DOW JONES NEWSWIRES
Sonic Automotive Inc. (SAH) swung to a fourth-quarter net loss
on charges and sagging sales as auditors expressed doubt about the
auto-dealership chain's ability to continue as a going concern.
Sonic, which trails only AutoNation Inc. (AN) and Penske
Automotive Group (PAG) in sales, said fears about its remaining in
compliance with its debt agreements prompted the "going concern"
statement. In response, Sonic negotiated an amendment to its 2006
credit facility that will prevent the statement itself from
triggering a default through May 4. The pact will increase the
interest rate and fees on the facility.
Auto dealerships are suffering from one of the worst sales
slumps in at least 15 years as the recession crimps consumer
spending. In January, AutoNation forecast 2009 industry sales of
about 11 million, about a 19% drop from 2008's nearly 13.5
million.
Falling sales and uncertainty about the future of the Detroit
Three auto makers has threatened the sustainability of some auto
dealers. In February, Sonic suspended its dividend and said it was
evaluating alternatives to boost liquidity as it faces looming debt
payments.
Sonic reported a net loss of $685.6 million, or $17.10 a share,
for the quarter, compared with net income of $23 million, or 54
cents a share, a year earlier. The latest quarter included charges
of $809.9 million for impairments and $115 million for deferred
income tax assets.
Revenue fell 28% to $1.25 billion, below the $1.46 billion
projected by a Thomson Reuters analyst survey.
Gross margin rose to 16.9% from 15.5%.
Sonic's shares closed Tuesday at $1.60, down 12%, and were
unchanged after hours. They have fallen 87% in the past six
months.
-By Mike Barris and Kathy Shwiff, Dow Jones Newswires;
201-938-5658; mike.barris@dowjones.com