Oregon
|
93-0572810
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
150 N. Bartlett Street, Medford, Oregon
|
97501
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Name of each exchange on which registered
|
Class A common stock, without par value
|
New York Stock Exchange
|
Page
|
||
PART I | ||
Item 1.
|
Business
|
2
|
Item 1A.
|
Risk Factors
|
11
|
Item 1B.
|
Unresolved Staff Comments
|
23
|
Item 2.
|
Properties
|
24
|
Item 3.
|
Legal Proceedings
|
24
|
Item 4.
|
Mine Safety Disclosure
|
25
|
PART II | ||
Item 5.
|
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
25
|
Item 6.
|
Selected Financial Data
|
28
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
29
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
54
|
Item 8.
|
Financial Statements and Supplementary Data
|
55
|
Item 9.
|
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
|
55
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Item 9A.
|
Controls and Procedures
|
55
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Item 9B.
|
Other Information
|
56
|
PART III | ||
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
56
|
Item 11.
|
Executive Compensation
|
56
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
57
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Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
57
|
Item 14.
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Principal Accountant Fees and Services
|
57
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PART IV | ||
Item 15.
|
Exhibits and Financial Statement Schedules
|
58
|
Signatures
|
62
|
State
|
Number of
Stores
|
Percent of
2012 Revenue
|
||||||
Texas
|
15 | 25 | % | |||||
Oregon
|
19 | 20 | ||||||
California
|
11 | 10 | ||||||
Montana
|
8 | 9 | ||||||
Washington
|
7 | 8 | ||||||
Alaska
|
7 | 8 | ||||||
Idaho
|
5 | 5 | ||||||
Iowa
|
5 | 5 | ||||||
Nevada
|
4 | 5 | ||||||
North Dakota
|
3 | 3 | ||||||
New Mexico
|
3 | 2 | ||||||
Total
|
87 | 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; late model, lower-mileage vehicles; and value autos to reach additional customers;
|
●
|
leveraging our cost structure as vehicle sales increase while maintaining fixed costs;
|
●
|
diversifying our franchise mix through acquisitions;
|
●
|
increasing our return to investors through dividends and strategic share buy backs;
|
●
|
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.
|
Manufacturer
|
Percent of
2012 New
Vehicle
Revenue
|
Percent of
2012 New
Vehicle Gross
Profit
|
||||||
Chrysler, Jeep, Dodge
|
33.2% | 29.7% | ||||||
Chevrolet, Cadillac, GMC, Buick
|
15.7 | 15.8 | ||||||
Toyota, Scion
|
12.3 | 11.7 | ||||||
BMW, Mini
|
9.8 | 10.1 | ||||||
Honda, Acura
|
5.6 | 7.1 | ||||||
Ford, Lincoln
|
5.9 | 5.1 | ||||||
Hyundai
|
2.7 | 4.6 | ||||||
Subaru
|
5.6 | 4.6 | ||||||
Mercedes, smart
|
3.5 | 4.6 | ||||||
Nissan
|
2.2 | 2.6 | ||||||
Volkswagen, Audi
|
1.8 | 1.9 | ||||||
Kia
|
0.7 | 0.9 | ||||||
Porsche
|
0.6 | 0.8 | ||||||
Mazda
|
0.3 | 0.5 | ||||||
Mitsubishi
|
0.1 | * | ||||||
Fiat
|
* | * | ||||||
Total
|
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;
|
·
|
increase new and used vehicle sales by aggressively pursuing customer trade-ins; and
|
·
|
increase finance and insurance revenues and service and parts sales.
|
●
|
locate our stores and identify the new vehicle brands sold at each store;
|
●
|
search new and pre-owned vehicle inventory;
|
●
|
view current pricing and specials;
|
●
|
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;
|
●
|
encountering undiscovered liabilities and operational difficulties at acquired dealerships;
|
●
|
disrupting our ongoing business;
|
●
|
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.
|
2011
|
High
|
Low
|
||||||
First quarter
|
$ | 16.07 | $ | 13.28 | ||||
Second quarter
|
20.31 | 14.12 | ||||||
Third quarter
|
23.84 | 13.80 | ||||||
Fourth quarter
|
24.85 | 13.57 | ||||||
2012
|
||||||||
First quarter
|
$ | 27.51 | $ | 20.62 | ||||
Second quarter
|
27.99 | 21.45 | ||||||
Third quarter | 34.00 | 22.08 | ||||||
Fourth quarter | 37.80 | 31.60 |
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 | ||||||
2012
|
||||||||
First quarter
|
$ | 0.07 | $ | 1,815 | ||||
Second quarter
|
0.10 | 2,583 | ||||||
Third quarter
|
0.10 | 2,545 | ||||||
Fourth quarter
(1)
|
0.20 | 5,123 |
(1)
|
In November 2012, we paid dividends of $2.5 million that had been declared in October 2012. An additional dividend payment of $2.6 million was declared and paid in December 2012 in lieu of the dividend typically declared and paid in March of the following year.
|
Total number of shares purchased
|
Average price paid per share
|
Total number of shares purchased as part of publicly announced plans or programs
(1)
|
Maximum number of shares that may yet be purchased under the plans or programs
(1)
|
|||||||||||||
October 1 to October 31
|
- | $ | - | - | 1,879,853 | |||||||||||
November 1 to November 30
|
70,819 | 34.28 | 25,000 | 1,854,853 | ||||||||||||
December 1 to December 31
|
6,695 | 36.64 | - | 1,854,853 | ||||||||||||
Total
|
77,514 | (2) | 34.48 | 25,000 | 1,854,853 |
(1)
|
In August 2011, our Board of Directors authorized the repurchase of up to 2,000,000 shares of our Class A common stock. On July 20, 2012, our Board of Directors authorized the repurchase of 1,000,000 additional shares of our Class A common stock. Through December 31, 2012, we had purchased 1,145,147 shares under these programs at an average price of $22.33 per share. These plans do not have an expiration date and we may continue to repurchase shares from time to time as conditions warrant.
|
(2)
|
Includes 52,514 shares repurchased in association with tax withholdings on the exercise of stock options.
|
Base
Period
|
Indexed Returns for the Year Ended
|
|||||||||||||||||||||||
Company/Index
|
12/31/2007
|
12/31/2008
|
12/31/2009
|
12/31/2010
|
12/31/2011
|
12/31/2012
|
||||||||||||||||||
Lithia Motors, Inc.
|
$ | 100.00 | $ | 25.37 | $ | 63.97 | $ | 113.07 | $ | 175.43 | $ | 305.85 | ||||||||||||
Auto Peer Group
|
100.00 | 48.43 | 100.20 | 139.53 | 172.62 | 214.74 | ||||||||||||||||||
Russell 2000
|
100.00 | 66.20 | 84.20 | 106.81 | 102.33 | 119.05 |
(In thousands, except per share amounts)
|
Year Ended December 31,
|
|||||||||||||||||||
Consolidated Statements of Operations Data:
|
2012
|
2011
|
2010
|
2009
|
2008
|
|||||||||||||||
Revenues:
|
||||||||||||||||||||
New vehicle
|
$ | 1,847,603 | $ | 1,391,375 | $ | 1,020,883 | $ | 844,294 | $ | 1,113,477 | ||||||||||
Used vehicle retail
|
833,484 | 678,571 | 558,105 | 455,633 | 443,825 | |||||||||||||||
Used vehicle wholesale
|
139,237 | 128,329 | 103,817 | 69,845 | 91,263 | |||||||||||||||
Finance and insurance
|
112,234 | 84,130 | 64,217 | 53,898 | 74,173 | |||||||||||||||
Service, body and parts
|
347,703 | 315,958 | 277,945 | 271,726 | 283,751 | |||||||||||||||
Fleet and other
|
36,226 | 34,383 | 11,655 | 2,457 | 4,829 | |||||||||||||||
Total revenues
|
$ | 3,316,487 | $ | 2,632,746 | $ | 2,036,622 | $ | 1,697,853 | $ | 2,011,318 | ||||||||||
Gross Profit:
|
||||||||||||||||||||
New vehicle
|
$ | 134,447 | $ | 107,150 | $ | 83,646 | $ | 70,971 | $ | 87,646 | ||||||||||
Used vehicle retail
|
121,721 | 98,214 | 78,795 | 64,167 | 51,138 | |||||||||||||||
Used vehicle wholesale
|
1,414 | 597 | 703 | 507 | (2,961 | ) | ||||||||||||||
Finance and insurance
|
112,234 | 84,130 | 64,217 | 53,898 | 74,173 | |||||||||||||||
Service, body and parts
|
168,070 | 152,220 | 133,942 | 129,242 | 135,487 | |||||||||||||||
Fleet and other
|
1,414 | 2,973 | 1,643 | 1,232 | 1,534 | |||||||||||||||
Total gross profit
|
$ | 539,300 | $ | 445,284 | $ | 362,946 | $ | 320,017 | $ | 347,017 | ||||||||||
Operating income (loss)
(1)
|
$ | 148,369 | $ | 110,818 | $ | 46,470 | $ | 34,517 | $ | (291,415 | ) | |||||||||
Income (loss) from continuing operations before income taxes
(1)
|
$ | 128,457 | $ | 88,270 | $ | 22,212 | $ | 11,578 | $ | (322,182 | ) | |||||||||
Income (loss) from continuing operations
(1)
|
$ | 79,395 | $ | 55,210 | $ | 13,587 | $ | 6,606 | $ | (218,420 | ) | |||||||||
Basic income (loss) per share from continuing operations
|
$ | 3.09 | $ | 2.10 | $ | 0.52 | $ | 0.30 | $ | (10.82 | ) | |||||||||
Basic income (loss) per share from discontinued operations
|
0.04 | 0.14 | 0.01 | 0.12 | (1.69 | ) | ||||||||||||||
Basic net income (loss) per share
|
$ | 3.13 | $ | 2.24 | $ | 0.53 | $ | 0.42 | $ | (12.51 | ) | |||||||||
Shares used in basic per share
|
25,696 | 26,230 | 26,062 | 22,037 | 20,195 | |||||||||||||||
Diluted income (loss) per share from continuing operations
|
$ | 3.03 | $ | 2.07 | $ | 0.52 | $ | 0.30 | $ | (10.82 | ) | |||||||||
Diluted income (loss) per share from discontinued operations
|
0.04 | 0.14 | 0.00 | 0.11 | (1.69 | ) | ||||||||||||||
Diluted net income (loss) per share
|
$ | 3.07 | $ | 2.21 | $ | 0.52 | $ | 0.41 | $ | (12.51 | ) | |||||||||
Shares used in diluted per share
|
26,170 | 26,664 | 26,729 | 22,176 | 20,195 | |||||||||||||||
Cash dividends declared per common share
|
$ | 0.47 | $ | 0.26 | $ | 0.15 | $ | - | $ | 0.47 |
(In thousands)
|
As of December 31,
|
|||||||||||||||||||
Consolidated Balance Sheets Data:
|
2012
|
2011
|
2010
|
2009
|
2008
|
|||||||||||||||
Working capital
|
$ | 211,905 | $ | 191,607 | $ | 162,675 | $ | 96,886 | $ | 99,524 | ||||||||||
Inventories
|
723,326 | 506,484 | 415,228 | 333,628 | 428,032 | |||||||||||||||
Total assets
|
1,492,702 | 1,146,133 | 971,676 | 895,100 | 1,133,459 | |||||||||||||||
Floor plan notes payable
|
581,584 | 343,940 | 251,257 | 216,082 | 343,290 | |||||||||||||||
Long-term debt, including current maturities
|
295,058 | 286,874 | 280,774 | 265,773 | 338,229 | |||||||||||||||
Total stockholders’ equity
|
428,101 | 367,121 | 320,217 | 307,038 | 248,343 |
(1)
|
Includes $0.1 million, $1.4 million, $15.3 million, $7.9 million and $330.3 million of non-cash charges related to asset impairments and terminated construction projects for the years ended 2012, 2011, 2010, 2009 and 2008, respectively. See Notes 1 and 4 of Notes to Consolidated Financial Statements for additional information.
|
2012
|
Revenues
|
Percent of
Total Revenues
|
Gross
Profit
|
Gross Profit
Margin
|
Percent of Total
Gross Profit
|
|||||||||||||||
New vehicle
|
$ | 1,847,603 | 55.7 | % | $ | 134,447 | 7.3 | % | 24.9 | % | ||||||||||
Used vehicle, retail
|
833,484 | 25.1 | 121,721 | 14.6 | 22.6 | |||||||||||||||
Used vehicle, wholesale
|
139,237 | 4.2 | 1,414 | 1.0 | 0.3 | |||||||||||||||
Finance and insurance
(1)
|
112,234 | 3.4 | 112,234 | 100.0 | 20.8 | |||||||||||||||
Service, body and parts
|
347,703 | 10.5 | 168,070 | 48.3 | 31.1 | |||||||||||||||
Fleet and other
|
36,226 | 1.1 | 1,414 | 3.9 | 0.3 | |||||||||||||||
$ | 3,316,487 | 100.0 | % | $ | 539,300 | 16.3 | % | 100.0 | % |
2011
|
Revenues
|
Percent of
Total Revenues
|
Gross
Profit
|
Gross Profit
Margin
|
Percent of Total
Gross Profit
|
|||||||||||||||
New vehicle
|
$ | 1,391,375 | 52.8 | % | $ | 107,150 | 7.7 | % | 24.1 | % | ||||||||||
Used vehicle, retail
|
678,571 | 25.8 | 98,214 | 14.5 | 22.1 | |||||||||||||||
Used vehicle, wholesale
|
128,329 | 4.9 | 597 | 0.5 | 0.1 | |||||||||||||||
Finance and insurance
(1)
|
84,130 | 3.2 | 84,130 | 100.0 | 18.9 | |||||||||||||||
Service, body and parts
|
315,958 | 12.0 | 152,220 | 48.2 | 34.2 | |||||||||||||||
Fleet and other
|
34,383 | 1.3 | 2,973 | 8.6 | 0.6 | |||||||||||||||
$ | 2,632,746 | 100.0 | % | $ | 445,284 | 16.9 | % | 100.0 | % |
2010
|
Revenues
|
Percent of
Total Revenues
|
Gross
Profit
|
Gross Profit
Margin
|
Percent of Total
Gross Profit
|
|||||||||||||||
New vehicle
|
$ | 1,020,883 | 50.1 | % | $ | 83,646 | 8.2 | % | 23.0 | % | ||||||||||
Used vehicle, retail
|
558,105 | 27.4 | 78,795 | 14.1 | 21.7 | |||||||||||||||
Used vehicle, wholesale
|
103,817 | 5.1 | 703 | 0.7 | 0.2 | |||||||||||||||
Finance and insurance
(1)
|
64,217 | 3.2 | 64,217 | 100.0 | 17.7 | |||||||||||||||
Service, body and parts
|
277,945 | 13.6 | 133,942 | 48.2 | 36.9 | |||||||||||||||
Fleet and other
|
11,655 | 0.6 | 1,643 | 14.1 | 0.5 | |||||||||||||||
$ | 2,036,622 | 100.0 | % | $ | 362,946 | 17.8 | % | 100.0 | % |
(1)
|
Commissions reported net of anticipated cancellations.
|
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2012
|
2011
|
Increase
|
Increase
|
||||||||||||
Reported
|
||||||||||||||||
Revenue
|
$ | 1,847,603 | $ | 1,391,375 | $ | 456,228 | 32.8 | % | ||||||||
Retail units sold
|
55,666 | 42,139 | 13,527 | 32.1 | ||||||||||||
Average selling price per retail unit
|
$ | 33,191 | $ | 33,019 | $ | 172 | 0.5 | |||||||||
Same store
|
||||||||||||||||
Revenue
|
$ | 1,776,896 | $ | 1,367,176 | $ | 409,720 | 30.0 | % | ||||||||
Retail units sold
|
53,590 | 41,391 | 12,199 | 29.5 | ||||||||||||
Average selling price per retail unit
|
$ | 33,157 | $ | 33,031 | $ | 126 | 0.4 |
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
Increase
|
Increase
|
||||||||||||
Reported
|
||||||||||||||||
Revenue
|
$ | 1,391,375 | $ | 1,020,883 | $ | 370,492 | 36.3 | % | ||||||||
Retail units sold
|
42,139 | 31,945 | 10,194 | 31.9 | ||||||||||||
Average selling price per retail unit
|
$ | 33,019 | $ | 31,958 | $ | 1,061 | 3.3 | |||||||||
Same Store
|
||||||||||||||||
Revenue
|
$ | 1,295,001 | $ | 1,005,721 | $ | 289,280 | 28.8 | % | ||||||||
Retail units sold
|
39,506 | 31,464 | 8,042 | 25.6 | ||||||||||||
Average selling price per retail unit
|
$ | 32,780 | $ | 31,964 | $ | 816 | 2.6 |
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2012
|
2011
|
Increase
|
Increase
|
||||||||||||
Reported
|
||||||||||||||||
Retail revenue
|
$ | 833,484 | $ | 678,571 | $ | 154,913 | 22.8 | % | ||||||||
Retail units sold
|
47,965 | 39,436 | 8,529 | 21.6 | ||||||||||||
Average selling price per retail unit
|
$ | 17,377 | $ | 17,207 | $ | 170 | 1.0 | |||||||||
Same store
|
||||||||||||||||
Retail revenue
|
$ | 802,169 | $ | 664,292 | $ | 137,877 | 20.8 | % | ||||||||
Retail units sold
|
46,179 | 38,628 | 7,551 | 19.5 | ||||||||||||
Average selling price per retail unit
|
$ | 17,371 | $ | 17,197 | $ | 174 | 1.0 |
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
Increase
|
Increase
|
||||||||||||
Reported
|
||||||||||||||||
Retail revenue
|
$ | 678,571 | $ | 558,105 | $ | 120,466 | 21.6 | % | ||||||||
Retail units sold
|
39,436 | 33,241 | 6,195 | 18.6 | ||||||||||||
Average selling price per retail unit
|
$ | 17,207 | $ | 16,790 | $ | 417 | 2.5 | |||||||||
Same store
|
||||||||||||||||
Retail revenue
|
$ | 633,912 | $ | 543,106 | $ | 90,806 | 16.7 | % | ||||||||
Retail units sold
|
37,168 | 32,325 | 4,843 | 15.0 | ||||||||||||
Average selling price per retail unit
|
$ | 17,055 | $ | 16,801 | $ | 254 | 1.5 |
●
|
Same store unit sales for manufacturer certified pre-owned used vehicles increased 22.9%. This category has higher average sale prices and experiences a lower gross margin than the other categories.
|
●
|
Same store unit sales for the late model, lower mileage vehicle category increased 11.3%. Our performance in this category is still below management’s expectation and we continue to focus on improving our results.
|
●
|
Same store unit sales for the value auto category increased 36.9%. Value auto vehicles have lower average selling prices and experience a higher gross margin than our other used vehicle categories. Additionally, value autos provide an organic opportunity to convert vehicles acquired via trade-in to retail used vehicle sales.
|
Year Ended
December 31,
|
Increase
|
%
Increase
|
||||||||||||||
(Dollars in thousands)
|
2012
|
2011
|
(Decrease)
|
(Decrease)
|
||||||||||||
Reported
|
||||||||||||||||
Wholesale revenue
|
$ | 139,237 | $ | 128,329 | $ | 10,908 | 8.5 | % | ||||||||
Wholesale units sold
|
19,144 | 16,085 | 3,059 | 19.0 | ||||||||||||
Average selling price per wholesale unit
|
$ | 7,273 | $ | 7,978 | $ | (705 | ) | (8.8 | ) | |||||||
Same store
|
||||||||||||||||
Wholesale revenue
|
$ | 132,722 | $ | 123,046 | $ | 9,676 | 7.9 | % | ||||||||
Wholesale units sold
|
18,383 | 15,613 | 2,770 | 17.7 | ||||||||||||
Average selling price per wholesale unit
|
$ | 7,220 | $ | 7,881 | $ | (661 | ) | (8.4 | ) |
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
Increase
|
Increase
|
||||||||||||
Reported
|
||||||||||||||||
Wholesale revenue
|
$ | 128,329 | $ | 103,817 | $ | 24,512 | 23.6 | % | ||||||||
Wholesale units sold
|
16,085 | 13,594 | 2,491 | 18.3 | ||||||||||||
Average selling price per wholesale unit
|
$ | 7,978 | $ | 7,637 | $ | 341 | 4.5 | |||||||||
Same store
|
||||||||||||||||
Wholesale revenue
|
$ | 118,591 | $ | 100,770 | $ | 17,821 | 17.7 | % | ||||||||
Wholesale units sold
|
15,171 | 13,239 | 1,932 | 14.6 | ||||||||||||
Average selling price per wholesale unit
|
$ | 7,817 | $ | 7,612 | $ | 205 | 2.7 |
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2012
|
2011
|
Increase
|
Increase
|
||||||||||||
Reported
|
||||||||||||||||
Revenue
|
$ | 112,234 | $ | 84,130 | $ | 28,104 | 33.4 | % | ||||||||
Same store
|
||||||||||||||||
Revenue
|
$ | 107,376 | $ | 81,055 | $ | 26,321 | 32.5 | % |
Year Ended
December 31,
|
Increase
|
%
Increase
|
||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
(Decrease)
|
(Decrease)
|
||||||||||||
Reported
|
||||||||||||||||
Revenue
|
$ | 84,130 | $ | 64,217 | $ | 19,913 | 31.0 | % | ||||||||
Same store
|
||||||||||||||||
Revenue
|
$ | 78,619 | $ | 60,440 | $ | 18,179 | 30.1 | % |
2012
|
2011
|
2010
|
||||||||||
Finance and insurance
|
76 | % | 72 | % | 68 | % | ||||||
Service contracts
|
41 | 41 | 41 | |||||||||
Lifetime oil change and filter
|
35 | 36 | 34 |
Year Ended
December 31,
|
Increase
|
%
Increase
|
||||||||||||||
(Dollars in thousands)
|
2012
|
2011
|
(Decrease)
|
(Decrease)
|
||||||||||||
Reported
|
||||||||||||||||
Customer pay
|
$ | 196,077 | $ | 176,879 | $ | 19,198 | 10.9 | % | ||||||||
Warranty
|
52,713 | 52,041 | 672 | 1.3 | ||||||||||||
Wholesale parts
|
64,139 | 56,826 | 7,313 | 12.9 | ||||||||||||
Body shop
|
34,774 | 30,212 | 4,562 | 15.1 | ||||||||||||
Total service, body and parts
|
$ | 347,703 | $ | 315,958 | $ | 31,745 | 10.0 | % | ||||||||
Same store
|
||||||||||||||||
Customer pay
|
$ | 185,047 | $ | 173,074 | $ | 11,973 | 6.9 | % | ||||||||
Warranty
|
49,056 | 50,408 | (1,352 | ) | (2.7 | ) | ||||||||||
Wholesale parts
|
60,931 | 56,111 | 4,820 | 8.6 | ||||||||||||
Body shop
|
34,769 | 30,212 | 4,557 | 15.1 | ||||||||||||
Total service, body and parts
|
$ | 329,803 | $ | 309,805 | $ | 19,998 | 6.5 | % |
Year Ended
December 31,
|
Increase
|
%
Increase
|
||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
(Decrease)
|
(Decrease)
|
||||||||||||
Reported
|
||||||||||||||||
Customer pay
|
$ | 176,879 | $ | 155,569 | $ | 21,310 | 13.7 | % | ||||||||
Warranty
|
52,041 | 48,633 | 3,408 | 7.0 | ||||||||||||
Wholesale parts
|
56,826 | 47,670 | 9,156 | 19.2 | ||||||||||||
Body shop
|
30,212 | 26,073 | 4,139 | 15.9 | ||||||||||||
Total service, body and parts
|
$ | 315,958 | $ | 277,945 | $ | 38,013 | 13.7 | % | ||||||||
Same store
|
||||||||||||||||
Customer pay
|
$ | 158,451 | $ | 152,451 | $ | 6,000 | 3.9 | % | ||||||||
Warranty
|
45,411 | 47,397 | (1,986 | ) | (4.2 | ) | ||||||||||
Wholesale parts
|
51,894 | 47,072 | 4,822 | 10.2 | ||||||||||||
Body shop
|
29,689 | 26,040 | 3,649 | 14.0 | ||||||||||||
Total service, body and parts
|
$ | 285,445 | $ | 272,960 | $ | 12,485 | 4.6 | % |
Basis
|
||||||||||||
Year Ended December 31,
|
Point Change*
|
|||||||||||
2012
|
2011
|
|||||||||||
New vehicle
|
7.3 | % | 7.7 | % | (40 | )bp | ||||||
Retail used vehicle
|
14.6 | 14.5 | 10 | |||||||||
Wholesale used vehicle
|
1.0 | 0.5 | 50 | |||||||||
Finance and insurance
|
100.0 | 100.0 | - | |||||||||
Service, body and parts
|
48.3 | 48.2 | 10 | |||||||||
Fleet and other
|
3.9 | 8.6 | (470 | ) | ||||||||
Overall
|
16.3 | % | 16.9 | % | (60 | ) |
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
|
0.5 | 0.7 | (20 | ) | ||||||||
Finance and insurance
|
100.0 | 100.0 | - | |||||||||
Service, body and parts
|
48.2 | 48.2 | - | |||||||||
Fleet and other
|
8.6 | 14.1 | (550 | ) | ||||||||
Overall
|
16.9 | % | 17.8 | % | (90 | ) |
Year Ended December 31,
|
2012
|
2011
|
2010
|
|||||||||
Asset Impairments
|
||||||||||||
Long-lived assets
|
$ | 115 | $ | 1,376 | $ | 15,301 |
●
|
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,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2012
|
2011
|
Increase
|
Increase
|
||||||||||||
Personnel
|
$ | 243,249 | $ | 210,996 | $ | 32,253 | 15.3 | % | ||||||||
Advertising
|
31,913 | 23,875 | 8,038 | 33.7 | ||||||||||||
Rent
|
15,162 | 13,256 | 1,906 | 14.4 | ||||||||||||
Facility costs
|
24,172 | 17,260 | 6,912 | 40.0 | ||||||||||||
Other
|
59,192 | 51,276 | 7,916 | 15.4 | ||||||||||||
Total SG&A
|
$ | 373,688 | $ | 316,663 | $ | 57,025 | 18.0 |
Year Ended
December 31,
|
Increase
|
|||||||||||
As a % of gross profit
|
2012
|
2011
|
(Decrease)
|
|||||||||
Personnel
|
45.1 | % | 47.4 | % |
(230
|
)bps | ||||||
Advertising
|
5.9 | 5.4 | 50 | |||||||||
Rent
|
2.8 | 3.0 | (20 | ) | ||||||||
Facility costs
|
4.5 | 3.8 | 70 | |||||||||
Other
|
11.0 | 11.5 | (50 | ) | ||||||||
Total SG&A
|
69.3 | % | 71.1 | % |
(180
|
)bps |
Year Ended
December 31,
|
Increase
|
%
Increase
|
||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
(Decrease)
|
(Decrease)
|
||||||||||||
Personnel
|
$ | 210,996 | $ | 176,938 | $ | 34,058 | 19.2 | % | ||||||||
Advertising
|
23,875 | 25,398 | (1,523 | ) | (6.0 | ) | ||||||||||
Rent
|
13,256 | 12,569 | 687 | 5.5 | ||||||||||||
Facility costs
|
17,260 | 22,335 | (5,075 | ) | (22.7 | ) | ||||||||||
Other
|
51,276 | 46,923 | 4,353 | 9.3 | ||||||||||||
Total SG&A
|
$ | 316,663 | $ | 284,163 | $ | 32,500 | 11.4 |
Year Ended
December 31,
|
Increase | |||||||||||
As a % of gross profit
|
2011
|
2010
|
(Decrease) | |||||||||
Personnel
|
47.4 | % | 48.8 | % |
(140
|
)bps | ||||||
Advertising
|
5.4 | 7.0 | (160 | ) | ||||||||
Rent
|
3.0 | 3.5 | (50 | ) | ||||||||
Facility costs
|
3.8 | 6.1 | (230 | ) | ||||||||
Other
|
11.5 | 12.9 | (140 | ) | ||||||||
Total SG&A
|
71.1 | % | 78.3 | % |
(720
|
)bps |
Year Ended
December 31,
|
% of
Change in
|
|||||||||||||||
(Dollars in thousands)
|
2012
|
2011
|
Change
|
Gross Profit
|
||||||||||||
Gross profit
|
$ | 539,300 | $ | 445,284 | $ | 94,016 | 100.0 | % | ||||||||
SG&A expense
|
(373,688 | ) | (316,663 | ) | (57,025 | ) | (60.7 | ) | ||||||||
Throughput contribution
|
$ | 36,991 | 39.3 | % |
Year Ended
December 31,
|
% of Change in
|
|||||||||||||||
(Dollars in thousands)
|
2011 | 2010 |
Change
|
Gross Profit
|
||||||||||||
Gross profit
|
$ | 445,284 | $ | 362,946 | $ | 82,338 | 100.0 | % | ||||||||
SG&A expense
|
(316,663 | ) | (284,163 | ) | (32,500 | ) | (39.5 | ) | ||||||||
Throughput contribution
|
$ | 49,838 | 60.5 | % |
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2012
|
2011
|
Increase
|
Increase
|
||||||||||||
Depreciation and amortization
|
$ | 17,128 | $ | 16,427 | $ | 701 | 4.3 | % |
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
Decrease
|
Decrease
|
||||||||||||
Depreciation and amortization
|
$ | 16,427 | $ | 17,012 | $ | (585 | ) | (3.4 | )% |
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2012
|
2011
|
Increase
|
Increase
|
||||||||||||
Floor plan interest expense (new vehicles)
|
$ | 12,816 | $ | 10,364 | $ | 2,452 | 23.7 | % | ||||||||
Floor plan assistance (included as an offset to cost of sales)
|
(16,633 | ) | (12,582 | ) | 4,051 | 32.2 | ||||||||||
Net new vehicle carrying costs (benefit)
|
$ | (3,817 | ) | $ | (2,218 | ) | $ | 1,599 | 72.1 | % |
Year Ended
December 31,
|
%
|
|||||||||||||||
(Dollars in thousands)
|
2011
|
2010
|
Increase
|
Increase
|
||||||||||||
Floor plan interest expense (new vehicles)
|
$ | 10,364 | $ | 10,155 | $ | 209 | 2.1 | % | ||||||||
Floor plan assistance (included as an offset to cost of sales)
|
(12,582 | ) | (9,362 | ) | 3,220 | 34.4 | ||||||||||
Net new vehicle carrying costs (benefit)
|
$ | (2,218 | ) | $ | 793 | $ | 3,011 | 379.7 | % |
Year Ended
December 31,
|
Increase
|
%
Increase
|
||||||||||||||
(Dollars in thousands)
|
2012
|
2011
|
(Decrease)
|
(Decrease)
|
||||||||||||
Mortgage interest
|
$ | 8,148 | $ | 11,395 | $ | (3,247 | ) | (28.5 | )% | |||||||
Other interest
|
1,767 | 1,646 | 121 | 7.4 | ||||||||||||
Capitalized interest
|
(294 | ) | (163 | ) | 131 | 80.4 | ||||||||||
Total other interest expense
|
$ | 9,621 | $ | 12,878 | $ | (3,257 | ) | (25.3 | )% |
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
|
1,646 | 930 | 716 | 77.0 | ||||||||||||
Capitalized interest
|
(163 | ) | - | (163 | ) | - | ||||||||||
Total other interest expense
|
$ | 12,878 | $ | 14,523 | $ | (1,645 | ) | (11.3 | )% |
Year Ended December 31, 2012
|
||||||||||||||||||||
As reported
|
Asset impairment and disposal gain
|
Equity investment
|
Tax attribute
|
Adjusted
|
||||||||||||||||
Asset impairments
|
$ | 115 | $ | (115 | ) | $ | - | $ | - | $ | - | |||||||||
Selling, general and administrative
|
$ | 373,688 | $ | 739 | $ | - | $ | - | $ | 374,427 | ||||||||||
Income from operations
|
$ | 148,369 | $ | (624 | ) | $ | - | $ | - | $ | 147,745 | |||||||||
Other income, net
|
$ | 2,525 | $ | - | $ | (244 | ) | $ | - | $ | 2,281 | |||||||||
Income from continuing operations before
income taxes
|
$ | 128,457 | $ | (624 | ) | $ | (244 | ) | $ | - | $ | 127,589 | ||||||||
Income tax provision
|
(49,062 | ) | 249 | 97 | (1,447 | ) | (50,163 | ) | ||||||||||||
Income from continuing operations, net of income tax
|
$ | 79,395 | $ | (375 | ) | $ | (147 | ) | $ | (1,447 | ) | $ | 77,426 | |||||||
Income from discontinued operations, net of income tax
|
$ | 967 | $ | (172 | ) | $ | - | $ | - | $ | 795 | |||||||||
Net income
|
$ | 80,362 | $ | (547 | ) | $ | (147 | ) | $ | (1447 | ) | $ | 78,221 | |||||||
Diluted income (loss) per share from continuing operations
|
$ | 3.03 | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.05 | ) | $ | 2.96 | |||||||
Diluted income (loss) per share from discontinued operations
|
$ | 0.04 | $ | (0.01 | ) | $ | - | $ | - | $ | 0.03 | |||||||||
Diluted net income per share
|
$ | 3.07 | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.05 | ) | $ | 2.99 | |||||||
Diluted share count
|
26,170 |
Year Ended December 31, 2011 | ||||||||||||||||
As reported
|
Asset impairment and disposal gain
|
Reserve adjustments
|
Adjusted
|
|||||||||||||
Cost of Sales – service, body and parts
|
$ | 163,738 | $ | - | $ | (950 | ) | $ | 162,788 | |||||||
Gross Profit
|
$ | 445,284 | $ | - | $ | 950 | $ | 446,234 | ||||||||
Asset impairments
|
$ | 1,376 | $ | (1,376 | ) | $ | - | $ | - | |||||||
Selling, general and administrative
|
$ | 316,663 | $ | 6,881 | $ | - | $ | 323,544 | ||||||||
Income from operations
|
$ | 110,818 | $ | (5,505 | ) | $ | 950 | $ | 106,263 | |||||||
Income from continuing operations before income taxes
|
$ | 88,270 | $ | (5,505 | ) | $ | 950 | $ | 83,715 | |||||||
Income tax provision
|
(33,060 | ) | 1,724 | (360 | ) | (31,696 | ) | |||||||||
Income from continuing operations, net of income tax
|
$ | 55,210 |
(3,781
|
) | $ | 590 | $ | 52,019 | ||||||||
Income from discontinued operations,
net of income tax
|
$ | 3,650 | $ | (2,616 | ) | $ | - | $ | 1,034 | |||||||
Net income
|
$ | 58,860 |
(6,397
|
) | $ | 590 | $ | 53,053 | ||||||||
Diluted income per share from continuing operations
|
$ | 2.07 | $ | (0.14 | ) | $ | 0.02 | $ | 1.95 | |||||||
Diluted income per share from
discontinued operations
|
$ | 0.14 | $ | (0.10 | ) | $ | - | $ | 0.04 | |||||||
Diluted net income per share
|
$ | 2.21 | $ | (0.24 | ) | $ | 0.02 | $ | 1.99 | |||||||
Diluted share count
|
26,664 |
Year Ended December 31, 2010
|
||||||||||||||||
As reported
|
Asset
impairment
and disposal
gain
|
Reserve
adjustment
|
Adjusted
|
|||||||||||||
Gross Profit
|
$ | 362,946 | $ | - | $ | 1,040 | $ | 363,986 | ||||||||
Asset impairments
|
$ | 15,301 | $ | (15,301 | ) | $ | - | $ | - | |||||||
Selling, general and administrative
|
$ | 284,163 | $ | 419 | $ | (1,238 | ) | $ | 283,344 | |||||||
Income from operations
|
$ | 46,470 | $ | 14,882 | $ | 2,278 | $ | 63,630 | ||||||||
Income from continuing operations before income taxes
|
$ | 22,212 | $ | 14,882 | $ | 2,278 | $ | 39,372 | ||||||||
Income tax provision
|
(8,625 | ) | (5,716 | ) | (782 | ) | (15,123 | ) | ||||||||
Income from continuing operations, net of income tax
|
$ | 13,587 | $ | 9,166 | $ | 1,496 | $ | 24,249 | ||||||||
Income from discontinued operations,
net of income tax
|
$ | 132 | $ | 181 | $ | - | $ | 313 | ||||||||
Income from continuing operations, net of income tax
|
$ | 13,719 | $ | 9,347 | $ | 1,496 | $ | 24,562 | ||||||||
Diluted income (loss) per share from continuing operations
|
$ | 0.52 | $ | 0.35 | $ | 0.05 |
0.92
|
|||||||||
Diluted income (loss) per share from discontinued operations
|
$ | - | $ | 0.01 | $ | - | $ | 0.01 | ||||||||
Diluted net income per share
|
$ | 0.52 | $ | 0.36 | $ | 0.05 | $ | 0.93 | ||||||||
Diluted share count
|
26,279 |
As of December 31,
|
Increase
|
%
Increase
|
||||||||||||||
2012
|
2011
|
(Decrease)
|
(Decrease)
|
|||||||||||||
Cash and cash equivalents
|
$ | 42,839 | $ | 20,851 | $ | 21,988 | 105.5 | % | ||||||||
Available credit on the Credit Facility
|
120,536 | 10,449 | 110,087 | 1,053.6 | ||||||||||||
Unfinanced new vehicles
|
- | 65,857 | (65,857 | ) | (100.0 | ) | ||||||||||
Total available funds
|
$ | 163,375 | $ | 97,157 | $ | 66,218 | 68.2 | % |
Outstanding as of December 31, 2012
|
Remaining Available as of December 31, 2012
|
||||||||
New vehicle floor plan commitment
|
$ | 568,130 | $ | - | (1),(4) | ||||
Floor plan notes payable
|
13,454 | - | (4) | ||||||
Used vehicle inventory financing facility
|
78,309 | - | (3) | ||||||
Revolving line of credit
|
21,045 | 120,536 | (2),(3) | ||||||
Real estate mortgages
|
192,928 | - | |||||||
Other debt
|
2,776 | - | |||||||
Liabilities related to assets held for sale
|
8,347 | - | (4) | ||||||
Total debt
|
$ | 884,989 | $ | 120,536 |
(1)
|
We have a $575 million new vehicle floor plan commitment as part of our credit facility.
|
(2)
|
Available credit is based on the borrowing base amount effective as of December 31, 2012. This amount is reduced by $3.4 million for outstanding letters of credit.
|
(3)
|
The amount available on the credit facility is limited based on a borrowing base calculation and fluctuates monthly.
|
(4)
|
At December 31, 2012, an additional $6.9 million of floor plan notes payable outstanding on our new vehicle floor plan commitment and $1.4 million of floor plan notes payable on vehicles designated as service loaners are recorded as liabilities related to assets held for sale.
|
Debt Covenant Ratio
|
Requirement
|
As of December 31, 2012
|
|||||||
Current ratio
|
Not less than 1.20
|
to | 1 |
1.43
|
to | 1 | |||
Fixed charge coverage ratio
|
Not less than 1.20
|
to | 1 |
2.35
|
to | 1 | |||
Liabilities to tangible net worth ratio
|
Not more than 5.00
|
to | 1 |
2.08
|
to | 1 | |||
Funded debt restriction
|
Not to exceed $375 million | $195.7 million |
Payments Due By Period
|
||||||||||||||||||||
Contractual Obligation
|
Total
|
2013
|
2014 and
2015
|
2016 and
2017
|
2018 and
beyond
|
|||||||||||||||
New vehicle floor plan commitment
(1)
|
$ | 568,130 | $ | 568,130 | $ | - | $ | - | $ | - | ||||||||||
Floor plan notes payable
(1)
|
13,454 | 13,454 | - | - | - | |||||||||||||||
Used vehicle inventory
financing facility
|
78,309 | - | - | 78,309 | - | |||||||||||||||
Revolving line of credit
|
21,045 | - | - | 21,045 | - | |||||||||||||||
Liabilities related to
assets held for sale
|
8,347 | 8,347 | - | - | - | |||||||||||||||
Real estate debt,
including interest
|
230,854 | 14,463 | 28,902 | 52,207 | 135,282 | |||||||||||||||
Other debt, including
capital leases and interest
|
3,871 | 258 | 503 | 409 | 2,701 | |||||||||||||||
Charge-backs on various contracts
|
13,504 | 7,540 | 5,345 | 609 | 10 | |||||||||||||||
Operating leases
(2)
|
139,965 | 16,930 | 29,562 | 23,205 | 70,268 | |||||||||||||||
Fixed rate payments on interest rate swaps
|
5,511 | 2,085 | 2,832 | 594 | - | |||||||||||||||
$ | 1,082,990 | $ | 631,207 | $ | 67,144 | $ | 176,378 | $ | 208,261 |
(1)
|
Amounts for floor plan notes payable, the used vehicle inventory financing facility and the revolving line of credit do not include estimated interest payments. See Notes 1 and 6 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 7 in the Notes to Consolidated Financial Statements.
|
Dividend paid:
|
Dividend
amount per
share
|
Total amount of
dividend
(in thousands)
|
||||||
March 2012
|
$ | 0.07 | $ | 1,815 | ||||
May 2012
|
0.10 | 2,583 | ||||||
August 2012
|
0.10 | 2,545 | ||||||
November 2012
|
0.10 | 2,556 | ||||||
December 2012
|
0.10 | 2,567 |
2012 (in thousands, except per share data )
|
Three Months Ended,
|
|||||||||||||||
|
March 31
|
June 30
|
September 30
|
December 31
|
||||||||||||
Revenues:
|
||||||||||||||||
New vehicle
|
$ | 392,946 | $ | 455,939 | $ | 491,847 | $ | 506,871 | ||||||||
Used vehicle retail
|
190,619 | 207,341 | 227,157 | 208,367 | ||||||||||||
Used vehicle wholesale
|
33,357 | 35,106 | 35,006 | 35,768 | ||||||||||||
Finance and insurance
|
24,877 | 27,183 | 30,930 | 29,244 | ||||||||||||
Service, body and parts
|
83,544 | 85,456 | 89,038 | 89,665 | ||||||||||||
Fleet and other
|
12,903 | 11,317 | 4,548 | 7,458 | ||||||||||||
Total revenues
|
738,246 | 822,342 | 878,526 | 877,373 | ||||||||||||
Cost of sales
|
613,912 | 688,246 | 736,016 | 739,013 | ||||||||||||
Gross profit
|
124,334 | 134,096 | 142,510 | 138,360 | ||||||||||||
Asset impairments
|
115 | - | - | - | ||||||||||||
Selling, general and administrative
|
88,440 | 92,990 | 95,132 | 97,126 | ||||||||||||
Depreciation and amortization
|
4,138 | 4,198 | 4,351 | 4,441 | ||||||||||||
Operating income
|
31,641 | 36,908 | 43,027 | 36,793 | ||||||||||||
Floor plan interest expense
|
(2,902 | ) | (3,054 | ) | (3,370 | ) | (3,490 | ) | ||||||||
Other interest expense
|
(2,726 | ) | (2,531 | ) | (2,125 | ) | (2,239 | ) | ||||||||
Other, net
|
498 | 820 | 453 | 754 | ||||||||||||
Income from continuing operations before income taxes
|
26,511 | 32,143 | 37,985 | 31,818 | ||||||||||||
Income tax provision
|
(9,877 | ) | (12,138 | ) | (14,893 | ) | (12,154 | ) | ||||||||
Income before discontinued operations
|
16,634 | 20,005 | 23,092 | 19,664 | ||||||||||||
Discontinued operations, net of tax
|
162 | 486 | 150 | 169 | ||||||||||||
Net income
|
$ | 16,796 | $ | 20,491 | $ | 23,242 | $ | 19,833 | ||||||||
Basic income per share from continuing operations
|
$ | 0.64 | $ | 0.78 | $ | 0.91 | $ | 0.77 | ||||||||
Basic income per share from discontinued operations
|
0.01 | 0.02 | - | - | ||||||||||||
Basic net income per share
|
$ | 0.65 | $ | 0.80 | $ | 0.91 | $ | 0.77 | ||||||||
Diluted income per share from continuing operations
|
$ | 0.63 | $ | 0.76 | $ | 0.90 | $ | 0.76 | ||||||||
Diluted income per share from discontinued operations
|
- | 0.02 | - | - | ||||||||||||
Diluted net income per share
|
$ | 0.63 | $ | 0.78 | $ | 0.90 | $ | 0.76 |
2011 (in thousands, except per share data)
|
T hree Months Ended, | |||||||||||||||
March 31 |
June 30
|
September 30 | December 31 | |||||||||||||
Revenues: | ||||||||||||||||
New vehicle
|
$ | 295,533 | $ | 339,378 | $ | 374,460 | $ | 382,004 | ||||||||
Used vehicle retail
|
153,803 | 172,283 | 182,432 | 170,053 | ||||||||||||
Used vehicle wholesale
|
29,327 | 28,852 | 35,288 | 34,862 | ||||||||||||
Finance and insurance
|
18,939 | 20,492 | 22,302 | 22,397 | ||||||||||||
Service, body and parts
|
72,199 | 78,410 | 83,296 | 82,053 | ||||||||||||
Fleet and other
|
3,128 | 17,168 | 10,108 | 3,979 | ||||||||||||
Total revenues
|
572,929 | 656,583 | 707,886 | 695,348 | ||||||||||||
Cost of sales
|
473,270 | 542,607 | 589,089 | 582,496 | ||||||||||||
Gross profit
|
99,659 | 113,976 | 118,797 | 112,852 | ||||||||||||
Asset impairments
|
383 | 489 | - | 504 | ||||||||||||
Selling, general and administrative
|
75,294 | 79,903 | 83,135 | 78,331 | ||||||||||||
Depreciation and amortization
|
4,059 | 4,170 | 4,103 | 4,095 | ||||||||||||
Operating income
|
19,923 | 29,414 | 31,559 | 29,922 | ||||||||||||
Floor plan interest expense
|
(2,423 | ) | (3,281 | ) | (1,954 | ) | (2,706 | ) | ||||||||
Other interest expense
|
(3,284 | ) | (2,999 | ) | (3,063 | ) | (3,532 | ) | ||||||||
Other, net
|
76 | 171 | 214 | 233 | ||||||||||||
Income from continuing operations before income taxes
|
14,292 | 23,305 | 26,756 | 23,917 | ||||||||||||
Income tax provision
|
(5,914 | ) | (8,716 | ) | (10,534 | ) | (7,896 | ) | ||||||||
Income before discontinued operations
|
8,378 | 14,589 | 16,222 | 16,021 | ||||||||||||
Discontinued operations, net of tax
|
327 | 237 | 341 | 2,745 | ||||||||||||
Net income
|
$ | 8,705 | $ | 14,826 | $ | 16,563 | $ | 18,766 | ||||||||
Basic income per share from continuing operations
|
$ | 0.32 | $ | 0.55 | $ | 0.62 | $ | 0.62 | ||||||||
Basic income per share from discontinued operations
|
0.01 | 0.01 | 0.01 | 0.10 | ||||||||||||
Basic net income per share
|
$ | 0.33 | $ | 0.56 | $ | 0.63 | $ | 0.72 | ||||||||
Diluted income per share from continuing operations
|
$ | 0.31 | $ | 0.54 | $ | 0.61 | $ | 0.61 | ||||||||
Diluted income per share from discontinued operations
|
0.02 | 0.01 | 0.01 | 0.10 | ||||||||||||
Diluted net income per share
|
$ | 0.33 | $ | 0.55 | $ | 0.62 | $ | 0.71 |
(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.
|
●
|
$25 million interest rate swap at a fixed rate of 4.495% per annum, variable rate adjusted on the 26
th
of each month, matures January 25, 2013;
|
●
|
$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, matures April 30, 2013;
|
●
|
$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, matures April 30, 2013 and
|
●
|
$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, matures June 15, 2016.
|
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)
(2)
|
|||||||||
Equity compensation plans approved by shareholders
|
1,349,152 | |||||||||||
Options
|
253,499 | $ | 6.26 | |||||||||
Restricted stock u
nits
|
583,463 |
NA
(1)
|
||||||||||
Equity compensation plans not approved by shareholders
|
- | - | - | |||||||||
Total
|
836,962 | $ | 6.26 | (1) | 1,349,152 |
(1)
|
There is no exercise price associated with our restricted stock units.
The total weighted average exercise price is shown with respect to options only.
|
(2)
|
Includes 667,859 shares available pursuant to our 2003 Stock Incentive Plan and 681,293 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, 2012 and 2011
|
F-3
|
Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010
|
F-4
|
Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011 and 2010
|
F-5
|
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2012, 2011 and 2010
|
F-6
|
Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010
|
F-7
|
Notes to Consolidated Financial Statements
|
F-8
|
Exhibit
|
Description
|
3.1
|
Restated Articles of Incorporation of Lithia Motors, Inc., as amended May 13, 1999 (incorporated by reference to exhibit 3.1 to the Company’s Form 10-K for the year ended December 31, 1999)
|
3.2
|
Amended and Restated Bylaws of Lithia Motors, Inc. (Corrected) (incorporated by reference to exhibit 3.2 to the Company’s Form 10-K for the year ended December 31, 2008)
|
10.1*
|
2009 Employee Stock Purchase Plan (incorporated by reference to Appendix A to the Company’s Proxy Statement for its 2009 annual meeting of shareholders filed on March 20, 2009)
|
10.2*
|
Lithia Motors, Inc. 2001 Stock Option Plan (incorporated by reference to Appendix B to the Company’s Proxy Statement for its 2001 annual meeting of shareholders filed on May 8, 2001)
|
10.2.1*
|
Form of Incentive Stock Option Agreement for 2001 Stock Option Plan (incorporated by reference to exhibit 10.6.1 to the Company’s Form 10-K for the year ended December 31, 2001)
|
10.2.2*
|
Form of Non-Qualified Stock Option Agreement for 2001 Stock Option Plan (incorporated by reference to exhibit 10.6.2 to the Company’s Form 10-K for the year ended December 31, 2001)
|
10.3
|
Lithia Motors, Inc. Amended and Restated 2003 Stock Incentive Plan (incorporated by reference to exhibit 10.1 to the Company’s Form 10-Q for the quarter ended March 31, 2011)
|
10.3.1
|
RSU Deferral Plan (incorporated by reference to exhibit 10.3.1 to the Company’s Form 10-K for the year ended December 31, 2011)
|
10.4*
|
Form of Restricted Stock Unit Agreement for Senior Executives (incorporated by reference to exhibit 10.4 to the Company’s Form 10-K for the year ended December 31, 2010)
|
10.4.1* |
Form of Restricted Stock Unit Agreement for Non-Executive Officers (incorporated by reference to exhibit 10.4.1 to the Company’s Form 10-K for the year ended December 31, 2010)
|
10.4.2* |
Form of Restricted Stock Unit Agreement for Non-Executive Directors (incorporated by reference to exhibit 10.4.2 to the Company’s Form 10-K for the year ended December 31, 2010)
|
10.5*
|
Written description of Discretionary Support Services Variable Performance Compensation Plan (incorporated by reference from the Company’s Proxy Statement for the 2013 Annual Meeting under the caption
Compensation Discussion and Analysis - Elements of Compensation Program
)
|
10.6
|
Chrysler Corporation Sales and Service Agreement Additional Terms and Provisions (incorporated by reference to exhibit 10.3.2 to 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)
|
Exhibit
|
Description
|
10.6.1
|
Chrysler Corporation Chrysler Sales and Service Agreement, dated September 28, 1999, between Chrysler Corporation and Lithia Chrysler Plymouth Jeep Eagle, Inc. (incorporated by reference to exhibit 10.15.1 to the Company’s Form 10-K for the year ended December 31, 1999 (Additional Terms and Provisions to the Sales and Service Agreements are in Exhibit 10.9) (1))
|
10.7
|
Mercury Sales and Service Agreement General Provisions (incorporated by reference to exhibit 10.6.5 to the Company’s Registration Statement on Form S-1, Reg. No. 333-14031)
|
10.7.1
|
Supplemental Terms and Conditions agreement between Ford Motor Company and Lithia Motors, Inc. dated June 12, 1997 (incorporated by reference to exhibit 10.7.2 to the Company’s Form 10-K for the year ended December 31, 1997)
|
10.7.2
|
Mercury Sales and Service Agreement, dated June 1, 1997, between Ford Motor Company and Lithia TLM, LLC dba Lithia Lincoln Mercury (incorporated by reference to exhibit 10.7.1 to the Company’s Form 10-K for the year ended December 31, 1997) (general provisions are in Exhibit 10.10) (2)
|
10.8
|
Volkswagen Dealer Agreement Standard Provisions (incorporated by reference to exhibit 10.16.2 to the Company’s Form 10-K for the year ended December 31, 1997)
|
10.8.1
|
Volkswagen Dealer Agreement dated September 17, 1998, between Volkswagen of America, Inc. and Lithia HPI, Inc. dba Lithia Volkswagen (incorporated by reference to exhibit 10.17.1 to the Company’s Form 10-K for the year ended December 31, 1999 (standard provisions are in Exhibit 10.11) (3)
|
10.9
|
General Motors Dealer Sales and Service Agreement Standard Provisions (incorporated by reference to exhibit 10.7.2 to the Company’s Registration Statement on Form S-1, Reg. No. 333-14031)
|
10.9.1
|
Supplemental Agreement to General Motors Corporation Dealer Sales and Service Agreement dated January 16, 1998 (incorporated by reference to exhibit 10.18.1 to the Company’s Form 10-K for the year ended December 31, 1999)
|
10.9.2
|
Chevrolet Dealer Sales and Service Agreement dated October 13, 1998 between General Motors Corporation, Chevrolet Motor Division and Camp Automotive, Inc. (incorporated by reference to exhibit 10.31 to the Company’s Form 10-K for the year ended December 31, 1998) (4)
|
10.10
|
Toyota Dealer Agreement Standard Provisions (incorporated by reference to exhibit 10.10.2 to the Company’s Registration Statement on Form S-1, Reg. No. 333-14031)
|
10.10.1
|
Toyota Dealer Agreement, between Toyota Motor Sales, USA, Inc. and Lithia Motors, Inc., dba Lithia Toyota, dated February 15, 1996 (incorporated by reference to exhibit 10.20.1 to the Company’s Form 10-K for the year ended December 31, 1999) (5)
|
10.11
|
Nissan Standard Provisions (incorporated by reference to exhibit 10.15.2 to the Company’s Form 10-K for the year ended December 31, 1997)
|
10.11.1
|
Nissan Public Ownership Addendum dated August 30, 1999 (incorporated by reference to exhibit 10.22.1 to the Company’s Form 10-K for the year ended December 31, 1999) (6)
|
10.11.2
|
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 (incorporated by reference to exhibit 10.15.1 to the Company’s Form 10-K for the year ended December 31, 1997) (standard provisions are in Exhibit 10.14) (7)
|
10.12
|
Lease Agreement between CAR LIT, LLC and Lithia Real Estate, Inc. relating to properties in Medford, Oregon (incorporated by reference to exhibit 10.36 to the Company’s Form 10-K for the year ended December 31, 1999) (8)
|
10.13*
|
Non Employee Director Compensation Plan 2010/2011 Service Year (incorporated by reference to exhibit 10.13 to the Company’s Form 10-K for the year ended December 31, 2011)
|
10.13.1* |
Non Employee Director Compensation Plan 2012/2013 Service Year
|
10.14*
|
Form of Outside Director Nonqualified Deferred Compensation Agreement (incorporated by reference to exhibit 10.20 to the Company’s Form 10-K for the year ended December 31, 2005)
|
10.15
|
Option Agreement between the Company and M. L. Dick Heimann dated December 31, 2009 (incorporated by reference to exhibit 99.1 to the Company’s Form 8-K filed January 5, 2010)
|
10.15.1*
|
Executive Nonqualified Deferred Compensation Agreement between the Company and M. L. Dick Heimann dated December 31, 2009 (incorporated by reference to exhibit 99.2 to the Company’s Form 8-K filed January 5, 2010)
|
Exhibit
|
Description
|
10.16
|
Loan Agreement dated as of April 17, 2012 between Lithia Motors, Inc., and U.S. Bank National Association, as agent for the lenders, and U.S. Bank National Association, JPMorgan Chase Bank, N.A., Mercedes-Benz Financial Services USA LLC, Toyota Motor Credit Corporation, BMW Financial Services N.A., LLC, Nissan Motor Acceptance Corporation, Bank of America, N.A., Wells Fargo Bank, N.A., Bank of the West and Key Bank National Association, as lenders (incorporated by reference to exhibit 99.1 to the Company’s Form 8-K filed April 20, 2012)
|
10.16.1
|
Amendment to Loan Agreement dated December 19, 2012 with U.S. Bank National Association as agent for the lenders, and U.S. Bank National Association, JPMorgan Chase Bank, N.A., Mercedes-Benz Financial Services USA LLC, Toyota Motor Credit Corporation, BMW Financial Services N.A., LLC, Nissan Motor Acceptance Corporation, Bank of America, N.A., Wells Fargo Bank, N.A., Bank of the West and KeyBank National Association, as lenders (incorporated by reference to exhibit 10.1 to the Company’s Form 8-K filed December 24, 2012)
|
10.17*
|
Amended and Restated Split-Dollar Agreement
|
10.18*
|
Terms of Amended Employment and Change in Control Agreement between Lithia Motors, Inc. and Sidney B. DeBoer dated January 15, 2009 (incorporated by reference to exhibit 10.22 to the Company’s Form 10-K for the year ended December 31, 2008) (9)
|
10.19*
|
Form of Indemnity Agreement for each Named Executive Officer (incorporated by reference to exhibit 10.1 to the Company’s Form 8-K filed May 29, 2009)
|
10.20*
|
Form of Indemnity Agreement for each non-management Director (incorporated by reference to exhibit 10.2 to the Company’s Form 8-K filed May 29, 2009)
|
10.21*
|
Executive Management Non-Qualified Deferred Compensation and Long-Term Incentive Plan (incorporated by reference to exhibit 10.22 to the Company’s Form 10-K for the year ended December 31, 2010)
|
10.21.1*
|
Form of Executive Management Non-Qualified Deferred Compensation and Long-Term Incentive Plan – Notice of Discretionary Contribution Award for Sidney DeBoer (incorporated by reference to exhibit 10.22.1 to the Company’s Form 10-K for the year ended December 31, 2010)
|
10.21.2*
|
Form of Executive Management Non-Qualified Deferred Compensation and Long-Term Incentive Plan – Notice of Discretionary Contribution Award (incorporated by reference to exhibit 10.22.2 to the Company’s Form 10-K for the year ended December 31, 2010)
|
10.22
|
Acquisition and Option Termination Agreement with M.L. Dick Heimann dated December 16, 2011 (incorporated by reference to exhibit 99.1 to the Company’s Form 8-K filed December 22, 2011)
|
10.22.1*
|
Form of Membership Purchase Agreement with M.L. Dick Heimann (incorporated by reference to exhibit 99.2 to the Company’s Form 8-K filed December 22, 2011)
|
10.23*
|
Employment Agreement with Executive Vice President Brad Gray dated March 1, 2012 (incorporated by reference to exhibit 10.2 to the Company’s Form 10-Q for the quarter ended March 31, 2012)
|
10.24* |
Form of Amended Employment and Change in Control Agreement dated February 22, 2013 between the Company and each of Scott Hillier, Bryan B. DeBoer, John F. North III and Chris Holzshu
|
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.
|
Exhibit
|
Description
|
101.INS
|
XBRL Instance Document.
|
101.SCH
|
XBRL Taxonomy Extension 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.
|
(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 documents exist with each Nissan store.
|
(7)
|
Substantially identical agreements exist between Nissan Motor Corporation and those other subsidiaries operating Nissan dealerships.
|
(8)
|
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 22, 2013 | LITHIA MOTORS, INC. | ||
By: | /s/Bryan B. DeBoer | ||
Bryan B. DeBoer | |||
Director, President and | |||
Chief Executive Officer |
Signature
|
Title
|
|
/s/ Bryan B. DeBoer
|
Director, President and Chief Executive Officer
|
|
Bryan B. DeBoer |
(Principal Executive Officer)
|
|
/s/ Christopher S. Holzshu
|
Senior Vice President, Chief Financial Officer
|
|
Christopher S. Holzshu |
and Secretary (Principal Financial Officer)
|
|
/s/John F. North III
|
Vice President and Corporate Controller
|
|
John F. North III |
(Principal Accounting Officer)
|
|
/s/Thomas Becker
|
Director
|
|
Thomas Becker | ||
/s/Susan O. Cain
|
Director
|
|
Susan O. Cain | ||
|
||
/s/Sidney B. DeBoer
|
Director
|
|
Sidney B. DeBoer | ||
|
||
/s/M.L. Dick Heimann
|
Director
|
|
M.L. Dick Heimann | ||
|
||
/s/Kenneth E. Roberts
|
Director
|
|
Kenneth E. Roberts | ||
/s/William J. Young
|
Director
|
|
William J. Young |
December 31, | ||||||||
2012
|
2011
|
|||||||
Assets
|
||||||||
Current Assets:
|
||||||||
Cash and cash equivalents
|
$ | 42,839 | $ | 20,851 | ||||
Accounts receivable, net of allowance for doubtful
accounts of $336 and $261
|
133,149 | 99,407 | ||||||
Inventories, net
|
723,326 | 506,484 | ||||||
Deferred income taxes
|
3,832 | 4,730 | ||||||
Other current assets
|
17,484 | 16,719 | ||||||
Assets held for sale
|
12,579 | - | ||||||
Total Current Assets
|
933,209 | 648,191 | ||||||
Property and equipment, net of accumulated
depreciation of $97,883 and $99,115
|
425,086 | 373,779 | ||||||
Goodwill
|
32,047 | 18,958 | ||||||
Franchise value
|
62,429 | 59,095 | ||||||
Deferred income taxes
|
17,123 | 29,270 | ||||||
Other non-current assets
|
22,808 | 16,840 | ||||||
Total Assets
|
$ | 1,492,702 | $ | 1,146,133 | ||||
|
||||||||
Liabilities and Stockholders' Equity
|
||||||||
Current Liabilities:
|
||||||||
Floor plan notes payable
|
$ | 13,454 | $ | 114,760 | ||||
Floor plan notes payable: non-trade
|
568,130 | 229,180 | ||||||
Current maturities of long-term debt
|
8,182 | 8,221 | ||||||
Trade payables
|
41,589 | 31,712 | ||||||
Accrued liabilities
|
81,602 | 72,711 | ||||||
Liabilities related to assets held for sale
|
8,347 | - | ||||||
Total Current Liabilities
|
721,304 | 456,584 | ||||||
Long-term debt, less current maturities
|
286,876 | 278,653 | ||||||
Deferred revenue
|
33,589 | 25,146 | ||||||
Other long-term liabilities
|
22,832 | 18,629 | ||||||
Total Liabilities
|
1,064,601 | 779,012 | ||||||
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 22,916 and 22,195
|
268,801 | 279,366 | ||||||
Class B common stock - no par value;
authorized 25,000 shares; issued and outstanding 2,762 and 3,762
|
343 | 468 | ||||||
Additional paid-in capital
|
12,399 | 10,918 | ||||||
Accumulated other comprehensive loss
|
(2,615 | ) | (4,508 | ) | ||||
Retained earnings
|
149,173 | 80,877 | ||||||
Total Stockholders' Equity
|
428,101 | 367,121 | ||||||
Total Liabilities and Stockholders' Equity
|
$ | 1,492,702 | $ | 1,146,133 |
Year Ended December 31, | ||||||||||||
2012
|
2011
|
2010
|
||||||||||
Revenues:
|
||||||||||||
New vehicle
|
$ | 1,847,603 | $ | 1,391,375 | $ | 1,020,883 | ||||||
Used vehicle retail
|
833,484 | 678,571 | 558,105 | |||||||||
Used vehicle wholesale
|
139,237 | 128,329 | 103,817 | |||||||||
Finance and insurance
|
112,234 | 84,130 | 64,217 | |||||||||
Service, body and parts
|
347,703 | 315,958 | 277,945 | |||||||||
Fleet and other
|
36,226 | 34,383 | 11,655 | |||||||||
Total revenues
|
3,316,487 | 2,632,746 | 2,036,622 | |||||||||
Cost of sales:
|
||||||||||||
New vehicle
|
1,713,156 | 1,284,225 | 937,237 | |||||||||
Used vehicle retail
|
711,763 | 580,357 | 479,310 | |||||||||
Used vehicle wholesale
|
137,823 | 127,732 | 103,114 | |||||||||
Service, body and parts
|
179,633 | 163,738 | 144,003 | |||||||||
Fleet and other
|
34,812 | 31,410 | 10,012 | |||||||||
Total cost of sales
|
2,777,187 | 2,187,462 | 1,673,676 | |||||||||
Gross profit
|
539,300 | 445,284 | 362,946 | |||||||||
Asset impairments
|
115 | 1,376 | 15,301 | |||||||||
Selling, general and administrative
|
373,688 | 316,663 | 284,163 | |||||||||
Depreciation and amortization
|
17,128 | 16,427 | 17,012 | |||||||||
Operating income
|
148,369 | 110,818 | 46,470 | |||||||||
Floor plan interest expense
|
(12,816 | ) | (10,364 | ) | (10,155 | ) | ||||||
Other interest expense
|
(9,621 | ) | (12,878 | ) | (14,523 | ) | ||||||
Other income, net
|
2,525 | 694 | 420 | |||||||||
Income from continuing operations before income taxes
|
128,457 | 88,270 | 22,212 | |||||||||
Income tax provision
|
(49,062 | ) | (33,060 | ) | (8,625 | ) | ||||||
Income from continuing operations, net of income tax
|
79,395 | 55,210 | 13,587 | |||||||||
Income from discontinued operations, net of income tax
|
967 | 3,650 | 132 | |||||||||
Net income
|
$ | 80,362 | $ | 58,860 | $ | 13,719 | ||||||
Basic income per share from continuing operations
|
$ | 3.09 | $ | 2.10 | $ | 0.52 | ||||||
Basic income per share from discontinued operations
|
0.04 | 0.14 | 0.01 | |||||||||
Basic net income per share
|
$ | 3.13 | $ | 2.24 | $ | 0.53 | ||||||
Shares used in basic per share calculations
|
25,696 | 26,230 | 26,062 | |||||||||
Diluted income per share from continuing operations
|
$ | 3.03 | $ | 2.07 | $ | 0.52 | ||||||
Diluted income per share from discontinued operations
|
0.04 | 0.14 | - | |||||||||
Diluted net income per share
|
$ | 3.07 | $ | 2.21 | $ | 0.52 | ||||||
Shares used in diluted per share calculations
|
26,170 | 26,664 | 26,279 |
Year Ended December 31, | ||||||||||||
2012
|
2011
|
2010
|
||||||||||
Net income
|
$ | 80,362 | $ | 58,860 | $ | 13,719 | ||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||
Gain (loss) on cash flow hedges, net of tax expense (benefit)
of $1,175, $195 and $(626)
|
1,893 | 361 | (1,019 | ) | ||||||||
Comprehensive income
|
$ | 82,255 | $ | 59,221 | $ | 12,700 |
Common Stock |
Additional
|
Accumulated
Other
|
Total
Stock-
|
|||||||||||||||||||||||||||||
Class A |
Class B
|
Paid In
|
Income
|
Retained
|
holders'
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
(Loss)
|
Earnings
|
Equity
|
|||||||||||||||||||||||||
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 | ) | ||||||||||||||||||||||
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 | ||||||||||||||||||||||||
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 | |||||||||||||||||||||||
Net income
|
- | - | - | - | - | - | 80,362 | 80,362 | ||||||||||||||||||||||||
Fair value of interest rate swap agreements, net of
tax expense of $1,175
|
- | - | - | - | - | 1,893 | - | 1,893 | ||||||||||||||||||||||||
Issuance of stock in connection with employee
stock plans
|
647 | 8,652 | - | - | - | - | - | 8,652 | ||||||||||||||||||||||||
Issuance of restricted stock to employees
|
3 | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Repurchase of Class A common stock
|
(929 | ) | (23,279 | ) | - | - | - | - | - | (23,279 | ) | |||||||||||||||||||||
Class B commons stock converted to Class A
common stock
|
1,000 | 125 | (1,000 | ) | (125 | ) | - | |||||||||||||||||||||||||
Compensation for stock and stock option issuances
and excess tax benefits from option exercises
|
- | 3,937 | - | - | 1,481 | - | - | 5,418 | ||||||||||||||||||||||||
Dividends paid
|
- | - | - | - | - | - | (12,066 | ) | (12,066 | ) | ||||||||||||||||||||||
Balance at December 31, 2012
|
22,916 | $ | 268,801 | 2,762 | $ | 343 | $ | 12,399 | $ | (2,615 | ) | $ | 149,173 | $ | 428,101 |
Year Ended December 31, | ||||||||||||
2012
|
2011
|
2010
|
||||||||||
Cash flows from operating activities:
|
||||||||||||
Net income
|
$ | 80,362 | $ | 58,860 | $ | 13,719 | ||||||
Adjustments to reconcile net income to net cash used in operating activities:
|
||||||||||||
Asset impairments
|
115 | 1,376 | 15,301 | |||||||||
Depreciation and amortization
|
17,128 | 16,427 | 17,012 | |||||||||
Depreciation and amortization within discontinued operations
|
186 | 521 | 574 | |||||||||
Stock-based compensation
|
3,116 | 2,001 | 2,419 | |||||||||
Gain on disposal of other assets
|
(747 | ) | (6,495 | ) | (107 | ) | ||||||
(Gain) loss from disposal activities within discontinued operations
|
621 | (4,396 | ) | 301 | ||||||||
Deferred income taxes
|
14,172 | 8,093 | (2,131 | ) | ||||||||
Excess tax benefit from share-based payment arrangements
|
(2,802 | ) | (525 | ) | (264 | ) | ||||||
(Increase) decrease (net of acquisitions and dispositions):
|
||||||||||||
Trade receivables, net
|
(33,704 | ) | (22,503 | ) | (22,881 | ) | ||||||
Inventories
|
(230,442 | ) | (78,202 | ) | (68,305 | ) | ||||||
Other current assets
|
(4,194 | ) | (13,111 | ) | (1,633 | ) | ||||||
Other non-current assets
|
(6,176 | ) | (1,108 | ) | (2,029 | ) | ||||||
Increase (decrease) (net of acquisitions and dispositions):
|
||||||||||||
Floor plan notes payable
|
(82,109 | ) | 13,510 | 10,550 | ||||||||
Trade payables
|
8,001 | 5,998 | 4,960 | |||||||||
Accrued liabilities
|
10,538 | 11,605 | 10,029 | |||||||||
Other long-term liabilities and deferred revenue
|
13,459 | 7,183 | 1,155 | |||||||||
Net cash used in operating activities
|
(212,476 | ) | (766 | ) | (21,330 | ) | ||||||
Cash flows from investing activities:
|
||||||||||||
Principal payments received on notes receivable
|
946 | 121 | 85 | |||||||||
Capital expenditures
|
(64,584 | ) | (31,673 | ) | (7,589 | ) | ||||||
Proceeds from sales of assets
|
6,027 | 29,677 | 10,288 | |||||||||
Cash paid for acquisitions, net of cash acquired
|
(44,716 | ) | (60,485 | ) | (23,691 | ) | ||||||
Payments for life insurance policies
|
(3,288 | ) | (900 | ) | - | |||||||
Proceeds from sales of stores
|
6,618 | 23,838 | 941 | |||||||||
Net cash used in investing activities
|
(98,997 | ) | (39,422 | ) | (19,966 | ) | ||||||
Cash flows from financing activities:
|
||||||||||||
Borrowings on floor plan notes payable: non-trade
|
348,477 | 63,145 | 24,090 | |||||||||
Borrowings on lines of credit
|
592,623 | 56,000 | 40,000 | |||||||||
Repayments on lines of credit
|
(580,269 | ) | (9,000 | ) | (24,000 | ) | ||||||
Principal payments on long-term debt, scheduled
|
(8,347 | ) | (10,909 | ) | (8,248 | ) | ||||||
Principal payments on long-term debt and capital leases, other
|
(40,765 | ) | (55,666 | ) | (40,146 | ) | ||||||
Proceeds from issuance of long-term debt
|
42,333 | 25,674 | 47,219 | |||||||||
Proceeds from issuance of common stock
|
8,652 | 5,654 | 4,192 | |||||||||
Repurchase of common stock
|
(23,279 | ) | (13,568 | ) | (1,626 | ) | ||||||
Excess tax benefit from share-based payment arrangements
|
2,802 | 525 | 264 | |||||||||
Decrease (increase) in restricted cash
|
3,300 | (3,300 | ) | - | ||||||||
Dividends paid
|
(12,066 | ) | (6,822 | ) | (3,919 | ) | ||||||
Net cash provided by financing activities
|
333,461 | 51,733 | 37,826 | |||||||||
Increase (decrease) in cash and cash equivalents
|
21,988 | 11,545 | (3,470 | ) | ||||||||
Cash and cash equivalents at beginning of year
|
20,851 | 9,306 | 12,776 | |||||||||
Cash and cash equivalents at end of year
|
$ | 42,839 | $ | 20,851 | $ | 9,306 | ||||||
Supplemental disclosure of cash flow information:
|
||||||||||||
Cash paid during the period for interest
|
$ | 22,976 | $ | 24,961 | $ | 25,357 | ||||||
Cash paid during the period for income taxes, net
|
36,579 | 33,722 | 8,000 | |||||||||
Supplemental schedule of non-cash activities:
|
||||||||||||
Debt issued in connection with acquisitions
|
2,609 | - | 63 | |||||||||
Floor plan debt acquired in connection with acquisitions
|
- | 19,348 | 1,856 | |||||||||
Acquisition of assets with capital leases
|
2,609 | - | 77 | |||||||||
Floor plan debt paid in connection with store disposals
|
6,712 | 1,784 | 2,134 |
·
|
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 (years)
|
5 | to |
40
|
Service equipment (years)
|
5 | to |
15
|
Furniture, office equipment, signs and fixtures (years)
|
3 | to |
10
|
●
|
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 the owner is 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.
|
·
|
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,
|
2012
|
2011
|
||||||
Contracts in transit
|
$ | 65,597 | $ | 47,867 | ||||
Trade receivables
|
20,932 | 16,418 | ||||||
Vehicle receivables
|
21,298 | 15,930 | ||||||
Manufacturer receivables
|
25,658 | 19,453 | ||||||
133,485 | 99,668 | |||||||
Less: Allowance
|
(336 | ) | (261 | ) | ||||
Total accounts receivables, net
|
$ | 133,149 | $ | 99,407 |
December 31,
|
2012
|
2011
|
||||||
New vehicles
|
$ | 563,275 | $ | 372,838 | ||||
Used vehicles
|
130,529 | 106,622 | ||||||
Parts and accessories
|
29,522 | 27,024 | ||||||
Total inventories
|
$ | 723,326 | $ | 506,484 |
December 31,
|
2012
|
2011
|
||||||
Land
|
$ | 128,653 | $ | 120,092 | ||||
Building and improvements
|
279,084 | 232,478 | ||||||
Service equipment
|
39,374 | 36,895 | ||||||
Furniture, office equipment, signs and fixtures
|
70,082 | 71,313 | ||||||
517,193 | 460,778 | |||||||
Less accumulated depreciation
|
(97,883 | ) | (99,115 | ) | ||||
419,310 | 361,663 | |||||||
Construction in progress
|
5,776 | 12,116 | ||||||
$ | 425,086 | $ | 373,779 |
Goodwill
|
||||
Balance as of December, 31, 2010, gross
|
$ | 305,452 | ||
Accumulated impairment losses
|
(299,266 | ) | ||
Balance as of December 31, 2010, net
|
6,186 | |||
Additions through acquisitions
|
12,869 | |||
Goodwill allocation to dispositions
|
(97 | ) | ||
Balance as of December 31, 2011, net
|
18,958 | |||
Additions through acquisitions
|
13,710 | |||
Goodwill allocation to dispositions
|
(621 | ) | ||
Balance as of December 31, 2012, net
|
$ | 32,047 |
Franchise
Value
|
||||
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 | |||
Additions through acquisitions
|
5,174 | |||
Transfers to discontinued operations
|
(1,840 | ) | ||
Balance as of December 31, 2012
|
$ | 62,429 |
December 31,
|
2012
|
2011
|
||||||
New vehicle floor plan commitment
(1) (2)
|
$ | 568,130 | $ | 229,180 | ||||
Floor plan notes payable
(2)
|
13,454 | 114,760 | ||||||
Total floor plan debt
|
581,584 | 343,940 | ||||||
Used vehicle inventory financing facility
|
78,309 | - | ||||||
Revolving line of credit
|
21,045 | 87,000 | ||||||
Real estate mortgages
|
192,928 | 194,404 | ||||||
Other debt
|
2,776 | 5,470 | ||||||
Total debt
|
$ | 876,642 | $ | 630,814 |
(1)
|
We have a $575 million new vehicle floor plan commitment as part of our credit facility.
|
(2)
|
At December 31, 2012, an additional $6.9 million of floor plan notes payable outstanding on our new vehicle floor plan commitment and $1.4 million of floor plan notes payable on vehicles designated as service loaners are recorded as liabilities related to assets held for sale.
|
Year Ending December 31,
|
||||
2013
|
$ | 8,182 | ||
2014
|
8,459 | |||
2015
|
8,713 | |||
2016
|
32,885 | |||
2017
|
109,216 | |||
Thereafter
|
127,603 | |||
Total principal payments
|
$ | 295,058 |
Year Ending December 31,
|
||||
2013
|
$ | 17,188 | ||
2014
|
15,749 | |||
2015
|
14,317 | |||
2016
|
12,948 | |||
2017
|
10,666 | |||
Thereafter
|
72,968 | |||
Total minimum lease payments
|
143,836 | |||
Less: sublease rentals
|
(7,785 | ) | ||
$ | 136,051 |
Year Ending December 31,
|
||||
2013
|
$ | 7,540 | ||
2014
|
3,792 | |||
2015
|
1,553 | |||
2016
|
491 | |||
2017
|
118 | |||
Thereafter
|
10 | |||
Total
|
$ | 13,504 |
Year Ending December 31,
|
|||||
2013
|
$ | 1,090 | |||
2014
|
850 | ||||
2015
|
654 | ||||
2016
|
488 | ||||
2017
|
349 | ||||
Thereafter
|
559 | ||||
Total
|
$ | 3,990 |
Year Ending December 31,
|
||||
2013
|
$ | 8,448 | ||
2014
|
5,839 | |||
2015
|
4,541 | |||
2016
|
3,547 | |||
2017
|
2,827 | |||
Thereafter
|
8,721 | |||
Total
|
$ | 33,923 |
Year Ended December 31,
|
||||||||||||
2012
|
2011
|
2010
|
||||||||||
Shares repurchased
(1)
|
848,092 | 716,431 | 100,893 | |||||||||
Total purchase price (in thousands)
|
$ | 20,698 | $ | 12,389 | $ | 795 | ||||||
Average purchase price per share
|
$ | 24.41 | $ | 17.29 | $ | 7.88 |
(1)
|
Includes only shares repurchased under repurchase plans. An additional 80,687, 56,012 and 61,153 shares were repurchased in association with tax withholdings on the exercise of stock options in 2012, 2011 and 2010, respectively.
|
Quarter declared
|
Dividend amount per Class A and Class B 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 | ||||||
2012
|
||||||||
First quarter
|
$ | 0.07 | $ | 1,815 | ||||
Second quarter
|
0.10 | 2,583 | ||||||
Third quarter
|
0.10 | 2,545 | ||||||
Fourth quarter
|
0.20 | 5,123 | (1) |
(1)
|
In November 2012, we paid dividends of $2.5 million that had been declared in October 2012. An additional dividend payment of $2.6 million was declared and paid in December 2012 in lieu of the dividend typically declared and paid in March of the following year.
|
Year Ended December 31,
|
2012
|
2011
|
2010
|
|||||||||||||||||||||
Basic EPS
|
Class A
|
Class B
|
Class A
|
Class B
|
Class A
|
Class B
|
||||||||||||||||||
Numerator:
|
||||||||||||||||||||||||
Income from continuing operations applicable to common stockholders
|
$ | 69,069 | $ | 10,326 | $ | 47,292 | $ | 7,918 | $ | 11,626 | $ | 1,961 | ||||||||||||
Distributed income applicable to common stockholders
|
(10,497 | ) | (1,569 | ) | (5,844 | ) | (978 | ) | (3,353 | ) | (566 | ) | ||||||||||||
Basic undistributed income from continuing operations applicable to common stockholders
|
$ | 58,572 | $ | 8,757 | $ | 41,448 | $ | 6,940 | $ | 8,273 | $ | 1,395 | ||||||||||||
Denominator:
|
||||||||||||||||||||||||
Weighted average number of shares out-standing used to calculate basic income per share
|
22,354 | 3,342 | 22,468 | 3,762 | 22,300 | 3,762 | ||||||||||||||||||
Basic income from continuing operations per share applicable to common stockholders
|
$ | 3.09 | $ | 3.09 | $ | 2.10 | $ | 2.10 | $ | 0.52 | $ | 0.52 | ||||||||||||
Basic distributed income per share applicable to common stockholders
|
(0.47 | ) | (0.47 | ) | (0.26 | ) | (0.26 | ) | (0.15 | ) | (0.15 | ) | ||||||||||||
Basic undistributed income from continuing operations per share applicable to common stockholders
|
$ | 2.62 | $ | 2.62 | $ | 1.84 | $ | 1.84 | $ | 0.37 | $ | 0.37 |
Year Ended December 31,
|
2012
|
2011
|
2010
|
|||||||||||||||||||||
Diluted EPS
|
Class A
|
Class B
|
Class A
|
Class B
|
Class A
|
Class B
|
||||||||||||||||||
Numerator:
|
||||||||||||||||||||||||
Distributed income applicable to common stockholders
|
$ | 10,497 | $ | 1,569 | $ | 5,844 | $ | 978 | $ | 3,353 | $ | 566 | ||||||||||||
Reallocation of distributed income as a result of conversion of dilutive stock options
|
28 | (28 | ) | 15 | (15 | ) | 5 | (5 | ) | |||||||||||||||
Reallocation of distributed income due to conversion of Class B to Class A
|
1,541 | - | 963 | - | 561 | - | ||||||||||||||||||
Diluted distributed income applicable to common stockholders
|
$ | 12,066 | $ | 1,541 | $ | 6,822 | $ | 963 | $ | 3,919 | $ | 561 | ||||||||||||
Undistributed income from continuing operations applicable to common stockholders
|
$ | 58,572 | $ | 8,757 | $ | 41,448 | $ | 6,940 | $ | 8,273 | $ | 1,395 | ||||||||||||
Reallocation of undistributed income as a result of conversion of dilutive stock options
|
159 | (159 | ) | 113 | (113 | ) | 11 | (11 | ) | |||||||||||||||
Reallocation of undistributed income due to conversion of Class B to Class A
|
8,598 | - | 6,827 | - | 1,384 | - | ||||||||||||||||||
Diluted undistributed income from continuing operations applicable to common stockholders
|
$ | 67,329 | $ | 8,598 | $ | 48,388 | $ | 6,827 | $ | 9,668 | $ | 1,384 | ||||||||||||
Denominator:
|
||||||||||||||||||||||||
Weighted average number of shares outstanding used to calculate basic income per share
|
22,354 | 3,342 | 22,468 | 3,762 | 22,300 | 3,762 | ||||||||||||||||||
Weighted average number of shares from stock options
|
474 | - | 434 | - | 217 | - | ||||||||||||||||||
Conversion of Class B to Class A
|
3,342 | - | 3,762 | - | 3,762 | - | ||||||||||||||||||
Weighted average number of shares outstanding used to calculate diluted income per share
|
26,170 | 3,342 | 26,664 | 3,762 | 26,279 | 3,762 |
Year Ended December 31,
|
2012
|
2011
|
2010
|
|||||||||||||||||||||
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
|
$ | 3.03 | $ | 3.03 | $ | 2.07 | $ | 2.07 | $ | 0.52 | $ | 0.52 | ||||||||||||
Diluted distributed income from continuing operations per share applicable to common stockholders
|
(0.47 | ) | (0.47 | ) | (0.26 | ) | (0.26 | ) | (0.15 | ) | (0.15 | ) | ||||||||||||
Diluted undistributed income from continuing operations per share applicable to common stockholders
|
$ | 2.56 | $ | 2.56 | $ | 1.81 | $ | 1.81 | $ | 0.37 | $ | 0.37 | ||||||||||||
Antidilutive Securities:
|
||||||||||||||||||||||||
Shares issuable pursuant to stock options not included since they were antidilutive
|
45 | - | 280 | - | 661 | - |
Shares subject
to options
|
Weighted average
exercise price
|
Aggregate intrinsic value
(in millions)
|
Weighted average
remaining contractual term
(in years)
|
||||||||||||
Balance, December 31, 2011
|
811,176 | $ | 12.69 | ||||||||||||
Granted
|
- | - | |||||||||||||
Forfeited
|
(59,793 | ) | 9.12 | ||||||||||||
Expired
|
(90,000 | ) | 31.67 | ||||||||||||
Exercised
|
(407,884 | ) | 13.02 | ||||||||||||
Balance, December 31, 2012
|
253,499 | $ | 6.26 | $ |
7.9
|
1.6
|
|||||||||
Exercisable, December 31, 2012
|
253,499 | $ | 6.26 | $ |
7.9
|
1.6
|
Non-vested
stock grants
|
Weighted average
grant date fair value
|
|||||||
Balance, December 31, 2011
|
590,550 | $ | 8.72 | |||||
Granted
|
225,664 | 23.82 | ||||||
Vested
|
(144,591 | ) | 11.19 | |||||
Forfeited
|
(19,680 | ) | 10.25 | |||||
Balance, December 31, 2012
|
651,943 | $ | 13.35 |
Year Ended December 31,
|
2010
|
|||
Risk-free interest rate
(1)
|
2.53 | % | ||
Dividend yield
(2)
|
2.54 | % | ||
Expected term
(3)
(in years)
|
4.2
|
|||
Volatility
(4)
|
81.22 | % | ||
Discount for post-vesting restrictions
|
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,
|
2012
|
2011
|
2010
|
|||||||||
Weighted average grant-date fair value per share of stock options granted
|
$ | - | $ | - | $ | 4.19 | ||||||
Per share intrinsic value of non-vested stock granted
|
23.82 | 13.58 | 6.02 | |||||||||
Weighted average per share discount for compensation expense recognized under the 2009 ESPP
|
4.29 | 2.56 | 1.11 | |||||||||
Total intrinsic value of stock options exercised (in millions)
|
7.2
|
1.5
|
1.1
|
|||||||||
Fair value of non-vested stock that vested during the period (in millions)
|
3.5
|
0.7
|
0.4
|
|||||||||
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 18. (in millions)
|
3.1
|
2.3
|
1.8
|
|||||||||
Tax benefit recognized in Consolidated Statements of Operations (in millions)
|
1.0
|
0.7
|
0.5
|
|||||||||
Cash received from options exercised and shares purchased under all share-based arrangements (in millions)
|
8.8
|
5.8
|
4.2
|
|||||||||
Tax deduction realized related to stock options exercised (in millions)
|
4.1
|
0.9
|
0.5
|
●
|
$25 million interest rate swap at a fixed rate of 4.495% per annum, variable rate adjusted on the 26
th
of each month, matures January 25, 2013;
|
●
|
$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, matures April 30, 2013;
|
●
|
$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, matures April 30, 2013 and
|
●
|
$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, matures June 15, 2016.
|
Balance Sheet Information (in thousands)
|
Fair Value of Liability Derivatives
|
|||||
Location in Balance Sheet
|
December 31, 2012
|
|||||
Derivatives designated as hedging instruments
|
||||||
Interest rate swap contracts
|
Accrued liabilities
|
$ | 1,839 | |||
Other long-term liabilities
|
2,840 | |||||
$ | 4,679 |
Balance Sheet Information (in thousands)
|
Fair Value of Liability Derivatives
|
|||||
Location in Balance Sheet
|
December 31, 2011
|
|||||
Derivatives designated as hedging instruments
|
||||||
Interest rate swap contracts
|
Accrued liabilities
|
$ | 3,522 | |||
Other long-term liabilities
|
4,008 | |||||
$ | 7,530 |
Derivatives in Cash Flow Hedging Relationships
|
Amount of gain (loss) recognized in Accumulated OCI (effective portion)
|
Location of loss reclassified from accumulated OCI into Income (effective portion)
|
Amount of 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, 2012
|
||||||||||||||||
Interest rate swap contracts
|
$ | 1,655 |
Floor plan
Interest expense
|
$ | (1,413 | ) |
Floor plan
Interest expense
|
$ | (2,900 | ) | ||||||
For the Year Ended December 31, 2011
|
||||||||||||||||
Interest rate swap contracts
|
$ | (1,343 | ) |
Floor plan
Interest expense
|
$ | (1,899 | ) |
Floor plan
Interest expense
|
$ | (1,587 | ) | |||||
For the Year Ended December 31, 2010
|
||||||||||||||||
Interest rate swap contracts
|
$ | (4,459 | ) |
Floor plan
Interest expense
|
$ | (2,814 | ) |
Floor plan
Interest expense
|
$ | (1,483 | ) |
●
|
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, 2012
|
Level 1
|
Level 2
|
Level 3
|
|||||||||
Measured on a recurring basis:
|
||||||||||||
Derivative contracts, net
|
$ | - | $ | (4,679 | ) | $ | - |
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:
|
||||||||||||
Certain buildings and improvements
|
$ | - | $ | - | $ | 2,500 |
December 31,
2012
|
December 31, 2011
|
|||||||
Carrying value
|
$ | 130,469 | $ | 64,463 | ||||
Fair value
|
134,688 | 73,551 |
Year Ended December 31,
|
2012
|
2011
|
2010
|
|||||||||
Current:
|
||||||||||||
Federal
|
$ | 31,438 | $ | 21,779 | $ | 9,093 | ||||||
State
|
3,626 | 3,561 | 1,619 | |||||||||
35,064 | 25,340 | 10,712 | ||||||||||
Deferred:
|
||||||||||||
Federal
|
10,888 | 7,046 | (1,670 | ) | ||||||||
State
|
3,110 | 674 | (417 | ) | ||||||||
13,998 | 7,720 | (2,087 | ) | |||||||||
Total
|
$ | 49,062 | $ | 33,060 | $ | 8,625 |
December 31,
|
2012
|
2011
|
||||||
Deferred tax assets:
|
||||||||
Deferred revenue and cancellation reserves
|
$ | 7,597 | $ | 6,369 | ||||
Allowances and accruals, including state tax
carryforward amounts
|
21,340 | 20,234 | ||||||
Interest on derivatives
|
1,796 | 2,889 | ||||||
Goodwill
|
18,139 | 26,817 | ||||||
Capital loss carryforward
|
12,248 | 12,841 | ||||||
Total deferred tax assets
|
61,120 | 69,150 | ||||||
Deferred tax liabilities:
|
||||||||
Inventories
|
(4,684 | ) | (4,351 | ) | ||||
Property and equipment, principally due to differences in depreciation
|
(22,484 | ) | (16,418 | ) | ||||
Prepaids and property taxes
|
(1,356 | ) | (1,540 | ) | ||||
Total deferred tax liabilities
|
(28,524 | ) | (22,309 | ) | ||||
Valuation allowance
|
(11,641 | ) | (12,841 | ) | ||||
Total
|
$ | 20,955 | $ | 34,000 |
Year Ended December 31,
|
2012
|
2011
|
2010
|
|||||||||
Federal tax provision at statutory rate
|
$ | 44,723 | $ | 30,895 | $ | 7,774 | ||||||
State taxes, net of federal income tax benefit
|
4,772 | 3,021 | 973 | |||||||||
Non-deductible expenses
|
618 | 208 | 223 | |||||||||
Permanent differences related to the employee
stock purchase program
|
52 | 105 | 164 | |||||||||
Release of valuation allowance
|
(1,200 | ) | (346 | ) | - | |||||||
Other
|
97 | (823 | ) | (509 | ) | |||||||
Income tax provision
|
$ | 49,062 | $ | 33,060 | $ | 8,625 |
Federal
|
2009-2012 | |||
13 states
|
2008-2012 |
●
|
On April 30, 2012, we acquired the inventory, equipment and intangible assets and assumed certain liabilities of Bellingham Chevrolet and Cadillac in Bellingham, Washington from Jerry Chambers Chevrolet.
|
●
|
On June 12, 2012, we acquired the inventory, equipment and intangible assets and assumed certain liabilities of Fairbanks GMC Buick from Gene’s GMC, LLC.
|
●
|
On August 27, 2012, we acquired the inventory, equipment and intangible assets and assumed certain liabilities of Killeen Chevrolet in Killeen, Texas from Connell Chevrolet, Inc.
|
●
|
On October 23, 2012, we acquired the inventory, equipment, real estate and intangible assets of, and assumed certain liabilities related to Bitterroot Toyota of Missoula, Montana from Bitterroot Motors, Inc.
|
●
|
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.
|
●
|
In July 2010, we acquired the inventory, equipment and intangible assets and assumed certain liabilities related to Honda of Bend and agreed to the transfer of Chevrolet and Cadillac brands from Bob Thomas Chevrolet Cadillac, both located in Bend, Oregon.
|
Year Ended December 31,
|
2012
|
2011
|
2010
|
|||||||||
Revenue
|
$ | 3,386,066 | $ | 2,789,436 | $ | 2,210,073 | ||||||
Income from continuing operations, net of tax
|
80,064 | 56,904 | 14,779 | |||||||||
Basic income per share from continuing operations, net of tax
|
3.12 | 2.17 | 0.57 | |||||||||
Diluted income per share from continuing operations, net of tax
|
3.06 | 2.13 | 0.57 |
Consideration paid for year ended December 31,
|
2012
|
2011
|
||||||
Cash paid, net of cash acquired
|
$ | 44,716 | $ | 55,368 | ||||
Floor plan financing assumed
|
- | 19,348 | ||||||
$ | 44 ,716 | $ | 74,716 |
Assets acquired and liabilities assumed for year ended ended December 31,
|
2012 | 2011 | ||||||
Inventories
|
$ | 17,541 | $ | 29,268 | ||||
Franchise value
|
5,174 | 14,517 | ||||||
Property, plant and equipment
|
11,097 | 17,351 | ||||||
Real estate lease reserves
|
- | 325 | ||||||
Other assets
|
110 | 1,475 | ||||||
Reserves
|
- | (663 | ) | |||||
Capital lease obligations
|
(2,609 | ) | - | |||||
Other liabilities
|
(307 | ) | (426 | ) | ||||
31,006 | 61,847 | |||||||
Goodwill
|
13,710 | 12,869 | ||||||
$ | 44,716 | $ | 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 market value; and
|
●
|
our management team believes it is unlikely that changes will be made to the plan or the plan to dispose of the store will be withdrawn.
|
December 31,
|
2012
|
|||
Inventories
|
$ | 9,412 | ||
Property, plant and equipment
|
1,102 | |||
Intangible assets
|
2,065 | |||
$ | 12,579 |
December 31,
|
2012
|
|||
Floor plan notes payable
|
$ | 8,347 |
Year Ended December 31,
|
2012
|
2011
|
2010
|
|||||||||
Floor plan interest
|
$ | 217 | $ | 520 | $ | 493 | ||||||
Other interest
|
69 | 108 | 117 | |||||||||
Total interest
|
$ | 286 | $ | 628 | $ | 610 |
Year Ended December 31,
|
2012
|
2011
|
2010
|
|||||||||
Revenue
|
$ | 82,150 | $ | 131,380 | $ | 100,979 | ||||||
Gain from discontinued operations
|
$ | 2,186 | $ | 1,516 | $ | 648 | ||||||
Net gain (loss) on disposal activities
|
(621 | ) | 4,396 | (301 | ) | |||||||
1,565 | 5,912 | 347 | ||||||||||
Income tax expense
|
(598 | ) | (2,262 | ) | (215 | ) | ||||||
Income from discontinued operations, net of income taxes
|
$ | 967 | $ | 3,650 | $ | 132 | ||||||
Goodwill and other intangible assets disposed of
|
$ | 169 | $ | 712 | $ | - | ||||||
Cash generated from disposal activities
|
$ | 6,618 | $ | 23,838 | $ | 941 | ||||||
Floor plan debt paid in connection with disposal activities
|
$ | 6,712 | $ | 1,784 | $ | 2,134 |
Year Ended December 31,
|
2012
|
2011
|
2010
|
|||||||||
Goodwill and other intangible assets
|
$ | (169 | ) | $ | 3,168 | $ | - | |||||
Property, plant and equipment
|
(299 | ) | 1,357 | (217 | ) | |||||||
Inventory
|
(82 | ) | (88 | ) | - | |||||||
Other
|
(71 | ) | (41 | ) | (84 | ) | ||||||
$ | (621 | ) | $ | 4,396 | $ | (301 | ) |
*
|
Number of shares is determined by dividing the average closing price of Lithia Class A Common Stock over the 20 trading days prior to the start of the service period on April 27, 2012 ($26.03), into $80,000 (3,073 shares), which RSUs shall vest 25% on the first business day of the month following each regularly scheduled quarterly in-person board of directors meeting, commencing with the April 27, 2012 meeting. On death, disability, or change in control, the RSUs will fully vest. On a termination prior to completion of the service period, the board of directors may waive all or any portion of the remaining service requirement to accelerate the vesting of the RSUs should the board of directors determine that the circumstances support such action.
|
**
|
An award of additional RSUs is made for the Audit Committee Chair (value of $6,000, which equals 231 shares), Corporate Governance Committee Chair (value of $3,000, which equals 115 shares), Compensation Committee Chair (value of $3,000, which equals 115 shares) and Lead Independent Director (value of $3,000, which equals 115 shares).
|
A.
|
Until October 24, 2012 (the “Conversion Date”), Lithia owned life insurance Policy Number 56740061 (the “Hancock Policy”) issued by Manufacturers Life Insurance Company (U.S.A.) (the “Insurer”), on the life of Employee with a face amount of $37,276,000.
|
B.
|
Lithia and Employee are parties to (i) the Split-Dollar Agreement dated effective November 7, 2006 (the “November 2006 Hancock Agreement”), which grants Employee the right to designate a beneficiary of the Hancock Policy in an amount equal to $7,000,000, and under which Employee is required to pay to Lithia pro-rata premiums in the amounts specified in the November 2006 Hancock Agreement; and (ii) the Split-Dollar Agreement dated effective January 28, 2009 (the “January 2009 Hancock Agreement”), which grants Employee the right to designate a beneficiary of the Hancock Policy in an amount equal to $6,000,000, and under which Employee is required to pay Lithia pro-rata premiums in the amounts specified in the January 2009 Hancock Agreement.
|
C.
|
Lithia is the owner of life insurance Policy Number 18-103-860 issued by The Northwestern Mutual Life Insurance Company (the “Northwestern Mutual Policy”), which provides a $12,000,000 death benefit on the life of Employee, and Employee and Lithia are parties to the Spit-Dollar Insurance Agreement (Endorsement Method) effective December 20, 2007 (the “NWM Split-Dollar Agreement”), under which Employee has right to designate the beneficiary of the Northwestern Mutual Policy in an amount equal to the death benefit minus the greater of Lithia’s cumulative premiums paid or the policy cash value as of Employee’s death.
|
D.
|
Effective as of the Conversion Date, the Hancock Policy was converted (the “Conversion”) into 10 new policies with a face value of $3.7276 million each (each, a “New Policy”), and Employee no longer designated any beneficiary of the Hancock Policy.
|
E.
|
Employee desires to swap (the “Swap”) his coverage under the Northwestern Mutual Policy with coverage under four of the New Policies, which have the following policy numbers (each, an “Employee Policy”): 93027940; 93027932; 93027949; and 93027971.
|
F.
|
Employee and Lithia desire to amend and restate the November 2006 Hancock Agreement and the January 2009 Hancock Agreement and to terminate the NWM Split-Dollar Agreement.
|
1.
|
Amended and Restated Agreement
. This Amended and Restated Agreement replaces each of the November 2006 Hancock Agreement and the January 2009 Hancock Agreement.
|
2.
|
Termination of NWM Split-Dollar Agreement
. The NWM Split-Dollar Agreement is terminated effective immediately. Employee irrevocably waives Employee’s right to purchase the Northwestern Mutual Policy from Lithia.
|
3.
|
Ownership of New Policies
. Lithia is the sole and absolute owner of each of the New Policies, and Lithia may exercise all ownership rights granted to the owner thereof by the terms of each New Policy, except as otherwise provided herein.
|
4.
|
Employee’s Right to Designate Beneficiaries
. Employee may designate the beneficiary or beneficiaries of the death benefit of each of the Employee Policies, minus the greater of Lithia’s cumulative premiums paid or the policy cash value as of Employee’s death, by specifying the beneficiary or beneficiaries in a written notice to Lithia. Upon receipt of such notice, Lithia shall execute and deliver to the Insurer the form necessary to designate the requested persons as the beneficiaries of the Employee Policies. Lithia shall have the right, in its sole discretion, to designate the beneficiary or beneficiaries of each of the six New Policies that are not Employee Policies.
|
5.
|
Endorsements.
Within a reasonable time following the Conversion, Lithia shall execute endorsements for the benefit of the Employee, endorsing the right to name beneficiaries of the Employee Policies death benefit as provided under this Agreement (each an “Endorsement”). Except as otherwise provided in this Amended and Restated Agreement, each Endorsement shall not be terminated, altered or amended by Lithia without the express written consent of the Employee. The parties hereto agree to take all action necessary to cause all Endorsements to conform to the provisions of this Agreement.
|
6.
|
Premium Payment.
Lithia shall pay the entire premium on each of the New Policies as each premium becomes due.
|
7.
|
Limitation on Lithia’s Rights in Employee Policies
. Except as otherwise provided herein, Lithia shall not sell, assign, transfer, surrender or cancel the Employee Policies, nor change the beneficiary designation provisions thereof, without, in any such case, the express written consent of the Employee.
|
8.
|
Termination; Right to Purchase Employee Policies
.
|
|
(a)
|
This Amended and Restated Agreement shall terminate upon the earlier to occur of (i) Employee’s death or (ii) 181 days after the Employment Termination Date. The “Employment Termination Date” is the date that Employee’s employment with Lithia is terminated for any reason other than Employee’s death. In addition, Employee may terminate this Amended and Restated Agreement, with or without the consent of Lithia, by giving notice of termination in writing to Lithia.
|
|
(b)
|
If Employee’s employment with Lithia is terminated for any reason other than Employee’s death, effective immediately Employee shall have the right to purchase each Employee Policy from Lithia as provided in this
Section 8(b)
(the “Purchase Option”). The Purchase Option shall remain open for 180 days after the Employment Termination Date, at which time the Purchase Option shall terminate. The purchase price of each Employee Policy shall be the sum of such policy’s interpolated terminal reserve and any unearned premiums, plus a pro-rata portion of dividends expected to be paid for that policy year, minus any policy and premium loans and any other indebtedness secured by the policy.
|
9.
|
Collection of Death Proceeds
. Upon the death of the Employee, Lithia shall promptly take all action necessary to obtain the death benefit provided under the Employee Policies. When such benefit has been collected and paid as provided herein, this Agreement shall thereupon terminate.
|
10.
|
Insurer Not a Party
. The Insurer shall be fully discharged from its obligations under each Employee Policy by payment of such policy’s death benefit to the beneficiary or beneficiaries named in the policy, subject to the terms and conditions of the policy. In no event shall the Insurer be considered a party to this Agreement, or any modification or amendment hereof, and none of the provisions herein shall in any way be construed as enlarging, changing, varying or in any other way affecting the obligations of the Insurer as expressly provided in any Employee Policy, except insofar as the provisions hereof are made a part of any Employee Policy by the beneficiary designation executed by Lithia and filed with the Insurer in connection herewith.
|
11.
|
Assignment by Employee.
Notwithstanding any provision hereof to the contrary, the Employee shall have the right to absolutely and irrevocably assign by gift all of the Employee’s right, title and interest in and to this Amended and Restated Agreement and under any Endorsement to an Employee Policy to an assignee. The Employee may exercise this right by executing a written document in the form used by the Insurer for irrevocable gifts, and delivering this form to Lithia. Upon receipt of such form, executed by the Employee and duly accepted by the assignee thereof, Lithia shall consent thereto in writing, and shall thereafter treat the Employee’s assignee as the sole owner of all of the Employee’s right, title and interest in and to this Amended and Restated Agreement and in and to any applicable Endorsement to an Employee Policy. Thereafter, the Employee shall have no right, title or interest in and to this Agreement or any applicable Endorsement, all such rights being vested in and exercisable only by such assignee.
|
12.
|
Named Fiduciary, Claims Procedure and Administration
.
|
|
(a)
|
Named Fiduciary.
Lithia is hereby designated as the named fiduciary under this Amended and Restated Agreement. The named fiduciary shall have authority to control and manage the operation and administration of this Amended and Restated Agreement, and it shall be responsible for establishing and carrying out a funding policy and method consistent with the objectives of this Amended and Restated Agreement.
|
|
(b)
|
Claim Procedure.
A person who believes that he or she is being denied a benefit to which he or she is entitled under this Amended and Restated Agreement (hereinafter referred to as a “Claimant”) may file a written request for such benefit with Lithia, setting forth his or her claim. The request must be addressed to the President, Chief Financial Officer, or Associate General Counsel of Lithia at its then principal place of business.
|
|
(c)
|
Claim Decision.
Upon receipt of a claim, Lithia shall advise the Claimant that a reply will be forthcoming within 90 days and shall, in fact, deliver such reply within such period. Lithia may, however, extend the reply period for an additional 90 days for reasonable cause. If the claim is denied in whole or in part, Lithia shall adopt a written opinion, using language calculated to be understood by the Claimant, setting forth: (i) the specific reason or reasons for such denial; (ii) the specific reference to pertinent provisions of this Amended and Restated Agreement on which such denial is based; (iii) a description of any additional material or information necessary for the Claimant to perfect his or her claim and an explanation why such material or such information is necessary; (iv) appropriate information as to the steps to be taken if the Claimant wishes to submit the claim for review; and (v) the time limits for requesting a review under
Section 12(d)
hereof and for review under
Section 12(e)
hereof.
|
|
(d)
|
Request for Review.
Within 60 days after the receipt by the Claimant of the written opinion described above, the Claimant may request in writing that the Secretary of Lithia review the determination of Lithia. Such request must be addressed to the Secretary of Lithia, at its then principal place of business. The Claimant or his or her duly authorized representative may, but need not, review the pertinent documents and submit issues and comments in writing for consideration by the Secretary. If the Claimant does not request a review of Lithia’s determination by the Secretary of Lithia within such 60 day period, he or she shall be barred and estopped from challenging Lithia’s determination.
|
|
(e)
|
Review of Decision.
Within 60 days after the Secretary’s receipt of a request for review, he or she will review Lithia’s determination. After considering all materials presented by the Claimant, the Secretary will render a written opinion, written in a manner calculated to be understood by the Claimant, setting forth the specific reasons for the decision and containing specific references to the pertinent provisions of this Amended and Restated Agreement on which the decision is based. If special circumstances require that the 60 day time period be extended, the Secretary will so notify the Claimant and will render the decision as soon as possible, but no later than 120 days after receipt of the request for review.
|
13.
|
Economic Benefit Tax Treatment
. This Amended and Restated Agreement shall be interpreted and enforced to comply with the split dollar final regulations so that it is treated as an economic benefit transaction for tax purposes in which, at all times, the only economic benefit to Employee shall be the value of the current life insurance protection attributable to naming one or more beneficiaries under the Employee Policies. Employee shall not have any current access to any Employee Policy’s cash values within the meaning of the split dollar final regulations or any other economic benefit other than the cost of current life insurance protection.
|
14.
|
Amendment.
This Amended and Restated Agreement may not be amended, altered or modified, except by a written instrument signed by the parties hereto, or their respective successors or assigns, and may not be otherwise terminated except as provided herein.
|
15.
|
Binding Effect.
This Amended and Restated Agreement shall be binding upon and inure to the benefit of Lithia and its successors and assigns, and upon the Employee, the Employee’s successors, assigns, heirs, executors, administrators and beneficiaries.
|
16.
|
Notices.
Any notice, consent or demand required or permitted to be given under the provisions of this Amended and Restated Agreement shall be in writing, and shall be signed by the party giving or making the same. If such notice, consent or demand is mailed to a party hereto, it shall be sent by United States certified mail, postage prepaid, addressed to such party’s last known address as shown on the records of Lithia. The date of such mailing shall be deemed the date of notice, consent or demand.
|
17.
|
Governing Law.
This Amended and Restated Agreement, and the rights of the parties hereunder, shall be governed by and construed in accordance with the laws of the State of Oregon.
|
18.
|
Effect of Termination; Survival
. If any party terminates this Amended and Restated Agreement pursuant to
Section 8
hereof, all rights and obligations of the parties hereunder shall terminate without any liability of any party to any other party; provided, however, that any provision that by its terms is intended to survive termination of this Amended and Restated Agreement, including, without limitation,
Sections 2
,
14
,
15
,
16
,
17
and
18
hereof, shall survive termination of this Amended and Restated Agreement.
|
Year Ended December 31,
|
||||||||||||||||||||
2012
|
2011
|
2010
|
2009
|
2008
|
||||||||||||||||
Earnings
|
||||||||||||||||||||
Income (loss) from continuing operations before income taxes
|
$ | 128,457 | $ | 88,270 | $ | 22,212 | $ | 11,578 | $ | (322,182 | ) | |||||||||
Fixed charges
|
27,381 | 26,866 | 29,401 | 30,947 | 45,357 | |||||||||||||||
Amortization of capitalized interest
|
276 | 270 | 268 | 256 | 224 | |||||||||||||||
Capitalized interest
|
(294 | ) | (163 | ) | - | (916 | ) | (1,661 | ) | |||||||||||
Total earnings
|
$ | 155,820 | $ | 115,243 | $ | 51,881 | $ | 41,865 | $ | (278,262 | ) | |||||||||
Fixed Charges
|
||||||||||||||||||||
Floor plan interest expense
|
$ | 12,816 | $ | 10,364 | $ | 10,155 | $ | 10,581 | $ | 19,838 | ||||||||||
Other interest expense
(1)
|
9,621 | 12,878 | 14,523 | 13,845 | 17,539 | |||||||||||||||
Capitalized interest costs
|
294 | 163 | - | 916 | 1,661 | |||||||||||||||
Interest component of rent expense
|
4,650 | 3,461 | 4,723 | 5,605 | 6,319 | |||||||||||||||
Total fixed charges
|
$ | 27,381 | $ | 26,866 | $ | 29,401 | $ | 30,947 | $ | 45,357 | ||||||||||
Ratio of earnings to fixed charges
|
5.7 | x | 4.3 | x | 1.8 | x | 1.4 | x | (323,619 | ) (2) |
(1)
|
Other interest expense includes amortization of debt issuance costs
|
(2)
|
Reflects deficiency of earnings available to cover fixed charges. Because of the deficiency, ratio information is not provided.
|
NAME OF ENTITY (1)
|
STATE OF
ORIGIN
|
ASSUMED BUSINESS NAME(S)
(if different than entity name)
|
NAME OF ENTITY (1)
|
STATE OF
ORIGIN
|
ASSUMED BUSINESS NAME(S)
(if different than entity name)
|
NAME OF ENTITY (1)
|
STATE OF
ORIGIN
|
ASSUMED BUSINESS NAME(S)
(if different than entity name)
|
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 Klamath Falls Auto Center
|
Lithia SOC, Inc.
|
Oregon
|
Lithia Subaru of Oregon City
|
Lithia of Roseburg, Inc.
|
Oregon
|
Lithia Chrysler Jeep Dodge of Roseburg
Lithia Roseburg Auto Center
|
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
|
Lithia of Eugene, LLC
|
Oregon
|
Lithia FIAT of Eugene
|
LMBB, LLC
|
Oregon
|
Mercedes-Benz of Beaverton
|
LMBP, LLC
|
Oregon
|
Mercedes-Benz of Portland
|
LMBW, Inc.
|
Oregon
|
Mercedes-Benz of Wilsonville
|
LMOP, LLC
|
Oregon
|
|
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
All American Autoplex
|
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 Killeen, LLC
|
Texas
|
All American Chevrolet of Killeen
|
Lithia of Midland, Inc.
|
Texas
|
Honda of Midland
|
NAME OF ENTITY (1)
|
STATE OF
ORIGIN
|
ASSUMED BUSINESS NAME(S)
(if different than entity name)
|
(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.
|