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Lithia Motors 8-K 2005

Documents found in this filing:

  1. 8-K
  2. Graphic
  3. Graphic
-- Converted by SECPublisher 3.1.0.1, created by BCL Technologies Inc., for SEC Filing

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):         April 26, 2005

Lithia Motors, Inc.
(Exact Name of Registrant as specified in its charter)

Oregon    0-21789    93 - 0572810 
(State or other jurisdiction of    (Commission File Number)    (IRS Employer Identification 
incorporation)        No.) 
 

360 E. Jackson Street
Medford, Oregon 97501
(Address of Principal Executive Office)

Registrant's telephone number including area code 541-776-6868

Not applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously 

satisfy the filing obligation of the registrant under any of the following provisions: 

 
[ ]  

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 

   

230.425) 

[ ]  

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a- 

   

12) 

[ ]  

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange 

   

Act (17 CFR 240.14d-2(b)) 

[ ]  

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange 

   

Act (17 CFR 240.13e-4(c)) 



Item 2.02     Results of Operations and Financial Condition.

         On April 26, 2005, Lithia Motors, Inc. issued a press release announcing financial results the first quarter 2005. A copy of the press release is attached as Exhibit 99.1.

Item 8.01     Other Events.

        On April 26, 2005, Lithia Motors, Inc. issued a press release announcing a cash dividend of $0.08 per share for the first quarter of 2005. Shareholders of record as of May 6, 2005 will receive the dividend that will be payable May 20, 2005. A copy of the press release is attached as Exhibit 99.2.

Item 9.01     Financial Statements and Exhibits.

  (a)    Not applicable. 
  (b)    Not applicable. 
  (c)    Exhibits. 
      99.1 Press Release 
      99.2 Press Release         

SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

            LITHIA MOTORS, INC. 
            (Registrant) 
 
 
Date:    April 28, 2005    By:    /s/ Kenneth E. Roberts 
            Kenneth E. Roberts 
            Assistant Secretary 


EXHIBIT 99.1

LITHIA MOTORS Q1 EARNINGS PER SHARE RISE 30% TO A RECORD 52 CENTS PER SHARE

Lithia Motors' First-quarter 2005 Highlights for Continuing Operations:

Operating Profits:    +36% 
Net Income:    +31% 
Adjusted earnings per Share:    +30% 

MEDFORD, OREGON, APRIL 26, 2005 (5:00 a.m. PDT) - Lithia Motors, Inc. (NYSE: LAD) today announced that first quarter 2005 net income from continuing operations increased 31% to $10.0 million from $7.7 million in the first quarter of 2004. Earnings per share from continuing operations, excluding the dilutive effect of the change in accounting for convertible notes, increased 30% to $0.52 as compared to $0.40 in the first quarter of 2004. Including the effect of the accounting change for convertible notes and discontinued operations, earnings per share were $0.48 per fully diluted share.

First quarter 2005 sales increased 6% to $670.8 million as compared to $632.8 million in the same period last year. New vehicle sales increased 4%, used vehicle sales increased 7%, parts/service sales increased 11%, and finance/insurance sales increased 10%.

Sid DeBoer, Lithia's Chairman and CEO, commented, "In the first quarter, we saw sales growth and margin improvements across all business lines. Our operating margin improved by 80 basis points to a record level of 3.6% for the quarter."

The total gross profit margin for the quarter was 17.8%, an improvement of 110 basis points as compared to the same period last year. Sales general & administrative (SG&A) expense, as a percentage of gross profit, improved by 350 basis points as compared to last year.

"The benefits of Lithia's operating model are readily apparent. This is the eighth consecutive quarter of total gross margin improvement for the company. In 2004, our SG&A expense as a percentage of total gross profit improved by 160 basis points year-over-year, and we are pleased to see this positive trend continuing in the first quarter of 2005," concluded Mr. DeBoer.

Jeffrey B. DeBoer, Senior Vice President and CFO added, "In the first quarter, we completed three acquisitions; a Chrysler and Jeep franchise in Concord, California which was added to our Dodge store in that market, a Chrysler franchise in Eugene, Oregon which was added to our Dodge store in that market and a Chrysler Dodge Jeep store in Omaha, Nebraska. Last week we completed the acquisition of Lithia Chrysler Dodge in Eureka, California. These stores and franchises represent approximately $178 million in annualized revenues."


"Our guidance for the second quarter and full-year 2005 is included in the table below. It includes the effect of the recent accounting pronouncements for convertible notes. Previous full-year 2005 guidance included the effect of accounting pronouncements for stock options that was to go into effect in the third quarter of the year and amounted to a five-cent decrease in annual earnings per share. A recent rule adopted by the SEC has delayed the required implementation of FAS 123(R) until the first quarter of 2006. The Company is not intending to implement FAS 123(R) early. Guidance for 2005 has been updated to reflect this delay," concluded Jeffrey B. DeBoer.

    Guidance    Actual    Guidance    Actual 
EPS excluding new accounting    2Q 2005    2Q 2004    2005    2004 

   pronouncements: 

  $0.59 - $0.61    $0.57    $2.41 - $2.49    $2.22 
Effect of Convertible Notes    ($0.04)    ($0.03)    ($0.16)    ($0.10) 
Effect of FAS 123(R)    N/A    N/A    N/A    N/A 
EPS - Reportable    $0.55 - $0.57    $0.54    $2.25 - $2.33    $2.12 

In October of 2004, the Financial Accounting Standards Board's Emerging Issues Task Force (EITF) ratified Issue No. 04-8, requiring the company to include in its share count in determining diluted earnings per share, the shares potentially issuable to the holders of its $85,000,000 in principle amount 2.875% Senior Subordinated Notes Due 2014, even though the holder of such notes cannot convert the notes into common stock except under certain limited circumstances and then only at a conversion price of approximately $37.69 per share. Previously, the shares issuable would only have been included in the calculation of diluted EPS if the holders were then entitled to convert the notes. For purposes of calculating reported diluted EPS for the first quarter ended 2005, Lithia is required to increase its share count by the amount contingently issuable to the noteholders. This resulted in an additional 2.255 million shares for the first quarter of 2005. Adoption of the accounting statement does not affect the cash flow of the company.

Also in December 2004, the Financial Accounting Standards Board ("FASB") issued Financial Accounting Standards Statement 123 (revised 2004) ("FAS 123 (R)") that will require that the value of all equity-based compensation arrangements, including stock options and employee stock purchase plans, be accounted for using a "fair value" method. Previously, the Company had accounted for such arrangements under the "intrinsic method" permitted by APB 25. Previously, FASB had determined that the new rules, absent any change, would be effective for the Company commencing with the third quarter of 2005. A recent modification by the SEC has determined that these rules will not be effective until the first quarter of 2006. Company guidance for 2005 has been updated to account for this change. Adoption of this accounting change will not affect the cash flow of the Company.

Conference Call Information

Lithia Motors will be providing more detailed information on the results for the first quarter 2005 in its conference call scheduled for 11 a.m. PT today. The call can be accessed live by calling 973-582-2700. To listen to a live webcast or hear a replay, log-on to: www.lithia.com - go to Investor Relations - and click on the Live Webcast icon.


About Lithia

Lithia Motors, Inc. is a Fortune 1000 and Russell 2000 Company that sells 25 brands of new vehicles and operates 88 stores and 174 franchises in 13 states in the Western United States and over the Internet through "Lithia.com-America's Car & Truck Store." Lithia also sells used vehicles; arranges finance, warranty, and credit insurance contracts; and provides vehicle parts, maintenance, and repair services at all of its locations. Lithia retailed 98,331 new and used vehicles and had $2.7 billion in total revenue in 2004.

Forward Looking Statements

This press release includes forward looking statements within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995, which management believes are a benefit to shareholders. These statements are necessarily subject to risk and uncertainty and actual results could differ materially due to certain risk factors, including without limitation economic conditions, acquisition risk factors and others set forth from time to time in the company's filings with the SEC. Specific risks in this press release include the benefits or strength of Lithia's operating model, anticipated revenues of recently acquired stores and projected second quarter and full-year 2005 earnings per share guidance, and potential changes in accounting standards.

Additional Information

For additional information on Lithia Motors, contact the Investor Relations Department: (541) 776-6591 or log-on to: www.lithia.com - go to Investor Relations


LITHIA MOTORS, INC.                 
(In Thousands except per share and unit data)             
 
Unaudited    Three Months Ended         
   

  March 31, 

       
 

$Increase

% Increase 

    2005    2004    (Decrease)    (Decrease) 
New Vehicle Sales    $365,647    $351,405    $14,242    4.1% 
Used Vehicle Sales    200,534    187,856    12,678    6.7 
Finance & Insurance    25,633    23,227    2,406    10.4 
Service, Body & Parts Sales    76,027    68,771    7,256    10.6 
Fleet & Other Revenues    2,964    1,531    1,433    93.6 
Total Revenues    670,805    632,790    38,015    6.0 
Cost of Sales    551,533    527,302    24,231    4.6 
Gross Profit    119,272    105,488    13,784    13.1 
SG&A Expense    91,681    84,853    6,828    8.0 
Depreciation/Amortization    3,441    2,900    541    18.7 
Income from Operations    24,150    17,735    6,415    36.2 
Flooring Interest Expense    (5,248)    (3,582)    1,666    46.5 
Other Interest Expense    (2,809)    (1,734)    1,075    62.0 
Other Expense, net    317    221    96    43.4 
Income from continuing operations                 

   before income taxes 

  16,410    12,640    3,770    29.8 
Income Tax Expense    (6,350)    (4,930)    1,420    28.8 
Income Tax Rate   

           38.7% 

 

             39.0% 

       
Net Income from continuing ops.    10,060    7,710    2,350    30.5 
 
Income (Loss) from discontinued                 
 operations, net of income taxes    (70)    (231)    161    (69.7) 
 
Net Income   
$9,990 
  $7,479    2,511    33.6% 
 
Diluted Net income per share                 
including effect of convertibles notes:             
Continuing Operations    $0.52    $0.40    $0.12    30.0% 
Effects of convertible senior sub. notes    (0.03)    N/A         
Discontinued Operations    (0.01)    (0.01)         
Net Income per share   
$0.48 
 
$0.39 
 
0.09 
  23.1% 
       
Diluted Shares Outstanding    21,704    19,111    2,593    13.6% 
 
Diluted Net income per share                 
before effect of convertibles notes:                 
Continuing Operations    $0.52    $0.40    $0.12    30.0% 
Discontinued Operations    (0.01)    (0.01)         
Net Income per share   
$0.51 
 
$0.39 
 
0.12 
  30.8% 
Diluted Shares Outstanding    19,449    19,111    338    1.8% 
 
Unit Sales:    2005    2004         
New Vehicle    13,065    12,756    309    2.4% 
Used - Retail Vehicle    10,965    10,658    307    2.9 
Used - Wholesale    5,691    6,007    (316)                       (5.3) 
Total Units Sold    29,721    29,421    300    1.0 


Average Selling Price:    2005        2004         
New Vehicle    $27,987    $27,548    $439    1.6% 
Used - Retail Vehicle    15,205        14,636    569    3.9 
Used - Wholesale    5,942        5,305    637    12.0 
 
Key Financial Data:                     
Gross Profit Margin    17.8%        16.7%         
SG&A as a % of Gross Profit    76.9%        80.4%         
Operating Margin    3.6%        2.8%         
Pre-Tax Margin    2.4%        2.0%         
 
Gross Margin/Profit Data    Three Months Ended         
   

  March 31, 

       
    2005        2004         
New Vehicle Retail    8.1%        7.5%         
Used Vehicle Retail    15.2%        14.2%         
Used Vehicle Wholesale    4.4%        3.0%         
Service, Body & Parts    48.5%        47.4%         
New Retail Gross Profit/Unit    $2,268        $2,067         
Used Retail Gross Profit/Unit    $2,319        $2,082         
Used Wholesale Gross Profit/Unit    $259        $161         
Finance & Insurance/Retail Unit    $1,065        $985         
 
Same Store Data    Three Months Ended         
   

  March 31, 

       
    2005        2004         
New Vehicle Retail Sales    -6.4%        1.4%         
Used Vehicle Sales (includes Wholesale) -1.9%        -1.4%         
Total Vehicle Sales (excludes fleet)    -4.8%        0.4%         
Finance & Insurance Sales    -1.8%        2.7%         
Service, Body & Parts Sales    -0.1%        8.0%         
Total Sales (Excluding Fleet)    -4.2%        1.2%         
Total Gross Profit (Excluding Fleet)    1.1%        6.8%         
 
Balance Sheet Highlights (Dollars in Thousands)             
 
    March 31, 2005    December 31, 2004 
    Unaudited             
Cash & Cash Equivalents    $19,562        $29,264     
   Trade Receivables*    84,615        84,489     
   Inventory    563,995        536,653     
   Assets Held for Sale    15,260        135     
   Other Current Assets    14,072        12,334     
Total Current Assets    697,504        662,875     
 
Real Estate, net    233,113        226,356     
Equipment & Leases, net    75,095        73,275     
Goodwill, net    249,905        244,532     
Other Assets    49,950        49,866     
Total Assets   
$1,305,567 
     
$1,256,904 
   
 
   Floorplan Notes Payable    $467,929        $450,859     
   Liabilities Held for Sale        3,719        -     
   Other Current Liabilities    86,122        85,839     
Total Current Liabilities    557,770        536,698     


Used Vehicle Flooring    -    - 
Real Estate Debt    147,677    139,702 
Other Long-Term Debt    131,820    127,608 
Other Liabilities    48,912    46,950 
 
Total Liabilities    886,179    850,958 
 
Shareholders' Equity    419,388    405,946 
 
         Total Liabilities &         
 
 
         Shareholders' Equity   
$1,305,567 
 
$1,256,904 
 
* Includes contracts-in-transit of $42,683 and $42,913 for 2005 and 2004.   
 
Other Balance Sheet Data (Dollars in Thousands)     
 
Current Ratio    1.3x    1.2x 
LT Debt/Total Cap.         
 (Excludes Used -Vehicle Flooring         
and Real Estate)    24%    24% 
Working Capital    $139,734    $126,177 
Book Value per Basic Share    $22.00    $21.79 


EXHIBIT 99.2

Lithia Motors Inc. Declares Quarterly Dividend of $0.08 Per Share for the First Quarter of 2005

     MEDFORD, Ore.--(BUSINESS WIRE)--April 26, 2005--Lithia Motors, Inc. (NYSE:LAD) today announced that the Board of Directors has approved a dividend of $0.08 per share for the first quarter of 2005. Shareholders of record as of May 6, 2005 will receive the dividend that will be payable May 20, 2005.

  About Lithia

     Lithia Motors, Inc. is a Fortune 1000 and Russell 2000 Company that sells 25 brands of new vehicles and operates 88 stores and 174 franchises in 13 states in the Western United States and over the Internet through "Lithia.com-America's Car & Truck Store." Lithia also sells used vehicles; arranges finance, warranty, and credit insurance contracts; and provides vehicle parts, maintenance, and repair services at all of its locations. Lithia retailed 98,331 new and used vehicles and had $2.7 billion in total revenue in 2004.

        # # #

CONTACT: Lithia Motors
                 Investor Relations, 541-776-6591
                 www.lithia.com - go to Investor Relations



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