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Lithia sales exceed expectations

The auto seller's revenue for the fourth quarter rises $210 million from 2000

A year ago Lithia Motors Inc. predicted a 5 to 8 percent drop in same-store sales for the year 2001.

Given a slumping global economy and the fallout of Sept. 11, most auto dealers might have been happy with that result.

Through the first three quarters of 2001, Lithia's same-store sales were off 4.7 percent But on Thursday, the Medford auto retailer with announced an 11.4 percent fourth-quarter increase in same-store sales as revenue for 2001 hit $1.87 billion, up $210 million from 2000.

"Better-than-expected performance in our core operations, improvements in newly acquired stores, manufacturer incentives and lower interest rates have all benefited the fourth quarter results," said Sid DeBoer, Lithia's chairman and chief executive officer.

The company, which owns 122 franchises and 64 stores in dealerships from Alaska to Texas, reported a net income of $21.8 million in 2001 - a drop of 10 percent from 2000 when Lithia netted $24.3 million. That drop is the result of expenses incurred as the auto dealer increased its holdings from 113 franchises and 54 stores in the past 12 months.

Lithia's per-share income was $1.60 for 2001, well above the earlier $1.30 to $1.33 per share estimate. Fourth-quarter earnings per share were 45 cents, up 10 percent from 41 cents per share for the previous fourth quarter. It was also 41 percent higher than the company's fourth-quarter projections of 31 to 33 cents per share.

A key component in Lithia's operational strategy is financing and insurance sales. The industry average for sales of such items is 58 percent. Lithia announced it reached a all-time high for the company of 78 percent in the fourth quarter, bringing in $977 per new and used vehicle sold. For the year, finance and insurance produced $933 per vehicle.

"A lot of people had the idea that zero-percent financing would negatively affect financing income," said Dan Retzlaff, Lithia's investor relations manager. "What it did was give us the opportunity for us to offer more warranties, which is included in finance and insurance totals."

The company's pre-tax profit was $306.5 million and its operating income was $58.2 million.

Lithia stock closed at $19.55 on Thursday, up 39 cents. It was selling for $14.40 a year earlier. It hit a 52-week high of $21.75 on Jan. 17, rebounding from a low of $11.85 on Oct. 3.

Last month, the National Automobile Dealers Association's chief economist, Paul Taylor, predicted new car and light truck sales of 15.9 million in 2002, down from 17.1 million in 2001. Last year marked the second-best sales year on record, topped only by 2000's 17.4 million total.

Taylor said the surge was sparked in part by a $90 billion to $120 billion stimulus resulting from declining oil prices.

Reach reporter Greg Stiles at 776-4463 or e-mail .