Hometown Auto Retailers Announces First Quarter 2003 Results
WATERTOWN, Conn.--May 15, 2003--Hometown Auto Retailers, Inc. (OTCBB:HCAR) today announced its financial results for the quarter ended March 31, 2003.Hometown reported revenues of $60.3 million in the first quarter of 2003 versus revenues of $65.1 million for the same period in 2002, a decrease of $4.8 million or 7.4 percent. Gross profits for the first quarter of 2003 decreased $647,000 or 6.7 percent to $9.0 million versus gross profits of $9.6 million in same period in 2002.
Net loss for the first quarter of 2003 was $(121,000) generating basic and diluted loss per share of $(0.02) versus a restated net loss of $(23.5) million and a restated basic and diluted loss per share of $(3.27) for the same period in 2002.
As previously announced by the company, Hometown has adopted SFAS 142 effective January 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. During the third quarter of 2002, Hometown completed its goodwill impairment testing, which resulted in a one-time, non-cash charge of approximately $23.7 million recorded by the company 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 and as a restatement of results in the accompanying statement of operations for the first quarter of 2002.
Before the cumulative effect of the accounting change, Hometown is reporting net income of $235,000 and basic and diluted income per share of $0.03 for 2002.
Sales of new cars decreased $725,000 or 2.0 percent to $35.9 million for the first quarter of 2003 versus $36.7 million in the same period in 2002. Used vehicle sales in the first quarter of 2003 decreased $3.7 million or 18.4 percent to $16.4 million for the first quarter of 2003 versus $20.1 million in the same period in 2002. Parts and service revenues for the first quarter of 2003 increased 1.9 percent or $114,000 to $6.2 million versus $6.1 million the same period in 2002. Other revenues (net) decreased $442,000 or 20.0 percent to $1.8 million in the first quarter of 2003 versus $2.2 million in the same period of 2002.
Hometown sold 1,368 new vehicles in the first quarter of 2003, a decrease of 60 units versus the 1,428 new vehicles sold in the same period in 2002. Hometown sold 936 used vehicles at retail in the first quarter of 2003, a decrease of 164 units versus the 1,100 used vehicles sold at retail in the same period in 2002. Hometown sold 2,916 total vehicles in the first quarter of 2003, including new, used vehicles at retail, and used vehicles at wholesale, a decrease of 309 units versus the 3,225 total vehicles sold by Hometown in the same period in 2002.
"Like many other companies, Hometown was affected during the first quarter by the extreme weather conditions here in the Northeast and the pending war in the Middle East," said Corey Shaker, president and chief executive officer of Hometown Auto. "With the ending of most of the conflict in Iraq and the summer months ahead, we remain cautiously optimistic for the remaining months of 2003."
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.
HOMETOWN AUTO RETAILERS, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
For the Three Months
Ended March 31,
---------------------
2003 2002
(Restated)
---------- ----------
Revenues
New vehicle sales $35,930 $36,655
Used vehicle sales 16,394 20,114
Parts and service sales 6,216 6,102
Other, net 1,780 2,222
---------- ----------
Total revenues 60,320 65,093
Cost of sales
New vehicle 33,620 34,362
Used vehicle 14,818 18,332
Parts and service 2,922 2,792
---------- ----------
Total cost of sales 51,360 55,486
---------- ----------
Gross profit 8,960 9,607
Selling, general and administrative expenses 8,386 8,413
---------- ----------
Income from operations 574 1,194
Interest income 7 17
Interest (expense) (778) (810)
Other income 13 6
Other (expense) (3) (2)
---------- ----------
Income (loss) before taxes and cumulative
effect of accounting change (187) 405
Provision (benefit) for income taxes (66) 170
---------- ----------
Income (loss) before cumulative effect of
accounting change (121) 235
Cumulative effect of accounting change - (23,708)
---------- ----------
Net (loss) $(121) $(23,473)
========== ==========
Earnings (loss) per share, basic
Before cumulative effect of accounting change $(0.02) $0.03
Cumulative effect of accounting change - (3.30)
---------- ----------
Earnings (loss) per share, basic $(0.02) $(3.27)
========== ==========
Earnings (loss) per share, diluted
Before cumulative effect of accounting change $(0.02) $0.03
Cumulative effect of accounting change - (3.30)
---------- ----------
Earnings (loss) per share, diluted $(0.02) $(3.27)
========== ==========
Weighted average shares outstanding, basic 7,175,105 7,175,105
Weighted average shares outstanding, diluted 7,175,105 7,175,105
HOMETOWN AUTO RETAILERS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
March 31, December 31,
ASSETS 2003 2002
(Unaudited)
------------- ------------
Current Assets:
Cash and cash equivalents $5,593 $3,624
Accounts receivable, net 5,743 4,883
Inventories, net 38,721 39,169
Prepaid expenses and other current assets 567 510
Deferred income taxes and taxes receivable 1,283 1,245
------------- ------------
Total current assets 51,907 49,431
Property and equipment, net 12,812 12,882
Other assets 1,529 1,503
------------- ------------
Total assets $66,248 $63,816
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Floor plan notes payable $40,767 $38,522
Accounts payable and accrued expenses 5,742 5,072
Current maturities of long-term debt and
capital lease obligations 1,107 1,164
Deferred revenue 584 588
------------- ------------
Total current liabilities 48,200 45,346
Long-term debt and capital lease obligations 12,783 13,059
Long-term deferred income taxes 108 118
Long-term deferred revenue 728 743
------------- ------------
Total liabilities 61,819 59,266
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,
3,564,605 and 3,563,605 shares issued
and Outstanding 3 3
Common stock, Class B, $.001 par value,
3,760,000 shares authorized,
3,610,500 and 3,611,500 shares issued
and Outstanding 4 4
Additional paid-in capital 29,760 29,760
Accumulated deficit (25,338) (25,217)
------------- ------------
Total stockholders' equity 4,429 4,550
------------- ------------
Total liabilities and stockholders'
equity $66,248 $63,816
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