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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------------------------------
FORM 10-Q
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(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to_______to________
Commission file number: 000-21789
-----------------------
LITHIA MOTORS, INC.
(Exact name of registrant as specified in its charter)
Oregon-----------------------
OREGON 93-0572810
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
360 E. Jackson Street, Medford, OregonJACKSON STREET, MEDFORD, OREGON 97501
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 541-776-6899
-----------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class A Common stock without par value 6,103,491
Class B Common stock without par value 4,110,000
(Class) (Outstanding at November 4, 1998)
Class A Common stock without par value 6,158,171
Class B Common stock without par value 4,110,000
(Class) (Outstanding at May 10, 1999)
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LITHIA MOTORS, INC.
FORM 10-Q
INDEX
Page
----
PART I - FINANCIAL INFORMATION PAGE
- ------------------------------ ----
Item 1. Financial Statements
Consolidated Balance Sheets -September 30, 1998 (unaudited)(Unaudited) - March 31, 1999 and
December 31, 19971998 2
Consolidated Statements of Operations (Unaudited) - Three and Nine Months
Ended September 30,March 31, 1999 and 1998
and 1997 (unaudited) 3
Consolidated Statements of Cash Flows (Unaudited) - NineThree Months
Ended September 30,March 31, 1999 and 1998 and 1997
(unaudited) 4
Notes to Consolidated Financial Statements (unaudited)(Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 86
Item 3. Quantitative and Qualitative Disclosures About Market Risk 1412
PART II - OTHER INFORMATION
- ---------------------------
Item 6. Exhibits and Reports on Form 8-K 1513
Signatures 1614
1
PART 1-FINANCIALI - FINANCIAL INFORMATION
ItemITEM 1. Financial StatementsFINANCIAL STATEMENTS
LITHIA MOTORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)(IN THOUSANDS)
(UNAUDITED)
September 30,March 31, December 31,
1999 1998
1997
---------------------- ------------
AssetsASSETS
Current Assets:
Cash and cash equivalents $ 17,65524,789 $ 18,45420,879
Trade receivables 14,468 7,65516,745 17,287
Notes receivable, current portion, 704 427net of allowance
for doubtful accounts of $677 and $714 2,923 3,074
Inventories, net 117,093 89,845153,320 157,455
Vehicles leased to others, current portion 705 738865 861
Prepaid expenses and other 776 913931 1,933
Deferred income taxes 2,062 1,855
------------- ------------1,760 2,707
-------- --------
Total Current Assets 153,463 119,887201,333 204,196
Property and Equipment, net of accumulated
depreciation of $3,519$4,244 and $2,822 29,203 16,265$3,907 33,200 32,933
Vehicles Leased to Others, less current portion 5,057 4,5885,494 5,647
Notes Receivable, less current portion 351 3096,630 7,173
Goodwill, net of accumulated amortization of
$910$1,473 and $293 35,531 24,062$1,180 43,390 42,951
Other Non-Current Assets, net of accumulated
amortization of $93$123 and $53 1,279 1,415
------------- ------------$103 1,433 1,498
-------- --------
Total Assets $224,884 $166,526
------------- ------------
------------- ------------
Liabilities and Shareholders' Equity$291,480 $294,398
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
FlooringNotes payable $ 1,612 $ 515
Floorplan notes payable $ 88,185 $ 82,598122,708 124,167
Current maturities of long-term debt 2,973 2,68810,645 7,601
Current portion of capital leases 105 9925 27
Trade payables 4,952 3,8746,465 6,313
Accrued liabilities 11,395 6,758
------------- ------------13,401 12,020
-------- --------
Total Current Liabilities 107,610 96,017154,856 150,643
Long-Term Debt, less current maturities 20,773 24,24228,600 38,994
Long-Term Capital Lease Obligation, less current
portion 2,236 2,3162,420 2,426
Deferred Revenue 1,984 2,5191,924 2,076
Other Long-Term Liabilities 1,328 4471,923 1,606
Deferred Income Taxes 3,044 3,108
------------- ------------6,928 7,142
-------- --------
Total Liabilities 136,975 128,649
------------- ------------196,651 202,887
-------- --------
-------- --------
Shareholders' Equity
Preferred stock - no par value; authorized 15,000
shares; issued and outstanding; none -- --- -
Class A common stock - no par value;
authorized 100,000 shares; issued and
outstanding 6,0826,150 and 2,926 70,633 28,1176,105 71,093 70,871
Class B common stock - no par value;
authorized 25,000 shares; issued and
outstanding 4,110 and 4,110 511 511
Additional paid-in capital 175 59170 150
Retained earnings 16,590 9,190
------------- ------------23,055 19,979
-------- --------
Total Shareholders' Equity 87,909 37,877
------------- ------------94,829 91,511
-------- --------
Total Liabilities and Shareholders' Equity $224,884 $166,526
------------- ------------
------------- ------------$291,480 $294,398
-------- --------
-------- --------
The accompanying notes are an integral part of these
consolidated financial statements.
2
LITHIA MOTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three months ended Nine months ended
September 30, September 30,
----------------------- -----------------------THREE MONTHS ENDED MARCH 31,
-----------------------------
1999 1998
1997 1998 1997
----------- ---------- ----------- ------------------- ---------
Sales:
VehiclesRevenues:
New vehicle sales $ 167,102116,853 $ 73,525 $ 442,409 $ 178,40074,908
Used vehicle sales 71,809 49,801
Service, body and parts and other 28,812 12,048 73,245 28,299
----------- ---------- ----------- ----------
Net Sales 195,914 85,573 515,654 206,69923,430 14,592
Other revenues 12,053 6,897
--------- ---------
Total revenues 224,145 146,198
Cost of sales Vehicles 151,307 66,107 400,938 160,156
Service, body, parts and other 13,104 5,281 33,625 12,694
----------- ---------- ----------- ----------
Cost of Sales 164,411 71,388 434,563 172,850
----------- ---------- ----------- ----------188,945 123,252
--------- ---------
Gross profit 31,503 14,185 81,091 33,84935,200 22,946
Selling, general and administrative 23,241 10,849 61,352 26,03926,648 17,916
Depreciation and amortization 675 313 1,742 704
----------- ---------- ----------- ----------
Operating income 7,587 3,023 17,997 7,1061,075 720
--------- ---------
Income from operations 7,477 4,310
Other income (expense)
Equity inFloorplan interest expense (2,109) (1,636)
Other interest expense (629) (574)
Other income, of affiliate 16 (4) 35 52
Interest income 41 39 115 100
Interest expense (2,232) (723) (7,099) (1,374)
Other, net 553 238 1,013 779
----------- ---------- ----------- ----------
(1,622) (450) (5,936) (443)
----------- ---------- ----------- ----------266 366
--------- ---------
(2,472) (1,844)
--------- ---------
Income before income taxes 5,965 2,573 12,061 6,6635,005 2,466
Income tax expense 2,307 994 4,661 2,573
----------- ---------- ----------- ----------1,976 947
--------- ---------
Net income $ 3,6583,029 $ 1,579 $ 7,400 $ 4,090
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------1,519
--------- ---------
--------- ---------
Basic net income per share $ 0.360.30 $ 0.23 $ 0.84 $ 0.59
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------0.22
--------- ---------
--------- ---------
Diluted net income per share $ 0.350.29 $ 0.22 $ 0.81 $ 0.56
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------0.21
--------- ---------
--------- ---------
The accompanying notes are an integral part of these
consolidated financial statements.
3
LITHIA MOTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except per share amounts)
(Unaudited)(IN THOUSANDS)
(UNAUDITED)
Nine months ended
September 30,
---------------------THREE MONTHS ENDED MARCH 31,
----------------------------
1999 1998
1997
------------------ ---------
Cash flows from operating activities:
Net income $ 7,4003,029 $ 4,0901,519
Adjustments to reconcile net income to net cash flows
provided by (used in) operating activities:
Depreciation and amortization 2,447 1,7211,075 720
Compensation expense related to stock option issuances 103 --20 -
Loss on sale of assets 32 2
Gain25 -
(Gain) loss on sale of vehicles leased to others (14) (216)
Deferred income taxes (64) 6838 (45)
Equity in income of affiliate (35) 91
(Increase) decrease,(16) (9)
Changes in operating assets and liabilities, net of
effect of acquisitions:
Trade and installment contract receivables, net (6,855) (3,694)369 (2,994)
Inventories (5,959) 5,9664,164 (19,174)
Prepaid expenses and other 75 (316)1,002 162
Other noncurrent assets 141 (236)
Increase (decrease), net of effect of acquisitions:
Flooring71 277
Floorplan notes payable 5,829 (6,005)(1,459) 4,793
Trade payables 1,000 (344)152 (519)
Accrued liabilities 4,638 2,1491,381 1,942
Deferred income taxes, net 204 (195)
Other liabilities 224 (371)
----------165 (196)
-------- ---------
Net cash provided by (used in) operating activities 8,962 2,90510,220 (13,719)
Cash flows from investing activities:
Notes receivable issued (621) (219)(769) (54)
Principal payments received on notes receivable 302 2531,463 87
Capital expenditures (2,840) (5,043)(1,128) (1,195)
Proceeds from sale of assets 168 3357 -
Expenditures for vehicles leased to others (1,851) (2,046)
Proceeds from sale of vehicles leased to others 5,416 4,042
Expenditures for vehicles leased to others (6,602) (5,953)1,669 2,191
Cash paid for acquisitions (28,256) (11,094)
----------(12) (15,197)
-------- ---------
Net cash used in investing activities (32,433) (18,011)(271) (16,214)
Cash flows from financing activities:
Net repayments on used vehicle line of credit (15,500) --
Principal payments on long-term debt (37,531) (5,919)and capital leases (6,928) (1,010)
Proceeds from issuance of long-term debt 33,174 11,078667 26,617
Proceeds from issuance of common stock 42,529 3,866
Dividends and distributions -- (1,953)
----------222 53
-------- ---------
Net cash provided by (used in) financing activities 22,672 7,072
----------(6,039) 25,660
-------- ---------
DecreaseIncrease (decrease) in cash and cash equivalents (799) (8,034)3,910 (4,273)
Cash and cash equivalents:
Beginning of period 20,879 18,454
15,413
------------------ ---------
End of period $ 17,65524,789 $ 7,379
----------14,181
-------- ---------
------------------ ---------
The accompanying notes are an integral part of these
consolidated financial statements.
4
LITHIA MOTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
Note(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 1. Basis of PresentationBASIS OF PRESENTATION
The financial information included herein for the three and nine-monththree-month periods ended
September 30,March 31, 1999 and 1998 and 1997 is unaudited; however, such information reflects all
adjustments consisting only of normal recurring adjustments which are, in the
opinion of management, necessary for a fair presentation of the financial
position, results of operations and cash flows for the interim periods. The
financial information as of December 31, 19971998 is derived from Lithia Motors,
Inc.'s (the Company's) 19971998 Annual Report to Shareholders on Form 10-K. The interim
consolidated financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in the Company's 1997Lithia
Motors' 1998 Annual Report on Form 10-K.to Shareholders.
The results of operations for the interim periods presented are not
necessarily indicative of the results to be expected for the full year.
NoteNOTE 2. InventoriesINVENTORIES
Inventories are valued at cost, using the specific identification method for
vehicles and the first-in first-out (FIFO) method of accounting for parts
(collectively, the FIFO method). Detail of inventory is as follows:
September 30,MARCH 31, 1999 DECEMBER 31, 1998
December 31, 1997
-------------------------------- -----------------
New and demonstrator vehicles $ 85,880 $ 63,457$112,878 $112,990
Used vehicles 25,033 21,52430,729 34,599
Parts and accessories 6,180 4,864
---------9,713 9,866
-------- $ 117,093 $ 89,845
--------- --------
---------$153,320 $157,455
-------- --------
-------- --------
NoteNOTE 3. Credit Facility
In May 1998, the Company's credit facilities were amended to increase the
total available credit by $20 million to a total of $195 million, including $130
million in new, used and program flooring lines, $30 million in acquisition
capital and $35 million for other corporate purposes. In July 1998, the
Company's credit facilities were again amended to increase the total available
credit by $45 million to a total of $240 million, including $175 million in new,
used and program flooring lines, $30 million in acquisition capital and $35
million for other corporate purposes. The amendment also extended the expiration
date of the credit facility to December 1, 1998.
In September 1998, the Company signed a letter of intent with Ford Motor
Credit Company to serve as its primary lender, providing a total of $350 million
in credit lines, including $275 million in new, program and used vehicle
flooring lines for any make of vehicle and $75 million for acquisitions. The
Company expects to sign a final agreement with Ford Credit in November 1998.
5
Note 4. Acquisitions
The following table sets forth the total purchase price, cash paid, debt
incurred and the net investment for acquisitions made by the Company to date
during 1998:
Debt Net
Name Month Total Paid Cash Paid Incurred Investment(1)
- ---- ------------- ---------- ----------- ----------- ---------------
Quality Nissan Jeep(2) January $ 8,404 $7,097 $1,307 $4,405
Reno Volkswagen February 1,400 411 989 293
Medford Nissan, BMW February 3,231 546 2,685 2,326
Haddad Jeep March 4,912 1,528 3,384 2,063
Rodway Chevrolet(2) June 11,488 5,094 6,394 3,783
Boyland Toyota(2) July 3,919 2,300 1,619 2,588
Camp Automotive October 11,535 8,000 3,535 11,535
Hutchins(2) November 6,955 5,000 1,955 6,955
------- ------- ------- -------
Total $51,844 $29,976 $21,868 $33,948
------- ------- ------- -------
------- ------- ------- -------
- -------------------
(1) Net investment consists of the amount of goodwill, working capital, any
notes issued to the seller and other initial investments.
(2) Excludes real property purchased for $5,560, $4,050, $1,650 and $1,750,
respectively.
The above acquisitions were accounted for under the purchase method of
accounting. Except for Camp Automotive, pro forma results of operations, both
individually and in aggregate, are not material and therefore have not been
included herein. Pro forma results of operations for Camp Automotive are not
included herein as the acquisition closed subsequent to the end of the quarter.
Note 5. Supplemental Cash Flow InformationSUPPLEMENTAL CASH FLOW INFORMATION
Supplemental disclosure of cash flow information is as follows:
Nine Months Ended September 30,
-------------------------------THREE MONTHS ENDED MARCH 31,
----------------------------
1999 1998
1997
-------------- ------------------------ ---------
Cash paid during the period for income taxes $ 4,372923 $ 2,262650
Cash paid during the period for interest 7,099 1,511
Property acquired through debt -- 1,424
LIFO to FIFO restatement -- 9,6202,899 1,614
Note 6. Earnings Per Share
Beginning December 31, 1997, basic earnings per share (EPS) and diluted EPS
are computed using the methods prescribed by Statement of Financial Accounting
Standards No. 128, Earnings per Share (SFAS 128). Basic EPS is calculated using
the weighted average number of common shares outstanding for the period and
diluted EPS is computed using the weighted average number of common shares and
dilutive common equivalent shares outstanding. Prior period amounts have been
restated to conform with the presentation requirements of SFAS 128.
65
NOTE 4. EARNINGS PER SHARE
Following is a reconciliation of basic EPSearnings per share ("EPS")
and diluted EPS:
Three Months Ended September 30,THREE MONTHS ENDED MARCH 31, 1999 1998
1997
- -------------------------------------- --------------------------------------------------------------- ---------------------------------- --------------------------------
Per Share Per
Share Share
BASIC EPS Income Shares Amount Income Shares Amount
---------- ------------ ---------- ----------- --------- -------------------------------------------- --------------------------------
Basic EPS
- ---------
Net incomeIncome available to Common Shareholders
$3,658 10,192 $ 0.36 $1,579 7,0063,029 10,240 $ 0.23
---------- ----------
---------- ----------
Diluted0.30 $ 1,519 7,036 $ 0.22
------ ------
------ ------
DILUTED EPS
- -----------
Effect of dilutive stock options -- 316 -- 306
--------- ------------ ----------- ---------
Net income- 365 - 335
------- ------ ------- -----
Income available to Common Shareholders $3,658 10,508 $ 0.35 $1,579 7,3123,029 10,605 $ 0.22
---------- ----------
---------- ----------0.29 $ 1,519 7,371 $ 0.21
------ ------
------ ------
Nine Months Ended September 30, 1998 1997
- -------------------------------------- --------------------------------- --------------------------------
Per Share Per Share
Income Shares Amount Income Shares Amount
---------- ------------ ---------- ----------- --------- ----------
Basic EPS
- ---------
Net income available to Common
Shareholders $7,400 8,789 $ 0.84 $4,090 6,973 $ 0.59
---------- ----------
---------- ----------
Diluted EPS
- -----------
Effect of dilutive stock options -- 324 -- 308
--------- ------------ ----------- ---------
Net income available to Common
Shareholders $7,400 9,113 $ 0.81 $4,090 7,281 $ 0.56
---------- ----------
---------- ----------
Note 7. Sale of Class A Common Stock
On May 1, 1998, the Company announced the sale of 3.0 million newly issued
shares of its Class A Common Stock in a public offering at a price of $14.50 per
share. On May 31, 1998, an additional 150 shares were sold through the
underwriters' overallotment option at a price of $14.50 per share. Net proceeds
from the sales were $42.5 million.
Note 8. Reclassifications
Certain amountsPotentially dilutive securities that are not included in the prior period financial statements have been
reclassifieddiluted EPS
calculations because they would be antidilutive include 24 and 44 shares,
respectively, issuable pursuant to conform to current period presentation.
Note 9. Subsequent Events
In Octoberstock options, for the three month periods
ended March 31, 1999 and 1998, the Company closed its acquisition of Camp Automotive for
a total purchase price of $11.5 million. In November 1998, the Company closed
its acquisition of Hutchins Imported Motors for a total purchase price of $7.0
million. See Note 4. Acquisitions.
7
Itemrespectively.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Forward Looking Statements and Risk FactorsMANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS AND RISK FACTORS
This Form 10-Q contains forward-looking statements. These statements are
necessarily subject to risk and uncertainty. Actual results could differ
materially from those projected in these forward looking statements as a result
of certain risks including those set forth in the Company's offering prospectus
dated May 1, 1998 and in its 1997 Annual Report on Form 10-K.forward-looking statements. These
risk factors include, but are not limited to, the following:
- - The cyclical nature of automobile sales, the
intense competition in the automobile retail industry and the Company'ssales;
- - Lithia's ability to negotiate profitable, acquisitions andaccretive acquisitions;
- - Lithia's ability to secure manufacturer approvals for such
acquisitions.
Generalacquisitions; and
- - Lithia's ability to retain existing management.
See Exhibit 99 to Lithia's 1998 Form 10-K for a more complete discussion of
risk factors.
GENERAL
Lithia Motors is a leading operator and retailer in the highly fragmented automotive
retailer offering a total ofindustry. We offer 23 brands of new vehicles, through 56 franchises in 28
locations in the western United States. The CompanyWe currently operatesoperate 14 dealerships
in California, 9 in Oregon, 2 in Washington and 3 in Nevada. The CompanyLithia sells new
and used cars and light trucks, sells replacement parts, provides vehicle
maintenance, warranty, paint and repair services, and arranges related
financing and insurance for its automotive customers.
Since
December 1996 when the Company completed its initial public offering, it has
acquired 23 dealerships and is actively pursuing additional acquisitions.6
The following table sets forthshows selected condensed financial data expressed as a
percentage of total salesrevenues for the periods indicated for the average
automotive dealer in the United States.
AverageAVERAGE U.S. Dealership Year Ended DecemberDEALERSHIP YEAR ENDED DECEMBER 31,
---------------------------------------------
Statement of Operations Data:STATEMENT OF OPERATIONS DATA: ---------------------------
1998 1997
1996
-------------------- ------------------------------ -----------
Sales:Revenues:
New vehicles 59.0% 58.3% 57.7%
Used vehicles 29.4 29.8 30.4
Parts and service, other 11.6 11.9
11.9
-------------------- -------------------
Total sales----------- -----------
100.0% 100.0%
Gross profit 12.9 12.7 12.9
Total dealership expense 11.411.2 11.3
Income before taxes 1.7% 1.4% 1.5%
Source: NADA Industry Analysis Division
8
INDUSTRY ANALYSIS DIVISION
The following table sets forth selected condensed financial data for the
Company, expressed as a percentage of total salesrevenues for the periods
indicated below.:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- -----------------------------------THREE MONTHS ENDED MARCH 31,
-----------------------------
1999 1998
1997 1998 1997
--------------- ------------- ---------------- ------------------------- -----------
Statement of Operations Data:STATEMENT OF OPERATIONS DATA:
Sales:
New vehicles 56.4 % 52.1 % 54.3 % 48.9 %52.1% 51.2%
Used vehicles 28.9 33.8 31.5 37.432.0 34.1
Service, body and parts and other 14.7 14.1 14.2 13.7
--------------- ------------- ---------------- --------------10.5 10.0
Other 5.4 4.7
----------- -----------
Total sales 100.0 % 100.0 % 100.0 % 100.0 %
Gross profit 16.1 16.6 15.7 16.415.7
Selling, general and administrative 11.9 12.7 11.9 12.612.3
Depreciation and amortization 0.3 0.4 0.3 0.4
--------------- ------------- ---------------- --------------0.5 0.5
----------- -----------
Operating income 3.9 3.5 3.5 3.43.3 2.9
Other income (expense), net (0.8) (0.5)(1.1) (1.2)
(0.2)
--------------- ------------- ---------------- ------------------------- -----------
Income before taxes 3.1 3.0 2.3 3.2
Income taxes 1.2 1.2 0.9 1.2
--------------- ------------- ---------------- --------------
Net income 1.9 % 1.8 % 1.4 % 2.0 %
--------------- ------------- ---------------- --------------
--------------- ------------- ---------------- --------------2.2% 1.7%
----------- -----------
----------- -----------
Results of Operations
Net sales for the CompanyRESULTS OF OPERATIONS
REVENUES. Revenues increased $110.3$77.9 million, or 128.953.3 percent, to $195.9$224.1
million for the quarter ended September 30, 1998March 31, 1999 from $85.6$146.2 million for the
comparable period of 1997. Net sales1998. Total retail vehicles sold during the quarter
ended March 31, 1999 increased $309.0 million, or 149.5
percent,47.1% to $515.7 million9,484 from 6,449 for the nine monthsquarter
ended September 30, 1998March 31, 1998. The average selling price for new and retail used
vehicles increased 2.0% and 2.4%, respectively, for the quarter ended
March 31, 1999 compared to $206.7 millionthe quarter ended March 31, 1998. The average
selling price for wholesale used vehicles decreased 2.6% in the comparable periodfirst quarter
of 1997. The Company's sales mix
shifted more1999 compared to new vehicle sales, away from used vehicle sales, with a slight
increase in service, body, parts and other as a percentagethe first quarter of total sales.1998. Same store sales growth was 15.9 percent and 15.1 percent,pre-tax
profit increased 12.9% and 43.5%, respectively, forin the three and nine month periods ended September 30, 1998first quarter of 1999
compared to the first quarter of 1998. Lithia's newest thirteen stores
7
showed a 14.6% increase in same-store sales and a 110.3% increase in same
periods of 1997.
New Vehicle Sales. The Company sells 23 domestic and imported brands
rangingstore pre-tax profits.
NEW VEHICLES. Total revenue from economy to luxury cars, as well as sport utility vehicles, minivans
and light trucks. Revenue on new vehicle sales increased 148.0 percent56.0%
to $110.5$116.9 million and 177.3 percent(52.1% of total revenues) in the first quarter of 1999 from
$74.9 million (51.2% of total revenues) in the first quarter of 1998. Lithia
sold 5,231 new vehicles in the first quarter of 1999, a 52.9% increase over
the 3,422 sold in the first quarter of 1998. Average selling prices for new
vehicles increased 2.0% to $280.1 million, respectively, for$22,338 in the three and
nine-month periods ended September 30, 1998first quarter of 1999 compared to
$44.6 million and $101.0
million, respectively, for$21,890 in the comparable periodsfirst quarter of 1997. These increases were
achieved by a 146.9 percent and 171.1 percent1998. The increase respectively, in units sold to 5,142is primarily
a result of acquisitions and 12,926, respectively, for the three and nine-month periods
ended September 30, 1998 and a 0.4 percent and 2.3 percent increase,
respectively, in the average selling price to $21,489 and $21,670, respectively,
for the three and nine-month periods ended September 30, 1998. The increases are
primarily attributable to a 15.1 percent overall same store growth rate in the
first nine months of 1998 and the inclusion of 13 locations acquired since
September 1997.
The Companystrong internal growth.
Lithia purchases substantially all of its new car inventory directly from
manufacturers who allocate new vehicles to dealerships based on orders and
the amount of vehicles sold by the dealership and by the dealership's market
area. The
Company willLithia also exchangeexchanges vehicles with other dealers to accommodate
customer demand and to balance inventory.
9
Used Vehicle Sales. The Company offers a variety of makes and models of
used cars and light trucks of varying model years and prices. RevenueRETAIL USED VEHICLES. Total revenue from retail used vehicle sales
increased 97.2 percent and 115.8 percent, respectively43.8% to $44.2$55.1 million and $127.1(24.6% of total revenues) in the first
quarter of 1999 from $38.3 million for(26.2% of total revenues) in the three and nine-month periods ended
September 30, 1998 from $22.4 million and $58.9 million, respectively, forfirst
quarter of 1998. Lithia sold 4,253 retail used vehicles in the comparable periodsfirst quarter
of 1997. Retail used unit volume increased 94.8 percent and
108.4 percent, respectively, to 3,493 units and 9,959 units, respectively, for1999, a 40.5% increase over the three and nine-month periods ended September 30,3,027 sold in the first quarter of 1998.
The average unitselling price for retail used vehicles increased 1.2 percent and 3.5 percent, respectively,2.4% to $12,650 and
$12,763, respectively for$12,948
in the three and nine-month periods ended September 30,first quarter of 1999 from $12,649 in the first quarter of 1998. The
increases areincrease in units sold is primarily attributable to a 15.1 percent overall same
store growth rateresult of acquisitions and the inclusion of 13 locations acquired since September
1997.
Other. The Companystrong
internal growth.
SERVICE, BODY AND PARTS. Lithia derives additional revenue from the
sale of parts and accessories, maintenance and repair services auto body work and financecollision
repair work. Revenues from these services increased 60.6% to $23.4 million
(10.5% of total revenues) in the first quarter of 1999 compared to
$14.6 million (10.0% of total revenues) in the first quarter of 1998. The
increase is primarily a result of internal growth and dealership acquisitions.
OTHER REVENUES. Other revenues consist primarily of financing and
insurance ("F&I") transactions. Other operating revenuerevenues increased 139.2 percent74.8% to
$12.1 million (5.4% of total revenues) in the first quarter of 1999 compared to
$6.9 million (4.7% of total revenues) in the first quarter of 1998. The
increase is a result of both internal growth and 158.8 percent, respectively,dealership acquisitions.
GROSS PROFIT. Gross profit increased 53.4% to $28.8$35.2 million and $73.2 million,
respectively, for the three and nine-month periods ended September 30, 1998,
from $12.0first
quarter of 1999, compared with $22.9 million and $28.3 million, respectively, for the comparable periodsfirst quarter of 1997. This increase is1998,
primarily due to a 15.1 percent overall same store
growth rate and the inclusion of 13 new locations since September 1997. To a
limited extent,increased revenues from the parts and service department are
countercyclical to new car sales as owners repair existing vehicles rather than
buy new vehicles. The Company believes this helps mitigate the affects of a
downturn in the new vehicle sales cycle.
Gross Profit. Gross profit increased to $31.5 million and $81.1 million,
respectively, for the three and nine-month periods ended September 30, 1998,
compared with $14.2 million and $33.8 million, respectively, for the comparable
periods of 1997. These increases are primarily due to an increase in new and
used vehicle unit sales and an increase in other operating revenue as discussedindicated above. The gross profit
margin achieved by the Company on new vehicle sales during the first quarter
of 1999 was 9.8 percent and 9.9 percent, respectively, for the three and nine-month periods
ended September 30, 1998,9.7% compared to 10.7 percent and 11.3 percent,
respectively,10.2% in the comparable periodsfirst quarter of 1997.1998. This
compares favorably with the average gross profit margin of 6.4 percent6.5% realized by
franchised automobile dealers in the United States on sales of new vehicles
in 1997. The Company sells1998. Lithia's gross profit margin on retail used vehiclesvehicle sales during the
first quarter of 1999 was 11.2% compared to retail customers and,10.6% in the casefirst quarter of
vehicles in poor condition
or vehicles which have not sold within a specified period1998, and compared to the industry average for 1998 of time, to other
dealers and to wholesalers.10.9%. Sales of used
vehicles to other dealers and to wholesalers are frequently at, or close to,
costcost. Total gross profit margin remained stable at 15.7% in the first quarter
of 1999 and therefore affect the Company's overall1998. The decreases in gross profit margin on usednew vehicle sales. Excluding wholesale transactions, the
Company'ssales
and service, body and parts were offset by increases in gross profit margin
on retail used vehicle sales was 11.3 percent and 10.9
percent, respectively,finance and lease transactions.
8
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative ("SG&A") expense increased 48.7% to $26.6 million (11.9% of
total revenues) for the three and nine-month periods ended September 30,
1998first quarter of 1999 compared to 11.4 percent and 11.5 percent in the comparable periods$17.9 million
(12.3% of 1997. The industry average for 1997 was 10.9 percent. Overall gross profit
margins were 16.1 percent and 15.7 percent, respectively, for the three and
nine-month periods ended September 30, 1998 compared to 16.6 percent and 16.4
percenttotal revenues) for the comparable periodsperiod of 1997. The decreases in the gross profit
margins were primarily a result of the acquisition of several new dealerships
during 1997 and early 1998, which were generating gross margins lower than those
of the Company's pre-existing stores. The Company's gross profit margin
continues to exceed the average U.S. dealership gross profit margin of 12.7
percent for the full year of 1997.
10
Selling, General and Administrative Expense ("SG&A"). The Company's SG&A
expense increased to $23.2 million and $61.3 million (11.9 percent and 11.9
percent, respectively, of net sales), respectively, for the three and nine-month
periods ended September 30, 1998 compared to $10.8 million and $26.0 million
(12.7 percent and 12.6 percent, respectively, of net sales), respectively, for
the comparable periods of 1997.1998. The increase in
SG&A was due primarily to increased selling, or variable, expense related to
the increase in salesrevenues and the number of total locations. The decrease in
SG&A as a percent of total salesrevenues is a result of economies of scale gained
as the fixed expenses are spread over a larger revenue base and from
macro and micro economies of scale as the CompanyLithia consolidates multiple stores in a single market.
Depreciation and Amortization.DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense increased
49.3% to $1.1 million in the first quarter of 1999 compared to $0.7 million and $1.8 million, respectively, forin
the three and
nine-month periods ended September 30,first quarter of 1998, compared to $0.3 million and $0.7
million, respectively, for the comparable periods of 1997, primarily as a result of increased property and
equipment and goodwill related to acquisitions in 1997
and 1998. Depreciation and
amortization was 0.3 percent0.5% of sales for the 1998
periods and 0.4 percent of sales for 1997 periods. These figures exclude
depreciation related to leased vehicles, which is included in cost of sales.
Operating Income. Operating income increased to $7.6 million and $18.0
million (3.9 percent and 3.5 percent, respectively, of net sales), respectively,
for the three and nine-month periods ended September 30, 1998 compared to $3.0
million and $7.1 million (3.5 percent and 3.4 percent, respectively, of net
sales). In addition to gaining efficiencies related to economies of scale, the
Company has seen improvementsrevenues in the operating margins at stores that it has
acquiredfirst quarter of 1999 and operated for a full year, bringing them more in line with the
Company's pre-existing stores.
Interest Expense. Interest1998.
FLOORPLAN INTEREST EXPENSE. Floorplan interest expense increased to $2.2$2.1
million and $7.1(0.9% of total revenues) in the first quarter of 1999 compared to
$1.6 million respectively, for(1.1% of total revenues) in the three and nine month periods ended September 30,first quarter of 1998, from $0.7 million and $1.4 million, respectively, for the comparable
periods of 1997, primarily
as a result of increased flooring notes payable related to increased
inventories as a result of the increase in stores owned.
Income Tax Expense. The Company'sowned and vehicles sold.
Lithia has been able to reduce its floorplan interest expense as a percentage
of total revenues by successfully managing inventory levels.
INCOME TAX EXPENSE. Lithia's effective tax rate for the three and
nine-month periods ended September 30, 1998first quarter of 1999
was 38.6 percent39.5% compared to 38.6
for38.4% in the comparable periodsfirst quarter of 1997.1998. The Company's
effective tax rate may be effected by the purchase of new storesdealerships in
jurisdictions with tax rates either higher or lower than the current
estimatedeffective rate.
Net Income.NET INCOME. Net income was $3.7increased 99.4% to $3.0 million and $7.4 million (1.9 percent and
1.4 percent, respectively,(1.4% of net sales), respectively,total
revenues) for the three and
nine-month periods ended September 30, 1998first quarter of 1999 compared to $1.6$1.5 million and $4.1
million (1.8 percent and 2.0 percent, respectively,(1.0% of
net sales), respectively,total revenues) for the comparable periodsperiod of 1997,1998, primarily as a result of
the individual line item
changes discussed above.
Liquidityincreased revenues and Capital Resourcesdecreased selling, general and administrative expenses
and floorplan and other interest expense as a percent of total revenues.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal needs for capital resources are for acquisitions,
capital expenditures and increased working capital requirements.
Historically, the Company has relied primarily upon internally generated cash
flows from operations, borrowings under its 11
credit facility and the proceeds
from its initial public offeringofferings to finance its operations and expansion.
In May 1998, the Company closed an offering of
3.15 million newly issued shares of its Class A Common Stock for net proceeds
of $42.5 million. The proceeds have been used to pay down the Company's lines
of credit until needed for future acquisitions.
At September 30, 1998March 31, 1999 the Company had working capital of $45.9$46.5 million, which
included $17.7$24.8 million of cash and cash equivalents. The $0.8$3.9 million
decreaseincrease in cash since December 31, 19971998 is primarily a result of
$28.3$10.2 million used for acquisitions, $2.8provided by operations, offset by $1.1 million used for the
purchase of property and equipment $15.5 million net payments on the used vehicle line of credit and $4.4$6.3 million net payments on long-term
debt, offset by $42.5 million from the
sale of the Company's Common Stock and $9.0 million provided by operations.debt. The current ratio at September 30, 1998March 31, 1999 was 1.4:1.3:1 compared to 1.2:1.4:1 at
December 31, 1997.
The Company's1998.
9
Ford Credit, Toyota Motor Credit Corporation, Chrysler Financial Corporation
and General Motors Acceptance Corporation have agreed to floor all of
Lithia's new vehicles for their respective brands with Ford serving as the
primary lender for all other brands. There are no formal limits to these
commitments for new vehicle wholesale financing.
Ford Credit has also extended a $60 million revolving line of credit facility hasfor used
vehicles and a maturity$75 million acquisition line of credit to purchase dealerships
of any brand. These commitments have an expiration date of December 1, 1998. At
that time, the CompanyNovember 23, 2000
with interest due monthly. Lithia has the right to elect to extend the term
on these lines of credit for an additional two years at November 23, 1999.
Lithia also has the option to convert outstanding loans under
the Acquisition Line and the Equipment Line toacquisition line into a five-year
term loan payable over 5 years.
Amounts outstanding at September 30, 1998 were as follows (in thousands):
Flooring Line $ 88,185
Acquisition Line --
Lease Line --
Equipment and Real Estate Lines 14,481
--------
Total $102,666
--------
--------
Loans underon November 23, 1999 or November 23, 2000. In addition, U.S. Bank
N.A. has extended a $10 million revolving line of credit for leased vehicles.
The lines with Ford Credit are cross-collateralized and are secured by
inventory, accounts receivable, intangible assets and equipment. The other
new vehicle lines are secured by new vehicle inventory of the relevant
dealerships.
The Ford Credit lines of credit facility bear interest at LIBOR (London Interbank
Offered Rate) plus 150 to 275 basis points, equivalent to 6.875 percent to 8.125
percent at September 30, 1998.
The Credit Facility containscontain financial covenants requiring the CompanyLithia
to maintain compliance with, among other things, specified ratios of (i) minimum
net worth;total
debt to tangible base capital; (ii) total liabilities to net worth; (iii) fundedadjusted debt to cash flow;tangible base
capital; (iii) current ratio; (iv) fixed charge coverage; and (v) maximum allowable capital expenditures.net cash.
The Company is currentlyFord Credit lines of credit agreements also preclude the payment of cash
dividends without the prior consent of Ford Credit. Lithia was in compliance
with all such financial covenants.covenants at March 31, 1999.
Interest rates on all of the above facilities ranged from 6.63% to 7.94% at
March 31, 1999. Amounts outstanding on the lines at March 31, 1999 were as
follows (in thousands):
Acquisition Line $ -
Used Vehicle Line -
New and Program Vehicle Lines 122,708
Leased Vehicle Line 4,000
--------
$126,708
--------
--------
Since December 1996 when the CompanyLithia completed its initial public offering, the Companyit has
acquired 23 dealerships. The aggregate net investment by the
Company was approximately $33.9$74.2
million (excluding borrowings on its credit lines to finance acquired vehicle
inventories and equipment and the purchase of any real estate).
Seasonality and Quarterly FluctuationsSEASONALITY AND QUARTERLY FLUCTUATIONS
Historically, the Company'sLithia's sales have been lower in the first and fourth quarters
of each year largely due to consumer purchasing patterns during the holiday
season, inclement weather and the reduced number of business days during the
holiday season. As a result, financial performance for the Company is
generallymay be lower during the
first and fourth quarters than during the other quarters of each fiscal year.
Management believes that interest rates, levels of consumer debt, consumer
buying patterns and confidence, as well as general 12
economic conditions, also
contribute to fluctuations in sales and operating results. The timing of
acquisitions may cause substantial fluctuations ofin operating results from
quarter to quarter.
Year10
YEAR 2000
General
The CompanyGENERAL. Lithia has identified three major areas of concern:
(1) the1. The functionality of the Company'sits internal systems and the Company's ability
to run its daily business after January 1, 2000, (2) the2000;
2. The visual representation of "2000""2000;" and
(3) third3. Third party systems.
The Company is not currentlyLithia expects to be Year 2000 compliant but expects to be prior to Januaryby July 1, 2000. The Company1999. Lithia is utilizing
the NADANational Auto Dealers Association dealer guide to assist in resolving its
Year 2000 issues and problems.
Internal Systems
The CompanyINTERNAL SYSTEMS. Lithia is in the process of analyzing and updating its
internal systems, including its dealer management systems, dealer
communication systems, personal computer systems, shared port systems and
phone systems. The CompanyLithia estimates that it is 6590 percent complete with
implementing various manufacturer upgrades to its systems in order to make
them Year 2000 compliant. The Company
estimatesWe estimate that itour internal systems we will be
fully Year 2000 compliant with its internal systems by July 1, 1999.
Like all businesses, the Company will beLithia is at risk from external infrastructure failures
that could arise from Year 2000 failures. It is not clear that electrical
power, telephone and computer networks, for example, will be fully functional
across the nation in the year 2000. Investigation and assessment of
infrastructures, like the nation's power grid, is beyond the scope and
resources of the Company.Lithia. Investors should use their own awareness of the issues
in the nation's infrastructure to make ongoing infrastructure risk
assessments and their potential impact to a company's performance.
Visual Representation
The CompanyVISUAL REPRESENTATION. Lithia is currently working on ensuring that all
report date stamps, timekeeping devises,devices, etc. are Year 2000 compliant. The Company estimatesWe
estimate that it
is about 55we are approximately 95 percent complete with this area.
Third Parties
The Companyprocess.
THIRD PARTIES. Lithia has begun a Year 2000 supplier audit program. It has
contacted all of its critical suppliers to inform them of the Company'sits Year 2000
expectations, and requests have been made for each vendor's compliance
program and/or Year 2000 compliance assurance. In regard to the automobile
manufacturers, the CompanyLithia has not yet received written or other confirmation that they
are Year 2000 compliant, but each of themexcept for Subaru. Subaru has assured the CompanyLithia that
they expect to be Year 2000 compliant prior to January 1, 2000.
It should be noted that there have been predictions of failures of key
components in the transportation infrastructure due to the Year 2000 problem.
It is possible that there could be delays in rail, over-the-road and air
shipments due to failure in transportation control systems. Investigation and
validation of the world's transportation infrastructure is beyond the scope
and the resources of the Company.Lithia. Investors should use their own awareness of
13
the
issues in the transportation infrastructure to make ongoing infrastructure
risk assessments and their potential impact to a company's performance.
Cost
The Company11
ACQUISITIONS. Acquisitions in 1999 will be subject to strict due diligence
for Year 2000 compliance.
COST. Lithia expects to incur incremental costs totaling approximately $950,000$1,054,000 to
ensure Year 2000 compliance, approximately $600,000$845,000 of which has already been
incurred.incurred since the end of 1997. A majority of the $950,000$1,054,000 represents
replacement of non-compliant systems, and therefore will be capitalized and
amortized over a three to five year period. This estimate could change
depending on variances not anticipated in the initial bids.
RiskRISK. The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company'sLithia's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Year 2000 problem, resulting in part from the
uncertainty of the Year 2000 readiness of third-party suppliers, the CompanyLithia is
unable to determine, at this time, whether the consequences of Year 2000
failures will have a material impact on the Company'sits results of operations, liquidity
or financial condition. The Company'sLithia's efforts to help ensure Year 2000
preparedness have, and will continue to, significantly reduce the Company'sits level of
uncertainty about the Year 2000 problem. The Company believesWe believe that, with completion of
the above mentioned plans, the possibility of significant interruptions of
normal operations should be reduced.
The Company is currently developingLithia has developed contingency plans in regard to its internal systems and
supplier issues as well as forand will distribute these plans to all relevant departments
of Lithia by October 1999. The contingency plans consist primarily of manual
processes and procedures to be followed in the more global
infrastructure issues.
Recent Accounting Pronouncementsevent of system failures.
RECENT ACCOUNTING PRONOUNCEMENT
In June 1998, the FASB issued Statement of Financial Accounting Standards
No. 133, "Accounting for Derivative Instruments and Hedging Activities
(SFAS 133). SFAS 133 establishes accounting and reporting standards for all
derivative instruments. SFAS 133 is effective for fiscal years beginning
after June 15, 1999. The CompanyLithia does not have any derivative instruments and,
accordingly, the adoption of SFAS 133 will have no impact on the Company'sits financial
position or results of operations.
ItemITEM 3. QuantitativeQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Lithia's only financial instruments with market risk exposure are variable
rate floor plan notes payable and Qualitative Disclosures About Market Risk
None.
14other credit line borrowings. At March 31,
1999 Lithia had $126.7 million outstanding under such facilities at interest
rates ranging from 6.63% to 7.94%. An increase or decrease in the interest
rates would affect interest expense for the period accordingly.
12
PART II - OTHER INFORMATION
ItemITEM 6. Exhibits and Reports on FormEXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits filed as a part of this report are listed belowbelow.
EXHIBIT NO.
-----------
10.1 Agreement and Plan of Reorganization dated January 1, 1999 by
and this list
constitutes the exhibit index.
2.1 Agreement for Purchase and Sale of Business Assets between Boyland
Auto Group dba Boyland Toyota, Dorian Boyland and Lithia Motors, Inc. and Moreland Auto Limited
Partnership, RLLLP and G. Michael Downey and Moreland Auto
Corp.
10.2 Agreement and Plan of Reorganization dated January 1, 1999 by
and between Lithia Motors, Inc. and L.A.H. Automotive Limited
Partnership, RLLLP and L.A.H. Automotive Enterprises, Inc.
10.3 Agreement and Plan of Reorganization dated January 1, 1999 by
and between Lithia Motors, Inc. and William D. Limited
Partnership, RLLLP and James Jannicelli and William D.Corp.
10.4 Agreement and Plan of Reorganization dated January 1, 1999 by
and between Lithia Motors, Inc. and Cherry Creek Dodge Limited
Partnership, RLLLP and Cherry Creek Dodge, Incorporated
10.5 Agreement and Plan of Reorganization dated January 1, 1999 by
and between Lithia Motors, Inc. and Colorado Springs Jeep
Eagle Limited Partnership, RLLP and Alex Jannicelli and
Colorado Springs Jeep/Eagle, Inc.
10.6 Agreement and Plan of Reorganization dated January 1, 1999 by
and between Lithia Motors, Inc. and Foothills Automotive Plaza
Limited Partnership, RLLLP and Jerry Cash and Foothills
Automotive Plaza, Inc.
10.7 Agreement and Plan of Reorganization dated January 1, 1999 by
and between Lithia Motors, Inc. and Reno Auto Sales Limited
Partnership, RLLLP and Reno Auto Sales, Inc.,
previously filed as Exhibit 10.34.1 to the Company's Registration
Statement No. 333-47525 on Form S-1 dated May 1, 1998 and is
incorporated herein by reference.
2.2 Agreement for Purchase and Sale of Business Assets between Rodway
Chevrolet Co. and Lithia Motors, Inc., dated March 19, 1998,
previously filed as Exhibit 2.2 to the Company's Form 10-Q for the
quarter ended June 30, 1998 as filed with the Securities and Exchange
Commission on August 13, 1998 and is incorporated herein by reference.
2.3 Stock Purchase Agreement between William N. Hutchins, Hutchins Eugene
Nissan, Inc. and Hutchins Imported Motors and Lithia Motors, Inc.,
dated June 18, 1998, previously filed as Exhibit 2.3 to the Company's
Form 10-Q for the quarter ended June 30, 1998 as filed with the
Securities and Exchange Commission on August 13, 1998 and is
incorporated herein by reference.
2.4 First, Second and Third Addenda to Stock Purchase Agreement by and
between William N. Hutchins, Hutchins Imported Motors, Inc. and
Hutchins Eugene Nissan, Inc. and Lithia Motors, Inc., dated June 18,
1998.
2.5 Restated Stock Purchase Agreement, by and between Phil S. Camp, Jerry
W. Camp, Jr., Julie A. Camp McKay, Chris E. Camp, Travis W. Camp,
Carter B. Camp and Camp Automotive, Inc. and the Company, dated August
1, 1998, previously filed as Exhibit 2.1 to the Company's Form 8-K
dated October 15, 1998 as filed with the Securities and Exchange
Commission on October 28, 1998 and is incorporated herein by
reference.
10.1 Amendment No. 1, dated April 9, 1998 to Business Loan Agreement among
U.S. Bank National Association, as Agent and Lender, and Lithia
Motors, Inc. and its Affiliates and Subsidiaries dated December 22,
1997, previously filed as Exhibit 10.1 to the Company's Form 10-Q for
the quarter ended June 30, 1998 as filed with the Securities and
Exchange Commission on August 13, 1998 and is incorporated herein by
reference.
10.2 Amendment No. 2, dated April 29, 1998 to Business Loan Agreement among
U.S. Bank National Association, as Agent and Lender, and Lithia
Motors, Inc. and its Affiliates and Subsidiaries dated December 22,
1997, previously filed as Exhibit 10.2 to the Company's Form 10-Q for
the quarter ended June 30, 1998 as filed with the Securities and
Exchange Commission on August 13, 1998 and is incorporated herein by
reference.
10.3 Amendment No. 3, dated July 7, 1998, to Business Loan Agreement among
U.S. Bank National Association, as Agent and Lender, and Lithia
Motors, Inc. and its Affiliates and Subsidiaries dated December 22,
1997.
10.4 Amendment No. 1 to the Lithia Motors, Inc. 1996 Stock Incentive Plan,
previously filed as Exhibit 10.3 to the Company's Form 10-Q for the
quarter ended June 30, 1998 as filed with the Securities and Exchange
Commission on August 13, 1998 and is incorporated herein by reference.
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reportsReports on Form 8-K were filed duringas follows:
- Under Item 5, Other Events, filed on January 11, 1999, regarding
Lithia's listing on the quarter ended September
30, 1998.New York Stock Exchange
- Under Item 5, Other Events, filed on March 15, 1999, regarding
a pending acquisition
13
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 thereunto duly authorized.
Date: November 6, 1998 LITHIA MOTORS, INC.
By /s/ SIDNEY B. DEBOER
--------------------
Sidney B. DeBoer
Chairman of the Board,
Chief Executive Officer and Secretary
(Principal Executive Officer)
By /s/ BRIAN R. NEILL
--------------------
Date: May 10, 1999 LITHIA MOTORS, INC.
By /s/ SIDNEY B. DEBOER
---------------------
Sidney B. DeBoer
Chairman of the Board,
Chief Executive Officer and Secretary
(Principal Executive Officer)
By /s/ BRIAN R. NEILL
-------------------
Brian R. Neill
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
16
14