SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 1, 1997
Lithia Motors, Inc.
(Exact Name of Registrant as specified in its charter)
Oregon 0-21789 93-0572810
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.
of incorporation)
360 E. Jackson St., Medford, Oregon 97501
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Address of Principal Executive Office Zip Code
Registrant's telephone number including area code 541-776-6899
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On July 1, 1997, the registrant completed the acquisition from
Magnussen-Barbee Ford, Lincoln-Mercury, Inc. a California corporation, of a
Ford, Lincoln, Mercury dealership located at 300 Soscol Avenue, Napa,
California, pursuant to an Agreement for the Purchase and Sale of Business
Assets (the "Agreement") dated February 21, 1997. The registrant acquired the
dealership business through the purchase of substantially all of the assets used
in the operation of the business, consisting of furniture, fixtures, leasehold
improvements, equipment, parts and accessories, inventories of new and used
vehicles, service supplies and work in progress, pre-paid expenses and goodwill.
Total consideration paid for the assets was $7,411,000, consisting of
(i) $250,000 for parts and accessories, valued at the seller's net cost or
replacement cost; (ii) $3,000,000 for new vehicle inventory, at the aggregate
factory invoice cost less factory rebates, holdbacks, incentives, and certain
allowances rebated to the dealer; (iii) $800,000 for used vehicle inventories,
based on mutual agreement of the parties as to the value of each individual
vehicle; (iv) $661,000 for furniture, fixtures, leasehold improvements and
equipment, based on an independent appraisal; and (v) $2,700,000 for intangible
assets, determined by agreement of the parties.
The purchase price for tangible assets was paid in cash, with new and
used vehicle inventories subsequently financed under the registrant's existing
credit facility with United States Bank of Oregon. Payment for intangible assets
consisted of $2,100,000 in cash and an unsecured promissory note in the amount
of $600,000, bearing interest at 9.0% per annum, with principal payable in four
annual installments of $150,000 each.
Concurrent with the close of the acquisition, a wholly-owned subsidiary
of the registrant assumed the existing lease of the premises on which the
dealership business is conducted, which premises were subsequently sub-leased on
substantially identical terms to Lithia FN, Inc., another wholly-owned
subsidiary of the registrant which was formed to operate the dealership.
The lease (the "Lease"), between Lithia Real Estate ("Lessee"), Inc.
and John Ferrogiaro ("Lessor"), expires on December 31, 2006, with the Lessee
having an option to extend for an additional five years thereafter. The Lease
provides for monthly payments of $6,000 through December 31, 2001, rising to
$6,500 for the remainder of the term. The monthly lease payments under the
renewal option are to be negotiated by the parties, but in any event will be no
less than $6,500 nor more than $7,500 per month.
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Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired.
Not Applicable
(b) Exhibits.
The following exhibits are being filed herewith:
10.1. Agreement for the Purchase and Sale of Business
Assets, dated February 21, 1997, between Magnussen-
Barbee Ford, Lincoln Mercury, Inc. and Lithia
Motors, Inc., incorporated by reference to Exhibit
10.23 to the registrant's annual report on Form 10-
K (file no. 0-21789) as filed with the Securities
and Exchange Commission on March 31, 1997.
10.2. Lease between John Ferrogiaro and Bernard L.
Magnussen et al., as amended by Second Amendment to
Lease, dated December 12, 1996, and Consent to
Assignment and Third Amendment to Lease, by and among
John Ferrogiaro, Magnussen Dealership Group and
Lithia Real Estate, Inc.
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 hereunto duly authorized.
LITHIA MOTORS, INC.
(Registrant)
Date: July 16, 1997 By: /s/ Sidney B. DeBoer
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Sidney B. DeBoer
President and Chief Executive
Officer
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Exhibit Index
Exhibit
10.1. Agreement for the Purchase and Sale of Business
Assets, dated February 21, 1997, between Magnussen-
Barbee Ford, Lincoln Mercury, Inc. and Lithia
Motors, Inc., incorporated by reference to Exhibit
10.23 to the registrant's annual report on Form 10-
K (file no. 0-21789) as filed with the Securities
and Exchange Commission on March 31, 1997.
10.2. Lease between John Ferrogiaro and Bernard L.
Magnussen et al., as amended by Second Amendment to
Lease, dated December 12, 1996, and Consent to
Assignment and Third Amendment to Lease, by and among
John Ferrogiaro, Magnussen Dealership Group and
Lithia Real Estate, Inc.
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