PRESS RELEASE
Lithia Motors Announces Financial Results
4 March 1997
Lithia Motors, Inc. Reports Fourth Quarter and Year End Results
MEDFORD, Ore., March 4 -- LITHIA MOTORS, INC.
today announced that revenues and earnings(1) (on the FIFO Method, before
minority interest but after pro forma income taxes) for the fourth quarter
ended December 31, 1996 increased 31 percent and 27 percent, respectively,
compared to the same quarter of 1995. For the year ended December 31, 1996,
revenues and earnings increased 25 percent and 13 percent, respectively(1).
Revenues for the quarter ended December 31, 1996 increased $9.0 million to
$37.3 million from $28.3 million. Earnings for the quarter(1) increased
$120,000 to $560,000, or $0.11 per share on 5.2 million shares, from $440,000,
or $0.09 per share on 4.9 million shares, for the same quarter of 1995.
Revenues for the year ended December 31, 1996 increased $28.6 million to
$142.8 million from $114.2 million for the year ended December 31, 1995.
Earnings for the year(1) increased $293,000 to $2.6 million, or $0.52 per
share on 5.0 million shares, compared to $2.3 million, or $0.47 per share on
4.9 million shares, for 1995.
Chairman and Chief Executive Officer Sid DeBoer stated, "significant
growth continues to be realized in our regional markets. These numbers
reflect same store growth at almost every store. The two acquisitions
completed in 1996 were closed very late in the year, and have contributed very
little to 1996 growth." He also stated that "long-term growth for Lithia will
be accomplished primarily through the acquisition of quality stores."
The increase in revenue for the quarter and the year resulted primarily
from increased new and used vehicle unit sales as a result of increased levels
of promotional activity for certain popular brands, increased availability of
late model used vehicles (both retail and wholesale) which were in high demand
and, although to a lesser extent, from increased average per unit sales prices
on both new and used vehicles. Sales in the third and fourth quarters of 1996
were also slightly higher due to a hail storm that mildly damaged vehicles in
the Company's lots in and around Medford, Oregon. Such vehicles were sold at
reduced prices, increasing unit sales, but decreasing the gross margin
percentage, which was made up with insurance proceeds.
The Company sold a total of 3,272 new vehicles and 6,508 used vehicles
during 1996 compared to 2,715 and 5,144 respectively during 1995. This
represents increases of 21 percent and 27 percent, respectively, for 1996.
Mr. DeBoer stated that "demand for the popular makes and models of new
vehicles we offer continues to be strong while our commitment to the used
vehicle side of the business has also been very rewarding."
The Company achieved gross profit margins(1) (using the FIFO Method) of
17.0 percent and 17.2 percent for the quarter and year ended December 31,
1996, respectively, compared to 18.3 percent and 18.1 percent, respectively,
for the comparable periods of 1995. The decrease in gross profit margins is
primarily due to a reduction in gross profit margins on used vehicle sales,
mostly caused by a shift in the overall mix of vehicles sold, with an increase
in wholesale vehicles, which typically provide profit margins of only 2
percent to 3 percent. The Company's gross profit margins continue to exceed
industry standards and remain in line with historical gross profit margins.
The Company continues to pursue acquisition opportunities in order to take
advantage of the consolidation taking place within the industry. Currently,
the Company has signed agreements in principal with Magnussen Dodge, a Dodge
and Isuzu dealer in Concord, California, Sam Linder, Inc., a Honda dealership
in Salinas, California and Magnussen - Barbee Ford, Lincoln Mercury in Napa,
California.
Lithia Motors, Inc. is one of the larger retailers of new and used
vehicles in the western United States, offering 16 domestic and imported makes
of new automobiles and light trucks at locations in California and Oregon.
(1) The Company currently utilizes and reports on the LIFO (Last In -
First Out) method of accounting. The industry standard is to utilize the
specific identification method of accounting for vehicles and the FIFO (First
In - First Out) method of accounting for parts (collectively referred to as
the "FIFO Method"). For comparability purposes, all discussions contained in
this press release regarding gross margins are presented using the FIFO Method
and all discussions regarding earnings amounts are presented using the FIFO
Method before minority interest but after pro forma income taxes.
LITHIA MOTORS, INC. AND SUBSIDIARIES
CONDENSED AND CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
1996 1995
Assets
Current Assets:
Cash and cash equivalents $15,413 $9,706
Trade receivables, net 2,260 1,744
Lease receivables, current portion - 140
Inventories, net 28,152 17,700
Vehicles leased to others, current portion 525 727
Notes receivable 414 127
Notes receivable - related party 308 -
Prepaid expenses and other 372 273
Deferred income taxes 1,646 -
Total Current Assets 49,090 30,417
Property and Equipment, net 4,616 3,234
Vehicles Leased to Others,
less current portion 4,500 4,599
Other Assets 5,548 1,328
Total Assets $63,754 $39,578
Liabilities, Minority Interest and Shareholders' Equity
Current Liabilities:
Notes payable $500 $625
Flooring notes payable 19,645 19,590
Current maturities of long-term debt 1,855 2,085
Trade payables 2,434 1,455
Payable to related parties 1,952 356
Taxes payable 93 -
Accrued liabilities 2,389 1,280
Total Current Liabilities 28,868 25,391
Long-Term Debt, less current maturities 6,160 10,743
Deferred Revenue 3,250 1,782
Other Long-Term Liabilities - 62
Deferred Income Taxes 740 -
Total Liabilities 39,018 37,978
Commitments and Contingency
Minority Interest - 749
Shareholders' Equity 24,736 851
Total Liabilities and Shareholders' Equity $63,754 $39,578
LITHIA MOTORS, INC. AND SUBSIDIARIES
CONDENSED AND CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
Three months ended Year ended
December 31, December 31,
1996 1995 1996 1995
Net sales 37,278 28,375 142,844 114,196
Cost of sales 31,341 22,765 118,647 93,132
Gross profit 5,937 5,610 24,197 21,064
Selling, general and
administrative 5,803 4,671 20,277 16,735
Operating income 134 939 3,920 4,329
Other income (expense), net 351 (36) (4) (176)
Income before minority interest
and taxes 485 903 3,916 4,153
Minority interest in earnings 60 181 687 778
Net income before income taxes 425 722 3,229 3,375
Income tax benefit 813(1) - 813(1) -
Net income - LIFO Method $1,238 $722 $4,042 $3,375
Net income per share - LIFO Method $0.24 $0.15 $0.81 $0.69
Pro Forma Net Income Data - LIFO Method
Income before minority interest
and taxes, as reported $485 $903 $3,916 $4,153
Pro forma income taxes (186) (344) (1,521) (1,598)
Pro forma net income before
minority interest 299 559 2,395 2,555
Pro forma minority interest 38 111 421 479
Pro forma net income - LIFO Method $261 $448 $1,974 $2,076
Pro forma net income per share
- LIFO Method $ 0.05 $ 0.09 $ 0.40 $ 0.42
Shares used in computing
per share amounts 5,204 4,893 4,973 4,893
Pro Forma Net Income Data - FIFO Method
Pro forma net income before minority
interest and after pro forma income
taxes - FIFO Method $560 $440 $2,604 $2,311
Pro forma net income per share before
minority interest and after pro forma
income taxes - FIFO Method $ 0.11 $ 0.09 $ 0.52 $ 0.47
Unit Sales
New 848 661 3,272 2,715
Used - Retail 844 789 3,901 3,302
Wholesale 804 460 2,607 1,842
Total 2,496 1,910 9,780 7,859
(1) In December 1996, the Company converted from S Corporation status to
C Corporation status. The conversion resulted in a net current deferred tax
asset of $906,000 and a corresponding benefit of $906,000 to income tax
expense for the three months ended December 31, 1996.
SOURCE Lithia Motors, Inc.
CONTACT: Brian Neill, Chief Financial Officer of Lithia Motors, 541-776-6486