Acquisitions

In the first six months of 2017, we completed the following acquisition:


•	On May 1, 2017, Baierl Auto Group, an eight store platform based in Pennsylvania.

Revenue and operating income contributed by the 2017 acquisition subsequent to the date of acquisition were as follows (in thousands):



Revenue	$	69,445
Operating income	$	2,168

In 2016, we completed the following acquisitions:


•	On January 26, 2016, Singh Subaru in Riverside, California.


•	On February 1, 2016, Ira Toyota in Milford, Massachusetts.


•	On June 23, 2016, Helena Auto Center, LLC in Helena, Montana.


•	On August 1, 2016, Kemp Ford in Thousand Oaks, California.


•	On September 12, 2016, Carbone Auto Group, a nine store platform based in New York and Vermont.


•	On September 28, 2016, Greiner Ford Lincoln in Casper, Wyoming.


•	On October 5, 2016, Woodland Hills Audi in Woodland Hills, California.


•	On November 16, 2016, Honolulu Ford 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.

The following tables summarize the consideration paid for the 2017 acquisition and the amount of identified assets acquired and liabilities assumed as of the acquisition date (in thousands):



	Consideration
Cash paid, net of cash acquired	$	88,075
Equity securities issued ¹	2,137
	$	90,212

¹In partial consideration for the purchase of Baierl Auto Group, we issued 4,489 shares of our class A common stock on May 1, 2017 and will issue an additional 17,957 shares over the next 4 years for a total of 22,446 shares. As of May 1, 2017, these shares were deemed outstanding for purposes of calculating basic and diluted EPS and had a market value of $2.1 million, based on the closing price of our class A common stock on May 1, 2017 of $95.22 per share. See also Note 7.

The purchase price allocations for the Baierl Auto Group acquisition 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. We 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.



	Assets Acquired and Liabilities Assumed
Trade receivables, net	$	12,203
Inventories	78,820
Property and equipment	54,433
Other assets	39,345
Floor plan notes payable	(70,960		)
Debt and capital lease obligations	(13,585		)
Other liabilities	(10,044		)
	$	90,212

In the six months ended June 30, 2017, we recorded $2.1 million in acquisition expense as a component of selling, general and administrative expense. We did not have any material acquisition expenses for the same period in 2016.

The following unaudited pro forma summary presents consolidated information as if all acquisitions in the three and six-month periods ended June 30, 2017 and 2016 had occurred on January 1, 2016 (in thousands, except per share amounts):



Three Months Ended June 30,	2017		2016
Revenue	$	2,502,299	$	2,452,886
Net income	53,380		54,019
Basic net income per share	2.13		2.12
Diluted net income per share	2.13		2.12



Six Months Ended June 30, 2017	2017		2016
Revenue	$	4,838,047	$	4,735,415
Net income	104,546		96,687
Basic net income per share	4.16		3.77
Diluted net income per share	4.15		3.75

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.