Lithia Motors Reports Profitable Second Quarter

* Lithia posts profit of 19 cents per share from continuing operations
* Gross margin of 19.4% of sales compared to 16.8% in 2008
* Significant progress on $65 million in annualized cost savings, with lower
sequential SG&A expenses than in the first quarter of 2009.

MEDFORD, Ore.--(Business Wire)--
Lithia Motors, Inc. (NYSE: LAD) announced today that net income from continuing
operations in the second quarter of 2009 was $4.1 million or nineteen cents per
diluted share, compared to net loss from continuing operations of $201.2
million, or $10.02 per diluted share in the second quarter of 2008. As disclosed
in the attached financial tables, excluding impairment charges and gains on
extinguishment of debt, net income from continuing operations in the second
quarter of 2009 was nineteen cents per share, compared to net income from
continuing operations of ten cents per share in the second quarter of 2008.

Second quarter 2009 revenue from continuing operations totaled $402 million,
compared to $532 million in the year-ago period, driven primarily by lower new
vehicle sales. Same store retail new vehicle sales declined 36.8% while retail
used vehicle sales increased 2.3% when compared to the same quarter last year.
Service, body and parts same store sales declined 5.2% compared to the same
quarter of last year.

Sid DeBoer, Lithia`s Chairman and CEO, commented: "The restructuring plan we
initiated in the second quarter of 2008 is proving to be successful. Despite a
new vehicle automotive market that is at historic lows, and the impact of the
reorganization of both Chrysler and General Motors, Lithia is profitable. We
have focused on improving gross margins and used vehicle retail sales throughout
the year and are pleased with our results. We continue to right-size our
organization to match industry sales volumes and performance objectives. SG&A as
a percentage of gross profit declined by 730 basis points, from 86.8% in the
first quarter of 2009 to 79.5% in the second quarter of 2009."

For the six-month period ending June 30, 2009, total sales declined 27% to $769
million as compared to $1.05 billion in the same period last year. Same store
new vehicle sales decreased 37.8%, retail used vehicle sales decreased 4.4% and
service, body and parts sales decreased 5.5%. For the first six months, Lithia`s
income from continuing operations, net of tax, and excluding asset impairment
charges and gains on debt retirements was eighteen cents per share as compared
to nine cents per share in 2008.

Jeff DeBoer, Senior Vice President and CFO, added: "We have generated $74.3
million in cash flows from operations in 2009. Including the effects of
floorplan repayments classified as financing activities in the statement of cash
flows, adjusted cash flows from operations were $48.8 million for the year to
date period. We are using these proceeds and cash generated from financing and
asset sales to pay down debt and strengthen the balance sheet. We remain in
compliance with all debt covenants at the end of the quarter."

The first quarter conference call may be accessed at 2:00 p.m. Pacific Time
today by phone at (800) 254-5933 Conference ID: 19480043. A playback of the
conference call will be available after 5 p.m. Pacific Time July 30, 2009
through August 6, 2009 by calling (800) 642-1687 access code: 19480043.

About Lithia

Lithia Motors, Inc. is a Fortune 700 Company, selling 27 brands of new and all
brands of used vehicles at 88 stores, which are located in 13 states. Internet
sales are centralized at www.Lithia.com. Lithia also sells used vehicles;
arranges finance, warranty, and credit insurance contracts; and provides vehicle
parts, maintenance, and repair services at all of its locations.

Additional Information

For additional information on Lithia Motors, contact the Investor Relations
Department: (541) 776-6591 or log-on to: www.lithia.com- go to Investor
Relations

Forward Looking Statements

This press release includes forward looking statements within the meaning of the
"Safe-Harbor" provisions of the Private Securities Litigation Reform Act of
1995, which management believes are a benefit to shareholders. These statements
are necessarily subject to risk and uncertainty and actual results could differ
materially due to certain risk factors, including without limitation, future
economic conditions and others set forth from time to time in the Company`s
filings with the SEC.

Non-GAAP Financial Measures

The attached financial tables contain certain non-GAAP financial measures as
defined under SEC rules, such as net income and diluted earnings per share from
continuing operations, adjusted to exclude certain items disclosed in the
attached financial tables. As required by SEC rules, the Company has provided
reconciliations of these measures to the most directly comparable GAAP measures,
which are set forth in the attachments to this release. The Company believes
that each of the foregoing non-GAAP financial measures improves the transparency
of the Company's disclosure, provides a meaningful presentation of the Company's
results from its core business operations excluding the impact of items not
related to the Company's ongoing core business operations, and improves the
period-to-period comparability of the Company's results from its core business
operations.

LITHIA MOTORS, INC.
(In thousands except per share data)
Unaudited Three Months Ended %
June 30, Increase Increase
2009 2008 (Decrease) (Decrease)
New vehicle sales $ 194,489 $ 308,830 $ (114,341 ) (37.0 ) %
Used vehicle sales 130,281 135,504 (5,223 ) (3.9 )
Finance and insurance 13,917 20,263 (6,346 ) (31.3 )
Service, body and parts 62,544 65,624 (3,080 ) (4.7 )
Fleet and other revenues 597 1,432 (835 ) (58.3 )
Total revenues 401,828 531,653 (129,825 ) (24.4 )

Cost of sales 324,062 442,245 (118,183 ) (26.7 )
Gross profit 77,766 89,408 (11,642 ) (13.0 )
Asset impairment charges - 294,075 (294,075 ) (100.0 )
SG&A expense 61,858 76,892 (15,034 ) (19.6 )
Depreciation and amortization 3,991 4,261 (270 ) (6.3 )
Income (loss) from operations 11,917 (285,820 ) 297,737 104.2

Floorplan interest expense (2,416 ) (4,750 ) (2,334 ) (49.1 )
Other interest expense (2,991 ) (4,251 ) (1,260 ) (29.6 )
Other income, net 258 1,068 (810 ) (75.8 )
Income (loss) from continuing 6,768 (293,753 ) 300,521 NM
operations before income taxes

Income tax expense (benefit) 2,718 (92,545 ) 95,263 NM
Income tax (benefit) rate 40.2 % (31.5 )%
Income (loss) from continuing 4,050 (201,208 ) 205,258 NM %
operations

Discontinued operations:
Loss from operations, (26 ) (3,068 ) (3,042 ) (99.2 )
net of income tax
Loss from disposal activities, (361 ) (39,508 ) (39,147 ) (99.1 )
net of income tax

Net income (loss) $ 3,663 $ (243,784 ) 247,447 NM %

Diluted net income (loss) per share:
Continuing operations 0.19 (10.02 ) 10.21 NM %
Discontinued operations:
Loss from operations, - (0.15 )
net of income tax
Loss from disposal activities, (0.02 ) (1.97 )
net of income tax
Net income (loss) per share $ 0.17 $ (12.14 ) $ 12.31 NM
Diluted shares outstanding 21,231 20,073 1,158 5.8 %

NM - not meaningful

LITHIA MOTORS, INC.
(Continuing operations) Three Months Ended %
Unaudited June 30, Increase Increase
2009 2008 (Decrease) (Decrease)
Unit sales:
New vehicle 6,509 10,992 (4,483 ) (40.8 ) %
Used - retail vehicle 6,937 6,527 410 6.3
Used - wholesale 2,855 4,082 (1,227 ) (30.1 )
Total units sold 16,301 21,601 (5,300 ) (24.5 )

Average selling price:
New vehicle $ 29,880 $ 28,096 $ 1,784 6.4 %
Used - retail vehicle 16,424 17,167 (743 ) (4.3 )
Used - wholesale 5,727 5,745 (18 ) (0.3 )

Gross margin/profit data
New vehicle retail 8.2 % 7.8 % 40 bps
Used vehicle retail 14.7 % 12.0 % 270 bps
Used vehicle wholesale 0.2 % (2.8 ) % 300 bps
Service, body & parts 49.4 % 48.8 % 60 bps
Finance & insurance 100.0 % 100.0 % -
Gross profit margin 19.4 % 16.8 % 260 bps
New retail gross profit/unit $ 2,439 $ 2,179 $ 260
Used retail gross profit/unit 2,413 2,057 356
Used wholesale gross profit/unit 13 (158 ) 171
Finance & insurance/retail unit 1,035 1,157 (122 )

Revenue mix:
New vehicles 48.4 % 58.1 %
Used retail vehicles 28.3 % 21.1 %
Used wholesale vehicles 4.1 % 4.4 %
Finance and insurance, net 3.5 % 3.8 %
Service and parts 15.6 % 12.3 %
Fleet and other 0.1 % 0.3 %

LITHIA MOTORS, INC.
(Continuing operations) Three Months Ended
Unaudited June 30,
2009 2008
New vehicle unit sales brand mix:
Chrysler Brands 28.8 % 29.4 %
General Motors & Saturn 17.5 % 18.1 %
Toyota 14.6 % 16.5 %
Honda 10.6 % 10.4 %
Ford 4.8 % 3.7 %
BMW 5.6 % 4.8 %
Hyundai 4.3 % 4.3 %
Nissan 4.3 % 4.7 %
Volkswagen, Audi 3.8 % 3.1 %
Subaru 4.1 % 2.6 %
Mercedes 0.7 % 0.6 %
Other 0.9 % 1.8 %

(Selected Same Store Data)
Unaudited Three Months Ended
June 30,
2009 2008
vs. vs.
2008 2007
Same store revenue:
New vehicle retail sales (36.8) % (21.0) %
Chrysler Brands (41.4) % (32.8) %
General Motors & Saturn (35.3) % (7.8) %
Toyota (45.3) % (11.7) %
All other brands (30.0) % (18.5) %
Used vehicle retail sales 2.3 % (21.6) %
Used wholesale sales (31.2) % (20.9) %
Total vehicle sales (excluding fleet) (26.7) % (21.1) %
Finance & insurance sales (34.8) % (20.5) %
Service, body and parts sales (5.2) % (1.2) %
Total sales (excluding fleet) (24.2) % (19.1) %
Total gross profit (excluding fleet) (13.4) % (19.7) %

LITHIA MOTORS, INC.
(In thousands except per share data)
Unaudited Six Months Ended %
June 30, Increase Increase
2009 2008 (Decrease) (Decrease)
New vehicle sales $ 370,561 $ 598,447 $ (227,886 ) (38.1 ) %
Used vehicle sales 246,078 275,933 (29,855 ) (10.8 )
Finance and insurance 26,570 40,335 (13,765 ) (34.1 )
Service, body and parts 125,091 132,621 (7,530 ) (5.7 )
Fleet and other revenues 1,133 2,342 (1,209 ) (51.6 )
Total revenues 769,433 1,049,678 (280,245 ) (26.7 )

Cost of sales 620,341 871,921 (251,580 ) (28.9 )
Gross profit 149,092 177,757 (28,665 ) (16.1 )
Asset impairment charges - 294,075 (294,075 ) (100.0 )
SG&A expense 123,794 152,302 (28,508 ) (18.7 )
Depreciation and amortization 8,065 8,559 (494 ) (5.8 )
Income (loss) from operations 17,233 (277,179 ) 294,412 106.2

Floorplan interest expense (5,122 ) (9,458 ) (4,336 ) (45.8 )
Other interest expense (6,602 ) (8,420 ) (1,818 ) (21.6 )
Other income, net 1,423 1,123 300 26.7
Income (loss) from continuing 6,932 (293,934 ) 300,866 NM
operations before income taxes

Income tax expense (benefit) 2,798 (92,619 ) 95,417 NM
Income tax (benefit) rate 40.3 % (31.5 ) %
Income (loss) from continuing 4,134 (201,315 ) 205,449 NM %
operations

Discontinued operations:
Loss from operations, (1,451 ) (5,122 ) (3,671 ) (60.0 )
net of income tax
Gain (Loss) from disposal activities, 2,309 (39,508 ) 41,817 NM
net of income tax

Net income (loss) $ 4,992 $ (245,945 ) 250,937 NM %

Diluted net income (loss) per share:
Continuing operations 0.20 (10.08 ) 10.28 NM %
Discontinued operations:
Loss from operations, (0.07 ) (0.26 )
net of income tax
Gain (loss) from disposal activities, 0.11 (1.98 )
net of income tax
Net income (loss) per share $ 0.24 $ (12.31 ) $ 12.55 NM
Diluted shares outstanding 20,960 19,973 987 4.9 %

NM - not meaningful

LITHIA MOTORS, INC.
(Continuing Operations) Six Months Ended %
Unaudited June 30, Increase Increase
2009 2008 (Decrease) (Decrease)
Unit sales:
New vehicle 12,382 20,717 (8,335 ) (40.2 ) %
Used - retail vehicle 13,412 12,911 501 3.9
Used - wholesale 5,740 8,269 (2,529 ) (30.6 )
Total units sold 31,534 41,897 (10,363 ) (24.7 )

Average selling price:
New vehicle $ 29,927 $ 28,887 $ 1,040 3.6 %
Used - retail vehicle 15,986 17,380 (1,394 ) (8.0 )
Used - wholesale 5,518 6,233 (715 ) (11.5 )

Gross margin/profit data
New vehicle retail 8.4 % 7.8 % 60 bps
Used vehicle retail 13.8 % 12.1 % 170 bps
Used vehicle wholesale 1.2 % (2.0 ) % 320 bps
Service, body & parts 48.7 % 48.2 % 50 bps
Finance & insurance 100.0 % 100.0 % -
Gross profit margin 19.4 % 16.9 % 250 bps
New retail gross profit/unit $ 2,505 $ 2,254 $ 251
Used retail gross profit/unit 2,199 2,097 102
Used wholesale gross profit/unit 69 (123 ) 192
Finance & insurance/retail unit 1,030 1,199 (169 )

Revenue mix:
New vehicles 48.2 % 57.0 %
Used retail vehicles 27.9 % 21.4 %
Used wholesale vehicles 4.1 % 4.9 %
Finance and insurance, net 3.4 % 3.9 %
Service and parts 16.3 % 12.6 %
Fleet and other 0.1 % 0.2 %

LITHIA MOTORS, INC.
(Continuing operations) Six Months Ended
Unaudited June 30,
2009 2008
New vehicle unit sales brand mix:
Chrysler Brands 31.0 % 31.4 %
General Motors & Saturn 16.6 % 18.0 %
Toyota 14.7 % 16.1 %
Honda 9.5 % 9.3 %
Ford 4.8 % 4.1 %
BMW 5.4 % 4.8 %
Hyundai 4.1 % 3.7 %
Nissan 3.9 % 5.0 %
Volkswagen, Audi 3.6 % 2.8 %
Subaru 4.3 % 2.6 %
Mercedes 0.7 % 0.5 %
Other 1.4 % 1.7 %

(Selected same store data)
Unaudited Six Months Ended
June 30,
2009 2008
vs. vs.
2008 2007
Same store revenue:
New vehicle retail sales (37.8 ) % (17.4 ) %
Chrysler Brands (40.4 ) % (25.3 ) %
General Motors & Saturn (40.3 ) % (7.6 ) %
Toyota (44.9 ) % (4.9 ) %
All other brands (31.0 ) % (18.6 ) %
Used vehicle retail sales (4.4 ) % (16.0 ) %
Used wholesale sales (39.4 ) % (14.4 ) %
Total vehicle sales (excluding fleet) (29.3 ) % (16.8 ) %
Finance & insurance sales (33.6 ) % (16.4 ) %
Service, body and parts sales (5.5 ) % 1.3 %
Total sales (excluding fleet) (26.4 ) % (14.9 ) %
Total gross profit (excluding fleet) (15.5 ) % (17.1 ) %

LITHIA MOTORS, INC.
Balance sheet highlights (dollars in thousands)
Unaudited
June 30, 2009 December 31, 2008
Cash & cash equivalents $ 17,009 $ 10,874
Trade receivables* 55,975 69,615
Inventory 300,130 422,812
Assets held for sale 140,021 161,423
Other current assets 8,878 31,828
Total current assets 522,013 696,552

Real estate, net 276,449 284,088
Equipment & other, net 49,956 62,188
Other assets 89,794 90,631
Total assets $ 938,212 $ 1,133,459

Flooring notes payable $ 215,987 $ 337,700
Liabilities related to assets held for sale 81,917 108,172
Current maturities of senior subordinated convertible notes 42,500
Current maturity of line of credit 68,000
Other current liabilities 96,971 108,656
Total current liabilities 462,875 597,028

Real estate debt 174,976 163,708
Other long-term debt 12,226 101,476
Other liabilities 30,512 22,904
Total liabilities $ 680,589 $ 885,116

Shareholders' equity 257,623 248,343

Total liabilities & shareholders' equity $ 938,212 $ 1,133,459

*Note: Includes contracts-in-transit of $22,786 and $27,799 for 2009 and 2008

Other balance sheet data
Lt debt/total cap (excludes real estate) 5% 29%
Book value per basic share $12.32 $12.30

Debt covenant ratios
Requirement As of June 30, 2009
Minimum net worth Not less than $175 million $257.6 million
Fixed charge coverage ratio Not less than 1.00 to 1 1.22 to 1
Cash flow leverage ratio Not more than 3.75 to 1 2.86 to 1
Minimum current ratio Not less than 1.05 to 1 1.12 to 1

The following table reconciles reported GAAP income (loss) per the income statement to non-GAAP income (loss):

Unaudited Three Months Ended June 30,
Net Income / (Loss) Diluted earnings per
share
Continuing Operations 2009 2008 2009 2008
As reported $ 4,050 $ (201,208 ) $ 0.19 $ (10.02 )
Goodwill impairment - 193,638 - 9.65
Franchise value impairment - 5,216 - 0.26
Other asset impairment 111 4,283 0.01 0.21
Gain on extinguishment of debt (187 ) - (0.01 ) -
Adjusted $ 3,974 $ 1,929 $ 0.19 $ 0.10

Discontinued Operations
As reported $ (387 ) $ (42,576 ) $ (0.02 ) $ (2.12 )
Impairments and disposal loss 361 39,508 0.02 1.97
Adjusted $ (26 ) $ (3,068 ) - $ (0.15 )

Consolidated Operations
As reported $ 3,663 $ (243,784 ) $ 0.17 $ (12.14 )
Adjusted $ 3,948 $ (1,139 ) $ 0.19 $ (0.05 )

Six Months Ended June 30,
Net Income / (Loss) Diluted earnings per
share
Continuing Operations 2009 2008 2009 2008
As reported $ 4,134 $ (201,315 ) $ 0.20 $ (10.08 )
Goodwill impairment - 193,638 - 9.70
Franchise value impairment - 5,216 - 0.26
Other asset impairment 336 4,283 0.02 0.21
Gain on extinguishment of debt (785 ) - (0.04 ) -
Adjusted $ 3,684 $ 1,822 $ 0.18 $ 0.09

Discontinued Operations
As reported $ 858 $ (44,630 ) $ 0.04 $ (2.23 )
Impairments and disposal loss (2,309 ) 39,508 (0.11 ) 1.98
Adjusted $ (1,451 ) $ (5,122 ) $ (0.07 ) $ (0.26 )

Consolidated Operations
As reported $ 4,992 $ (245,945 ) $ 0.24 $ (12.31 )
Adjusted $ 2,233 $ (3,300 ) $ 0.11 $ (0.17 )

The following table reconciles GAAP cash flows from operations per the statement of cash flows to non-GAAP cash flows from operations:

Consolidated Statement of Cash Flows Six Months Ended June 30, 2009
As reported
Cash flows from Operations $74,316
Flooring notes payable: non-trade (25,502)
Adjusted $48,814

Lithia Motors, Inc.
Investor Relations Department, 541-776-6591
www.lithia.com- go to Investor Relations

Copyright Business Wire 2009

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