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0 of 3 Premium Clicks used this month SUBSCRIBE Print + Online Subscriber Activation | Register x Forgot Password | Need an Account? e-edition | subscribe | newsletter | deals Classifieds Jobs Autos Real Estate FEATURED » NEWS NOW Spring chinook release to emulate historic Rogue run ... UPDATED: Wounded Idaho pastor regains consciousness; suspect arrested in D.C. ... Hearts With a Mission expanding to Grants Pass ... Spring chinook release to emulate historic Rogue run ... UPDATED: Wounded Idaho pastor regains consciousness; suspect arrested in D.C. ... Hearts With a Mission expanding to Grants Pass ... Lithia Motors reports $243.4 million loss Non-cash write-offs account for most of it A drop in same-store sales, the cost of shuttering several operations and changes in accounting requirements saddled Lithia Motors with its worst quarterly results ever. Comment By GREG STILES MailTribune.com By GREG STILES Posted Aug. 8, 2008 at 12:01 AM By GREG STILES Posted Aug. 8, 2008 at 12:01 AM » RELATED CONTENT • Economy halts work on The Commons » Social News A drop in same-store sales, the cost of shuttering several operations and changes in accounting requirements saddled Lithia Motors with its worst quarterly results ever. The Medford auto retailer Thursday reported a net loss of $243.4 million for the second quarter, as $210.6 million worth of goodwill carried on Lithia's books was written off as mandated by a change in accounting procedures triggered by the declining stock price. Discontinued operations accounted for $24.8 million of the charge-off. Intangible assets of $32.8 million related to franchise value also were charged off, including $10 million related to discontinued operations. Goodwill is an intangible business asset based on brand-name products or standing in the community. The buyer pays a premium for the asset, hoping it will perform over the long haul. Lithia Motors Chairman and Chief Executive Officer Sid DeBoer said the non-cash charges stem from the firm's declining stock price as well as underperforming franchise locations. Lithia's stock peaked at just over $36 per share in late March 2006. Since then, it has steadily declined and fallen — along with most of the auto industry — into disfavor. Trading was off 36 cents to $4.14 Thursday. "Our current book value is $13.05, which does not include any appreciation of real estate values," DeBoer said. "Recent pending and completed store sales have indicated that franchise value and blue-sky (value) exist, particularly with import and luxury brands and domestic stores in stronger market areas. For us to buy those stores today, we would probably have to pay what we spent before, so there is hidden value." Aside from the charge-off, Lithia reported a 10-cent-per-share profit on continuing operations. The company's second-quarter revenue of $665.1 million declined 19.2 percent from a year ago. Lithia has made a concerted effort to pay down its debt in recent months. It previously announced it would slash expenses by $18 million by the end of August, but DeBoer said that goal was accomplished by the end of July. "In the process we've identified another $4 million in reductions earmarked by the end of the year," DeBoer said. "Historically, Lithia Motors had been structured and staffed for growth. Our current focus is to keep our company strong and profitable." DeBoer said Lithia has reduced its employee count by 1,000 over the past year, leaving about 5,000 on the payroll. He said about 20 percent of the layoffs were in the Medford area. "In my 40-plus years in the business, I've never experienced such upheaval as we've seen since May," DeBoer said. "Our dramatic response was because of what happened beginning in May. We're committed to right-sizing this company to a new operating environment." Lithia announced the first of more than a dozen planned sales Thursday when it sold Issaquah (Wash.) Chevrolet to David Broadus, Erik Paulson and Tom Paulson. The dealership has been renamed Michael's Chevrolet of Issaquah. DeBoer said six sales, including one Oregon dealership, are under contract. Lithia also received unsolicited bids for two stores that weren't on its sell list and they are under contract as well. Reach reporter Greg Stiles at 776-4463 or e-mail [email protected]. By GREG STILES MailTribune.com By GREG STILES Posted Aug. 8, 2008 at 12:01 AM » Comment or view comments Reader Reaction » STAY INFORMED Email NewsLetter Sign Up Today Sign up for our newsletter and have the top headlines from your community delivered right to your inbox. Southern Oregon Directory Featured Businesses Loading... 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