Hometown Auto Retailers Reports 2002 Annual Results
WATERTOWN, Conn.--March 27, 2003--Hometown Auto Retailers Inc. (OTC BB: HCAR) today announced audited financial results for the year ended Dec. 31, 2002.Hometown reported revenues of $269.7 million in 2002 versus revenues of $275.8 million in 2001, a decrease of 2.2 percent. Gross profit was $38.7 million for 2002, versus $39.8 million in 2001 a decrease of 2.8 percent.
As previously announced by the company, Hometown has adopted SFAS 142 effective Jan. 1, 2002, an accounting rule issued by the Financial Accounting Standards Board, which (among other things) eliminates the need to amortize goodwill and requires companies to use a fair-value approach to determine whether there is an impairment of existing and future goodwill.
Since adopting SFAS 142, Hometown has ceased recording goodwill amortization as of Jan. 1, 2002. During 2002, Hometown completed its goodwill impairment testing which resulted in Hometown recording a one-time, non-cash charge of approximately $23.7 million to write-off the carrying value of its goodwill. This charge is non-operational in nature and is reflected as a cumulative effect of the accounting change in the accompanying statement of operations.
As a result, Hometown is reporting a net loss of $(22.9) million and basic and diluted loss per share of $(3.20) for 2002. Before the cumulative effect of the accounting change, Hometown is reporting net income of $776,000 and basic and diluted income per share of $0.10 for 2002 versus a net loss of $(2.1) million and basic and diluted loss per share of $(0.32) for the 2001 period.
Had SFAS 142 been adopted on Jan. 1, 2001, Hometown's net loss for 2001 would have been $(1.6) million with basic and diluted loss per share of $(0.24).
"We are pleased that outside of our one-time write-off of goodwill we have shown a profit for 2002 versus 2001," said Corey Shaker, president and chief executive officer of Hometown Auto Retailers. "In addition, this year saw the completion of our new facility in Framingham, Mass. This state-of-the-art facility will provide the highest quality sales and service experiences for our Lincoln Mercury customers. This new facility sits on 4 acres fronting Route 9, a busy thoroughfare in Framingham. With increased service bays and a used car display, we anticipate this store will also help increase used car, service and parts sales with corresponding increases in margins."
As previously reported, the 2001 period reflects the write-off of Hometown's investment in CarDay Inc., which had the effect of reducing net income by $2.1 million and reducing earnings per share, fully diluted by $0.32. Excluding the charge, and had SFAS 142 been adopted on January 1, 2001, net income would have been $532,000 or $0.08 per share fully diluted for 2001. The charge did not affect cash, cash flow from operations, or liquidity and capital resources.
Sales of new cars increased $5.9 million or 3.7 percent to $164.7 million for 2002 compared to $158.8 million in restated new car sales in 2001. Used car sales in 2002 decreased by $11.4 million or 13.6 percent to $72.5 million compared to $83.9 million in used car sales in 2001. Parts and service revenues decreased $1.1 million or 4.3 percent to $24.3 million for 2002 compared from $25.4 million for parts and service revenues in 2001. Other revenues (net) increased $638,000 or 8.4 percent to $8.3 million in 2002 compared to $7.6 million in stated other revenues (net) in 2001.
Hometown sold 6,432 new vehicles in 2002, an increase of 202 units versus the 6,230 new vehicles in 2001. Hometown sold 4,128 used vehicles at retail in 2002, a decrease of 746 units versus the 4,874 used vehicles at retail by Hometown in 2001. Hometown had 13,417 total vehicles sold in 2002 (including new, used vehicles at retail and used vehicles at wholesale) a decrease of 792 units versus the 14,209 total vehicles sold by Hometown in 2001.
Revenues for the quarter ended Dec. 31, 2002, were $57.3 million compared to revenues of $69.1 million for the same period in 2001. Gross profit for the quarter decreased to $8.5 million from gross profit of $9.2 million for the same period in 2001. Net loss for the quarter was $0.3 million or $0.05 per diluted share compared to the net loss of $1.2 million or $0.17 per diluted share for the same period in 2001.
About Hometown
Hometown Auto Retailers (www.htauto.com) sells new and used cars and light trucks, provides maintenance and repair services, sells replacement parts, and provides related financing, insurance and service contracts through 10 franchised dealerships located in New Jersey, New York, Connecticut, Massachusetts and Vermont. The company's dealerships offer 10 American and Asian automotive brands, including Chevrolet, Chrysler, Dodge, Ford, Jeep, Lincoln, Mazda, Mercury, Oldsmobile and Toyota. Hometown is also active in two "niche" segments of the automotive market: the sale of Lincoln Town Cars and limousines to livery car and livery fleet operators and the maintenance and repair of cars and trucks at a Ford and Lincoln Mercury factory authorized free-standing service center.
This release contains "forward-looking statements" based on current expectations but involving known and unknown risks and uncertainties. Actual results or achievements may be materially different from those expressed or implied. The company's plans and objectives are based on assumptions involving judgments with respect to future economic, competitive and market conditions, its ability to consummate, and the timing of; acquisitions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the company. Therefore, there can be no assurance that any forward-looking statement will prove to be accurate.
HOMETOWN AUTO RETAILERS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
For the Years Ended December 31,
--------------------------------
2002 2001 2000
---------- ---------- ----------
Revenues
New vehicle sales $164,659 $158,825 $172,759
Used vehicle sales 72,482 83,903 75,623
Parts and service sales 24,330 25,402 23,869
Other, net 8,268 7,630 7,131
---------- ---------- ----------
Total revenues 269,739 275,760 279,382
Cost of sales
New vehicle 154,225 148,271 161,752
Used vehicle 65,821 76,189 68,981
Parts and service 11,026 11,485 10,768
---------- ---------- ----------
Total Cost of sales 231,072 235,945 241,501
---------- ---------- ----------
Gross profit 38,667 39,815 37,881
Amortization of goodwill - 704 661
Selling, general and administrative
expenses 33,978 35,114 37,946
---------- ---------- ----------
Income (loss) from operations 4,689 3,997 (726)
Interest income 43 90 1
Interest (expense) (3,379) (4,225) (5,069)
Other income 52 254 -
Other (expense) (158) (8) (23)
Valuation adjustment for CarDay.com - (3,258) -
---------- ---------- ----------
Income (loss) before taxes and
cumulative effect of
accounting change 1,247 (3,150) (5,817)
Provision (benefit) for income
taxes 471 (1,014) (2,017)
---------- ---------- ----------
Income (loss) before and
cumulative effect of
accounting change 776 (2,136) (3,800)
Cumulative effect of accounting
change (23,708) - -
---------- ---------- ----------
Net loss $(22,932) $(2,136) $(3,800)
======== ======= =======
Earnings (loss) per share, basic
Before cumulative effect of
accounting change $0.10 $(0.32) $(0.63)
Cumulative effect of accounting
change (3.30) - -
---------- ---------- ----------
Earnings (loss) per share, basic $(3.20) $(0.32) $(0.63)
======= ======= ======
Earnings (loss) per share, diluted
Before cumulative effect of
accounting change $0.10 $(0.32) $(0.63)
Cumulative effect of accounting
change (3.30) - -
---------- ---------- ----------
Earnings (loss) per share, diluted $(3.20) $(0.32) $(0.63)
======= ======= ======
Weighted average shares outstanding,
basic 7,175,105 6,592,436 5,995,996
Weighted average shares outstanding,
diluted 7,175,105 6,592,436 5,995,996
HOMETOWN AUTO RETAILERS INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
December 31,
----------------
ASSETS 2002 2001
Current Assets: ----------------
Cash and cash equivalents $3,624 $4,446
Accounts receivable, net 4,883 5,656
Inventories, net 39,169 31,887
Prepaid expenses and other current assets 510 344
Deferred income taxes and taxes receivable 1,245 1,681
----------------
Total current assets 49,431 44,014
Property and equipment, net 12,882 11,889
Goodwill, net - 23,708
Other assets 1,503 2,231
----------------
Total assets $63,816 $81,842
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Floor plan notes payable $38,522 $32,463
Accounts payable and accrued expenses 5,072 6,160
Current maturities of long-term debt and capital
lease obligations 1,164 886
Deferred revenue 588 476
----------------
Total current liabilities 45,346 39,985
Long-term debt and capital lease obligations 13,059 12,885
Long-term deferred income taxes 118 721
Other long-term liabilities and deferred revenue 743 799
----------------
Total liabilities 59,266 54,390
Stockholders' Equity:
Preferred stock, $.001 par value, 2,000,000
shares authorized, no shares issued and
outstanding - -
Common stock, Class A, $.001 par value,
12,000,000 shares authorized, 3,563,605
and 3,561,605 issued and outstanding,
respectively 3 3
Common stock, Class B, $.001 par value, 3,760,000
shares authorized, 3,611,500 and 3,613,500
issued and outstanding, respectively 4 4
Additional paid-in capital 29,760 29,730
Accumulated deficit (25,217) (2,285)
----------------
Total stockholders' equity 4,550 27,452
----------------
Total liabilities and stockholders' equity $63,816 $81,842
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