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Note 14 - Acquisitions
 12 Months Ended
Dec. 31, 2014
Business Combinations [Abstract]  
Business Combination Disclosure [Text Block]

(14)         Acquisitions


In 2014, we completed the following acquisitions, which contributed revenues of $724.4 million and earnings of $9.3 million for the year ended December 31, 2014:


 

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


 

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


 

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


 

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On April 1, 2014, we acquired Corpus Christi Ford in Corpus Christi, Texas.


 

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On June 11, 2014, we acquired Beaverton GMC Buick and Portland Cadillac in Portland, Oregon.


 

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On July 28, 2014, we acquired Bellingham GMC Buick in Bellingham, Washington.


 

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On October 1, 2014, we completed the purchase of all of the issued and outstanding shares of the capital stock of DCH, which includes 27 stores located in New York, New Jersey and California.


 

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On October 6, 2014, we acquired Harris Nissan in Clovis, California.


We completed the following acquisitions in 2013:


 

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On June 10, 2013, we acquired OB Salem Auto Group, Inc. in Salem, Oregon, including BMW, Honda and Volkswagen franchises.


 

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On October 7, 2013, we acquired Stockton Nissan Kia in Stockton, California.


 

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On October 24, 2013, we acquired Fresno Lincoln Volvo in Fresno, California.


 

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On November 1, 2013, we acquired Howard’s Body Shop in Klamath Falls, Oregon.


 

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On November 4, 2013, we acquired Geweke Motors, Inc. a Toyota Scion store in Lodi, California.


 

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On December 2, 2013, we acquired Diablo Subaru in Walnut Creek, California.


We completed the following acquisitions in 2012:


 

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On April 30, 2012, we acquired Bellingham Chevrolet and Cadillac in Bellingham, Washington.


 

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On June 12, 2012, we acquired Fairbanks GMC Buick in Fairbanks, Alaska.


 

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On August 27, 2012, we acquired Killeen Chevrolet in Killeen, Texas.


 

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On October 23, 2012, we acquired Bitterroot Toyota in Missoula, Montana.


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.


The following table summarizes the consideration paid in cash and equity securities for our acquisitions and the amount of identified assets acquired and liabilities assumed as of the acquisition date (in thousands):


Consideration paid for year ended December 31,

 

DCH

   

All other acquisitions

   

Total

2014

   

2013

 

Cash paid, net of cash acquired

  $ 569,995     $ 89,639     $ 659,634     $ 81,105  

Equity securities issued

    19,736       -       19,736       -  
    $ 589,731     $ 89,639     $ 679,370     $ 81,105  

Assets acquired and liabilities assumed for year ended December 31,

 

DCH

   

All other acquisitions

   

Total

2014

   

2013

 

Trade receivables, net

  $ 63,888     $ -     $ 63,888     $ -  

Inventories

    265,378       48,662       314,040       30,624  

Franchise value

    72,856       7,377       80,233       8,770  

Property, plant and equipment

    256,122       17,395       273,517       24,741  

Other assets

    20,313       531       20,844       264  

Floor plan notes payable

    (24,686 )     -       (24,686 )     -  

Debt and capital lease obligations

    (52,532 )     (3,161 )     (55,693 )     (37 )

Deferred taxes, net

    (49,651 )     -       (49,651 )     -  

Other liabilities

    (92,863 )     (123 )     (92,986 )     (721 )
      458,825       70,681       529,506       63,641  

Goodwill

    130,906       18,958       149,864       17,464  
    $ 589,731     $ 89,639     $ 679,370     $ 81,105  

We account for franchise value as an indefinite-lived intangible asset. We expect $70.2 million of the goodwill recognized to be deductible for tax purposes. In 2014, we recorded $1.9 million in acquisition expenses as a component of selling, general and administrative exenses in the Consolidated Statements of Operations. We did not have any material acquisition-related expenses in 2013 or 2012.


The following unaudited pro forma summary presents consolidated information as if the 2014, and 2013 acquisitions had occurred on January 1 of the prior year (in thousands, except for per share amounts):


Year Ended December 31,

 

2014

   

2013

 

Revenue

  $ 7,153,497     $ 6,488,280  

Income from continuing operations, net of tax

    148,119       125,958  

Basic income per share from continuing operations, net of tax

    5.67       4.88  

Diluted income per share from continuing operations, net of tax

    5.61       4.81  

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.