Chatfield Dean & Co. Inc. Releases Research Report on Republic Industries Inc.

GREENWOOD VILLAGE, Colo.--(BUSINESS WIRE)--June 12, 1998--Chatfield Dean & Co. Inc. today released its research report on Republic Industries Inc. (NYSE:RII), with a STRONG BUY recommendation in a nine-page research report entitled "Republic's earnings and revenues in 1998 are expected to be almost double 1997 levels."

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o Reiterate: STRONG BUY

o Rating: STRONG BUY

o Risk Rating: Growth

o 1998 Earnings Estimates: $1.23

o 1999 Earnings Estimates: $1.53

o 12-Month Price Target: $49.00

o 18-Month Price Target: $55.00

Analyst: Cheryl J. Bostater

(NYSE: RII)

Industry: Automotive/Solid Waste

Research Update: Republic's earnings and revenues in 1998 are

expected to be almost double 1997 levels

Reiterate: Strong Buy

Recommendation: Strong Buy

Recent Price: $25.19

12-Month Price Target: $49.00

18-Month Price Target: $55.00

Risk Rating: Growth

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                                 Price        52-Week
  Symbol           Exchange    (06/11/98)      Range       S&P 500

RII (Common)      NYSE - NMS     $25.19    $36.00-$19.00   $1,094.58


                  Shares        Market       Avg. Daily   Dividend $/yr.
 Symbol            Out.          Cap.       Vol. (shrs.)    and Yield%

RII (Common)     453.5 mil.    $11.4 bil.     1.7 mil.       Nil./Nil.


                           EPS SUMMARY          Jan-Mar   Apr-Jun
                           FYE: Dec.    Year         Q1        Q2

Book/Share:      $8.76     1997A/a      $0.50        ne        ne
Current Ratio:  1.42:1      1998E       $1.23    $0.17A     $0.27
Cashflow/Share: ($1.48)     1999E       $1.53     $0.30     $0.35


                          Jul-Sep       Oct-Dec     P/E on Full-Yr.
                               Q3            Q4       Est. EPS

Book/Share:                    ne            ne            -
Current Ratio:              $0.49         $0.30        20.5X
Cashflow/Share:             $0.41         $0.46        16.5X

/a Quarterly results not estimated due to restatement of earnings.

o Republic is a dominant player in the consumer transportation industry as the largest automotive retailer in the United States with approximately 300 new car dealerships, 26 AutoNation used car megastores, and the largest rental car fleet in the United States.

o We believe that Republic has reached a critical mass in certain markets that should allow it to build competitive advantage through efficiency initiatives. We estimate that Republic can earn $1.23 in FY'98 and $1.53 in FY'99. In our opinion, the stock should trade at an expanded P/E of 40X by the end of FY'98, indicating a 12-month price target of $49.00. With an expected EPS growth rate of 30% or more over the next few years, we calculate an 18-month price target of $55.00.

o Republic recently signed an agreement with American Honda that sets the conditions under which it can buy Honda and Acura dealerships. Honda was the last major automobile manufacturer for Republic to reach an agreement with.

o Republic expects to generate $1 billion in sales in the next 2.5 years through its internet web site that is under development.

o The IPO for the Waste Division will result in up to $2.0 billion in the form of a dividend payment to Republic and a stock dividend to existing shareholders. This $2.0 billion will be used to continue its new car dealership acquisition strategy.

o Republic has a proven management team with acquisition experience and automotive executives in key positions. In addition, management owns 46% of Republic's stock.

o We anticipate strong earnings and operating margin growth due to economies of scale and synergies among new and used car dealerships and rental business.

o On April 21, Republic reported net income of $0.17 per share for 1Q'98, beating consensus estimates by three cents, and revenues of $3.4 billion.

OVERVIEW

Republic Industries, Inc. (NYSE: RII) operates subsidiaries in the automotive retailing, automotive rental, and solid waste services industries. The Company owns the nation's largest chain of new vehicle dealerships and is building a chain of used car megastores which it operates under the AutoNation brand name. Republic also owns National Car Rental System, Inc., Alamo Rent-A-Car, Inc. and CarTemps USA. The Company is considering changing its corporate name to AutoNation USA, reflecting its planned divestiture of its waste division.

The Company's overall strategy is to offer one-stop automotive centers that meet all of the customer's transportation needs, and to be customer driven. Being customer driven to Republic means offering one price for automobiles, new or used, with no hassle and no haggling. The Company plans to leverage the integration of its new vehicle dealerships, used car megastores, internet-based car sales, and car rental businesses to provide additional economies of scale not available to companies that are only involved in one aspect of the automotive market. In addition, the Company views the internet as a key area of growth.

The Company's primary strategy for improving the profitability of new car dealerships and used car megastores is to cut costs, leverage its size to accomplish economies of scale, and adding or expanding services such as financing, auto parts sales, and service.

SUMMARY AND INVESTMENT THESIS

Republic expects high growth in both revenues and earnings over the next few years. The Company projects a 75% revenue gain to $18 billion in 1998 from $10.3 billion in 1997. The Company expects revenues to exceed $60 billion in three to five years. With operating margins approaching 5% we believe this will translate into $2.1 billion in net income after tax.

With shares of Republic trading in the mid 20's, we believe that an investment in Republic is a compelling opportunity. We believe that Republic has reached a critical mass in certain markets that should allow it to build a competitive advantage through efficiency initiatives. We estimate that Republic can earn $1.23 in FY'98 and $1.53 in FY'99. In our opinion, the stock could trade at an expanded P/E of 40X by the end of FY'98, indicating a 12-month price target of $49.00. With an expected EPS growth rate of 30% or more over the next few years, we calculate an 18-month price target of $55.00. In our opinion, one factor that has depressed the price of RII's shares has been the sale of stock by dealers who received stock for their dealerships. We believe, however, that the majority of those who wanted to sell already have, and that Republic's increased use of cash for acquisitions will have a positive effect on the stock price going forward. Considering the current trading range of RII shares, the potential upside and based, in part, on the following investment considerations, we rate an investment in RII shares with a STRONG BUY for the portfolios of long-term growth-oriented investors.

KEY INVESTMENT CONSIDERATIONS

o The IPO for the Waste Division will result in a $2.0 Billion Dividend Payment to Republic. Republic announced that it plans to sell 25%-35% of its solid waste division to the public, with the remaining shares distributed to existing shareholders. According to Mr. Huizenga, existing shareholders will receive one share of the spun off entity, to be called Republic Services, Inc., for every four Republic Industry shares that they own. Republic plans to continue buying new car dealerships with the $1.5 to $2 billion in cash proceeds it expects from the initial public offering of its waste division. The Company believes that the interest income on this $2.0 Billion dividend will replace any loss of net income due to the spin-off of the waste division.

AUTOMOTIVE RETAIL

o Republic Reached an Agreement with American Honda. Republic recently signed an agreement with American Honda that sets the conditions under which it can buy Honda and Acura dealerships. The agreement also resolves all pending litigation between the parties. Honda was the only major manufacturer without a formal agreement with the Company.

During FY'97 Republic signed agreements with most of the major manufacturers including Toyota, GM, Chrysler, and Ford, stipulating the size of the market share it can acquire of each manufacturer's dealerships. Though each agreement is separate, in general, Republic is allowed to acquire roughly 5% of a manufacturer's national distribution.

o The Internet is a Key High Growth Business. Republic's goal for its online service, which is under development, is to generate $1 billion in sales in the next 2.5 years. Republic plans to sell all makes and models of cars and trucks on the Internet and deliver them nationwide through its franchised dealers, significantly reducing marketing costs. According to a study conducted by JD Power & Associates, 48% of new vehicle buyers have access to the internet, 16% use the internet for researching their car purchases, and 4% use an online new vehicle referral service. Republic plans to be a dominant player on the internet by entering into national agreements with internet based-content providers such as: Microsoft CarPoint, Auto Vantage, Auto Web, DealerNet, AutoConnect, and Auto-by-Internet. In addition, the Company plans to establish "e-commerce" Web sites for each of its Dealers, with capabilities such as the ability to search for available inventory, the ability to schedule service on a car, electronic mail, and the tracking of prospects. This strategy will require equipping every one of its dealerships with New Technology. Utilizing the internet will reduce sales costs and enhance a customer's ability to obtain the "right" car.

o Car Dealership Network Expanding. Through an aggressive acquisition strategy, Republic now operates in 27 of the 50 top auto markets in U.S. and owns approximately 300 dealerships. Though it plans to eventually penetrate all 50 top car markets in the United States, to date its acquisition strategy has focused on the following key markets: Ft. Lauderdale, Houston, Dallas/Ft. Worth, Denver, and Phoenix. Acquisitions for the remainder of 1998 will be concentrated in existing markets and five new markets: San Francisco, Chicago, Philadelphia, Washington and Baltimore. In our opinion, Republic has reached a critical mass in many of its primary target markets that could allow it to build a significant competitive advantage through economies of scale.

o Republic is the Low Cost Provider; Initiatives are Widening Profit Margins. Republic is already far more profitable than its peers: The auto-retailing industry's operating profit margin averages about 1.4%, while Republic's was over 2% in the first quarter of 1998, if corporate expenses are subtracted. Considering that Republic has only reached critical mass in a few markets, we are pleased by its increase in retail operating margin from 2% in FY'96 to 2.7% in FY'97. We expect that FY'98 and FY'99 will better reflect the Company's margin potential as more AutoNation stores will have been open for over 12 months and acquisitions completed during FY'97 will be better integrated into the Republic structure. Republic expects to surpass a 3% operating margin in FY'98, 4% in FY'99, and 5% in FY'00 and beyond, based, in part, on the following initiatives:

- Economies of Scale. The Company expects to continue to increase operating margins by purchasing items, from motor oil to uniforms in bulk, and from pooling advertising. By pooling advertising, Republic has cut between 15% and 20% from print and radio ads, according to the Company. Advertising has become an increasingly large portion of dealers' overhead, an estimated average of $400 per car. Since advertising is a portion of a dealer's business that lends itself particularly well to volume purchase discounts, this is one of the first areas where we expect Republic to build a competitive advantage both for new car dealerships and AutoNation stores. Specifically, the Company plans to sub-brand individual dealerships with the AutoNation USA name. This would mean a phrase such as, "an AutoNation U.S.A. dealer" that follows the individual dealers' name. Sub-branding creates a link between dealerships and can affect advertising spending by allowing multiple dealerships to be represented in one advertisement. Republic has found that the combination of bulk advertising, group insurance and decreased cost of capital (see next bullet point) can reduce operating expenses by 50 basis points within one year of acquisition.

- Lower Cost of Capital for Dealerships, Competitive Financing for Customers. Chatfield Dean estimates that 10% of a dealer's overhead is cost of capital. For most dealerships, inventory financing is either through manufacturers or local banks and currently runs around prime plus 1%. Republic, through its financing company, can obtain financing at LIBOR plus approximately 40%. As the difference between the prime rate and LIBOR has exceeded 250 basis points for the past six months, this can significantly reduce the cost of goods sold. In addition, the Company's financing branch will be able to provide leasing and other financing options for customers at a competitive rate which could create an additional revenue stream for Republic, and allow the Company to retain ownership of a car longer.

- Operational Efficiencies. In addition, Republic plans cut 4% from selling, general and administrative costs by providing centralized back office support for clusters of dealerships and improved management of inventory and inventory turnover, parts and service. Although some functions require on-site staff, much of the paperwork processing and other support functions can be sent to a central/district processing site, allowing individual dealerships to cut redundant and costly administrative positions and streamline overhead. Typically, these initiatives would be implemented more slowly than those mentioned above, but could provide a significant increase in operating margins over a couple of years.

o AutoNation Expected to Show Profits in 3Q'98, and Expansion is On-Track. We believe that the AutoNation stores will not contribute significantly to revenue this year, but should break even for FY'98. The AutoNation chain had a $2 million loss in the first quarter of 1998, but was profitable in February and March. The Company expects AutoNation to become profitable by the third quarter, but it appears it will be sooner than that.

Republic now operates 26 megastores under the AutoNation name. The Company plans to open eight new AutoNation USA superstores in 1998 and 18 in 1999. In April, Republic purchased Driver's Mart Worldwide Inc., a chain of eight used-car stores in mid-sized markets. Initially, eight Driver's Mart superstores will be converted to AutoNation USA franchised stores and will be operated by the individual Driver's Mart retailers. Republic has reported that 19 additional AutoNation franchised megastores may be developed by Driver's Mart through FY'00. This announcement is the first initiative Republic has undertaken to leverage its AutoNation brand name and, we believe, represents a significant opportunity for the Company. The Company expects to operate 100 AutoNation USA superstores by the year 2000. So far this year, the Company has opened one store (Irvine, CA), and we expect the other seven to fall in 2H'98. Due to management's experience in rapid expansion, and the impending profitability of the AutoNation chain, we believe that opening the remainder of the stores over FY'99 and FY'00 may be achievable, particularly if existing stores are profitable and the store concept has been optimized.

The AutoNation "concept" seeks to differentiate itself from traditional used car dealers through no haggle pricing, leasing opportunities, limited warranties, and customer service innovations such as ChildPlay Centers, AutoGear USA stores and The Cafe in-store restaurants. Republic estimated that in 1995 more than 43 million used cars were sold, although many consumers rate buying a used car as one of the least pleasurable activities, and an estimated 30% of transactions are completed through classified advertisements. This presents an opportunity for AutoNation to attract first-time customers by changing some of the more notorious dealer tactics (i.e., by offering fixed pricing, etc.) and in turn building customer loyalty through superior service. In addition, the Company has reported that the AutoNation chain has a 90%+ satisfaction rate from customers, a significant achievement over traditional used car dealerships. As this system is implemented, we expect the stores to leverage their size and traffic to exploit other revenue generating areas and increase customer satisfaction. Two of the first areas that could enhance revenue are service and accessories, which are not currently emphasized in the stores. We also expect RII to perform small-scale tests in some districts for customer service initiatives such as an "Info Cafe" where customers would be able to access automobile-specific information such as Blue-Book value.

o No-Haggle Pricing Expected to be a Hit with Customers. The automobile buying process has long been frustrating to consumers that simply want to find the car they want at the best price with minimal hassle. In the past, the only consumers that had access to this type of service was through fleet buying arrangements, typically made through credit unions and other organizations. These fleet arrangements typically offer prices better than can be negotiated and with far less time and hassle. Republic is now offering the same service to every customer. We believe this will be a huge success with car buyers.

o AutoNation's "We Make It Easy Campaign". Republic announced on April 21 that it will rollout a new AutoNation marketing and advertising initiative that highlights the Company's philosophy of making it simple and easy for consumers to buy the car of their choice through its "We Make It Easy" campaign. This campaign emphasizes AutoNation's differentiating factors, including no haggle, one price, 99-day warranty and a low-pressure environment. This campaign represents a year-long research effort by Republic to ascertain the factors affecting consumers' used-car buying decision. The combined print, radio, and TV advertising will focus on AutoNation's 15 markets and will cost approximately $40 million during FY'98.

o Alternate Revenue Opportunities. We believe that Republic has yet to exploit its collision repair and financial services opportunities effectively, which could add top-line revenue and earnings going forward. Considering that Republic already supplies parts, repair service, used cars and rental cars, Republic seems uniquely positioned to grow its presence in the collision-repair market. In addition, Republic's finance segment, under the AutoNation name, already provides prime financing to AutoNation customers, which we expect to grow through the expansion of the AutoNation name.

RENTAL CAR

With an estimated $16.4 billion in revenue in 1997, the rental car industry in the United States is divided into three sectors; business travel (40%), leisure travel (40%) and local or insurance replacement (20%). The 13% increase over 1996 revenue of $14.5 billion has been attributed to both organic growth (8% average annually from 1990-1996) and rate hikes over the past year. Strong demand, increased rates, more efficient use of fleets, and reduced financing costs due to the increased use of commercial paper and medium-term notes, have all contributed to increased profitability for rental car companies, which could propel industry growth of 4-5% through FY'99. In 1Q'98, Republic reported revenue of $775.7 for its rental car segment, a 21% increase over 1Q'97 revenue of $641.3 million. Operating income was $19.1 million, an increase over the $0.3 million loss reported in 1Q'97. Sequentially, revenue increased 0.9% while operating income decreased 1% over 4Q'97. We believe that the sequential change was partially attributable to seasonality as well as costs associated with integrating CarTemps.

o New CarTemps Brand to Compete with Enterprise. Republic recently announced that it has consolidated its insurance replacement rental business under the Car Temps brand name. CarTemps will provide insurance replacement cars to compete with Enterprise, the dominant leader in this estimated $3+ billion market. Republic also plans to add 108 CarTemps offices for a total of 420. These new offices will be located primarily in some of Republic's larger dealerships and AutoNation stores to provide greater convenience for customers.

o Fleet Optimization could Save 5-8% of Fleet Costs. Republic intends to expand its rental car division internationally, following its acquisition of EuroDollar Holdings Plc in the U.K. One area where Republic may be able to build a significant competitive advantage in the rental car industry is through optimization of fleets. In the United States, Alamo primarily serves leisure travel while National serves business. Since much of each brand's demand occurs at different times (weekdays versus weekends), Alamo and National could decrease the size of their fleets if they could coordinate bookings. Republic estimates that it can increase operating margins to 7% in FY'98, 8% in FY'99 and up to 9% by FY'00 through optimized fleet utilization and increased rental volume. This translates into a 5-8% saving in fleet costs, or roughly $1.0 billion. To support this initiative, Republic will spend $100 million for Alamo and $250 million for National on a comprehensive MIS system that should be completed for Alamo in FY'98 and National in FY'99. The first version of this MIS system tracks revenue and scheduling, relying on historical data to predict where and when cars will be needed as well as set price. Since the outcome is based on historical data, the project has an 18-month ramp-up period, which should give solid results to Alamo by the fall of 1998 and 2Q'99 for National. Chatfield Dean anticipates that once completed, all rental cars will be under joint ownership and will be treated as a single fleet. We expect a second version of this system will track additional information such as "turn-downs" or the number of times the Company can not fulfill a customer's needs. We believe that this second version should be available in about two years and could contribute to wider margins after FY'01.

o Brand Differentiation Key Initiative. With three brands designed to serve the three primary rental car markets (business, leisure and local), we believe that brand differentiation will be a key component to Republic's success in this industry. National, designed to serve business travelers, has launched an advertising campaign called "Let's Go!" to illustrate the level of service it provides. Alamo, in contrast has launched a campaign entitled "Don't Worry, Drive Happy" that targets the savings that it gives to leisure travelers. CarTemps, targeting the local and insurance replacement market, seeks to be a viable alternative to Enterprise, the current segment leader, and build relationships with insurance companies. We expect that Republic can gain market share through brand differentiation and a clear message of each brand's core competency, with the largest gains coming from CarTemps and the insurance replacement market.

MANAGEMENT

A concern that has been raised regarding Republic's management is that they have little automobile industry experience and that this lack of experience makes the team less capable of running a car company. In acquiring dealerships, however, Republic has retained many of the former owners and local management through long-term employment contracts and utilized their industry experience to run day-to-day operations. In our opinion, the fact that Huizenga and Republic's upper management have little industry experience is more than offset by the operational expertise of the dealership owners that Republic has retained. We have a high degree of confidence in Huizenga and his management team based on their background, commitment and strategy to date and believe that collectively they are a solid asset group for Republic.

- H. WAYNE HUIZENGA- Chairman of the Board (since August 1995), Chief Executive Officer (August1995-October 1996), Co-Chief Executive Officer (since October 1996). From April 1987 through September 1994, Huizenga served as the Chairman of the Board and Chief Executive Officer of Blockbuster Entertainment Corporation, during which time he helped build Blockbuster from a 19-store chain into the world's largest video and music retailer. In September 1994, Blockbuster merged into Viacom. In 1971, Huizenga co-founded Waste Management, Inc, which he helped build into the world's largest integrated environmental services company. Huizenga also owns the Miami Dolphins and Florida Marlins professional sports franchises, as well as Pro Player Stadium, in South Florida.

- STEVEN R. BERRARD- Co-Chief Executive Officer, President and Director of Republic (since October 1996), Chief Executive Officer of AutoNation Incorporated (since March 1996). From September 1994 through March 1996, Berrard served as President and Chief Executive Officer of Blockbuster Entertainment Group. Berrard joined Blockbuster in June 1987 as Senior Vice President, Treasurer and Chief Financial Officer and became a Director of Blockbuster in May 1989. He became Vice Chairman of the Board of Blockbuster in November 1989 and served as Blockbuster's President and Chief Operating Officer from January 1993 until September 1994. In addition, Berrard served as President and Chief Executive Officer and a director of Spelling Entertainment Group Inc., a television and film entertainment producer and distributor, from March 1993 through March 1996, and served as a director of Viacom from September 1994 until March 1996.

- MICHAEL S. KARSNER- Senior Vice President and Chief Financial Officer of Republic since October 1996. Prior to joining Republic, Karsner served from May 1996 until September 1996 as Senior Vice President and Chief Financial Officer of Dole Food Company, Inc, a multinational packaged food company, and from February 1995 until May 1996 as Vice President, Chief Financial Officer and Treasurer of Dole. From January 1990 through December 1993, Karsner served as Vice President and Treasurer of the Black & Decker Corporation, a multinational consumer products company.

SELECTED RISK FACTORS

An investment in RII shares has inherent risks. The Company operates in the highly competitive, cyclical automobile industry, and is attempting to redefine how business is practiced within that industry. Republic Industries is also growing rapidly across many geographical borders. There are no assurances that acquired assets will be assimilated efficiently, that managerial expertise will keep pace with the demands of this aggressive growth strategy, or that a significant downturn in the economy will not materially impact the Company's ability to generate profits. Further, there can be no assurance that the sale of Republic's solid waste interests will not have a negative impact on the Company's earnings, as the segment contributes significantly to the Company's top-line revenue. In addition, an investment in RII shares may involve the following risks:

o Cyclical Nature of Automobile Industry. With the United States economy currently in a protracted boom, the automobile industry has enjoyed sustained growth. However, this industry is cyclical in nature and can be expected to falter if the economy should experience recession. We believe that, if this were to occur, it could negatively impact Republic's revenue in the near-term. Considering Republic's large market share, larger than average profit margins on automobile sales, and diversified business, we believe that Republic is in a better position than other dealers to weather a recession. In the long-term, a short and mild downturn in automobile sales might benefit Republic, as it could cause some of Republic's smaller competitors to leave the industry altogether or become acquisition targets for Republic.

o Competition. Even though Republic is currently the largest auto dealer in the country, there are other companies attempting to do the same or similar consolidation, including the CarMax Group, Ford Motor Co., Fidelity Holdings, Sonic Automotive Inc., Sunbelt Automotive Group Inc., and Lithia Motors Inc. In May, Ford Motor Co. announced that it is consolidating 12 Salt Lake City dealerships into a handful of superstores as part of a drive to cut U.S. distribution costs. The dealerships will be moved into a new company in which Ford will be a minority partner. Ford intends to create similar partnerships in other U.S. cities. Fidelity Holdings, with current annual sales of approximately $150 million is currently planning to acquire dealerships in the New York metro area and is also currently selling vehicles using the Internet. Sunbelt Automotive Group Inc. is looking to consolidate car dealerships in the Southeast, and on May 1st filed to sell 5.5 million shares in an initial public offering. Sunbelt expects to raise about $53 million in the IPO. Sonic Automotive Inc. went public in November of 1997 and also focuses on Southeast and Southwest dealerships. Lithia Motors Inc. is a public company that currently owns 22 dealerships in California, Oregon, and Washington.

o Possible Dilution. In order to finance its acquisitions, the Company is offering the sellers a combination of cash and stock. To the extent the company issues new common stock, there will be dilution to current shareholders. In addition, any sales of these shares after the acquisitions could adversely affect Republic's stock price.

VALUATION AND INVESTMENT CONCLUSION

Republic expects high growth in both revenues and earnings over the next few years. The Company projects a 75% revenue gain to $18 billion in 1998 from $10.3 billion in 1997. The Company expects revenues to exceed $60 billion in three to five years. With an estimated after tax profit margin of 3.5%, this translates into $2.1 billion in net income after tax.

With shares of Republic trading in the mid 20's, we believe that an investment in Republic is a compelling opportunity. We believe that Republic has reached a critical mass in certain markets that should allow it to build a competitive advantage through efficiency initiatives. We estimate that Republic can earn $1.23 in FY'98 and $1.53 in FY'99. In our opinion, the stock could trade at an expanded P/E of 40X by the end of FY'98, indicating a 12-month price target of $49.00. With an expected EPS growth rate of 30% or more over the next few years, we calculate an 18-month price target of $55.00. In our opinion, one factor that has depressed the price of RII's shares has been the sale of stock by dealers who received stock for their dealerships. We believe, however, that the majority of those who wanted to sell already have, and that Republic's increased use of cash for acquisitions will have a positive effect on the stock price going forward. Considering the current trading range of RII shares, the potential upside and based, in part, on the following investment considerations, we rate an investment in RII shares with a STRONG BUY for the portfolios of long-term growth oriented investors.

All investments involve risk. The risk inherent in a particular security may not be appropriate for you. Please consult with your Chatfield Dean Account Executive to obtain assistance in selecting appropriate investments.

This report is published for informational purposes only and is not to be construed as an offer or the solicitation of an offer to sell or buy the security. The information contained herein is based on sources that we believe to be reliable, but we make no guarantee or representation about the completeness of the statements or summaries of available data contained herein.

This information is provided as of the date of this report, is subject to change without notice. Furthermore, the information in this report should be considered outdated 90 days after publication, or such earlier date as circumstances may require, and should not be relied upon thereafter to develop investment strategies. Shares of Republic Industries may not be eligible for purchase or sale in a particular state. Officers, Directors and employees of Chatfield Dean & Co., Inc. or their families may have a position in the securities discussed herein as principal or agent, which positions may be increased or decreased in the future. Officers, directors or employees of Chatfield Dean & Co. may also hold a position in this security. Chatfield Dean & Co. does not make a market in the securities of Republic Industries. Additional information may be obtained at http:\\www.chatfield.com.

CONTACT: Chatfield Dean & Co.

Cheryl Bostater, AM, Senior Analyst

Sanford D. Greenberg, CEO

[phone]