Acquisitions

In the first nine months of 2017, we completed the following acquisitions:


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


•	On August 7, 2017, Downtown LA ("DTLA") Auto Group, a seven store platform based in California.

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



Revenue	$	281,416
Net income	$	4,378

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 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	$	400,558
Equity securities issued ¹	2,137
Debt issued	1,748
	$	404,443

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 four 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 8.

The purchase price allocations for the Baierl Auto Group and DTLA Auto Group 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. 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	$	15,554
Inventories	190,079
Franchise value	—
Property and equipment	57,217
Other assets	249,725
Floor plan notes payable	(75,065		)
Debt and capital lease obligations	(11,837		)
Other liabilities	(21,230		)
	$	404,443

In the three and nine-month periods ended September 30, 2017, we recorded $3.5 million and $5.7 million, respectively, in acquisition related expenses as a component of selling, general and administrative expense. These expenses include costs related to current year acquisitions, as well as reserve adjustments associated with contingent consideration recorded in association with previous acquisitions. We did not have any material acquisition expenses for the same periods in 2016.

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Revenue	$	2,773,082	$	2,792,994	$	8,032,963	$	7,941,561
Net income	53,488		59,925		164,938		163,473
Basic net income per share	2.14		2.38		6.57		6.41
Diluted net income per share	2.13		2.37		6.56		6.39

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 proforma adjustments directly attributable to the acquisitions are included in the reported proforma revenues and earnings.