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Note 14 - Acquisitions | 12 Months Ended
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Dec. 31, 2016
Notes to Financial Statements |
Business Combination Disclosure [Text Block] | (14) Acquisitions In 2016, we completed the following acquisitions:
| • | On January 26, 2016, we acquired Riverside Subaru in Riverside, California.
| • | On February 1, 2016, we acquired Ira Toyota in Milford. Massachusetts.
| • | On June 23, 2016, we acquired the Helena Buick GMC franchises in Helena, Montana.
| • | On August 1, 2016, we acquired Thousand Oaks Ford in Thousand Oaks, California.
| • | On September 12, 2016, we acquired Carbone Auto Group: a nine store platform in New York and Vermont.
| • | On September 28, 2016, we acquired Greiner Ford Lincoln in Casper, Wyoming.
| • | On October 5, 2016, we acquired Woodland Hills Audi in Woodland Hills, California.
| • | On November 16, 2016, we acquired Honolulu Ford in Honolulu, Hawaii.
Revenue and operating income contributed by the 2016 acquisitions subsequent to the date of acquisition were as follows (in thousands):
Year Ended December 31, |  | 2016 |
Revenue |  | $ | 266,160 |
Operating income |  |  | 1,720 |
In 2015, we completed the following acquisitions:
| • | On May 14, 2015, we acquired a smart franchise from Smart Center of Omaha.
| • | On July 31, 2015, we acquired Bitterroot Ford in Missoula, Montana.
| • | On August 20, 2015, we acquired Acura of Honolulu in Honolulu, Hawaii.
| • | On September 28, 2015, we acquired Bennett Motors in Great Falls, Montana.
| • | On October 12, 2015, we acquired Crown Chrysler Jeep Dodge Ram Fiat in Concord, California.
| • | On December 17, 2015, we acquired Barton Chrysler Jeep Dodge Ram Alfa Fiat in Spokane, Washington.
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 tables summarize the consideration paid for the acquisitions and the preliminary amount of identified assets acquired and liabilities assumed as of the acquisition date (in thousands):
Consideration paid for the Year Ended December 31, |  | 2016 |  |  | 2015 |
Cash paid, net of cash acquired |  | $ | 234,700 |  |  | $ | 71,615 |
Property and equipment transferred |  |  | 2,637 |  |  |  | — |
Forgiven outstanding notes receivable |  |  | — |  |  |  | 1,374 |
|  | $ | 237,337 |  |  | $ | 72,989 |
Assets acquired and liabilities assumed for the Year Ended December 31, |  | 2016 |  |  | 2015 |
Trade receivables, net |  | $ | — |  |  | $ | 36 |
Inventories |  |  | 148,915 |  |  |  | 34,374 |
Franchise value |  |  | 27,087 |  |  |  | 6,843 |
Property and equipment |  |  | 75,345 |  |  |  | 22,118 |
Other assets |  |  | 990 |  |  |  | 224 |
Floor plan notes payable |  |  | (30,134 | ) |  |  | — |
Debt and capital lease obligations |  |  | (22,813 | ) |  |  | (2,160 | )
Other liabilities |  |  | (9,450 | ) |  |  | (2,537 | )
|  |  | 189,940 |  |  |  | 58,898 |
Goodwill |  |  | 47,397 |  |  |  | 14,091 |
|  | $ | 237,337 |  |  | $ | 72,989 |
The purchase price allocation for Carbone Auto Group acquisition is preliminary as we have not obtained all of the detailed information to finalize the opening balance sheet related to allocation of franchise value to each reporting unit. Management has recorded the purchase price allocations based on the information that is currently available. We account for franchise value as an indefinite-lived intangible asset. We expect $47.4 million of the goodwill recorded in 2016 to be deductible for tax purposes. In 2016, we recognized $1.0 million in acquisition expenses as a component of selling, general and administrative expenses in the Consolidated Statements of Operations. We did not have any material acquisition-related expenses in 2015. The following unaudited pro forma summary presents consolidated information as if the acquisitions had occurred on January 1 of the previous year (in thousands, except for per share amounts):
Year Ended December 31, |  | 2016 |  |  | 2015 |
Revenue |  | $ | 9,297,452 |  |  | $ | 8,905,065 |
Income from continuing operations, net of tax |  |  | 202,639 |  |  |  | 189,505 |
Basic income per share from continuing operations, net of tax |  |  | 7.98 |  |  |  | 7.21 |
Diluted income per share from continuing operations, net of tax |  |  | 7.94 |  |  |  | 7.15 |
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.

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