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Note 12 - Acquisitions
 9 Months Ended
Sep. 30, 2016
Notes to Financial Statements  
Business Combination Disclosure [Text Block]
Note 12. Acquisitions
In the first nine months of 2016, we completed the following acquisitions:
•          On January 26, 2016, we acquired Singh Subaru in Riverside, California.
•          On February 1, 2016, we acquired Ira Toyota Milford in Milford, Massachusetts.
•          On June 23, 2016, we acquired Helena Auto Center, LLC in Helena, Montana.
•          On August 1, 2016, we acquired Kemp Ford in Thousand Oaks, California.
•          On September 12, 2016, we acquired the Carbone Auto Group, a nine store platform based in New York and Vermont.
•          On September 28, 2016, we acquired Greiner Ford Lincoln in Casper, Wyoming.
 
Revenue and operating income contributed by 2016 acquisitions subsequent to the date of acquisition were as follows (in thousands):
 
Revenue
   $ 82,730  
Operating income
     993  
 
 
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
   $ 199,435  
Assets transferred
     2,637  
    $ 202,072  
 
 
The purchase price allocations for the Carbone Auto Group and Greiner Ford Lincoln acquisitions are preliminary and we have not obtained and evaluated all of the detailed information necessary to finalize the opening balance sheet amounts in all respects. Management has recorded the purchase price allocations based upon information that is currently available. Unallocated items are recorded as a component of other non-current assets in the Consolidated Balance Sheets. Management expects to finalize its purchase price allocations in the fourth quarter of 2016.
 
 
 
 
Assets Acquired
and Liabilities
Assumed
 
Inventories
   $ 112,406  
Franchise value
     6,039  
Property and equipment
     73,029  
Other current assets     305  
Other non-current assets
     49,752  
Floor plan notes payable
     (7,558
)
Debt and capital lease obligations
     (23,465
)
Other current liabilities     (5,850 )
Other non-current liabilities
     (9,605
)
      195,053  
Goodwill
     7,019  
    $ 202,072  
 
 
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.
 
 
 
The following unaudited pro forma summary presents consolidated information as if all acquisitions in the nine-month periods ended September 30, 2016 and 2015 had occurred on January 1, 2015 (in thousands, except for per share amounts):
 
Three Months Ended September 30,
 
2016
 
 
2015
 
Revenue
   $ 2,412,788     $ 2,320,323  
Net income
     55,296       44,490  
Basic net income per share
     2.19       1.69  
Diluted net income per share
     2.19       1.68  
 
 
 
Nine Months Ended September 30, 2016
 
2016
 
 
2015
 
Revenue
   $ 6,865,409     $ 6,547,658  
Net income
     150,258       138,868  
Basic net income per share
     5.89       5.28  
Diluted net income per share
     5.87       5.24  
 
 
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 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.