Oregon
|
93-0572810
|
||
(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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360 E. Jackson Street, Medford, Oregon
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97501
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
|
Name of each exchange on which registered
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Class A common stock, without par value
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New York Stock Exchange
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Page
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PART I
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Item 1.
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Business
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2
|
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Item 1A.
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Risk Factors
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11
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Item 1B.
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Unresolved Staff Comments
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24
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Item 2.
|
Properties
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25
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Item 3.
|
Legal Proceedings
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25
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Item 4.
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Reserved
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26
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PART II
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|||
Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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27
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Item 6.
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Selected Financial Data
|
29
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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30
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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52
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Item 8.
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Financial Statements and Supplementary Data
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54
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Item 9.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
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54
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Item 9A.
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Controls and Procedures
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54
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Item 9B.
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Other Information
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55
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PART III
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|||
Item 10.
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Directors, Executive Officers and Corporate Governance
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55
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Item 11.
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Executive Compensation
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55
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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56
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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56
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Item 14.
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Principal Accountant Fees and Services
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56
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PART IV
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|||
Item 15.
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Exhibits and Financial Statement Schedules
|
56
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Signatures
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61
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State
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Number of
Stores
|
Percent of
2011 Revenue
|
||
Texas
|
14
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24%
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Oregon
|
20
|
20
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||
California
|
11
|
10
|
||
Washington
|
8
|
10
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||
Alaska
|
7
|
9
|
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Montana
|
7
|
8
|
||
Idaho
|
5
|
6
|
||
Iowa
|
5
|
5
|
||
Nevada
|
4
|
5
|
||
North Dakota
|
3
|
2
|
||
New Mexico
|
1
|
1
|
||
Total
|
85
|
100
%
|
|
·
|
increasing revenues in all business lines;
|
|
·
|
capturing a greater percentage of overall new vehicle sales in our local markets;
|
|
·
|
increasing sales of manufacturer certified pre-owned used vehicles; three to seven years old, lower-mileage vehicles; and value autos to reach additional customers;
|
|
·
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diversifying our franchise mix through acquisitions;
|
|
·
|
increasing our return to investors through dividends and strategic share buy backs;
|
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·
|
utilizing prudent cash management, including investing capital to produce accretive returns; and
|
|
·
|
reducing our exposure to pending debt maturities by renewing and extending debt instruments.
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Manufacturer
|
Percent of
2011 Total Revenue
|
Percent of
2011 New Vehicle Revenue
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Percent of
2011 New Vehicle Gross Profit
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|||
Chrysler, Jeep, Dodge
|
17.1%
|
32.4%
|
29.9%
|
|||
Chevrolet, Cadillac, Saab
|
8.9
|
16.8
|
15.8
|
|||
Toyota, Scion
|
5.6
|
10.5
|
10.4
|
|||
BMW, Mini
|
5.3
|
10.1
|
9.3
|
|||
Honda, Acura
|
2.9
|
5.6
|
7.1
|
|||
Ford, Lincoln
|
3.3
|
6.2
|
5.0
|
|||
Subaru
|
2.2
|
4.2
|
3.7
|
|||
Hyundai
|
2.1
|
3.9
|
6.1
|
|||
Volkswagen, Audi
|
1.1
|
2.1
|
2.6
|
|||
Nissan
|
1.4
|
2.7
|
3.1
|
|||
Mercedes, smart
|
2.0
|
3.7
|
4.7
|
|||
Kia
|
0.4
|
0.8
|
0.9
|
|||
Porsche
|
0.4
|
0.7
|
0.9
|
|||
Mazda
|
0.2
|
0.3
|
0.5
|
|||
Suzuki
|
*
|
*
|
*
|
|||
Mitsubishi | * | * | * | |||
Total
|
52.9
%
|
100.0
%
|
100.0
%
|
|
·
|
generate sales to customers financially unable or unwilling to purchase a new vehicle;
|
|
·
|
generate sales of vehicle brands other than the store’s new vehicle franchise;
|
|
·
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increase new and used vehicle sales by aggressively pursuing customer trade-ins; and
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·
|
increase finance and insurance revenues and service and parts sales.
|
|
·
|
locate our stores and identify the new vehicle brands sold at each store;
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|
·
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search new and pre-owned vehicle inventory;
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|
·
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view current pricing and specials;
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|
·
|
obtain a value for their vehicle to trade or sell to us;
|
|
·
|
submit credit applications;
|
|
·
|
shop for and order manufacturers’ vehicle parts;
|
|
·
|
schedule service appointments; and
|
|
·
|
provide feedback about their Lithia experience.
|
|
·
|
facilities and equipment;
|
|
·
|
inventories of vehicles and parts;
|
|
·
|
minimum working capital;
|
|
·
|
training of personnel; and
|
|
·
|
performance standards for market share and customer satisfaction.
|
|
·
|
a change of management or ownership without manufacturer consent;
|
|
·
|
insolvency or bankruptcy of the dealer;
|
|
·
|
death or incapacity of the dealer/manager;
|
|
·
|
conviction of a dealer/manager or owner of certain crimes;
|
|
·
|
misrepresentation of certain sales or inventory information by the store, dealer/manager or owner to the manufacturer;
|
|
·
|
failure to adequately operate the store;
|
|
·
|
failure to maintain any license, permit or authorization required for the conduct of business;
|
|
·
|
poor market share; or
|
|
·
|
low customer satisfaction index scores.
|
|
·
|
customer rebates;
|
|
·
|
dealer incentives on new vehicles;
|
|
·
|
special rates on certified, pre-owned cars;
|
|
·
|
below-market financing on new vehicles and special leasing terms; and
|
|
·
|
sponsorship of used vehicle sales by authorized new vehicle dealers.
|
|
·
|
number of such manufacturers’ stores that may be acquired by a single owner;
|
|
·
|
number of stores that may be acquired in any market or region;
|
|
·
|
percentage of market share that may be controlled by one automotive retailer group;
|
|
·
|
ownership of stores in contiguous markets;
|
|
·
|
performance requirements for existing stores; and
|
|
·
|
frequency of acquisitions.
|
|
·
|
failing to assimilate the operations and personnel of acquired dealerships;
|
|
·
|
failing to achieve predicted sales levels;
|
|
·
|
incurring significantly higher capital expenditures and operating expenses;
|
|
·
|
entering new markets with which we are unfamiliar;
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|
·
|
encountering undiscovered liabilities and operational difficulties at acquired dealerships;
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|
·
|
disrupting our ongoing business;
|
|
·
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diverting our management resources;
|
|
·
|
failing to maintain uniform standards, controls and policies;
|
|
·
|
impairing relationships with employees, manufacturers and customers as a result of changes in management;
|
|
·
|
incurring increased expenses for accounting and computer systems, as well as integration difficulties;
|
|
·
|
failing to obtain a manufacturer’s consent to the acquisition of one or more of its dealership franchises or renew the franchise agreement on terms acceptable to us; and
|
|
·
|
incorrectly valuing entities to be acquired.
|
|
·
|
the availability of suitable acquisition candidates;
|
|
·
|
competition with other dealer groups for suitable acquisitions;
|
|
·
|
the negotiation of acceptable terms with the seller and with the manufacturer;
|
|
·
|
our financial capabilities and ability to obtain financing on acceptable terms;
|
|
·
|
our stock price;
|
|
·
|
our ability to maintain required financial covenant levels after the acquisition; and
|
|
·
|
the availability of skilled employees to manage the acquired businesses.
|
|
·
|
limitations on our ability to make acquisitions;
|
|
·
|
impaired ability to obtain additional financing for acquisitions, capital expenditures, working capital or general corporate purposes;
|
|
·
|
reduced funds available for our operations and other purposes, as a portion of our current cash flow from operations would be dedicated to the payment of principal and interest on our indebtedness; and
|
|
·
|
exposure to the risk of increasing interest rates as certain borrowings are, and will continue to be, at variable rates of interest.
|
|
·
|
reports by industry analysts;
|
|
·
|
changes in financial estimates by securities analysts or us, or our inability to meet or exceed securities analysts’, investors’ or our own estimates or expectations;
|
|
·
|
actual or anticipated sales of common stock by existing shareholders;
|
|
·
|
capital commitments;
|
|
·
|
additions or departures of key personnel;
|
|
·
|
developments in our business or in our industry;
|
|
·
|
a prolonged downturn in our industry;
|
|
·
|
general market conditions, such as interest or foreign exchange rates, commodity and equity prices, availability of credit, asset valuations and volatility;
|
|
·
|
changes in global financial and economic markets;
|
|
·
|
armed conflict, war or terrorism;
|
|
·
|
regulatory changes affecting our industry generally or our business and operations in particular;
|
|
·
|
changes in market valuations of other companies in our industry;
|
|
·
|
the operating and securities price performance of companies that investors consider to be comparable to us; and
|
|
·
|
announcements of strategic developments, acquisitions and other material events by us, our competitors or our suppliers.
|
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
2010
|
High
|
Low
|
||||||
First quarter
|
$ | 9.55 | $ | 5.18 | ||||
Second quarter
|
9.36 | 6.09 | ||||||
Third quarter
|
9.94 | 5.87 | ||||||
Fourth quarter
|
14.45 | 9.45 | ||||||
2011
|
||||||||
First quarter
|
$ | 16.07 | $ | 13.28 | ||||
Second quarter
|
20.31 | 14.12 | ||||||
Third quarter
|
23.84 | 13.80 | ||||||
Fourth quarter
|
24.85 | 13.57 |
Quarter declared:
|
Dividend amount per share
|
Total amount of dividend (in thousands)
|
||||||
2010
|
||||||||
First quarter
|
$ | - | $ | - | ||||
Second quarter
|
0.05 | 1,300 | ||||||
Third quarter
|
0.05 | 1,307 | ||||||
Fourth quarter
|
0.05 | 1,312 | ||||||
2011
|
||||||||
First quarter
|
$ | 0.05 | $ | 1,316 | ||||
Second quarter
|
0.07 | 1,851 | ||||||
Third quarter
|
0.07 | 1,838 | ||||||
Fourth quarter
|
0.07 | 1,817 |
Total number of shares purchased
|
Average price paid per share
|
Total number of shares purchased as part of publicly announced plan
|
Maximum number of shares that may yet be purchased under the plans
|
|||||||||||||
October 1 to October 31
|
43,137 | $ | 16.43 | 29,822 | 1,736,145 | |||||||||||
November 1 to November 30
|
68,650 | 20.73 | 33,200 | 1,702,945 | ||||||||||||
December 1 to December 31
|
- | - | - | 1,702,945 | ||||||||||||
Total
|
111,787 | (1) | $ | 19.07 | 63,022 | 1,702,945 |
(1)
|
Includes 48,765 shares repurchased in association with tax withholdings on the exercises of stock options.
|
Base
|
||||||||||||||||||||||||
Period
|
Indexed Returns for the Year Ended
|
|||||||||||||||||||||||
Company/Index
|
12/31/2006
|
12/31/2007
|
12/31/2008
|
12/31/2009
|
12/31/2010
|
12/31/2011
|
||||||||||||||||||
Lithia Motors, Inc.
|
$ | 100.00 | $ | 48.94 | $ | 12.42 | $ | 31.31 | $ | 55.34 | $ | 85.86 | ||||||||||||
Auto Peer Group
|
100.00 | 69.23 | 33.52 | 69.37 | 96.60 | 119.51 | ||||||||||||||||||
Russell 2000
|
100.00 | 98.45 | 65.18 | 82.90 | 105.16 | 100.75 |
(In thousands, except per share amounts)
|
Year Ended December 31,
|
|||||||||||||||||||
Consolidated Statements of Operations Data:
|
2011
|
2010
|
2009
|
2008
|
2007
|
|||||||||||||||
Revenues:
|
||||||||||||||||||||
New vehicle
|
$ | 1,426,888 | $ | 1,038,321 | $ | 857,096 | $ | 1,128,279 | $ | 1,497,984 | ||||||||||
Used vehicle retail
|
695,796 | 566,803 | 465,001 | 451,257 | 538,486 | |||||||||||||||
Used vehicle wholesale
|
130,720 | 105,714 | 70,699 | 92,317 | 129,541 | |||||||||||||||
Finance and insurance
|
85,852 | 65,274 | 54,953 | 75,447 | 97,480 | |||||||||||||||
Service, body and parts
|
325,658 | 284,170 | 278,336 | 289,395 | 288,450 | |||||||||||||||
Fleet and other
|
34,446 | 11,706 | 2,544 | 4,846 | 4,626 | |||||||||||||||
Total revenues
|
$ | 2,699,360 | $ | 2,071,988 | $ | 1,728,629 | $ | 2,041,541 | $ | 2,556,567 | ||||||||||
Gross Profit:
|
||||||||||||||||||||
New vehicle
|
$ | 110,475 | $ | 85,135 | $ | 72,295 | $ | 88,910 | $ | 117,163 | ||||||||||
Used vehicle retail
|
100,618 | 80,064 | 65,515 | 51,929 | 75,863 | |||||||||||||||
Used vehicle wholesale
|
553 | 644 | 471 | (2,978 | ) | 2,898 | ||||||||||||||
Finance and insurance
|
85,852 | 65,274 | 54,953 | 75,447 | 97,480 | |||||||||||||||
Service, body and parts
|
157,120 | 137,051 | 132,500 | 138,226 | 137,225 | |||||||||||||||
Fleet and other
|
2,920 | 1,691 | 1,319 | 1,551 | 1,343 | |||||||||||||||
Total gross profit
|
$ | 457,538 | $ | 369,859 | $ | 327,053 | $ | 353,085 | $ | 431,972 | ||||||||||
Operating income (loss)
(1)
|
$ | 111,991 | $ | 46,571 | $ | 34,907 | $ | (295,760 | ) | $ | 77,986 | |||||||||
Income (loss) from continuing operations before income taxes
(1)
|
$ | 89,175 | $ | 22,120 | $ | 11,764 | $ | (327,030 | ) | $ | 38,496 | |||||||||
Income (loss) from continuing operations
(1)
|
$ | 55,767 | $ | 13,531 | $ | 6,722 | $ | (221,425 | ) | $ | 22,876 | |||||||||
Basic income (loss) per share from continuing operations
|
$ | 2.13 | $ | 0.52 | $ | 0.31 | $ | (10.96 | ) | $ | 1.16 | |||||||||
Basic income (loss) per share from discontinued operations
|
0.11 | 0.01 | 0.11 | (1.55 | ) | (0.06 | ) | |||||||||||||
Basic net income (loss) per share
|
$ | 2.24 | $ | 0.53 | $ | 0.42 | $ | (12.51 | ) | $ | 1.10 | |||||||||
Shares used in basic per share
|
26,230 | 26,062 | 22,037 | 20,195 | 19,675 | |||||||||||||||
Diluted income (loss) per share from continuing operations
|
$ | 2.09 | $ | 0.51 | $ | 0.30 | $ | (10.96 | ) | $ | 1.11 | |||||||||
Diluted income (loss) per share from discontinued operations
|
0.12 | 0.01 | 0.11 | (1.55 | ) | (0.05 | ) | |||||||||||||
Diluted net income (loss) per share
|
$ | 2.21 | $ | 0.52 | $ | 0.41 | $ | (12.51 | ) | $ | 1.06 | |||||||||
Shares used in diluted per share
|
26,664 | 26,279 | 22,176 | 20,195 | 22,204 | |||||||||||||||
Cash dividends declared per common share
|
$ | 0.26 | $ | 0.15 | $ | - | $ | 0.47 | $ | 0.56 |
(In thousands)
|
As of December 31,
|
|||||||||||||||||||
Consolidated Balance Sheets Data:
|
2011
|
2010
|
2009
|
2008
|
2007
|
|||||||||||||||
Working capital
|
$ | 191,607 | $ | 162,675 | $ | 96,886 | $ | 99,524 | $ | 193,447 | ||||||||||
Inventories
|
506,484 | 415,228 | 333,628 | 428,032 | 606,056 | |||||||||||||||
Total assets
|
1,146,133 | 971,676 | 895,100 | 1,133,459 | 1,626,735 | |||||||||||||||
Floor plan notes payable
|
343,940 | 251,257 | 216,082 | 343,290 | 456,237 | |||||||||||||||
Long-term debt, including current maturities
|
286,874 | 280,774 | 265,773 | 338,229 | 464,175 | |||||||||||||||
Total stockholders’ equity
|
367,121 | 320,217 | 307,038 | 248,343 | 508,212 |
(1)
|
Includes $1.4 million, $15.3 million, $8.0 million, $333.8 million and $0.2 million of non-cash charges related to asset impairments and terminated construction projects for the years ended 2011, 2010, 2009, 2008 and 2007, respectively. See Notes 1, 4 and 5 of Notes to Consolidated Financial Statements for additional information.
|
2011
|
Revenues
|
Percent of
Total Revenues
|
Gross
Profit
|
Gross Profit
Margin
|
Percent of Total
Gross Profit
|
|||||||||||||||
New vehicle
|
$ | 1,426,888 | 52.9 | % | $ | 110,475 | 7.7 | % | 24.1 | % | ||||||||||
Used vehicle, retail
|
695,796 | 25.8 | 100,618 | 14.5 | 22.0 | |||||||||||||||
Used vehicle, wholesale
|
130,720 | 4.8 | 553 | 0.4 | 0.1 | |||||||||||||||
Finance and insurance
(1)
|
85,852 | 3.2 | 85,852 | 100.0 | 18.8 | |||||||||||||||
Service, body and parts
|
325,658 | 12.0 | 157,120 | 48.2 | 34.3 | |||||||||||||||
Fleet and other
|
34,446 | 1.3 | 2,920 | 8.5 | 0.7 | |||||||||||||||
$ | 2,699,360 | 100.0 | % | $ | 457,538 | 16.9 | % | 100.0 | % |
2010
|
Revenues
|
Percent of
Total Revenues
|
Gross
Profit
|
Gross Profit
Margin
|
Percent of Total
Gross Profit
|
|||||||||||||||
New vehicle
|
$ | 1,038,321 | 50.1 | % | $ | 85,135 | 8.2 | % | 23.0 | % | ||||||||||
Used vehicle, retail
|
566,803 | 27.4 | 80,064 | 14.1 | 21.6 | |||||||||||||||
Used vehicle, wholesale
|
105,714 | 5.1 | 644 | 0.6 | 0.2 | |||||||||||||||
Finance and insurance
(1)
|
65,274 | 3.1 | 65,274 | 100.0 | 17.6 | |||||||||||||||
Service, body and parts
|
284,170 | 13.7 | 137,051 | 48.2 | 37.1 | |||||||||||||||
Fleet and other
|
11,706 | 0.6 | 1,691 | 14.4 | 0.5 | |||||||||||||||
$ | 2,071,988 | 100.0 | % | $ | 369,859 | 17.9 | % | 100.0 | % |
2009
|
Revenues
|
Percent of
Total Revenues
|
Gross
Profit
|
Gross Profit
Margin
|
Percent of Total
Gross Profit
|
|||||||||||||||
New vehicle
|
$ | 857,096 | 49.6 | % | $ | 72,295 | 8.4 | % | 22.1 | % | ||||||||||
Used vehicle, retail
|
465,001 | 26.9 | 65,515 | 14.1 | 20.0 | |||||||||||||||
Used vehicle, wholesale
|
70,699 | 4.1 | 471 | 0.7 | 0.2 | |||||||||||||||
Finance and insurance
(1)
|
54,953 | 3.2 | 54,953 | 100.0 | 16.8 | |||||||||||||||
Service, body and parts
|
278,336 | 16.1 | 132,500 | 47.6 | 40.5 | |||||||||||||||
Fleet and other
|
2,544 | 0.1 | 1,319 | 51.8 | 0.4 | |||||||||||||||
$ | 1,728,629 | 100.0 | % | $ | 327,053 | 18.9 | % | 100.0 | % |
|
(1)
|
Commissions reported net of anticipated cancellations.
|
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
Increase
|
Increase
|
||||||||||||
Reported
|
||||||||||||||||
Revenue
|
$ | 1,426,888 | $ | 1,038,321 | $ | 388,567 | 37.4 | % | ||||||||
Retail units sold
|
43,273 | 32,664 | 10,609 | 32.5 | ||||||||||||
Average selling price per retail unit
|
$ | 32,974 | $ | 31,788 | $ | 1,186 | 3.7 | |||||||||
Same store
|
||||||||||||||||
Revenue
|
$ | 1,341,171 | $ | 1,039,886 | $ | 301,285 | 29.0 | % | ||||||||
Retail units sold
|
41,144 | 32,703 | 8,441 | 25.8 | ||||||||||||
Average selling price per retail unit
|
$ | 32,597 | $ | 31,798 | $ | 799 | 2.5 |
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2010
|
2009
|
Increase
|
Increase
|
||||||||||||
Reported
|
||||||||||||||||
Revenue
|
$ | 1,038,321 | $ | 857,096 | $ | 181,225 | 21.1 | % | ||||||||
Retail units sold
|
32,664 | 28,439 | 4,225 | 14.9 | ||||||||||||
Average selling price per retail unit
|
$ | 31,788 | $ | 30,138 | $ | 1,650 | 5.5 | |||||||||
Same Store
|
||||||||||||||||
Revenue
|
$ | 1,024,085 | $ | 857,877 | $ | 166,208 | 19.4 | % | ||||||||
Retail units sold
|
32,136 | 28,457 | 3,679 | 12.9 | ||||||||||||
Average selling price per retail unit
|
$ | 31,867 | $ | 30,146 | $ | 1,721 | 5.7 |
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
Increase
|
Increase
|
||||||||||||
Reported
|
||||||||||||||||
Retail revenue
|
$ | 695,796 | $ | 566,803 | $ | 128,993 | 22.8 | % | ||||||||
Retail units sold
|
40,457 | 33,869 | 6,588 | 19.5 | ||||||||||||
Average selling price per retail unit
|
$ | 17,198 | $ | 16,735 | $ | 463 | 2.8 | |||||||||
Same store
|
||||||||||||||||
Retail revenue
|
$ | 658,586 | $ | 563,587 | $ | 94,999 | 16.9 | % | ||||||||
Retail units sold
|
38,762 | 33,646 | 5,116 | 15.2 | ||||||||||||
Average selling price per retail unit
|
$ | 16,991 | $ | 16,750 | $ | 241 | 1.4 |
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2010
|
2009
|
Increase
|
Increase
|
||||||||||||
Reported
|
||||||||||||||||
Retail revenue
|
$ | 566,803 | $ | 465,001 | $ | 101,802 | 21.9 | % | ||||||||
Retail units sold
|
33,869 | 28,577 | 5,292 | 18.5 | ||||||||||||
Average selling price per retail unit
|
$ | 16,735 | $ | 16,272 | $ | 463 | 2.8 | |||||||||
Same store
|
||||||||||||||||
Retail revenue
|
$ | 554,150 | $ | 464,365 | $ | 89,785 | 19.3 | % | ||||||||
Retail units sold
|
33,073 | 28,532 | 4,541 | 15.9 | ||||||||||||
Average selling price per retail unit
|
$ | 16,755 | $ | 16,275 | $ | 480 | 2.9 |
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
Increase
|
Increase
|
||||||||||||
Reported
|
||||||||||||||||
Wholesale revenue
|
$ | 130,720 | $ | 105,714 | $ | 25,006 | 23.7 | % | ||||||||
Wholesale units sold
|
16,439 | 13,906 | 2,533 | 18.2 | ||||||||||||
Average selling price per wholesale unit
|
$ | 7,952 | $ | 7,602 | $ | 350 | 4.6 | |||||||||
Same store
|
||||||||||||||||
Wholesale revenue
|
$ | 125,324 | $ | 104,292 | $ | 21,032 | 20.2 | % | ||||||||
Wholesale units sold
|
15,942 | 13,769 | 2,173 | 15.8 | ||||||||||||
Average selling price per wholesale unit
|
$ | 7,861 | $ | 7,574 | $ | 287 | 3.8 |
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2010
|
2009
|
Increase
|
Increase
|
||||||||||||
Reported
|
||||||||||||||||
Wholesale revenue
|
$ | 105,714 | $ | 70,699 | $ | 35,015 | 49.5 | % | ||||||||
Wholesale units sold
|
13,906 | 13,211 | 695 | 5.3 | ||||||||||||
Average selling price per wholesale unit
|
$ | 7,602 | $ | 5,352 | $ | 2,250 | 42.0 | |||||||||
Same store
|
||||||||||||||||
Wholesale revenue
|
$ | 103,302 | $ | 69,970 | $ | 33,332 | 47.6 | % | ||||||||
Wholesale units sold
|
13,584 | 13,159 | 425 | 3.2 | ||||||||||||
Average selling price per wholesale unit
|
$ | 7,605 | $ | 5,317 | $ | 2,288 | 43.0 |
Year Ended
December 31,
|
Increase
|
%
Increase
|
||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
(Decrease)
|
(Decrease)
|
||||||||||||
Reported
|
||||||||||||||||
Revenue
|
$ | 85,852 | $ | 65,274 | $ | 20,578 | 31.5 | % | ||||||||
Revenue per retail unit
|
||||||||||||||||
Finance reserves
|
$ | 387 | $ | 338 | $ | 49 | 14.5 | % | ||||||||
Maintenance contracts
|
528 | 535 | (7 | ) | (1.3 | ) | ||||||||||
Insurance and other
|
110 | 108 | 2 | 1.9 | ||||||||||||
Revenue per retail unit
|
$ | 1,025 | $ | 981 | $ | 44 | 4.5 | % | ||||||||
Same store
|
||||||||||||||||
Revenue
|
$ | 81,335 | $ | 62,433 | $ | 18,902 | 30.3 | % | ||||||||
Revenue per retail unit
|
||||||||||||||||
Finance reserves
|
$ | 382 | $ | 333 | $ | 49 | 14.7 | % | ||||||||
Maintenance contracts
|
532 | 508 | 24 | 4.7 | ||||||||||||
Insurance and other
|
104 | 100 | 4 | 4.0 | ||||||||||||
Revenue per retail unit
|
$ | 1,018 | $ | 941 | $ | 77 | 8.2 | % |
Year Ended
December 31,
|
Increase
|
%
Increase
|
||||||||||||||
(Dollars in thousands)
|
2010
|
2009
|
(Decrease)
|
(Decrease)
|
||||||||||||
Reported
|
||||||||||||||||
Revenue
|
$ | 65,274 | $ | 54,953 | $ | 10,321 | 18.8 | % | ||||||||
Revenue per retail unit
|
||||||||||||||||
Finance reserves
|
$ | 338 | $ | 291 | $ | 47 | 16.2 | % | ||||||||
Maintenance contracts
|
535 | 560 | (25 | ) | (4.5 | ) | ||||||||||
Insurance and other
|
108 | 113 | (5 | ) | (4.4 | ) | ||||||||||
Revenue per retail unit
|
$ | 981 | $ | 964 | $ | 17 | 1.8 | % | ||||||||
Same store
|
||||||||||||||||
Revenue
|
$ | 61,263 | $ | 52,445 | $ | 8,818 | 16.8 | % | ||||||||
Revenue per retail unit
|
||||||||||||||||
Finance reserves
|
$ | 334 | $ | 286 | $ | 48 | 16.8 | % | ||||||||
Maintenance contracts
|
505 | 530 | (25 | ) | (4.7 | ) | ||||||||||
Insurance and other
|
100 | 104 | (4 | ) | (3.8 | ) | ||||||||||
Revenue per retail unit
|
$ | 939 | $ | 920 | $ | 19 | 2.1 | % |
2011
|
2010
|
2009
|
||||||||||
Finance and insurance
|
73% | 72% | 69% | |||||||||
Service contracts
|
40 | 41 | 41 | |||||||||
Lifetime oil change and filter
|
36 | 34 | 35 |
Year Ended
December 31,
|
Increase
|
%
Increase
|
||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
(Decrease)
|
(Decrease)
|
||||||||||||
Reported
|
||||||||||||||||
Customer pay
|
$ | 184,335 | $ | 160,395 | $ | 23,940 | 14.9 | % | ||||||||
Warranty
|
53,377 | 49,360 | 4,017 | 8.1 | ||||||||||||
Wholesale parts
|
57,734 | 48,342 | 9,392 | 19.4 | ||||||||||||
Body shop
|
30,212 | 26,073 | 4,139 | 15.9 | ||||||||||||
Total service, body and parts
|
$ | 325,658 | $ | 284,170 | $ | 41,488 | 14.6 | % | ||||||||
Same store
|
||||||||||||||||
Customer pay
|
$ | 166,418 | $ | 160,148 | $ | 6,270 | 3.9 | % | ||||||||
Warranty
|
47,470 | 49,311 | (1,841 | ) | (3.7 | ) | ||||||||||
Wholesale parts
|
53,078 | 48,137 | 4,941 | 10.3 | ||||||||||||
Body shop
|
29,689 | 26,040 | 3,649 | 14.0 | ||||||||||||
Total service, body and parts
|
$ | 296,655 | $ | 283,636 | $ | 13,019 | 4.6 | % |
Year Ended
December 31,
|
Increase
|
%
Increase
|
||||||||||||||
(Dollars in thousands)
|
2010
|
2009
|
(Decrease)
|
(Decrease)
|
||||||||||||
Reported
|
||||||||||||||||
Customer pay
|
$ | 160,395 | $ | 151,035 | $ | 9,360 | 6.2 | % | ||||||||
Warranty
|
49,360 | 53,062 | (3,702 | ) | (7.0 | ) | ||||||||||
Wholesale parts
|
48,342 | 48,075 | 267 | 0.6 | ||||||||||||
Body shop
|
26,073 | 26,164 | (91 | ) | (0.3 | ) | ||||||||||
Total service, body and parts
|
$ | 284,170 | $ | 278,336 | $ | 5,834 | 2.1 | % | ||||||||
Same store
|
||||||||||||||||
Customer pay
|
$ | 158,052 | $ | 151,024 | $ | 7,028 | 4.7 | % | ||||||||
Warranty
|
48,616 | 53,062 | (4,446 | ) | (8.4 | ) | ||||||||||
Wholesale parts
|
47,628 | 47,956 | (328 | ) | (0.7 | ) | ||||||||||
Body shop
|
25,601 | 26,164 | (563 | ) | (2.2 | ) | ||||||||||
Total service, body and parts
|
$ | 279,897 | $ | 278,206 | $ | 1,691 | 0.6 | % |
Basis
|
||||||||||||
Year Ended December 31,
|
Point Change*
|
|||||||||||
2011
|
2010
|
|||||||||||
New vehicle
|
7.7% | 8.2% | (50)bp | |||||||||
Retail used vehicle
|
14.5 | 14.1 | 40 | |||||||||
Wholesale used vehicle
|
0.4 | 0.6 | (20) | |||||||||
Finance and insurance
|
100.0 | 100.0 | - | |||||||||
Service, body and parts
|
48.2 | 48.2 | - | |||||||||
Overall
|
16.9% | 17.9% | (100) |
Basis
|
||||||||||||
Year Ended December 31,
|
Point Change*
|
|||||||||||
2010
|
2009
|
|||||||||||
New vehicle
|
8.2% | 8.4% | (20)bp | |||||||||
Retail used vehicle
|
14.1 | 14.1 | - | |||||||||
Wholesale used vehicle
|
0.6 | 0.7 | (10) | |||||||||
Finance and insurance
|
100.0 | 100.0 | - | |||||||||
Service, body and parts
|
48.2 | 47.6 | 60 | |||||||||
Overall
|
17.9% | 18.9% | (100) |
December 31,
|
2011
|
2010
|
2009
|
|||||||||
Asset Impairments
|
||||||||||||
Intangible assets
|
$ | - | $ | - | $ | 250 | ||||||
Long-lived assets
|
1,376 | 15,301 | 9,720 | |||||||||
Other assets
|
- | - | (1,998 | ) | ||||||||
Total asset impairments
|
$ | 1,376 | $ | 15,301 | $ | 7,972 |
|
·
|
slower industry recovery for retail vehicle sales than originally projected at the end of 2009;
|
|
·
|
oversupply of vacant dealership properties due to the economic downturn and bankruptcy proceedings for Chrysler and GM; and
|
|
·
|
the broader economic recovery, including the availability of credit, remained gradual, limiting the potential buyers of these types of properties.
|
Year Ended
December 31,
|
Increase
|
%
Increase
|
||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
(Decrease)
|
(Decrease)
|
||||||||||||
Personnel
|
$ | 216,653 | $ | 180,356 | $ | 36,297 | 20.1 | % | ||||||||
Advertising
|
25,116 | 26,170 | (1,054 | ) | (4.0 | ) | ||||||||||
Rent
|
15,035 | 13,611 | 1,424 | 10.5 | ||||||||||||
Facility costs
|
18,047 | 22,816 | (4,769 | ) | (20.9 | ) | ||||||||||
Other
|
52,694 | 47,880 | 4,814 | 10.1 | ||||||||||||
Total SG&A
|
$ | 327,545 | $ | 290,833 | $ | 36,712 | 12.6 |
Year Ended
December 31,
|
Increase
|
%
Increase
|
||||||||||||||
(Dollars in thousands)
|
2010
|
2009
|
(Decrease)
|
(Decrease)
|
||||||||||||
Personnel
|
$ | 180,356 | $ | 166,085 | $ | 14,271 | 8.6 | % | ||||||||
Advertising
|
26,170 | 17,798 | 8,372 | 47.0 | ||||||||||||
Rent
|
13,611 | 14,378 | (767 | ) | (5.3 | ) | ||||||||||
Facility costs
|
22,816 | 22,545 | 271 | 1.2 | ||||||||||||
Other
|
47,880 | 45,582 | 2,298 | 5.0 | ||||||||||||
Total SG&A
|
$ | 290,833 | $ | 266,388 | $ | 24,445 | 9.2 |
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
Decrease
|
Decrease
|
||||||||||||
Depreciation and amortization
|
$ | 16,626 | $ | 17,154 | $ | (528 | ) | (3.1 | )% |
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2010
|
2009
|
Decrease
|
Decrease
|
||||||||||||
Depreciation and amortization
|
$ | 17,154 | $ | 17,786 | $ | (632 | ) | (3.6 | )% |
Year Ended
December 31,
|
Increase
|
%
Increase
|
||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
(Decrease)
|
(Decrease)
|
||||||||||||
Floor plan interest expense (new vehicles)
|
$ | 10,584 | $ | 10,325 | $ | 259 | 2.5 | % | ||||||||
Floor plan assistance (included in cost of sales)
|
(12,812 | ) | (9,543 | ) | (3,269 | ) | (34.3 | ) | ||||||||
Net new vehicle carrying costs (benefit)
|
$ | (2,228 | ) | $ | 782 | $ | (3,010 | ) | (384.9 | )% |
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2010
|
2009
|
Decrease
|
Decrease
|
||||||||||||
Floor plan interest expense (new vehicles)
|
$ | 10,325 | $ | 10,704 | $ | (379 | ) | (3.5 | )% | |||||||
Floor plan assistance (included in cost of sales)
|
(9,543 | ) | (9,002 | ) | (541 | ) | (6.0 | ) | ||||||||
Net new vehicle carrying costs
|
$ | 782 | $ | 1,702 | $ | (920 | ) | (54.1 | )% |
Year Ended
December 31,
|
Increase
|
%
Increase
|
||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
(Decrease)
|
(Decrease)
|
||||||||||||
Mortgage interest
|
$ | 11,395 | $ | 13,593 | $ | (2,198 | ) | (16.2 | )% | |||||||
Other interest
|
1,696 | 952 | 744 | 78.2 | ||||||||||||
Capitalized interest
|
(163 | ) | - | (163 | ) | - | ||||||||||
Total other interest expense
|
$ | 12,928 | $ | 14,545 | $ | (1,617 | ) | (11.1 | )% |
Year Ended
December 31,
|
Increase
|
%
Increase
|
||||||||||||||
(Dollars in thousands)
|
2010
|
2009
|
(Decrease)
|
(Decrease)
|
||||||||||||
Mortgage interest
|
$ | 13,593 | $ | 12,439 | $ | 1,154 | 9.3 | % | ||||||||
Other interest
|
952 | 2,402 | (1,450 | ) | (60.4 | ) | ||||||||||
Capitalized interest
|
- | (916 | ) | 916 | - | |||||||||||
Total other interest expense
|
$ | 14,545 | $ | 13,925 | $ | 620 | 4.5 | % |
Year Ended December 31
|
||||||||||||
Service, body and parts cost of sale
|
2011
|
2010
|
2009
|
|||||||||
As reported
|
$ | 168,538 | $ | 147,119 | $ | 145,836 | ||||||
Reserve adjustments
|
(950 | ) | (1,040 | ) | (1,400 | ) | ||||||
Adjusted
|
$ | 167,588 | $ | 146,079 | $ | 144,436 | ||||||
Selling, general and administrative
expense
|
||||||||||||
As reported
|
$ | 327,545 | $ | 290,833 | $ | 266,388 | ||||||
Impairments, disposal gains and other, net
|
6,881 | 419 | - | |||||||||
Reserve adjustments
|
- | (1,238 | ) | (454 | ) | |||||||
Adjusted
|
$ | 334,426 | $ | 290,014 | $ | 265,934 | ||||||
SG&A as a % of gross profit
|
||||||||||||
As reported
|
71.6 | % | 78.6 | % | 81.5 | % | ||||||
Adjusted
|
72.9 | 78.2 | 81.0 | |||||||||
Income from operations
|
||||||||||||
As reported
|
$ | 111,991 | $ | 46,571 | $ | 34,907 | ||||||
Impairments, disposal gains and other, net
|
(5,505 | ) | 14,882 | 7,542 | ||||||||
Reserve adjustments
|
950 | 2,278 | 1,854 | |||||||||
Adjusted
|
$ | 107,436 | $ | 63,731 | $ | 44,303 | ||||||
Operating profit
|
||||||||||||
As reported
|
4.1 | % | 2.2 | % | 2.0 | % | ||||||
Adjusted
|
4.0 | 3.1 | 2.6 |
Income from continuing
operations before income taxes
|
||||||||||||
As reported
|
$ | 89,175 | $ | 22,120 | $ | 11,764 | ||||||
Impairments, disposal (gains) losses and other, net
|
(5,505 | ) | 14,882 | 7,542 | ||||||||
Reserve adjustments
|
950 | 2,278 | 1,854 | |||||||||
Gain on extinguishment of debt
|
- | - | (1,317 | ) | ||||||||
Adjusted
|
$ | 84,620 | $ | 39,280 | $ | 19,843 | ||||||
Pre-tax margin
|
||||||||||||
As reported
|
3.3 | % | 1.1 | % | 0.7 | % | ||||||
Adjusted
|
3.1 | 1.9 | 1.1 | |||||||||
Net income from continuing
operations
|
||||||||||||
As reported
|
$ | 55,767 | $ | 13,531 | $ | 6,722 | ||||||
Impairments, disposal (gains) losses and other, net
|
(3,732 | ) | 9,166 | 4,782 | ||||||||
Reserve adjustments
|
591 | 1,496 | 1,102 | |||||||||
Gain on extinguishment of debt
|
- | - | (811 | ) | ||||||||
Adjusted
|
$ | 52,626 | $ | 24,193 | $ | 11,795 | ||||||
Diluted net income per share from continuing operations
|
||||||||||||
As reported
|
$ | 2.09 | $ | 0.51 | $ | 0.30 | ||||||
Impairments, disposal (gains) losses and other, net
|
(0.14 | ) | 0.35 | 0.22 | ||||||||
Reserve adjustments
|
0.02 | 0.07 | 0.05 | |||||||||
Gain on extinguishment of debt
|
- | - | (0.04 | ) | ||||||||
Adjusted
|
$ | 1.97 | $ | 0.93 | $ | 0.53 |
As of December 31,
|
Increase
|
%
Increase
|
||||||||||||||
2011
|
2010
|
(Decrease)
|
(Decrease)
|
|||||||||||||
Cash and cash equivalents
|
$ | 20,851 | $ | 9,306 | $ | 11,545 | 124.1 | % | ||||||||
Available credit on the Credit Facility
|
10,449 | 23,332 | (12,883 | ) | (55.2 | ) | ||||||||||
Unfinanced new vehicles
|
65,857 | 65,601 | 256 | 0.4 | ||||||||||||
Total available funds
|
$ | 97,157 | $ | 98,239 | $ | (1,082 | ) | (1.1 | )% |
Outstanding as of December 31, 2011
|
Remaining Available as of December 31, 2011
|
||||||||||
New and program floor plan notes payable
|
$ | 343,940 | $ | - | (1) | ||||||
Credit facility
|
87,000 | 10,449 | (2),(3) | ||||||||
Real estate mortgages
|
194,404 | - | |||||||||
Other debt
|
5,470 | - | |||||||||
Total debt
|
$ | 630,814 | $ | 10,449 |
(1)
|
We have a $100 million credit facility for floor plan financing with U.S. Bank National Association and JPMorgan Chase Bank, N.A. Certain of our lenders do not have formal limits on the new and program vehicle lines. We had approximately $65.9 million in unfloored new vehicles at December 31, 2011.
|
(2)
|
Reduced by $2.6 million for outstanding letters of credit.
|
(3)
|
The amount available on the line is limited based on a borrowing base calculation and fluctuates monthly.
|
Year Ended December 31,
|
||||||||||||
(In thousands)
|
2011
|
2010
|
2009
|
|||||||||
As Reported
|
||||||||||||
Cash flow from (used in) operations
|
$ | (766 | ) | $ | (21,330 | ) | $ | 9,939 | ||||
Change in floor plan notes payable: non-trade
|
63,145 | 24,090 | 31,417 | |||||||||
As Adjusted
|
$ | 62,379 | $ | 2,760 | $ | 41,356 | ||||||
As Reported
|
||||||||||||
Cash flow from (used in) financing activities
|
$ | 51,733 | $ | 37,826 | $ | (29,127 | ) | |||||
Change in floor plan notes payable: non-trade
|
(63,145 | ) | (24,090 | ) | (31,417 | ) | ||||||
As Adjusted
|
$ | (11,412 | ) | $ | 13,736 | $ | (60,544 | ) |
Debt Covenant Ratio
|
Requirement
|
As of December 31, 2011
|
||
Current ratio
|
Not less than 1.20 to 1
|
1.44 to 1
|
||
Fixed charge coverage ratio
|
Not less than 1.20 to 1
|
1.39 to 1
|
||
Liabilities to tangible net worth ratio
|
Not more than 4.00 to 1
|
2.72 to 1
|
||
Funded debt restriction
|
Not to exceed $310 million
|
$199.9 million
|
Payments Due By Period
|
||||||||||||||||||||
Contractual Obligation
|
Total
|
2012
|
2013 and 2014
|
2015 and 2016
|
2017 and beyond
|
|||||||||||||||
Floor plan notes payable
(1)
|
$ | 343,940 | $ | 343,940 | $ | - | $ | - | $ | - | ||||||||||
Credit Facility
(1)
|
87,000 | - | 87,000 | - | - | |||||||||||||||
Real estate debt,
including interest
|
228,948 | 16,151 | 81,845 | 78,026 | 52,926 | |||||||||||||||
Other debt, including
capital leases and interest
|
7,416 | 1,771 | 1,299 | 4,306 | 40 | |||||||||||||||
Charge-backs on various contracts
|
10,361 | 5,752 | 4,106 | 489 | 14 | |||||||||||||||
Operating leases
(2)
|
166,558 | 19,522 | 34,574 | 29,405 | 83,057 | |||||||||||||||
Fixed rate payments on interest rate swaps
|
9,850 | 4,339 | 8,655 | (2,318 | ) | (826 | ) | |||||||||||||
$ | 854,073 | $ | 391,475 | $ | 217,479 | $ | 109,908 | $ | 135,211 |
|
(1)
|
Amounts for floor plan notes payable and the Credit Facility do not include estimated interest payments. See Notes 1, 6 and 7 in the Notes to Consolidated Financial Statements.
|
|
(2)
|
Amounts for operating lease commitments do not include sublease income, and certain operating expenses such as maintenance, insurance and real estate taxes. See Note 8 in the Notes to Consolidated Financial Statements.
|
Dividend paid:
|
Dividend amount per share
|
Total amount of dividend (in thousands)
|
||||||
March 2011
|
$ | 0.05 | $ | 1,316 | ||||
May 2011
|
0.07 | 1,851 | ||||||
August 2011
|
0.07 | 1,838 | ||||||
November 2011
|
0.07 | 1,817 |
2011 (in thousands, except per share data )
|
Three Months Ended,
|
|||||||||||||||
|
March 31
|
June 30
|
September 30
|
December 31
|
||||||||||||
Revenues:
|
||||||||||||||||
New vehicle
|
$ | 300,640 | $ | 347,727 | $ | 383,951 | $ | 394,570 | ||||||||
Used vehicle retail
|
156,478 | 176,591 | 187,443 | 175,284 | ||||||||||||
Used vehicle wholesale
|
29,537 | 29,153 | 36,105 | 35,925 | ||||||||||||
Finance and insurance
|
19,299 | 20,886 | 22,747 | 22,920 | ||||||||||||
Service, body and parts
|
73,761 | 80,937 | 86,161 | 84,799 | ||||||||||||
Fleet and other
|
3,142 | 17,193 | 10,131 | 3,980 | ||||||||||||
Total revenues
|
582,857 | 672,487 | 726,538 | 717,478 | ||||||||||||
Cost of sales
|
481,261 | 555,350 | 604,330 | 600,881 | ||||||||||||
Gross profit
|
101,596 | 117,137 | 122,208 | 116,597 | ||||||||||||
Asset impairments
|
382 | 490 | - | 504 | ||||||||||||
Selling, general and administrative
|
77,134 | 82,768 | 86,247 | 81,396 | ||||||||||||
Depreciation and amortization
|
4,092 | 4,217 | 4,161 | 4,156 | ||||||||||||
Operating income
|
19,988 | 29,662 | 31,800 | 30,541 | ||||||||||||
Floor plan interest expense
|
(2,462 | ) | (3,359 | ) | (2,010 | ) | (2,753 | ) | ||||||||
Other interest expense
|
(3,292 | ) | (3,011 | ) | (3,075 | ) | (3,550 | ) | ||||||||
Other, net
|
77 | 171 | 215 | 233 | ||||||||||||
Income from continuing operations before income taxes
|
14,311 | 23,463 | 26,930 | 24,471 | ||||||||||||
Income tax provision
|
(5,923 | ) | (8,777 | ) | (10,600 | ) | (8,108 | ) | ||||||||
Income before discontinued operations
|
8,388 | 14,686 | 16,330 | 16,363 | ||||||||||||
Discontinued operations, net of tax
|
317 | 140 | 233 | 2,403 | ||||||||||||
Net income
|
$ | 8,705 | $ | 14,826 | $ | 16,563 | $ | 18,766 | ||||||||
Basic income per share from continuing operations
|
$ | 0.32 | $ | 0.56 | $ | 0.62 | $ | 0.63 | ||||||||
Basic income per share from discontinued operations
|
0.01 | - | 0.01 | 0.09 | ||||||||||||
Basic net income per share
|
$ | 0.33 | $ | 0.56 | $ | 0.63 | $ | 0.72 | ||||||||
Diluted income per share from continuing operations
|
$ | 0.31 | $ | 0.55 | $ | 0.61 | $ | 0.62 | ||||||||
Diluted income per share from discontinued operations
|
0.02 | - | 0.01 | 0.09 | ||||||||||||
Diluted net income per share
|
$ | 0.33 | $ | 0.55 | $ | 0.62 | $ | 0.71 |
2010 (in thousands, except per share data )
|
Three Months Ended,
|
|||||||||||||||
|
March 31
|
June 30
|
September 30
|
December 31
|
||||||||||||
Revenues:
|
||||||||||||||||
New vehicle
|
$ | 210,449 | $ | 263,014 | $ | 284,391 | $ | 280,467 | ||||||||
Used vehicle retail
|
132,693 | 143,227 | 154,875 | 136,008 | ||||||||||||
Used vehicle wholesale
|
22,782 | 25,166 | 30,204 | 27,562 | ||||||||||||
Finance and insurance
|
14,268 | 15,863 | 18,367 | 16,776 | ||||||||||||
Service, body and parts
|
65,960 | 69,227 | 74,799 | 74,184 | ||||||||||||
Fleet and other
|
800 | 4,699 | 3,120 | 3,087 | ||||||||||||
Total revenues
|
446,952 | 521,196 | 565,756 | 538,084 | ||||||||||||
Cost of sales
|
363,614 | 428,147 | 464,067 | 446,301 | ||||||||||||
Gross profit
|
83,338 | 93,049 | 101,689 | 91,783 | ||||||||||||
Asset impairments
|
1,491 | 13,260 | - | 550 | ||||||||||||
Selling, general and administrative
|
68,725 | 72,436 | 74,921 | 74,751 | ||||||||||||
Depreciation and amortization
|
4,685 | 4,201 | 4,159 | 4,109 | ||||||||||||
Operating income
|
8,437 | 3,152 | 22,609 | 12,373 | ||||||||||||
Floor plan interest expense
|
(2,691 | ) | (2,506 | ) | (3,011 | ) | (2,117 | ) | ||||||||
Other interest expense
|
(3,585 | ) | (3,526 | ) | (3,715 | ) | (3,719 | ) | ||||||||
Other, net
|
67 | 213 | 74 | 65 | ||||||||||||
Income (loss) from continuing operations before income taxes
|
2,228 | (2,667 | ) | 15,957 | 6,602 | |||||||||||
Income tax (provision) benefit
|
(860 | ) | 1,119 | (6,485 | ) | (2,363 | ) | |||||||||
Income (loss) before discontinued operations
|
1,368 | (1,548 | ) | 9,472 | 4,239 | |||||||||||
Discontinued operations, net of tax
|
(101 | ) | (171 | ) | 320 | 140 | ||||||||||
Net income (loss)
|
$ | 1,267 | $ | (1,719 | ) | $ | 9,792 | $ | 4,379 | |||||||
Basic income (loss) per share from continuing operations
|
$ | 0.05 | $ | (0.06 | ) | $ | 0.36 | $ | 0.16 | |||||||
Basic income (loss) per share from discontinued operations
|
- | (0.01 | ) | 0.01 | 0.01 | |||||||||||
Basic net income (loss) per share
|
$ | 0.05 | $ | (0.07 | ) | $ | 0.37 | $ | 0.17 | |||||||
Diluted income (loss) per share from continuing operations
|
$ | 0.05 | $ | (0.06 | ) | $ | 0.36 | $ | 0.16 | |||||||
Diluted income (loss) per share from discontinued operations
|
- | (0.01 | ) | 0.01 | - | |||||||||||
Diluted net income (loss) per share
|
$ | 0.05 | $ | (0.07 | ) | $ | 0.37 | $ | 0.16 |
(1)
|
Quarterly data may not add to yearly totals due to rounding.
|
(2)
|
Certain reclassifications of amounts previously reported have been made to the quarterly financial data to maintain consistency and comparability between periods presented.
|
|
·
|
effective June 16, 2006 – a ten year, $25 million interest rate swap at a fixed rate of 5.587% per annum, variable rate adjusted on the 1
st
and 16
th
of each month;
|
|
·
|
effective January 26, 2008 – a five year, $25 million interest rate swap at a fixed rate of 4.495% per annum, variable rate adjusted on the 26
th
of each month;
|
|
·
|
effective May 1, 2008 – a five year, $25 million interest rate swap at a fixed rate of 3.495% per annum, variable rate adjusted on the 1
st
and 16
th
of each month; and
|
|
·
|
effective May 1, 2008 – a five year, $25 million interest rate swap at a fixed rate of 3.495% per annum, variable rate adjusted on the 1
st
and 16
th
of each month.
|
Plan Category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)
|
Weighted average exercise price of outstanding options, warrants and rights (b)
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a) (c))
|
|||||||||
Equity compensation plans approved by shareholders
|
811,176 | $ | 12.69 | 1,548,414 | ||||||||
Equity compensation plans not approved by shareholders
|
- | - | - | |||||||||
Total
|
811,176 | $ | 12.69 | 1,548,414 |
(1)
|
Includes 724,050 shares available pursuant to our 2003 Stock Incentive Plan and 824,364 shares available pursuant to our Employee Stock Purchase Plan.
|
Page
|
|
Reports of Independent Registered Public Accounting Firm
|
F-1, F-2
|
Consolidated Balance Sheets as of December 31, 2011 and 2010
|
F-3
|
Consolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009
|
F-4
|
Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income for the years ended December 31, 2011, 2010 and 2009
|
F-5
|
Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009
|
F-6
|
Notes to Consolidated Financial Statements
|
F-7
|
Exhibit
|
Description
|
|
3.1
|
(a)
|
Restated Articles of Incorporation of Lithia Motors, Inc., as amended May 13, 1999
|
3.2
|
(l)
|
Amended and Restated Bylaws of Lithia Motors, Inc. (Corrected)
|
4.1
|
(b)
|
Specimen Common Stock certificate
|
10.1*
|
(i)
|
2009 Employee Stock Purchase Plan
|
10.2*
|
(d)
|
Lithia Motors, Inc. 2001 Stock Option Plan
|
10.2.1*
|
(e)
|
Form of Incentive Stock Option Agreement for 2001 Stock Option Plan
|
10.2.2*
|
(e)
|
Form of Non-Qualified Stock Option Agreement for 2001 Stock Option Plan
|
10.3
|
(q)
|
Lithia Motors, Inc. Amended and Restated 2003 Stock Incentive Plan
|
10.3.1
|
RSU Deferral Plan
|
|
10.4*
|
(f)
|
Form of Restricted Stock Unit Agreement for Senior Executives
|
10.4.1*
|
(f)
|
Form of Restricted Stock Unit Agreement for Non-Executive Officers
|
10.4.2*
|
(f)
|
Form of Restricted Stock Unit Agreement for Non-Executive Directors
|
10.5*
|
(k)
|
Summary 2011 Discretionary Support Services Bonus Program
|
10.11.2
|
(c)
|
Nissan Dealer Term Sales and Service Agreement between Lithia Motors, Inc., Lithia NF, Inc., and the Nissan Division of Nissan Motor Corporation In USA dated January 2, 1998. (standard provisions are in Exhibit 10.14) (6)
|
10.12
|
(a)
|
Lease Agreement between CAR LIT, LLC and Lithia Real Estate, Inc. relating to properties in Medford, Oregon (7)
|
10.13*
|
Non Employee Director Compensation Plan 2010/2011 Service Year.
|
|
10.14*
|
(h)
|
Form of Outside Director Nonqualified Deferred Compensation Agreement
|
10.15*
|
(o)
|
Form of Executive Nonqualified Deferred Compensation Plan
|
10.16
|
(m)
|
Loan Agreement dated as of September 30, 2011 between Lithia Motors, Inc., and U.S. Bank National Association, as agent
|
Exhibit
|
Description
|
|
10.17*
|
(j)
|
Split Dollar Agreement dated November 7, 2006 with Sidney B. DeBoer
|
10.18*
|
(j)
|
Split Dollar Insurance Agreement dated December 20, 2007 with Sidney B. DeBoer
|
10.19*
|
(l)
|
Terms of Amended Employment and Change in Control Agreement between Lithia Motors, Inc. and Sidney B. DeBoer dated January 15, 2009. Substantially similar agreements exist between Lithia Motors, Inc. and each of M.L. Dick Heimann, Bryan B. DeBoer, Christopher S. Holzshu and John F. North III
|
10.20*
|
(n)
|
Form of Indemnity Agreement for each Named Executive Officer.
|
10.21*
|
(n)
|
Form of Indemnity Agreement for each non-management Director
|
10.22*
|
(f)
|
Executive Management Non-Qualified Deferred Compensation and Long-Term Incentive Plan
|
10.22.1*
|
(f)
|
Form of Executive Management Non-Qualified Deferred Compensation and Long-Term Incentive Plan – Notice of Discretionary Contribution Award for Sidney DeBoer
|
10.22.2*
|
(f)
|
Form of Executive Management Non-Qualified Deferred Compensation and Long-Term Incentive Plan – Notice of Discretionary Contribution Award
|
10.23
|
(p)
|
Acquisition and Option Termination Agreement with M.L. Dick Heimann
|
10.23.1
|
(p)
|
Form of Membership Purchase Agreement with M.L. Dick Heimann
|
12
|
Ratio of Earnings to Combined Fixed Charges
|
|
21
|
Subsidiaries of Lithia Motors, Inc.
|
23
|
Consent of KPMG LLP, Independent Registered Public Accounting Firm
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.
|
|
32.1
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
|
|
32.2
|
Certification of
Chief Financial
Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
|
|
101 . INS |
XBRL Instance Document.
|
|
101 .SCH | XBRL Taxonomy Exten si on Schema Document. | |
101 . CAL | XBRL Taxonomy Extension Calculation Linkbase Document. | |
101 . DEF | XBRL Taxonomy Extension Definition Linkbase Document. | |
101 . LAB | XBRL Taxonomy Extension Label Linkbase Document. | |
101 . PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
(a)
|
Incorporated by reference from the Company’s Form 10-K for the year ended December 31, 1999 as filed with the Securities and Exchange Commission on March 30, 2000.
|
(b)
|
Incorporated by reference from the Company's Registration Statement on Form S-1, Registration Statement No. 333-14031, as declared effective by the Securities Exchange Commission on December 18, 1996.
|
(c)
|
Incorporated by reference from the Company’s Form 10-K for the year ended December 31, 1997 as filed with the Securities and Exchange Commission on March 31, 1998.
|
(d)
|
Incorporated by reference from Appendix B to the Company’s Proxy Statement for its 2001 Annual Meeting as filed with the Securities and Exchange Commission on May 8, 2001.
|
(e)
|
Incorporated by reference from the Company’s Form 10-K for the year ended December 31, 2001 as filed with the Securities and Exchange Commission on February 22, 2002.
|
(f)
|
Incorporated by reference from the Company’s Form 10-K for the year ended December 31, 2010 as filed with the Securities and Exchange Commission on March 7, 2011.
|
(g)
|
Incorporated by reference from the Company’s Form 10-K for the year ended December 31, 1998 as filed with the Securities and Exchange Commission on March 31, 1999.
|
(h)
|
Incorporated by reference from the Company’s Form 10-K for the year ended December 31, 2005 as filed with the Securities and Exchange Commission on March 8, 2006.
|
(i)
|
Incorporated by reference from the Company’s Proxy Statement for its 2009 Annual Meeting as filed with the Securities and Exchange Commission on
March 20, 2009.
|
(j)
|
Incorporated by reference from the Company’s Form 10-K for the year ended December 31, 2007 as filed with the Securities and Exchange Commission on April 11, 2008.
|
(k)
|
Incorporated by reference from the Company’s Proxy Statement for its 2011 Annual Meeting as filed with the Securities and Exchange Commission on March 14, 2011.
|
(l)
|
Incorporated by reference from the Company’s Form 10-K for the year ended December 31, 2008 as filed with the Securities and Exchange Commission on March 16, 2009.
|
(m)
|
Incorporated by reference from the Company’s Form 8-K as filed with the Securities and Exchange Commission on October 6, 2011.
|
(n)
|
Incorporated by reference from the Company’s Form 8-K as filed with the Securities and Exchange Commission on May 28, 2009.
|
(o)
|
Incorporated by reference from the Company’s Form 8-K as filed with the Securities and Exchange Commission on January 5, 2010.
|
(p)
|
Incorporated by reference from the Company’s Form 8-K as filed with the Securities and Exchange Commission on December 22, 2011.
|
(q)
|
Incorporated by reference from the Company’s Form 10-Q as filed with the Securities and Exchange Commission on April 29, 2011.
|
(1)
|
Substantially identical agreements exist between DaimlerChrysler Motor Company, LLC and those other subsidiaries operating Dodge, Chrysler, Plymouth or Jeep dealerships.
|
(2)
|
Substantially identical agreements exist for its Ford and Lincoln-Mercury lines between Ford Motor Company and those other subsidiaries operating Ford or Lincoln-Mercury dealerships.
|
(3)
|
Substantially identical agreements exist between Volkswagen of America, Inc. and those subsidiaries operating Volkswagen dealerships.
|
(4)
|
Substantially identical agreements exist between Chevrolet Motor Division, GM Corporation and those other subsidiaries operating General Motors dealerships.
|
(5)
|
Substantially identical agreements exist (except the terms are all 2 years) between Toyota Motor Sales, USA, Inc. and those other subsidiaries operating Toyota dealerships.
|
(6)
|
Substantially identical agreements exist between Nissan Motor Corporation and those other subsidiaries operating Nissan dealerships.
|
(7)
|
Lithia Real Estate, Inc. leases all the property in Medford, Oregon sold to CAR LIT, LLC under substantially identical leases covering six separate blocks of property.
|
Date: February 24, 2012 | LITHIA MOTORS, INC. | ||
By /s/ Sidney B. DeBoer | |||
Sidney B. DeBoer | |||
Chairman of the Board and | |||
Chief Executive Officer |
Signature | Title | |
/s/ Sidney B. DeBoer | Chairman of the Board and Chief Executive Officer | |
Sidney B. DeBoer | (Principal Executive Officer) | |
/s/ Christopher S. Holzshu | Senior Vice President and Chief Financial Officer | |
Christopher S. Holzshu | (Principal Financial Officer) | |
/s/ John F. North III | Vice President and Corporate Controller | |
John F. North III | (Principal Accounting Officer) | |
/s/ Bryan B. DeBoer | Director, President and Chief Operating Officer | |
Bryan B. DeBoer | ||
/s/ Thomas Becker | Director | |
Thomas Becker | ||
/s/ Susan O. Cain | Director | |
Susan O. Cain | ||
/s/ William J. Young | Director | |
William J. Young |
December 31, | ||||||||
2011
|
2010
|
|||||||
Assets
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 20,851 | $ | 9,306 | ||||
Accounts receivable, net of allowance for doubtful
accounts of $261 and $190
|
99,407 | 75,011 | ||||||
Inventories, net
|
506,484 | 415,228 | ||||||
Deferred income taxes
|
4,730 | 2,937 | ||||||
Other current assets
|
16,719 | 6,062 | ||||||
Total Current Assets
|
648,191 | 508,544 | ||||||
Property and equipment, net of accumulated
depreciation of $99,115 and $93,745
|
373,779 | 362,433 | ||||||
Goodwill
|
18,958 | 6,186 | ||||||
Franchise value
|
59,095 | 45,193 | ||||||
Deferred income taxes
|
29,270 | 39,524 | ||||||
Other non-current assets
|
16,840 | 9,796 | ||||||
Total Assets
|
$ | 1,146,133 | $ | 971,676 | ||||
|
||||||||
Liabilities and Stockholders' Equity
|
||||||||
Current Liabilities:
|
||||||||
Floor plan notes payable
|
$ | 114,760 | $ | 84,775 | ||||
Floor plan notes payable: non-trade
|
229,180 | 166,482 | ||||||
Current maturities of long-term debt
|
8,221 | 12,081 | ||||||
Trade payables
|
31,712 | 23,747 | ||||||
Accrued liabilities
|
72,711 | 58,784 | ||||||
Total Current Liabilities
|
456,584 | 345,869 | ||||||
Long-term debt, less current maturities
|
278,653 | 268,693 | ||||||
Deferred revenue
|
25,146 | 20,158 | ||||||
Other long-term liabilities
|
18,629 | 16,739 | ||||||
Total Liabilities
|
779,012 | 651,459 | ||||||
Stockholders' Equity:
|
||||||||
Preferred stock - no par value; authorized
15,000 shares; none outstanding
|
- | - | ||||||
Class A common stock - no par value;
authorized 100,000 shares; issued and outstanding 22,195 and 22,523
|
279,366 | 284,807 | ||||||
Class B common stock - no par value;
authorized 25,000 shares; issued and outstanding 3,762 and 3,762
|
468 | 468 | ||||||
Additional paid-in capital
|
10,918 | 10,972 | ||||||
Accumulated other comprehensive loss
|
(4,508 | ) | (4,869 | ) | ||||
Retained earnings
|
80,877 | 28,839 | ||||||
Total Stockholders' Equity
|
367,121 | 320,217 | ||||||
Total Liabilities and Stockholders' Equity
|
$ | 1,146,133 | $ | 971,676 |
Year Ended December 31, | ||||||||||||
2011
|
2010
|
2009
|
||||||||||
Revenues:
|
||||||||||||
New vehicle
|
$ | 1,426,888 | $ | 1,038,321 | $ | 857,096 | ||||||
Used vehicle retail
|
695,796 | 566,803 | 465,001 | |||||||||
Used vehicle wholesale
|
130,720 | 105,714 | 70,699 | |||||||||
Finance and insurance
|
85,852 | 65,274 | 54,953 | |||||||||
Service, body and parts
|
325,658 | 284,170 | 278,336 | |||||||||
Fleet and other
|
34,446 | 11,706 | 2,544 | |||||||||
Total revenues
|
2,699,360 | 2,071,988 | 1,728,629 | |||||||||
Cost of sales:
|
||||||||||||
New vehicle
|
1,316,413 | 953,186 | 784,801 | |||||||||
Used vehicle retail
|
595,178 | 486,739 | 399,486 | |||||||||
Used vehicle wholesale
|
130,167 | 105,070 | 70,228 | |||||||||
Service, body and parts
|
168,538 | 147,119 | 145,836 | |||||||||
Fleet and other
|
31,526 | 10,015 | 1,225 | |||||||||
Total cost of sales
|
2,241,822 | 1,702,129 | 1,401,576 | |||||||||
Gross profit
|
457,538 | 369,859 | 327,053 | |||||||||
Asset impairment
|
1,376 | 15,301 | 7,972 | |||||||||
Selling, general and administrative
|
327,545 | 290,833 | 266,388 | |||||||||
Depreciation and amortization
|
16,626 | 17,154 | 17,786 | |||||||||
Operating income
|
111,991 | 46,571 | 34,907 | |||||||||
Floor plan interest expense
|
(10,584 | ) | (10,325 | ) | (10,704 | ) | ||||||
Other interest expense
|
(12,928 | ) | (14,545 | ) | (13,925 | ) | ||||||
Other income, net
|
696 | 419 | 1,486 | |||||||||
Income from continuing operations before income taxes
|
89,175 | 22,120 | 11,764 | |||||||||
Income tax provision
|
(33,408 | ) | (8,589 | ) | (5,042 | ) | ||||||
Income from continuing operations, net of income tax
|
55,767 | 13,531 | 6,722 | |||||||||
Income from discontinued operations, net of income tax
|
3,093 | 188 | 2,429 | |||||||||
Net income
|
$ | 58,860 | $ | 13,719 | $ | 9,151 | ||||||
Basic income per share from continuing operations
|
$ | 2.13 | $ | 0.52 | $ | 0.31 | ||||||
Basic income per share from discontinued operations
|
0.11 | 0.01 | 0.11 | |||||||||
Basic net income per share
|
$ | 2.24 | $ | 0.53 | $ | 0.42 | ||||||
Shares used in basic per share calculations
|
26,230 | 26,062 | 22,037 | |||||||||
Diluted income per share from continuing operations
|
$ | 2.09 | $ | 0.51 | $ | 0.30 | ||||||
Diluted income per share from discontinued operations
|
0.12 | 0.01 | 0.11 | |||||||||
Diluted net income per share
|
$ | 2.21 | $ | 0.52 | $ | 0.41 | ||||||
Shares used in diluted per share calculations
|
26,664 | 26,279 | 22,176 |
Accumulated
Other
|
||||||||||||||||||||||||||||||||
Compre- | Total | |||||||||||||||||||||||||||||||
Common Stock | Additional | hensive | Stock- | |||||||||||||||||||||||||||||
Class A | Class B | Paid In | Income | Retained | holders' | |||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
(Loss)
|
Earnings
|
Equity
|
|||||||||||||||||||||||||
Balance at December 31, 2008
|
16,717 | $ | 234,522 | 3,762 | $ | 468 | $ | 9,275 | $ | (5,810 | ) | $ | 9,888 | $ | 248,343 | |||||||||||||||||
Net income
|
- | - | - | - | - | - | 9,151 | 9,151 | ||||||||||||||||||||||||
Fair value of interest rate swap agreements, net of
tax expense of $1,177
|
- | - | - | - | - | 1,960 | - | 1,960 | ||||||||||||||||||||||||
Comprehensive income
|
11,111 | |||||||||||||||||||||||||||||||
Issuance of stock in connection with employee
stock plans
|
635 | 2,426 | - | - | - | - | - | 2,426 | ||||||||||||||||||||||||
Issuance of restricted stock to employees and directors
|
110 | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Shares forfeited by employees
|
(26 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||||
Issuance of Class A common stock
|
4,600 | 43,150 | - | - | - | - | - | 43,150 | ||||||||||||||||||||||||
Repurchase of Class A common stock
|
- | (1 | ) | - | - | - | - | - | (1 | ) | ||||||||||||||||||||||
Compensation for stock and stock option issuances
and excess tax benefits from option exercises
|
- | 783 | - | - | 1,226 | - | - | 2,009 | ||||||||||||||||||||||||
Balance at December 31, 2009
|
22,036 | 280,880 | 3,762 | 468 | 10,501 | (3,850 | ) | 19,039 | 307,038 | |||||||||||||||||||||||
Net income
|
- | - | - | - | - | - | 13,719 | 13,719 | ||||||||||||||||||||||||
Fair value of interest rate swap agreements, net of
tax benefit of $626
|
- | - | - | - | - | (1,019 | ) | - | (1,019 | ) | ||||||||||||||||||||||
Comprehensive income
|
12,700 | |||||||||||||||||||||||||||||||
Issuance of stock in connection with employee
stock plans
|
658 | 4,192 | - | - | - | - | - | 4,192 | ||||||||||||||||||||||||
Shares forfeited by employees
|
(9 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||||
Repurchase of Class A common stock
|
(162 | ) | (1,626 | ) | - | - | - | - | - | (1,626 | ) | |||||||||||||||||||||
Compensation for stock and stock option issuances
and excess tax benefits from option exercises
|
- | 1,361 | - | - | 471 | - | - | 1,832 | ||||||||||||||||||||||||
Dividends paid
|
- | - | - | - | - | - | (3,919 | ) | (3,919 | ) | ||||||||||||||||||||||
Balance at December 31, 2010
|
22,523 | 284,807 | 3,762 | 468 | 10,972 | (4,869 | ) | 28,839 | 320,217 | |||||||||||||||||||||||
Net income
|
- | - | - | - | - | - | 58,860 | 58,860 | ||||||||||||||||||||||||
Fair value of interest rate swap agreements, net of
tax expense of $195
|
- | - | - | - | - | 361 | - | 361 | ||||||||||||||||||||||||
Comprehensive income
|
59,221 | |||||||||||||||||||||||||||||||
Issuance of stock in connection with employee
stock plans
|
438 | 5,654 | - | - | - | - | - | 5,654 | ||||||||||||||||||||||||
Issuance of restricted stock to employees
|
11 | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Shares forfeited by employees
|
(5 | ) | - | - | - | - | - | - | - | |||||||||||||||||||||||
Repurchase of Class A common stock
|
(772 | ) | (13,568 | ) | - | - | - | - | - | (13,568 | ) | |||||||||||||||||||||
Compensation for stock and stock option issuances
and excess tax benefits from option exercises
|
- | 2,473 | - | - | (54 | ) | - | - | 2,419 | |||||||||||||||||||||||
Dividends paid
|
- | - | - | - | - | - | (6,822 | ) | (6,822 | ) | ||||||||||||||||||||||
Balance at December 31, 2011
|
22,195 | $ | 279,366 | 3,762 | $ | 468 | $ | 10,918 | $ | (4,508 | ) | $ | 80,877 | $ | 367,121 |
Year Ended December 31, | ||||||||||||
2011
|
2010
|
2009
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
$ | 58,860 | $ | 13,719 | $ | 9,151 | ||||||
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
|
||||||||||||
Asset impairments
|
1,376 | 15,301 | 7,972 | |||||||||
Depreciation and amortization
|
16,626 | 17,154 | 17,786 | |||||||||
Depreciation and amortization within discontinued operations
|
322 | 432 | 1,035 | |||||||||
Amortization of debt discount
|
- | - | 48 | |||||||||
Stock-based compensation
|
2,001 | 2,419 | 2,054 | |||||||||
Gain on early extinguishment of debt
|
- | - | (1,317 | ) | ||||||||
Gain on disposal of other assets
|
(6,495 | ) | (107 | ) | (476 | ) | ||||||
(Gain) loss from disposal activities within discontinued operations
|
(4,396 | ) | 301 | (9,910 | ) | |||||||
Deferred income taxes
|
8,093 | (2,131 | ) | 5,627 | ||||||||
Excess tax deficit (benefit) from share-based payment arrangements
|
(525 | ) | (264 | ) | 45 | |||||||
(Increase) decrease, net of effect of acquisitions and divestitures:
|
||||||||||||
Accounts receivables, net
|
(22,503 | ) | (22,881 | ) | 17,780 | |||||||
Inventories
|
(78,202 | ) | (68,305 | ) | 120,785 | |||||||
Other current assets
|
(13,111 | ) | (1,633 | ) | 15,992 | |||||||
Other non-current assets
|
(1,108 | ) | (2,029 | ) | (4,347 | ) | ||||||
Increase (decrease), net of effect of acquisitions and divestitures:
|
||||||||||||
Floor plan notes payable
|
13,510 | 10,550 | (179,893 | ) | ||||||||
Trade payables
|
5,998 | 4,960 | (2,789 | ) | ||||||||
Accrued liabilities
|
11,605 | 10,029 | (4,318 | ) | ||||||||
Other long-term liabilities and deferred revenue
|
7,183 | 1,155 | 14,714 | |||||||||
Net cash provided by (used in) operating activities
|
(766 | ) | (21,330 | ) | 9,939 | |||||||
Cash flows from investing activities:
|
||||||||||||
Principal payments received on notes receivable
|
121 | 85 | - | |||||||||
Capital expenditures
|
(31,673 | ) | (7,589 | ) | (21,131 | ) | ||||||
Proceeds from sales of assets
|
29,677 | 10,288 | 14,524 | |||||||||
Payments for life insurance proceeds, net of proceeds received
|
(900 | ) | - | - | ||||||||
Cash paid for acquisitions, net of cash acquired
|
(60,485 | ) | (23,691 | ) | - | |||||||
Proceeds from sales of stores
|
23,838 | 941 | 27,697 | |||||||||
Net cash provided by (used in) investing activities
|
(39,422 | ) | (19,966 | ) | 21,090 | |||||||
Cash flows from financing activities:
|
||||||||||||
Net borrowings on floor plan notes payable: non-trade
|
63,145 | 24,090 | 31,417 | |||||||||
Borrowings on lines of credit
|
56,000 | 40,000 | 48,000 | |||||||||
Repayments on lines of credit
|
(9,000 | ) | (24,000 | ) | (110,000 | ) | ||||||
Principal payments on long-term debt and capital leases, scheduled
|
(10,909 | ) | (8,248 | ) | (13,260 | ) | ||||||
Principal payments on long-term debt and capital leases, other
|
(55,666 | ) | (40,146 | ) | (78,652 | ) | ||||||
Proceeds from issuance of long-term debt
|
25,674 | 47,219 | 47,838 | |||||||||
Proceeds from issuance of common stock
|
5,654 | 4,192 | 45,576 | |||||||||
Repurchase of common stock
|
(13,568 | ) | (1,626 | ) | (1 | ) | ||||||
Excess tax (deficit) benefit from share-based payment arrangements
|
525 | 264 | (45 | ) | ||||||||
Dividends paid
|
(6,822 | ) | (3,919 | ) | - | |||||||
Increase in restricted cash
|
(3,300 | ) | - | - | ||||||||
Net cash provided by (used in) financing activities
|
51,733 | 37,826 | (29,127 | ) | ||||||||
Increase (decrease) in cash and cash equivalents
|
11,545 | (3,470 | ) | 1,902 | ||||||||
Cash and cash equivalents at beginning of year
|
9,306 | 12,776 | 10,874 | |||||||||
Cash and cash equivalents at end of year
|
$ | 20,851 | $ | 9,306 | $ | 12,776 | ||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
Cash paid during the period for interest
|
$ | 24,961 | $ | 25,357 | $ | 29,741 | ||||||
Cash paid (refunded) during the period for income taxes, net
|
33,722 | 8,000 | (14,996 | ) |
·
|
various lenders for the financing of vehicles sold;
|
·
|
customers for vehicles sold and service and parts sales;
|
·
|
manufacturers for factory rebates, dealer incentives and warranty reimbursement; and
|
·
|
insurance companies, finance companies, and other miscellaneous receivables.
|
Buildings and improvements
|
5 to 40 years
|
Service equipment
|
5 to 15 years
|
Furniture, signs and fixtures
|
5 to 10 years
|
·
|
certain of our Franchise Agreements continue indefinitely by their terms;
|
·
|
certain of our Franchise Agreements have limited terms, but are routinely renewed without substantial cost to us;
|
·
|
other than franchise terminations related to the unprecedented reorganizations of Chrysler and General Motors, and allowed by bankruptcy law, we are not aware of manufacturers terminating Franchise Agreements against the wishes of the franchise owners under the ordinary course of business. A manufacturer may pressure a franchise owner to sell a franchise when they are in breach of the franchise agreement over an extended period of time;
|
·
|
state dealership franchise laws typically limit the rights of the manufacturer to terminate or not renew a franchise;
|
·
|
we are not aware of any legislation or other factors that would materially change the retail automotive franchise system; and
|
·
|
as evidenced by our acquisition and disposition history, there is an active market for most automotive dealership franchises within the United States. We attribute value to the Franchise Agreements acquired with the dealerships we purchase based on the understanding and industry practice that the Franchise Agreements will be renewed indefinitely by the manufacturer.
|
Year Ended December 31,
|
2011
|
2010
|
2009
|
|||||||||
Intangible assets
|
$ | - | $ | - | $ | 250 | ||||||
Long-lived assets
|
1,376 | 15,301 | 9,720 | |||||||||
Other assets
|
- | - | (1,998 | ) | ||||||||
Total asset impairments
|
$ | 1,376 | $ | 15,301 | $ | 7,972 |
·
|
engages in business activities from which it may earn revenues and incur expenses;
|
·
|
operating results are regularly reviewed by the enterprise’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance; and
|
·
|
discrete financial information is available.
|
December 31,
|
2011
|
2010
|
||||||
Contracts in transit
|
$ | 47,867 | $ | 34,365 | ||||
Trade receivables
|
16,418 | 13,166 | ||||||
Vehicle receivables
|
15,930 | 13,439 | ||||||
Manufacturer receivables
|
19,453 | 14,231 | ||||||
99,668 | 75,201 | |||||||
Less: Allowance
|
(261 | ) | (190 | ) | ||||
Total accounts receivables, net
|
$ | 99,407 | $ | 75,011 |
December 31,
|
2011
|
2010
|
||||||
New vehicles
|
$ | 372,838 | $ | 305,721 | ||||
Used and program vehicles
|
106,622 | 87,349 | ||||||
Parts and accessories
|
27,024 | 22,158 | ||||||
Total inventories
|
$ | 506,484 | $ | 415,228 |
December 31,
|
2011
|
2010
|
||||||
Land
|
$ | 120,092 | $ | 117,083 | ||||
Building and improvements
|
232,478 | 225,331 | ||||||
Service equipment
|
36,895 | 36,905 | ||||||
Furniture, signs and fixtures
|
71,313 | 73,925 | ||||||
460,778 | 453,244 | |||||||
Less accumulated depreciation
|
(99,115 | ) | (93,745 | ) | ||||
361,663 | 359,499 | |||||||
Construction in progress
|
12,116 | 2,934 | ||||||
$ | 373,779 | $ | 362,433 |
Goodwill
|
||||
Gross balance as of December, 31, 2009
|
$ | 299,266 | ||
Accumulated impairment losses
|
(299,266 | ) | ||
Net balance as of December 31, 2009
|
- | |||
Additions through acquisitions
|
6,186 | |||
Net balance as of December 31, 2010
|
6,186 | |||
Additions through acquisitions
|
12,869 | |||
Transfers to discontinued operations
|
(97 | ) | ||
Net balance as of December 31, 2011
|
$ | 18,958 |
Franchise Value
|
||||
Balance as of December 31, 2009
|
$ | 42,428 | ||
Additions through acquisitions
|
2,615 | |||
Transfers from discontinued operations
|
150 | |||
Balance as of December 31, 2010
|
45,193 | |||
Additions through acquisitions
|
14,517 | |||
Transfers to discontinued operations
|
(615 | ) | ||
Balance as of December 31, 2011
|
$ | 59,095 |
December 31,
|
2011
|
2010
|
||||||
Working capital, acquisition and used vehicle credit facility
|
$ | 87,000 | $ | 40,000 | ||||
Real estate mortgages
|
194,404 | 234,850 | ||||||
Other debt
|
5,470 | 5,924 | ||||||
Total long-term debt
|
286,874 | 280,774 | ||||||
Less current maturities
|
(8,221 | ) | (12,081 | ) | ||||
Long-term debt
|
$ | 278,653 | $ | 268,693 |
Year Ending December 31,
|
||||
2012
|
$ | 8,221 | ||
2013
|
34,318 | |||
2014
|
122,821 | |||
2015
|
46,187 | |||
2016
|
29,498 | |||
Thereafter
|
45,829 | |||
Total principal payments
|
$ | 286,874 |
Year Ending December 31,
|
||||
2012
|
$ | 19,584 | ||
2013
|
18,182 | |||
2014
|
16,499 | |||
2015
|
15,344 | |||
2016
|
14,142 | |||
Thereafter
|
83,097 | |||
Total minimum lease payments
|
166,848 | |||
Less: sublease rentals
|
(8,819 | ) | ||
$ | 158,029 |
Year Ending December 31,
|
||||
2012
|
$ | 5,752 | ||
2013
|
2,889 | |||
2014
|
1,217 | |||
2015
|
402 | |||
2016
|
87 | |||
Thereafter
|
14 | |||
Total
|
$ | 10,361 |
Year Ending December 31,
|
|||||
2012
|
$ | 1,530 | |||
2013
|
1,163 | ||||
2014
|
888 | ||||
2015
|
660 | ||||
2016
|
473 | ||||
Thereafter
|
799 | ||||
Total
|
$ | 5,513 |
Year Ending December 31,
|
||||
2012
|
$ | 5,493 | ||
2013
|
4,258 | |||
2014
|
3,206 | |||
2015
|
2,433 | |||
2016
|
1,921 | |||
Thereafter
|
5,509 | |||
Total
|
$ | 22,820 |
Year Ended December 31,
|
||||||||
2011
|
2010
|
|||||||
Shares repurchased
|
716,431 | 100,893 | ||||||
Total purchase price (in thousands)
|
$ | 12,389 | $ | 795 | ||||
Average purchase price per share
|
$ | 17.29 | $ | 7.88 |
Quarter declared:
|
Dividend amount per Class A and Class B share
|
Total amount of dividend (in thousands)
|
||||||
2009
|
||||||||
First quarter
|
$ | -- | $ | -- | ||||
Second quarter
|
-- | -- | ||||||
Third quarter
|
-- | -- | ||||||
Fourth quarter
|
-- | -- | ||||||
2010
|
||||||||
First quarter
|
$ | -- | $ | -- | ||||
Second quarter
|
0.05 | 1,300 | ||||||
Third quarter
|
0.05 | 1,307 | ||||||
Fourth quarter
|
0.05 | 1,312 | ||||||
2011
|
||||||||
First quarter
|
$ | 0.05 | $ | 1,316 | ||||
Second quarter
|
0.07 | 1,851 | ||||||
Third quarter
|
0.07 | 1,838 | ||||||
Fourth quarter
|
0.07 | 1,817 |
Year Ended December 31,
|
2011
|
2010
|
2009
|
|||||||||||||||||||||
Basic EPS
|
Class A
|
Class B
|
Class A
|
Class B
|
Class A
|
Class B
|
||||||||||||||||||
Numerator:
|
||||||||||||||||||||||||
Income from continuing operations applicable to common stockholders
|
$ | 47,769 | $ | 7,998 | $ | 11,578 | $ | 1,953 | $ | 5,574 | $ | 1,148 | ||||||||||||
Distributed income applicable to common stockholders
|
(5,844 | ) | (978 | ) | (3,353 | ) | (566 | ) | - | - | ||||||||||||||
Basic undistributed income from continuing operations applicable to common stockholders
|
$ | 41,925 | $ | 7,020 | $ | 8,225 | $ | 1,387 | $ | 5,574 | $ | 1,148 | ||||||||||||
Denominator:
|
||||||||||||||||||||||||
Weighted average number of shares out-standing used to calculate basic income per share
|
22,468 | 3,762 | 22,300 | 3,762 | 18,275 | 3,762 | ||||||||||||||||||
Basic income from continuing operations per share applicable to common stockholders
|
$ | 2.13 | $ | 2.13 | $ | 0.52 | $ | 0.52 | $ | 0.31 | $ | 0.31 | ||||||||||||
Basic distributed income per share applicable to common stockholders
|
(0.26 | ) | (0.26 | ) | (0.15 | ) | (0.15 | ) | - | - | ||||||||||||||
Basic undistributed income from continuing operations per share applicable to common stockholders
|
$ | 1.87 | $ | 1.87 | $ | 0.37 | $ | 0.37 | $ | 0.31 | $ | 0.31 |
Year Ended December 31,
|
2011
|
2010
|
2009
|
|||||||||||||||||||||
Diluted EPS
|
Class A
|
Class B
|
Class A
|
Class B
|
Class A
|
Class B
|
||||||||||||||||||
Numerator:
|
||||||||||||||||||||||||
Distributed income applicable to common stockholders
|
$ | 5,844 | $ | 978 | $ | 3,353 | $ | 566 | $ | - | $ | - | ||||||||||||
Reallocation of distributed income as a result of conversion of dilutive stock options
|
15 | (15 | ) | 5 | (5 | ) | - | - | ||||||||||||||||
Reallocation of distributed income due to conversion of Class B to Class A
|
963 | - | 561 | - | - | - | ||||||||||||||||||
Diluted distributed income applicable to common stockholders
|
$ | 6,822 | $ | 963 | $ | 3,919 | $ | 561 | $ | - | $ | - | ||||||||||||
Undistributed income from continuing operations applicable to common stockholders
|
$ | 41,925 | $ | 7,020 | $ | 8,225 | $ | 1,387 | $ | 5,574 | $ | 1,148 | ||||||||||||
Reallocation of undistributed income as a result of conversion of dilutive stock options
|
114 | (114 | ) | 11 | (11 | ) | 8 | (8 | ) | |||||||||||||||
Reallocation of undistributed income due to conversion of Class B to Class A
|
6,906 | - | 1,376 | - | 1,140 | - | ||||||||||||||||||
Diluted undistributed income from continuing operations applicable to common stockholders
|
$ | 48,945 | $ | 6,906 | $ | 9,612 | $ | 1,376 | $ | 6,722 | $ | 1,140 | ||||||||||||
Denominator:
|
||||||||||||||||||||||||
Weighted average number of shares outstanding used to calculate basic income per share
|
22,468 | 3,762 | 22,300 | 3,762 | 18,275 | 3,762 | ||||||||||||||||||
Weighted average number of shares from stock options
|
434 | - | 217 | - | 139 | - | ||||||||||||||||||
Conversion of Class B to Class A
|
3,762 | - | 3,762 | - | 3,762 | - | ||||||||||||||||||
Weighted average number of shares outstanding used to calculate diluted income per share
|
26,664 | 3,762 | 26,279 | 3,762 | 22,176 | 3,762 |
Year Ended December 31,
|
2011
|
2010
|
2009
|
|||||||||||||||||||||
Diluted EPS
|
Class A
|
Class B
|
Class A
|
Class B
|
Class A
|
Class B
|
||||||||||||||||||
Diluted income from continuing operations per share available to common stockholders
|
$ | 2.09 | $ | 2.09 | $ | 0.51 | $ | 0.51 | $ | 0.30 | $ | 0.30 | ||||||||||||
Diluted distributed income from continuing operations per share applicable to common stockholders
|
(0.26 | ) | (0.26 | ) | (0.15 | ) | (0.15 | ) | - | - | ||||||||||||||
Diluted undistributed income from continuing operations per share applicable to common stockholders
|
$ | 1.83 | $ | 1.83 | $ | 0.36 | $ | 0.36 | $ | 0.30 | $ | 0.30 | ||||||||||||
Antidilutive Securities:
|
||||||||||||||||||||||||
2 7/8% convertible senior subordinated notes
|
- | - | - | - | 321 | - | ||||||||||||||||||
Shares issuable pursuant to stock options not included since they were antidilutive
|
280 | - | 661 | - | 1,338 | - |
Shares Subject
to Options
|
Weighted Average
Exercise Price
|
Aggregate Intrinsic Value
|
Weighted Average
Remaining Contractual Term
|
||||||||
Balance, December 31, 2010
|
1,185,241 | $ | 13.56 | ||||||||
Granted
|
- | - | |||||||||
Forfeited
|
(58,066 | ) | 9.62 | ||||||||
Expired
|
(84,773 | ) | 27.28 | ||||||||
Exercised
|
(231,226 | ) | 12.57 | ||||||||
Balance, December 31, 2011
|
811,176 | $ | 12.69 |
$8.9 million
|
2.0 years
|
||||||
Exercisable, December 31, 2011
|
407,133 | $ | 13.25 |
$4.4 million
|
1.8 years
|
Non-Vested
Stock Grants
|
Weighted Average
Grant Date Fair Value
|
|||||||
Balance, December 31, 2010
|
458,529 | $ | 8.12 | |||||
Granted
|
191,450 | 13.58 | ||||||
Vested
|
(43,498 | ) | 23.56 | |||||
Forfeited
|
(15,931 | ) | 9.39 | |||||
Balance, December 31, 2011
|
590,550 | $ | 8.72 |
Year Ended December 31,
|
2010
|
2009
|
||||||
Risk-free interest rate
(1)
|
2.53% | 2.03% - 2.93% | ||||||
Dividend yield
(2)
|
2.54% | 0.0% | ||||||
Expected term
(3)
|
4.2 years
|
5.9 years
|
||||||
Volatility
(4)
|
81.22% | 87.41% | ||||||
Discount for post-vesting restrictions
|
0.0% | 0.0% |
(1)
|
The risk-free interest rate for each grant is based on the U.S. Treasury yield curve in effect at the time of grant for a period equal to the expected term of the stock option.
|
(2)
|
The dividend yield is calculated as a ratio of annualized expected dividends per share to the market value of our common stock on the date of grant.
|
(3)
|
The expected term is calculated based on the observed and expected time to post-vesting exercise behavior of identifiable employee groups.
|
(4)
|
The expected volatility is estimated based on a weighted average of historical volatility of our common stock.
|
Year Ended December 31,
|
2011
|
2010
|
2009
|
|||||||||
Weighted average grant-date fair value per share of stock options granted
|
$ | - | $ | 4.19 | $ | 3.10 | ||||||
Per share intrinsic value of non-vested stock granted
|
13.58 | 6.02 | 2.91 | |||||||||
Weighted average per share discount for compensation expense recognized under the 2009 ESPP
|
2.56 | 1.11 | 0.85 | |||||||||
Total intrinsic value of stock options exercised
|
1,521,647 | 1,066,000 | 28,000 | |||||||||
Fair value of non-vested stock that vested during the period
|
664,404 | 357,000 | 267,000 | |||||||||
Stock-based compensation recognized in results of operations, as a component of selling, general and administrative expense - excludes compensation expense related to an option granted to one of our executives. See Note 19.
|
2.3 million
|
1.8 million
|
2.1 million
|
|||||||||
Tax benefit recognized in statement of operations
|
698,000 | 529,000 | 583,000 | |||||||||
Cash received from options exercised and shares purchased under all share-based arrangements
|
5.8 million
|
4.2 million
|
2.4 million
|
|||||||||
Tax deduction realized related to stock options exercised
|
938,000 | 541,000 | 112,000 |
·
|
effective June 16, 2006 – a ten year, $25 million interest rate swap at a fixed rate of 5.587% per annum, variable rate adjusted on the 1
st
and 16
th
of each month;
|
·
|
effective January 26, 2008 – a five year, $25 million interest rate swap at a fixed rate of 4.495% per annum, variable rate adjusted on the 26
th
of each month;
|
·
|
effective May 1, 2008 – a five year, $25 million interest rate swap at a fixed rate of 3.495% per annum, variable rate adjusted on the 1
st
and 16
th
of each month; and
|
·
|
effective May 1, 2008 – a five year, $25 million interest rate swap at a fixed rate of 3.495% per annum, variable rate adjusted on the 1
st
and 16
th
of each month.
|
Balance Sheet Information (in thousands)
|
Fair Value of Asset Derivatives
|
Fair Value of Liability Derivatives
|
|||||||||
Location in Balance Sheet
|
December 31, 2011
|
Location in Balance Sheet
|
December 31, 2011
|
||||||||
Derivatives Designated as Hedging Instruments
|
|||||||||||
Interest Rate Swap Contracts
|
Prepaid expenses and other
|
$ | - |
Accrued
liabilities
|
$ | 3,522 | |||||
Other non-current assets
|
- |
Other long-term liabilities
|
4,008 | ||||||||
$ | - | $ | 7,530 | ||||||||
Balance Sheet Information (in thousands)
|
Fair Value of Asset Derivatives
|
Fair Value of Liability Derivatives
|
|||||||||
Location in Balance Sheet
|
December 31, 2010
|
Location in Balance Sheet
|
December 31, 2010
|
||||||||
Derivatives Designated as Hedging Instruments
|
|||||||||||
Interest Rate Swap Contracts
|
Prepaid expenses and other
|
$ | - |
Accrued
liabilities
|
$ | 2,862 | |||||
Other non-current assets
|
- |
Other long-term liabilities
|
5,830 | ||||||||
$ | - | $ | 8,692 |
Derivatives in Cash Flow Hedging Relationships
|
Amount of Gain/(Loss) Recognized in OCI (Effective Portion)
|
Location of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
|
Amount of Gain/(Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
|
Location of Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
|
Amount of Gain/(Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
|
|||||||||
For the Year
Ended December 31, 2011
|
Floor plan
|
Floor plan
|
||||||||||||
Interest Rate Swap Contracts
|
$ | (1,343 | ) |
Interest expense
|
$ | (1,899 | ) |
Interest expense
|
$ | (1,587 | ) | |||
For the Year Ended
December 31, 2010
|
Floor plan
|
Floor plan
|
||||||||||||
Interest Rate Swap Contracts
|
$ | (4,459 | ) |
Interest expense
|
$ | (2,814 | ) |
Interest expense
|
$ | (1,483 | ) | |||
For the Year Ended
December 31, 2009
|
Floor plan
|
Floor plan
|
||||||||||||
Interest Rate Swap Contracts
|
$ | (649 | ) |
Interest expense
|
$ | (3,786 | ) |
Interest expense
|
$ | 420 |
Derivatives Not Designated as Hedging Instruments
|
Location of Gain/(Loss) Recognized in Income on Derivative
|
Amount of Gain/(Loss) Recognized in Income on Derivative
|
|||
For the Year Ended December 31, 2011
|
Floor plan
interest
|
||||
Interest Rate Swap Contracts
|
expense
|
$ | - | ||
For the Year Ended December 31, 2010
|
Floor plan
interest
|
||||
Interest Rate Swap Contracts
|
expense
|
$ | - | ||
For the Year Ended December 31, 2009
|
Floor plan
interest
|
||||
Interest Rate Swap Contracts
|
expense
|
$ | (6 | ) |
·
|
Level 1 – quoted prices in active markets for identical securities;
|
·
|
Level 2 – other significant observable inputs, including quoted prices for similar securities, interest rates, prepayment spreads, credit risk; and
|
·
|
Level 3 – significant unobservable inputs, including our own assumptions in determining fair value.
|
Fair Value at December 31, 2011
|
Level 1
|
Level 2
|
Level 3
|
|||||||||
Measured on a recurring basis:
|
||||||||||||
Derivative contracts, net
|
$ | - | $ | (7,530 | ) | $ | - | |||||
Measured on a non-recurring basis:
|
||||||||||||
Long-lived assets held and used
|
$ | - | $ | - | $ | 2,500 |
Fair Value at December 31, 2010
|
Level 1
|
Level 2
|
Level 3
|
|||||||||
Measured on a recurring basis:
|
||||||||||||
Derivative contracts, net
|
$ | - | $ | (8,692 | ) | $ | - | |||||
Measured on a non-recurring basis:
|
||||||||||||
Long-lived assets held and used:
|
||||||||||||
Certain buildings and improvements
|
$ | - | $ | - | $ | 23,400 | ||||||
Certain parcels of land
|
- | - | 13,511 | |||||||||
Total
|
$ | - | $ | - | $ | 36,911 |
Year Ended December 31,
|
2011
|
2010
|
2009
|
|||||||||
Current:
|
||||||||||||
Federal
|
$ | 22,009 | $ | 9,056 | $ | (5,117 | ) | |||||
State
|
3,598 | 1,613 | (80 | ) | ||||||||
25,607 | 10,669 | (5,197 | ) | |||||||||
Deferred:
|
||||||||||||
Federal
|
7,120 | (1,664 | ) | 8,704 | ||||||||
State
|
681 | (416 | ) | 1,535 | ||||||||
7,801 | (2,080 | ) | 10,239 | |||||||||
Total
|
$ | 33,408 | $ | 8,589 | $ | 5,042 |
December 31,
|
2011
|
2010
|
||||||
Deferred tax assets:
|
||||||||
Deferred revenue and cancellation reserves
|
$ | 6,369 | $ | 6,047 | ||||
Allowances and accruals, including state tax
carryforward amounts
|
20,234 | 16,324 | ||||||
Interest on derivatives
|
2,889 | 3,337 | ||||||
Goodwill
|
26,817 | 33,380 | ||||||
Capital loss carryforward
|
12,841 | - | ||||||
Total deferred tax assets
|
69,150 | 59,088 | ||||||
Deferred tax liabilities:
|
||||||||
Inventories
|
(4,351 | ) | (3,503 | ) | ||||
Property and equipment, principally due to differences in depreciation
|
(16,418 | ) | (11,653 | ) | ||||
Prepaids and property taxes
|
(1,540 | ) | (1,471 | ) | ||||
Total deferred tax liabilities
|
(22,309 | ) | (16,627 | ) | ||||
Valuation allowance
|
(12,841 | ) | - | |||||
Total
|
$ | 34,000 | $ | 42,461 |
Year Ended December 31,
|
2011
|
2010
|
2009
|
|||||||||
Federal tax provision at statutory rate
|
$ | 31,200 | $ | 7,315 | $ | 4,117 | ||||||
State taxes, net of federal income tax benefit
|
3,439 | 917 | 632 | |||||||||
Non-deductible expenses
|
205 | 211 | 320 | |||||||||
Permanent differences related to the employee
stock purchase program
|
25 | 155 | 17 | |||||||||
Other
|
(1,461 | ) | (9 | ) | (44 | ) | ||||||
Income tax provision
|
$ | 33,408 | $ | 8,589 | $ | 5,042 |
Federal
|
2007-2010
|
|
13 states
|
2006-2010
|
·
|
In April 2011, we acquired the inventory, equipment, real estate and intangible assets of, and assumed certain liabilities related to, Mercedes-Benz of Portland, Oregon, Mercedes Benz of Wilsonville, Oregon and Rasmussen BMW/MINI in Portland, Oregon from the Don Rasmussen Group.
|
·
|
In October 2011 we acquired the inventory, equipment, real estate and intangible assets of Fresno Subaru from Herwaldt Automotive Group.
|
Year Ended December 31,
|
2011
|
2010
|
||||||
Revenue
|
$ | 2,753,745 | $ | 2,245,439 | ||||
Income from continuing operations, net of tax
|
56,624 | 14,591 | ||||||
Basic income per share from continuing operations, net of tax
|
2.16 | 0.56 | ||||||
Diluted income per share from continuing operations, net of tax
|
2.12 | 0.56 |
Consideration
|
||||
Cash paid
|
$ | 55,368 | ||
Floor plan financing assumed
|
19,348 | |||
$ | 74,716 | |||
Assets Acquired and Liabilities Assumed
|
||||
Inventories
|
$ | 29,268 | ||
Franchise value
|
14,517 | |||
Property, plant and equipment
|
17,351 | |||
Real estate lease reserves
|
325 | |||
Other assets
|
1,475 | |||
Reserves
|
(663 | ) | ||
Other liabilities
|
(426 | ) | ||
61,847 | ||||
Goodwill
|
12,869 | |||
$ | 74,716 |
·
|
our management team, possessing the necessary authority, commits to a plan to sell the store;
|
·
|
the store is available for immediate sale in its present condition;
|
·
|
an active program to locate buyers and other actions that are required to sell the store are initiated;
|
·
|
a market for the store exists and we believe its sale is likely to be completed within one year;
|
·
|
active marketing of the store commences at a price that is reasonable in relation to the estimated fair value; and
|
·
|
our management team believes it is unlikely that changes will be made to the plan or will withdraw the plan to dispose of the store.
|
·
|
a lack of available credit continued to prove challenging to prospective purchasers of our stores. One of the primary problems was the lack of vehicle inventory floor plan financing, which is a basic requirement of the franchise agreement. Even for prospective purchasers with existing floor plan financing, obtaining mortgage financing on dealership real estate or committing to other significant capital investment proved exceedingly difficult.
|
·
|
continued economic uncertainty, including increasing unemployment, resulting in low consumer confidence and a prolonged reluctance to purchase big ticket items such as automobiles.
|
·
|
the dramatically decreased pool of potential purchasers further extended our store disposition time line. The absence of qualified buyers reduced expected proceeds to levels significantly below the range of what we considered to be reasonable.
|
·
|
a restructuring of store operations that began in 2008 and accelerated in 2009 aligned our costs with current industry vehicle sales levels, and enhanced our liquidity position. This restructuring improved operational performance at all locations, including those slated for divestiture. Improved operating performance at the stores held for sale, even on a constant valuation multiple, increased expected selling prices, which proved unobtainable given market conditions.
|
·
|
the reorganization of Chrysler and GM resulted in the closure of four domestic stores that we had not selected for divestiture. One of the original considerations for the restructuring we initiated in 2008 involved diversifying our portfolio to reduce dependence on domestic manufacturers, particularly Chrysler and GM. The unexpected closure of locations not selected for disposition accelerated this portfolio diversification and made some divestitures less critical.
|
·
|
throughout 2008 and 2009, we generated cash through asset sales, mortgage financing and operational cash flows. In 2009, we retired our outstanding convertible notes as they matured. Also, in late 2009, we completed a follow-on equity offering raising approximately $43 million. We also extended the maturity on our Credit Facility. These actions reduced the immediate need for additional liquidity to ensure our ongoing operations and eliminated the need to dispose of assets to raise cash.
|
Year Ended December 31,
|
2011
|
2010
|
2009
|
|||||||||
Floor plan interest
|
$ | 301 | $ | 324 | $ | 749 | ||||||
Other interest
|
58 | 95 | 2,486 | |||||||||
Total interest
|
$ | 359 | $ | 419 | $ | 3,235 |
Year Ended December 31,
|
2011
|
2010
|
2009
|
|||||||||
Revenue
|
$ | 64,766 | $ | 65,613 | $ | 148,680 | ||||||
Gain (loss) from discontinued operations
|
$ | 611 | $ | 740 | $ | (6,410 | ) | |||||
Net gain (loss) on disposal activities
|
4,396 | (301 | ) | 9,910 | ||||||||
5,007 | 439 | 3,500 | ||||||||||
Income tax expense
|
(1,914 | ) | (251 | ) | (1,071 | ) | ||||||
Income from discontinued operations, net of income taxes
|
$ | 3,093 | $ | 188 | $ | 2,429 | ||||||
Goodwill and other intangible assets disposed of
|
$ | 712 | $ | - | $ | 1,037 | ||||||
Cash generated from disposal activities
|
$ | 23,838 | $ | 941 | $ | 27,697 | ||||||
Floor plan debt paid in connection with disposal activities
|
$ | 1,784 | $ | 2,134 | $ | 26,597 |
Year Ended December 31,
|
2011
|
2010
|
2009
|
|||||||||
Goodwill and other intangible assets
|
$ | 3,168 | $ | - | $ | 12,146 | ||||||
Property, plant and equipment
|
1,357 | (217 | ) | (1,972 | ) | |||||||
Inventory
|
(88 | ) | - | 1,212 | ||||||||
Other
|
(41 | ) | (84 | ) | (1,476 | ) | ||||||
$ | 4,396 | $ | (301 | ) | $ | 9,910 |
Year Ended December 31,
|
2010
|
|||
Risk-free interest rate
(1)
|
0.34% | |||
Expected term
(2)
|
2.17 years
|
|||
Volatility
(3)
|
50% |
(1)
|
The risk-free interest rate for the option is based on the U.S. Treasury 2-year constant maturities rate for the 2010 valuation.
|
(2)
|
The expected term is calculated based on the remaining term of the option.
|
(3)
|
The expected volatility is estimated based on the historical volatilities of our and comparable public companies’ common stock, as well as implied volatilities based on the prices of currently traded options of our company and the comparable public companies.
|
ARTICLE I PREAMBLE AND PURPOS | 1 | ||
1.1. | Preamble | 1 | |
1.2. | Purpose | 1 | |
ARTICLE II DEFINITIONS AND CONSTRUCTION | 1 | ||
2.1. | Definitions | 1 | |
2.2. | Construction | 5 | |
ARTICLE III PARTICIPATION AND FORFEITABILITY OF BENEFITS | 5 | ||
3.1. | Eligibility and Participation | 5 | |
3.2. | Forfeitability of Benefits | 5 | |
ARTICLE IV DEFERRAL, SETTLEMENT, AND ACCOUNTING | 6 | ||
4.1. | Deferral Election | 6 | |
4.2. | Maximum Permissible Election | 6 | |
4.3. | Timing of Deferral Election | 6 | |
4.4. | Elements of Deferral Election | 6 | |
4.5. | Timing of Settlement and Distribution of Deferred RSUs | 6 | |
4.6. | Elections are Irrevocable | 7 | |
4.7. | Election Conflicts | 7 | |
4.8. | Manner of Settlement | 7 | |
4.9. | Taxation of Settlement | 7 | |
4.10. | Establishment of Subaccount | 7 | |
4.11. | Provisional RSU Credits to Subaccount | 8 | |
ARTICLE V SETTLEMENT OF DEFERRED RSU AWARDS | 8 | ||
5.1. | Timing of Settlement and Payment of Deferred RSU | 8 | |
5.2. | Amounts Settled and Paid under Deferral Election | 8 | |
ARTICLE VI TERMINATION EVENTS | 9 | ||
6.1. | Timing of Settlement and Payment | 9 | |
6.2. | Settlement and Payment due to Plan Termination | 9 | |
6.3. | Terminating Events | 9 | |
ARTICLE VII SETTLEMENT LIMITATIONS | 9 | ||
7.1. | Right to Deferral Subaccount | 9 | |
7.2. | Liability Limitation | 10 | |
7.3. | Legal Disability | 10 |
ARTICLE VIII FUNDING | 10 | ||
8.1. | Funding | 10 | |
8.2. | Creditor Status | 10 | |
ARTICLE IX ADMINISTRATION | 11 | ||
9.1. | Powers and Authority of the Company | 11 | |
9.2. | Plan Administrator | 11 | |
9.3. | Binding Effect of Decisions | 12 | |
9.4. | Indemnification | 12 | |
9.5. | Receipt and Release of Necessary Information | 13 | |
9.6. | Overpayment and Underpayment of Benefits | 13 | |
9.7. | Claims for Benefits | 13 | |
ARTICLE X OTHER BENEFIT PLANS OF THE COMPANY; BENEFICIARY DESIGNATION | 14 | ||
10.1. | Other Plans | 14 | |
10.2. | Beneficiary | 15 | |
ARTICLE XI AMENDMENT AND TERMINATION OF THE PLAN | 16 | ||
11.1. | Continuation | 16 | |
11.2. | Amendment of Plan | 16 | |
11.3. | Termination of Plan | 16 | |
ARTICLE XII MISCELLANEOUS | 16 | ||
12.1. | Nonassignability | 16 | |
12.2. | Not a Contract of Employment | 17 | |
12.3. | Successors | 17 | |
12.4. | Entire Agreement | 17 | |
12.5. | Section 409A | 17 | |
12.6. | Furnishing Information | 18 |
1.1.
|
Preamble
. Lithia Motors, Inc. (the “Company”) hereby adopts the Lithia Motors, Inc. RSU Deferral Plan (the “Plan”) to permit participants in the Lithia Motors, Inc. Amended and Restated 2003 Stock Incentive Plan (the “2003 SIP”) to elect to defer the settlement of restricted stock units (“RSUs”) awarded to them under the 2003 SIP. This Plan is intended to be a sub-plan under the 2003 SIP and any shares of Company stock settled pursuant to this Plan will consist of shares of stock issued under the 2003 SIP. Deferral elections made under this Plan shall constitute deferral elections within the meaning of Code section 409A (“Section 409A”) and will be construed and administered in accordance with such provisions.
|
1.2.
|
Purpose.
Through this Plan, the Company intends to permit the deferral of RSUs by members of its Board of Directors and certain other select management or highly compensated employees. Accordingly, it is intended that this Plan will not constitute a “qualified plan” subject to the limitations of Code section 401(a), nor will it constitute a “funded plan,” for purposes of such requirements. It also is intended that this Plan will be exempt from the participation and vesting requirements of Part 2 of Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), the funding requirements of Part 3 of Title I of ERISA, and the fiduciary requirements of Part 4 of Title I of ERISA by reason of the exclusions afforded plans that are unfunded and maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees. This Plan is a nonqualified deferred compensation plan and is intended that the Plan comply with the applicable requirements of Section 409A so that no amounts payable hereunder are subject to taxation under Section 409A.
|
2.1.
|
Definitions.
When a word or phrase appears in this Plan with the initial letter capitalized, and the word or phrase does not commence a sentence, the word or phrase will generally be a term defined in this Section 2.1. The following words and phrases with the initial letter capitalized will have the meaning set forth in this Section 2.1, unless a different meaning is required by the context in which the word or phrase is used. Capitalized terms not herein defined shall have the meaning prescribed to such term under the 2003 SIP.
|
(a)
|
“Annual Election Period” means the end of the Plan Year prior to the Plan Year in which the Award is granted.
|
(b)
|
“Award” means an agreement to issue RSUs pursuant to the 2003 SIP.
|
(c)
|
“Award Proceeds” means the Common Stock that would be settled on the Award’s Original RSU Settlement Date but for a timely RSU Deferral Election that applies to the Award.
|
(d)
|
“Beneficiary” means the person, persons or entity (approved by the Committee) and entitled under Section 8.2 to receive any Plan benefits payable after a Participant’s death.
|
(e)
|
“Board” means the Board of Directors of the Company.
|
(f)
|
“Code” means the Internal Revenue Code of 1986, as amended.
|
(g)
|
“Company” means Lithia Motors, Inc. and, unless the context requires otherwise, any successor or assignee of the Company by merger, consolidation, acquisition of all or substantially all of the assets of the Company or otherwise. As used in connection with either the term “Eligible Employee” or “Service,” it includes Subsidiaries of the Company.
|
(h)
|
“Committee” means the Compensation Committee of the Company’s Board. Where applicable, “Committee” also refers to any individual or entity to which the Committee has delegated authority to act with respect to the Plan.
|
(i)
|
The “Deferral Date” for any deferred Award Proceeds shall mean the Award’s Original RSU Settlement Date on which date the Award Proceeds have been deferred hereunder pursuant to an RSU Deferral Election. The Deferral Date is that date on which the Company shall credit such deferred amounts to a Subaccount pursuant to Section 3 herein.
|
(j)
|
“Deferred RSUs” shall mean the RSUs into which the deferred amounts credited to a Subaccount are delineated as of a Deferral Date pursuant to Section 4 herein.
|
(k)
|
“Deferred RSU Settlement Date” shall mean the date that Deferred RSUs in a Subaccount are settled in Common Stock and distributed to a Participant or Beneficiary; this date will be the Scheduled Distribution Date or, if so provided on the RSU Deferral Election Form governing the Deferred RSUs, an earlier Termination Date.
|
(l)
|
“Director” means an individual member of the Board who meets the requirements to be an “outside director” as that term is defined in Treas. Reg. 1.162-27(e)(3).
|
(m)
|
“Effective Date” means January 1, 2012, except as provided otherwise herein.
|
(n)
|
“Election Form” means the forms provided by the Plan Administrator pursuant to which the Participant consents to participation in the Plan and makes an RSU Deferral Election. Such Participant consent and elections may be done either in writing or on-line through an electronic signature.
|
(o)
|
“Initial Election Period” means, for any Eligible Employee or Director who first becomes an Eligible Person on or after the first day of the Plan Year ends on the day prior to the date on which an Award is granted to such Eligible Person.
|
(p)
|
“RSU Deferral Election” means an election to defer settlement of vested RSUs to a future Scheduled Distribution Date made pursuant to Section 4.2.
|
(q)
|
“RSU Deferral Election Form” shall mean a written notice to be completed by an Eligible Person and delivered to the Company indicating a desire to defer all or a portion of such Eligible Person’s Award Proceeds for an Award and setting forth the information described in subsection 2.3 herein (a form of which is attached hereto as Exhibit A), thus effectuating the Eligible Person’s RSU Deferral Election with respect to such Award.
|
(r)
|
“RSU Deferral Period” shall mean the period commencing on the applicable original scheduled vesting date for any particular Award, delineated in full one-year increments of at least two (2) years but not longer than ten (10) years, with respect to which a Participant has chosen to defer any portion of his or her Award Proceeds.
|
(s)
|
“Eligible Person” means each Eligible Employee or Director who is a participant in the 2003 SIP and who is (or will be) granted an RSU Award on or after January 1, 2012.
|
(t)
|
“Eligible Employee” means, for any Plan Year, any employee who: (1) holds a position at the Company at a “Director” level or higher and (2) has been designated by the Committee as eligible to participate in the Lithia Motors, Inc. Lithia Motors, Inc. Executive Management Non-Qualified Deferred Compensation and Long-Term Incentive Plan.
|
(u)
|
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
|
(v)
|
“Original RSU Settlement Date” with respect to an Award means the date on which the Award would completely vest pursuant to the terms of the Award agreement and the 2003 SIP.
|
(w)
|
“Participant” means each Eligible Person who has made an RSU Deferral Election with respect to one or more Awards.
|
(x)
|
“Plan” means the Lithia Motors, Inc. RSU Deferral Plan as set forth herein and as the same may be amended from time to time.
|
(y)
|
“Plan Administrator” means the individual or entity appointed by the Committee to handle the day-to-day administration of the Plan, including but not limited to determining an Eligible Person’s eligibility to defer RSUs under the Plan, the number of such RSUs and complying with all applicable reporting and disclosure obligations imposed on the Plan. If the Committee does not appoint an individual or entity as Plan Administrator, the Committee will serve as the Plan Administrator.
|
(z)
|
“Plan Year” means the fiscal year of this Plan, which will commence on January 1 each year and end on December 31 of such year.
|
(aa)
|
“RSU” means a Restricted Stock Unit awarded under Article XI of the 2003 SIP.
|
(bb)
|
The “Scheduled Distribution Date,” with respect to any Participant’s deferred Award Proceeds for any Award, shall mean the date chosen by such Participant pursuant to Article IV hereof. Scheduled Distribution Date itself will be measured from the latest scheduled vesting date under the Award. For example, if a Participant elects a Scheduled Distribution Date of three (3) years with respect to an Award, and the Award agreement provides for graduated vesting over a four year period, the Scheduled Distribution Date shall be that date which is three (3) years from that date which is the fourth and final vesting year under the applicable Award agreement.
|
(cc)
|
A “Separation from Service” with respect to any Participant means a Participant’s “separation from service” within the meaning of Section 409A.
|
(dd)
|
“Specified Employee” means a Participant who, as of the date of his or her Separation from Service, is a key employee of the Company or any of its Affiliates (excluding entities or organizations required to be aggregated pursuant to Code Section 414(m) or 414(o)), but only if the stock of the Company or any such Affiliates is publicly traded on an established securities market or otherwise on such date. A Participant is a “key employee” if the Participant meets the requirements of Code Section 416(i)(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations thereunder and disregarding Code Section 416(i)(5)) at any time during the 12-month period ending on a “specified employee identification date.” If a Participant is a key employee as of December 31, the Participant shall be treated as a Specified Employee for the entire 12 month period beginning on the next following January 1.
|
(ee)
|
A “Subaccount” means one or more of the bookkeeping accounts maintained by the Company or its agent on behalf of a Participant, as described in more detail in Section 3.1.
|
(ff)
|
“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the relevant time each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.
|
(gg)
|
A “Terminating Event” shall mean an event described in section 6 hereof.
|
(hh)
|
A “Termination Date” shall mean the date of any Terminating Event.
|
(ii)
|
“2003 SIP” means the Lithia Motors, Inc. Amended and Restated 2003 Stock Incentive Plan, as amended from time to time.
|
2.2.
|
Construction.
If any provision of this Plan is determined to be for any reason invalid or unenforceable, the remaining provisions of this Plan will continue in full force and effect. All of the provisions of this Plan will be construed and enforced in accordance with the laws of the State of Oregon and will be administered according to the laws of such state, except as otherwise required by ERISA, the Code or other applicable federal law. The term “delivered to the Plan Administrator,” as used in this Plan, will include delivery to a person or persons designated by the Plan Administrator, as applicable, for the disbursement and the receipt of administrative forms. Delivery will be deemed to have occurred only when the form or other communication is actually received. Headings and subheadings are for the purpose of reference only and are not to be considered in the construction of this Plan. The pronouns “he,” “him” and “his” used in the Plan will also refer to similar pronouns of the female gender unless otherwise qualified by the context.
|
3.1.
|
Eligibility and Participation.
|
(a)
|
Determination of Eligibility.
It is intended that eligibility to participate in the Plan will be limited to Eligible Persons, as determined by the Plan Administrator, in its sole and absolute discretion. An Eligible Person will become a Participant by completing an Election Form and making an RSU Deferral Election pursuant to Section 4.1. Eligibility to become a Participant for any Plan Year will not entitle an individual to continue as an Eligible Person for any subsequent Plan Year. For RSU Awards made in 2012, the RSU Deferral Election may be made in 2011 even though this Plan is adopted effective January 1, 2012.
|
(b)
|
Loss of Eligibility Status.
A Participant under this Plan who separates from employment with the Company or its Subsidiaries, or who ceases to be a Director, or who transfers to an ineligible employment position will continue as an inactive Participant under this Plan until all RSUs deferred under the Plan have been settled.
|
3.2.
|
Forfeitability of Benefits
. Except as provided in Section 5.1, from and after the Deferral Date, a Participant will at all times have a nonforfeitable right to RSUs deferred under this Plan and credited to his Subaccount. As provided in Section 6.2, however, each Participant will be only a general creditor of the Company with respect to the settlement of any RSUs deferred under this Plan. Moreover, and for the avoidance of doubt, any portion of an Award that is subject to an RSU Deferral Election but that is forfeited prior to the Deferral Date under the terms of the Award or the 2003 SIP will not be credited to a Participant’s Subaccount under this Plan.
|
4.1.
|
Deferral Election.
With respect to Awards granted to an Eligible Person in a Plan Year, the Company shall inform each Eligible Person that he or she may make an RSU Deferral Election with respect to all or part of the Award Proceeds which may become payable for any such Award by an election made pursuant to this Plan and the maximum percentage of such Award Proceeds that may be voluntarily deferred hereunder.
|
4.2.
|
Maximum Permissible Election.
Subject to the maximum percentage established by the Company under subsection 4.1 herein, an Eligible Person may elect to defer all or any part of his or her Award Proceeds for a particular Award.
|
4.3.
|
Timing of Deferral Election.
Generally, an election to defer receipt of all or part of the Award Proceeds for a particular Award shall be made by completing and delivering an RSU Deferral Election Form to the Plan Administrator (i) no later than the end of the Annual Election Period or, for newly Eligible Persons, the Initial Election Period and (ii) at least one (1) year prior to the original vesting date with respect to such Award Proceeds. A Participant’s deferred Award Proceeds shall be automatically deferred and credited to a Subaccount on the Deferral Date following the original vesting date with respect to such Award Proceeds.
|
4.4.
|
Elements of Deferral Election.
Each RSU Deferral Election made pursuant to subsection 4.2 hereof shall state (a) the percentage of the Award Proceeds (subject to the maximum percentage established by the Company for each Participant for such Award) for such Award which a Participant elects to defer into a Subaccount established in the name of such Participant, (b) the length of the Deferral Period after which such deferred amount is to be settled and distributed, (c) the form of payment (e.g., as a single lump sum amount or in annual installments over a five (5) or ten (10) year period) and (d) if desired, the name of one or more Beneficiaries to whom the deferred amounts are to be distributed upon the Participant’s death.
|
4.5.
|
Timing of Settlement and Distribution of Deferred RSUs.
The settlement and distribution of any portion of the Award Proceeds that is voluntarily deferred pursuant to this Section 4 shall commence when and as provided on the RSU Deferral Election Form governing the Deferred RSUs on the specified Scheduled Distribution Date, unless settled and distributed earlier on account of a Terminating Event. Notwithstanding the foregoing to the contrary, where the settlement and distribution occurs prior to the Scheduled Distribution Date on account of the Participant’s Separation from Service, in the case of a Participant who is a Specified Employee as of his or her date of Separation from Service, all payments under this Section 4.5 to which the Participant is otherwise entitled during the first six (6) months following such Separation from Service shall be delayed until and paid on the first day of the seventh month following such Separation from Service Date (or, if earlier, the date of death of the Specified Employee). The Participant’s Subaccounts shall continue to be deemed invested in Company Stock and delineated in Deferred RSUs through the date of actual settlement and distribution pursuant to this Section 4.5.
|
4.6.
|
Elections are Irrevocable.
Each RSU Deferral Election under subsection 4.2 hereof shall be irrevocable and, with respect to the portion of any Award Proceeds which a Participant elects to defer, the Participant shall have no right to settlement and distribution thereof otherwise than on account of a Scheduled Distribution Date or a Terminating Event.
|
4.7.
|
Election Conflicts.
Awards deferred pursuant to this Article IV will continue to be subject to the underlying Award agreement to the extent the terms of such agreement do not conflict with the terms of the Plan and the Participant’s RSU Deferral Election (e.g., the deferral and settlement provisions of this Plan, rather than the Award agreement, will govern the settlement of the RSUs). For avoidance of doubt, if the Award agreement underlying the RSUs provides for the settlement of the RSUs upon a Corporate Transaction, then such provision will have no force or effect with respect to an Award deferred pursuant to this Section 4.1 and such Awards will be settled on the applicable Deferred RSU Settlement Date. Additionally, any portion of an Award that is subject to an RSU Deferral Election but that is forfeited prior to the Deferral Date under the terms of the Award agreement or the 2003 SIP will not be credited to a Participant’s Subaccount under this Plan.
|
4.8.
|
Manner of Settlement.
Settlement of the Awards deferred pursuant to this Article IV will be made in Common Stock as provided under Section 5.2 as soon as practicable following the Deferred RSU Settlement Date, but no later than sixty (60) days following such Deferred RSU Settlement Date; provided, however, that in no event shall the Participant have the right to designate the taxable year in which settlement actually occurs. Except as determined otherwise by the Plan Administrator pursuant to Section 5.1, if the Participant dies prior to the Scheduled Distribution Date, settlement of the Awards will be made under Section 10.2.
|
4.9.
|
Taxation of Settlement.
All amounts settled under this Plan will be taxable as ordinary income at the time of settlement and subject to appropriate withholding of income taxes. The appropriate number of shares of Common Stock may be withheld to satisfy such withholding obligations pursuant to administrative procedures adopted by the Plan Administrator.
|
4.10.
|
Establishment of Subaccount.
Assuming a Participant who has made a timely RSU Deferral Election with respect to an Award subsequently meets the Award’s vesting requirements, effective immediately upon such original vesting date the Company shall establish, for bookkeeping purposes only, a separate Subaccount for each such Participant. A Participant’s deferred Award Proceeds attributable to each Award, minus any amount required to be withheld pursuant to Code section 3121(v) (“Section 3121(v)”), shall be provisionally credited to the appropriate Subaccount on the Deferral Date as of the applicable original vesting date. Deferred amounts shall be delineated in the form of Deferred RSUs, with each Deferred RSU having a value equal to the Fair Market Value of one share of Company Stock as of the Deferral Date. At the time of such provisional crediting, the Company may subtract from the amount to be credited the appropriate amount to be withheld for purposes of Section 3121(v) and shall remit an amount equal to such withholding amount to the appropriate taxing authorities in satisfaction of the requirements of Section 3121(v).
|
4.11.
|
Provisional RSU Credits to Subaccount.
Any part of the Award Proceeds which a Participant elects to defer under this Article IV and which is provisionally credited to a Subaccount established in the name of such Participant shall be deemed invested in Company Stock and delineated in Deferred RSUs. Each Deferred RSU shall appreciate or depreciate in value from the Deferral Date through the date on which the Deferred RSU is actually settled and distributed in the same manner and at the same rate as one share of Company Stock. Unless and until the RSUs are settled in Common Stock, no holder of a Deferred RSU shall have any dividend or voting rights with respect to Deferred RSUs held in his or her Subaccount. Notwithstanding the foregoing to the contrary, Deferred RSUs shall be entitled to dividend equivalent rights if and as provided for under the underlying Award agreement.
|
5.1.
|
Timing of Settlement and Payment of Deferred RSU.
The Deferred RSUs shall be settled and paid under Section 5.2 to the respective Participants, or their chosen Beneficiaries in the event of death on the applicable Deferred RSU Settlement Date set forth in a Participant’s RSU Deferral Election. Moreover, in the event a Participant elects to have the Deferred RSUs paid in annual installments and the Participant dies, then the vested Deferred RSUs shall be paid as a single lump sum amount instead of installment payments, whether or not the installment payments had commenced prior to the Participant’s death.
|
5.2.
|
Amounts Settled and Paid under Deferral Election.
Deferred RSUs will be settled and distributed in shares of Company Stock on a one to one ratio. Any deferred amount settled and distributed hereunder is compensation income to the respective Participant and is subject to applicable tax withholding. The Company may deduct from any distribution hereunder an amount up to the minimum amount necessary to satisfy all federal, state and local taxes as required by law to be withheld with respect to such distribution. In addition or in the alternative, the Company may require a Participant to pay to the Company an amount up to the minimum amount necessary for the Company to satisfy all federal, state and local taxes as required by law to be withheld and in such event the Company may condition settlement and distribution on payment of such withholding amount and postpone distribution of the deferred amounts until such withholding amounts are paid to the Company by the Participant. Fractional Deferred RSUs, whether created through the crediting of dividend equivalents or as a result of tax withholding, shall be distributed in cash having a value equal to the value of the fractional Deferred RSU based on the Fair Market Value of the Company Stock on the date of distribution.
|
6.1.
|
Timing of Settlement and Payment.
If pursuant to an applicable RSU Deferral Election Form governing the Deferred RSUs, the Deferred RSUs become payable on account of a Terminating Event, then within the 90-day period following the Termination Date with respect to a Terminating Event, the corresponding amount attributable to Deferred RSUs credited to a Participant’s Subaccounts established hereunder shall be settled and distributed as provided in Section 5.2 except that in no event shall the Participant have the right to designate the taxable year of the payment.
|
6.2.
|
Settlement and Payment due to Plan Termination.
Notwithstanding anything in an RSU Deferral Election form to the contrary, the termination and liquidation of the Plan shall be a Terminating Event with respect to all Subaccounts. In such an event, amounts attributable to Deferred RSUs credited to all Subaccounts shall be settled and distributed to Participants at such time as shall be determined by the Administrator pursuant to Treasury Regulation section 1.409A-3(j)(4)(ix).
|
6.3.
|
Terminating Events.
The following events shall constitute Terminating Events with respect to each individual Subaccount maintained in the name of a Participant:
|
(a)
|
The death of the Participant;
|
(b)
|
The Participant’s Separation from Service with the Company; or
|
(c)
|
The presentation by any Participant to the Board of Directors of the Company of satisfactory evidence of a final determination by a court of competent jurisdiction from which no appeal is or can be taken, or, in the event that no litigation is pursued, the final determination by the United States Internal Revenue Service, or analogous taxing authority of another jurisdiction, that all or a portion of such Subaccount is currently taxable or taxable in any prior year to the Participant, or a change in the tax laws of the United States, or any other applicable jurisdiction, having the same effect (but only the amount necessary to cover any such taxes, penalties and/or interest due to the applicable taxing authority shall be distributed; provided, however, that an event described in this Section 6.3(c) shall be a Terminating Event only if permitted under Treasury Regulation section 1.409A-3(j)(4)(iv), (vii), or (xi).
|
7.1.
|
Right to Deferral Subaccount.
No Participant shall have any property interest whatsoever in any Subaccount. Nothing contained herein and no action taken pursuant to the provisions of this Plan shall create or be construed to create a trust of any kind, or a fiduciary relationship between any Participant and the Company. Any amounts which may be set aside by the Company for the purpose of satisfying the Company’s obligations hereunder shall continue for all purposes to be a part of the general assets of the Company and subject to the claims of its general creditors, and no person other than the Company shall have, by virtue of the provisions of this Plan, any interest in such amounts. To the extent that a Participant acquires a right to receive a distribution of Deferred RSUs, such right shall create no right of action by the Participant against the Company greater than the right of any unsecured general creditor of the Company.
|
7.2.
|
Liability Limitation.
Notwithstanding any provision to the contrary contained herein, no provision in this Plan shall create or be construed to create any claim, right or cause of action against the Company arising from any diminution in the value of any of the Subaccounts in connection with the deemed investment of such Subaccount in accordance with Section 4 hereof. The liability of the Company under this Plan shall be limited to the value of each of the Subaccounts as computed in accordance with Section 4 hereof.
|
7.3.
|
Legal Disability.
If a person entitled to settlement of Deferred RSUs under this Plan is, in the sole judgment of the Plan Administrator, under a legal disability, or otherwise is unable to apply such settlement to his own interest and advantage, the Plan Administrator, in the exercise of its discretion, may direct the Company or payor of the RSUs to make any such settlement in any one or more of the following ways:
|
(a)
|
Directly to such person;
|
(b)
|
To his legal guardian or conservator; or
|
(c)
|
To his spouse or to any person charged with the duty of his support, to be expended for his benefit and/or that of his dependents.
|
|
The decision of the Plan Administrator will in each case be final and binding upon all persons in interest, unless the Plan Administrator reverses its decision due to changed circumstances.
|
8.1.
|
Funding.
The Plan is an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly compensated employees” within the meaning of Sections 201, 301 and 401 of ERISA, and therefore is exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA. Accordingly, the Board may terminate the Plan and make no further benefit payments or remove certain employees as Participants if it is determined by the United States Department of Labor, a court of competent jurisdiction or an opinion of counsel that the Plan constitutes an employee pension benefit plan within the meaning of Section 3(2) of ERISA (as currently in effect or hereafter amended) which is not so exempt.
|
8.2.
|
Creditor Status.
Participants and their Beneficiaries, heirs, successors and assigns (including any alternate payees under qualified domestic relations orders (as defined in Code Section 414(p)(1)(B)) shall have no secured legal or equitable rights, interest or claims in any property or assets of the Company, nor shall they be beneficiaries of, or have any rights, claims or interests in, any property or asset which may be acquired by the Company. Assets of the Company shall not be held under any trust for the benefit of Participants or their Beneficiaries, heirs, successors or assigns (including any alternate payees), or held in any way as collateral security for the fulfilling of the obligations of the Company under the Plan. Any and all of the Company’s assets and policies shall be, and remain, the general, unpledged, unrestricted assets of the Company. The Company’s obligation under the Plan shall be that of an unfunded and unsecured promise to pay money in the future.
|
9.1.
|
Powers and Authority of the Company.
The Company, acting through the Board, has the following absolute powers and authority under the Plan:
|
(a)
|
To amend or terminate the Plan, at any time and for any reason (subject to the requirements of Section 9.3);
|
(b)
|
To determine the amount, timing, vesting, and other conditions applicable to Plan contributions and benefits;
|
(c)
|
To set aside funds to assist the Company (or any participating Affiliate) to meet its obligations under this Plan, provided that the funds are set aside in a manner that does not result in immediate taxation to Participants;
|
(d)
|
To establish one or more grantor trusts (as defined in Code Section 671 et seq.) to facilitate the payment of benefits under the Plan;
|
(e)
|
To take any such other actions as it deems advisable to carry out the purposes of the Plan; and
|
(f)
|
To delegate its authority to any officer, employee, committee or agent of the Company, as it deems advisable for the effective administration of the Plan.
|
9.2.
|
Plan Administrator.
The Committee is the Plan Administrator. All actions taken by the Committee, or by its delegate, as Plan Administrator will be conclusive and binding on all persons having any interest under the Plan, subject only to the claims procedures in Section 7.7. The Company intends the Plan and all amounts deferred thereunder to meet the requirements of Section 409A. The Plan Administrator shall interpret the Plan in such a way as to meet such requirements. The Plan Administrator has the following powers and authority under the Plan:
|
(a)
|
In the exercise of its sole, absolute, and exclusive discretion, to construe and interpret the terms and provisions of the Plan, to remedy and resolve ambiguities, to grant or deny any and all non-routine claims for benefits and to determine all issues relating to eligibility for benefits;
|
(b)
|
To carry out day-to-day administration of the Plan, including notifying individuals of their eligibility to participate in the Plan and of the provisions of the Plan, processing distributions, establishing enrollment requirements, approving and processing RSU Deferral Elections, providing Participants with statements of Subaccount and approving and processing changes in the time and/or form of distributions;
|
(c)
|
To establish administratively reasonable dates, times, and periods, to the extent that the terms of the Plan provide for the Plan Administrator to do so;
|
(d)
|
To prepare forms necessary for the administration of the Plan, including Participation Elections, Beneficiary designation forms, investment designation forms, and any other form or document deemed necessary to the effective administration of the Plan;
|
(e)
|
To approve and adopt communications to be furnished to Participants explaining the material provisions, terms, and conditions of the Plan;
|
(f)
|
To negotiate and document agreements with Plan service providers;
|
(g)
|
To amend the Plan for legal, technical, administrative, or compliance purposes, as recommended by legal counsel, as well as to amend the Plan’s claims rules;
|
(h)
|
To work with Plan service providers to ensure the effective administration of the Plan; and
|
(i)
|
To delegate its authority to any officer, employee, committee or agent of the Company, as it deems advisable for the effective administration of the Plan, any such delegation to carry with it the full discretion and authority vested in the Plan Administrator.
|
9.3.
|
Binding Effect of Decisions.
The finding, decision, determination or action of the Plan Administrator or its delegate with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final and conclusive and binding upon any and all persons having any interest in the Plan unless determined, subject only to the Plan’s claims rules. No findings, decisions or determinations of any kind made by the Plan Administrator or its delegate shall be disturbed unless the Plan Administrator or its delegate has acted in an arbitrary and capricious manner.
|
9.4.
|
Indemnification.
The Company shall indemnify and hold harmless the Board, the Plan Administrator, the Committee and any officers or employees of the Company and its Affiliates to which Plan responsibilities have been delegated from and against any and all liabilities, claims, demands, costs and expenses including attorneys’ fees, arising out of an alleged breach in the performance of their fiduciary duties under the Plan and ERISA, other than such liabilities, claims, demands, costs and expenses as may result from the gross negligence or willful misconduct of such person. The Company shall have the right, but not the obligation, to conduct the defense of such person in any proceeding to which this paragraph applies.
|
9.5.
|
Receipt and Release of Necessary Information.
Any Participant claiming the right to the settlement of RSUs under this Plan will furnish to the Plan Administrator such information as may be necessary to determine eligibility for and the number of RSUs subject to settlement, as a condition of claiming and receiving such settlement.
|
9.6.
|
Overpayment and Underpayment of Benefits.
The Plan Administrator may adopt, in its sole and absolute discretion, whatever rules, procedures and accounting practices are appropriate in providing for the correction of any error in settling RSUs. If a Participant’s RSU settlement is less than it should have been (i.e., an under settlement), the Plan Administrator will direct that settlement be made as soon as practicable to make up for the under settlement. If a Participant’s RSU settlement is more than it should have been (i.e., an over settlement), for whatever reason, the Plan Administrator may, in its sole and absolute discretion, (a) withhold payment of any further RSU settlements under the Plan until the over settlement has been collected; or (b) may require repayment of RSUs settled under this Plan without regard to further benefits to which the Participant may be entitled.
|
9.7.
|
Claims for Benefits.
|
(a)
|
Presentation of Claim
. Any Participant or Beneficiary of a deceased Participant (such Participant or Beneficiary being referred to below as a “Claimant”) may deliver to the Committee a written claim for a determination with respect to the amounts distributable to such Claimant from the Plan. The claim must state with particularity the determination desired by the Claimant.
|
(b)
|
Notification of Decision.
The Committee shall consider a Claimant’s claim within a reasonable time, and shall notify the Claimant in writing:
|
(i)
|
That the Claimant’s requested determination has been made, and that the claim has been allowed in full; or
|
(ii)
|
That the Committee has reached a conclusion contrary, in whole or in part, to the Claimant’s requested determination, and such notice must set forth in a manner calculated to be understood by the Claimant:
|
(A)
|
The specific reason(s) for the denial of the claim, or any part of it;
|
(B)
|
Specific reference(s) to pertinent provisions of the Plan upon which such denial was based;
|
(C)
|
A description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and
|
(D)
|
An explanation of the claim review procedure set forth in Section 12.3 below.
|
(c)
|
Review of a Denied Claim.
Within 60 days after receiving a notice from the Committee that a claim has been denied, in whole or in part, a Claimant (or the Claimant’s duly authorized representative) may file with the Committee a written request for a review of the denial of the claim. Thereafter, but not later than 30 days after the review procedure began, the Claimant (or the Claimant’s duly authorized representative):
|
(i)
|
May review pertinent documents;
|
(ii)
|
May submit written comments or other documents; and/or
|
(iii)
|
May request a hearing, which the Committee, in its sole discretion, may grant.
|
(d)
|
Decision on Review.
The Committee shall render its decision on review promptly, and not later than 60 days after the filing of a written request for review of the denial, unless a hearing is held or other special circumstances require additional time, in which case the Committee’s decision must be rendered within 120 days after such date. Such decision must be written in a manner calculated to be understood by the Claimant, and it must contain:
|
(i)
|
Specific reasons for the decision;
|
(ii)
|
Specific reference(s) to the pertinent Plan provisions upon which the decision was based; and
|
(iii)
|
Such other matters as the Committee deems relevant.
|
(e)
|
Legal Action.
A Claimant’s compliance with the foregoing provisions of this Section 7.7 is a mandatory prerequisite to a Claimant’s right to commence any legal action with respect to any claim for benefits under this Plan. Any such legal action must be taken within twelve (12) months of the date of the Committee’s final denial on review; otherwise, it is time-barred.
|
10.1.
|
Other Plans
. Nothing contained in this Plan will prevent a Participant prior to his death, or a Participant’s spouse or other Beneficiary after such Participant’s death, from receiving, in addition to any payments provided for under this Plan, any payments provided for under any other plan or benefit program of the Company, or which would otherwise be payable or distributable to him, his surviving spouse or Beneficiary under any plan or policy of the Company or otherwise. Nothing in this Plan will be construed as preventing the Company or any of its Subsidiaries from establishing any other or different plans providing for current or deferred compensation for employees and/or Directors. Unless otherwise specifically provided in any plan of the Company intended to “qualify” under section 401 of the Code, RSU Deferrals made under this Plan will not constitute earnings or compensation for purposes of determining contributions or benefits under such qualified plan.
|
10.2.
|
Beneficiary.
Each Participant shall have the right, at any time, to designate his or her Beneficiary(ies) (both primary as well as contingent) to receive any benefits payable under the Plan to a beneficiary upon the death of a Participant. The Beneficiary designated under this Plan may be the same as, or different from, the Beneficiary designated under any other plan of the Company or an Affiliate in which the Participant participates.
|
(a)
|
Beneficiary Designation Form
. A Participant shall designate his or her Beneficiary by completing and signing the Beneficiary Designation Form, and returning it to the Committee or its designated agent. A Participant shall have the right to change a Beneficiary by completing, signing and otherwise complying with the terms of the Beneficiary Designation Form and the Committee’s rules and procedures, as in effect from time-to-time. Upon acceptance by the Committee of a new Beneficiary Designation Form, all Beneficiary designations previously filed shall be canceled. The Committee shall be entitled to rely on the last Beneficiary Designation Form filed by the Participant and accepted by the Committee prior to his or her death.
|
(b)
|
Acknowledgment.
No designation or change in designation of a Beneficiary shall be effective until received in writing by the Committee or its designated agent.
|
(c)
|
No Beneficiary Designation.
If a Participant fails to designate a Beneficiary as provided in this Section 8.2 or if all designated Beneficiaries predecease the Participant or die prior to complete distribution of the Participant’s benefits, then the Participant’s designated Beneficiary shall be deemed to be his or her surviving spouse. If the Participant has no surviving spouse, the benefits remaining under the Plan to be paid to a Beneficiary shall be payable to the Participant’s estate.
|
(d)
|
Doubt as to Beneficiary.
If the Committee has any doubt as to the proper Beneficiary to receive payments pursuant to this Plan, the Committee shall have the right, exercisable in its discretion, to cause the Employer to withhold such payments until this matter is resolved to the Committee’s satisfaction.
|
(e)
|
Discharge of Obligations
. The payment of benefits under the Plan to a Beneficiary shall fully and completely discharge the Employer and the Committee from all further obligations under this Plan with respect to the Participant.
|
11.1.
|
Continuation.
The Company intends to continue this Plan indefinitely, but nevertheless assumes no contractual obligation beyond the promise to settle RSUs deferred under this Plan as described herein.
|
11.2.
|
Amendment of Plan.
Generally, the Company shall amend the Plan by action of the Board. However, the Committee may approve amendments to the Plan, without prior approval or subsequent ratification by the Board, if the amendment (i) does not significantly change the benefits provided under the Plan (except as required by a change in applicable law); (ii) does not significantly increase the costs of the Plan; and (iii) is intended to enable the Plan to remain in compliance with the requirements of the Code, ERISA, or other applicable law, to facilitate administration of the Plan, or to improve the operation of the Plan. A duly authorized officer of the Company shall execute the amendment, evidencing the Company’s adoption of the amendment.
|
11.3.
|
Termination of Plan.
The Company, acting through its Board may, at any time, partially or completely, terminate the Plan.
|
(a)
|
Partial Termination.
The Board may partially terminate the Plan by instructing the Committee not to accept any additional Participation Elections. If such a partial termination occurs, the Plan shall continue to operate and be effective with regard to Participation Elections entered into prior to the effective date of such partial termination.
|
(b)
|
Complete Termination.
The Board may completely terminate the Plan by instructing the Plan Administrator not to accept any additional Participation Elections, and by terminating all ongoing Participation Elections. If such a complete termination occurs, the Plan shall cease to operate and all Accounts and Subaccounts will be distributed to Participants at the time(s) and in the form(s) elected by the Participants in such Participants’ RSU Deferral Elections (or upon an earlier Terminating Event if so provided under the applicable RSU Deferral Election Form) unless the Board directs that distributions occur sooner in accordance with the provisions of Treasury Regulation Section 1.409A-3(j)(4)(ix).
|
12.1.
|
Nonassignability.
Except as required below, neither a Participant nor any other person shall, other than by will or the laws of descent and distribution, have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, expressly declared to be unassignable and nontransferable. Except as the Plan Administrator determines is otherwise required by law or order of a court of competent jurisdiction, including a domestic relations order (as defined in Code Section 414(p)(1)(B)), no part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency. To the extent and under such terms and conditions as determined by the Plan Administrator, a Participant may assign or transfer an RSU deferred under this Plan (each transferee thereof, a “Permitted Assignee”) to (i) the Participant’s spouse, children or grandchildren (including any adopted and step children or grandchildren), parents, grandparents or siblings, (ii) to a trust for the benefit of one or more of the Participant or the persons referred to in clause (i), (iii) to a partnership, limited liability company or corporation in which the Participant or the persons referred to in clause (i) are the only partners, members or shareholders, (iv) for charitable donations or (v) pursuant to a domestic relations order entered or approved by a court of competent jurisdiction; provided that such Permitted Assignee will be bound by and subject to all of the terms and conditions of the Plan and the underlying Award agreement relating to the transferred RSU and will be required to execute an agreement satisfactory to the Company evidencing such obligations; and provided further that such Participant will remain bound by the terms and conditions of the Plan. The Company will cooperate with any Permitted Assignee and the Company’s transfer agent in effectuating any transfer permitted under this Section.
|
12.2.
|
Not a Contract of Employment.
The Plan shall not constitute a contract of employment between the Company and the Participant, nor does it entitle a Participant who is a Director to remain on the Board. Nothing in the Plan shall give a Participant the right to be retained in the service of the Company in any capacity or to interfere with the right of the Company to discipline or discharge a Participant at any time.
|
12.3.
|
Successors.
The provisions of the Plan shall bind and inure to the benefit of the Company, its Affiliates, and their successors and assigns. The term “successors” as used herein shall include any corporation or other business entity, which shall, whether by merger, consolidation, purchase or otherwise, acquire all or substantially all of the business and assets of the Company, and the successors of any such corporation or other business entity.
|
12.4.
|
Entire Agreement.
The Plan document represents the entire agreement between the Company and any Participant in the Plan. The Plan supersedes any and all prior agreements between the Company and any Participant, whether such agreement or agreements were written or oral. Any amendment or modification to the terms of the Plan must be in writing and signed by an authorized officer of the Company. No RSU Deferral Election shall in any way amend, modify, alter or revise the Plan. In the event the terms of an RSU Deferral Election conflict with the terms of the Plan, the terms of the Plan shall be controlling.
|
12.5.
|
Section 409A.
The Plan is intended to comply with the requirements of Section 409A (including accompanying regulations and current IRS guidance) or, to the extent possible, to be exempt from the requirements of Section 409A, whether pursuant to the short-term deferral exception described in Treas. Reg. 1.409A-1(b)(4) or otherwise. To the extent Section 409A applies to the Plan or to any Participant Subaccounts, it is intended that the Plan and any such Subaccounts comply with the deferral, payout and other limitations and restrictions imposed under Section 409A. The Plan shall be interpreted, operated and administered in a manner consistent with this intention to the extent the Committee deems necessary to comply with Section 409A and any official guidance issued thereunder. The Plan shall be deemed to be amended, and any deferrals and distributions hereunder shall be deemed to be modified, to the extent necessary to comply with Section 409A (or to be exempt from the requirements of Section 409A) and to avoid or mitigate the imposition of additional taxes under Section 409A. Moreover, and notwithstanding any provision of the Plan to the contrary, the Committee, to the extent it deems necessary or advisable in its sole and complete discretion, reserves the right, but shall not be required, to unilaterally amend or modify the Plan so that the Plan qualifies for exemption from, or complies with, the requirements of Section 409A. None of the Company, the Board or the Committee (i) make any representations that the Plan qualifies for exemption from or complies with Section 409A or (ii) make any undertaking to preclude Section 409A from applying to the Plan; no provision of the Plan shall be interpreted or construed to transfer any liability for failure to comply with the requirements of Section 409A from a Participant or any other individual to the Company or any of its affiliates, employees or agents. Moreover, for purposes of applying the provisions of Section 409A to this Plan, each separately identified amount to which a Participant is entitled under this Plan shall be treated as a separate payment.
|
12.6.
|
Furnishing Information
. A Participant, or his or her Beneficiary, will cooperate with the Plan Administrator by furnishing any, and all information, requested by the Plan Administrator and take such other actions as may be requested in order to facilitate the administration of the Plan and the payments of benefits hereunder, including but not limited to, taking such physical examinations as the Committee may deem necessary.
|
|
IN WITNESS WHEREOF, this Lithia Motors, Inc. RSU Deferral Plan has been executed pursuant to proper authority on this 27
th
day of December, 2011, effective January 1, 2012.
|
LITHIA MOTORS, INC. | |||
|
By:
|
/s/ Christopher Holzshu | |
Christopher Holzshu |
Retainer:
|
$36,000 per year (paid in twelve equal installments of $3,000 subsequent to shareholder approval of nomination)
|
Attendance:
|
$20,000; $5,000 paid following attendance (in person or via conference call) at the regular quarterly board and committee meetings, or upon an excused absence.
|
Award of Restricted
|
Share Units*:
|
$50,000
**
|
Total Compensation
|
$106,000
|
Year Ended December 31,
|
||||||||||||||||||||
2011
|
2010
|
2009
|
2008
|
2007
|
||||||||||||||||
Earnings
|
||||||||||||||||||||
Income (loss) from continuing operations before income taxes
|
$ | 89,175 | $ | 22,120 | $ | 11,764 | $ | (327,030 | ) | $ | 38,496 | |||||||||
Fixed charges
|
27,600 | 29,984 | 31,588 | 46,298 | 49,930 | |||||||||||||||
Amortization of capitalized interest
|
270 | 268 | 256 | 224 | 164 | |||||||||||||||
Capitalized interest
|
(163 | ) | - | (916 | ) | (1,661 | ) | (3,153 | ) | |||||||||||
Total earnings
|
$ | 116,882 | $ | 52,372 | $ | 42,692 | $ | (282,169 | ) | $ | 85,437 | |||||||||
Fixed Charges
|
||||||||||||||||||||
Floor plan interest expense
|
$ | 10,584 | $ | 10,325 | $ | 10,704 | $ | 20,205 | $ | 23,979 | ||||||||||
Other interest expense
(1)
|
12,928 | 14,545 | 13,925 | 17,675 | 16,108 | |||||||||||||||
Capitalized interest costs
|
163 | - | 916 | 1,661 | 3,153 | |||||||||||||||
Interest component of rent expense
|
3,925 | 5,114 | 6,043 | 6,757 | 6,690 | |||||||||||||||
Total fixed charges
|
$ | 27,600 | $ | 29,984 | $ | 31,588 | $ | 46,298 | $ | 49,930 | ||||||||||
Ratio of earnings to fixed charges
|
4.2 | x | 1.7 | x | 1.4 | x | (328,467 | ) | 1.7 | x |
NAME OF EN
TITY (1)
|
STATE OF
ORIGIN
|
ASSUMED BUSINESS NAME(S)
(if different than entity name)
|
Lithia of Anchorage, Inc.
|
Alaska
|
Lithia Chrysler Jeep Dodge of South Anchorage
|
Lithia Imports of Anchorage, Inc.
|
Alaska
|
Lithia Hyundai of Anchorage
Lithia Kia of Anchorage
|
Lithia of Fairbanks, Inc.
|
Alaska
|
Chevrolet of Fairbanks
|
Lithia NA, Inc.
|
Alaska
|
BMW of Anchorage
|
Lithia of South Central AK, Inc.
|
Alaska
|
Chevrolet of South Anchorage
Chevrolet of Wasilla
Saab of South Anchorage
|
Lithia CIMR, Inc.
|
California
|
Lithia Chevrolet of Redding
|
Lithia DC, Inc.
|
California
|
Lithia Chrysler Jeep Dodge of Concord
|
Lithia of Eureka, Inc.
|
California
|
Lithia Chrysler Jeep Dodge of Eureka
|
Lithia FMF, Inc.
|
California
|
Lithia Ford of Fresno
|
Lithia JEF, Inc.
|
California
|
Lithia Hyundai of Fresno
|
Lithia MMF, Inc.
|
California
|
Lithia Mazda of Fresno
Lithia Suzuki of Fresno
|
Lithia NF, Inc.
|
California
|
Lithia Nissan of Fresno
|
Lithia of Santa Rosa, Inc.
|
California
|
Lithia Chrysler Jeep Dodge of Santa Rosa
|
Lithia Sea P, Inc.
|
California
|
Porsche of Monterey
|
Lithia Seaside, Inc.
|
California
|
BMW of Monterey
|
Lithia TR, Inc.
|
California
|
Lithia Toyota of Redding
Lithia Scion of Redding
|
Lithia Ford of Boise, Inc.
|
Idaho
|
Lithia Ford Lincoln of Boise
|
Lithia of Pocatello, Inc.
|
Idaho
|
Lithia Chrysler Jeep Dodge of Pocatello
Lithia Hyundai of Pocatello
|
Lithia Poca-Hon, Inc.
|
Idaho
|
Honda of Pocatello
|
Lithia CCTF, Inc.
|
Idaho
|
Chevrolet of Twin Falls
|
Lithia of TF, Inc.
|
Idaho
|
Lithia Chrysler Jeep Dodge of Twin Falls
|
NAME OF EN
TITY (1)
|
STATE OF
ORIGIN
|
ASSUMED BUSINESS NAME(S)
(if different than entity name)
|
Lithia Motors Support Services, Inc.
|
Oregon
|
|
Lithia MTLM, LLC
|
Oregon
|
Lithia Toyota
Lithia Scion
|
LGPAC, Inc.
|
Oregon
|
Lithia Grants Pass Auto Center
|
Lithia DM, Inc.
|
Oregon
|
Lithia Dodge
Lithia Chrysler Jeep Dodge
|
Lithia HPI, Inc.
|
Oregon
|
Lithia Volkswagen
|
Lithia DE, Inc.
|
Oregon
|
Lithia Chrysler Jeep Dodge of Eugene
|
Lithia BNM, Inc.
|
Oregon
|
Lithia Nissan
Lithia BMW
|
Hutchins Imported Motors, Inc.
|
Oregon
|
Lithia Toyota of Springfield
Lithia Scion of Springfield
|
Hutchins Eugene Nissan, Inc.
|
Oregon
|
Lithia Nissan of Eugene
|
Lithia Klamath, Inc.
|
Oregon
|
Lithia Chrysler Jeep Dodge of Klamath Falls
Lithia Toyota of Klamath Falls
Lithia Scion of Klamath Falls
|
Lithia SOC, Inc.
|
Oregon
|
Lithia Subaru of Oregon City
|
Lithia of Roseburg, Inc.
|
Oregon
|
Lithia Chrysler Jeep Dodge of Roseburg
|
Lithia Rose-FT, Inc.
|
Oregon
|
Lithia Ford Lincoln of Roseburg
|
Lithia Medford Hon, Inc.
|
Oregon
|
Lithia Honda
|
Lithia of Bend 1, LLC
|
Oregon
|
Bend Honda
|
Lithia of Bend 2, LLC
|
Oregon
|
Chevrolet Cadillac of Bend
|
LMBP, LLC
|
Oregon
|
Mercedes Benz of Portland
|
LMBW, LLC
|
Oregon
|
Mercedes Benz of Wilsonville
|
LBMP, LLC
|
Oregon
|
BMW Portland
MINI of Portland
|
LFKF, LLC
|
Oregon
|
Lithia Ford of Klamath Falls
|
Lithia Bryan Texas, Inc.
|
Texas
|
Lithia Chrysler Jeep Dodge of Bryan College Station
|
Lithia CJDSA, Inc.
|
Texas
|
All American Chrysler Jeep Dodge of San Angelo
|
Lithia CSA, Inc.
|
Texas
|
All American Chevrolet of San Angelo
|
Lithia NSA, Inc.
|
Texas
|
Honda of San Angelo
|
NAME OF EN
TITY (1)
|
STATE OF
ORIGIN
|
ASSUMED BUSINESS NAME(S)
(if different than entity name)
|
Lithia CJDO, Inc.
|
Texas
|
All American Chrysler Jeep Dodge of Odessa
|
Lithia DMID, Inc.
|
Texas
|
All American Chrysler Jeep Dodge of Midland
|
Lithia CO, Inc.
|
Texas
|
All American Chevrolet of Odessa
|
Lithia CM, Inc.
|
Texas
|
All American Chevrolet of Midland
|
Lithia HMID, Inc.
|
Texas
|
Hyundai of Odessa
|
Lithia TO, Inc.
|
Texas
|
Lithia Toyota of Odessa
Lithia Scion of Odessa
|
Lithia of Abilene, Inc.
|
Texas
|
Honda of Abilene
|
Lithia of Corpus Christi, Inc.
|
Texas
|
|
Lithia of Midland, Inc.
|
Texas
|
Honda of Midland
|
Lithia TA, Inc.
|
Texas
|
Lithia Toyota of Abilene
|
Camp Automotive, Inc.
|
Washington
|
Camp BMW
Camp Chevrolet
Camp Subaru
Camp Cadillac
|
Lithia Dodge of Tri-Cities, Inc.
|
Washington
|
Lithia Chrysler Jeep Dodge of Tri-Cities
|
Lithia DC of Renton, Inc.
|
Washington
|
Lithia Chrysler Jeep Dodge of Renton
|
Lithia HyR, Inc.
|
Washington
|
Lithia Hyundai of Renton
|
Lithia of Seattle, Inc.
|
Washington
|
BMW Seattle
|
Lithia of Spokane, Inc.
|
Washington
|
Mercedes Benz of Spokane
|
(1)
|
Unless specifically noted to the contrary, all entities are wholly owned subsidiaries of Lithia Motors, Inc.
|
1.
|
I have reviewed this annual report on Form 10-K of Lithia Motors, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
1.
|
I have reviewed this annual report on Form 10-K of Lithia Motors, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |