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Note 10 - Acquisitions
 3 Months Ended
Mar. 31, 2014
Business Combinations [Abstract]  
Business Combination Disclosure [Text Block]

Note 10. Acquisitions


In the first three months of 2014, we completed the following acquisitions, which contributed revenues of $9.6 million for the three months ended March 31, 2014:


 

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On January 31, 2014, we acquired Island Honda in Kahului, Hawaii.


 

●

On February 3, 2014, we acquired Stockton Volkswagen in Stockton, California.


 

●

On March 5, 2014, we acquired Honolulu Buick GMC Cadillac and Honolulu Volkswagen in Honolulu, Hawaii.


All acquisitions were accounted for as business combinations under the acquisition method of accounting. The results of operations of the acquired stores are included in our Consolidated Financial Statements from the date of acquisition.


No portion of the purchase price was paid with our equity securities. The following table summarizes the consideration paid for the acquisitions and the amount of identified assets acquired and liabilities assumed as of the acquisition date (in thousands):


   

Consideration

 

Cash paid, net of cash acquired

  $ 31,689  

Debt issued

    3,161  
    $ 34,850  

   

Assets Acquired and Liabilities Assumed

 

Inventories

  $ 22,281  

Franchise value

    2,303  

Property, plant and equipment

    2,876  

Other assets

    160  

Other liabilities

    (46 )
      27,574  

Goodwill

    7,276  
    $ 34,850  

We assumed a contract associated with an acquisition and determined the remaining term would not provide economic benefit. As a result, we recorded costs of $1.4 million, included as a component of selling, general and administrative expense in our Consolidated Statements of Operations.


We account for franchise value as an indefinite-lived intangible asset. We expect the full amount of the goodwill recognized to be deductible for tax purposes. We did not have any material acquisition-related expenses for the three months ended March 31, 2014.


The following unaudited pro forma summary presents consolidated information as if all acquisitions in the three-month periods ended March 31, 2013 and 2014 had occurred on January 1, 2013 (in thousands, except for per share amounts):


Three Months Ended March 31,

 

2014

   

2013

 

Revenue

  $ 1,091,052     $ 973,533  

Income from continuing operations, net of tax

    24,857       22,751  

Basic income per share from continuing operations, net of tax

    0.96       0.89  

Diluted income per share from continuing operations, net of tax

    0.94       0.87  

These amounts have been calculated by applying our accounting policies and estimates. The results of the acquired stores have been adjusted to reflect the following: depreciation on a straight-line basis over the expected lives for property, plant and equipment; accounting for inventory on a specific identification method; and recognition of interest expense for real estate financing related to stores where we purchased the facility. No nonrecurring pro forma adjustments directly attributable to the acquisitions are included in the reported pro forma revenues and earnings.