corporation ("ADT"),
which provided for the acquisition of ADT by the Company, was terminated by
mutual agreement of the parties. In connection with the execution of the ADT
Agreement, ADT granted to the Company a warrant (the "ADT Warrant") to purchase
15.0 million common shares of ADT at a purchase price of $20 per share (which
approximated fair market value), subject to certain anti-dilution adjustments.
The warrant became exercisable upon the termination of the ADT Agreement and
remains exercisable through March 1997. Pursuant to the terms of the warrant,
ADT has granted to the Company certain registration rights with respect to the
common shares of ADT issuable to the Company upon exercise of the warrant.

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BUSINESS SEGMENT INFORMATION

The following table sets forth revenue with percentages of total revenue,
and sets forth cost of operations, selling, general and administrative expenses,
restructuring and merger expenses and operating income (loss) with percentages
of the applicable segment revenue, for each of the Company's various business
segments for the years ended December 31 (in thousands):



1996 % 1995 % 1994 %
---------- ---- ---------- ---- ---------- ----

Revenue:
Automotive rental........................... $1,516,693 64 $1,391,727 78 $1,312,922 82
Solid waste services........................ 611,350 26 349,893 19 241,045 15
Automotive retailing........................ 152,201 6 -- -- -- --
Electronic security services................ 85,276 4 49,826 3 41,913 3
---------- ---------- ----------
2,365,520 1,791,446 1,595,880
Cost of Operations:
Automotive rental........................... 604,315 40 593,892 43 496,647 38
Solid waste services........................ 446,162 73 239,298 68 164,365 68
Automotive retailing........................ 145,077 95 -- -- -- --
Electronic security services................ 37,307 44 20,569 41 20,643 49
---------- ---------- ----------
1,232,861 853,759 681,655
---------- ---------- ----------
Selling, General and Administrative:
Automotive rental........................... 954,599 63 839,883 60 786,051 60
Solid waste services........................ 63,784 10 52,612 15 39,301 16
Automotive retailing........................ 19,147 13 4,038 -- -- --
Electronic security services................ 33,474 39 20,626 41 18,918 45
Corporate................................... 25,763 -- 4,318 -- 2,882 --
---------- ---------- ----------
1,096,767 921,477 847,152
---------- ---------- ----------
Restructuring and Merger Expenses:
Automotive rental........................... 23,500 2 -- -- -- --
Solid waste services........................ 8,835 1 3,264 1 -- --
Corporate................................... 6,000 -- -- -- -- --
---------- ---------- ----------
38,335 3,264 --
---------- ---------- ----------
Operating Income (Loss):
Automotive rental........................... (65,721) (5) (42,048) (3) 30,224 2
Solid waste services........................ 92,569 16 54,719 16 37,379 16
Automotive retailing........................ (12,023) (8) (4,038) -- -- --
Electronic security services................ 14,495 17 8,631 18 2,352 6
Corporate................................... (31,763) -- (4,318) -- (2,882) --
---------- ---------- ----------
$ (2,443) $ 12,946 $ 67,073
========== ========== ==========


CONSOLIDATED RESULTS OF OPERATIONS

The Company's consolidated revenue increased 32% to $2.4 billion for the
year ended December 31, 1996 and 12% to $1.8 billion for the year ended December
31, 1995 due to growth in all four of the Company's business segments.
Consolidated operating income (loss) was $(2.4) million, $12.9 million and $67.1
million for the years ended December 31, 1996, 1995 and 1994, respectively. Net
income (loss) was $(59.5) million, $(26.6) million and $27.2 million for the
years ended December 31, 1996, 1995 and 1994, respectively. Net income (loss)
per common and common equivalent share was $(.25), $(.16) and $.19 for the years
ended December 31, 1996, 1995 and 1994, respectively. The year ended December
31, 1996 was impacted by one-time pre-tax charges of approximately $95.5 million
and an extraordinary charge of approximately $31.6 million, both of which are
more fully discussed below. Excluding these charges, operating results of the
Company's automotive rental segment for the year ended December 31, 1996
improved significantly over 1995. The Company's solid waste services and
electronic security services segments experienced significant

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improvement over 1995. Additionally, 1996 marked the beginning of the Company's
entry into the automotive retailing business which has considerably accelerated
during early 1997 with the acquisitions of a significant number of new car
dealerships. The operating results for each of the Company's various business
segments are discussed below.

Restructuring, Merger and Other Non-Recurring Expenses

During the year ended December 31, 1996, the Company took one-time pre-tax
charges of approximately $95.5 million related primarily to the integration of
the operations of Alamo into those of the Company. Also included in these
charges are merger expenses associated with the acquisitions of Alamo, Addington
and Continental. Approximately $38.3 million of such expenses appear as
restructuring and merger expenses on the Company's Consolidated Statement of
Operations for the year ended December 31, 1996 with the remainder of
approximately $57.2 million included in selling, general and administrative
expenses. These costs primarily include asset write-offs, severance benefits,
accounting and legal merger costs and changes in various estimated reserve
requirements.

Extraordinary Charge

During the year ended December 31, 1996, in connection with refinancing
Alamo's debt at substantially lower interest rates, the Company took an
extraordinary charge of approximately $31.6 million, net of income taxes.
Included in this charge are bond redemption premiums, the write-off of debt
issue costs, prepayment penalties and other related fees. See Note 4, Long-Term
Debt and Notes Payable, of Notes to Consolidated Financial Statements for
further discussion of this charge.

Discontinued Operations

During the year ended December 31, 1995, the Company disposed of its mining
and citrus operations and spun-off its hazardous waste services segment
resulting in a loss from discontinued operations of approximately $25.1 million,
net of income taxes. Operating results have been reclassified in the
Consolidated Financial Statements from the historical classification in order to
properly identify them as discontinued operations. See Note 11, Discontinued
Operations, of Notes to Consolidated Financial Statements, for further
discussion of these transactions.

AUTOMOTIVE RENTAL

Revenue from the Company's automotive rental operations consists primarily
of rental fees and related rental products generated by Alamo from the leisure
and business travel segments. Rental revenue for the year ended December 31,
1996 increased 9% to $1.52 billion from $1.39 billion in 1995, while 1995
revenue increased 6% from $1.31 billion in 1994. The 1996 increase is primarily
from improvements in rental volume and average daily rental rates resulting from
increases in air passenger deplanements in Florida, Hawaii and California. The
1995 increase was due to improvement in average daily rental rates and European
transaction growth.

Operating income (loss) from the Company's automotive rental operations has
fluctuated during the three years ended December 31, 1996, 1995 and 1994 due to
restructuring, merger and other non-recurring expenses and the level of vehicle
rental operating expenses as discussed below. Operating income (loss) was
$(65.7) million for the year ended December 31, 1996 as compared to $(42.0)
million in 1995 and income of $30.2 million in 1994. Approximately $75.7 million
of the Company's 1996 restructuring, merger and other non-recurring expenses
relate to the operations of Alamo as discussed above. Without these charges,
operating income from the Company's automotive rental business would have been
approximately $10.0 million in 1996.

Automotive rental operating expenses consist primarily of vehicle
depreciation, interest and lease expenses. Automotive rental operating expenses
were $604.3 million, $593.9 million and $496.6 million or, as percentages of
automotive rental revenue, 40%, 43% and 38% for the years ended December 31,
1996, 1995 and 1994, respectively. The 1995 increase in such expenses as a
percentage of revenue over 1994 was primarily a result of increased vehicle
depreciation due to unfavorable changes to manufacturers' repurchase programs

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and the Company's decision to accelerate the removal of certain higher cost
vehicles from its fleet. Additionally, vehicle lease costs and interest costs
increased as percentages of revenue due to an increase in the number of vehicles
under lease and an increase in market interest rates, respectively. Automotive
rental operating expenses decreased in 1996 as a percentage of rental revenue
versus 1995. This improvement was due to the Company's decision to maintain a
less expensive fleet mix and slightly lower interest rates.

Selling, general and administrative expenses related to the Company's
automotive rental operations consist primarily of personnel, estimated auto
liability claims, vehicle maintenance, marketing costs, travel agent and tour
operator commissions and airport fees. Such expenses were $954.6 million, $839.9
million and $786.1 million for the years ended December 31, 1996, 1995 and 1994,
respectively. Excluding one-time charges, selling, general and administrative
expenses remained relatively constant as a percentage of rental revenue for the
years ended December 31, 1996, 1995 and 1994 while the increases in aggregate
dollars reflect the expansion of the Company's automotive rental operations.

SOLID WASTE SERVICES

Revenue from the Company's solid waste services operations consists of
collection fees from residential, commercial and industrial customers and
landfill disposal fees charged to third parties. Solid waste revenue was $611.4
million, $349.9 million and $241.0 million for the years ended December 31,
1996, 1995 and 1994, respectively. These increases in revenue are a result of
acquisitions as well as the expansion of the Company's existing business.

Cost of solid waste services includes disposal, labor and equipment
operating costs related to waste collection operations and the cost of operating
the Company's landfills which consist of daily operating expenses, legal and
administrative costs of ongoing environmental compliance and site closure and
post-closure costs. Certain direct landfill development costs, such as
engineering, upgrading, cell construction and permitting costs, are capitalized
and depleted based on consumed airspace. All indirect landfill development
costs, such as executive salaries, general corporate overhead, public affairs
and other corporate services are expensed as incurred. Cost of solid waste
services was $446.2 million, $239.3 million and $164.4 million or, as
percentages of solid waste revenue, 73%, 68% and 68% for the years ended
December 31, 1996, 1995 and 1994, respectively. The increases in aggregate
dollars are a result of the expansion of the Company's solid waste services
operations through acquisition and internal growth. The 1996 increase in cost of
solid waste services as a percentage of solid waste revenue is primarily a
result of certain of the Company's acquired collection companies which had
higher levels of operating costs than the Company's historical operations. The
Company also incurred various operating costs in 1996 related to its plan to
realign certain collection routes in an effort to make its collection process
more efficient. Also, the Company incurred various costs related to upgrading
several of its landfills during 1996.

Selling, general and administrative expenses related to the Company's solid
waste services operations consist primarily of office salaries, supervisor
salaries and office expenses. Such expenses were $63.8 million, $52.6 million
and $39.3 million or, as percentages of solid waste revenue, 10%, 15% and 16%
for the years ended December 31, 1996, 1995 and 1994, respectively. The
increases in aggregate dollars from year to year primarily reflects the growth
of the Company's business through acquisitions. The decreases in selling,
general and administrative expenses as percentages of revenue in each of the
years are primarily due to the reduction of administrative expenses for acquired
businesses and growth in revenue.

AUTOMOTIVE RETAILING

Revenue from the Company's automotive retailing operations consists of
sales of new and used vehicles, parts and service. Automotive retailing revenue
was $152.2 million for the year ended December 31, 1996 and is a result of the
Company's entry into the business of selling new and used vehicles at its
dealerships. The Company has aggressively expanded this business through the
acquisition of AutoNation and several new car dealerships during 1997 and
currently plans to continue this expansion for the remainder of 1997 and beyond.
In this regard, the Company has recently established framework agreements with
each of Ford Motor Company and General Motors Corporation which will allow the
Company to acquire franchised automotive dealerships nationwide.

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Cost of operations of the Company's automotive retailing operations was
$145.1 million for the year ended December 31, 1996 and consists primarily of
the cost of vehicles sold, including the cost of reconditioning used vehicles,
the cost of parts and accessories and interest expense related to vehicle
inventory financing.

Selling, general and administrative expenses consist primarily of sales
salaries and commissions, marketing expense and office salaries. Such expenses
were $19.1 million and $4.0 million for the years ended December 31, 1996 and
1995, respectively. The Company believes the levels of cost of operations and
selling, general and administrative expenses related to its automotive retailing
operations and resultant operating losses for the years ended December 31, 1996
and 1995 are a result of start-up costs associated with the Company's initial
development of these operations. As the Company opens AutoNation stores and
reconditioning centers during 1997 and beyond, such operations will incur fixed
operating and administrative costs immediately while revenue volume will tend to
grow more gradually. Consequently, the Company anticipates it will take
approximately nine months for an average AutoNation store to generate operating
income.

ELECTRONIC SECURITY SERVICES

Revenue from the Company's electronic security services operations results
from monitoring contracts for security systems and fees charged for the sale and
installation of such systems. Electronic security revenue was $85.3 million,
$49.8 million and $41.9 million for the years ended December 31, 1996, 1995 and
1994, respectively. These increases in revenue are principally a result of the
installation of new monitoring systems and acquisitions of subscriber accounts
during the periods.

Cost of electronic security services primarily consists of the labor and
equipment associated with the sale, installation and monitoring of security
systems. Cost of electronic security services was $37.3 million, $20.6 million
and $20.6 million or, as percentages of electronic security revenue, 44%, 41%
and 49% for the years ended December 31, 1996, 1995 and 1994, respectively. The
1996 increase in aggregate dollars from 1995 is a result of the installation of
new monitoring systems and acquisitions of subscriber accounts. The 1996
increase in cost of electronic security services as a percentage of electronic
security revenue is primarily a result of the Company's expansion in 1996
through the opening of additional branch offices which have not yet reached the
revenue volume of a mature branch office, yet have attained a full level of
operating costs and expenses. The 1995 decrease from 1994 in cost of electronic
security services as a percentage of electronic security revenue is primarily a
result of 1995 acquisitions of monitoring accounts which were integrated into
the Company's existing operations with the addition of substantially no
incremental cost of operations.

Selling, general and administrative expenses related to the Company's
electronic security services operations consist primarily of office salaries,
office expenses and marketing expenses. Such expenses were $33.5 million, $20.6
million and $18.9 million or, as percentages of electronic security revenue,
39%, 41% and 45% for the years ended December 31, 1996, 1995, and 1994,
respectively. The increases in aggregate dollars primarily reflect the Company's
expanded operations through the growth of its existing business. The decreases
in selling, general and administrative expenses as percentages of revenue are
primarily due to the reduction of administrative expenses for acquired
businesses and growth in revenue.

CORPORATE ACTIVITIES

Corporate selling, general and administrative expenses consist primarily of
office salaries for corporate employees, professional and regulatory fees,
office expenses and the cost of business travel. Such expenses were $25.8
million, $4.3 million and $2.9 million for the years ended December 31, 1996,
1995 and 1994, respectively. The 1996 increase over 1995 is a result of the
growth experienced by the Company during the year.

INTEREST INCOME

Interest income was $20.6 million, $12.0 million and $5.6 million for the
years ended December 31, 1996, 1995 and 1994, respectively. The increases in
1996 over 1995 and 1995 over 1994 are due to the increase in interest income
from proceeds from sales of Common Stock and interest income on advances to
AutoNation

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42

made during 1996. For further discussion of the sales of Common Stock, see Note
6, Shareholders' Equity, of Notes to the Consolidated Financial Statements.

INTEREST EXPENSE

Interest expense was incurred on general corporate debt and the debt
assumed in acquisitions. Interest expense was $33.5 million, $23.2 million and
$15.9 million for the years ended December 31, 1996, 1995 and 1994,
respectively. The increases in 1996 over 1995 and 1995 over 1994 are primarily
due to higher average outstanding borrowings used to fund the Company's growth
and debt assumed in acquisitions. Interest expense related to revenue earning
vehicle financing in the Company's automotive rental operations is included in
vehicle rental operating expenses and interest expense related to the vehicle
inventory financing in the Company's automotive retailing operations is included
in cost of vehicle sales.

INCOME TAXES

Income tax expense was $17.7 million, $4.2 million and $20.7 million for
the years ended December 31, 1996, 1995 and 1994, respectively. The effective
income tax rate was 173%, 154% and 41% for the years ended December 31, 1996,
1995 and 1994, respectively. The increases in the effective income tax rates for
1996 and 1995 are primarily due to the Company providing valuation allowances on
certain deferred tax assets of acquired pooled entities, non-deductible
acquisition related costs and varying historical effective income tax rates of
acquired businesses accounted for under the pooling of interests method of
accounting.

ENVIRONMENTAL AND LANDFILL MATTERS

The Company provides for accrued environmental and landfill costs which
include landfill site closure and post-closure costs. Landfill site closure and
post-closure costs include estimated costs to be incurred for final closure of
the landfills and estimated costs for providing required post-closure monitoring
and maintenance of landfills. These costs are accrued based on consumed
airspace. The Company estimates its future cost requirements for closure and
post-closure monitoring and maintenance for its solid waste facilities based on
its interpretation of the technical standards of the Environmental Protection
Agency's Subtitle D regulations. These estimates do not take into account
discounts for the present value of such total estimated costs. Excluding
existing accruals at December 31, 1996, approximately $53.7 million of such
costs are to be expensed over the remaining lives of these facilities.

Environmental costs are accrued by the Company through a charge to income
in the period such liabilities become probable and can be reasonably estimated.

The Company periodically reassesses its methods and assumptions used to
estimate such accruals for environmental and landfill costs and adjusts such
accruals accordingly. Such factors considered are changing regulatory
requirements, the effects of inflation, changes in operating climates in the
regions in which the Company's facilities are located and the expectations
regarding costs of securing environmental services.

FINANCIAL CONDITION

At December 31, 1996, the Company had $63.6 million in cash and
approximately $92.6 million of availability under its $250.0 million revolving
credit facility which may be used for general corporate purposes. The Company
believes that its financial condition is strong and that it has sufficient
operating cash flow and other financial resources necessary to meet its
anticipated capital requirements and obligations as they come due.

In January 1997, the Company sold approximately 15.8 million shares of
Common Stock to certain institutional investors in a private placement
transaction resulting in net proceeds of approximately $552.7 million. As of
February 24, 1997, subsequent to the acquisition of National, the Company had
approximately $294.1 million in cash; approximately $3.5 billion of long-term
debt outstanding, $3.3 billion of which was secured by revenue earning vehicles
and $198.9 million of which was under vehicle inventory financings secured by
vehicle inventories; and no borrowings outstanding under the Company's revolving
credit facility.

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In connection with the Company's automotive rental operations, Alamo and
National, through separate special purpose entities, may issue up to $1.4
billion and $1.1 billion of commercial paper, respectively, the proceeds of
which may be used solely to purchase or finance rental fleet vehicles that are
subject to manufacturer repurchase programs or to refinance repurchase
receivables due from vehicle manufacturers under repurchase programs. National
has also issued $800.0 million of medium term notes, the proceeds of which were
used to finance rental fleet vehicles. The Company has various other credit
facilities to finance its current vehicle rental operations in Europe and other
foreign markets. In connection with the development of the AutoNation
megastores, AutoNation is the lessee under a $150.0 million operating lease
facility established to acquire and develop properties used in its business,
which as of February 24, 1997 had approximately $52.0 million in properties
under development.

Working Capital

Working capital at December 31, 1996 was $356.8 million as compared to
$99.7 million at December 31, 1995. The increase in working capital primarily
results from sales of Common Stock in May and November of 1996 in private
placement transactions resulting in net proceeds to the Company of approximately
$550.6 million. Such proceeds were used to repay a portion of revenue earning
vehicle debt and to make advances to AutoNation pursuant to a loan agreement.
The Company believes working capital may decline in 1997 to lower levels as
additional capital is used for the continued expansion of the Company's
businesses including the development of the AutoNation business.

Revenue earning vehicles, net consist of the Company's vehicle rental
fleet, net of accumulated depreciation, and were $1.8 billion at December 31,
1996 as compared to $1.5 billion at December 31, 1995. The increase is primarily
a result of the Company's decision to operate a greater percentage of owned
vehicles versus leased vehicles in 1996 and also increased vehicle purchases in
1996 over 1995 to support additional rental volume. Revenue earning vehicles
with depreciated cost of $1.3 billion at December 31, 1996 were acquired under
programs that allow the Company to require counterparties to repurchase vehicles
held for periods of up to 24 months.

Advances to affiliate of $247.5 million includes advances made to
AutoNation and accrued interest thereon pursuant to a loan agreement whereby the
Company agreed to provide a line of credit to AutoNation for the development of
new and used vehicle megastores.

Receivables, net at December 31, 1996 were $316.3 million as compared to
$227.4 million at December 31, 1995. Receivables consist primarily of amounts
due from retail and service customers, travel agents and tour operators and
amounts due under vehicle repurchase and incentive programs. The increase is
primarily attributed to various business acquisitions and expansion of the
Company's existing businesses.

Accounts payable and accrued liabilities at December 31, 1996 were $267.9
million as compared to $174.7 million at December 31, 1995. The increase is
primarily attributed to various business acquisitions and expansion of the
Company's existing businesses.

Revenue earning vehicle debt consists of the Company's obligations to
various financial institutions. Such debt is secured by the Company's vehicle
rental fleet and was $1.7 billion at December 31, 1996 and $1.5 billion at
December 31, 1995. The Company expects to continue to fund its purchases of
revenue earning vehicles with secured vehicle financings.

Property and Equipment

Property and equipment increased $339.9 million during 1996 primarily as a
result of various business acquisitions and increased capital expenditures
resulting from expansion of the Company's existing businesses.

Intangible Assets

Intangible assets increased $106.4 million during 1996 primarily as a
result of the acquisition of various businesses accounted for under the purchase
method of accounting during the period. See Note 1, Summary

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44

of Significant Accounting Policies -- Intangible Assets, of Notes to
Consolidated Financial Statements for further discussion of intangible assets.

Investment in Subscriber Accounts

Investment in subscriber accounts represents certain capitalized costs
associated with the installation of new electronic security systems and the cost
of acquired subscriber accounts. Investment in subscriber accounts increased
$59.5 million during 1996 primarily as a result of growth in electronic security
system installations and acquisitions of subscriber accounts.

Notes Payable and Long-Term Debt Including Current Maturities

Notes payable and long-term debt including current maturities increased to
$218.8 million at December 31, 1996 from $191.5 million at December 31, 1995.
The increase is primarily attributed to borrowings under the Company's $250.0
million revolving credit facility.

Shareholders' Equity

Shareholders' equity increased $633.7 million during the year ended
December 31, 1996 primarily due to the May and November 1996 sales of
approximately 9.9 million and 12.1 million shares of Common Stock, respectively,
which resulted in aggregate net proceeds of approximately $550.6 million. Also
contributing to this increase were 1996 acquisitions of various businesses
accounted for under the purchase method of accounting.

CASH FLOWS

Cash and cash equivalents decreased by $119.8 million during the year ended
December 31, 1996 and increased $148.8 million during the year ended December
31, 1995. The major components of these changes are discussed below.

Cash Provided by Operating Activities

The Company's net cash flows from operating activities increased by $60.6
million during the year ended December 31, 1996 primarily as a result of various
business acquisitions and expansion of the Company's existing businesses.

Cash Used in Investing Activities

Capital additions were approximately $1.0 billion, $303.7 million and
$775.2 million during the years ended December 31, 1996, 1995 and 1994,
respectively, which included the purchases of revenue earning vehicles (net of
sales) and property and equipment and the expansion of landfill sites. The
decrease in 1995 is primarily a result of the Company's utilization of a greater
percentage of leased vehicles in its rental fleet during the year. During 1996,
the Company returned to a policy which resulted in a greater percentage of owned
vehicles in its fleet. The Company also made capital expenditures of
approximately $41.4 million, $16.0 million and $17.5 million during the years
ended December 31, 1996, 1995 and 1994, respectively, related to the expansion
of its electronic security services business through installations of new
monitoring systems and acquisitions of subscriber accounts.

In addition, during the year ended December 31, 1996, Republic advanced
$243.4 million to AutoNation under the AutoNation loan agreement as previously
discussed.

The Company expects capital expenditures to increase substantially during
the remainder of 1997 and in the foreseeable future due to the development of
the AutoNation business as well as continued internal growth of existing
businesses and future acquisitions. In addition, management anticipates
continuing to make capital expenditures for revenue earning vehicles, equipment,
the construction of new airspace at landfill sites and the installation of new
security systems.

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As of February 24, 1997, AutoNation is in various stages of evaluating,
contracting and closing on purchases or leases of approximately 65 additional
sites for vehicle retail stores or reconditioning centers. Due to the recent
commencement of AutoNation's principal operations, the amount of capital
expenditures to be incurred related to such operations cannot be reasonably
estimated. However, the Company intends to finance capital expenditures through
cash on hand, revolving credit facilities, lease facilities and other
financings.

Cash Provided by (Used in) Financing Activities

Cash provided by (used in) financing activities during the years ended
December 31, 1996, 1995, and 1994 resulted from revenue earning vehicle
financing, commercial bank borrowings, repayments of debt and issuances of
Common Stock. In May 1996, the Company sold 9.9 million shares of Common Stock
in a private placement transaction resulting in net proceeds of approximately
$197.6 million. In November 1996, the Company sold 12.1 million shares of Common
Stock in a private placement transaction resulting in net proceeds of
approximately $353.0 million. These financing activities combined with cash
provided by operating activities were used to fund capital additions and the
expansion of the Company's business during these years.

In August 1995, the Company issued and sold an aggregate of 16.7 million
shares of Common Stock and warrants to purchase an additional 33.4 million
shares of Common Stock to H. Wayne Huizenga, Westbury (Bermuda) Ltd. (a Bermuda
corporation controlled by Michael G. DeGroote), Harris W. Hudson, and certain of
their assigns for an aggregate purchase price of approximately $37.5 million.
The warrants are exercisable at prices ranging from $2.25 to $3.50 per share. In
August 1995, the Company issued and sold an additional 2.0 million shares of
Common Stock each to Mr. Huizenga and John J. Melk, for aggregate proceeds of
approximately $26.5 million.

In July 1995, the Company sold 10.8 million shares of Common Stock in a
private placement transaction resulting in net proceeds of approximately $69.0
million. In September 1995, the Company sold 10.0 million shares of Common Stock
in an additional private placement transaction resulting in net proceeds of
approximately $99.0 million.

SEASONALITY

The Company's automotive rental operations and particularly the leisure
travel segment is highly seasonal. In these operations, the third quarter, which
includes the peak summer travel months, has historically been the strongest
quarter of the year. During the peak season, the Company increases its rental
fleet and workforce to accommodate increased rental activity. As a result, any
occurrence that disrupts travel patterns during the summer period could have a
material adverse effect on the annual performance of this segment. The first
quarter for the Company's automotive rental operations is generally the weakest,
when there is limited leisure family travel and a greater potential for adverse
weather conditions. Many of the operating expenses such as rent, general
insurance and administrative personnel are fixed and cannot be reduced during
periods of decreased rental demand.

FORWARD-LOOKING STATEMENTS

Certain statements and information included herein constitute
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance, or achievements of the Company to be materially
different from any future results, performance, or achievements expressed or
implied by such forward-looking statements. Such factors include, among other
things, the ability to develop and implement operational and financial systems
to manage rapidly growing operations; competition in the Company's lines of
business; the ability to integrate and successfully operate acquired businesses
and the risks associated with such businesses; the ability to obtain financing
on acceptable terms to finance the Company's growth strategy and for the Company
to operate within the limitations imposed by financing arrangements; the
Company's limited history of operations in automotive retailing; the dependence
on vehicle manufacturers to approve dealership acquisitions; the possibility of
unfavorable changes to the cost or financing of the Company's vehicle rental
fleet; the Company's dependence on key personnel; and other factors referenced
herein.

44
46

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



PAGE
----

Report of Independent Certified Public Accountants.......... 46
Consolidated Balance Sheets as of December 31, 1996 and
1995...................................................... 47
Consolidated Statements of Operations for Each of the Three
Years Ended December 31, 1996............................. 48
Consolidated Statements of Shareholders' Equity for Each of
the Three Years Ended December 31, 1996................... 49
Consolidated Statements of Cash Flows for Each of the Three
Years Ended December 31, 1996............................. 50
Notes to Consolidated Financial Statements.................. 51
Financial Statement Schedule II, Valuation and Qualifying
Accounts and Reserves, for Each of
the Three Years Ended December 31, 1996................... 77


45
47

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of Republic Industries, Inc.:

We have audited the accompanying consolidated balance sheets of Republic
Industries, Inc. (a Delaware corporation) and subsidiaries as of December 31,
1996 and 1995, and the related consolidated statements of operations,
shareholders' equity and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements and the schedule referred to
below are the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and the schedule based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Republic
Industries, Inc. and subsidiaries as of December 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1996, in conformity with generally accepted
accounting principles.

Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
consolidated financial statements is presented for the purpose of complying with
the Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.

ARTHUR ANDERSEN LLP

Fort Lauderdale, Florida,
February 25, 1997.

46
48

REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31,
(IN THOUSANDS, EXCEPT SHARE DATA)



1996 1995
---------- ----------

ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 63,614 $ 183,395
Receivables, net.......................................... 316,253 227,361
Revenue earning vehicles, net............................. 1,802,997 1,478,409
Advances to affiliate..................................... 247,472 --
Inventory................................................. 34,157 14,924
Other current assets...................................... 120,341 124,437
---------- ----------
Total Current Assets.............................. 2,584,834 2,028,526
PROPERTY AND EQUIPMENT, NET................................. 846,430 607,762
INTANGIBLE ASSETS, NET...................................... 228,448 135,106
INVESTMENT IN SUBSCRIBER ACCOUNTS, NET...................... 92,427 42,240
OTHER ASSETS................................................ 23,923 16,161
---------- ----------
$3,776,062 $2,829,795
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.......................................... $ 177,829 $ 139,200
Accrued liabilities....................................... 90,065 35,455
Estimated liability insurance claims...................... 144,225 119,161
Revenue earning vehicle debt.............................. 1,720,166 1,546,122
Notes payable and current maturities of long-term debt.... 48,195 41,885
Other current liabilities................................. 47,583 46,963
---------- ----------
Total Current Liabilities......................... 2,228,063 1,928,786
LONG-TERM DEBT, NET OF CURRENT MATURITIES................... 170,578 149,580
OTHER LIABILITIES........................................... 101,203 108,930
COMMITMENTS AND CONTINGENCIES...............................
SHAREHOLDERS' EQUITY:
Preferred stock, par value $.01 per share; 5,000,000
shares authorized; none issued......................... -- --
Common stock, par value $.01 per share; 500,000,000 and
350,000,000 shares authorized, respectively;
258,866,023 and 210,049,975 shares issued and
outstanding, respectively.............................. 2,589 2,100
Additional paid-in capital................................ 1,296,528 576,233
Retained earnings (deficit)............................... (22,899) 64,166
---------- ----------
Total Shareholders' Equity........................ 1,276,218 642,499
---------- ----------
$3,776,062 $2,829,795
========== ==========


The accompanying notes are an integral part of these statements.

47
49

REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
(IN THOUSANDS, EXCEPT PER SHARE DATA)



1996 1995 1994
---------- ---------- ----------

REVENUE:
Vehicle rentals.......................................... $1,516,693 $1,391,727 $1,312,922
Solid waste services..................................... 611,350 349,893 241,045
Vehicle sales............................................ 152,201 -- --
Electronic security services............................. 85,276 49,826 41,913
---------- ---------- ----------
2,365,520 1,791,446 1,595,880
EXPENSES:
Vehicle rental operating expenses........................ 604,315 593,892 496,647
Cost of solid waste services............................. 446,162 239,298 164,365
Cost of vehicle sales.................................... 145,077 -- --
Cost of electronic security services..................... 37,307 20,569 20,643
Selling, general and administrative...................... 1,096,767 921,477 847,152
Restructuring and merger expenses........................ 38,335 3,264 --
---------- ---------- ----------
OPERATING INCOME (LOSS).................................... (2,443) 12,946 67,073
INTEREST INCOME............................................ 20,564 12,041 5,639
INTEREST EXPENSE........................................... (33,496) (23,249) (15,865)
OTHER INCOME (EXPENSE), NET................................ 5,135 975 (6,211)
---------- ---------- ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES AND EXTRAORDINARY CHARGE........................... (10,240) 2,713 50,636
PROVISION FOR INCOME TAXES................................. 17,665 4,176 20,684
---------- ---------- ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
EXTRAORDINARY CHARGE..................................... (27,905) (1,463) 29,952
EXTRAORDINARY CHARGE RELATED TO EARLY EXTINGUISHMENT OF
DEBT, NET OF BENEFIT FOR INCOME TAXES OF $14,955......... (31,592) -- --
---------- ---------- ----------
INCOME (LOSS) FROM CONTINUING OPERATIONS................... (59,497) (1,463) 29,952
---------- ---------- ----------
DISCONTINUED OPERATIONS:
Income (loss) from discontinued operations, net of income
taxes................................................. -- 5,414 (2,764)
Loss on disposal of segment, net of income taxes......... -- (30,537) --
---------- ---------- ----------
Loss from discontinued operations........................ -- (25,123) (2,764)
---------- ---------- ----------
NET INCOME (LOSS).......................................... $ (59,497) $ (26,586) $ 27,188
========== ========== ==========
FULLY DILUTED EARNINGS (LOSS) PER COMMON AND COMMON
EQUIVALENT SHARE:
Income (loss) from continuing operations before
extraordinary charge.................................. $ (.12) $ (.01) $ .21
Extraordinary charge..................................... (.13) -- --
Discontinued operations.................................. -- (.15) (.02)
---------- ---------- ----------
Net income (loss)........................................ $ (.25) $ (.16) $ .19
========== ========== ==========


The accompanying notes are an integral part of these statements.

48
50

REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(IN THOUSANDS)



RETAINED
COMMON ADDITIONAL EARNINGS
STOCK PAID-IN CAPITAL (DEFICIT)
------ --------------- ---------

BALANCE AT DECEMBER 31, 1993................................ $1,370 $ 220,043 $ 91,862
Sales of common stock..................................... 29 16,490 --
Distributions to former owners of pooled companies........ -- -- (17,868)
Other..................................................... 16 16,632 (141)
Net income................................................ -- -- 27,188
------ ---------- --------
BALANCE AT DECEMBER 31, 1994................................ 1,415 253,165 101,041
Sales of common stock and warrants........................ 441 261,967 --
Stock issued in acquisitions.............................. 173 83,910 --
Exercise of stock options and warrants, including tax
benefit of $4,068...................................... 30 15,690 --
Reclassification of additional paid-in capital to effect
the spin-off........................................... -- (36,305) 36,305
Spin-off of Republic Environmental Systems, Inc........... -- -- (23,579)
Distributions to former owners of pooled companies........ -- -- (22,932)
Other..................................................... 41 (2,194) (83)
Net loss.................................................. -- -- (26,586)
------ ---------- --------
BALANCE AT DECEMBER 31, 1995................................ 2,100 576,233 64,166
Sales of common stock..................................... 220 550,652 --
Stock issued in acquisitions.............................. 221 101,224 --
Exercise of stock options and warrants, including tax
benefit of $20,308..................................... 57 43,707 --
Contributions to capital from former owners of pooled
companies.............................................. -- 21,887 --
Distributions to former owners of pooled companies........ -- -- (26,800)
Other..................................................... (9) 2,825 (768)
Net loss.................................................. -- -- (59,497)
------ ---------- --------
BALANCE AT DECEMBER 31, 1996................................ $2,589 $1,296,528 $(22,899)
====== ========== ========


The accompanying notes are an integral part of these statements.

49
51

REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
(IN THOUSANDS)



1996 1995 1994
----------- ----------- -----------

CASH PROVIDED BY OPERATING ACTIVITIES OF CONTINUING
OPERATIONS:
Income (loss) from continuing operations.............. $ (59,497) $ (1,463) $ 29,952
Adjustments to reconcile income (loss) from continuing
operations to net cash provided by continuing
operations:
Restructuring, merger and other non-recurring
expenses......................................... 95,519 3,264 --
Loss on extinguishment of debt, net of income
taxes............................................ 31,592 -- --
Depreciation and amortization...................... 540,482 464,214 404,804
Changes in assets and liabilities, net of effects
from business acquisitions:
Receivables...................................... (101,985) (5,088) (34,936)
Inventory........................................ (19,233) (10,442) --
Other assets..................................... (45,373) 5,933 10,305
Accounts payable and accrued liabilities......... 36,988 20,753 15,742
Other liabilities................................ 10,473 (48,833) (1,489)
----------- ----------- -----------
488,966 428,338 424,378
----------- ----------- -----------
CASH PROVIDED BY DISCONTINUED OPERATIONS................ -- 6,105 12,168
----------- ----------- -----------
CASH USED IN INVESTING ACTIVITIES:
Purchases of revenue earning vehicles from third party
suppliers.......................................... (2,200,087) (1,961,343) (2,762,648)
Purchases of revenue earning vehicles from related
party suppliers.................................... (631,280) (351,755) (551,157)
Sales of revenue earning vehicles..................... 2,032,374 2,182,698 2,673,654
Purchases of property and equipment................... (203,350) (173,261) (135,066)
Advances to affiliate................................. (243,400) -- --
Investment in subscriber accounts..................... (41,371) (15,980) (17,512)
Cash used in business acquisitions.................... (23,405) (13,969) (11,797)
Other................................................. 56,523 75,590 166,952
----------- ----------- -----------
(1,253,996) (258,020) (637,574)
----------- ----------- -----------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Payments of revenue earning vehicle financing......... (2,741,497) (2,606,436) (3,071,250)
Proceeds from revenue earning vehicle financing....... 2,902,880 2,348,791 3,348,787
Payments of notes payable and long-term debt.......... (512,020) (185,529) (182,068)
Proceeds from notes payable and long-term debt........ 454,329 127,922 80,867
Sales of common stock................................. 550,872 262,408 16,519
Exercise of stock options and warrants................ 23,456 11,652 --
Other................................................. (32,771) 13,585 7,743
----------- ----------- -----------
645,249 (27,607) 200,598
----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........ (119,781) 148,816 (430)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD........ 183,395 34,579 35,009
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.............. $ 63,614 $ 183,395 $ 34,579
=========== =========== ===========


The accompanying notes are an integral part of these statements.

50
52

REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(000'S OMITTED IN ALL TABLES EXCEPT PER SHARE AMOUNTS)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying Consolidated Financial Statements include the accounts of
Republic Industries, Inc. and its subsidiaries ("Republic" or the "Company").
All significant intercompany accounts and transactions have been eliminated. In
1995, the Company implemented a formal plan to dispose of all of its mining and
citrus operations. In 1994, the Board of Directors authorized management to
pursue a plan to distribute its hazardous waste services segment, Republic
Environmental Systems, Inc. ("RESI"), now known as International Alliance
Services, Inc., to Republic shareholders. Accordingly, as discussed in Note 11,
Discontinued Operations, these segments have been accounted for as discontinued
operations and the accompanying Consolidated Financial Statements presented
herein have been restated to report separately the operating results of these
discontinued operations.

In order to maintain consistency and comparability between periods
presented, certain amounts have been reclassified from the previously reported
financial statements in order to conform with the financial statement
presentation of the current period.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

The accompanying Consolidated Financial Statements include the financial
position and results of operations of Addington Resources, Inc. ("Addington")
and Continental Waste Industries, Inc. ("Continental") which the Company
acquired in December 1996; Alamo Rent-A-Car, Inc. ("Alamo") which the Company
acquired in November 1996; CarChoice, Inc. ("CarChoice") which the Company
acquired in August 1996; and Incendere, Inc. ("Incendere") and The Denver Fire
Reporter & Protective Co. ("Denver Alarm"), which the Company acquired in
February 1996. These transactions were accounted for under the pooling of
interests method of accounting and, accordingly, the Consolidated Financial
Statements have been restated as if the Company and Addington, Continental,
Alamo, CarChoice, Incendere and Denver Alarm had operated as one entity since
inception. See Note 2, Business Combinations, for further discussion of these
transactions.

All per share data and numbers of shares of the Company's common stock, par
value $.01 per share ("Common Stock") for all periods included in the financial
statements and notes thereto have been adjusted to reflect a two-for-one stock
split in the form of a 100% stock dividend that became effective in June 1996,
as more fully described in Note 6, Shareholders' Equity.

RECEIVABLES

Receivables include trade accounts receivable from the Company's various
operating business segments which consist of amounts due from retail and service
customers, travel agents and tour operators. Receivables also include vehicle
receivables from automobile manufacturers which consist of amounts due under
vehicle repurchase and incentive programs and from vehicle renters for damages
incurred on revenue earning vehicles.

51
53

REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The components of receivables, net of allowance for doubtful accounts at
December 31 are as follows:



1996 1995
-------- --------

Trade....................................................... $200,352 $132,038
Vehicle..................................................... 121,964 94,408
Other....................................................... 8,156 10,184
-------- --------
330,472 236,630
Less: allowance for doubtful accounts....................... (14,219) (9,269)
-------- --------
$316,253 $227,361
======== ========


INVESTMENTS

Investments have a maturity of three months or less, are classified as
held-to-maturity securities and are recorded at amortized cost adjusted for the
amortization or accretion of premiums or discounts, which approximates market
value. Investments are included in other current assets in the accompanying
Consolidated Balance Sheets.

Investments at December 31 are as follows:



1996 1995
------- -------

Eurodollar deposits......................................... $ -- $26,727
Repurchase agreements....................................... 20,165 24,000
Certificates of deposit..................................... -- 9,548
Other....................................................... 130 2,351
------- -------
$20,295 $62,626
======= =======


Repurchase agreements are restricted for the settlement of specific
estimated auto liability claims.

REVENUE EARNING VEHICLES AND DEPRECIATION

Revenue earning vehicles are stated at cost less accumulated depreciation
and allowances for stolen vehicles. The straight-line method is used to
depreciate revenue earning vehicles to their estimated residual values over the
anticipated periods of use based on the Company's fleet plan, typically ranging
from 4 to 20 months in the United States and from 4 to 9 months in Canada and
Europe. Depreciation expense also includes those costs relating to losses from
damaged vehicles, and gains and losses on revenue earning vehicle sales in the
ordinary course of business. Depreciation expense related to revenue earning
vehicles was $449.6 million, $398.6 million, and $352.5 million for the years
ended December 31, 1996, 1995 and 1994, respectively, and is included as a
component of vehicle rental operating expenses in the accompanying Consolidated
Statements of Operations.

A summary of revenue earning vehicles at December 31 is as follows:



1996 1995
---------- ----------

Revenue earning vehicles.................................... $2,046,269 $1,701,945
Less: accumulated depreciation.............................. (243,272) (223,536)
---------- ----------
$1,802,997 $1,478,409
========== ==========


Revenue earning vehicles with depreciated cost of $1.3 billion at December
31, 1996 were acquired under programs that allow the Company to require
counterparties to repurchase vehicles held for periods of up to 24 months. The
agreements contain varying mileage and damage limitations.

52
54

REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company also leases vehicles under operating lease agreements which
require the Company to provide normal maintenance and liability coverage. The
agreements generally have terms of 4 to 12 months. Many agreements provide for
an option to terminate the leases early and allow the purchase of leased
vehicles subject to certain restrictions. Most leases provide for an initial
minimum monthly charge, with contingent rental charges for changes in interest
rates and adjustments for wear, damage and mileage in excess of stipulated
amounts. Contingent rental charges totaled $1.8 million, $13.2 million and $2.8
million for the years ended December 31, 1996, 1995 and 1994, respectively.

INVENTORY

Inventory consists primarily of retail vehicles held for sale valued using
the specific identification method. Cost includes acquisition expenses,
including reconditioning and transportation costs. Parts and accessories are
valued at the lower of cost or market, using the first-in, first-out method.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Expenditures for major
additions and improvements are capitalized, while minor replacements,
maintenance and repairs are charged to expense as incurred. When property is
retired or otherwise disposed of, the cost and accumulated depreciation are
removed from the accounts and any resulting gain or loss is reflected in the
Statement 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
useful lives of the assets involved using the straight-line method. The
estimated useful lives are: twenty to forty years for buildings and
improvements, three to fifteen years for trucks and equipment and five to ten
years for furniture and fixtures.

Landfills are stated at cost and are depleted based on consumed airspace.
Landfill improvements include direct costs incurred to obtain a landfill permit
and direct costs incurred to construct and develop the site. These costs are
depleted based on consumed airspace. No general and administrative costs are
capitalized as landfills and landfill improvements.

Interest costs are capitalized in connection with the construction of
automotive rental facilities and landfill sites. Interest capitalized was $1.8
million, $3.3 million, and $2.7 million for the years ended December 31, 1996,
1995 and 1994, respectively.

Depreciation, amortization and depletion expense related to property and
equipment was $73.3 million, $56.0 million and $46.4 million in 1996, 1995 and
1994, respectively.

A summary of property and equipment at December 31 is as follows:



1996 1995
--------- ---------

Land, landfills and improvements............................ $ 397,882 $ 333,938
Furniture, fixtures and equipment........................... 551,092 313,163
Buildings and improvements.................................. 223,817 185,798
--------- ---------
1,172,791 832,899
Less: accumulated depreciation, amortization and
depletion................................................. (326,361) (225,137)
--------- ---------
$ 846,430 $ 607,762
========= =========


53
55

REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INTANGIBLE ASSETS

Intangible assets consist primarily of the cost of acquired businesses in
excess of the fair value of net tangible assets acquired. The cost in excess of
the fair value of net tangible assets is amortized over periods ranging from
fifteen to forty years on a straight-line basis. Amortization expense related to
intangible assets was $8.4 million, $5.3 million and $2.6 million, in 1996, 1995
and 1994, respectively. Accumulated amortization of intangible assets was $27.6
million and $14.5 million at December 31, 1996 and 1995, respectively.

The Company continually evaluates whether events and circumstances have
occurred that may warrant revision of the estimated useful life of intangible
assets or whether the remaining balance of intangible assets should be evaluated
for possible impairment. The Company uses an estimate of the related
undiscounted cash flows over the remaining life of the intangible assets in
measuring their recoverability.

INVESTMENT IN SUBSCRIBER ACCOUNTS

Investment in subscriber accounts consists of certain capitalized costs
associated with new monitoring systems installed by the Company's electronic
security service business and the cost of acquired subscriber accounts.

The costs are amortized over periods ranging from eight to twelve years
(based on estimated and historical customer attrition rates) on a straight-line
basis. Amortization expense related to investment in subscriber accounts was
$9.3 million, $4.4 million and $3.4 million in 1996, 1995 and 1994,
respectively. Accumulated amortization of investment in subscriber accounts was
$20.7 million and $11.4 million at December 31, 1996 and 1995, respectively.

ACCRUED ENVIRONMENTAL AND LANDFILL COSTS

Accrued environmental and landfill costs are included in other liabilities
and include landfill site closure and post-closure costs. Landfill site closure
and post-closure costs include estimated costs to be incurred for final closure
of the landfills and estimated costs for providing required post-closure
monitoring and maintenance of landfills. These costs are accrued based on
consumed airspace. Estimated aggregate closure and post-closure costs are to be
fully accrued for these landfills at the time that such facilities cease to
accept waste and are closed. Excluding existing accruals at December 31, 1996,
approximately $53.7 million of such costs are to be expensed over the remaining
lives of these facilities. The Company estimates its future cost requirements
for closure and post-closure monitoring and maintenance for its solid waste
facilities based on its interpretation of the technical standards of the United
States Environmental Protection Agency's Subtitle D regulations. These estimates
do not take into account discounts for the present value of such total estimated
costs.

In addition to the Company's solid waste collection and disposal
operations, the Company's vehicle rental operations also involve the storage and
dispensing of petroleum products, primarily gasoline. The Company records as
expense, on a current basis, costs associated with remediation of environmental
pollution. The Company also accrues for its proportionate share of costs
associated with the remediation of environmental pollution when it becomes
probable that a liability has been incurred and the amount can be reasonably
estimated. Estimated costs include anticipated site testing, consulting,
remediation, disposal, post-remediation monitoring and legal fees, as
appropriate. The liability does not reflect possible recoveries from insurance
companies or reimbursement of remediation costs.

The Company periodically reassesses its method and assumptions used to
estimate such accruals for environmental and landfill costs and adjusts such
accruals accordingly. Such factors considered are changing regulatory
requirements, the effects of inflation, changes in operating climates in the
regions in which the Company's facilities are located and the expectations
regarding costs of securing environmental services.

54
56

REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

As discussed in Note 8, Commitments and Contingencies, the Company is
involved in litigation and is subject to ongoing environmental investigations by
certain regulatory agencies, as well as other claims and disputes that could
result in additional litigation which are in the normal course of business.

LIABILITY INSURANCE

The Company retains up to $1.0 million of risk per claim under its various
liability insurance programs for property damage and bodily injury claims. Costs
in excess of $1.0 million per claim are insured under various contracts with
insurance carriers. The costs of these retained insurance risks are estimated by
management and by actuarial evaluation based on historical claims experience,
adjusted for current trends and changes in claims-handling procedures. In 1996,
the Company changed its method of accounting for estimated auto rental liability
insurance claims by no longer discounting such liability. The effect of this
change was not material to the Company's consolidated financial position or
results of operations.

REVENUE RECOGNITION

Revenue from the Company's automotive rental operations consists primarily
of fees from rentals and related rental products generated by Alamo from the
leisure and business travel segments. Revenue from the Company's solid waste
services operations consists of collection fees from residential, commercial and
industrial customers and landfill disposal fees charged to third parties.
Revenue from the Company's automotive retailing operations consists of sales of
new and used vehicles, parts and service. Revenue from the Company's electronic
security services business results from monitoring contracts for security
systems and fees charged for the sale and installation of such systems. The
Company recognizes revenue over the period vehicles are rented, services are
provided or products are sold.

FINANCIAL INSTRUMENTS

The Company utilizes interest rate swaps in the management of interest rate
risk. The differentials between the amounts paid and received from these swaps
are recognized over the terms of the agreements and are recorded as adjustments
to interest expense. Amounts receivable or payable under the agreements are
included in receivables or accrued liabilities in the Consolidated Balance
Sheets and were not material at December 31, 1996 or 1995.

ADVERTISING

The Company expenses the cost of advertising as incurred or when such
advertising initially takes place. No advertising costs were capitalized at
December 31, 1996 or 1995. Advertising expense was $56.8 million, $62.7 million
and $69.6 million for the years ended December 31, 1996, 1995 and 1994,
respectively.

STATEMENTS OF CASH FLOWS

The Company considers all highly liquid investments with purchased
maturities of three months or less to be cash equivalents unless the investments
are legally or contractually restricted for more than three months. The effect
of non-cash transactions related to business combinations, as discussed in Note
2, Business Combinations, and other non-cash transactions are excluded from the
Statements of Cash Flows.

NEW ACCOUNTING PRONOUNCEMENT

In October 1996, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 96-1, "Environmental Remediation
Liabilities," effective for fiscal years beginning after December 15, 1996. This
statement provides that environmental remediation liabilities should be accrued
when the criteria of Statement of Financial Accounting Standards ("SFAS") No. 5,
"Accounting for Contingencies,"

55
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REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

are met, and it includes benchmarks to aid in the determination of when
environmental remediation liabilities should be recognized. SOP 96-1 also states
that an accrual for environmental liabilities should include incremental direct
costs of the remediation effort and costs of compensation and benefits for those
employees who are expected to devote a significant amount of time directly to
the remediation effort. The Company early adopted SOP 96-1 in 1996 without
material impact on its consolidated results of operations or financial position.

2. BUSINESS COMBINATIONS

PENDING ACQUISITIONS

In February 1997, the Company signed a definitive agreement to acquire
Taormina Industries, Inc. ("Taormina"), which provides waste collection services
and owns and operates a materials recycling facility. The Company will issue
approximately 7.3 million shares of Common Stock in this transaction, which will
be accounted for under the pooling of interests method of accounting. The
closing of the transaction is subject to customary conditions, including
regulatory approvals.

In February 1997, the Company signed a definitive agreement to acquire AAA
Disposal Services, Inc. ("AAA Disposal"), which provides waste collection and
recycling services. The Company will issue approximately 2.9 million shares of
Common Stock in this transaction, which will be accounted for under the pooling
of interests method of accounting. The closing of the transaction is subject to
customary conditions, including regulatory approvals.

In February 1997, the Company signed a definitive agreement to acquire
Wallace Automotive Group ("Wallace"), which owns and operates three franchised
automotive dealerships. The Company will issue approximately 1.7 million shares
of Common Stock in this transaction, which will be accounted for under the
pooling of interests method of accounting. The closing of the transaction is
subject to customary conditions, including manufacturer and regulatory
approvals.

In January 1997, the Company signed a definitive agreement to acquire
Maroone Automotive Group ("Maroone"), which owns and operates five franchised
automotive dealerships. The Company will issue approximately 6.1 million shares
of Common Stock in this transaction, which will be accounted for under the
pooling of interests method of accounting. The closing of the transaction is
subject to customary conditions, including manufacturer and regulatory
approvals.

In addition, in January and February 1997, the Company signed definitive
agreements to acquire other businesses in the solid waste services and
automotive retailing industries which are not material to the Company. The
Company will issue an aggregate of approximately 2.5 million shares of Common
Stock in such transactions which will be accounted for under the purchase method
of accounting, and will issue an aggregate of approximately 1.1 million shares
of Common Stock in such transactions which will be accounted for under the
pooling of interests method of accounting. These transactions are subject to
customary conditions, including manufacturer and regulatory approvals, as
applicable.

ACQUISITIONS COMPLETED SUBSEQUENT TO DECEMBER 31, 1996

In February 1997, the Company acquired National Car Rental System, Inc.
("National"), which operates a vehicle rental business. The Company issued
approximately 21.7 million shares of Common Stock in this transaction, which
will be accounted for under the pooling of interests method of accounting.

In January 1997, following approval by the Company's stockholders at a
special meeting, the Company acquired AutoNation Incorporated ("AutoNation"),
which is developing a chain of used vehicle megastores.

56
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REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company issued approximately 17.5 million shares of Common Stock in this
transaction, which will be accounted for under the purchase method of
accounting.

In January 1997, the Company acquired Carlisle Motors, Inc. ("Carlisle"),
which owns and operates three franchised automotive dealerships. The Company
issued approximately 1.0 million shares of Common Stock in this transaction,
which will be accounted for under the pooling of interests method of accounting.

The Company's unaudited pro forma consolidated results of operations
assuming the acquisitions of Carlisle and National had been consummated as of
December 31, 1996 are as follows for the years ended December 31:



1996 1995 1994
---------- ---------- ----------

Revenue............................................ $3,747,023 $2,645,224 $1,865,463
========== ========== ==========
Net income (loss).................................. $ (38,958) $ (8,877) $ 28,914
========== ========== ==========
Fully diluted earnings (loss) per common and common
equivalent share................................. $ (.15) $ (.05) $ .21
========== ========== ==========


In addition, in January and February 1997, the Company acquired various
other businesses in the solid waste services, electronic security services and
automotive retailing industries which were not material to the Company. The
Company issued an aggregate of approximately 9.1 million shares of Common Stock
and paid approximately $56.5 million of cash in such transactions which will be
accounted for under the purchase method of accounting, and issued an aggregate
of approximately .9 million shares of Common Stock in such transactions which
will be accounted for under the pooling of interests method of accounting.

ACQUISITIONS COMPLETED DURING 1996

Significant businesses acquired through December 31, 1996 and accounted for
under the pooling of interests method of accounting have been included
retroactively in the Consolidated Financial Statements as if the companies had
operated as one entity since inception. Businesses acquired through December 31,
1996 and accounted for under the purchase method of accounting are included in
the Consolidated Financial Statements from the date of acquisition.

In December 1996, the Company acquired Addington, which primarily provides
solid waste disposal services. The Company issued approximately 13.7 million
shares of Common Stock in this transaction, which has been accounted for under
the pooling of interests method of accounting.

In December 1996, the Company acquired Continental, which provides
integrated solid waste services. The Company issued approximately 12.4 million
shares of Common Stock in this transaction, which has been accounted for under
the pooling of interests method of accounting.

In November 1996, the Company acquired Alamo, which operates a vehicle
rental business. The Company issued approximately 22.6 million shares of Common
Stock in this transaction, which has been accounted for under the pooling of
interests method of accounting.

In August 1996, the Company acquired substantially all of the assets of
CarChoice, which operated used vehicle superstores similar to those being
developed by AutoNation. The Company issued approximately 3.9 million shares of
Common Stock in this transaction, which has been accounted for under the pooling
of interests method of accounting.

In February 1996, the Company acquired Incendere, which provides solid
waste collection, recycling and medical waste hauling services. In February
1996, the Company acquired Denver Alarm, which provides electronic security
services. The Company issued an aggregate of approximately 5.8 million shares of
Common

57
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REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Stock in these transactions, which have been accounted for under the pooling of
interests method of accounting.

Details of the results of operations of the Company and Addington,
Continental, Alamo, CarChoice, Incendere and Denver Alarm (the "Pooled
Entities") for the periods before the pooling of interests combinations were
consummated are as follows for the years ended December 31:



1996 1995 1994
---------- ---------- ----------

Revenue:
The Company.................................. $ 744,883 $ 260,315 $ 187,111
Pooled Entities.............................. 1,620,637 1,531,131 1,408,769
---------- ---------- ----------
$2,365,520 $1,791,446 $1,595,880
========== ========== ==========
Net income (loss):
The Company.................................. $ (47,562) $ 22,919 $ 17,116
Pooled Entities.............................. (11,935) (49,505) 10,072
---------- ---------- ----------
$ (59,497) $ (26,586) $ 27,188
========== ========== ==========


During the year ended December 31, 1996, the Company also acquired various
other businesses in the solid waste services, electronic security services and
automotive retailing industries which were not material to the Company. The
Company issued an aggregate of approximately 9.1 million shares of Common Stock
and paid $23.4 million of cash in such transactions which have been accounted
for under the purchase method of accounting, and issued an aggregate of
approximately 13.0 million shares of Common Stock in such transactions which
have been accounted for under the pooling of interests method of accounting.
These acquisitions accounted for under the pooling of interests method of
accounting were not material in the aggregate and, consequently, prior period
financial statements were not restated for such acquisitions.

In November 1995, the Company acquired J.C. Duncan Company, Inc.
("Duncan"), Garbage Disposal Service, Inc. ("GDS"), Fennell Container Co., Inc.
("Fennell") and Scott Security Systems ("Scott"). Duncan provides solid waste
collection and recycling services and also operates two landfills. GDS provides
solid waste collection and recycling services. Fennell provides solid waste
collection and recycling services and also owns a landfill. Scott provides
electronic security services. In October 1995, the Company acquired United Waste
Service, Inc. ("United") and Southland Environmental Services, Inc.
("Southland"). United provides solid waste collection, transfer and recycling
services. Southland provides solid waste collection services. In August 1995,
the Company acquired Kertz Security Systems, Inc. ("Kertz"), which provides
electronic security services. The Company issued an aggregate of approximately
36.3 million shares of Common Stock for the above acquisitions. These
acquisitions have been accounted for under the pooling of interests method of
accounting and, accordingly, the accompanying Consolidated Financial Statements
have previously been restated as if the Company and Duncan, GDS, Fennell, Scott,
United, Southland and Kertz had operated as one entity since inception.

In August 1995, the Company acquired Hudson Management Corporation and
Envirocycle, Inc. (collectively, "HMC"). HMC provides solid waste collection and
recycling services. The Company issued 16.0 million shares of Common Stock to
acquire HMC. The acquisition of HMC has been accounted for under the purchase
method of accounting. During the years ended December 31, 1995 and 1994, the
Company entered into several other business combinations which have been
accounted for under the purchase method of accounting, and which were not
material to the Company.

58
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REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The preliminary purchase price allocations for business combinations
accounted for under the purchase method of accounting (including historical
accounts of immaterial acquisitions accounted for under the pooling of interests
method of accounting) for the years ended December 31 were as follows:



1996 1995 1994
--------- -------- --------

Property and equipment................................ $ 106,933 $ 25,272 $ 45,301
Investment in subscriber accounts..................... 18,087 -- --
Intangible assets..................................... 101,026 97,017 18,802
Working capital deficiency, net of cash acquired...... (27,963) (4,900) (10,536)
Long-term debt assumed................................ (54,825) (18,484) (15,445)
Other liabilities, net................................ (18,408) (853) (17,879)
Common stock issued................................... (101,445) (84,083) (8,446)
--------- -------- --------
Cash used in acquisitions............................. $ 23,405 $ 13,969 $ 11,797
========= ======== ========


3. NOTES PAYABLE AND LINES OF CREDIT SECURED BY REVENUE EARNING VEHICLES

Notes payable and lines of credit secured by revenue earning vehicles at
December 31 consist of the following:



1996 1995
---------- ----------

Amounts under $750.0 million revolving credit agreement and
predecessor agreements with termination date of June 30,
1999; secured by eligible vehicle collateral and vehicle
receivable balances; interest at formulas based on prime,
Federal funds or LIBOR at the Company's discretion; repaid
in 1996................................................... $ -- $ 19,393
Amounts under $1.4 billion loan agreement with termination
date of June 10, 1997; secured by eligible vehicle
collateral and vehicle receivable balances; interest based
on market dictated commercial paper rates................. 1,396,846 579,001
Senior secured notes payable with interest at fixed rates
ranging from 5.58% to 7.08% with various maturity dates
secured by eligible vehicle collateral and vehicle
receivable balances; repaid in 1996....................... -- 445,500
Amounts under $250.0 million loan agreement with termination
date of September 19, 1997; secured by eligible vehicle
collateral and vehicle receivable balances; interest based
on market dictated commercial paper rates; repaid in
1996...................................................... -- 236,357
Amounts under various uncommitted revolving lease facilities
with financing institutions in United Kingdom; secured by
eligible vehicle collateral; interest based on an as
quoted basis dictated by market competition; no stated
expiration dates, reviewed annually....................... 143,519 157,088
Other, including amounts to be financed after period end,
under various revolving credit agreements and lease
facilities................................................ 179,801 108,783
---------- ----------
$1,720,166 $1,546,122
========== ==========


In November 1996, the Company refinanced a substantial portion of its notes
payable and lines of credit secured by revenue earning vehicles through an
increase in its commercial paper loan agreement from $580.0 million to $1.4
billion. Certain of the notes payable and lines of credit secured by revenue
earning vehicles contain various restrictive covenants, including provisions
relating to the maintenance of tangible net worth

59
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REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and debt to tangible net worth ratios, incurrence of additional indebtedness,
and limitations on the payment of dividends and certain investments. The
effective economic interest rate on notes payable and lines of credit secured by
revenue earning vehicles was 6.79%, 6.94% and 6.02% at December 31, 1996, 1995
and 1994, respectively. Interest expense on notes payable and lines of credit
secured by revenue earning vehicles is included as a component of vehicle rental
operating expenses in the accompanying Consolidated Statements of Operations.

The Company has only limited involvement with derivative financial
instruments and does not use them for trading purposes. Interest protection
agreements with several counterparties are used to manage the impact of interest
rate changes. At December 31, 1996 and 1995, the Company effectively converted
interest rates on the following notional principal amounts:



LATEST
1996 1995 MATURITY
-------- -------- -----------

Variable-rate (capped) into fixed-rate
obligations....................................... $150,000 $175,000 August 1998
Variable-rate into fixed-rate obligations........... 100,000 -- August 2000
-------- --------
Aggregate notional principal........................ $250,000 $175,000
======== ========


4. LONG-TERM DEBT AND NOTES PAYABLE

Long-term debt and notes payable at December 31 is as follows:



1996 1995
-------- --------

$250.0 million revolving credit facility; interest payable
monthly using either a competitive bid feature or LIBOR
based rate; matures December 1998; unsecured.............. $150,000 $ --
Mortgages payable to GMAC and predecessor agreements with
interest at 9.19%; payable in monthly installments;
secured by real property; repaid in 1997.................. 22,711 107,840
Revolving credit facility, secured by the stock of certain
of the Company's subsidiaries, interest at prime or at a
Eurodollar rate plus 0% to 2.75%, repaid in 1996.......... -- 16,400
Amounts under United Kingdom $17.1 million revolving credit
commitment due on demand with 90-day notice; interest
based on Sterling LIBOR plus 125 basis points or base rate
plus 125 basis points; secured by non-vehicle equipment
and leaseholds............................................ 6,003 11,431
Notes to banks and financial institutions, secured by real
property, equipment and other assets, interest ranging
from 4.8% to 14.0%, maturing through 2015................. 12,146 7,648
Vehicle inventory credit facilities secured by the Company's
vehicle inventory, interest at prime...................... 5,602 9,909
Note payable to bank with interest based on LIBOR or prime
paid quarterly; secured by a building; repaid in 1996..... -- 8,700
Other notes, secured by equipment and other assets, interest
ranging from 0% to 21%, maturing through 2010............. 22,311 29,537
-------- --------
218,773 191,465
Less: current portion....................................... (48,195) (41,885)
-------- --------
$170,578 $149,580
======== ========


60
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REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In December 1996, the Company completed a tender offer and consent
solicitation resulting in the repurchase of approximately $100.0 million
aggregate principal amount 11 3/4% senior notes due 2006 ("Senior Notes"), which
were issued in February 1996. The Company recorded an extraordinary charge of
$31.6 million, net of income taxes, during 1996 related to the early
extinguishment of the Senior Notes and certain other debt. Included in this
charge are bond redemption premiums, the write-off of debt issue costs,
prepayment penalties and other fees related to the tender offer and the
repayment of other debt.

In December 1995, the Company entered into a credit agreement (the "Credit
Agreement") with certain banks pursuant to which such banks have agreed to
advance the Company on an unsecured basis an aggregate of $250.0 million for a
term of 36 months. Outstanding advances, if any, are payable at the expiration
of the 36-month term. The Credit Agreement requires, among other items, that the
Company maintain certain financial ratios and comply with certain financial
covenants. Interest is payable monthly and generally determined using either a
competitive bid feature or a LIBOR based rate. As of December 31, 1996, $150.0
million was outstanding and the Company was in compliance with all covenants
under the Credit Agreement.

At December 31, 1996, aggregate maturities of long-term debt were as
follows:



1997........................................................ $ 48,195
1998........................................................ 157,812
1999........................................................ 2,014
2000........................................................ 2,300
2001........................................................ 1,500
Thereafter.................................................. 6,952
--------
$218,773
========


The Company made interest payments on revenue earning vehicle financing and
notes payable and long-term debt of approximately $155.4 million, $144.2
million, and $119.9 million in 1996, 1995 and 1994, respectively.

5. INCOME TAXES

The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes". Accordingly, deferred income taxes have been
provided to show the effect of temporary differences between the recognition of
revenue and expenses for financial and income tax reporting purposes and between
the tax basis of assets and liabilities and their reported amounts in the
financial statements.

The Company files a consolidated federal income tax return which includes
the operations of businesses acquired for periods subsequent to the dates of the
acquisitions. Certain businesses acquired which were accounted for under the
pooling of interests method of accounting were subchapter S corporations for
income tax purposes prior to their acquisition by the Company. For purposes of
these Consolidated Financial Statements, federal and state income taxes have
been provided as if these companies had filed subchapter C corporation tax
returns for the pre-acquisition periods, and the current income tax expense is
reflected as an increase to additional paid-in capital. The subchapter S
corporation status of these companies was terminated effective with the closing
date of the acquisitions.

61
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REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The components of the provision (benefit) for income taxes related to
continuing operations for the years ended December 31 are as follows:



1996 1995 1994
-------- ------- -------

Current:
Federal................................................... $ 23,125 $ 3,085 $ 8,564
State..................................................... 1,274 874 2,154
Federal and state deferred.................................. (13,876) (1,491) 13,171
Foreign deferred............................................ (8,780) (1,406) (2,617)
Change in valuation allowance............................... 15,922 3,114 (588)
-------- ------- -------
Provision for income taxes.................................. $ 17,665 $ 4,176 $20,684
======== ======= =======


A reconciliation of the statutory federal income tax rate to the Company's
effective tax rate for the years ended December 31 is shown below:



1996 1995 1994
----- ----- -----

Statutory federal income tax rate........................... (35.0)% 35.0% 35.0%
Amortization of intangible assets........................... 12.1 25.1 .5
Non-deductible expenses..................................... 55.6 27.9 1.5
State income taxes, net of federal benefit.................. (10.4) (53.3) 4.6
Change in valuation allowance............................... 156.1 116.2 (1.0)
Foreign income tax benefit at other than U.S. rates......... (10.6) (3.5) --
Other, net.................................................. 4.7 6.5 .2
----- ----- -----
Effective tax rate........................................ 172.5% 153.9% 40.8%
===== ===== =====


Components of the net deferred income tax liability included in other
liabilities in the accompanying Consolidated Balance Sheets at December 31 are
as follows:



1996 1995
-------- --------

Deferred income tax liabilities:
Book basis in property over tax basis..................... $128,805 $118,226
Deferred costs............................................ 11,041 8,174
Deferred income tax assets:
Net operating losses...................................... (45,689) (23,538)
Deferred revenue.......................................... (12,832) (14,913)
Accruals not currently deductible......................... (63,267) (52,974)
Valuation allowance......................................... 34,342 16,149
-------- --------
Net deferred income tax liability........................... $ 52,400 $ 51,124
======== ========


At December 31, 1996, the Company had available federal net operating loss
carryforwards of approximately $86.5 million which begin to expire in the year
2006 and foreign net operating loss carryforwards of approximately $47.9
million, the majority of which have an indefinite carryforward. In assessing the
realizability of deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. The Company has provided a valuation allowance to offset a portion of
the deferred tax assets due to uncertainty surrounding the future realization of
such deferred tax assets. The Company adjusts the valuation allowance in the
period management determines it is more likely than not that deferred tax assets
will or will not be realized.

62
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REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The foreign component of income (loss) from continuing operations before
income taxes and extraordinary charge for the years ended December 31, 1996,
1995 and 1994 was $(22.0) million, $(20.8) million and $.8 million,
respectively.

The Company made income tax payments of approximately $8.8 million, $5.1
million and $2.3 million in 1996, 1995 and 1994, respectively.

6. SHAREHOLDERS' EQUITY

In January 1997, the Company sold 15.8 million shares of Common Stock in a
private placement transaction resulting in net proceeds of approximately $552.7
million.

In November 1996, the Company sold 12.1 million shares of Common Stock in a
private placement transaction resulting in net proceeds of approximately $353.0
million.

In May 1996, the Company sold 9.9 million shares of Common Stock in a
private placement transaction resulting in net proceeds of approximately $197.6
million.

In May 1996, the Board of Directors declared a two-for-one split of the
Company's Common Stock in the form of a 100% stock dividend, payable June 8,
1996, to holders of record on May 28, 1996.

In May 1996, the Company's Certificate of Incorporation was amended to
increase the number of authorized shares of Common Stock from 350.0 million
shares to 500.0 million shares.

In October 1995, one of the Pooled Entities completed a secondary public
offering of approximately 2.6 million equivalent shares of Common Stock
resulting in net proceeds of approximately $30.1 million.

In September 1995, the Company sold 10.0 million shares of Common Stock in
a private placement transaction resulting in net proceeds of approximately $99.0
million.

In August 1995, the Company sold an aggregate of 16.7 million shares of
Common Stock and warrants to purchase an additional 33.4 million shares of
Common Stock to H. Wayne Huizenga, Westbury (Bermuda) Ltd. (a Bermuda
corporation controlled by Michael G. DeGroote, former Chairman of the Board,
President and Chief Executive Officer of Republic), Harris W. Hudson, and
certain of their assigns for an aggregate purchase price of $37.5 million. Mr.
Huizenga is the Chairman of the Board and Co-Chief Executive Officer of the
Company; Mr. DeGroote is a Director of the Company and Mr. Hudson is Vice
Chairman of the Board of the Company. The warrants are exercisable at prices
ranging from $2.25 to $3.50 per share. In August 1995, the Company issued and
sold an additional 2.0 million shares of Common Stock each to Mr. Huizenga and
John J. Melk (a Director of the Company) for aggregate proceeds of approximately
$26.5 million.

In July 1995, the Company sold 10.8 million shares of Common Stock in a
private placement transaction resulting in net proceeds of approximately $69.0
million.

The Company has 5.0 million authorized shares of preferred stock, par value
$.01 per share, none of which are issued or outstanding. The Board of Directors
has the authority to issue the preferred stock in one or more series and to
establish the rights, preferences and dividends.

7. STOCK OPTIONS AND WARRANTS

The Company has various stock option plans under which shares of Common
Stock may be granted to key employees and directors of the Company. Options
granted under the plans are non-qualified and are granted at a price equal to
the fair market value of the Common Stock at the date of grant. Generally,
options granted will have a term of ten years from the date of grant, and will
vest in increments of 25% per year over a four year period on the yearly
anniversary of the grant date.

63
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REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

A summary of stock option and warrant transactions for the years ended
December 31 is as follows:



1996 1995 1994
----------------------- ----------------------- -----------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
SHARES EXERCISE PRICE SHARES EXERCISE PRICE SHARES EXERCISE PRICE
------ -------------- ------ -------------- ------ --------------

Options and warrants
outstanding at beginning
of year.................. 49,635 $ 4.87 8,062 $4.54 7,195 $ 4.45
Granted.................... 8,741 21.86 45,110 4.92 1,310 4.96
Exercised.................. (5,666) 4.03 (2,884) 4.14 (26) 13.61
Canceled................... (208) 9.44 (653) 7.49 (417) 4.07
------ ------ -----
Options and warrants
outstanding at end of
year..................... 52,502 7.63 49,635 4.87 8,062 4.54
====== ====== =====
Options and warrants
exercisable at
year-end................. 38,495 4.12 39,852 3.50 4,334 4.33
Options available for
future grants............ 7,911 4,344 5,698


The following table summarizes information about outstanding and
exercisable stock options and warrants at December 31, 1996:



OUTSTANDING EXERCISABLE
-------------------------------------------- -------------------------
WEIGHTED-AVERAGE
REMAINING WEIGHTED-AVERAGE WEIGHTED-AVERAGE
RANGE OF EXERCISE PRICES SHARES CONTRACTUAL LIFE EXERCISE PRICE SHARES EXERCISE PRICE
- ------------------------ ------ ---------------- ---------------- ------ ----------------

$ 1.05 - $ 2.75.......... 24,144 1.22 $ 2.37 23,323 $ 2.40
2.95 - 12.38.......... 17,761 5.15 7.28 14,123 6.10
12.88 - 33.75.......... 10,597 9.38 20.21 1,049 15.76
------ ------
1.05 - 33.75.......... 52,502 4.20 7.63 38,495 4.12
====== ======


The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" in accounting for stock-based employee
compensation arrangements whereby no compensation cost related to stock options
is deducted in determining net income (loss). Had compensation cost for the
Company's stock option plans been determined pursuant to SFAS No. 123,
"Accounting for Stock-Based Compensation", the Company's pro forma net loss and
net loss per share would have increased accordingly. Using the Black-Scholes
option pricing model for all options granted after December 31, 1994, the
Company's pro forma net loss, pro forma net loss per share and pro forma
weighted average fair value of options granted, with related assumptions, are as
follows for the years ended December 31:



1996 1995
------------- -------------

Pro forma net loss................................... $(77,331) $(34,542)
Pro forma net loss per share......................... (.32) (.20)
Pro forma weighted average fair value of options
granted............................................ 9.80 5.28
Risk free interest rates............................. 5.98% - 6.17% 5.98% - 6.17%
Expected lives....................................... 5-7 years 5-7 years
Expected volatility.................................. 40% 40%


64
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REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. COMMITMENTS AND CONTINGENCIES

LEGAL PROCEEDINGS

In 1992, the Company received notices from Imperial County, California (the
"County") and the California Department of Toxic Substances Control ("DTSC")
that spent filter elements (the "Filters") from geothermal power plants, which
had been deposited at the Company's Imperial Landfill for approximately five
years, were classified as hazardous waste under California environmental
regulations. Under United States EPA regulations, the Filters are not deemed
hazardous waste as they are associated with the production of geothermal energy.

The Company is currently conducting active discussions with all appropriate
California regulatory agencies in order to obtain a variance under California
regulations to reclassify the Filters as a special waste so they may be left in
the landfill. If this occurs, the State, regional and local regulatory agencies
may nevertheless require that the affected area of the landfill be capped and
closed. In the event that the variance is not granted, remedial measures may be
required based on the Filters' classification as a California hazardous waste.
One of those measures could include the removal of the Filters or the closure of
a portion of the landfill.

Management is currently unable to determine (i) whether the waste will
ultimately be classified as hazardous, (ii) if so, what action, if any, will be
required as a result of this issue or (iii) what liability, if any, the Company
will have as a result of this inquiry. In January 1994, the Company filed suit
in the United States District Court for the Southern District of California
against the known past and present owners and operators of the geothermal power
plants for all losses, fines and expenses incurred by the Company associated
with the resolution of this matter. This suit was settled in November 1996
without material impact on the Company's consolidated financial position,
results of operations or cash flows.

The Company's solid waste and environmental services activities are
conducted in the context of a developing and changing statutory and regulatory
framework, aggressive government enforcement and a highly visible political
environment. Governmental regulation of the waste management industry requires
the Company to obtain and retain numerous governmental permits to conduct
various aspects of its operations. These permits are subject to revocation,
modification or denial. The costs and other capital expenditures which may be
required to obtain or retain the applicable permits or comply with applicable
regulations could be significant.

By letter dated January 11, 1996, Acme Commercial Corp. d/b/a CarMax, The
Auto Superstore, ("CarMax") accused AutoNation 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 February 5, 1996, filed suit in the
U.S. District Court for the Southern District of Florida seeking a declaratory
judgment that AutoNation's use and registration of such marks do not violate any
of the rights of CarMax. On or about October 11, 1996, CarMax filed a
counterclaim against AutoNation seeking unspecified damages and an order
enjoining AutoNation from using certain marks, including the marks AutoNation
USA and "The Better Way to Buy a Car." In February 1997, AutoNation filed a
motion for partial summary judgment on CarMax's dilution claim under Florida
law. A trial has been set for May 1997. Although it is impossible to predict the
outcome of this litigation, the Company believes that AutoNation has a valid
basis for its complaint and that CarMax's allegations and counterclaims are
without merit.

While the results of the legal and environmental proceedings described
above and other proceedings which arose in the normal course of business cannot
be predicted with certainty, management believes that losses, if any, resulting
from the ultimate resolution of these matters will not have a material adverse
effect on the Company's consolidated results of operations, consolidated cash
flows or consolidated financial position. However, unfavorable resolution of
each matter individually or in the aggregate could affect the consolidated
results of operations or cash flows for the quarterly periods in which they are
resolved.

65
67

REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company maintains general liability and property insurance and an
umbrella and excess liability policy in amounts it considers adequate and
customary for businesses of its kind. However, there can be no assurance that
the Company will not experience legal claims in excess of its insurance coverage
or claims which are ultimately not covered by insurance.

LEASE COMMITMENTS

The Company and its subsidiaries lease real property, equipment and
software under various operating leases with terms from 1 to 20 years. The
Company has also entered into various airport concession and permit agreements
which generally provide for payment of a percentage of revenue from vehicle
rentals with a guaranteed minimum lease obligation.

Expenses under real property, equipment and software leases and airport
concession agreements (excluding amounts charged through to customers) for the
years ended December 31 are as follows:



1996 1995 1994
-------- -------- --------

Real property.......................................... $ 23,226 $ 21,820 $ 20,546
Equipment and software................................. 22,105 24,513 22,890
Airport concession and permit fees:
Minimum fixed obligations............................ 45,742 46,061 36,328
Additional amounts, based on revenue from vehicle
rentals........................................... 33,711 28,397 27,617
-------- -------- --------
Total........................................ $124,784 $120,791 $107,381
======== ======== ========


Future minimum lease obligations under noncancelable real property and
equipment leases and airport agreements with initial terms in excess of one year
at December 31, 1996 are as follows:



Year Ending December 31:
1997................................................... $ 51,207
1998................................................... 39,542
1999................................................... 25,388
2000................................................... 17,786
2001................................................... 8,024
Thereafter............................................. 25,671
--------
$167,618
========


In August 1995, the Company entered into a ten-year lease agreement for
Alamo's Fort Lauderdale, Florida corporate headquarters facility. In December
1996, the Company acquired the headquarters facility for approximately $23.5
million, including the assumption of debt totaling approximately $22.7 million
which was repaid by the Company in January 1997.

OTHER MATTERS

In the normal course of business, the Company is required to post
performance bonds, letters of credit, and/or cash deposits as a financial
guarantee of the Company's performance. To date, the Company has satisfied
financial responsibility requirements for regulatory agencies by making cash
deposits, obtaining bank letters of credit or by obtaining surety bonds. At
December 31, 1996, letters of credit and surety bonds totaling $168.1 million
expire through October 1999.

9. EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE

Earnings (loss) per common and common equivalent share are based on the
combined weighted average number of common shares and common share equivalents
outstanding which include, where appropriate, the assumed exercise or conversion
of warrants and options. For the years ended December 31, 1996 and 1995, common
stock equivalents have been omitted from the computation of loss per share since
they are anti-dilutive. In computing earnings per common and common equivalent
share in 1994, the Company has utilized the treasury stock method.

66
68

REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The computation of weighted average common and common equivalent shares
used in the calculation of fully diluted earnings (loss) per share, which is
substantially the same as the computation used to calculate primary earnings per
share, for the years ended December 31 is as follows:



1996 1995 1994
------- ------- -------

Common shares outstanding................................. 258,866 210,050 141,566
Common equivalent shares.................................. -- -- 1,234
Weighted average treasury shares purchased................ -- -- 298
Effect of using weighted average common and common
equivalent shares outstanding........................... (20,000) (39,777) (3,298)
------- ------- -------
238,866 170,273 139,800
======= ======= =======


10. RESTRUCTURING, MERGER AND OTHER NON-RECURRING EXPENSES

During the year ended December 31, 1996, the Company recorded one-time
pre-tax charges of approximately $95.5 million related primarily to the
integration of the operations of Alamo into those of the Company. Also included
in these charges are merger expenses associated with the acquisitions of Alamo,
Addington and Continental. Approximately $38.3 million of such expenses appear
as restructuring and merger expenses in the Company's Consolidated Statements of
Operations for the year ended December 31, 1996 with the remainder of
approximately $57.2 million included in selling, general and administrative
expenses. These costs primarily include asset write-offs, severance benefits,
accounting and legal merger costs and changes in various estimated reserve
requirements.

In 1995, the Company recorded a $3.3 million pre-tax charge related to the
closing of a subsidiary's headquarters office in Indianapolis, Indiana. The
major components of the charge include severance costs, future contractual
payments required under pre-existing contracts and other costs related to the
write-off of equipment and other obligations related to the physical closure of
the office.

11. DISCONTINUED OPERATIONS

In 1995, the Company implemented a formal plan to dispose of all of its
mining and citrus operations. These discontinued operations consisted primarily
of the following: coal mining, mining equipment manufacturing and licensing,
citrus properties in Belize, precious and industrial metals mining and
incidental limestone properties. The Company initially recorded a loss on the
disposal of the discontinued operations of approximately $30.5 million (net of
income tax benefits of approximately $10. 0 million) which represents the
estimated loss on the disposal of such operations and a provision of
approximately $2.0 million for expected operating losses through the final
disposition of such operations. See Note 14, Related Party Transactions, for
discussion of the disposition of the Company's mining and citrus operations.

In 1994, the Company announced the contemplation of a plan to spin-off
RESI, its hazardous waste services segment. In April 1995, Republic shareholders
received one share of common stock of RESI for every ten shares of Common Stock
of Republic owned in connection with the spin-off of RESI. Approximately 5.4
million RESI shares were distributed to Republic shareholders (the
"Distribution"). In connection with the Distribution, the Company contributed
the intercompany balance to RESI's equity and contributed approximately $2.5
million to RESI to repay RESI's indebtedness and to provide working capital to
RESI. Additionally, the Company reclassified approximately $36.3 million to
retained earnings from additional paid-in capital to effect the spin-off under
Delaware law. As a result of these transactions, the Company's equity at the
date of the Distribution was reduced by approximately $23.6 million.

The Company has sold or spun-off all of its subsidiaries included in
discontinued operations, hence fully disposing of all mining and citrus and
hazardous waste operations. Upon ultimate disposal of its discontinued
operations, the Company determined its initial estimates did not require
adjustment. The recorded transactions reflect the disposal of all of the
Company's hazardous waste and mining and citrus segments and,

67
69

REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

accordingly, the operating results of these segments have been classified as
discontinued operations for all periods presented in the accompanying
Consolidated Financial Statements.

12. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash and cash equivalents, investments, receivables,
other assets (excluding goodwill, intangibles and deferred costs), accounts
payable and accrued liabilities (nonderivatives) approximates fair value because
of the short maturity of these instruments.

Fair value estimates are made at a specific point in time, based on
relevant market information about the financial instrument. These estimates are
subjective in nature and involve uncertainties and matters of significant
judgment, and therefore cannot be determined with precision. The assumptions
used have a significant effect on the estimated amounts reported.

The Company has interest protection agreements with several counterparties
to manage the impact of interest rate changes. The estimated fair values of the
interest protection agreements were determined from dealer quotations and
represent the discounted future cash flows through maturity or expiration using
current rates, and are effectively the amounts the Company would pay or receive
to terminate the agreements. The estimated fair values of the interest rate
protection agreements at December 31, 1996 and 1995 was a net payable position
of $.4 million and $3.5 million, respectively.

The estimated fair value of mortgages payable to GMAC at December 31, 1996
and 1995 was approximately $23.0 million and $109.0 million, respectively which
approximates the carrying value. The estimated fair values were derived by
discounting expected cash flows at the rates then offered to the Company for
debt of similar terms and remaining maturities. The carrying amount of the
remaining debt approximates fair value because interest rates are variable and,
accordingly, approximate current market rates.

In September 1996, the Agreement and Plan of Amalgamation, dated as of July
1, 1996 and amended as of July 15, 1996 (the "ADT Agreement") by and among the
Company, R.I./Triangle, Ltd. and ADT Limited, a Bermuda corporation ("ADT"),
which provided for the acquisition of ADT by the Company, was terminated by
mutual agreement of the parties. In connection with the execution of the ADT
Agreement, ADT granted to the Company a warrant (the "ADT Warrant") to purchase
15.0 million common shares of ADT at a purchase price $20 per share (which
approximated fair market value), subject to certain anti-dilution adjustments.
The warrant became exercisable upon the termination of the ADT Agreement and
remains exercisable through March 1997. Pursuant to the terms of the warrant,
ADT has granted to the Company certain registration rights with respect to the
common shares of ADT issuable to the Company upon exercise of the warrant. The
Company estimates the fair value of the ADT Warrant at December 31, 1996 to be
approximately $5.7 million based upon an option pricing model calculation, which
approximates the carrying value.

13. BUSINESS AND CREDIT CONCENTRATIONS

AUTOMOTIVE RENTAL INDUSTRY

At December 31, 1996 the Company had 206 corporate owned vehicle rental
facilities at airport, near-airport and downtown locations throughout the United
States. The Company also had 31 corporate owned vehicle rental facilities in the
United Kingdom, 25 in Germany, 4 in Switzerland, 4 in Canada, 1 in Belgium and 2
in The Netherlands. In addition to its corporate owned locations, the Company's
licensee network operates 120 locations throughout Europe, including 98
locations in Germany. The automotive rental industry in which the Company
operates is highly seasonal.

Trade receivables at December 31, 1996 and 1995 include $66.0 million and
$57.2 million, respectively from travel agents and tour operators. Of the travel
agent and tour operator receivable balances, $23.5 million

68
70

REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and $24.2 million at December 31, 1996 and 1995, respectively, are maintained
outside the United States. The Company holds minimum collateral in the form of
cash, letters of credit or insurance from most of these vendors. The Company
continually evaluates the credit risk of these customers and believes that the
allowance for doubtful accounts relative to its trade receivables is adequate.
At December 31, 1996 and 1995, the Company had vehicle receivables from
manufacturers of $125.4 million and $65.0 million, respectively. Of the
receivable balances from manufacturers, $16.9 million and $12.7 million are
maintained outside the United States. Vehicle receivables also include amounts
due from renters for damages incurred on revenue earning vehicles.

The Company enters into vehicle repurchase programs with one principal
vehicle manufacturer, as well as other vehicle manufacturers. During model year
1996, the Company purchased 65% of its vehicle fleet under repurchase programs
with one vehicle manufacturer.

SOLID WASTE SERVICES, ELECTRONIC SECURITY SERVICES AND AUTOMOTIVE RETAILING
INDUSTRIES

Concentrations of credit risk with respect to trade receivables related to
the Company's solid waste services, electronic security services and automotive
retailing segments are limited due to the wide variety of customers and markets
in which the Company's products are sold and services are provided as well as
their dispersion across many different geographic areas in the United States. As
a result, at December 31, 1996, the Company does not consider itself to have any
significant concentrations of credit risk in the solid waste services,
electronic security services and automotive retailing segments.

14. RELATED PARTY TRANSACTIONS

As of December 31, 1996, approximately $247.5 million was due from
AutoNation pursuant to a loan agreement whereby the Company agreed to provide
advances at an interest rate of LIBOR plus 2% to fund AutoNation's cash flow
requirements. Interest income recognized on such advances was approximately $5.6
million for the year ended December 31, 1996. In addition, on behalf of
AutoNation, the Company has guaranteed certain lease obligations and the
residual value related to a portfolio of properties leased by AutoNation under a
$150.0 million operating lease facility. At December 31, 1996, annual lease
obligations were approximately $2.6 million through the year 2001 and the
residual value guaranty was approximately $37.6 million.

The Company purchased approximately $631.3 million, $351.8 million and
$551.2 million of revenue earning vehicles from a group of automotive
dealerships owned primarily by a former director of Alamo during the years ended
December 31, 1996, 1995 and 1994, respectively. Pursuant to an automobile
purchase agreement, the Company agreed to purchase and/or lease a minimum number
of vehicles and pay to these automotive dealerships a specific amount (in
addition to the manufacturer's sales price) for each vehicle purchased.

In September 1995, in a related party transaction, the Company entered into
a stock purchase agreement with Addington Enterprises, Inc. (a company f/k/a
Addington Acquisition Company, Inc., owned by certain former shareholders of
Addington; collectively, the "Addington Brothers") whereby the Company would
receive $30.0 million, subject to a working capital adjustment, in exchange for
all the issued and outstanding shares of common stock of its subsidiaries,
Addington Mining, Inc., Mining Technologies Inc., Addwest Mining, Inc. and
Addington Coal Holding, Inc. This transaction closed in November 1995, at which
time the proceeds received were used by the Company to pay down certain
borrowings under a revolving line of credit.

Included in the transaction described above and pursuant to an option
agreement, in August 1995 the Company sold to the Addington Brothers all the
issued and outstanding shares of common stock of its subsidiary, Tennessee
Mining, Inc. According to the terms of the option agreement, the Addington
Brothers will pay the Company a royalty based on tons of coal delivered under a
certain coal sales contract, up to a maximum aggregate royalty of $12.5 million.

69
71

REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In September 1995, in a related party transaction, the Company entered into
an agreement to sell all of the issued and outstanding shares of common stock of
its subsidiary, Belize River Fruit Co., to the Addington Brothers in exchange
for .9 million shares of Common Stock of the Company owned by such shareholders.
This transaction was consummated in November 1995, at which time the Company
acquired and retired the .9 million shares valued at $13.6 million. The Company
retained no obligations in connection with the sales and has fully divested its
investment in its citrus operations.

15. OPERATIONS BY INDUSTRY SEGMENT

The Company is a diversified holding company with major business operations
in the solid waste services, electronic security services, automotive rental and
automotive retailing industries. The Company operates primarily in the United
States.

The following table presents financial information regarding the Company's
different industry segments as of and for the years ended December 31:



1996 1995 1994
---------- ---------- ----------

Revenue:
Automotive rental................................ $1,516,693 $1,391,727 $1,312,922
Solid waste services............................. 611,350 349,893 241,045
Automotive retailing............................. 152,201 -- --
Electronic security services..................... 85,276 49,826 41,913
---------- ---------- ----------
$2,365,520 $1,791,446 $1,595,880
========== ========== ==========
Operating income (loss):
Automotive rental................................ $ (65,721) $ (42,048) $ 30,224
Solid waste services............................. 92,569 54,719 37,379
Automotive retailing............................. (12,023) (4,038) --
Electronic security services..................... 14,495 8,631 2,352
Corporate........................................ (31,763) (4,318) (2,882)
---------- ---------- ----------
$ (2,443) $ 12,946 $ 67,073
========== ========== ==========
Depreciation and amortization:
Automotive rental................................ $ 477,939 $ 422,614 $ 372,544
Solid waste services............................. 50,967 36,654 28,149
Automotive retailing............................. 766 -- --
Electronic security services..................... 10,810 4,946 4,111
---------- ---------- ----------
$ 540,482 $ 464,214 $ 404,804
========== ========== ==========
Capital expenditures, purchases of revenue earning
vehicles and investment in subscriber accounts:
Automotive rental................................ $2,867,505 $2,346,632 $3,347,988
Solid waste services............................. 134,499 128,233 100,120
Automotive retailing............................. 21,063 10,015 --
Electronic security services..................... 53,021 17,459 18,275
---------- ---------- ----------
$3,076,088 $2,502,339 $3,466,383
========== ========== ==========
Assets:
Automotive rental................................ $2,442,713 $2,000,745 $2,310,448
Solid waste services............................. 1,219,682 760,804 393,653
Automotive retailing............................. 70,109 24,412 --
Electronic security services..................... 43,558 43,834 34,447
Net assets of discontinued operations............ -- -- 86,229
---------- ---------- ----------
$3,776,062 $2,829,795 $2,824,777
========== ========== ==========


70
72

REPUBLIC INDUSTRIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

16. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

The Company's automotive rental operations and particularly the leisure
travel segment is highly seasonal. In these operations, the third quarter which
includes the peak summer travel months has historically been the strongest
quarter of the year. During the peak season the Company increases its rental
fleet and workforce to accommodate increased rental activity. As a result, any
occurrence that disrupts travel patterns during the summer period could have a
material adverse effect on the annual performance of this segment. The first
quarter for the Company's automotive rental operations is generally the weakest,
when there is limited leisure family travel and a greater potential for adverse
weather conditions. Many of the operating expenses such as rent, general
insurance and administrative personnel are fixed and cannot be reduced during
periods of decreased rental demand.

The third and fourth quarters of 1996 included one-time pre-tax charges of
approximately $7.6 million and $87.9 million, respectively, as described in Note
10, Restructuring, Merger and Other Non-Recurring Expenses. The fourth quarter
of 1996 also included an extraordinary charge of approximately $31.6 million,
net of income taxes, related to the early extinguishment of debt as described in
Note 4, Long-Term Debt and Notes Payable.

The following is an analysis of certain items in the Consolidated
Statements of Operations by quarter for 1996 and 1995. Amounts for the first,
second and third quarters of 1996 and the 1995 quarterly amounts have been
restated from amounts previously reported in Form 10-Q for significant business
combinations accounted for under the pooling of interests method of accounting.



FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- --------

Revenue................................. 1996 $464,946 $567,842 $669,668 $663,064
1995 383,900 434,522 534,648 438,376
Operating income (loss)................. 1996 $ 9,105 $ 28,208 $ 38,672 $(78,428)
1995 (18,346) 1,315 36,823 (6,846)
Income (loss) from continuing operations
before extraordinary charge........... 1996 $ 3,579 $ 13,616 $ 19,859 $(64,959)
1995 (13,196) (1,944) 21,134 (7,457)
Earnings (loss) per share from
continuing operations before
extraordinary charge.................. 1996 $ .02 $ .05 $ .07 $ (.26)
1995 (.09) (.01) .11 (.03)
Net income (loss)....................... 1996 $ 3,579 $ 13,616 $ 19,859 $(96,551)
1995 (11,694) 352 (6,656) (8,588)


71
73

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

72
74

PART III

The information required by Items 10, 11, 12 and 13 of Part III of Form
10-K will be set forth in the Proxy Statement of the Company relating to the
1997 Annual Meeting of Stockholders and is incorporated herein by reference.

73
75

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) (1) Financial Statements of the Company are set forth in Part II, Item
8.

(2) Financial Statement Schedule II, Valuation and Qualifying Accounts
and Reserves, for each of the three years ended December 31, 1996
is submitted herewith.

(3) Exhibits -- (See Index to Exhibits included elsewhere herein.)

(b) Form 8-K dated February 14, 1996 relating to the Company's execution of
a definitive agreement to acquire Incendere

Form 8-K (as amended by Form 8-K/A) dated February 27, 1996 relating to
the Company's acquisition of Incendere and Denver Alarm and reporting
certain financial information related thereto

Form 8-K dated March 29, 1996 relating to the Company's proposed
acquisition of AutoNation

Form 8-K dated May 8, 1996 relating to the Company's execution of a
definitive agreement to acquire AutoNation

Form 8-K dated May 9, 1996 (as amended by Form 8-K/A) relating to the
Stock Split and the resignation of Gregory K. Fairbanks

Form 8-K dated May 15, 1996 reporting certain financial information
relating to Incendere and Denver Alarm

Form 8-K dated May 20, 1996 relating to the Company's proposed
acquisition of Continental and a private placement of approximately 9.9
million shares of Common Stock

Form 8-K dated May 31, 1996 relating to the Company's proposed
acquisition of Addington

Form 8-K dated June 12, 1996 relating to the Company's execution of a
definitive agreement to acquire CarChoice

Form 8-K dated June 25, 1996 relating to the Company's execution of a
definitive agreement to acquire Addington

Form 8-K dated June 27, 1996 relating to the Company's execution of a
definitive agreement to acquire Continental

Form 8-K (as amended by Form 8-K/A) dated July 1, 1996 relating to the
Company's execution of a definitive agreement to acquire ADT Limited

Form 8-K dated July 16, 1996 relating to an amendment to the definitive
agreement to acquire ADT Limited

Form 8-K (as amended by Form 8-K/A) dated September 30, 1996 relating
to the Company's termination of the agreement to acquire ADT Limited
and reporting certain financial information

Form 8-K dated November 7, 1996 relating to the Company's execution of
a definitive agreement to acquire Alamo

Form 8-K dated November 8, 1996 relating to a private placement of
approximately 12.1 million shares of Common Stock

Form 8-K (as amended by Form 8-K/A) dated November 25, 1997 relating to
the Company's acquisition of Alamo and reporting certain financial
information related thereto

Form 8-K dated December 19, 1996 relating to the Company's acquisition
of Addington

Form 8-K dated December 23, 1996 relating to the Company's acquisition
of Mullinax

74
76

Form 8-K dated December 24, 1996 relating to the completion of the
tender offer for certain Alamo notes and reporting certain fourth
quarter charges

Form 8-K dated December 30, 1996 relating to the Company's acquisition
of Continental

75
77

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

REGISTRANT:

REPUBLIC INDUSTRIES, INC.

By: /s/ H. WAYNE HUIZENGA
------------------------------------
H. Wayne Huizenga
Chairman of the Board and
Co-Chief Executive Officer
February 26, 1997

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.



SIGNATURE TITLE DATE
--------- ----- ----


/s/ H. WAYNE HUIZENGA Chairman of the Board and Co- February 26, 1997
- ----------------------------------------------------- Chief Executive Officer
H. Wayne Huizenga (Principal Executive
Officer)

/s/ STEVEN R. BERRARD Co-Chief Executive Officer, February 26, 1997
- ----------------------------------------------------- President and Director
Steven R. Berrard

/s/ MICHAEL J. KARSNER Chief Financial Officer and February 26, 1997
- ----------------------------------------------------- Senior Vice President
Michael J. Karsner (Principal Financial
Officer)

/s/ HARRIS W. HUDSON Vice Chairman and Director February 26, 1997
- -----------------------------------------------------
Harris W. Hudson

/s/ MICHAEL R. CARPENTER Vice President and Corporate February 26, 1997
- ----------------------------------------------------- Controller (Principal
Michael R. Carpenter Accounting Officer)

/s/ MICHAEL G. DEGROOTE Director February 26, 1997
- -----------------------------------------------------
Michael G. DeGroote

/s/ J.P. BRYAN Director February 26, 1997
- -----------------------------------------------------
J.P. Bryan

/s/ RICK L. BURDICK Director February 26, 1997
- -----------------------------------------------------
Rick L. Burdick

/s/ GEORGE D. JOHNSON, JR. Director February 26, 1997
- -----------------------------------------------------
George D. Johnson, Jr.

/s/ JOHN J. MELK Director February 26, 1997
- -----------------------------------------------------
John J. Melk


76
78

REPUBLIC INDUSTRIES, INC.

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
SCHEDULE II
(IN THOUSANDS)

================================================================================



BALANCE
AT ADDITIONS ACCOUNTS BALANCE
BEGINNING CHARGED TO WRITTEN AT END
CLASSIFICATIONS OF YEAR INCOME OFF OTHER(1) OF YEAR
- --------------- --------- ---------- -------- -------- -------

ALLOWANCE FOR DOUBTFUL ACCOUNTS:
1996.......................................... $9,269 $4,819 $(3,296) $3,427 $14,219
1995.......................................... 5,028 5,841 (2,217) 617 9,269
1994.......................................... 3,989 2,836 (1,801) 4 5,028


- ---------------

(1) Allowance of acquired businesses.

77
79

EXHIBIT INDEX



EXHIBITS DESCRIPTION OF EXHIBIT
- -------- ----------------------

2.1 -- Agreement and Plan of Merger and Reorganization, dated May
30, 1991, by and between Republic Waste Industries, Inc., an
Oklahoma corporation, and Republic Waste Industries, Inc., a
Delaware corporation (incorporated by reference to Exhibit
3.1 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1991)
3.1 -- Second Amended and Restated Certificate of Incorporation of
Republic Industries, Inc. (incorporated by reference to
Exhibit 3.1 to the Registrant's Post-Effective Amendment No.
3 to Registration Statement on Form S-1, No. 33-63209).
3.2 -- Bylaws of Republic Industries, Inc., as amended to date
(incorporated by reference to Exhibit 3.2 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1995).
4.1 -- Credit Facilities and Reimbursement Agreement, dated
December 19, 1995 ("Credit Facilities and Reimbursement
Agreement"), by and among Republic Industries, Inc., as
Borrower, NationsBank of Florida, National Association, The
First National Bank of Boston, The Bank of Nova Scotia, The
First National Bank of Chicago, SunTrust Bank, South
Florida, National Association, United States National Bank
of Oregon, ABN AMRO Bank, N.V., The Bank of New York,
Barnett Bank of Broward County, N.A., Credit Lyonnais New
York Branch, Credit Lyonnaise Cayman Island Branch, and LTCB
Trust Company, as Lenders and NationsBank of Florida,
National Association, as Agent, and The First National Bank
of Boston, as Co-Agent (incorporated by reference to Exhibit
10.32 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995).
4.2 -- Amendment Agreement Number One to Credit Facilities and
Reimbursement Agreement, dated June 11, 1996 (incorporated
by reference to Exhibit 4.2 to the Registrant's Registration
Statement on Form S-4 Commission File No.333-17867).
4.3 -- Amendment Agreement Number Two to Credit Facilities and
Reimbursement Agreement, dated November 25, 1996
(incorporated by reference to Exhibit 4.3 to the
Registrant's Registration Statement on Form S-4 Commission
File No. 333-17867).
4.4 -- Loan Agreement, dated as of June 20, 1994 ("Alamo Funding
Loan Agreement"), between Alamo Rent-A-Car, Inc. and Alamo
Funding, L.P. (incorporated by reference to Exhibit 4.8 to
the Registration Statement on Form S-1 of Alamo Rent-A-Car,
Inc. Commission File No. 33-80271).
4.5 -- Amendment to Alamo Funding Loan Agreement, dated as of
December 29, 1994 (incorporated by reference to Exhibit 4.9
to the Registration Statement on Form S-1 of Alamo
Rent-A-Car, Inc. Commission File No. 33-80271).
4.6 -- Second Amendment to Alamo Funding Loan Agreement, dated as
of June 11, 1996 (incorporated by reference to Exhibit 4.1
to the Quarterly Report on Form 10-Q of Alamo Rent-A-Car,
Inc. for the period ending June 30, 1996).
4.7 -- Third Amendment to Alamo Funding Loan Agreement, dated as of
November 25, 1996 (incorporated by reference to Exhibit 4.8
to the Registrant's Registration Statement on Form S-4
Commission File No. 333-17867).
4.8 -- Liquidity Loan Agreement, dated as of June 20, 1994
("Liquidity Loan Agreement"), among Alamo Funding, L.P., AFL
Fleet Funding, Inc., certain financial institutions, as the
liquidity lenders, and Citibank N.A., as the liquidity agent
for the liquidity lenders (incorporated by reference to
Exhibit 4.10 to the Registration Statement on Form S-1 of
Alamo Rent-A-Car, Inc. Commission File No. 33- 80271).
4.9 -- Consent of Liquidity Lenders to Extension of the Scheduled
Liquidity Commitment Termination Date (incorporated by
reference to Exhibit 4.11 to the Registration Statement on
Form S-1 of Alamo Rent-A-Car, Inc. Commission File No.
33-80271).


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EXHIBITS DESCRIPTION OF EXHIBIT
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4.10 -- First Amendment to Liquidity Loan Agreement dated June 11,
1996 (incorporated by reference to Exhibit 4.1 to the
Quarterly Report on Form 10-Q of Alamo Rent-A-Car, Inc. for
the period ending June 30, 1996).
4.11 -- Second Amendment to Liquidity Loan Agreement, dated as of
November 25, 1996 (incorporated by reference to Exhibit 4.12
to the Registrant's Registration Statement on Form S-4
Commission File No. 333-17867).
4.12 -- Letter of Credit Reimbursement Agreement, dated as of June
20, 1994 ("Letter of Credit Reimbursement Agreement"), among
Alamo Rent-A-Car, Inc., Alamo Funding, L.P., AFL Fleet
Funding, Inc. and Credit Suisse, as Credit Enhancer
(incorporated by reference to Exhibit 4.12 to the
Registration Statement on Form S-1 of Alamo Rent-A-Car, Inc.
Commission File No. 33-80271).
4.13 -- Amendment to Letter of Credit Reimbursement Agreement, dated
as of December 29, 1994 (incorporated by reference to
Exhibit 4.13 to the Registration Statement on Form S-1 of
Alamo Rent-A-Car, Inc. Commission File No. 33-80271).
4.14 -- Second Amendment to Letter of Credit Reimbursement
Agreement, dated as of November 25, 1996 (incorporated by
reference to Exhibit 4.15 to the Registrant's Registration
Statement on Form S-4 Commission File No. 333-17867).
4.15 -- Guaranty, dated as of November 25, 1996, by Republic
Industries, Inc. in favor of Credit Suisse (incorporated by
reference to Exhibit 4.16 to the Registrant's Registration
Statement on Form S-4 Commission File No. 333-17867).
4.16 -- Amended and Restated Security Agreement, dated as of
December 17, 1993 ("Restated Security Agreement"), between
Alamo Rent-A-Car, Inc. and NationsBank of Georgia N.A., as
collateral agent (incorporated by reference to Exhibit 4.14
to the Registration Statement on Form S-1 of Alamo
Rent-A-Car, Inc. Commission File No. 33-80271).
4.17 -- First Amendment to Restated Security Agreement, dated as of
November 30, 1994 (incorporated by reference to Exhibit 4.15
to the Registration Statement on Form S-1 of Alamo
Rent-A-Car, Inc. Commission File No. 33-80271).
Note: Pursuant to the provisions of Item 601(b)(4)(iii) of
Regulation S-K, the registrant hereby undertakes to furnish
to the Commission upon request copies of any instruments
governing long-term debt of Republic and its consolidated
subsidiaries that does not exceed 10% of the total assets of
Republic and its subsidiaries on a consolidated basis.
10.1 -- Republic Waste Industries, Inc. 1990 Stock Option and Stock
Purchase Plan (incorporated by reference to Exhibit 10.1(a)
to the Registrant's Registration Statement on Form S-1
Commission File No. 33-37191).
10.2 -- Form of Stock Option Agreement (incorporated by reference to
Exhibit 10.1(b) to the Registrant's Registration Statement
on Form S-1 Commission File No. 33-37191).
10.3 -- Letter Agreement, dated March 18, 1991, by and among MGD
Holdings Ltd., Republic Waste Industries, Inc., Tom J.
Fatjo, Jr., Republic Investors, Ltd., Investors, Inc.,
Robert Alpert, First Financial Environmental Investors, Pete
Boyas, James D. Lee, Richard K. Reiling, William M. DeArman,
Frank C. Payton, David C. Payton and Richard Morton
(incorporated by reference to Exhibit 10.31 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1990).
10.4 -- Warrant to Purchase 1,150,000 Shares of Republic Waste
Industries, Inc. Common Stock issued to MGD Holdings Ltd.
(incorporated by reference to Exhibit 10.18 to the
Registrant's Registration Statement on Form S-1 Commission
File No. 33-42530).
10.5 -- Stock Exchange Agreement between Republic Waste Industries,
Inc. and MGD Holdings Ltd. (incorporated by reference to
Exhibit 10.22 to the Registrant's Registration Statement on
Form S-1 Commission File No. 33-42530).
10.6 -- Republic Waste Industries, Inc. 1991 Stock Option Plan
(incorporated by reference to Exhibit 10.42 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992).


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EXHIBITS DESCRIPTION OF EXHIBIT
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10.7 -- Form of Stock Option Agreement (incorporated by reference to
Exhibit 10.43 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1992).
10.8 -- Form of Warrant to purchase 300,000 shares of Republic Waste
Industries, Inc. Common Stock, issued to Donald E. Koogler
(incorporated by reference to Exhibit 10.54 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992).
10.9 -- Agreement of Settlement and Mutual Release by and among
Republic Waste Industries, Inc. and Michael G. DeGroote,
Donald E. Koogler, Gary W. DeGroote, Kevin J. Comeau, Rick
L. Burdick, Douglas R. Gowland, Lance R. Ruud, August C.
Schultes, III, Mark S. Alsentzer, Gary J. Ziegler, Eugene J.
Kerins, Edward A. Schultes, Richard J. Schultes, Peter
Schultes, Barbara Schultes ITF Elizabeth Schultes (Minor),
Barbara Schultes ITF Deborah Schultes (Minor) and August C.
Schultes, IV, dated as of January 29, 1994 (incorporated by
reference to Exhibit 10.46 to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1993).
10.10 -- Form of Warrant to purchase 100,000 shares of Republic Waste
Industries, Inc. Common Stock issued to MGD Holdings Ltd.
(incorporated by reference to Exhibit 10.33 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994).
10.11 -- Form of Warrant to purchase 50,000 shares of Republic Waste
Industries, Inc. Common Stock issued to J.P. Bryan
(incorporated by reference to Exhibit 10.34 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994).
10.12 -- Form of Warrant to purchase 50,000 shares of Republic Waste
Industries, Inc. Common Stock issued to Rick L. Burdick
(incorporated by reference to Exhibit 10.35 to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994).
10.13 -- Distribution Agreement, dated February 14, 1995, by and
between Republic Waste Industries, Inc. and Republic
Environmental Systems, Inc. (incorporated by reference to
Exhibit 10.36 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1994).
10.14 -- Stock Purchase Agreement, dated May 21, 1995, by and between
H. Wayne Huizenga and Republic Waste Industries, Inc.
(incorporated by reference to Exhibit (c)(1) to the
Registrant's Current Report on Form 8-K/A, dated July 17,
1995).
10.15 -- Agreement and Plan of Merger, dated May 21, 1995, by and
among Republic Waste Industries, Inc., Republic Hudson
Acquisition Corporation, Hudson Management Corporation,
Harris W. Hudson and Bonnie J. Hudson (incorporated by
reference to Exhibit (c)(2) to the Registrant's Current
Report on Form 8-K/A, dated July 17, 1995).
10.16 -- Agreement and Plan of Merger, dated May 21, 1995, by and
among Republic Waste Industries, Inc., Republic Hudson
Acquisition Corporation, Envirocycle, Inc., Harris W. Hudson
and Bonnie J. Hudson (incorporated by reference to Exhibit
(c)(3) to the Registrant's Current Report on Form 8-K/A,
dated July 17, 1995)
10.17 -- Stock Purchase Agreement, dated May 21, 1995, by and between
Harris W. Hudson and Republic Waste Industries, Inc.
(incorporated by reference to Exhibit (c)(4) to the
Registrant's Current Report on Form 8-K/A, dated July 17,
1995).
10.18 -- Stock Purchase Agreement, dated May 21, 1995, by and between
Westbury (Bermuda) Ltd. and Republic Waste Industries, Inc.
(incorporated by reference to Exhibit (c)(5) to the
Registrant's Current Report on Form 8-K/A, dated July 17,
1995).
10.19 -- Proxy, dated as of May 21, 1995, by MGD Holdings Ltd., in
favor of H. Wayne Huizenga (incorporated by reference to
Exhibit (c)(6) to the Registrant's Current Report on Form
8-K/A, dated July 17, 1995).
10.20 -- Stockholder Stock Option Agreement, dated as of May 21,
1995, by MGD Holdings Ltd., in favor of H. Wayne Huizenga
(incorporated by reference to Exhibit (c)(7) to the
Registrant's Current Report on Form 8-K/A, dated July 17,
1995).
10.21 -- First Amendment to Stock Purchase Agreement, dated July 17,
1995, by and between Republic Waste Industries, Inc. and H.
Wayne Huizenga (incorporated by reference to Exhibit (c)(8)
to the Registrant's Current Report on Form 8-K/A, dated July
17, 1995).


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EXHIBITS DESCRIPTION OF EXHIBIT
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10.22 -- Republic Industries, Inc. 1995 Amended and Restated Employee
Stock Option Plan (incorporated by reference to Appendix B
to the Registrant's Proxy Statement for the 1996 Annual
Meeting of Stockholders).
10.23 -- Republic Industries, Inc. Amended and Restated 1995
Non-employee Director Stock Option Plan (incorporated by
reference to Exhibit B to the Registrant's Information
Statement dated November 8, 1995).
10.24 -- Merger Agreement, dated August 24, 1995 ("Southland Merger
Agreement"), by and among Republic Waste Industries, Inc.,
RS Mergersub, Inc., Southland Environmental Services, Inc.,
Felix A. Crawford, Individually and as Trustee of the Felix
A. Crawford Revocable Living Trust, and CFP, Ltd.
(incorporated by reference to Exhibit (c)(1) to the
Registrant's Current Report on Form 8-K, dated August 24,
1995).
10.25 -- Merger Agreement, dated as of August 24, 1995, by and among
Republic Waste Industries, Inc., RKSA, Inc., RKSA II, Inc.,
Kertz Security Systems, Inc., Kertz Security System II,
Inc., Leon W. Brauser, Michael Brauser, Robert Brauser and
Joel Brauser (incorporated by reference to Exhibit (c)(2.1)
to the Registrant's Current Report on Form 8-K, dated August
28, 1995).
10.26 -- First Amendment to the Southland Merger Agreement, dated as
of October 17, 1995 (incorporated by reference to Exhibit
2.2 to the Registrant's Current Report on Form 8-K, dated
October 17, 1995).
10.27 -- Merger Agreement, dated as of October 31, 1995, by and among
Republic Waste Industries, Inc., RWI/GDS Mergersub, Inc.,
Garbage Disposal Service, Inc., Lee G. Brown and Mina Brown
McLean (incorporated by reference to Exhibit 2.1 to the
Registrant's Current Report on Form 8-K, dated October 31,
1995).
10.28 -- Merger Agreement, dated as of November 11, 1995, by and
among Republic Waste Industries, Inc., RWI/JCD Inc.,
RWI/Grand Inc., RWI/Trashaway Inc., RWI/Tos-It Inc.,
RWI/WestTex Inc., RWI/Pantego I Inc., RWI/Pantego II Inc.,
J.C. Duncan Company, Inc., Arlington Disposal Company, Inc.,
Grand Prairie Disposal Company, Inc., Trashaway Services,
Inc., Tos-It Service Company, Inc., Wes Tex Waste Services,
Inc., Pantego Service Company, Pantego I, Inc., Pantego II,
Inc., E & E Truck Leasing, Ltd., EETL I, Inc., EETL II,
Inc., Robert C. Duncan, Jannette T. Duncan, Dan R. Duncan,
Debra A. Duncan, DeeDee Duncan Elliot, George Martin Duncan,
Melinda Duncan Vince, Robert C. Duncan as Trustee of the
Robert C. Duncan Annuity Trusts Nos. One, Two, Three and
Four, and Jannette T. Duncan as Trustee of the Jannette T.
Duncan Annuity Trust No.'s One, Two, Three and Four
(incorporated by reference to Exhibit 2.2 to the
Registrant's Current Report on Form 8-K, dated October 31,
1995).
10.29 -- Merger Agreement, dated as of November 13, 1995, by and
among Republic Waste Industries, Inc., RI/FCC Mergersub,
Inc., RI/FWS Mergersub, Inc., RI/FV Mergersub, Inc., RI/PD
Mergersub, Inc., RI Investment Co., Inc., Fennell Waste
Systems, Inc., Fennell Container Co., Inc., Fenn-Vac, Inc.,
Pepperhill Development Co., Inc., GF/WWF, Inc., George W.
Fennell, Robert N. Shepard, G. Scott Fennell, S. Allison
Fennell, Debra A. Haschker, James R. Bland, John H. Chapman,
Jeffrey A. Forslund and Leo J. Zolnierowicz (incorporated by
reference to Exhibit 2.3 to the Registrant's Current Report
on Form 8-K, dated October 31, 1995).
10.30 -- Merger Agreement, dated as of February 15, 1996, by and
among Republic Industries, Inc., RI/DFRP, Inc., RI/GS Merger
Corp., The Denver Fire Reporter & Protective Co., Guardian
Security Services, Inc., and John Stewart Jackson
(incorporated by reference to Exhibit 2.1 to the
Registrant's Current Report on Form 8-K, dated February 14,
1995).
10.31 -- Reorganization Agreement, dated as of February 14, 1996, by
and among Republic Industries, Inc., RI/Area, Inc.,
RI/Smith, Inc., Incendere, Inc., Area Container Services,
Inc., Smithton Sanitation Service, Inc., Dwight C.
Schaubach, James D. Schaubach, Emmett K. Moore, Charles F.
Moore and R.D. Cuthrell (incorporated by reference to
Exhibit 2.2 to the Registrant's Current Report on Form 8-K,
dated February 14, 1996).


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EXHIBITS DESCRIPTION OF EXHIBIT
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10.32 -- Merger Agreement, dated as of May 8, 1996 ("AutoNation
Merger Agreement"), by and among Republic Industries, Inc.,
RI/ANI Merger Corp., AutoNation Incorporated, H. Wayne
Huizenga, Steven R. Berrard and JM Family Enterprises, Inc.
(incorporated by reference to Exhibit 99.1 to the
Registrant's Current Report on Form 8-K, dated May 8, 1996).
10.33 -- Loan Agreement, dated May 8, 1996 ("AutoNation Loan
Agreement"), by and between AutoNation Incorporated and
Republic Industries, Inc. (incorporated by reference to
Exhibit 99.2 to the Registrant's Current Report on Form 8-K,
dated May 8, 1996).
10.34 -- Employment Agreement, dated as of May 8, 1996, among
Republic Industries, Inc. and Steven R. Berrard
(incorporated by reference to Exhibit 10.34 to the
Registrant's Registration Statement on Form S-4 Commission
File No. 333-17867).
10.35 -- First Amendment to AutoNation Merger Agreement, dated as of
September 30, 1996 (incorporated by reference to Annex A to
the Registrant's Schedule 14A Proxy Statement, dated
December 13, 1996).
10.36 -- Second Amendment to AutoNation Merger Agreement and First
Amendment to AutoNation Loan Agreement and Related Loan
Documents, dated as of October 31, 1996 (incorporated by
reference to Annex A to the Registrant's Schedule 14A Proxy
Statement dated December 13, 1996).
10.37 -- Third Amendment to AutoNation Merger Agreement, dated as of
December 31, 1996 (incorporated by reference to Exhibit 2.2
to the Registrant's Current Report on Form 8-K/A dated
January 16, 1997).
10.38 -- Agreement and Plan of Merger, dated as of June 25, 1996,
among Addington Resources, Inc., Republic Industries, Inc.
and RI/AR Merger Corp. (incorporated by reference to Exhibit
99.1 to the Registrant's Current Report on Form 8-K dated
June 25, 1996).
10.39 -- Agreement and Plan of Merger, dated as of June 27, 1996,
among Continental Waste Industries, Inc., Republic
Industries, Inc., and RI/CW Merger Corp. (incorporated by
reference to Exhibit 99.1 to the Registrant's Current Report
on Form 8-K, dated June 27, 1996).
10.40 -- Agreement and Plan of Reorganization, dated November 6,
1996, among Republic Industries, Inc., certain acquisition
subsidiaries of Republic Industries, Inc., Michael S. Egan,
Norman D. Tripp, William H. Kelly, Michael S. Egan as
trustee of certain trusts, Alamo Rent-A-Car, Inc., and
certain affiliated entities of Alamo Rent-A-Car, Inc.
(incorporated by reference to Exhibit 2 to the Registrant's
Current Report on Form 8-K dated November 25, 1996).
10.41 -- Letter Agreement between Alamo Rent-A-Car, Inc. and General
Motors Corporation (incorporated by reference to Exhibit
10.16 to the Registration Statement on Form S-1 of Alamo
Rent-A-Car, Inc. Commission File No. 33-80271).
10.42 -- Share Exchange Agreement, dated as of January 5, 1997, among
Republic Industries, Inc., National Car Rental Systems, Inc.
("National") and the stockholders of National (incorporated
by reference to Exhibit 2 to the Registrant's Current Report
on Form 8-K dated January 5, 1997).
21.1 -- Subsidiaries of Republic Industries, Inc. (incorporated by
reference to Exhibit 21.1 of the Registrant's Registration
Statement on Form S-4 Commission File No. 333-17867).
23.1* -- Consent of Arthur Andersen LLP.
27.1* -- 1996 Financial Data Schedule (for SEC use only).
27.2* -- 1995 Financial Data Schedule (Restated) (for SEC use only).


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* Filed herewith.

82