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Long-Term Debt | 12 Months Ended
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Dec. 31, 2015
Debt Disclosure [Abstract] |
LONG-TERM DEBT | LONG-TERM DEBT The Company carries its long-term debt at face value, net of applicable discounts. Long-term debt consisted of the following:
|  | December 31,
|  | 2015 |  | 2014
|  | (In thousands)
5.00% Senior Notes (principal of $550,000 at December 31, 2015 and 2014, respectively) |  | $ | 541,252 |  |  | $ | 540,100 |
5.25% Senior Notes (principal of $300,000 at December 31, 2015) |  | 296,274 |  |  | — |
Real Estate Credit Facility |  | 54,663 |  |  | 58,003 |
Acquisition Line |  | — |  |  | 69,713 |
Other real estate related and long-term debt |  | 311,568 |  |  | 358,271 |
Capital lease obligations related to real estate, maturing in varying amounts through June 2034 with a weighted average interest rate of 9.8% |  | 51,902 |  |  | 55,380 |
|  | 1,255,659 |  |  | 1,081,467 |
Less current maturities of long-term debt |  | 52,223 |  |  | 72,630 |
|  | $ | 1,203,436 |  |  | $ | 1,008,837 |
Included in current maturities of long-term debt and short-term financing in the Company’s Consolidated Balance Sheets for the years ended December 31, 2015 and 2014 was $3.0 million and zero, respectively, of short-term financing that was due within one year. 5.00% Senior Notes On June 2, 2014, the Company issued $350.0 million aggregate principal amount of its 5.00% Senior Notes due 2022 (“5.00% Notes”). Subsequently, on September 9, 2014, the Company issued an additional $200.0 million of 5.00% Notes at a discount of 1.5% from face value. The 5.00% Notes will mature on June 1, 2022 and pay interest semiannually, in arrears, in cash on each June 1 and December 1, beginning December 1, 2014. Using proceeds of certain equity offerings, the Company may redeem up to 35.0% of the 5.00% Notes prior to June 1, 2017, subject to certain conditions, at a redemption price equal to 105% of principal amount of the 5.00% Notes plus accrued and unpaid interest. Otherwise, the Company may redeem some or all of the 5.00% Notes prior to June 1, 2017 at a redemption price equal to 100% of the principal amount of the 5.00% Notes redeemed, plus an applicable premium, and plus accrued and unpaid interest. On or after June 1, 2017, the Company may redeem some or all of the 5.00% Notes at specified prices, plus accrued and unpaid interest. The Company may be required to purchase the 5.00% Notes if it sells certain assets or triggers the change in control provisions defined in the 5.00% Notes indenture. The 5.00% Notes are senior unsecured obligations and rank equal in right of payment to all of the Company’s existing and future senior unsecured debt and senior in right of payment to all of its future subordinated debt. The 5.00% Notes are guaranteed by substantially all of the Company’s U.S. subsidiaries. The U.S. subsidiary guarantees rank equally in the right of payment to all of the Company’s U.S. subsidiary guarantor’s existing and future subordinated debt. In addition, the 5.00% Notes are structurally subordinated to the liabilities of its non-guarantor subsidiaries and are subject to customary covenants, including a restricted payment basket and debt limitations. The restricted payment basket under the terms of the 5.00% Notes is less restrictive than the Restricted Payment Basket. In connection with the issuance of the 5.00% Notes, the Company entered into registration rights agreements (the “Registration Rights Agreements”) with the initial purchasers. Pursuant to the Registration Rights Agreements, the Company agreed to file a registration statement with the Securities and Exchange Commission, so that holders of the 5.00% Notes could exchange the 5.00% Notes for registered 5.00% Notes that have substantially identical terms as the 5.00% Notes. The Company also agreed to use commercially reasonable efforts to cause the exchange to be completed by June 2, 2015, or be required to pay additional interest. In June 2015, the Company completed the exchange. Underwriters’ fees and the discount relative to the $550.0 million totaled $10.4 million, which were recorded as a reduction of the 5.00% Notes principal balance and are being amortized over a period of eight years. The 5.00% Notes are presented net of unamortized underwriter fees and discount of $8.7 million as of December 31, 2015. In connection with the issuance of the 5.00% Notes, the Company capitalized $2.6 million of debt issuance costs, which are included in Other Assets on the accompanying Consolidated Balance Sheets and amortized over a period of eight years. Unamortized debt issuance costs as of December 31, 2015 totaled $2.0 million. 5.25% Senior Notes On December 8, 2015, the Company issued 5.25% senior unsecured notes with a face amount of $300.0 million due to mature on December 15, 2023 (“5.25% Notes”). The 5.25% Notes pay interest semiannually, in arrears, in cash on each June 15 and December 15, beginning June 15, 2016. Using proceeds of certain equity offerings, the Company may redeem up to 35.0% of the 5.25% Notes prior to December 15, 2018, subject to certain conditions, at a redemption price equal to 105.25% of principal amount of the 5.25% Notes plus accrued and unpaid interest. Otherwise, the Company may redeem some or all of the 5.25% Notes prior to December 15, 2018 at a redemption price equal to 100% of the principal amount of the 5.25% Notes redeemed, plus an applicable make-whole premium, and plus accrued and unpaid interest. On or after December 15, 2018, the Company may redeem some or all of the 5.25% Notes at specified prices, plus accrued and unpaid interest. The Company may be required to purchase the 5.25% Notes if it sells certain assets or triggers the change in control provisions defined in the 5.25% Notes indenture. The 5.25% Notes are senior unsecured obligations and rank equal in right of payment to all of the Company’s existing and future senior unsecured debt and senior in right of payment to all of its future subordinated debt. The 5.25% Notes are guaranteed by substantially all of the Company’s U.S. subsidiaries. The U.S. subsidiary guarantees rank equally in the right of payment to all of the Company’s U.S. subsidiary guarantor’s existing and future subordinated debt. In addition, the 5.25% Notes are structurally subordinated to the liabilities of its non-guarantor subsidiaries and are subject to customary covenants, including a restricted payment basket and debt limitations. The restricted payment basket under the terms of the 5.25% Notes is less restrictive than the Restricted Payment Basket. Underwriters' fees relative to the 5.25% Notes issuance totaled $3.8 million, which were recorded as a reduction of the 5.25% Notes principal balance and are being amortized over a period of eight years. The 5.25% Notes are presented net of unamortized underwriter fees of $3.7 million as of December 31, 2015. At the time of issuance of the 5.25% Notes, the Company capitalized $1.1 million of debt issuance costs, which are included in Other Assets on the accompanying Consolidated Balance Sheets and amortized over a period of eight years. Unamortized debt issuance costs as of December 31, 2015 totaled $1.1 million. Real Estate Credit Facility Group 1 Realty, Inc., a wholly-owned subsidiary of the Company, is party to a real estate credit facility with Bank of America, N.A. and Comerica Bank (the “Real Estate Credit Facility”) providing the right for term loans to finance real estate purchases. As of December 31, 2015, $25.0 million of term loan borrowings remained available. The term loans can be expanded provided that (a) no default or event of default exists under the Real Estate Credit Facility; (b) the Company obtains commitments from the lenders who would qualify as assignees for such increased amounts; and (c) certain other agreed upon terms and conditions have been satisfied. The Real Estate Credit Facility is guaranteed by the Company and substantially all of the existing and future domestic subsidiaries of the Company and is secured by the real property owned by the Company that is mortgaged under the Real Estate Credit Facility. The Company capitalized $1.1 million of debt issuance costs related to the Real Estate Credit Facility which are included in Prepaid expenses and other current assets and Other Assets on the accompanying Consolidated Balance Sheets and are being amortized over the term of the facility, $0.1 million of which remained unamortized as of December 31, 2015. The interest rate on the Real Estate Credit Facility is equal to (a) the per annum rate equal to one-month LIBOR plus 2.00% per annum, determined on the first day of each month; or (b) 0.95% per annum in excess of the higher of (i) the Bank of America prime rate (adjusted daily on the day specified in the public announcement of such price rate), (ii) the Federal Funds Rate adjusted daily, plus 0.50% or (iii) the per annum rate equal to the one-month LIBOR plus 1.05% per annum. The Federal Funds Rate is the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the business day succeeding such day. The Company is required to make quarterly principal payments equal to 1.25% of the principal amount outstanding and is required to repay the aggregate amount outstanding on the maturity dates of the individual property borrowings, ranging from March 31, 2016 through December 8, 2018. During the year ended December 31, 2015, the Company made no additional borrowings and made principal payments of $3.3 million on outstanding borrowings from the Real Estate Credit Facility. As of December 31, 2015, borrowings outstanding under the Real Estate Credit Facility totaled $54.7 million, with $29.1 million recorded as a current maturity of long-term debt in the accompanying Consolidated Balance Sheets. The Real Estate Credit Facility also contains usual and customary provisions limiting the Company’s ability to engage in certain transactions, including limitations on the Company’s ability to incur additional debt, additional liens, make investments, and pay distributions to its stockholders. In addition, the Real Estate Credit Facility requires certain financial covenants that are identical to those contained in the Company’s Revolving Credit Facility. As of December 31, 2015, the Company was in compliance with all applicable covenants and ratios under the Real Estate Credit Facility. Acquisition Line The Revolving Credit Facility has the total borrowing capacity of $1.7 billion and expires on June 20, 2018. This arrangement provides a maximum of $320.0 million and a minimum of $100.0 million for working capital and general corporate purposes, including acquisitions. See Note 11, “Credit Facilities,” for further discussion on the Company’s Revolving Credit Facility and Acquisition Line. Other Real Estate Related and Long-Term Debt The Company, as well as certain of its wholly-owned subsidiaries, has entered into separate term mortgage loans in the U.S. with four of its manufacturer-affiliated finance partners - Toyota Motor Credit Corporation (“TMCC”), Mercedes-Benz Financial Services USA, LLC (“MBFS”), BMW Financial Services NA, LLC (“BMWFS”) and FMCC, as well as several third-party financial institutions (collectively, “Real Estate Notes”). The Real Estate Notes are on specific buildings and/or properties and are guaranteed by the Company. Each loan was made in connection with, and is secured by mortgage liens on, the real property owned by the Company that is mortgaged under the Real Estate Notes. The Real Estate Notes bear interest at fixed rates between 3.00% and 4.69%, and at variable indexed rates plus a spread between 1.50% and 2.55% per annum. The Company capitalized $1.3 million of related debt issuance costs related to the Real Estate Notes which are included in Prepaid expenses and other current assets and Other Assets on the accompanying Consolidated Balance Sheets and are being amortized over the terms of the notes, $0.3 million of which remained unamortized as of December 31, 2015. The loan agreements with TMCC consist of seven term loans. As of December 31, 2015, $35.7 million was outstanding under the TMCC term loans with $1.5 million classified as a current maturity of long-term debt as compared to $49.9 million outstanding with $5.1 million classified as current as of December 31, 2014. During 2015, the Company made no additional borrowings and made principal payments of $14.3 million. These loans will mature by August 2022 and provide for monthly payments based on a 20-year amortization schedule. These seven loans are cross-collateralized and cross-defaulted with each other and are cross-defaulted with the Revolving Credit Facility. The loan agreements with MBFS consisted of two term loans that were paid in full as of December 31, 2015. During 2015, the Company made principal payments of $27.4 million. As of December 31, 2014, $27.4 million was outstanding under the MBFS term loans with $7.6 million classified as a current maturity of long-term debt. The loan agreements with BMWFS consist of 12 term loans. As of December 31, 2015, $55.7 million was outstanding under the BMWFS term loans with $4.3 million classified as a current maturity of long-term debt as compared to $66.0 million outstanding with $4.5 million classified as current as of December 31, 2014. During 2015, the Company made no additional borrowings and made principal payments of $10.2 million. The agreements provide for monthly payments based on a 15-year amortization schedule and will mature by October 2021. In the case of three properties owned by subsidiaries, the applicable loan is also guaranteed by the subsidiary real property owner. These 12 loans are cross-collateralized with each other. In addition, they are cross-defaulted with each other, the Revolving Credit Facility, and certain dealership franchising agreements with BMW of North America, LLC. The loan agreements with FMCC consist of four term loans. As of December 31, 2015, $33.6 million was outstanding under the FMCC term loans, with $1.5 million classified as a current maturity of long-term debt as compared to $35.1 million outstanding with $1.4 million classified as current as of December 31, 2014. During 2015, the Company made no additional borrowings and made principal payments of $1.4 million. The agreements provide for monthly payments based on a 20-year amortization schedule that will mature by December 2024. These four loans are cross-defaulted with the Revolving Credit Facility. In addition, agreements with third-party financial institutions consist of 18 term loans for an aggregate principal amount of $124.5 million, to finance real estate associated with the Company’s dealerships. The loans are being repaid in monthly installments that will mature by November 2022. As of December 31, 2015, borrowings under these notes totaled $116.8 million, with $6.4 million classified as a current maturity of long-term debt in the accompanying Consolidated Balance Sheets, as compared to $115.2 million outstanding with $6.5 million classified as current as of December 31, 2014. During 2015, the Company made additional borrowings and principal payments of $9.6 million and $8.0 million, respectively. These 18 loans are cross-defaulted with the Revolving Credit Facility. The Company has entered into eight separate term mortgage loans in the U.K. with other third-party financial institutions, which are secured by the Company’s U.K. properties. These mortgage loans (collectively, “U.K. Notes”) are being repaid in monthly installments and will mature by September 2034. As of December 31, 2015, borrowings under the U.K. Notes totaled $57.1 million, with $4.5 million classified as a current maturity of long-term debt in the accompanying Consolidated Balance Sheets, as compared to $45.3 million outstanding with $5.0 million classified as current as of December 31, 2014. During 2015, the Company made additional borrowings and principal payments of $17.4 million and $3.7 million, respectively. The Company has entered into a separate term mortgage loan in Brazil with a third-party financial institution to finance the purchase and construction of dealership properties (the “Brazil Note”). The Brazil Note is secured by the Company’s Brazilian properties as purchased and/or constructed, as well as a guarantee from the Company. The Brazil Note will be repaid in monthly installments that will mature by April 2025. As of December 31, 2015, borrowings under the Brazil Note totaled $3.8 million, with $0.4 million classified as a current maturity of long-term debt in the accompanying Consolidated Balance Sheets. The Company also has working capital loan agreements with third-party financial institutions in Brazil. The Company paid one of these loan agreements in full as of December 31, 2015, with principal payments of $8.6 million. The principal balance on the remaining loans is due February 2017 with interest only payments being made until the due date. As of December 31, 2015, borrowings under the Brazilian third-party loans totaled $5.6 million classified as long-term debt in the accompanying Consolidated Balance Sheets. During 2015, the Company made no additional borrowings under the working capital loan agreements. Fair Value of Long-Term Debt The Company’s outstanding 5.00% Notes had a fair value of $545.9 million as of December 31, 2015. The Company’s outstanding 5.25% Notes had a fair value of $297.8 million as of December 31, 2015. The Company’s fixed interest rate borrowings included in other real estate related and long-term debt totaled $100.7 million and $158.1 million as of December 31, 2015 and December 31, 2014, respectively. The fair value of such fixed interest rate borrowings was $102.4 million and $186.4 million as of December 31, 2015 and December 31, 2014, respectively. The fair value estimates are based on Level 2 inputs of the fair value hierarchy available as of December 31, 2015 and December 31, 2014. The Company determined the estimated fair value of its long-term debt using available market information and commonly accepted valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, these estimates are not necessarily indicative of the amounts that the Company, or holders of the instruments, could realize in a current market exchange. The use of different assumptions and/or estimation methodologies could have a material effect on estimated fair values. The carrying value of the Company’s variable rate debt approximates fair value due to the short-term nature of the interest rates. 2.25% Convertible Senior Notes On September 2, 2014, holders of $182.5 million in aggregate amount of the Company’s then outstanding 2.25% Convertible Senior Notes due 2036 (“2.25% Notes”) elected to convert their 2.25% Notes. The Company redeemed the remaining outstanding 2.25% Notes. The settlement for the conversion and the redemption of the 2.25% Notes occurred on September 4, 2014. Consideration paid for the conversion and redemption of the 2.25% Notes was $237.5 million, including $182.8 million in cash and 701,795 shares of the Company’s common stock, which was recognized as a decrease to treasury stock. In conjunction with the conversion and redemption of the 2.25% Notes, the Company received 421,309 shares of its common stock in net settlement of the purchased ten-year call options on its common stock (“2.25% Purchased Options”) and 2.25% Warrants sold in connection with the 2.25% Notes (“2.25% Warrants”), which was recognized as an increase to treasury stock. As a result of the conversion and redemption of the 2.25% Notes, the Company recognized a loss of $16.9 million based on the difference in the carrying value and the fair value of the liability component immediately prior to the conversion and redemption. For the years ended December 31, 2015, 2014, and 2013, the contractual interest expense and the discount amortization relative to the 2.25% Notes, which is recorded as other interest expense in the accompanying Consolidated Statements of Operations, were as follows:
|  | Year Ended December 31,
|  | 2015 |  | 2014 |  | 2013
|  | (dollars in thousands)
Year-to-date contractual interest expense |  | $ | — |  |  | $ | 1,875 |  |  | $ | 4,112 |
Year-to-date discount amortization(1) |  | $ | — |  |  | $ | 5,366 |  |  | $ | 7,530 |
Effective interest rate of liability component |  | — | % |  | 7.7 | % |  | 7.7 | %
(1) Represents the incremental impact of the accounting for convertible debt as primarily codified in ASC 470, Debt. The Company determined the discount using the estimated effective interest rate for similar debt with no convertible features. The original effective interest rate of 7.50% was estimated by comparing debt issuances from companies with similar credit ratings during the same annual period as the Company. The effective interest rate differs from the 7.50% due to the impact of underwriter fees associated with this issuance that were capitalized as an additional discount and were being amortized to interest expense through 2016. These costs were written off as part of the conversion and redemption of the 2.25% Notes. 3.00% Convertible Senior Notes On June 25, 2014, the Company repurchased $92.5 million of the $115.0 million principal outstanding of its 3.00% Convertible Senior Notes due 2020 (“3.00% Notes”) in a tender offer, leaving an outstanding balance of $22.6 million as of June 30, 2014. Consideration paid for this repurchase was $210.4 million. In conjunction with the repurchase, the Company recognized a loss of $23.6 million, based on the difference in the carrying value and the fair value of the liability component immediately prior to the purchase. Subsequent to June 30, 2014, the Company settled the purchased ten-year call options on its common stock (“3.00% Purchased Options”) and 3.00% Warrants in the same proportion as the 3.00% Notes repurchased on June 25, 2014 and received $26.4 million in cash as a result, which was recognized as an increase to additional paid in capital. In September 2014, the Company repurchased the remaining outstanding $22.6 million of the 3.00% Notes. Total consideration paid for the repurchase was $49.5 million in cash. In conjunction with the repurchase, the Company recognized a loss of $5.9 million, based on the difference in the carrying value and the fair value of the liability component immediately prior to the repurchase. Also, in September 2014, the Company settled the remaining 3.00% Purchased Options and 3.00% Warrants in conjunction with the repurchase and received $6.2 million in cash, which was recognized as an increase to additional paid in capital. For the years ended December 31, 2015, 2014 and 2013, the contractual interest expense and the discount amortization, which is recorded as interest expense in the accompanying Consolidated Statements of Operations, were as follows:
|  | Year Ended December 31,
|  | 2015 |  | 2014 |  | 2013
|  | (dollars in thousands)
Year-to-date contractual interest expense |  | $ | — |  |  | $ | 1,839 |  |  | $ | 3,450 |
Year-to-date discount amortization(1) |  | $ | — |  |  | $ | 1,810 |  |  | $ | 3,251 |
Effective interest rate of liability component |  | — | % |  | 8.6 | % |  | 8.6 | %
(1) Represents the incremental impact of the accounting for convertible debt as primarily codified in ASC 470, Debt. The Company determined the discount using the estimated effective interest rate for similar debt with no convertible features. The original effective interest rate of 8.25% was estimated by receiving a range of quotes from the underwriters for the estimated rate that the Company could reasonably expect to issue non-convertible debt for the same tenure. The effective interest rate differs from the 8.25% due to the impact of underwriter fees associated with this issuance that were capitalized as an additional discount and were being amortized to interest expense through 2020. These costs were written off as part of the extinguishment of the 3.00% Notes. All Long-Term Debt Total interest expense on the 3.00% Notes, 2.25% Notes, 5.00% Notes, and 5.25% Notes for the years ended December 31, 2015, 2014 and 2013 was $28.5 million, $17.0 million and $7.6 million, excluding amortization of discounts and capitalized cost of $1.5 million, $8.0 million, and $11.1 million, respectively. Total interest expense on the Real Estate Credit Facility, real estate related debt, and Acquisition Line for the years ended December 31, 2015, 2014 and 2013, was $17.6 million, $15.3 million and $13.1 million, excluding amortization of capitalized cost of $0.0 million, $0.3 million and $0.5 million, respectively. Also excluded is the impact of the interest rate derivative instruments related to the Real Estate Credit Facility of $1.8 million, $1.5 million, and $1.2 million for the years ended December 31, 2015, 2014, and 2013 respectively. In addition, the Company incurred $7.6 million, $7.5 million and $5.5 million of total interest expense related to capital leases and various other notes payable, net of interest income, for the years ended December 31, 2015, 2014, and 2013, respectively. The Company capitalized $0.7 million, $0.7 million, and $0.8 million of interest on construction projects in 2015, 2014 and 2013, respectively. The aggregate annual maturities of long-term debt for the next five years are as follows:
| Total
| (In thousands)
Year Ended December 31, |
2016 | $ | 52,223 |
2017 | 63,402 |
2018 | 44,991 |
2019 | 75,669 |
2020 | 37,175 |
Thereafter | 982,199 |
Total | $ | 1,255,659 |

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- Definition The entire disclosure for debt and capital lease obligations can be reported. Information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. Also includes descriptions and amounts of capital leasing arrangements that consist of direct financing, sales type and leveraged leases. Disclosure may include the effect on the balance sheet and the income statement resulting from a change in lease classification for leases that at inception would have been classified differently had guidance been in effect at the inception of the original lease. + References No definition available. + Details
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- References No definition available. + Details
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