UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(Mark One)
| /x/ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2000 OR
| / / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 000-21789
LITHIA MOTORS, INC.
(Exact name of registrant as specified in its charter)
| Oregon (State or other jurisdiction of incorporation or organization) | 93-0572810 (I.R.S. Employer Identification No.) | |
| 360 E. Jackson Street, Medford, Oregon (Address of principal executive offices) | | 97501 (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 | 8,411,449 | |
| Class B Common stock without par value | 4,087,000 | |
| (Class) | (Outstanding at August 4, 2000) |
LITHIA MOTORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| | June 30, 2000 | December 31, 1999 | ||||||
|---|---|---|---|---|---|---|---|---|
| | (Unaudited) | | ||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 29,432 | $ | 30,364 | ||||
| Trade receivables, net of allowance for doubtful accounts of $688 and $851 | 31,743 | 25,683 | ||||||
| Notes receivable, current portion, net of allowance for doubtful accounts of $1,004 and $677 | 1,868 | 2,777 | ||||||
| Related party receivable | 187 | — | ||||||
| Inventories, net | 325,722 | 268,281 | ||||||
| Vehicles leased to others, current portion | 3,011 | 3,000 | ||||||
| Prepaid expenses and other | 2,296 | 3,815 | ||||||
| Deferred income taxes | 46 | 724 | ||||||
| Total Current Assets | 394,305 | 334,644 | ||||||
| Property and Equipment, net of accumulated depreciation of $6,713 and $5,683 | 68,155 | 52,368 | ||||||
| Notes Receivable, less current portion | 3,936 | 4,095 | ||||||
| Vehicles Leased to Others, less current portion | 5,282 | 2,808 | ||||||
| Goodwill, net of accumulated amortization of $4,555 and $3,073 | 120,334 | 110,677 | ||||||
| Other Non-Current Assets, net of accumulated amortization of $163 and $143 | 1,599 | 1,841 | ||||||
| Total Assets | $ | 593,611 | $ | 506,433 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities: | ||||||||
| Flooring notes payable | $ | 267,110 | $ | 208,403 | ||||
| Current maturities of long-term debt | 6,816 | 7,039 | ||||||
| Current portion of capital leases | 78 | 93 | ||||||
| Trade payables | 13,156 | 11,873 | ||||||
| Payable to related party | — | 9,000 | ||||||
| Accrued liabilities | 23,394 | 23,237 | ||||||
| Total Current Liabilities | 310,554 | 259,645 | ||||||
| Long-Term Debt, less current maturities | 97,257 | 73,715 | ||||||
| Long-Term Capital Lease Obligation, less current portion | 122 | 196 | ||||||
| Deferred Revenue | 1,994 | 2,262 | ||||||
| Other Long-Term Liabilities | 6,489 | 5,456 | ||||||
| Deferred Income Taxes | 9,184 | 9,521 | ||||||
| Total Liabilities | 425,600 | 350,795 | ||||||
| Shareholders' Equity: | ||||||||
| Preferred stock—no par value; authorized 15,000 shares; 15 shares designated Series M Preferred; issued and outstanding 14.9 and 10.4 | 8,915 | 6,216 | ||||||
| Class A common stock—no par value; authorized 100,000 shares; issued and outstanding 8,357 and 7,824 | 108,010 | 102,333 | ||||||
| Class B common stock authorized 25,000 shares; issued and outstanding 4,087 | 508 | 508 | ||||||
| Additional paid-in capital | 267 | 7,428 | ||||||
| Retained earnings | 50,311 | 39,153 | ||||||
| Total Shareholders' Equity | 168,011 | 155,638 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 593,611 | $ | 506,433 | ||||
The accompanying notes are an integral part of these consolidated balance sheets.
2
LITHIA MOTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
| | Three months ended June 30, | Six months ended June 30, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | 2000 | 1999 | 2000 | 1999 | |||||||||||
| Revenues: | |||||||||||||||
| New vehicle sales | $ | 222,039 | $ | 167,222 | $ | 440,048 | $ | 284,075 | |||||||
| Used vehicle sales | 119,277 | 93,049 | 235,975 | 164,858 | |||||||||||
| Service, body and parts | 40,476 | 28,477 | 78,933 | 51,907 | |||||||||||
| Other revenues | 36,059 | 19,005 | 58,498 | 31,058 | |||||||||||
| Total revenues | 417,851 | 307,753 | 813,454 | 531,898 | |||||||||||
| Cost of sales | 350,667 | 258,967 | 683,406 | 447,912 | |||||||||||
| Gross profit | 67,184 | 48,786 | 130,048 | 83,986 | |||||||||||
| Selling, general and administrative | 48,528 | 36,061 | 95,729 | 62,709 | |||||||||||
| Depreciation and amortization | 1,887 | 1,364 | 3,607 | 2,439 | |||||||||||
| Income from operations | 16,769 | 11,361 | 30,712 | 18,838 | |||||||||||
| Other income (expense) | |||||||||||||||
| Floorplan interest expense | (4,712 | ) | (2,179 | ) | (8,573 | ) | (4,288 | ) | |||||||
| Other interest expense | (1,862 | ) | (1,065 | ) | (3,657 | ) | (1,694 | ) | |||||||
| Other income (expense), net | 305 | (338 | ) | 433 | (72 | ) | |||||||||
| (6,269 | ) | (3,582 | ) | (11,797 | ) | (6,054 | ) | ||||||||
| Income before income taxes | 10,500 | 7,779 | 18,915 | 12,784 | |||||||||||
| Income tax expense | 4,306 | 3,202 | 7,757 | 5,178 | |||||||||||
| Net income | $ | 6,194 | $ | 4,577 | $ | 11,158 | $ | 7,606 | |||||||
| Basic net income per share | $ | 0.50 | $ | 0.42 | $ | 0.90 | $ | 0.72 | |||||||
| Diluted net income per share | $ | 0.45 | $ | 0.40 | $ | 0.81 | $ | 0.69 | |||||||
The accompanying notes are an integral part of these consolidated statements.
3
LITHIA MOTORS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| | Six months ended June 30, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| | 2000 | 1999 | |||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 11,158 | $ | 7,606 | |||||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: | |||||||||||
| Depreciation and amortization | 3,607 | 2,439 | |||||||||
| Compensation expense related to stock option issuances | 39 | 39 | |||||||||
| Loss on sale of assets | 52 | 21 | |||||||||
| Loss on sale of vehicles leased to others | 72 | 111 | |||||||||
| Deferred income taxes | (337 | ) | (1,446 | ) | |||||||
| Equity in income of affiliate | (30 | ) | (151 | ) | |||||||
| Changes in operating assets and liabilities, net of effect of acquisitions: | |||||||||||
| Trade and installment contract receivables, net | (5,579 | ) | 526 | ||||||||
| Inventories | (41,634 | ) | (13,686 | ) | |||||||
| Prepaid expenses and other | 2,042 | 884 | |||||||||
| Other noncurrent assets | (103 | ) | (42 | ) | |||||||
| Floorplan notes payable | 47,435 | 12,776 | |||||||||
| Trade payables | 1,283 | (3,544 | ) | ||||||||
| Accrued liabilities | 157 | 5,940 | |||||||||
| Other long-term liabilities and deferred revenue | 753 | 1,737 | |||||||||
| Net cash provided by operating activities | 18,915 | 13,210 | |||||||||
| Cash flows from investing activities: | | | | | | | | ||||
| Notes receivable issued | (431 | ) | (418 | ) | |||||||
| Principal payments received on notes receivable | 2,185 | 2,496 | |||||||||
| Capital expenditures | (14,555 | ) | (4,497 | ) | |||||||
| Proceeds from sale of assets | 1,134 | 389 | |||||||||
| Expenditures for vehicles leased to others | (6,448 | ) | (4,932 | ) | |||||||
| Proceeds from sale of vehicles leased to others | 3,359 | 3,312 | |||||||||
| Cash paid for acquisitions, net of cash acquired | (29,914 | ) | (21,490 | ) | |||||||
| Distribution from affiliate | 379 | — | |||||||||
| Net cash used in investing activities | (44,291 | ) | (25,140 | ) | |||||||
| Cash flows from financing activities: | |||||||||||
| Net borrowings on lines of credit | 20,220 | 36,400 | |||||||||
| Principal payments on long-term debt and capital leases | (4,090 | ) | (5,047 | ) | |||||||
| Proceeds from issuance of long-term debt | 7,138 | 1,351 | |||||||||
| Proceeds from issuance of common stock | 1,406 | 348 | |||||||||
| Repurchase of common stock | (230 | ) | — | ||||||||
| Net cash provided by financing activities | 24,444 | 33,052 | |||||||||
| Increase (decrease) in cash and cash equivalents | (932 | ) | 21,122 | ||||||||
| Cash and cash equivalents: | |||||||||||
| Beginning of period | 30,364 | 20,879 | |||||||||
| End of period | $ | 29,432 | $ | 42,001 | |||||||
The accompanying notes are an integral part of these consolidated statements.
4
LITHIA MOTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts or as otherwise indicated)
(Unaudited)
Note 1. Basis of Presentation
The financial information included herein as of June 30, 2000 and December 31, 1999 and for the three and six-month periods ended June 30, 2000 and 1999 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, 1999 is derived from Lithia Motors, Inc.'s (the Company's) 1999 Annual Report 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 1999 Annual Report on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year.
Note 2. Inventories
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:
| | June 30, 2000 | December 31, 1999 | |||||
|---|---|---|---|---|---|---|---|
| New and program vehicles | $ | 255,707 | $ | 198,812 | |||
| Used vehicles | 55,718 | 56,292 | |||||
| Parts and accessories | 14,297 | 13,177 | |||||
| $ | 325,722 | $ | 268,281 | ||||
Note 3. Supplemental Cash Flow Information
Supplemental disclosure of cash flow information is as follows:
| | Six Months Ended June 30, | |||||
|---|---|---|---|---|---|---|
| | 2000 | 1999 | ||||
| Cash paid during the period for income taxes | $ | 4,646 | $ | 4,630 | ||
| Cash paid during the period for interest | 11,845 | 5,569 | ||||
Note 4. Earnings Per Share
Following is a reconciliation of basic earnings per share ("EPS") and diluted EPS:
| | 2000 | 1999 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended June 30, | Income | Shares | Per Share Amount | Income | Shares | Per Share Amount | ||||||||||
| Basic EPS | ||||||||||||||||
| Net income available to Common Shareholders | $ | 6,194 | 12,460 | $ | 0.50 | $ | 4,577 | 10,926 | $ | 0.42 | ||||||
| Diluted EPS | ||||||||||||||||
| Effect of dilutive stock options | — | 137 | — | 349 | ||||||||||||
| Conversion of preferred stock | — | 1,222 | — | 295 | ||||||||||||
| Net income available to Common Shareholders | $ | 6,194 | 13,819 | $ | 0.45 | $ | 4,577 | 11,570 | $ | 0.40 | ||||||
5
| | 2000 | 1999 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Six Months Ended June 30, | Income | Shares | Per Share Amount | Income | Shares | Per Share Amount | ||||||||||
| Basic EPS | ||||||||||||||||
| Net income available to Common Shareholders | $ | 11,158 | 12,408 | $ | 0.90 | $ | 7,606 | 10,585 | $ | 0.72 | ||||||
| Diluted EPS | ||||||||||||||||
| Effect of dilutive stock options | — | 171 | — | 353 | ||||||||||||
| Conversion of preferred stock | — | 1,222 | — | 147 | ||||||||||||
| Net income available to Common Shareholders | $ | 11,158 | 13,801 | $ | 0.81 | $ | 7,606 | 11,085 | $ | 0.69 | ||||||
Potentially dilutive securities that are not included in the diluted EPS calculations because they would be antidilutive include 692 and 109 shares, respectively, issuable pursuant to stock options, for the three month periods ended June 30, 2000 and 1999, respectively, and 689 and 133 shares, respectively, for the six month periods ended June 30, 2000 and 1999, respectively.
Note 5. Acquisitions
The following acquisitions were made in 2000. In March, Lithia acquired the Bob Rice Ford/Chrysler dealership in Boise, Idaho. The dealership had estimated 1999 revenues of approximately $73,000. In May, Lithia acquired Shumate Honda in Kennewick, Washington with estimated annual revenues of $27,000.
The above acquisitions were accounted for under the purchase method of accounting. Pro forma results of operations are not materially different from actual results of operations.
Additionally, in April 2000, Lithia added a Daewoo franchise and store in Twin Falls, Idaho. Two shared franchises in Reno, Nevada have now been split, creating two separate stores; Lithia Reno Subaru and Lithia Reno Hyundai.
Note 6. Purchase of Common Stock
In June 2000, Lithia's Board of Directors authorized the repurchase of up to 1,000,000 shares of Lithia's Class A Common Stock. Lithia has purchased shares under this program and will continue to do so from time to time in the future as market conditions warrant.
Note 7. Subsequent Event
In July 2000, Saturn of Eugene, Oregon was acquired with estimated revenues of $5,000.
6
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: September 6, 2000 | 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/ JEFFREY B. DEBOER Jeffrey B. DeBoer Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
7
