<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 March 31, 1998
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
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LITHIA MOTORS, INC.
(Exact name of registrant as specified in its charter)
OREGON 93-0572810
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
360 E. JACKSON STREET, MEDFORD, OREGON 97501
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 541-776-6899
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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 5,931,715
Class B Common stock without par value 4,110,000
(Class) (Outstanding at May 11, 1998)
- --------------------------------------------------------------------------------
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<PAGE>
LITHIA MOTORS, INC.
FORM 10-Q
INDEX
PART I - FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited) - March 31, 1998 2
and December 31, 1997
Consolidated Statements of Operations (Unaudited) - Three
Months Ended March 31, 1998 and 1997 3
Consolidated Statements of Cash Flows (Unaudited) - Three
Months Ended March 31, 1998 and 1997 4
Notes to Consolidated Financial Statements (Unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk 12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
1
<PAGE>
PART I-FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
LITHIA MOTORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 14,181 $ 18,454
Trade receivables 10,541 7,655
Notes receivable, current portion 446 427
Inventories, net 120,743 89,845
Vehicles leased to others, current portion 648 738
Prepaid expenses and other 1,388 913
Deferred income taxes 1,388 1,855
-------- --------
Total Current Assets 149,335 119,887
Property and Equipment, net of accumulated
depreciation of $3,114 and $2,822 23,309 16,265
Vehicles Leased to Others, less current portion 4,336 4,588
Notes Receivable, less current portion 257 309
Goodwill, net of accumulated amortization of
$471 and $293 29,628 24,062
Other Non-Current Assets, net of accumulated
amortization of $96 and $86 1,137 1,415
-------- --------
Total Assets $208,002 $166,526
-------- --------
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Flooring notes payable $ 94,642 $ 82,598
Current maturities of long-term debt 3,322 2,688
Current portion of capital leases 101 99
Trade payables 3,355 3,874
Accrued liabilities 8,699 6,758
-------- --------
Total Current Liabilities 110,119 96,017
Long-Term Debt, less current maturities 50,340 24,242
Long-Term Capital Lease Obligation, less current
portion 2,289 2,316
Deferred Revenue 2,301 2,519
Other Long-Term Liabilities 591 447
Deferred Income Taxes 2,913 3,108
-------- --------
Total Liabilities 168,553 128,649
-------- --------
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 2,932 and 2,926 28,136 28,117
Class B common stock
authorized 25,000 shares; issued and
outstanding 4,110 and 4,110 511 511
Additional paid-in capital 93 59
Retained earnings 10,709 9,190
-------- --------
Total Shareholders' Equity 39,449 37,877
-------- --------
Total Liabilities and Shareholders' Equity $208,002 $166,526
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
2
<PAGE>
LITHIA MOTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1998 1997
--------- --------
<S> <C> <C>
Sales:
Vehicles $124,709 $47,470
Service, body, parts and other 21,489 7,234
-------- -------
Net Sales 146,198 54,704
Cost of sales
Vehicles 112,993 42,479
Service, body, parts and other 10,481 3,276
-------- -------
Cost of Sales 123,474 45,755
-------- -------
Gross profit 22,724 8,949
Selling, general and administrative 17,916 6,995
Depreciation and amortization 498 169
-------- -------
Operating income 4,310 1,785
Other income (expense)
Equity in income of affiliate 9 50
Interest income 54 28
Interest expense (2,210) (146)
Other, net 303 147
-------- -------
(1,844) 79
-------- -------
Income before income taxes 2,466 1,864
Income tax expense 947 720
-------- -------
Net income $ 1,519 $ 1,144
-------- -------
-------- -------
Basic net income per share $ 0.22 $ 0.17
-------- -------
-------- -------
Diluted net income per share $ 0.21 $ 0.16
-------- -------
-------- -------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
<PAGE>
LITHIA MOTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
----------------------------
1998 1997
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,519 $ 1,144
Adjustments to reconcile net income to net cash flow
used in operating activities:
Depreciation and amortization 720 475
Gain on sale of assets - (76)
Gain on sale of vehicles leased to others (45) -
Deferred income taxes (195) 720
Equity in income of affiliate (9) (50)
Changes in operating assets and liabilities, net of
effect of acquisitions:
Trade and installment contract receivables, net (2,994) (632)
Inventories (19,174) (5,738)
Prepaid expenses and other 162 53
Other noncurrent assets 277 (457)
Increase (decrease) in:
Trade payables (519) (996)
Accrued liabilities 1,942 594
Other liabilities (196) (2,127)
Proceeds from sale of vehicles leased to others 2,191 1,587
Expenditures for vehicles leased to others (2,046) (1,851)
-------- -------
Net cash used in operating activities (18,367) (7,354)
Cash flows from investing activities:
Notes receivable issued (54) (127)
Principal payments received on notes receivable 87 81
Capital expenditures (1,195) (3,761)
Acquisitions (15,197) -
-------- -------
Net cash used in investing activities (16,359) (3,807)
Cash flows from financing activities:
Net repayments on notes payable - (500)
Net borrowings on flooring notes payable 4,793 5,121
Principal payments on long-term debt (1,010) (1,945)
Proceeds from issuance of long-term debt 26,617 2,702
Proceeds from issuance of common stock 53 3,898
-------- -------
Net cash provided by financing activities 30,453 9,276
-------- -------
Decrease in cash and cash equivalents (4,273) (1,885)
Cash and cash equivalents:
Beginning of period 18,454 15,413
-------- -------
End of period $ 14,181 $13,528
-------- -------
-------- -------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE>
LITHIA MOTORS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The financial information included herein for the three-month periods ended
March 31, 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, 1997 is derived from Lithia Motors,
Inc.'s (the Company's) 1997 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 1997 Annual Report 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.
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).
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------- -----------------
<S> <C> <C>
New and demonstrator vehicles $ 88,146 $ 63,457
Used vehicles 22,432 21,524
Parts and accessories 10,165 4,864
-------- --------
$120,743 $ 89,845
-------- --------
-------- --------
</TABLE>
NOTE 3. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental disclosure of cash flow information is as follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
--------- --------
<S> <C> <C>
Cash paid during the period for income
taxes $ 650 $ 99
Cash paid during the period for interest 1,614 243
Property acquired through debt - 1,424
</TABLE>
NOTE 4. 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
Standard 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.
5
<PAGE>
Following is a reconciliation of basic EPS and diluted EPS:
<TABLE>
<CAPTION>
Three Months Ended March 31, 1998 1997
- ---------------------------- ------------------------------------ --------------------------------
Per Per
Share Share
BASIC EPS Income Shares Amount Income Shares Amount
- --------- ------------------------------------ --------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income available to Common
Shareholders $ 1,519 7,036 $ 0.22 $ 1,144 6,907 $ 0.17
------ ------
------ ------
DILUTED EPS
- -----------
Effect of dilutive stock options - 335 - 314
------------------------ ------------------
Income available to Common
Shareholders $ 1,519 7,371 $ 0.21 $ 1,144 7,221 $ 0.16
------ ------
------ ------
</TABLE>
NOTE 5. ACQUISITIONS
The following table sets forth the total purchase price, cash paid, debt
incurred and the net investment for acquisitions made by the Company in the
first quarter of 1998:
<TABLE>
<CAPTION>
TOTAL CASH DEBT NET
NAME MONTH PAID PAID INCURRED INVESTMENT(1)
- ----------------------- -------- ------- ------ -------- -------------
<S> <C> <C> <C> <C> <C>
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
------- ------ ------ ------
Total $17,947 $9,582 $8,365 $9,087
------- ------ ------ ------
------- ------ ------ ------
</TABLE>
(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.
The above acquisitions were accounted for under the purchase method of
accounting. Pro forma results of operations, both individually and in
aggregate, are not material for the above acquisitions and therefore have not
been included herein.
NOTE 6. SUBSEQUENT EVENTS
In May 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.
Net proceeds from the sale were $41.0 million.
6
<PAGE>
ITEM 2. MANAGEMENT'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. These risk
factors include, but are not limited to, the cyclical nature of automobile
sales, the intense competition in the automobile retail industry and the
Company's ability to negotiate profitable acquisitions and secure manufacturer
approvals for such acquisitions.
GENERAL
Lithia Motors is a leading automotive retailer offering a total of 21 brands in
22 locations in the western United States. The Company currently operates 12
dealerships in California, 7 in Oregon and 3 in Nevada. The Company 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, Lithia has acquired
17 dealerships and is actively pursuing additional acquisitions.
The following table sets forth selected condensed financial data expressed as a
percentage of total sales for the periods indicated for the average automotive
dealer in the United States.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
AVERAGE U.S. DEALERSHIP -----------------------------
STATEMENT OF OPERATIONS DATA: 1996 1995
<S> <C> <C>
Sales:
New vehicles 57.7 % 58.6 %
Used vehicles 30.4 29.0
Parts and service, other 11.9 12.4
----- -----
Total sales 100.0 % 100.0 %
Gross profit 12.9 12.9
Total dealership expense 11.3 11.5
Income before taxes 1.5 % 1.4 %
</TABLE>
________
Source: NADA INDUSTRY ANALYSIS DIVISION
7
<PAGE>
The following table sets forth selected condensed financial data for the
Company, expressed as a percentage of total sales for the periods indicated
below.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1998 1997
------ ------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Sales:
New vehicles 51.2 % 45.4 %
Used vehicles 34.1 41.4
Parts and service 10.0 8.3
Finance, insurance and other 4.7 4.9
----- -----
Total sales 100.0 100.0
Gross profit 15.5 16.4
Selling, general and administrative 12.2 12.8
Depreciation and amortization 0.3 0.3
----- -----
Operating income 3.0 3.3
Other income (expense), net (1.3) 0.1
----- -----
Income before taxes 1.7 % 3.4 %
----- -----
----- -----
</TABLE>
RESULTS OF OPERATIONS
1998 COMPARED TO 1997
SALES. Net sales for the Company increased $91.5 million, or 167 percent, to
$146.2 million for the quarter ended March 31, 1998 from $54.7 million for the
comparable period of 1997. The Company's sales mix shifted more to new vehicle
sales, with 51.2 percent of total sales generated from new vehicle sales, 34.1
percent from used vehicle sales and 14.7 percent from other operating income.
Same store sales growth was 9.9 percent with a 10.4 percent increase in vehicle
sales and a 5.9 percent increase in other revenue, which includes service,
parts, finance fees and insurance, the Company's highest margin products.
NEW VEHICLE SALES. The Company sells 21 domestic and imported brands
ranging from economy to luxury cars, as well as sport utility vehicles, minivans
and light trucks. Revenue from new vehicle sales increased 202 percent to $74.9
million for the quarter ended March 31, 1998 compared to $24.8 million for the
comparable quarter of 1997. This increase was achieved by a 186 percent
increase in units sold to 3,422 from 1,197 in the first quarter of 1997 and a
5.5 percent increase in the average selling price to $21,890 from $20,743. New
vehicle sales represented 51.2 percent of total sales in the first quarter of
1998 compared to 45.4 percent in the comparable quarter of 1997. The increases
are primarily attributable to a 9.9% overall same store growth rate, the
inclusion of 15 locations in California and Nevada acquired since March 1997 and
incentives from manufacturers for new vehicle sales.
The Company purchases substantially all of its new car inventory directly from
manufacturers who allocate new vehicles to dealerships based on the amount of
vehicles sold by the dealership and by the dealership's market area. The Company
will also exchange vehicles with other dealers to accommodate customer demand
and to balance inventory.
8
<PAGE>
USED VEHICLE SALES. The Company offers a variety of makes and models of
used cars and light trucks of varying model years and prices. Used vehicle sales
are an important part of the Company's overall profitability. Revenue from
retail used vehicle sales increased 118 percent to $38.3 million for the quarter
ended March 31, 1998 from $17.6 million for the comparable quarter of 1997.
Retail used unit volume increased 109 percent to 3,027 units from 1,450 units
and the average unit price increased 4.4 percent to $12,649 from $12,112. The
increases are primarily attributable to a 9.9% overall same store growth rate
and the inclusion of 15 locations in California and Nevada acquired since March
1997.
OTHER. The Company derives additional revenue from the sale of parts and
accessories, maintenance and repair services, auto body work and finance and
insurance ("F&I") transactions. Other operating revenue increased 197 percent
to $21.5 million during the first quarter of 1998, from $7.2 million during the
comparable period of 1997. This increase is primarily due to a 5.9% same store
growth rate in such revenue and the inclusion of 15 new locations in California
and Nevada since March 1997. To a limited extent, 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 154 percent to $22.7 million for the first
quarter of 1998, compared with $8.9 million for the first quarter of 1997,
primarily due to increased revenues as indicated above. The gross profit margin
achieved by the Company on new vehicle sales during the first quarter of 1998
was 10.4 percent compared to 12.3 percent in the first quarter of 1997. This
compares favorably with the average gross profit margin of 6.5% realized by
franchised automobile dealers in the United States on sales of new vehicles in
1996. The Company sells used vehicles to retail customers and, in the case of
vehicles in poor condition or vehicles which have not sold within a specified
period of time, to other dealers and to wholesalers. Sales to other dealers and
to wholesalers are frequently at, or close to, cost and therefore affect the
Company's overall gross profit margin on used vehicle sales. Excluding
wholesale transactions, the Company's gross profit margin on used vehicle sales
during the first quarter of 1998 was 10.9 percent compared to 10.9 percent in
the first quarter of 1997, as compared to the industry average for 1996 of
11.0%. Total gross profit margin decreased to 15.5 percent in the first quarter
of 1998 compared to 16.4 percent in the first quarter of 1997. The decrease in
gross profit margins was 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. The Company's gross profit margin continues to
exceed the average U.S. dealership gross profit margin of 12.9% for the eleven
months ended November, 30, 1997.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. The Company's selling, general and
administrative ("SG&A") expense increased 156 percent to $17.9 million (12.3
percent of total sales) for the three months ended March 31, 1998 compared to
$7.0 million (12.8 percent of total sales) for the comparable period of 1997.
The increase in SG&A was due primarily to increased selling, or variable,
expense related to the increase in sales and the number of total locations. The
decrease in SG&A as a percent of total sales is a result of economies of scale
gained as the fixed expenses are spread over a larger revenue base.
9
<PAGE>
DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense increased
195 percent to $498,000 in the first quarter of 1998 compared to $169,000 in the
first quarter 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 percent of sales in the first quarter of 1998 and 1997.
These figures exclude depreciation related to leased vehicles included in cost
of sales.
INTEREST EXPENSE. Interest expense increased to $2.2 million for the
three-month period ended March 31, 1998 from $146,000 for the comparable
period of 1997, primarily as a result of increased flooring notes payable
related to increased inventories.
INCOME TAX EXPENSE. The Company's effective tax rate for the quarter ended
March 31, 1998 was 38.4 percent compared to 38.6 percent for the quarter ended
March 31, 1997. The Company's effective tax rate may be effected by the
purchase of new stores in jurisdictions with tax rates either higher or lower
than the current estimated rate.
NET INCOME. Net income was $1.5 million (1.0 percent of total sales) for the
three months ended March 31, 1998 compared to $1.1 million (2.1 percent of total
sales) for the comparable period of 1997, as a result of the individual line
item changes discussed above.
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 credit facility and the proceeds from its
initial public offering to finance its operations and expansion. In May 1998,
the Company closed an offering of 3.0 million newly issued shares of its Class A
Common Stock for net proceeds of $41.0 million. The proceeds have been used to
pay down the Company's lines of credit until needed for future acquisitions.
At March 31, 1998 the Company had working capital of $39.2 million, which
included $14.2 million of cash. The $4.3 million decrease in cash since
December 31, 1997 is primarily a result of $18.4 million used in operations,
primarily for the purchase of inventories, $1.2 million used for the purchase of
property and equipment and $15.2 million used for acquisitions, offset by $26.6
million from the issuance of long-term debt and $4.8 million net borrowing on
flooring lines. The current ratio at March 31, 1998 was 1.4:1 compared to 1.2:1
at December 31, 1997.
The Company's credit facility with a syndicate of banks, with U.S. Bank N.A. as
agent, provides for aggregate borrowings of $175 million (the "Credit
Facility"). The Credit Facility consists of (i) a $110 million revolving line
of credit to finance new and used vehicle inventory (the "Flooring Line"),
(ii) a $30 million revolving line of credit for acquisitions (the "Acquisition
Line"), (iii) a $10 million revolving line of credit for leased vehicles (the
"Lease Line"), (iv) a $10 million revolving line of credit for equipment (the
"Equipment Line"), and (v) a $15 million commitment for real estate acquisitions
(the "Real Estate Line").
The Credit Facility has a maturity date of October 1, 1998. At that time, the
Company has the right to elect to convert outstanding loans under the
Acquisition Line and the Equipment Line to a term loan payable over 5 years.
10
<PAGE>
Amounts outstanding at March 31, 1998 were as follows (in thousands):
<TABLE>
<S> <C>
Flooring Line $ 94,642
Acquisition Line 30,000
Lease Line 4,559
Equipment and Real Estate Lines 6,432
---------
Total $ 135,633
---------
---------
</TABLE>
Loans under the Credit Facility bear interest at LIBOR (London Interbank Offered
Rate) plus 150 to 275 basis points, equivalent to 7.25 percent to 8.75 percent
at March 31, 1998.
The Credit Facility contains financial covenants requiring the Company to
maintain compliance with, among other things, specified ratios of (i) minimum
net worth; (ii) total liabilities to net worth; (iii) funded debt to cash flow;
(iv) fixed charge coverage; and (v) maximum allowable capital expenditures. The
Company is currently in compliance with all such financial covenants.
Since December 1996 when the Company completed its initial public offering, the
Company has acquired 17 dealerships. The aggregate net investment by the
Company was approximately $48.6 million (excluding borrowings on its credit
lines to finance acquired vehicle inventories and equipment and the purchase of
any real estate).
SEASONALITY AND QUARTERLY FLUCTUATIONS
Historically, the Company'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
generally 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
economic conditions, also contribute to fluctuations in sales and operating
results. The timing of acquisitions may cause substantial fluctuations of
operating results from quarter to quarter.
11
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits filed as a part of this report are listed below.
EXHIBIT NO.
-----------
10 Agreement for Purchase and Sale of Business Assets between Boyland
Auto Group dba Boyland Toyota, Dorian Boyland and Lithia Motors, 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.
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended March 31, 1998.
12
<PAGE>
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: May 11, 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
-------------------------------------------
Brian R. Neill
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 14,181
<SECURITIES> 0
<RECEIVABLES> 10,987
<ALLOWANCES> 0
<INVENTORY> 120,743
<CURRENT-ASSETS> 149,335
<PP&E> 26,423
<DEPRECIATION> 3,114
<TOTAL-ASSETS> 208,002
<CURRENT-LIABILITIES> 110,119
<BONDS> 150,694
0
0
<COMMON> 28,647
<OTHER-SE> 10,802
<TOTAL-LIABILITY-AND-EQUITY> 208,002
<SALES> 124,709
<TOTAL-REVENUES> 146,198
<CGS> 112,993
<TOTAL-COSTS> 123,474
<OTHER-EXPENSES> 498
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,210
<INCOME-PRETAX> 2,466
<INCOME-TAX> 947
<INCOME-CONTINUING> 1,519
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,519
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.21
</TABLE>
