Oregon | 93-0572810 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
150 N. Bartlett Street, Medford, Oregon | 97501 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Name of each exchange on which registered | |
Class A common stock, without par value | New York Stock Exchange |
Page | |||
Item 16. | Form 10-K Summary | ||
• | Future market conditions; |
• | Expected operating results, such as improved store performance; continued improvement of selling, general and administrative expenses (“SG&A”) as a percentage of gross profit and all projections; |
• | Anticipated integration, success and growth of acquired stores; |
• | Anticipated ability to capture additional market share; |
• | Anticipated ability to find accretive acquisitions; |
• | Expected revenues from acquired stores; |
• | Anticipated additions of dealership locations to our portfolio in the future; |
• | Anticipated availability of liquidity from our unfinanced operating real estate; |
• | Anticipated levels of capital expenditures in the future; and |
• | Our strategies for customer retention, growth, market position, financial results and risk management. |
State | Number of Stores | Percent of 2017 Revenue | |||
California | 42 | 24.6 | % | ||
Oregon | 26 | 15.1 | |||
New Jersey | 11 | 12.3 | |||
Texas | 16 | 11.0 | |||
New York | 11 | 6.8 | |||
Montana | 11 | 5.4 | |||
Washington | 6 | 4.5 | |||
Alaska | 9 | 3.9 | |||
Pennsylvania | 8 | 2.7 | |||
Nevada | 4 | 2.6 | |||
Idaho | 4 | 2.6 | |||
Hawaii | 5 | 2.4 | |||
Iowa | 7 | 2.3 | |||
North Dakota | 3 | 1.1 | |||
Vermont | 2 | 0.8 | |||
New Mexico | 2 | 0.7 | |||
Massachusetts | 1 | 0.6 | |||
Wyoming | 1 | 0.6 | |||
Total | 169 | 100.0 | % |
• | increasing revenues in all core business lines; |
• | capturing a greater percentage of overall new vehicle sales in our local markets; |
• | capitalizing on a used vehicle market that is approximately three times larger than the new vehicle market by increasing sales of late model, lower-mileage used vehicles and value autos, which are older, higher mileage vehicles; and |
• | growing our service, body and parts revenues as units in operation increase. |
Manufacturer | Percent of 2017 New Vehicle Revenue | Percent of 2017 New Vehicle Gross Profit | |||||
Chrysler, Jeep, Dodge, Ram, Alfa Romeo | 18.5 | % | 14.6 | % | |||
Honda, Acura | 16.4 | 20.0 | |||||
Toyota | 15.6 | 15.6 | |||||
Chevrolet, Cadillac, GMC, Buick | 10.9 | 9.8 | |||||
BMW, MINI | 7.6 | 8.9 | |||||
Ford, Lincoln | 8.5 | 7.5 | |||||
Subaru | 5.9 | 3.4 | |||||
Volkswagen, Audi | 4.8 | 4.9 | |||||
Nissan | 3.5 | 4.9 | |||||
Mercedes, Smart | 2.9 | 4.2 | |||||
Hyundai | 1.9 | 2.4 | |||||
Lexus | 1.1 | 1.1 | |||||
Kia | 1.2 | 0.8 | |||||
Mazda | 0.2 | 0.2 | |||||
Porsche | 0.8 | 1.4 | |||||
Fiat | 0.1 | 0.2 | |||||
Volvo | 0.1 | 0.1 | |||||
Mitsubishi | — | * | — | * | |||
Total | 100.0 | % | 100.0 | % |
• | generate sales to customers unable or unwilling to purchase a new vehicle; |
• | generate sales of vehicle brands other than the store’s new vehicle franchise(s); |
• | increase vehicle sales by aggressively pursuing customer trade-ins; and |
• | increase finance and insurance revenues and service and parts sales. |
• | locate our stores and identify the new vehicle brands sold at each store; |
• | search new and pre-owned vehicle inventory; |
• | view current pricing and specials; |
• | calculate payments for purchase or lease; |
• | obtain a value for their vehicle to trade or sell to us; |
• | submit credit applications; |
• | shop for and order manufacturers’ vehicle parts; |
• | schedule service appointments; and |
• | provide feedback about their experience. |
• | facilities and equipment; |
• | inventories of vehicles and parts; |
• | minimum working capital; |
• | training of personnel; and |
• | performance standards for market share and customer satisfaction. |
• | a change of management or ownership without manufacturer consent; |
• | insolvency or bankruptcy of the dealer; |
• | death or incapacity of the dealer/manager; |
• | conviction of a dealer/manager or owner of certain crimes; |
• | misrepresentation of certain sales or inventory information by the store, dealer/manager or owner to the manufacturer; |
• | failure to adequately operate the store; |
• | failure to maintain any license, permit or authorization required for the conduct of business; |
• | poor market share; or |
• | low customer satisfaction index scores. |
• | customer rebates; |
• | dealer incentives on new vehicles; |
• | special financing rates on certified, pre-owned cars; and |
• | below-market financing on new vehicles and special leasing terms. |
• | number of such manufacturers’ stores that may be acquired by a single owner; |
• | number of stores that may be acquired in any market or region; |
• | percentage of market share that may be controlled by one automotive retailer group; |
• | ownership of stores in contiguous markets; |
• | performance requirements for existing stores; and |
• | frequency of acquisitions. |
• | failing to assimilate the operations and personnel of acquired dealerships; |
• | straining our existing systems, procedures, structures and personnel; |
• | failing to achieve predicted sales levels; |
• | incurring significantly higher capital expenditures and operating expenses, which could substantially limit our operating or financial flexibility; |
• | entering new, unfamiliar markets; |
• | encountering undiscovered liabilities and operational difficulties at acquired dealerships; |
• | disrupting our ongoing business; |
• | diverting our management resources; |
• | failing to maintain uniform standards, controls and policies; |
• | impairing relationships with employees, manufacturers and customers as a result of changes in management; |
• | incurring increased expenses for accounting and computer systems, as well as integration difficulties; |
• | failing to obtain a manufacturer’s consent to the acquisition of one or more of its dealership franchises or renew the franchise agreement on terms acceptable to us; |
• | incorrectly valuing entities to be acquired; and |
• | incurring additional facility renovation costs or other expenses required by the manufacturer. |
• | the availability of suitable acquisition candidates; |
• | competition with other dealer groups for suitable acquisitions; |
• | the negotiation of acceptable terms with sellers and with manufacturers; |
• | our financial capabilities and ability to obtain financing on acceptable terms; |
• | our stock price; |
• | our ability to maintain required financial covenant levels after the acquisition; and |
• | the availability of skilled employees to manage the acquired businesses. |
• | limitations on our ability to make acquisitions; |
• | impaired ability to obtain additional financing for acquisitions, capital expenditures, working capital or general corporate purposes; |
• | reduced funds available for our operations and other purposes, as a larger portion of our cash flow from operations would be dedicated to the payment of principal and interest on our indebtedness; and |
• | exposure to the risk of increasing interest rates as certain borrowings are, and will continue to be, at variable rates of interest. |
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
2016 | High | Low | ||||||
First quarter | $ | 105.38 | $ | 72.30 | ||||
Second quarter | 93.16 | 68.70 | ||||||
Third quarter | 95.67 | 69.36 | ||||||
Fourth quarter | 101.89 | 75.85 | ||||||
2017 | ||||||||
First quarter | $ | 105.32 | $ | 83.38 | ||||
Second quarter | 98.05 | 80.88 | ||||||
Third quarter | 120.48 | 87.90 | ||||||
Fourth quarter | 123.50 | 105.00 |
Quarter declared: | Dividend amount per share | Total amount of dividends paid (in thousands) | ||||||
2015 | ||||||||
First quarter | $ | 0.16 | $ | 4,216 | ||||
Second quarter | 0.20 | 5,266 | ||||||
Third quarter | 0.20 | 5,257 | ||||||
Fourth quarter | 0.20 | 5,246 | ||||||
2016 | ||||||||
First quarter | $ | 0.20 | $ | 5,151 | ||||
Second quarter | 0.25 | 6,373 | ||||||
Third quarter | 0.25 | 6,299 | ||||||
Fourth quarter | 0.25 | 6,308 | ||||||
2017 | ||||||||
First quarter | $ | 0.25 | $ | 6,292 | ||||
Second quarter | 0.27 | 6,760 | ||||||
Third quarter | 0.27 | 6,751 | ||||||
Fourth quarter | 0.27 | 6,741 |
Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plan(1) | Maximum dollar value of shares that may yet be purchased under publicly announced plan (in thousands)(1) | |||||||||||
October | 19,000 | $ | 116.58 | 19,000 | $ | 162,559 | ||||||||
November | 157 | 113.95 | — | 162,559 | ||||||||||
December | — | — | — | 162,559 | ||||||||||
Total(2) | 19,157 | 116.56 | 19,000 | 162,559 |
(1) | In February 2016, our Board of Directors authorized the repurchase of up to $250 million of our Class A common stock. Through December 31, 2017, we have repurchased 1,042,725 shares at an average price of $92.79 per share. This authority to repurchase shares does not have an expiration date. |
(2) | Includes 157 shares repurchased in association with tax withholdings on the vesting of RSUs. |
Base Period | Indexed Returns for the Year Ended | |||||||||||||||||||||||
Company/Index | 12/31/2012 | 12/31/2013 | 12/31/2014 | 12/31/2015 | 12/31/2016 | 12/31/2017 | ||||||||||||||||||
Lithia Motors, Inc. | $100.00 | $ | 186.73 | $ | 235.10 | $ | 291.34 | $ | 267.51 | $ | 317.13 | |||||||||||||
Auto Peer Group | 100.00 | 135.40 | 161.18 | 147.93 | 145.09 | 142.69 | ||||||||||||||||||
Russell 2000 | 100.00 | 138.83 | 145.62 | 139.19 | 168.85 | 193.59 |
(In thousands, except per share amounts) | Year Ended December 31, | |||||||||||||||||||
Consolidated Statements of Operations Data: | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Revenues: | ||||||||||||||||||||
New vehicle | $ | 5,763,587 | $ | 4,938,436 | $ | 4,552,301 | $ | 3,077,670 | $ | 2,256,598 | ||||||||||
Used vehicle retail | 2,544,379 | 2,226,951 | 1,927,016 | 1,362,481 | 1,032,224 | |||||||||||||||
Used vehicle wholesale | 277,844 | 276,616 | 261,530 | 195,699 | 158,235 | |||||||||||||||
Finance and insurance | 385,863 | 330,922 | 283,018 | 190,381 | 139,007 | |||||||||||||||
Service, body and parts | 1,015,773 | 844,505 | 738,990 | 512,124 | 383,483 | |||||||||||||||
Fleet and other | 99,064 | 60,727 | 101,397 | 51,971 | 36,202 | |||||||||||||||
Total revenues | $ | 10,086,510 | $ | 8,678,157 | $ | 7,864,252 | $ | 5,390,326 | $ | 4,005,749 | ||||||||||
Gross Profit: | ||||||||||||||||||||
New vehicle | $ | 339,843 | $ | 289,412 | $ | 280,370 | $ | 198,184 | $ | 151,118 | ||||||||||
Used vehicle retail | 286,835 | 263,684 | 241,249 | 179,253 | 150,858 | |||||||||||||||
Used vehicle wholesale | 4,786 | 4,313 | 4,457 | 3,646 | 2,711 | |||||||||||||||
Finance and insurance | 385,863 | 330,922 | 283,018 | 190,381 | 139,007 | |||||||||||||||
Service, body and parts | 493,124 | 410,283 | 363,921 | 249,736 | 185,570 | |||||||||||||||
Fleet and other | 5,635 | 2,701 | 2,619 | 2,122 | 1,689 | |||||||||||||||
Total gross profit | $ | 1,516,086 | $ | 1,301,315 | $ | 1,175,634 | $ | 823,322 | $ | 630,953 | ||||||||||
Operating income (1) (2) | $ | 408,986 | $ | 338,364 | $ | 302,735 | $ | 231,899 | $ | 183,518 | ||||||||||
Income from continuing operations before income taxes (1) | $ | 347,069 | $ | 283,523 | $ | 262,704 | $ | 210,495 | $ | 165,788 | ||||||||||
Income from continuing operations (1) | $ | 245,217 | $ | 197,058 | $ | 182,999 | $ | 135,540 | $ | 105,214 | ||||||||||
Basic income per share from continuing operations | $ | 9.78 | $ | 7.76 | $ | 6.96 | $ | 5.19 | $ | 4.08 | ||||||||||
Basic income per share from discontinued operations | — | — | — | 0.12 | 0.03 | |||||||||||||||
Basic net income per share | $ | 9.78 | $ | 7.76 | $ | 6.96 | $ | 5.31 | $ | 4.11 | ||||||||||
Shares used in basic per share | 25,065 | 25,409 | 26,290 | 26,121 | 25,805 | |||||||||||||||
Diluted income per share from continuing operations | $ | 9.75 | $ | 7.72 | $ | 6.91 | $ | 5.14 | $ | 4.02 | ||||||||||
Diluted income per share from discontinued operations | — | — | — | 0.12 | 0.03 | |||||||||||||||
Diluted net income per share | $ | 9.75 | $ | 7.72 | $ | 6.91 | $ | 5.26 | $ | 4.05 | ||||||||||
Shares used in diluted per share | 25,145 | 25,521 | 26,490 | 26,382 | 26,191 | |||||||||||||||
Cash dividends paid per common share | $ | 1.06 | $ | 0.95 | $ | 0.76 | $ | 0.61 | $ | 0.39 |
(In thousands) | As of December 31, | |||||||||||||||||||
Consolidated Balance Sheets Data: | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Working capital | $ | 481,801 | $ | 365,200 | $ | 288,040 | $ | 172,909 | $ | 209,038 | ||||||||||
Inventories | 2,132,744 | 1,772,587 | 1,470,987 | 1,249,659 | 859,019 | |||||||||||||||
Total assets | 4,683,066 | 3,844,150 | 3,225,130 | 2,879,093 | 1,723,930 | |||||||||||||||
Floor plan notes payable | 1,919,026 | 1,601,497 | 1,313,955 | 1,178,679 | 713,855 | |||||||||||||||
Long-term debt, including current maturities | 1,047,352 | 790,881 | 643,186 | 639,138 | 251,363 | |||||||||||||||
Total stockholders’ equity (2) | 1,083,218 | 910,776 | 828,164 | 673,105 | 534,722 |
(1) | Includes $14.0 million, $20.1 million, and $1.9 million in non-cash charges related to asset impairments for the years ended 2016, 2015 and 2014, respectively. We did not record any non-cash charges related to asset impairments in 2017 and 2013. See Notes 1, 4 and 17 of Notes to Consolidated Financial Statements for additional information. |
(2) | Reclassifications of amounts previously reported have been made to the selected financial data to maintain consistency and comparability between periods presented. |
2017 | Revenues | Percent of Total Revenues | Gross Profit | Gross Profit Margin | Percent of Total Gross Profit | ||||||||||||
New vehicle | $ | 5,763,587 | 57.1 | % | $ | 339,843 | 5.9 | % | 22.4 | % | |||||||
Used vehicle retail | 2,544,379 | 25.2 | 286,835 | 11.3 | 18.9 | ||||||||||||
Used vehicle wholesale | 277,844 | 2.8 | 4,786 | 1.7 | 0.3 | ||||||||||||
Finance and insurance(1) | 385,863 | 3.8 | 385,863 | 100.0 | 25.5 | ||||||||||||
Service, body and parts | 1,015,773 | 10.1 | 493,124 | 48.5 | 32.5 | ||||||||||||
Fleet and other | 99,064 | 1.0 | 5,635 | 5.7 | 0.4 | ||||||||||||
$ | 10,086,510 | 100.0 | % | $ | 1,516,086 | 15.0 | % | 100.0 | % |
2016 | Revenues | Percent of Total Revenues | Gross Profit | Gross Profit Margin | Percent of Total Gross Profit | ||||||||||||
New vehicle | $ | 4,938,436 | 56.9 | % | $ | 289,412 | 5.9 | % | 22.2 | % | |||||||
Used vehicle retail | 2,226,951 | 25.7 | 263,684 | 11.8 | 20.3 | ||||||||||||
Used vehicle wholesale | 276,616 | 3.2 | 4,313 | 1.6 | 0.3 | ||||||||||||
Finance and insurance(1) | 330,922 | 3.8 | 330,922 | 100.0 | 25.4 | ||||||||||||
Service, body and parts | 844,505 | 9.7 | 410,283 | 48.6 | 31.5 | ||||||||||||
Fleet and other | 60,727 | 0.7 | 2,701 | 4.4 | 0.3 | ||||||||||||
$ | 8,678,157 | 100.0 | % | $ | 1,301,315 | 15.0 | % | 100.0 | % |
2015 | Revenues | Percent of Total Revenues | Gross Profit | Gross Profit Margin | Percent of Total Gross Profit | ||||||||||||
New vehicle | $ | 4,552,301 | 57.9 | % | $ | 280,370 | 6.2 | % | 23.8 | % | |||||||
Used vehicle retail | 1,927,016 | 24.5 | 241,249 | 12.5 | 20.5 | ||||||||||||
Used vehicle wholesale | 261,530 | 3.3 | 4,457 | 1.7 | 0.4 | ||||||||||||
Finance and insurance(1) | 283,018 | 3.6 | 283,018 | 100.0 | 24.1 | ||||||||||||
Service, body and parts | 738,990 | 9.4 | 363,921 | 49.2 | 31.0 | ||||||||||||
Fleet and other | 101,397 | 1.3 | 2,619 | 2.6 | 0.2 | ||||||||||||
$ | 7,864,252 | 100.0 | % | $ | 1,175,634 | 14.9 | % | 100.0 | % |
(1) | Commissions reported net of anticipated cancellations. |
Year Ended December 31, | Increase (Decrease) | % Increase (Decrease) | |||||||||||||
(Dollars in thousands, except per unit amounts) | 2017 | 2016 | |||||||||||||
Reported | |||||||||||||||
Revenue | $ | 5,763,587 | $ | 4,938,436 | $ | 825,151 | 16.7 | % | |||||||
Gross profit | $ | 339,843 | $ | 289,412 | $ | 50,431 | 17.4 | ||||||||
Gross margin | 5.9 | % | 5.9 | % | — | ||||||||||
Retail units sold | 167,146 | 145,772 | 21,374 | 14.7 | |||||||||||
Average selling price per retail unit | $ | 34,482 | $ | 33,878 | $ | 604 | 1.8 | ||||||||
Average gross profit per retail unit | $ | 2,033 | $ | 1,985 | $ | 48 | 2.4 | ||||||||
Same store | |||||||||||||||
Revenue | $ | 4,959,751 | $ | 4,898,292 | $ | 61,459 | 1.3 | % | |||||||
Gross profit | $ | 290,309 | $ | 286,519 | $ | 3,790 | 1.3 | ||||||||
Gross margin | 5.9 | % | 5.8 | % | 10 | bps | |||||||||
Retail units sold | 144,308 | 144,728 | (420 | ) | (0.3 | ) | |||||||||
Average selling price per retail unit | $ | 34,369 | $ | 33,845 | $ | 524 | 1.5 | ||||||||
Average gross profit per retail unit | $ | 2,012 | $ | 1,980 | $ | 32 | 1.6 |
Year Ended December 31, | Increase (Decrease) | % Increase (Decrease) | |||||||||||||
(Dollars in thousands, except per unit amounts) | 2016 | 2015 | |||||||||||||
Reported | |||||||||||||||
Revenue | $ | 4,938,436 | $ | 4,552,301 | $ | 386,135 | 8.5 | % | |||||||
Gross profit | $ | 289,412 | $ | 280,370 | $ | 9,042 | 3.2 | ||||||||
Gross margin | 5.9 | % | 6.2 | % | (30 | ) bps | |||||||||
Retail units sold | 145,772 | 137,486 | 8,286 | 6.0 | |||||||||||
Average selling price per retail unit | $ | 33,878 | $ | 33,111 | $ | 767 | 2.3 | ||||||||
Average gross profit per retail unit | $ | 1,985 | $ | 2,039 | $ | (54 | ) | (2.6 | ) | ||||||
Same store | |||||||||||||||
Revenue | $ | 4,670,738 | $ | 4,520,429 | $ | 150,309 | 3.3 | % | |||||||
Gross profit | $ | 273,207 | $ | 277,724 | $ | (4,517 | ) | (1.6 | ) | ||||||
Gross margin | 5.8 | % | 6.1 | % | (30 | ) bps | |||||||||
Retail units sold | 137,998 | 136,707 | 1,291 | 0.9 | |||||||||||
Average selling price per retail unit | $ | 33,846 | $ | 33,067 | $ | 779 | 2.4 | ||||||||
Average gross profit per retail unit | $ | 1,980 | $ | 2,032 | $ | (52 | ) | (2.6 | ) |
(1) | A basis point is equal to 1/100th of one percent. |
2017 compared to 2016 | National growth in 2017 compared to 2016 | 2016 compared to 2015 | National growth in 2016 compared to 2015 | |||||||||
Domestic brand same store unit sales growth | (1.6 | )% | (3.3 | )% | (0.7 | )% | (0.7 | )% | ||||
Import brand same store unit sales growth | 2.1 | (1.1 | ) | 3.1 | 1.2 | |||||||
Luxury brand same store unit sales growth | (7.8 | ) | 1.2 | (3.7 | ) | 1.7 | ||||||
Overall | (0.3 | ) | (1.9 | ) | 1.0 | 0.4 |
Year Ended December 31, | Increase (Decrease) | % Increase (Decrease) | |||||||||||||
(Dollars in thousands, except per unit amounts) | 2017 | 2016 | |||||||||||||
Reported | |||||||||||||||
Retail revenue | $ | 2,544,379 | $ | 2,226,951 | $ | 317,428 | 14.3 | % | |||||||
Retail gross profit | $ | 286,835 | $ | 263,684 | $ | 23,151 | 8.8 | ||||||||
Retail gross margin | 11.3 | % | 11.8 | % | (50 | ) bps | |||||||||
Retail units sold | 129,913 | 113,498 | 16,415 | 14.5 | |||||||||||
Average selling price per retail unit | $ | 19,585 | $ | 19,621 | $ | (36 | ) | (0.2 | ) | ||||||
Average gross profit per retail unit | $ | 2,208 | $ | 2,323 | $ | (115 | ) | (5.0 | ) | ||||||
Same store | |||||||||||||||
Retail revenue | $ | 2,288,290 | $ | 2,204,795 | $ | 83,495 | 3.8 | % | |||||||
Retail gross profit | $ | 263,119 | $ | 261,589 | $ | 1,530 | 0.6 | ||||||||
Retail gross margin | 11.5 | % | 11.9 | % | (40 | ) bps | |||||||||
Retail units sold | 116,359 | 112,387 | 3,972 | 3.5 | |||||||||||
Average selling price per retail unit | $ | 19,666 | $ | 19,618 | $ | 48 | 0.2 | ||||||||
Average gross profit per retail unit | $ | 2,261 | $ | 2,328 | $ | (67 | ) | (2.9 | ) |
Year Ended December 31, | Increase (Decrease) | % Increase (Decrease) | |||||||||||||
(Dollars in thousands, except per unit amounts) | 2016 | 2015 | |||||||||||||
Reported | |||||||||||||||
Retail revenue | $ | 2,226,951 | $ | 1,927,016 | $ | 299,935 | 15.6 | % | |||||||
Retail gross profit | $ | 263,684 | $ | 241,249 | $ | 22,435 | 9.3 | ||||||||
Retail gross margin | 11.8 | % | 12.5 | % | (70 | ) bps | |||||||||
Retail units sold | 113,498 | 99,109 | 14,389 | 14.5 | |||||||||||
Average selling price per retail unit | $ | 19,621 | $ | 19,443 | $ | 178 | 0.9 | ||||||||
Average gross profit per retail unit | $ | 2,323 | $ | 2,434 | $ | (111 | ) | (4.6 | ) | ||||||
Same store | |||||||||||||||
Retail revenue | $ | 2,119,831 | $ | 1,909,209 | $ | 210,622 | 11.0 | % | |||||||
Retail gross profit | $ | 251,484 | $ | 239,444 | $ | 12,040 | 5.0 | ||||||||
Retail gross margin | 11.9 | % | 12.5 | % | (60 | ) bps | |||||||||
Retail units sold | 107,519 | 98,235 | 9,284 | 9.5 | |||||||||||
Average selling price per retail unit | $ | 19,716 | $ | 19,435 | $ | 281 | 1.4 | ||||||||
Average gross profit per retail unit | $ | 2,339 | $ | 2,437 | $ | (98 | ) | (4.0 | ) |
2017 compared to 2016 | 2016 compared to 2015 | |||||
Manufacturer CPO vehicles | (2.7 | )% | 11.1 | % | ||
Core vehicles | 6.2 | 12.2 | ||||
Value autos | 9.9 | 6.5 | ||||
Overall | 3.8 | 11.0 |
Year Ended December 31, | Increase (Decrease) | % Increase (Decrease) | |||||||||||||
(Dollars in thousands, except per unit amounts) | 2017 | 2016 | |||||||||||||
Reported | |||||||||||||||
Wholesale revenue | $ | 277,844 | $ | 276,616 | $ | 1,228 | 0.4 | % | |||||||
Wholesale gross profit | $ | 4,786 | $ | 4,313 | $ | 473 | 11.0 | ||||||||
Wholesale gross margin | 1.7 | % | 1.6 | % | 10 | bps | |||||||||
Wholesale units sold | 43,912 | 40,615 | 3,297 | 8.1 | |||||||||||
Average selling price per wholesale unit | $ | 6,327 | $ | 6,811 | $ | (484 | ) | (7.1 | ) | ||||||
Average gross profit per retail unit | $ | 109 | $ | 106 | $ | 3 | 2.8 | ||||||||
Same store | |||||||||||||||
Wholesale revenue | $ | 238,474 | $ | 273,679 | $ | (35,205 | ) | (12.9 | )% | ||||||
Wholesale gross profit | $ | 4,019 | $ | 4,394 | $ | (375 | ) | (8.5 | ) | ||||||
Wholesale gross margin | 1.7 | % | 1.6 | % | 10 | bps | |||||||||
Wholesale units sold | 37,150 | 40,349 | (3,199 | ) | (7.9 | ) | |||||||||
Average selling price per wholesale unit | $ | 6,419 | $ | 6,783 | $ | (364 | ) | (5.4 | ) | ||||||
Average gross profit per retail unit | $ | 108 | $ | 109 | $ | (1 | ) | (0.9 | ) |
Year Ended December 31, | Increase (Decrease) | % Increase (Decrease) | |||||||||||||
(Dollars in thousands, except per unit amounts) | 2016 | 2015 | |||||||||||||
Reported | |||||||||||||||
Wholesale revenue | $ | 276,616 | $ | 261,530 | $ | 15,086 | 5.8 | % | |||||||
Wholesale gross profit | $ | 4,313 | $ | 4,457 | $ | (144 | ) | (3.2 | ) | ||||||
Wholesale gross margin | 1.6 | % | 1.7 | % | (10 | ) bps | |||||||||
Wholesale units sold | 40,615 | 38,167 | 2,448 | 6.4 | |||||||||||
Average selling price per wholesale unit | $ | 6,811 | $ | 6,852 | $ | (41 | ) | (0.6 | ) | ||||||
Average gross profit per retail unit | $ | 106 | $ | 117 | $ | (11 | ) | (9.4 | ) | ||||||
Same store | |||||||||||||||
Wholesale revenue | $ | 260,809 | $ | 259,772 | $ | 1,037 | 0.4 | % | |||||||
Wholesale gross profit | $ | 4,171 | $ | 4,606 | $ | (435 | ) | (9.4 | ) | ||||||
Wholesale gross margin | 1.6 | % | 1.8 | % | (20 | ) bps | |||||||||
Wholesale units sold | 38,158 | 37,909 | 249 | 0.7 | |||||||||||
Average selling price per wholesale unit | $ | 6,835 | $ | 6,853 | $ | (18 | ) | (0.3 | ) | ||||||
Average gross profit per retail unit | $ | 109 | $ | 122 | $ | (13 | ) | (10.7 | ) |
Year Ended December 31, | Increase | % Increase | |||||||||||||
(Dollars in thousands, except per unit amounts) | 2017 | 2016 | |||||||||||||
Reported | |||||||||||||||
Revenue | $ | 385,863 | $ | 330,922 | $ | 54,941 | 16.6 | % | |||||||
Average finance and insurance per retail unit | 1,299 | 1,276 | 23 | 1.8 | |||||||||||
Same store | |||||||||||||||
Revenue | $ | 347,583 | $ | 329,031 | $ | 18,552 | 5.6 | % | |||||||
Average finance and insurance per retail unit | 1,333 | 1,280 | 53 | 4.1 |
Year Ended December 31, | Increase | % Increase | |||||||||||||
(Dollars in thousands, except per unit amounts) | 2016 | 2015 | |||||||||||||
Reported | |||||||||||||||
Revenue | $ | 330,922 | $ | 283,018 | $ | 47,904 | 16.9 | % | |||||||
Average finance and insurance per retail unit | 1,276 | 1,196 | 80 | 6.7 | |||||||||||
Same store | |||||||||||||||
Revenue | $ | 317,015 | $ | 281,351 | $ | 35,664 | 12.7 | % | |||||||
Average finance and insurance per retail unit | 1,291 | 1,198 | 93 | 7.8 |
2017 | 2016 | 2015 | |||||||
Vehicle financing | 76 | % | 76 | % | 77 | % | |||
Service contracts | 44 | % | 44 | % | 42 | % | |||
Lifetime lube, oil and filter contracts | 25 | % | 26 | % | 25 | % |
Year Ended December 31, | Increase (Decrease) | % Increase | |||||||||||||
(Dollars in thousands) | 2017 | 2016 | |||||||||||||
Reported | |||||||||||||||
Customer pay | $ | 547,102 | $ | 462,492 | $ | 84,610 | 18.3 | % | |||||||
Warranty | 239,834 | 199,049 | 40,785 | 20.5 | |||||||||||
Wholesale parts | 153,059 | 123,440 | 29,619 | 24.0 | |||||||||||
Body shop | 75,778 | 59,524 | 16,254 | 27.3 | |||||||||||
Total service, body and parts | $ | 1,015,773 | $ | 844,505 | $ | 171,268 | 20.3 | ||||||||
Service, body and parts gross profit | $ | 493,124 | $ | 410,283 | $ | 82,841 | 20.2 | % | |||||||
Service, body and parts gross margin | 48.5 | % | 48.6 | % | (10 | ) bps | |||||||||
Same store | |||||||||||||||
Customer pay | $ | 481,796 | $ | 457,782 | $ | 24,014 | 5.2 | % | |||||||
Warranty | 207,074 | 197,428 | 9,646 | 4.9 | |||||||||||
Wholesale parts | 126,375 | 122,001 | 4,374 | 3.6 | |||||||||||
Body shop | 61,977 | 57,791 | 4,186 | 7.2 | |||||||||||
Total service, body and parts | $ | 877,222 | $ | 835,002 | $ | 42,220 | 5.1 | ||||||||
Service, body and parts gross profit | $ | 428,169 | $ | 405,661 | $ | 22,508 | 5.5 | % | |||||||
Service, body and parts gross margin | 48.8 | % | 48.6 | % | 20 | bps |
Year Ended December 31, | Increase (Decrease) | % Increase | |||||||||||||
(Dollars in thousands) | 2016 | 2015 | |||||||||||||
Reported | |||||||||||||||
Customer pay | $ | 462,492 | $ | 414,197 | $ | 48,295 | 11.7 | % | |||||||
Warranty | 199,049 | 165,902 | 33,147 | 20.0 | |||||||||||
Wholesale parts | 123,440 | 111,557 | 11,883 | 10.7 | |||||||||||
Body shop | 59,524 | 47,334 | 12,190 | 25.8 | |||||||||||
Total service, body and parts | $ | 844,505 | $ | 738,990 | $ | 105,515 | 14.3 | ||||||||
Service, body and parts gross profit | $ | 410,283 | $ | 363,921 | $ | 46,362 | 12.7 | % | |||||||
Service, body and parts gross margin | 48.6 | % | 49.2 | % | (60 | ) bps | |||||||||
Same store | |||||||||||||||
Customer pay | $ | 437,650 | $ | 408,740 | $ | 28,910 | 7.1 | % | |||||||
Warranty | 187,410 | 164,213 | 23,197 | 14.1 | |||||||||||
Wholesale parts | 112,393 | 110,754 | 1,639 | 1.5 | |||||||||||
Body shop | 55,099 | 47,334 | 7,765 | 16.4 | |||||||||||
Total service, body and parts | $ | 792,552 | $ | 731,041 | $ | 61,511 | 8.4 | ||||||||
Service, body and parts gross profit | $ | 387,091 | $ | 359,834 | $ | 27,257 | 7.6 | % | |||||||
Service, body and parts gross margin | 48.8 | % | 49.2 | % | (40 | ) bps |
2017 compared to 2016 | 2016 compared to 2015 | |||||
Domestic | 9.1 | % | 10.5 | % | ||
Import | (1.5 | ) | 28.1 | |||
Luxury | 11.0 | (1.1 | ) |
Year Ended December 31, | Increase (Decrease) | % Increase (Decrease) | |||||||||||||
(Dollars in thousands) | 2017 | 2016 | |||||||||||||
Revenues: | |||||||||||||||
Domestic | $ | 3,845,830 | $ | 3,381,715 | $ | 464,115 | 13.7 | % | |||||||
Import | 4,432,760 | 3,764,255 | 668,505 | 17.8 | |||||||||||
Luxury | 1,810,085 | 1,528,760 | 281,325 | 18.4 | |||||||||||
10,088,675 | 8,674,730 | 1,413,945 | 16.3 | ||||||||||||
Corporate and other | (2,165 | ) | 3,427 | (5,592 | ) | (163.2 | ) | ||||||||
$ | 10,086,510 | $ | 8,678,157 | $ | 1,408,353 | 16.2 |
Year Ended December 31, | Increase (Decrease) | % Increase (Decrease) | |||||||||||||
(Dollars in thousands) | 2016 | 2015 | |||||||||||||
Revenues: | |||||||||||||||
Domestic | $ | 3,381,715 | $ | 3,038,883 | $ | 342,832 | 11.3 | % | |||||||
Import | 3,764,255 | 3,330,949 | 433,306 | 13.0 | |||||||||||
Luxury | 1,528,760 | 1,490,632 | 38,128 | 2.6 | |||||||||||
8,674,730 | 7,860,464 | 814,266 | 10.4 | ||||||||||||
Corporate and other | 3,427 | 3,788 | (361 | ) | (9.5 | ) | |||||||||
$ | 8,678,157 | $ | 7,864,252 | $ | 813,905 | 10.3 |
Year Ended December 31, | Increase (Decrease) | % Increase (Decrease) | |||||||||||||
(Dollars in thousands) | 2017 | 2016 | |||||||||||||
Segment income*: | |||||||||||||||
Domestic | $ | 105,208 | $ | 106,210 | $ | (1,002 | ) | (0.9 | )% | ||||||
Import | 117,776 | 110,204 | 7,572 | 6.9 | |||||||||||
Luxury | 37,022 | 31,467 | 5,555 | 17.7 | |||||||||||
260,006 | 247,881 | 12,125 | 4.9 | ||||||||||||
Corporate and other | 167,366 | 114,321 | 53,045 | 46.4 | |||||||||||
Depreciation and amortization | (57,722 | ) | (49,369 | ) | 8,353 | 16.9 | |||||||||
Other interest expense | (34,776 | ) | (23,207 | ) | 11,569 | 49.9 | |||||||||
Other (expense) income, net | 12,195 | (6,103 | ) | 18,298 | NM | ||||||||||
Income before income taxes | $ | 347,069 | $ | 283,523 | $ | 63,546 | 22.4 |
Year Ended December 31, | Increase (Decrease) | % Increase (Decrease) | |||||||||||||
(Dollars in thousands) | 2016 | 2015 | |||||||||||||
Segment income*: | |||||||||||||||
Domestic | $ | 106,210 | $ | 115,145 | $ | (8,935 | ) | (7.8 | )% | ||||||
Import | 110,204 | 98,751 | 11,453 | 11.6 | |||||||||||
Luxury | 31,467 | 36,391 | (4,924 | ) | (13.5 | ) | |||||||||
247,881 | 250,287 | (2,406 | ) | (1.0 | ) | ||||||||||
Corporate and other | 114,321 | 74,514 | 39,807 | 53.4 | |||||||||||
Depreciation and amortization | (49,369 | ) | (41,600 | ) | 7,769 | 18.7 | |||||||||
Other interest expense | (23,207 | ) | (19,491 | ) | 3,716 | 19.1 | |||||||||
Other (expense) income, net | (6,103 | ) | (1,006 | ) | 5,097 | NM | |||||||||
Income before income taxes | $ | 283,523 | $ | 262,704 | $ | 20,819 | 7.9 |
Year Ended December 31, | Increase (Decrease) | % Increase (Decrease) | ||||||||||
2017 | 2016 | |||||||||||
Retail new vehicle unit sales: | ||||||||||||
Domestic | 53,288 | 47,707 | 5,581 | 11.7 | % | |||||||
Import | 94,634 | 80,769 | 13,865 | 17.2 | ||||||||
Luxury | 19,597 | 17,591 | 2,006 | 11.4 | ||||||||
167,519 | 146,067 | 21,452 | 14.7 | |||||||||
Allocated to management | (373 | ) | (295 | ) | (78 | ) | (26.4 | ) | ||||
167,146 | 145,772 | 21,374 | 14.7 |
Year Ended December 31, | Increase | % Increase | ||||||||||
2016 | 2015 | |||||||||||
Retail new vehicle unit sales: | ||||||||||||
Domestic | 47,707 | 45,080 | 2,627 | 5.8 | % | |||||||
Import | 80,769 | 75,091 | 5,678 | 7.6 | ||||||||
Luxury | 17,591 | 17,556 | 35 | 0.2 | ||||||||
146,067 | 137,727 | 8,340 | 6.1 | |||||||||
Allocated to management | (295 | ) | (241 | ) | 54 | 22.4 | ||||||
145,772 | 137,486 | 8,286 | 6.0 |
Year Ended December 31, | Increase (Decrease) | % Increase (Decrease) | |||||||||||||
(Dollars in thousands) | 2017 | 2016 | |||||||||||||
Revenue | $ | 3,845,830 | $ | 3,381,715 | $ | 464,115 | 13.7 | % | |||||||
Segment income | $ | 105,208 | $ | 106,210 | $ | (1,002 | ) | (0.9 | ) | ||||||
Retail new vehicle unit sales | 53,288 | 47,707 | 5,581 | 11.7 |
Year Ended December 31, | Increase (Decrease) | % Increase (Decrease) | |||||||||||||
(Dollars in thousands) | 2016 | 2015 | |||||||||||||
Revenue | $ | 3,381,715 | $ | 3,038,883 | $ | 342,832 | 11.3 | % | |||||||
Segment income | $ | 106,210 | $ | 115,145 | $ | (8,935 | ) | (7.8 | ) | ||||||
Retail new vehicle unit sales | 47,707 | 45,080 | 2,627 | 5.8 |
Year Ended December 31, | % | ||||||||||||||
(Dollars in thousands) | 2017 | 2016 | Increase | Increase | |||||||||||
Revenue | $ | 4,432,760 | $ | 3,764,255 | $ | 668,505 | 17.8 | % | |||||||
Segment income | $ | 117,776 | $ | 110,204 | $ | 7,572 | 6.9 | ||||||||
Retail new vehicle unit sales | 94,634 | 80,769 | 13,865 | 17.2 |
Year Ended December 31, | % | ||||||||||||||
(Dollars in thousands) | 2016 | 2015 | Increase | Increase | |||||||||||
Revenue | $ | 3,764,255 | $ | 3,330,949 | $ | 433,306 | 13.0 | % | |||||||
Segment income | $ | 110,204 | $ | 98,751 | $ | 11,453 | 11.6 | ||||||||
Retail new vehicle unit sales | 80,769 | 75,091 | 5,678 | 7.6 |
Year Ended December 31, | % | ||||||||||||||
(Dollars in thousands) | 2017 | 2016 | Increase | Increase | |||||||||||
Revenue | $ | 1,810,085 | $ | 1,528,760 | $ | 281,325 | 18.4 | % | |||||||
Segment income | $ | 37,022 | $ | 31,467 | $ | 5,555 | 17.7 | ||||||||
Retail new vehicle unit sales | 19,597 | 17,591 | 2,006 | 11.4 |
Year Ended December 31, | Increase | % Increase | |||||||||||||
(Dollars in thousands) | 2016 | 2015 | (Decrease) | (Decrease) | |||||||||||
Revenue | $ | 1,528,760 | $ | 1,490,632 | $ | 38,128 | 2.6 | % | |||||||
Segment income | $ | 31,467 | $ | 36,391 | $ | (4,924 | ) | (13.5 | ) | ||||||
Retail new vehicle unit sales | 17,591 | 17,556 | 35 | 0.2 |
Year Ended December 31, | Increase | % Increase | |||||||||||||
(Dollars in thousands) | 2017 | 2016 | (Decrease) | (Decrease) | |||||||||||
Revenue | $ | (2,165 | ) | $ | 3,427 | $ | (5,592 | ) | NM | ||||||
Segment income | $ | 167,366 | $ | 114,321 | $ | 53,045 | 46.4 | % |
Year Ended December 31, | Increase | % Increase | |||||||||||||
(Dollars in thousands) | 2016 | 2015 | (Decrease) | (Decrease) | |||||||||||
Revenue | $ | 3,427 | $ | 3,788 | $ | (361 | ) | (9.5 | )% | ||||||
Segment income | $ | 114,321 | $ | 74,514 | $ | 39,807 | 53.4 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Equity-method investment | $ | — | $ | 13,992 | $ | 16,521 | ||||||
Long-lived assets | — | — | 3,603 |
Year Ended December 31, | |||||||||||||||
(Dollars in thousands) | 2017 | 2016 | Increase | % Increase | |||||||||||
Personnel | $ | 695,527 | $ | 597,185 | $ | 98,342 | 16.5 | % | |||||||
Advertising | 93,312 | 81,363 | 11,949 | 14.7 | |||||||||||
Rent | 33,399 | 26,785 | 6,614 | 24.7 | |||||||||||
Facility costs | 55,813 | 43,883 | 11,930 | 27.2 | |||||||||||
Other | 171,327 | 150,374 | 20,953 | 13.9 | |||||||||||
Total SG&A | $ | 1,049,378 | $ | 899,590 | $ | 149,788 | 16.7 |
Year Ended December 31, | Increase | ||||||||
As a % of gross profit | 2017 | 2016 | (Decrease) | ||||||
Personnel | 45.9 | % | 45.9 | % | — | ||||
Advertising | 6.2 | 6.3 | (10 | ) | |||||
Rent | 2.2 | 2.1 | 10 | ||||||
Facility costs | 3.7 | 3.4 | 30 | ||||||
Other | 11.2 | 11.4 | (20 | ) | |||||
Total SG&A | 69.2 | % | 69.1 | % | 10 | bps |
Year Ended December 31, | |||||||||||||||
(Dollars in thousands) | 2016 | 2015 | Increase | % Increase | |||||||||||
Personnel | $ | 597,185 | $ | 556,719 | $ | 40,466 | 7.3 | % | |||||||
Advertising | 81,363 | 69,935 | 11,428 | 16.3 | |||||||||||
Rent | 26,785 | 23,817 | 2,968 | 12.5 | |||||||||||
Facility costs | 43,883 | 39,738 | 4,145 | 10.4 | |||||||||||
Other | 150,374 | 120,966 | 29,408 | 24.3 | |||||||||||
Total SG&A | $ | 899,590 | $ | 811,175 | $ | 88,415 | 10.9 |
Year Ended December 31, | Increase | ||||||||
As a % of gross profit | 2016 | 2015 | (Decrease) | ||||||
Personnel | 45.9 | % | 47.4 | % | (150 | ) bps | |||
Advertising | 6.3 | 5.9 | 40 | ||||||
Rent | 2.1 | 2.0 | 10 | ||||||
Facility costs | 3.4 | 3.4 | — | ||||||
Other | 11.4 | 10.3 | 110 | ||||||
Total SG&A | 69.1 | % | 69.0 | % | 10 | bps |
Year Ended December 31, | % | ||||||||||||||
(Dollars in thousands) | 2017 | 2016 | Increase | Increase | |||||||||||
Personnel | $ | 695,527 | $ | 597,185 | $ | 98,342 | 16.5 | % | |||||||
Advertising | 93,312 | 81,363 | 11,949 | 14.7 | |||||||||||
Rent | 33,399 | 26,785 | 6,614 | 24.7 | |||||||||||
Facility costs | 60,918 | 44,971 | 15,947 | 35.5 | |||||||||||
Other | 160,091 | 146,437 | 13,654 | 9.3 | |||||||||||
Total SG&A | $ | 1,043,247 | $ | 896,741 | $ | 146,506 | 16.3 |
Year Ended December 31, | Increase | ||||||||
As a % of gross profit | 2017 | 2016 | (Decrease) | ||||||
Personnel | 45.9 | % | 45.9 | % | — | ||||
Advertising | 6.2 | 6.3 | (10 | ) | |||||
Rent | 2.2 | 2.1 | 10 | ||||||
Facility costs | 4.0 | 3.5 | 50 | ||||||
Other | 10.5 | 11.1 | (60 | ) | |||||
Total SG&A | 68.8 | % | 68.9 | % | (10 | ) bps |
Year Ended December 31, | Increase | % Increase | |||||||||||||
(Dollars in thousands) | 2016 | 2015 | (Decrease) | (Decrease) | |||||||||||
Personnel | $ | 597,185 | $ | 538,423 | $ | 58,762 | 10.9 | % | |||||||
Advertising | 81,363 | 69,935 | 11,428 | 16.3 | |||||||||||
Rent | 26,785 | 23,817 | 2,968 | 12.5 | |||||||||||
Facility costs | 44,971 | 45,656 | (685 | ) | (1.5 | ) | |||||||||
Other | 146,437 | 120,967 | 25,470 | 21.1 | |||||||||||
Total SG&A | $ | 896,741 | $ | 798,798 | $ | 97,943 | 12.3 |
Year Ended December 31, | Increase | ||||||||
As a % of gross profit | 2016 | 2015 | (Decrease) | ||||||
Personnel | 45.9 | % | 45.8 | % | 10 | bps | |||
Advertising | 6.3 | 5.9 | 40 | ||||||
Rent | 2.1 | 2.0 | 10 | ||||||
Facility costs | 3.5 | 3.9 | (40 | ) | |||||
Other | 11.1 | 10.3 | 80 | ||||||
Total SG&A | 68.9 | % | 67.9 | % | 100 | bps |
Year Ended December 31, | % | ||||||||||||||
(Dollars in thousands) | 2017 | 2016 | Increase | Increase | |||||||||||
Depreciation and amortization | $ | 57,722 | $ | 49,369 | $ | 8,353 | 16.9 | % |
Year Ended December 31, | % | ||||||||||||||
(Dollars in thousands) | 2016 | 2015 | Increase | Increase | |||||||||||
Depreciation and amortization | $ | 49,369 | $ | 41,600 | $ | 7,769 | 18.7 | % |
Year Ended December 31, | ||||||
2017 | 2016 | 2015 | ||||
Operating margin | 4.1% | 3.9% | 3.8% | |||
Operating margin adjusted for non-core charges(1) | 4.1% | 4.1% | 4.3% |
(1) | See “Non-GAAP Reconciliations” for additional information. |
Year Ended December 31, | Increase | % Increase | |||||||||||||
(Dollars in thousands) | 2017 | 2016 | (Decrease) | (Decrease) | |||||||||||
Floor plan interest expense (new vehicles) | $ | 39,336 | $ | 25,531 | $ | 13,805 | 54.1 | % | |||||||
Floor plan assistance (included as an offset to cost of sales) | (55,962 | ) | (46,328 | ) | 9,634 | 20.8 | |||||||||
Net new vehicle carrying costs (benefit) | $ | (16,626 | ) | $ | (20,797 | ) | $ | (4,171 | ) | (20.1 | ) |
Year Ended December 31, | Increase | % Increase | |||||||||||||
(Dollars in thousands) | 2016 | 2015 | (Decrease) | (Decrease) | |||||||||||
Floor plan interest expense (new vehicles) | $ | 25,531 | $ | 19,534 | $ | 5,997 | 30.7 | % | |||||||
Floor plan assistance (included as an offset to cost of sales) | (46,328 | ) | (41,438 | ) | 4,890 | 11.8 | |||||||||
Net new vehicle carrying costs (benefit) | $ | (20,797 | ) | $ | (21,904 | ) | $ | (1,107 | ) | (5.1 | ) |
Year Ended December 31, | Increase | % Increase | |||||||||||||
(Dollars in thousands) | 2017 | 2016 | (Decrease) | (Decrease) | |||||||||||
Mortgage interest | $ | 19,054 | $ | 15,102 | $ | 3,952 | 26.2 | % | |||||||
Other interest | 16,246 | 8,519 | 7,727 | 90.7 | |||||||||||
Capitalized interest | (524 | ) | (414 | ) | 110 | 26.6 | |||||||||
Total other interest expense | $ | 34,776 | $ | 23,207 | $ | 11,569 | 49.9 |
Year Ended December 31, | Increase | % | |||||||||||||
(Dollars in thousands) | 2016 | 2015 | (Decrease) | Increase | |||||||||||
Mortgage interest | $ | 15,102 | $ | 13,295 | $ | 1,807 | 13.6 | % | |||||||
Other interest | 8,519 | 6,646 | 1,873 | 28.2 | |||||||||||
Capitalized interest | (414 | ) | (450 | ) | (36 | ) | (8.0 | ) | |||||||
Total other interest expense | $ | 23,207 | $ | 19,491 | $ | 3,716 | 19.1 |
Year Ended December 31, | % | |||||||||||||
(Dollars in thousands) | 2017 | 2016 | Increase | Increase | ||||||||||
Other (expense) income, net | $ | 12,195 | $ | (6,103 | ) | $ | 18,298 | NM |
Year Ended December 31, | % | |||||||||||||
(Dollars in thousands) | 2016 | 2015 | Increase | Increase | ||||||||||
Other (expense) income, net | $ | (6,103 | ) | $ | (1,006 | ) | $ | 5,097 | NM |
Year Ended December 31, | |||||||||
2017 | 2016 | 2015 | |||||||
Effective income tax rate | 29.3 | % | 30.5 | % | 30.3 | % | |||
Effective income tax rate excluding tax credits generated through our equity-method investment and other non-core items(1) | 38.7 | % | 38.6 | % | 38.4 | % |
(1) | See “Non-GAAP Reconciliations” for more details. |
Year Ended December 31, 2017 | ||||||||||||||||||||||||||||
As reported | Insurance Reserves | Acquisition expense | OEM Settlement | Disposal gain on sale of stores | Tax reform | Adjusted | ||||||||||||||||||||||
Selling, general and administrative | $ | 1,049,378 | $ | (5,582 | ) | $ | (5,653 | ) | $ | — | $ | 5,104 | $ | — | $ | 1,043,247 | ||||||||||||
Operating income | 408,986 | 5,582 | 5,653 | — | (5,104 | ) | — | 415,117 | ||||||||||||||||||||
Other (expense) income, net | 12,195 | — | — | (9,111 | ) | — | — | 3,084 | ||||||||||||||||||||
Income before income taxes | $ | 347,069 | $ | 5,582 | $ | 5,653 | $ | (9,111 | ) | $ | (5,104 | ) | $ | — | $ | 344,089 | ||||||||||||
Income tax (provision) benefit | (101,852 | ) | (2,174 | ) | (2,202 | ) | 3,423 | 2,482 | (32,901 | ) | (133,224 | ) | ||||||||||||||||
Net income | $ | 245,217 | $ | 3,408 | $ | 3,451 | $ | (5,688 | ) | $ | (2,622 | ) | $ | (32,901 | ) | $ | 210,865 | |||||||||||
Diluted net income per share | $ | 9.75 | $ | 0.14 | $ | 0.14 | $ | (0.23 | ) | $ | (0.10 | ) | $ | (1.31 | ) | $ | 8.39 | |||||||||||
Diluted share count | 25,145 |
Year Ended December 31, 2016 | ||||||||||||||||||||||||
As reported | Disposal gain on sale of stores | Equity-method investment | Legal Reserve | Tax attribute | Adjusted | |||||||||||||||||||
Asset impairments | $ | 13,992 | $ | — | $ | (13,992 | ) | $ | — | $ | — | $ | — | |||||||||||
Selling, general and administrative | 899,590 | 1,087 | — | (3,936 | ) | — | 896,741 | |||||||||||||||||
Operating income | 338,364 | (1,087 | ) | 13,992 | 3,936 | — | 355,205 | |||||||||||||||||
Other (expense) income, net | (6,103 | ) | — | 8,262 | — | — | 2,159 | |||||||||||||||||
Income before income taxes | $ | 283,523 | $ | (1,087 | ) | $ | 22,254 | $ | 3,936 | $ | — | $ | 308,626 | |||||||||||
Income tax (provision) benefit | (86,465 | ) | 426 | (28,530 | ) | (3,250 | ) | (1,320 | ) | (119,139 | ) | |||||||||||||
Net income | $ | 197,058 | $ | (661 | ) | $ | (6,276 | ) | $ | 686 | $ | (1,320 | ) | $ | 189,487 | |||||||||
Diluted net income per share | $ | 7.72 | $ | (0.03 | ) | $ | (0.25 | ) | $ | 0.03 | $ | (0.05 | ) | $ | 7.42 | |||||||||
Diluted share count | 25,521 |
Year Ended December 31, 2015 | ||||||||||||||||||||||||
As reported | Disposal gain on sale of stores | Asset impairment | Equity-method investment | Transition Agreement | Adjusted | |||||||||||||||||||
Asset impairments | $ | 20,124 | $ | — | $ | (3,603 | ) | $ | (16,521 | ) | $ | — | $ | — | ||||||||||
Selling, general and administrative | 811,175 | 5,919 | — | — | (18,296 | ) | 798,798 | |||||||||||||||||
Income from operations | 302,735 | (5,919 | ) | 3,603 | 16,521 | 18,296 | 335,236 | |||||||||||||||||
Other (expense) income, net | (1,006 | ) | — | — | 6,930 | — | 5,924 | |||||||||||||||||
Income before income taxes | $ | 262,704 | $ | (5,919 | ) | $ | 3,603 | $ | 23,451 | $ | 18,296 | $ | 302,135 | |||||||||||
Income tax (provision) benefit | (79,705 | ) | 2,309 | (1,385 | ) | (30,832 | ) | (6,507 | ) | (116,120 | ) | |||||||||||||
Net income | $ | 182,999 | $ | (3,610 | ) | $ | 2,218 | $ | (7,381 | ) | $ | 11,789 | $ | 186,015 | ||||||||||
Diluted net income per share | $ | 6.91 | $ | (0.14 | ) | $ | 0.08 | $ | (0.28 | ) | $ | 0.45 | $ | 7.02 | ||||||||||
Diluted share count | 26,490 |
As of December 31, | % | ||||||||||||||
2017 | 2016 | Increase | Increase | ||||||||||||
Cash and cash equivalents | $ | 57,253 | $ | 50,282 | $ | 6,971 | 13.9 | % | |||||||
Available credit on the credit facilities | 222,502 | 138,090 | 84,412 | 61.1 | |||||||||||
Total current available funds | 279,755 | 188,372 | 91,383 | 48.5 | |||||||||||
Estimated funds from unfinanced real estate | 236,135 | 168,383 | 67,752 | 40.2 | |||||||||||
Total estimated available funds | $ | 515,890 | $ | 356,755 | $ | 159,135 | 44.6 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Net cash provided by operating activities | $ | 148,856 | $ | 90,905 | $ | 79,551 | ||||||
Net cash used in investing activities | (538,198 | ) | (351,693 | ) | (169,733 | ) | ||||||
Net cash provided by financing activities | 396,313 | 266,062 | 105,292 |
Year Ended December 31, | Increase | |||||||||||
2017 | 2016 | (Decrease) | ||||||||||
Net cash provided by operating activities – as reported | $ | 148,856 | $ | 90,905 | $ | 57,951 | ||||||
Add: Net borrowings on floor plan notes payable: non-trade | 241,479 | 252,893 | (11,414 | ) | ||||||||
Less: Borrowings on floor plan notes payable: non-trade associated with acquired new vehicle inventory | (111,017 | ) | (94,550 | ) | (16,467 | ) | ||||||
Net cash provided by operating activities – adjusted | $ | 279,318 | $ | 249,248 | $ | 30,070 |
Year Ended December 31, | Increase | |||||||||||
2016 | 2015 | (Decrease) | ||||||||||
Net cash provided by operating activities – as reported | $ | 90,905 | $ | 79,551 | $ | 11,354 | ||||||
Add: Net borrowings on floor plan notes payable: non-trade | 252,893 | 136,201 | 116,692 | |||||||||
Less: Borrowings on floor plan notes payable: non-trade associated with acquired new vehicle inventory | (94,550 | ) | (25,642 | ) | (68,908 | ) | ||||||
Net cash provided by operating activities – adjusted | $ | 249,248 | $ | 190,110 | $ | 59,138 |
Year Ended December 31, | Increase | |||||||||||
2017 | 2016 | (Decrease) | ||||||||||
Capital expenditures | $ | (105,378 | ) | $ | (100,761 | ) | $ | (4,617 | ) | |||
Cash paid for acquisitions, net of cash acquired | (460,394 | ) | (234,700 | ) | (225,694 | ) | ||||||
Cash paid for other investments | (8,570 | ) | (30,280 | ) | 21,710 | |||||||
Proceeds from sales of stores | 20,943 | 11,837 | 9,106 |
Year Ended December 31, | Increase | |||||||||||
2016 | 2015 | (Decrease) | ||||||||||
Capital expenditures | $ | (100,761 | ) | $ | (83,244 | ) | $ | (17,517 | ) | |||
Cash paid for acquisitions, net of cash acquired | (234,700 | ) | (71,615 | ) | (163,085 | ) | ||||||
Cash paid for other investments | (30,280 | ) | (28,110 | ) | (2,170 | ) | ||||||
Proceeds from sales of stores | 11,837 | 12,966 | (1,129 | ) |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Post-acquisition capital improvements | $ | 41,193 | $ | 31,489 | $ | 32,802 | ||||||
Facilities for open points | 511 | — | 3,338 | |||||||||
Purchases of previously leased facilities | — | 24,016 | 9,946 | |||||||||
Existing facility improvements | 29,563 | 24,249 | 20,245 | |||||||||
Maintenance | 34,111 | 21,007 | 16,913 | |||||||||
Total capital expenditures | $ | 105,378 | $ | 100,761 | $ | 83,244 |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Number of stores acquired | 18 | 15 | 6 | |||||||||
Number of stores opened | 1 | 1 | 1 | |||||||||
Number of franchises added | — | 1 | 1 | |||||||||
Cash paid for acquisitions, net of cash acquired | $ | (460,394 | ) | $ | (234,700 | ) | $ | (71,615 | ) | |||
Less: Borrowings on floor plan notes payable: non-trade associated with acquired new vehicle inventory | 111,017 | 94,550 | 25,642 | |||||||||
Cash paid for acquisitions, net of cash acquired – adjusted | $ | (349,377 | ) | $ | (140,150 | ) | $ | (45,973 | ) |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Cash provided by financing activities, as reported | $ | 396,313 | $ | 266,062 | $ | 105,292 | ||||||
Less: cash provided by borrowings of floor plan notes payable: non-trade | (241,479 | ) | (252,893 | ) | (136,201 | ) | ||||||
Cash provided by (used in) financing activities, as adjusted | $ | 154,834 | $ | 13,169 | $ | (30,909 | ) |
Year Ended December 31, | Increase (Decrease) in | |||||||||||
2017 | 2016 | Cash Flow | ||||||||||
Net borrowings (repayments) on lines of credit | $ | (81,717 | ) | $ | 121,261 | $ | (202,978 | ) | ||||
Principal payments on long-term debt and capital leases, other | (50,288 | ) | (27,703 | ) | (22,585 | ) | ||||||
Proceeds from the issuance of long-term debt | 395,905 | 66,466 | 329,439 | |||||||||
Payments of debt issuance costs | (4,664 | ) | — | (4,664 | ) | |||||||
Repurchases of common stock | (33,753 | ) | (112,939 | ) | 79,186 | |||||||
Dividends paid | (26,544 | ) | (24,131 | ) | (2,413 | ) | ||||||
Other financing activity | (33,396 | ) | — | (33,396 | ) |
Year Ended December 31, | Increase (Decrease) in | |||||||||||
2016 | 2015 | Cash Flow | ||||||||||
Net borrowings (repayments) on lines of credit | $ | 121,261 | $ | (36,523 | ) | $ | 157,784 | |||||
Principal payments on long-term debt, unscheduled | (27,703 | ) | (9,189 | ) | (18,514 | ) | ||||||
Proceeds from the issuance of long-term debt | 66,466 | 75,675 | (9,209 | ) | ||||||||
Repurchases of common stock | (112,939 | ) | (31,548 | ) | (81,391 | ) | ||||||
Dividends paid | (24,131 | ) | (19,985 | ) | (4,146 | ) |
Dividend paid: | Dividend amount per share | Total amount of dividend (in thousands) | ||||||
March 2017 | $ | 0.25 | $ | 6,292 | ||||
May 2017 | 0.27 | 6,760 | ||||||
August 2017 | 0.27 | 6,751 | ||||||
November 2017 | 0.27 | 6,741 |
Outstanding as of December 31, 2017 | Remaining Available as of December 31, 2017 | ||||||||
Floor plan notes payable: non-trade | $ | 1,802,252 | $ | — | (1) | ||||
Floor plan notes payable | 116,774 | — | |||||||
Used vehicle inventory financing facility | 177,222 | — | (2) | ||||||
Revolving lines of credit | 94,568 | 222,502 | (2),(3) | ||||||
Real estate mortgages | 469,969 | — | |||||||
5.25% Senior notes due 2025 | $ | 300,000 | — | ||||||
Other debt | 12,512 | — | |||||||
Unamortized debt issuance costs | (6,919 | ) | — | (4) | |||||
Total debt | $ | 2,966,378 | $ | 222,502 |
(1) | As of December 31, 2017, we had a $1.9 billion new vehicle floor plan commitment as part of our credit facility. |
(2) | The amount available on the credit facility is limited based on a borrowing base calculation and fluctuates monthly. |
(3) | Available credit is based on the borrowing base amount effective as of November 30, 2017. This amount is reduced by $9.2 million for outstanding letters of credit. |
(4) | We adopted an accounting standard update that requires debt issuance costs be presented on the balance sheet as a reduction from the carrying amount of the related debt liability. We adopted the standard retrospectively and have presented all debt issuance costs as a reduction from the carrying amount of the related debt liability for both current and prior periods. See Note 6 of the Notes to Consolidated Financial Statements for additional information. |
Debt Covenant Ratio | Requirement | As of December 31, 2017 | ||
Current ratio | Not less than 1.10 to 1 | 1.21 to 1 | ||
Fixed charge coverage ratio | Not less than 1.20 to 1 | 2.82 to 1 | ||
Leverage ratio | Not more than 5.00 to 1 | 2.59 to 1 |
Payments Due By Period | ||||||||||||||||||||
Contractual Obligation | Total | 2018 | 2019 and 2020 | 2021 and 2022 | 2023 and beyond | |||||||||||||||
Floor plan notes payable: non-trade(1) | $ | 1,802,252 | $ | 1,802,252 | $ | — | $ | — | $ | — | ||||||||||
Floor plan notes payable(1) | 116,774 | 116,774 | — | — | — | |||||||||||||||
Used vehicle inventory financing facility(1) | 177,222 | — | — | 177,222 | — | |||||||||||||||
Revolving lines of credit(1)(3) | 94,568 | 111 | 457 | 94,000 | — | |||||||||||||||
Real estate mortgages, including interest(3) | 571,549 | 36,327 | 119,187 | 128,164 | 287,871 | |||||||||||||||
5.25% Senior Notes Due 2025, including interest (3) | 426,339 | 16,089 | 31,500 | 31,500 | 347,250 | |||||||||||||||
Other debt, including capital leases and interest | 327,909 | 1,731 | 3,305 | 3,282 | 319,591 | |||||||||||||||
Charge-backs on various contracts | 52,744 | 27,352 | 22,495 | 2,856 | 41 | |||||||||||||||
Operating leases(2) | 408,396 | 38,357 | 67,139 | 59,658 | 243,242 | |||||||||||||||
Self-insurance programs | 31,227 | 14,354 | 7,385 | 3,765 | 5,723 | |||||||||||||||
$ | 4,008,980 | $ | 2,053,347 | $ | 251,468 | $ | 500,447 | $ | 1,203,718 |
(1) | Amounts for new vehicle floor plan commitment, floor plan notes payable, the used vehicle inventory financing facility and the revolving lines of credit do not include estimated interest payments. See Notes 1 and 6 in the Notes to Consolidated Financial Statements. |
(2) | Amounts for operating lease commitments do not include sublease income, and certain operating expenses such as maintenance, insurance and real estate taxes. See Note 7 in the Notes to Consolidated Financial Statements. |
(3) | Balances exclude net impact of debt issuance costs. See Note 6 in the Notes to Consolidated Financial Statements. |
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) (2) | ||||||
Equity compensation plans approved by shareholders | 344,804 | $— | (1) | 1,665,697 | |||||
Equity compensation plans not approved by shareholders | — | — | — | ||||||
Total | 344,804 | $— | 1,665,697 |
(1) | There is no exercise price associated with our restricted stock units. |
(2) | Includes 1,383,827 shares available pursuant to our 2013 Amended and Restated Stock Incentive Plan and 281,870 shares available pursuant to our Employee Stock Purchase Plan. |
Page | |
Report of Independent Registered Public Accounting Firm | |
Consolidated Balance Sheets as of December 31, 2017 and 2016 | |
Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015 | |
Consolidated Statements of Comprehensive Income for the years ended December 31, 2017, 2016 and 2015 | |
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2017, 2016 and 2015 | |
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015 | |
Notes to Consolidated Financial Statements | |
Selected Quarterly Financial Information (Unaudited) |
Exhibit | Description |
Stock Purchase Agreement between Lithia Motors, Inc. and DCH Auto Group (USA) Limited dated June 14, 2014 (incorporated by reference to exhibit 2.1 to the Company’s Form 8-K filed October 3, 2014) | |
First Amendment to Stock Purchase Agreement between Lithia Motors, Inc. and DCH Auto Group (USA) Limited effective July 15, 2014 (incorporated by reference to exhibit 2.2 to the Company’s Form 10-Q for the quarter ended June 30, 2014) | |
Second Amendment to Stock Purchase Agreement between Lithia Motors, Inc. and DCH Auto Group (USA) Limited effective November 13, 2014 (incorporated by reference to exhibit 2.1.2 to the Company’s Form 10-K for the year ended December 31, 2014) | |
3.1 | Restated Articles of Incorporation of Lithia Motors, Inc., as amended May 13, 1999 (incorporated by reference to exhibit 3.1 to the Company’s Form 10-K for the year ended December 31, 1999) |
2013 Amended and Restated Bylaws of Lithia Motors, Inc. (incorporated by reference to exhibit 3.1 to the Company’s Form 8-K filed August 26, 2013) | |
Indenture, dated as of July 24, 2017, among Lithia Motors, Inc., the Guarantors and the Trustee (incorporated by reference to exhibit 4.1 to Form 8-K dated July 24, 2017 and filed with the Securities and Exchange Commission on July 24, 2017). | |
Form of 5.250% Senior Notes due 2025 (included as part of Exhibit 4.1)(incorporated by reference to exhibit 4.1 to Form 8-K dated July 24, 2017 and filed with the Securities and Exchange Commission on July 24, 2017). | |
10.1* | 2009 Employee Stock Purchase Plan (incorporated by reference to Appendix A to the Company’s Proxy Statement for its 2009 annual meeting of shareholders filed on March 20, 2009) |
Exhibit | Description |
Amendment 2014-1 to the Lithia Motors, Inc. 2009 Employee Stock Purchase Plan (incorporated by reference to exhibit 10.1.1 to the Company’s Form 10-K for the year ended December 31, 2014) | |
10.2* | Lithia Motors, Inc. 2013 Amended and Restated Stock Incentive Plan (incorporated by reference to exhibit 10.1 to the Company’s Form 8-K filed May 2, 2013) |
RSU Deferral Plan (incorporated by reference to exhibit 10.3.1 to the Company’s Form 10-K for the year ended December 31, 2011) | |
Amendment to RSU Deferral Plan (incorporated by reference to exhibit 10.2.2 to the Company’s Form 10-K for the year ended December 31, 2014) | |
Restricted Stock Unit (RSU) Deferral Election Form (incorporated by reference to exhibit 10.2.3 to the Company’s Form 10-K for the year ended December 31, 2014) | |
10.3* | Form of Restricted Stock Unit Agreement (2016 Performance- and Time-Vesting) (for Senior Executives) (incorporated by reference to exhibit 10.3.3 to the Company’s Form 10-K for the year ended December 31, 2015) |
Form of Restricted Stock Unit Agreement (2017 Performance- and Time-Vesting) (for Senior Executives) (incorporated by reference to exhibit 10.3.1 to the Company's Form 10-K for the year ended December 31, 2016) | |
Form of Restricted Stock Unit Agreement (2018 Performance- and Time-Vesting) (for Senior Executives) | |
Form of Restricted Stock Unit Agreement (Time-Vesting) (incorporated by reference to exhibit 10.3.2 to the Company's Form 10-K for the year ended December 31, 2016) | |
10.4* | Lithia Motors, Inc. 2013 Discretionary Support Services Variable Performance Compensation Plan (incorporated by reference to exhibit 10.2 to the Company’s Form 8-K filed May 2, 2013) |
10.5* | Form of Outside Director Nonqualified Deferred Compensation Agreement (incorporated by reference to exhibit 10.20 to the Company’s Form 10-K for the year ended December 31, 2005) |
Amended and Restated Loan Agreement among Lithia Motors, Inc., the subsidiaries of Lithia Motors, Inc. listed on the signature pages of the agreement or that thereafter become borrowers thereunder, the lenders party thereto from time to time, and U.S. Bank National Association (incorporated by reference to exhibit 10.1 to the Company’s Form 8-K filed October 3, 2014) | |
First Amendment to Amended and Restated Loan Agreement (incorporated by reference to exhibit 10.4 to the Company’s Form 10-Q for the quarter ended March 31, 2015) | |
Second Amendment to Amended and Restated Loan Agreement (incorporated by reference to exhibit 10.1 to the Company’s Form 8-K filed December 22, 2015) | |
Third Amendment to Amended and Restated Loan Agreement (incorporated by reference to exhibit 10.1 to the Company’s Form 10-Q for the quarter ended June 30, 2016) | |
Fourth Amendment to Amended and Restated Loan Agreement (incorporated by reference to exhibit 10.2 to the Company’s Form 10-Q for the quarter ended June 30, 2016) | |
Sixth Amendment to Amended and Restated Loan Agreement dated July 12, 2017. (incorporated by reference to exhibit 10.1 to the Company's Form 10-Q for the quarter ended September 30, 2017) | |
Seventh Amendment to Amended and Restated Loan Agreement dated August 1, 2017 (incorporated by reference to exhibit 10.1 to Form 8-K dated August 1, 2017 and filed with the Securities and Exchange Commission on August 3, 2017) | |
10.7* | Amended and Restated Split-Dollar Agreement (incorporated by reference to exhibit 10.17 to the Company’s Form 10-K for the year ended December 31, 2012) |
10.8* | Form of Indemnity Agreement for each Named Executive Officer (incorporated by reference to exhibit 10.1 to the Company’s Form 8-K filed May 29, 2009) |
10.9* | Form of Indemnity Agreement for each non-management Director (incorporated by reference to exhibit 10.2 to the Company’s Form 8-K filed May 29, 2009) |
Executive Management Non-Qualified Deferred Compensation and Long-Term Incentive Plan (incorporated by reference to exhibit 10.1 to the Company's Form 10-Q for the quarter ended March 31, 2016) | |
Exhibit | Description |
Form of Executive Management Non-Qualified Deferred Compensation and Long-Term Incentive Plan – Notice of Discretionary Contribution Award for Sidney DeBoer (incorporated by reference to exhibit 10.22.1 to the Company’s Form 10-K for the year ended December 31, 2010) | |
Form of Executive Management Non-Qualified Deferred Compensation and Long-Term Incentive Plan – Notice of Discretionary Contribution Award (incorporated by reference to exhibit 10.22.2 to the Company’s Form 10-K for the year ended December 31, 2010) | |
Transition Agreement dated September 14, 2015 between Lithia Motors, Inc. and Sidney B. DeBoer (incorporated by reference to exhibit 10.1 to the Company’s Form 8-K filed September 17, 2015) | |
Director Service Agreement effective January 1, 2016 between Lithia Motors, Inc. and Sidney B. DeBoer (incorporated by reference to Exhibit 10.2 to the Company’s Form 8-K filed September 17, 2015) | |
Form of Employment and Change in Control Agreement dated February 4, 2016 between Lithia Motors, Inc. and Bryan DeBoer (incorporated by reference to Exhibit 10.1 to the Company’s Form 8-K filed February 5, 2016)(1) | |
Ratio of Earnings to Combined Fixed Charges | |
Subsidiaries of Lithia Motors, Inc. | |
Consent of KPMG LLP, Independent Registered Public Accounting Firm | |
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934. | |
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934. | |
Certification of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350. | |
Certification of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350. | |
101.INS | XBRL Instance Document. |
101.SCH | XBRL Taxonomy Extension Schema Document. |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
(1) | Substantially similar agreements exist between Lithia Motors, Inc. and each of Scott Hillier, Christopher S. Holzshu, John F. North III, George Liang, Mark DeBoer, Tom Dobry and Bryan Osterhout. The "Cash Change in Control Benefits" under the agreements with Mr. Mark DeBoer and Mr. Dobry provide for 12 months of base salary rather than 24 months. |
Date: February 23, 2018 | LITHIA MOTORS, INC. |
By /s/ Bryan B. DeBoer | |
Bryan B. DeBoer | |
Director, President and Chief Executive Officer |
Signature | Title | |
/s/ Bryan B. DeBoer | Director, President and Chief Executive Officer. (Principal Executive Officer) | |
Bryan B. DeBoer | ||
/s/ John F. North, III | Senior Vice President and Chief Financial Officer (Principal Accounting Officer) | |
John F. North, III | ||
/s/ Sidney B. DeBoer | Chairman of the Board | |
Sidney B. DeBoer | ||
/s/ Thomas R. Becker | Director | |
Thomas Becker | ||
/s/ Susan O. Cain | Director | |
Susan O. Cain | ||
/s/ Kenneth E. Roberts | Director | |
Kenneth E. Roberts | ||
/s/ David J. Robino | Director | |
David J. Robino |
LITHIA MOTORS, INC. AND SUBSIDIARIES Consolidated Balance Sheets (In thousands) | ||||||||
December 31, | ||||||||
2017 | 2016 | |||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ | 57,253 | $ | 50,282 | ||||
Accounts receivable, net of allowance for doubtful accounts of $7,386 and $5,281 | 521,938 | 417,714 | ||||||
Inventories, net | 2,132,744 | 1,772,587 | ||||||
Other current assets | 70,847 | 46,611 | ||||||
Total Current Assets | 2,782,782 | 2,287,194 | ||||||
Property and equipment, net of accumulated depreciation of $197,802 and $167,300 | 1,185,169 | 1,006,130 | ||||||
Goodwill | 256,320 | 259,399 | ||||||
Franchise value | 186,977 | 184,268 | ||||||
Other non-current assets | 271,818 | 107,159 | ||||||
Total Assets | $ | 4,683,066 | $ | 3,844,150 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current Liabilities: | ||||||||
Floor plan notes payable | $ | 116,774 | $ | 94,602 | ||||
Floor plan notes payable: non-trade | 1,802,252 | 1,506,895 | ||||||
Current maturities of long-term debt | 18,876 | 20,965 | ||||||
Trade payables | 111,362 | 88,423 | ||||||
Accrued liabilities | 251,717 | 211,109 | ||||||
Total Current Liabilities | 2,300,981 | 1,921,994 | ||||||
Long-term debt, less current maturities | 1,028,476 | 769,916 | ||||||
Deferred revenue | 103,111 | 81,929 | ||||||
Deferred income taxes | 56,277 | 59,075 | ||||||
Other long-term liabilities | 111,003 | 100,460 | ||||||
Total Liabilities | 3,599,848 | 2,933,374 | ||||||
Stockholders' Equity: | ||||||||
Preferred stock - no par value; authorized 15,000 shares; none outstanding | — | — | ||||||
Class A common stock - no par value; authorized 100,000 shares; issued and outstanding 23,968 and 23,382 | 149,123 | 165,512 | ||||||
Class B common stock - no par value; authorized 25,000 shares; issued and outstanding 1,000 and 1,762 | 124 | 219 | ||||||
Additional paid-in capital | 11,309 | 41,225 | ||||||
Retained earnings | 922,662 | 703,820 | ||||||
Total Stockholders' Equity | 1,083,218 | 910,776 | ||||||
Total Liabilities and Stockholders' Equity | $ | 4,683,066 | $ | 3,844,150 |
LITHIA MOTORS, INC. AND SUBSIDIARIES Consolidated Statements of Operations (In thousands, except per share amounts) | ||||||||||||
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Revenues: | ||||||||||||
New vehicle | $ | 5,763,587 | $ | 4,938,436 | $ | 4,552,301 | ||||||
Used vehicle retail | 2,544,379 | 2,226,951 | 1,927,016 | |||||||||
Used vehicle wholesale | 277,844 | 276,616 | 261,530 | |||||||||
Finance and insurance | 385,863 | 330,922 | 283,018 | |||||||||
Service, body and parts | 1,015,773 | 844,505 | 738,990 | |||||||||
Fleet and other | 99,064 | 60,727 | 101,397 | |||||||||
Total revenues | 10,086,510 | 8,678,157 | 7,864,252 | |||||||||
Cost of sales: | ||||||||||||
New vehicle | 5,423,744 | 4,649,024 | 4,271,931 | |||||||||
Used vehicle retail | 2,257,544 | 1,963,267 | 1,685,767 | |||||||||
Used vehicle wholesale | 273,058 | 272,303 | 257,073 | |||||||||
Service, body and parts | 522,649 | 434,222 | 375,069 | |||||||||
Fleet and other | 93,429 | 58,026 | 98,778 | |||||||||
Total cost of sales | 8,570,424 | 7,376,842 | 6,688,618 | |||||||||
Gross profit | 1,516,086 | 1,301,315 | 1,175,634 | |||||||||
Asset impairments | — | 13,992 | 20,124 | |||||||||
Selling, general and administrative | 1,049,378 | 899,590 | 811,175 | |||||||||
Depreciation and amortization | 57,722 | 49,369 | 41,600 | |||||||||
Operating income | 408,986 | 338,364 | 302,735 | |||||||||
Floor plan interest expense | (39,336 | ) | (25,531 | ) | (19,534 | ) | ||||||
Other interest expense | (34,776 | ) | (23,207 | ) | (19,491 | ) | ||||||
Other (expense) income, net | 12,195 | (6,103 | ) | (1,006 | ) | |||||||
Income before income taxes | 347,069 | 283,523 | 262,704 | |||||||||
Income tax provision | (101,852 | ) | (86,465 | ) | (79,705 | ) | ||||||
Net income | $ | 245,217 | $ | 197,058 | $ | 182,999 | ||||||
Basic net income per share | $ | 9.78 | $ | 7.76 | $ | 6.96 | ||||||
Shares used in basic per share calculations | 25,065 | 25,409 | 26,290 | |||||||||
Diluted net income per share | $ | 9.75 | $ | 7.72 | $ | 6.91 | ||||||
Shares used in diluted per share calculations | 25,145 | 25,521 | 26,490 | |||||||||
Cash dividends paid per Class A and Class B share | $ | 1.06 | $ | 0.95 | $ | 0.76 |
LITHIA MOTORS, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (In thousands) | ||||||||||||
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Net income | $ | 245,217 | $ | 197,058 | $ | 182,999 | ||||||
Other comprehensive income, net of tax: | ||||||||||||
Gain on cash flow hedges, net of tax expense of $0, $175 and $399 | — | 277 | 649 | |||||||||
Comprehensive income | $ | 245,217 | $ | 197,335 | $ | 183,648 |
LITHIA MOTORS, INC. AND SUBSIDIARIES Consolidated Statements of Changes in Stockholders' Equity (In thousands) | ||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Total Stockholders' Equity | ||||||||||||||||||||||||||||
Class A | Class B | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||||||
Balance at December 31, 2014 | 23,671 | $ | 276,058 | 2,562 | $ | 319 | $ | 29,775 | $ | (926 | ) | $ | 367,879 | $ | 673,105 | |||||||||||||||||
Net income | — | — | — | — | — | — | 182,999 | 182,999 | ||||||||||||||||||||||||
Gain on cash flow hedges, net of tax expense of $399 | — | — | — | — | — | 649 | — | 649 | ||||||||||||||||||||||||
Issuance of stock in connection with employee stock plans | 74 | 6,065 | — | — | — | — | — | 6,065 | ||||||||||||||||||||||||
Issuance of restricted stock to employees | 217 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Repurchase of Class A common stock | (306 | ) | (31,548 | ) | — | — | — | — | — | (31,548 | ) | |||||||||||||||||||||
Class B common stock converted to Class A common stock | 20 | 3 | (20 | ) | (3 | ) | — | — | — | — | ||||||||||||||||||||||
Compensation for stock and stock option issuances and excess tax benefits from option exercises | — | 7,832 | — | — | 9,047 | — | — | 16,879 | ||||||||||||||||||||||||
Dividends paid | — | — | — | — | — | — | (19,985 | ) | (19,985 | ) | ||||||||||||||||||||||
Balance at December 31, 2015 | 23,676 | 258,410 | 2,542 | 316 | 38,822 | (277 | ) | 530,893 | 828,164 | |||||||||||||||||||||||
Net income | — | — | — | — | — | — | 197,058 | 197,058 | ||||||||||||||||||||||||
Gain on cash flow hedges, net of tax expense of $175 | — | — | — | — | — | 277 | — | 277 | ||||||||||||||||||||||||
Issuance of stock in connection with employee stock plans | 93 | 6,932 | — | — | — | — | — | 6,932 | ||||||||||||||||||||||||
Issuance of restricted stock to employees | 241 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Repurchase of Class A common stock | (1,408 | ) | (112,939 | ) | — | — | — | (112,939 | ) | |||||||||||||||||||||||
Class B common stock converted to Class A common stock | 780 | 97 | (780 | ) | (97 | ) | — | — | — | — | ||||||||||||||||||||||
Compensation for stock and stock option issuances and excess tax benefits from option exercises | — | 13,012 | — | — | 2,403 | — | — | 15,415 | ||||||||||||||||||||||||
Dividends paid | — | — | — | — | — | — | (24,131 | ) | (24,131 | ) | ||||||||||||||||||||||
Balance at December 31, 2016 | 23,382 | 165,512 | 1,762 | 219 | 41,225 | — | 703,820 | 910,776 | ||||||||||||||||||||||||
Adjustment to adopt ASU 2016-09 | — | — | — | — | (169 | ) | — | 169 | — | |||||||||||||||||||||||
Net income | — | — | — | — | — | — | 245,217 | 245,217 | ||||||||||||||||||||||||
Issuance of stock in connection with employee stock plans | 90 | 7,509 | — | — | — | — | — | 7,509 | ||||||||||||||||||||||||
Issuance of restricted stock to employees | 91 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Repurchase of Class A common stock | (361 | ) | (33,753 | ) | — | — | — | — | — | (33,753 | ) | |||||||||||||||||||||
Class B common stock converted to Class A common stock | 762 | 95 | (762 | ) | (95 | ) | — | — | — | — | ||||||||||||||||||||||
Compensation for stock and stock option issuances and excess tax benefits from option exercises | — | 7,623 | — | — | 3,649 | — | — | 11,272 | ||||||||||||||||||||||||
Option premiums paid | — | — | — | — | — | — | (33,396 | ) | — | — | (33,396 | ) | ||||||||||||||||||||
Dividends paid | — | — | — | — | — | — | (26,544 | ) | (26,544 | ) | ||||||||||||||||||||||
Issuance of stock in connection with acquisitions | 4 | 2,137 | — | — | — | — | — | 2,137 | ||||||||||||||||||||||||
Balance at December 31, 2017 | 23,968 | $ | 149,123 | 1,000 | $ | 124 | $ | 11,309 | $ | — | $ | 922,662 | $ | 1,083,218 |
LITHIA MOTORS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) | ||||||||||||
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 245,217 | $ | 197,058 | $ | 182,999 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Asset impairments | — | 13,992 | 20,124 | |||||||||
Depreciation and amortization | 57,722 | 49,369 | 41,600 | |||||||||
Stock-based compensation | 11,272 | 11,047 | 11,871 | |||||||||
(Gain) loss on disposal of other assets | (438 | ) | (4,343 | ) | 203 | |||||||
Gain from disposal activities | (5,110 | ) | (1,102 | ) | (5,919 | ) | ||||||
Deferred income taxes | (2,798 | ) | 10,138 | 12,341 | ||||||||
(Increase) decrease (net of acquisitions and dispositions): | ||||||||||||
Trade receivables, net | (57,360 | ) | (105,961 | ) | (13,047 | ) | ||||||
Inventories | (193,099 | ) | (168,847 | ) | (197,079 | ) | ||||||
Other assets | (3,120 | ) | (13,305 | ) | (31,290 | ) | ||||||
Increase (decrease) (net of acquisitions and dispositions): | ||||||||||||
Floor plan notes payable | 20,273 | 16,385 | 7,035 | |||||||||
Trade payables | 20,008 | 16,449 | 674 | |||||||||
Accrued liabilities | 37,227 | 42,852 | 16,273 | |||||||||
Other long-term liabilities and deferred revenue | 19,062 | 27,173 | 33,766 | |||||||||
Net cash provided by operating activities | 148,856 | 90,905 | 79,551 | |||||||||
Cash flows from investing activities: | ||||||||||||
Capital expenditures | (105,378 | ) | (100,761 | ) | (83,244 | ) | ||||||
Proceeds from sales of assets | 15,201 | 2,211 | 270 | |||||||||
Cash paid for other investments | (8,570 | ) | (30,280 | ) | (28,110 | ) | ||||||
Cash paid for acquisitions, net of cash acquired | (460,394 | ) | (234,700 | ) | (71,615 | ) | ||||||
Proceeds from sales of stores | 20,943 | 11,837 | 12,966 | |||||||||
Net cash used in investing activities | (538,198 | ) | (351,693 | ) | (169,733 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Borrowings on floor plan notes payable: non-trade, net | 241,479 | 252,893 | 136,201 | |||||||||
Borrowings on lines of credit | 1,754,450 | 1,244,343 | 1,261,597 | |||||||||
Repayments on lines of credit | (1,836,167 | ) | (1,123,082 | ) | (1,298,120 | ) | ||||||
Principal payments on long-term debt, scheduled | (18,218 | ) | (16,717 | ) | (15,404 | ) | ||||||
Principal payments on long-term debt and capital leases, other | (50,288 | ) | (27,703 | ) | (9,189 | ) | ||||||
Proceeds from issuance of long-term debt | 395,905 | 66,466 | 75,675 | |||||||||
Payment of debt issuance costs | (4,664 | ) | — | — | ||||||||
Proceeds from issuance of common stock | 7,509 | 6,932 | 6,065 | |||||||||
Repurchase of common stock | (33,753 | ) | (112,939 | ) | (31,548 | ) | ||||||
Dividends paid | (26,544 | ) | (24,131 | ) | (19,985 | ) | ||||||
Other financing activity | (33,396 | ) | — | — | ||||||||
Net cash provided by financing activities | 396,313 | 266,062 | 105,292 | |||||||||
Increase in cash and cash equivalents | 6,971 | 5,274 | 15,110 | |||||||||
Cash and cash equivalents at beginning of year | 50,282 | 45,008 | 29,898 | |||||||||
Cash and cash equivalents at end of year | $ | 57,253 | $ | 50,282 | $ | 45,008 | ||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Cash paid during the period for interest | $ | 68,850 | $ | 49,730 | $ | 41,098 | ||||||
Cash paid during the period for income taxes, net | 127,258 | 57,236 | 86,533 | |||||||||
Floor plan debt paid in connection with store disposals | 3,699 | 5,284 | 4,400 | |||||||||
Supplemental schedule of non-cash activities: | ||||||||||||
Debt issued in connection with acquisitions | $ | 1,748 | $ | — | $ | 2,160 | ||||||
Non-cash assets transferred in connection with acquisitions | — | 2,637 | — | |||||||||
Debt forgiven in connection with acquisitions | — | — | 1,374 | |||||||||
Debt assumed in connection with acquisitions | 84,333 | 48,081 | — | |||||||||
Acquisition of assets with capital leases | — | 8,916 | — | |||||||||
Issuance of Class A common stock in connection with acquisition | 2,137 | — | — |
• | Contracts in transit are receivables from various lenders for the financing of vehicles that we have arranged on behalf of the customer and are typically received within five to ten days of selling a vehicle. |
• | Trade receivables are comprised of amounts due from customers, lenders for the commissions earned on financing and others for commissions earned on service contracts and insurance products. |
• | Vehicle receivables represent receivables for the portion of the vehicle sales price paid directly by the customer. |
• | Manufacturer receivables represent amounts due from manufacturers, including holdbacks, rebates, incentives and warranty claims. |
• | Auto loan receivables include amounts due from customers related to retail sales of vehicles and certain finance and insurance products. |
Buildings and improvements | 5 to 40 years |
Service equipment | 5 to 15 years |
Furniture, office equipment, signs and fixtures | 3 to 10 years |
• | certain of our Franchise Agreements continue indefinitely by their terms; |
• | certain of our Franchise Agreements have limited terms, but are routinely renewed without substantial cost to us; |
• | other than franchise terminations related to the unprecedented reorganizations of Chrysler and General Motors, and allowed by bankruptcy law, we are not aware of manufacturers terminating Franchise Agreements against the wishes of the franchise owners in the ordinary course of business. A manufacturer may pressure a franchise owner to sell a franchise when the owner is in breach of the franchise agreement over an extended period of time; |
• | state dealership franchise laws typically limit the rights of the manufacturer to terminate or not renew a franchise; |
• | we are not aware of any legislation or other factors that would materially change the retail automotive franchise system; and |
• | as evidenced by our acquisition and disposition history, there is an active market for most automotive dealership franchises within the United States. We attribute value to the Franchise Agreements acquired with the dealerships we purchase based on the understanding and industry practice that the Franchise Agreements will be renewed indefinitely by the manufacturer. |
• | an other than temporary decline in fair value is reflected as an asset impairment; |
• | our portion of the operating gains and losses is included as a component of other (expense) income, net; |
• | the amortization related to the discounted fair value of future equity contributions is recognized over the life of the investments as non-cash interest expense; and |
• | tax benefits and credits are reflected as a component of our income tax provision. |
Year Ended December 31, | 2017 | 2016 | 2015 | |||||||||
Advertising expense, gross | $ | 116,124 | $ | 101,656 | $ | 89,736 | ||||||
Manufacturer cooperative advertising credits | (22,812 | ) | (20,293 | ) | (19,801 | ) | ||||||
Advertising expense, net | $ | 93,312 | $ | 81,363 | $ | 69,935 |
• | Reclassified $0.2 million as a decrease to additional paid-in capital and an increase to retained earnings upon adoption related to our policy election to record forfeitures as they occur. |
• | All prior periods presented in our Consolidated Statements of Cash Flows have been adjusted for the presentation of excess tax benefits on the cash flow statement. This resulted in a $4.4 million and a $5.0 million reclassification between financing and operating cash flows for the years ended December 31, 2016 and 2015, respectively. |
• | We had $0.3 million of tax-affected state net operating loss carryforwards related to excess tax benefits for which a deferred tax asset had not been recognized. At adoption, this amount was recorded with the offset to retained earnings. Additionally, we do not believe that it is more-likely-than-not that the asset will be utilized and, as a result, a valuation allowance in the same amount was recorded that offset the impact to retained earnings. See Note 13. |
December 31, | 2017 | 2016 | ||||||
Contracts in transit | $ | 286,578 | $ | 233,506 | ||||
Trade receivables | 45,895 | 45,193 | ||||||
Vehicle receivables | 60,022 | 43,937 | ||||||
Manufacturer receivables | 96,141 | 76,948 | ||||||
Auto loan receivables | 75,052 | 69,859 | ||||||
Other receivables | 14,634 | 3,857 | ||||||
578,322 | 473,300 | |||||||
Less: Allowance for doubtful accounts | (7,386 | ) | (5,281 | ) | ||||
Less: Long-term portion of accounts receivable, net | (48,998 | ) | (50,305 | ) | ||||
Total accounts receivable, net | $ | 521,938 | $ | 417,714 |
• | Contracts in transit are receivables from various lenders for the financing of vehicles that we have arranged on behalf of the customer and are typically received within five to ten days of selling a vehicle. |
• | Trade receivables are comprised of amounts due from customers, lenders for the commissions earned on financing and others for commissions earned on service contracts and insurance products. |
• | Vehicle receivables represent receivables for the portion of the vehicle sales price paid directly by the customer. |
• | Manufacturer receivables represent amounts due from manufacturers, including holdbacks, rebates, incentives and warranty claims. |
• | Auto loan receivables include amounts due from customers related to retail sales of vehicles and certain finance and insurance products. |
December 31, | 2017 | 2016 | ||||||
New vehicles | $ | 1,553,751 | $ | 1,338,110 | ||||
Used vehicles | 500,011 | 368,067 | ||||||
Parts and accessories | 78,982 | 66,410 | ||||||
Total inventories | $ | 2,132,744 | $ | 1,772,587 |
December 31, | 2017 | 2016 | ||||||
Land | $ | 346,680 | $ | 318,832 | ||||
Building and improvements | 685,516 | 611,798 | ||||||
Service equipment | 94,121 | 80,953 | ||||||
Furniture, office equipment, signs and fixtures | 231,454 | 141,248 | ||||||
1,357,771 | 1,152,831 | |||||||
Less accumulated depreciation | (197,802 | ) | (167,300 | ) | ||||
1,159,969 | 985,531 | |||||||
Construction in progress | 25,200 | 20,599 | ||||||
$ | 1,185,169 | $ | 1,006,130 |
Domestic | Import | Luxury | Consolidated | |||||||||||||
Balance as of December 31, 2015 ¹ | $ | 97,903 | $ | 84,384 | $ | 30,933 | $ | 213,220 | ||||||||
Additions through acquisitions 2 | 18,154 | 21,795 | 7,448 | 47,397 | ||||||||||||
Reductions through divestitures | (1,218 | ) | — | — | (1,218 | ) | ||||||||||
Balance as of December 31, 2016 ¹ | 114,839 | 106,179 | 38,381 | 259,399 | ||||||||||||
Adjustments to purchase price allocations 2,3 | (817 | ) | (1,006 | ) | (391 | ) | (2,214 | ) | ||||||||
Reductions through divestitures | — | (865 | ) | — | (865 | ) | ||||||||||
Balance as of December 31, 2017 ¹ | $ | 114,022 | $ | 104,308 | $ | 37,990 | $ | 256,320 |
(1) | Net of accumulated impairment losses of $299.3 million recorded during the year ended December 31, 2008. |
(2) | Our purchase price allocation for the acquisition of the Carbone Auto Group was finalized in the third quarter of 2017, resulting in a reclassification of $2.2 million from goodwill to franchise value. |
(3) | Our purchase price allocation is preliminary for the acquisition of the Baierl Auto Group, Downtown LA Auto Group, Albany CJD Fiat, Crater Lake Ford Lincoln, and Crater Lake Mazda and the associated goodwill has not been allocated to each of our segments. See Note 14. |
Franchise Value | ||||
Balance as of December 31, 2015 | $ | 157,699 | ||
Additions through acquisitions | 27,087 | |||
Reductions through divestitures | (518 | ) | ||
Balance as of December 31, 2016 | 184,268 | |||
Additions through acquisitions 1 | 495 | |||
Adjustments to purchase price allocations 2 | 2,214 | |||
Balance as of December 31, 2017 | $ | 186,977 |
(1) | Our purchase price allocation is preliminary for the acquisition of the Baierl Auto Group, Downtown LA Auto Group, Albany Chrysler, Crater Lake Ford Lincoln, and Crater Lake Mazda and the associated franchise value has not been allocated to each of our segments. See Note 14. |
(2) | Our purchase price allocation for the acquisition of the Carbone Auto Group was finalized in the third quarter of 2017, resulting in a reclassification of $2.2 million from goodwill to franchise value. |
December 31, | 2017 | 2016 | ||||||
Floor plan notes payable: non-trade | $ | 1,802,252 | $ | 1,506,895 | ||||
Floor plan notes payable | 116,774 | 94,602 | ||||||
Total floor plan debt | $ | 1,919,026 | $ | 1,601,497 | ||||
Used vehicle inventory financing facility | $ | 177,222 | $ | 211,000 | ||||
Revolving lines of credit | 94,568 | 142,507 | ||||||
Real estate mortgages | 469,969 | 428,367 | ||||||
5.25% Senior notes due 2025 | 300,000 | — | ||||||
Other debt | 12,512 | 11,191 | ||||||
Total long-term debt outstanding | 1,054,271 | 793,065 | ||||||
Less: unamortized debt issuance costs | (6,919 | ) | (2,184 | ) | ||||
Less: current maturities (net of current debt issuance costs) | (18,876 | ) | (20,965 | ) | ||||
Long-term debt | $ | 1,028,476 | $ | 769,916 |
Debt Covenant Ratio | Requirement | As of December 31, 2017 | ||
Current ratio | Not less than 1.10 to 1 | 1.21 to 1 | ||
Fixed charge coverage ratio | Not less than 1.20 to 1 | 2.82 to 1 | ||
Leverage ratio | Not more than 5.00 to 1 | 2.59 to 1 |
Year Ending December 31, | ||||
2018 | $ | 18,948 | ||
2019 | 47,888 | |||
2020 | 40,236 | |||
2021 | 43,291 | |||
2022 | 61,103 | |||
Thereafter | 571,014 | |||
Total principal payments | $ | 782,480 |
Year Ending December 31, | ||||
2018 | $ | 38,357 | ||
2019 | 34,587 | |||
2020 | 32,552 | |||
2021 | 30,673 | |||
2022 | 28,985 | |||
Thereafter | 243,242 | |||
Total minimum lease payments | 408,396 | |||
Less: sublease rentals | (8,005 | ) | ||
$ | 400,391 |
Year Ending December 31, | ||||
2018 | $ | 27,352 | ||
2019 | 16,113 | |||
2020 | 6,382 | |||
2021 | 2,183 | |||
2022 | 673 | |||
Thereafter | 41 | |||
Total | $ | 52,744 |
Year Ending December 31, | ||||
2018 | $ | 25,212 | ||
2019 | 20,048 | |||
2020 | 15,913 | |||
2021 | 13,292 | |||
2022 | 11,368 | |||
Thereafter | 41,424 | |||
Total | $ | 127,257 |
Repurchases Occurring in 2017 | Cumulative Repurchases as of December 31, 2017 | |||||||||||||
Shares | Average Price | Shares | Average Price | |||||||||||
2016 Share Repurchase Authorization | 329,000 | $ | 92.79 | 1,042,725 | $ | 83.86 |
Year Ended December 31, | 2017 | 2016 | 2015 | |||||||||
Shares repurchased pursuant to repurchase authorizations | 329,000 | 1,312,848 | 228,737 | |||||||||
Total purchase price (in thousands) | $ | 30,527 | $ | 104,370 | $ | 24,676 | ||||||
Average purchase price per share | $ | 92.79 | $ | 79.50 | $ | 107.88 | ||||||
Shares repurchased in association with tax withholdings on the vesting of RSUs | 32,457 | 94,826 | 77,649 |
Quarter declared | Dividend amount per Class A and Class B share | Total amount of dividends paid (in thousands) | ||||||
2015 | ||||||||
First quarter | $ | 0.16 | $ | 4,216 | ||||
Second quarter | 0.20 | 5,266 | ||||||
Third quarter | 0.20 | 5,257 | ||||||
Fourth quarter | 0.20 | 5,246 | ||||||
2016 | ||||||||
First quarter | $ | 0.20 | $ | 5,151 | ||||
Second quarter | 0.25 | 6,373 | ||||||
Third quarter | 0.25 | 6,299 | ||||||
Fourth quarter | 0.25 | 6,308 | ||||||
2017 | ||||||||
First quarter | $ | 0.25 | $ | 6,292 | ||||
Second quarter | 0.27 | 6,760 | ||||||
Third quarter | 0.27 | 6,751 | ||||||
Fourth quarter | 0.27 | 6,741 |
Year Ended December 31, | 2017 | 2016 | 2015 | Affected Line Item in the Consolidated Statement of Operations | ||||||||||
Loss on cash flow hedges | $ | — | $ | (219 | ) | $ | (449 | ) | Floor plan interest expense | |||||
Income tax benefits | — | 85 | 174 | Income tax provision | ||||||||||
Loss on cash flow hedges, net | $ | — | $ | (134 | ) | $ | (275 | ) |
Year Ended December 31, | 2017 | 2016 | 2015 | |||||||||
Compensation expense | $ | 1,059 | $ | 1,081 | $ | 1,812 | ||||||
Total discretionary contribution | $ | 1,730 | $ | 1,785 | $ | 2,249 | ||||||
Guaranteed annual return | 5.00 | % | 5.25 | % | 5.25 | % |
Year Ended December 31, | 2017 | |||
Shares purchased pursuant to 2009 ESPP | 90,881 | |||
Weighted average per share price of shares purchased | $ | 86.13 | ||
Weighted average per share discount from market value for shares purchased | $ | 15.20 | ||
As of December 31, | 2017 | |||
Shares available for purchase pursuant to 2009 ESPP | 281,870 |
RSUs | Weighted average grant date fair value | |||||
Balance, December 31, 2016 | 298,984 | $ | 80.37 | |||
Granted | 162,356 | 99.24 | ||||
Vested | (90,215 | ) | 69.61 | |||
Forfeited | (26,321 | ) | 83.86 | |||
Balance, December 31, 2017 | 344,804 | 91.81 |
Year Ended December 31, | 2017 | 2016 | 2015 | |||||||||
Per share intrinsic value of non-vested stock granted | $ | 99.24 | $ | 82.90 | $ | 88.74 | ||||||
Weighted average per share discount for compensation expense recognized under the 2009 ESPP | 15.20 | 13.00 | 15.89 | |||||||||
Total intrinsic value of stock options exercised (in millions) | — | — | 0.5 | |||||||||
Fair value of non-vested stock that vested during the period (in millions) | 69.6 | 47.5 | 19.3 | |||||||||
Stock-based compensation recognized in Consolidated Statements of Operations, as a component of selling, general and administrative expense (in millions) | 11.3 | 11.0 | 11.9 | |||||||||
Tax benefit recognized in Consolidated Statements of Operations (in millions) | 3.5 | 3.8 | 4.2 | |||||||||
Cash received from options exercised and shares purchased under all share-based arrangements (in millions) | 7.8 | 7.0 | 6.5 | |||||||||
Tax deduction realized related to stock options exercised (in millions) | 9.0 | 8.9 | 7.6 |
Derivatives in Cash Flow Hedging Relationships | Amount of gain recognized in Accumulated OCI (effective portion) | Location of loss reclassified from Accumulated OCI into Income (effective portion) | Amount of loss reclassified from Accumulated OCI into Income (effective portion) | Location of loss recognized in Income on derivative (ineffective portion and amount excluded from effectiveness testing) | Amount of loss recognized in Income on derivative (ineffective portion and amount excluded from effectiveness testing) | |||||||||||
Year Ended December 31, 2016 | ||||||||||||||||
Interest rate swap contract | $ | 233 | Floor plan interest expense | $ | (219 | ) | Floor plan interest expense | $ | (352 | ) | ||||||
Year Ended December 31, 2015 | ||||||||||||||||
Interest rate swap contract | $ | 599 | Floor plan interest expense | $ | (449 | ) | Floor plan interest expense | $ | (758 | ) |
• | Level 1 - quoted prices in active markets for identical securities; |
• | Level 2 - other significant observable inputs, including quoted prices for similar securities, interest rates, prepayment spreads, credit risk; and |
• | Level 3 - significant unobservable inputs, including our own assumptions in determining fair value. |
December 31, | 2017 | 2016 | ||||||
Carrying value | ||||||||
5.25% Senior Notes due 2025 | $ | 300,000 | $ | — | ||||
Real Estate Mortgages and Other Debt | 376,880 | 286,660 | ||||||
$ | 676,880 | $ | 286,660 | |||||
Fair value | ||||||||
5.25% Senior Notes due 2025 | $ | 312,750 | $ | — | ||||
Real Estate Mortgages and Other Debt | 385,337 | 293,522 | ||||||
$ | 698,087 | $ | 293,522 |
Year Ended December 31, | 2017 | 2016 | 2015 | |||||||||
Current: | ||||||||||||
Federal | $ | 95,128 | $ | 68,088 | $ | 58,408 | ||||||
State | 16,883 | 13,884 | 14,572 | |||||||||
112,011 | 81,972 | 72,980 | ||||||||||
Deferred: | ||||||||||||
Federal | (14,257 | ) | 4,893 | 6,046 | ||||||||
State | 4,098 | (400 | ) | 679 | ||||||||
(10,159 | ) | 4,493 | 6,725 | |||||||||
Total | $ | 101,852 | $ | 86,465 | $ | 79,705 |
Year Ended December 31, | 2017 | 2016 | 2015 | |||||||||
Federal tax provision at statutory rate | $ | 121,474 | $ | 99,233 | $ | 91,947 | ||||||
State taxes, net of federal income tax benefit | 13,308 | 10,784 | 9,357 | |||||||||
Equity investment basis difference | — | 9,470 | 11,048 | |||||||||
Non-deductible items | 1,316 | 1,436 | 882 | |||||||||
Permanent differences related to stock-based compensation | (822 | ) | 139 | 156 | ||||||||
Net change in valuation allowance | 330 | (5,133 | ) | (3,303 | ) | |||||||
General business credits | (934 | ) | (27,950 | ) | (29,093 | ) | ||||||
Deferred revaluation for change in statutory tax rate | (32,901 | ) | — | — | ||||||||
Other | 81 | (1,514 | ) | (1,289 | ) | |||||||
Income tax provision | $ | 101,852 | $ | 86,465 | $ | 79,705 |
December 31, | 2017 | 2016 | ||||||
Deferred tax assets: | ||||||||
Deferred revenue and cancellation reserves | $ | 39,397 | $ | 49,332 | ||||
Allowances and accruals, including state NOL carryforward amounts | 36,314 | 49,074 | ||||||
Credits and other | 1,112 | 1,781 | ||||||
Valuation allowance | (557 | ) | (227 | ) | ||||
Total deferred tax assets | 76,266 | 99,960 | ||||||
Deferred tax liabilities: | ||||||||
Inventories | (20,926 | ) | (22,253 | ) | ||||
Goodwill | (35,042 | ) | (41,107 | ) | ||||
Property and equipment, principally due to differences in depreciation | (73,399 | ) | (93,943 | ) | ||||
Prepaid expenses and other | (3,176 | ) | (1,732 | ) | ||||
Total deferred tax liabilities | (132,543 | ) | (159,035 | ) | ||||
Total | $ | (56,277 | ) | $ | (59,075 | ) |
Balance, December 31, 2015 | $ | 1,031 | |
Decrease related to tax positions taken - prior year | (1,031 | ) | |
Balance, December 31, 2016 | $ | — | |
Decrease related to tax positions taken - prior year | — | ||
Balance, December 31, 2017 | $ | — |
Federal | 2014 - 2017 |
20 states | 2013 - 2017 |
• | On May 1, 2017, we acquired Baierl Auto Group: an eight store platform based in Pennsylvania. |
• | On August 7, 2017, we acquired Downtown LA ("DTLA") Auto Group, a seven store platform based in California. |
• | On November 11, 2017, we acquired Albany CJD Fiat in Albany, New York. |
• | On November 15, 2017, we acquired Crater Lake Ford Lincoln and Crater Lake Mazda in Medford, Oregon. |
Year Ended December 31, | 2017 | |||
Revenue | $ | 617,300 | ||
Operating income | 9,316 |
• | 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. |
Consideration paid for the Year Ended December 31, | 2017 | 2016 | |||||
Cash paid, net of cash acquired | $ | 460,394 | $ | 234,700 | |||
Property and equipment transferred | — | 2,637 | |||||
Equity securities issued | 2,137 | — | |||||
Debt issued | 1,748 | — | |||||
$ | 464,279 | $ | 237,337 |
Assets acquired and liabilities assumed for the Year Ended December 31, | 2017 | 2016 | ||||||
Trade receivables, net | $ | 46,864 | $ | — | ||||
Inventories | 189,747 | 148,915 | ||||||
Franchise value | — | 27,087 | ||||||
Property and equipment | 146,835 | 75,345 | ||||||
Other assets | 187,549 | 990 | ||||||
Floor plan notes payable | (72,495 | ) | (30,134 | ) | ||||
Debt and capital lease obligations | (13,727 | ) | (22,813 | ) | ||||
Other liabilities | (20,494 | ) | (9,450 | ) | ||||
464,279 | 189,940 | |||||||
Goodwill | — | 47,397 | ||||||
$ | 464,279 | $ | 237,337 |
Year Ended December 31, | 2017 | 2016 | ||||||
Revenue | $ | 10,879,567 | $ | 10,727,906 | ||||
Net income | 254,966 | 219,756 | ||||||
Basic net income per share | 10.17 | 8.65 | ||||||
Diluted net income per share | 10.14 | 8.61 |
Year Ended December 31, | 2017 | 2016 | 2015 | |||||||||||||||||||||
(in thousands, except per share data) | Class A | Class B | Class A | Class B | Class A | Class B | ||||||||||||||||||
Net income applicable to common stockholders - basic | $ | 233,399 | $ | 11,818 | $ | 182,369 | $ | 14,689 | $ | 165,172 | $ | 17,827 | ||||||||||||
Reallocation of distributed net income as a result of conversion of dilutive stock options | 4 | (4 | ) | 8 | (8 | ) | 15 | (15 | ) | |||||||||||||||
Reallocation of distributed net income due to conversion of Class B to Class A common shares outstanding | 1,275 | — | 1,791 | — | 1,932 | — | ||||||||||||||||||
Conversion of Class B common shares into Class A common shares | 10,505 | — | 12,833 | — | 15,760 | — | ||||||||||||||||||
Effect of dilutive stock options on net income | 34 | (34 | ) | 57 | (57 | ) | 120 | (120 | ) | |||||||||||||||
Net income applicable to common stockholders - diluted | $ | 245,217 | $ | 11,780 | $ | 197,058 | $ | 14,624 | $ | 182,999 | $ | 17,692 | ||||||||||||
Weighted average common shares outstanding – basic | 23,857 | 1,208 | 23,515 | 1,894 | 23,729 | 2,561 | ||||||||||||||||||
Conversion of Class B common shares into Class A common shares | 1,208 | — | 1,894 | — | 2,561 | — | ||||||||||||||||||
Effect of employee stock purchases and restricted stock units on weighted average common shares | 80 | — | 112 | — | 200 | — | ||||||||||||||||||
Weighted average common shares outstanding – diluted | 25,145 | 1,208 | 25,521 | 1,894 | 26,490 | 2,561 | ||||||||||||||||||
Net income per common share - basic | $ | 9.78 | $ | 9.78 | $ | 7.76 | $ | 7.76 | $ | 6.96 | $ | 6.96 | ||||||||||||
Net income per common share - diluted | $ | 9.75 | $ | 9.75 | $ | 7.72 | $ | 7.72 | $ | 6.91 | $ | 6.91 | ||||||||||||
Antidilutive Securities | ||||||||||||||||||||||||
Shares issuable pursuant to employee stock purchases not included since they were antidulutive | 12 | — | — | — | 16 | — |
Year Ended December 31, | 2017 | 2016 | 2015 | |||||||||
Asset impairments to write investment down to fair value | $ | — | $ | 13,992 | $ | 16,521 | ||||||
Our portion of the partnership’s operating losses | — | 8,262 | 6,929 | |||||||||
Non-cash interest expense related to the amortization of the discounted fair value of future equity contributions | — | 185 | 674 | |||||||||
Tax benefits and credits generated | — | 28,530 | 30,831 |
Year Ended December 31, | 2017 | 2016 | 2015 | |||||||||
Revenues: | ||||||||||||
Domestic | $ | 3,845,830 | $ | 3,381,715 | $ | 3,038,883 | ||||||
Import | 4,432,760 | 3,764,255 | 3,330,949 | |||||||||
Luxury | 1,810,085 | 1,528,760 | 1,490,632 | |||||||||
10,088,675 | 8,674,730 | 7,860,464 | ||||||||||
Corporate and other | (2,165 | ) | 3,427 | 3,788 | ||||||||
$ | 10,086,510 | $ | 8,678,157 | $ | 7,864,252 | |||||||
Segment income*: | ||||||||||||
Domestic | $ | 105,208 | $ | 106,210 | $ | 115,145 | ||||||
Import | 117,776 | 110,204 | 98,751 | |||||||||
Luxury | 37,022 | 31,467 | 36,391 | |||||||||
260,006 | 247,881 | 250,287 | ||||||||||
Corporate and other | 167,366 | 114,321 | 74,514 | |||||||||
Depreciation and amortization | (57,722 | ) | (49,369 | ) | (41,600 | ) | ||||||
Other interest expense | (34,776 | ) | (23,207 | ) | (19,491 | ) | ||||||
Other (expense) income, net | 12,195 | (6,103 | ) | (1,006 | ) | |||||||
Income before income taxes | $ | 347,069 | $ | 283,523 | $ | 262,704 |
Year Ended December 31, | 2017 | 2016 | 2015 | |||||||||
Floor plan interest expense: | ||||||||||||
Domestic | $ | 37,196 | $ | 26,445 | $ | 21,061 | ||||||
Import | 29,009 | 18,665 | 14,959 | |||||||||
Luxury | 15,756 | 10,999 | 9,096 | |||||||||
81,961 | 56,109 | 45,116 | ||||||||||
Corporate and other | (42,625 | ) | (30,578 | ) | (25,582 | ) | ||||||
$ | 39,336 | $ | 25,531 | $ | 19,534 |
December 31, | 2017 | 2016 | ||||||
Total assets: | ||||||||
Domestic | $ | 1,338,232 | $ | 1,225,387 | ||||
Import | 1,137,934 | 959,355 | ||||||
Luxury | 641,118 | 511,779 | ||||||
Corporate and other | 1,565,782 | 1,147,629 | ||||||
$ | 4,683,066 | $ | 3,844,150 |
• | A portion of the transaction price related to sales of finance and insurance contracts is considered variable consideration and subject to accelerated recognition under the new standard. Upon adoption, we will recognize an asset associated with future estimated variable consideration and do not believe there will be a significant impact to future revenue recognized. |
• | The guidance provided clarification on how to determine and capitalize direct costs incurred. As a result, we reassessed the method used to capitalize and amortize direct cost associated with the sale of lifetime oil, lube and filter contracts. |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter(2) | |||||||||||||
Revenue | 2017 | $ | 2,236,101 | $ | 2,467,036 | $ | 2,680,342 | $ | 2,703,030 | |||||||
2016 | 1,982,861 | 2,133,339 | 2,269,967 | 2,291,990 | ||||||||||||
Gross profit | 2017 | 341,652 | 375,271 | 403,021 | 396,141 | |||||||||||
2016 | 307,182 | 322,036 | 337,261 | 334,837 | ||||||||||||
Operating income | 2017 | 86,141 | 103,950 | 105,952 | 112,942 | |||||||||||
2016 | 72,915 | 90,509 | 93,423 | 81,518 | ||||||||||||
Income before income taxes | 2017 | 81,263 | 87,836 | 86,543 | 91,427 | |||||||||||
2016 | 60,021 | 77,303 | 80,077 | 66,122 | ||||||||||||
Net income | 2017 | 50,727 | 53,200 | 51,886 | 89,404 | |||||||||||
2016 | 40,270 | 51,428 | 54,041 | 51,319 | ||||||||||||
Basic net income per share | 2017 | 2.01 | 2.12 | 2.07 | 3.58 | |||||||||||
2016 | 1.56 | 2.02 | 2.15 | 2.04 | ||||||||||||
Diluted net income per share | 2017 | 2.01 | 2.12 | 2.07 | 3.56 | |||||||||||
2016 | 1.55 | 2.01 | 2.15 | 2.03 | ||||||||||||
(1) | Quarterly data may not add to yearly totals due to rounding. |
(2) | During the fourth quarter of 2017, we recognized a $32.9 million provisional income tax benefit due to the revaluation of our deferred tax liability as a result of the U.S. tax reform bill enacted in December 2017 and a $4.9 million LIFO benefit, net of tax, primarily related to amounts expensed in the prior three quarters of 2017. |
(i) | The RSUs are subject to forfeiture based on the Company’s 2018 pro forma earnings per share, calculated as specified in Section 1.2(a)(iii) of this Agreement (the “2018 Pro Forma EPS”). The number of RSUs that will be forfeited is determined according to the highest earnings per share threshold set forth on the table below (each, an “EPS Threshold”) that the 2018 Pro Forma EPS meets or exceeds. The table below specifies the applicable percentage of RSUs that will be retained (the “Earned RSUs”), subject to adjustment as provided in Section 1.2(a)(ii), at the specified EPS Threshold. When the Committee certifies the number of Earned RSUs as provided in Section 1.2(a)(iii), all RSUs that are not Earned RSUs will be forfeited. |
EPS Threshold | Percentage of Earned RSUs |
$10.50 (highest) | 150.0% |
Any amount between $8.95 and $9.25 (inclusive) | 100.0% |
$6.80 | 50.0% |
Any amount between $0.01 and $6.79 (inclusive) | 41.667% |
$ 0.00 or negative 2018 Pro Forma EPS (lowest) | 0.0% |
Example 1: If the 2018 Pro Forma EPS is $7.26, the percentage of Earned RSUs would be 50.0% plus an additional percentage calculated as follows: (a) 50%, multiplied by a fraction, (i) the numerator of which is the amount by which 2018 Prof Forma EPS exceeds $6.80 and (ii) the denominator of which is $2.15: 50% ($0.46/2.15) = 10.7% The resulting percentage of Earned RSUs correlating to an EPS of $7.26 would be 60.7%. If the Award were 1,000 RSUs, the number of Earned RSUs would be 60.7% of 1,000, or 607 RSUs. The number of forfeited RSUs would be 1,000 minus 607, or 393. The Earned RSUs would be subject to the vesting according to the schedule specified in Section 1.2(b) of this Agreement. |
iv. | reserves for real estate leases, Company-owned service contracts (e.g., lifetime oil), and legal matters; and |
Vesting Date | Vesting of Award |
January 1, 2020 | 33% |
January 1, 2021 | 33% |
January 1, 2022 | 34% |
Example 2: If there are 607 Earned RSUs, and the Committee certifies the number of Earned RSUs on February 1, 2019, the Earned RSUs would vest and entitle Recipient to receive Shares, subject to continued employment, as follows. | ||||
Vesting Date | Vesting of Award | Shares | ||
January 1, 2020 | 33% | 202 | ||
January 1, 2021 | 33% | 202 | ||
January 1, 2022 | 34% | 203 |
Year Ended December 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
Earnings | ||||||||||||||||||||
Income from continuing operations before income taxes | $ | 347,069 | $ | 283,523 | $ | 262,704 | $ | 210,495 | $ | 165,788 | ||||||||||
Fixed charges | 83,453 | 54,096 | 46,413 | 29,797 | 25,820 | |||||||||||||||
Amortization of capitalized interest | 320 | 308 | 297 | 287 | 280 | |||||||||||||||
Capitalized interest | (524 | ) | (414 | ) | (450 | ) | (407 | ) | (85 | ) | ||||||||||
Total earnings | 430,318 | 240,172 | 191,803 | 155,820 | 115,243 | |||||||||||||||
Fixed Charges | ||||||||||||||||||||
Floor plan interest expense | 39,336 | 25,531 | 19,534 | 13,861 | 12,373 | |||||||||||||||
Other interest expense (1) | 34,776 | 23,207 | 19,491 | 10,742 | 8,350 | |||||||||||||||
Capitalized interest costs | 524 | 414 | 450 | 407 | 85 | |||||||||||||||
Interest component of rent expense | 8,817 | 4,944 | 6,938 | 4,787 | 5,012 | |||||||||||||||
Total fixed charges | 83,453 | 54,096 | 46,413 | 29,797 | 25,820 | |||||||||||||||
Ratio of earnings to fixed charges | 5.2 | x | 4.4 | x | 4.1 | x | 5.2 | x | 4.5 | x |
NAME OF ENTITY | STATE OF ORIGIN | ASSUMED BUSINESS NAME(S) (if different than entity name) |
Lithia Imports of Anchorage, Inc. | Alaska | Lithia Hyundai of Anchorage Lithia Kia of Anchorage Lithia Anchorage Auto Body |
Lithia NA, Inc. | Alaska | BMW of Anchorage MINI of Anchorage |
Lithia of Anchorage, Inc. | Alaska | Lithia Chrysler Jeep Dodge of Anchorage Lithia Value Autos |
Lithia of Fairbanks, Inc. | Alaska | Chevrolet Buick GMC of Fairbanks |
Lithia of South Central AK, Inc. | Alaska | Chevrolet of South Anchorage Chevrolet of Wasilla |
Lithia of Wasilla, LLC | Alaska | Lithia Chrysler Jeep Dodge Ram of Wasilla |
DCH (Oxnard) Inc. | California | DCH Honda of Oxnard Honda of Oxnard Supercraft Auto Body & Paint DCH Used Car Superstore |
DCH CA LLC | California | DCH Acura of Temecula DCH Acura Temecula |
DCH Calabasas-A, LLC | California | Audi Calabasas |
DCH California Investments LLC | California | |
DCH California Motors Inc. | California | DCH Toyota of Oxnard Toyota of Oxnard DCH Scion of Oxnard |
DCH Del Norte, INC. | California | DCH Lexus of Oxnard Lexus of Oxnard DCH Lexus of Santa Barbara |
DCH Korean Imports LLC | California | DCH Kia of Temecula |
DCH Mission Valley LLC | California | DCH Honda of Mission Valley |
DCH Oxnard 1521 Imports Inc. | California | DCH Audi of Oxnard Audi of Oxnard |
DCH Riverside-S, Inc. | California | DCH Subaru of Riverside |
DCH Simi Valley Inc. | California | DCH Toyota of Simi Valley Toyota of Simi Valley DCH Scion of Simi Valley |
DCH Temecula Imports LLC | California | DCH Honda of Temecula DCH Honda Temecula |
DCH Temecula Motors LLC | California | DCH Chrysler Jeep Dodge of Temecula DCH Chrysler Jeep of Temecula DCH Dodge of Temecula |
DCH Thousand Oaks-F, Inc. | California | DCH Ford of Thousand Oaks |
DCH Torrance Imports Inc. | California | DCH Toyota of Torrance DCH Scion of Torrance Torrance Toyota Torrance Scion Toyota Scion |
LA Motors Holding, LLC | California | |
LAD Carson-N, LLC | California | Carson Nissan |
LAD-AU, LLC | California | Audi Downtown LA |
LAD-MB, LLC | California | Downtown LA Motors |
LAD-N, LLC | California | Nissan of Downtown LA |
LAD-P, LLC | California | Porsche Downtown LA |
LAD-T, LLC | California | Toyota of Downtown LA |
LAD-V, LLC | California | Volkswagen of Downtown LA |
Lithia CIMR, Inc. | California | Lithia Chevrolet of Redding |
Lithia FMF, Inc. | California | Lithia Ford of Fresno Lithia Ford Lincoln of Fresno |
Lithia Fresno, Inc. | California | Lithia Subaru of Fresno Fresno Mitsubishi |
Lithia JEF, Inc. | California | Lithia Hyundai of Fresno |
Lithia MMF, Inc. | California | Lithia Mazda of Fresno Lithia Suzuki of Fresno |
Lithia NC, Inc. | California | Nissan of Clovis |
Lithia NF, Inc. | California | Lithia Nissan of Fresno |
Lithia of Concord I, Inc. | California | Lithia Chrysler Dodge Jeep Ram of Concord |
Lithia of Concord II, Inc. | California | Lithia FIAT of Concord |
Lithia of Eureka, Inc. | California | Lithia Chrysler Jeep Dodge of Eureka |
Lithia of Lodi, Inc. | California | Lodi Toyota Lodi Scion |
Lithia of Santa Rosa, Inc. | California | Lithia Chrysler Jeep Dodge of Santa Rosa |
Lithia of Stockton, Inc. | California | Nissan of Stockton, Kia of Stockton |
Lithia of Stockton-V, Inc. | California | Volkswagen of Stockton |
Lithia of Walnut Creek, Inc. | California | Diablo Subaru of Walnut Creek |
Lithia Sea P, Inc. | California | Porsche of Monterey |
Lithia Seaside, Inc. | California | BMW of Monterey |
Lithia TR, Inc. | California | Lithia Toyota of Redding Lithia Scion of Redding |
Lithia VF, Inc. | California | Volvo of Fresno |
LLL Sales CO LLC | California | DCH Gardena Honda Gardena Honda Gardena Honda, a DCH Company All-Savers Auto Sales & Leasing |
Tustin Motors Inc. | California | Honda Acura DCH Tustin Acura Tustin Acura |
Dah Chong Hong CA Trading LLC | Delaware | |
DCH Auto Group (USA) Inc. | Delaware | |
DCH Holdings LLC | Delaware | |
DCH Mamaroneck LLC | Delaware | DCH Toyota City DCH Scion City |
DCH North America Inc. | Delaware |
DCH NY Motors LLC | Delaware | DCH Wappingers Falls Toyota DCH Wappingers Falls Auto Group DCH Wappingers Falls Scion |
DCH TL Holdings LLC | Delaware | |
DCH TL NY Holdings LLC | Delaware | |
Lithia Armory Garage, LLC | Delaware | Armory Chrysler Dodge Jeep Ram Fiat of Albany |
Lithia Auction & Recon, LLC | Delaware | Auction & Recon |
Lithia BA Holding, Inc. | Delaware | |
Lithia Buffalo-A, LLC | Delaware | Ray Laks Acura of Buffalo |
Lithia Crater Lake-F, Inc. | Delaware | Crater Lake Ford Lincoln |
Lithia Crater Lake-M, Inc. | Delaware | Crater Lake Mazda |
Lithia of Honolulu-F, LLC | Delaware | Honolulu Ford |
Lithia Orchard Park-H, LLC | Delaware | Ray Laks Honda of Orchard Park |
Lithia of Honolulu-A, Inc. | Hawaii | Acura of Honolulu |
Lithia of Honolulu-BGMCC, LLC | Hawaii | Honolulu Buick GMC Honolulu Buick GMC Cadillac Honolulu Cadillac |
Lithia of Honolulu-V, LLC | Hawaii | Honolulu Volkswagen |
Lithia of Maui-H, LLC | Hawaii | Island Honda |
Lithia CCTF, Inc. | Idaho | Chevrolet of Twin Falls |
Lithia Ford of Boise, Inc. | Idaho | Lithia Ford of Boise Lithia Ford Lincoln of Boise Auto Credit of Idaho Lithia Body & Paint of Boise |
Lithia of Pocatello, Inc. | Idaho | Lithia Chrysler Jeep Dodge of Pocatello Lithia Hyundai of Pocatello Lithia Dodge Trucks of Pocatello |
Lithia of TF, Inc. | Idaho | Lithia Chrysler Jeep Dodge of Twin Falls |
Lithia AcDM, Inc. | Iowa | Acura of Johnston |
Lithia HDM, Inc. | Iowa | Honda of Ames |
Lithia MBDM, Inc. | Iowa | Mercedes Benz of Des Moines European Motorcars Des Moines |
Lithia NDM, Inc. | Iowa | Lithia Nissan of Ames |
Lithia of Des Moines, Inc. | Iowa | BMW of Des Moines European Motorcars Des Moines Lithia Body and Paint of Des Moines |
Lithia VAuDM, Inc. | Iowa | Audi Des Moines Lithia Volkswagen of Des Moines Assured Used Cars & Trucks Lithia Audi of Des Moines |
Milford DCH, Inc. | Massachusetts | DCH Toyota of Milford |
Lithia CDH, Inc. | Montana | Lithia Chrysler Jeep Dodge of Helena |
Lithia HGF, Inc. | Montana | Honda of Great Falls |
Lithia LBGGF, Inc. | Montana | Lithia Buick GMC of Great Falls |
Lithia LHGF, Inc. | Montana | Lithia Hyundai of Great Falls |
Lithia LSGF, Inc. | Montana | Lithia Subaru of Great Falls |
Lithia of Billings II LLC | Montana | Lithia Toyota of Billings Lithia Scion of Billings |
Lithia of Billings, Inc. | Montana | Lithia Chrysler Jeep Dodge of Billings |
Lithia of Great Falls, Inc. | Montana | Lithia Chrysler Jeep Dodge of Great Falls |
Lithia of Helena, Inc. | Montana | Chevrolet of Helena |
Lithia of Missoula II LLC | Montana | Lithia Toyota of Missoula Lithia Scion of Missoula |
Lithia of Missoula, Inc. | Montana | Lithia Chrysler Jeep Dodge of Missoula Lithia Auto Center of Missoula |
Lithia of Missoula III, Inc. | Montana | Lithia Ford of Missoula |
Lithia Reno Sub-Hyun, Inc. | Nevada | Lithia Reno Subaru Lithia Body & Paint |
Lithia SALMIR, Inc. | Nevada | Lithia Volkswagen of Reno Lithia Hyundai of Reno Lithia Chrysler Jeep of Reno |
797 Valley Street, LLC | New Jersey | |
Dah Chong Hong Trading Corporation | New Jersey | |
Daron Motors LLC | New Jersey | DCH Academy Honda Academy Honda |
DCH Bloomfield LLC | New Jersey | DCH Bloomfield BMW DCH Essex BMW Essex BMW BMW of Bloomfield Parkway BMW |
DCH DMS NJ, LLC | New Jersey | |
DCH Essex Inc. fka DCH-Millburn Inc. (fka DCH Essex LLC) | New Jersey | DCH Audi DCH Maplewood Audi DCH Millburn Audi Essex Motors Millburn Audi |
DCH Financial NJ, LLC | New Jersey | |
DCH Freehold LLC | New Jersey | Freehold Toyota DCH Freehold Toyota DCH Freehold Scion |
DCH Freehold-V, LLC | New Jersey | DCH Volkswagen of Freehold |
DCH Investments Inc. (New Jersey) | New Jersey | |
DCH Leasing Corporation | New Jersey | |
DCH Monmouth LLC | New Jersey | BMW of Freehold |
DCH Montclair LLC | New Jersey | Montclair Acura DCH Montclair Acura |
DCH Motors LLC | New Jersey | Kay Honda DCH Motors DCH Kay Honda |
DCH Support Services, LLC | New Jersey | |
Freehold Nissan LLC | New Jersey | DCH Freehold Nissan Freehold Nissan |
Lithia Eatontown-F, LLC | New Jersey | |
Lithia Paramus-M, LLC | New Jersey | |
Lithia Ramsey-B, LLC | New Jersey | |
Lithia Ramsey-L, LLC | New Jersey | |
Lithia Ramsey-M, LLC | New Jersey |
Lithia Ramsey-T, LLC | New Jersey | |
Paramus Collision, LLC | New Jersey | |
Paramus World Motors LLC | New Jersey | DCH Paramus Honda Paramus Honda Crown Leasing |
Sharlene Realty LLC | New Jersey | DCH Brunswick Toyota DCH Brunswick Scion DCH Collision Center |
LDLC, LLC | New Mexico | Lithia Dodge of Las Cruces |
Lithia CJDSF, Inc. | New Mexico | Lithia Chrysler Jeep Dodge of Santa Fe |
Carbone Auto Body, LLC | New York | |
DCH Investments, Inc. (New York) | New York | |
DCH Management Inc. | New York | |
DCH Nanuet LLC | New York | DCH Honda of Nanuet |
Lithia Middletown-L, LLC | New York | |
Lithia of Troy, LLC | New York | Carbone Subaru |
Lithia of Utica-1, LLC | New York | BMW of Utica |
Lithia of Utica-2, LLC | New York | Don’s Ford |
Lithia of Utica-3, LLC | New York | Don’s Subaru |
Lithia of Yorkville-1, LLC | New York | Carbone Chevrolet Buick Cadillac GMC |
Lithia of Yorkville-2, LLC | New York | Carbone Chrysler Dodge Jeep Ram |
Lithia of Yorkville-3, LLC | New York | Carbone Honda |
Lithia of Yorkville-4, LLC | New York | Carbone Hyundai |
Lithia of Yorkville-5, LLC | New York | Carbone Nissan |
Lithia ND Acquisition Corp. #1 | North Dakota | Lithia Ford Lincoln of Grand Forks |
Lithia ND Acquisition Corp. #3 | North Dakota | Lithia Chrysler Jeep Dodge of Grand Forks |
Lithia ND Acquisition Corp. #4 | North Dakota | Lithia Toyota of Grand Forks Lithia Scion of Grand Forks Lithia Toyota Scion of Grand Forks |
Cadillac of Portland Lloyd Center, LLC | Oregon | Cadillac of Portland |
Fuse Auto Sales, LLC | Oregon | |
Hutchins Eugene Nissan, Inc. | Oregon | Lithia Nissan of Eugene |
Hutchins Imported Motors, Inc. | Oregon | Lithia Toyota of Springfield Lithia Scion of Springfield Lithia Toyota Scion of Springfield |
LAD Advertising, Inc. | Oregon | LAD Advertising LAD Printing The Print Shop at the Commons The Print Shop |
LBMP, LLC | Oregon | BMW Portland |
LFKF, LLC | Oregon | Lithia Ford of Klamath Falls |
LGPAC, Inc. | Oregon | Lithia’s Grants Pass Auto Center Xpress Lube |
Lithia Aircraft, Inc. | Oregon | |
Lithia Auto Services, Inc. | Oregon | |
Lithia BNM, Inc. | Oregon |
Lithia Community Development Company, Inc. | Oregon | |
Lithia DE, Inc. | Oregon | Lithia Chrysler Jeep Dodge of Eugene |
Lithia DM, Inc. | Oregon | Lithia Dodge Lithia Chrysler Jeep Dodge Xpress Lube |
Lithia Financial Corporation | Oregon | Lithia Leasing |
Lithia HPI, Inc. | Oregon | |
Lithia Klamath, Inc. | Oregon | Lithia Chrysler Jeep Dodge of Klamath Falls Lithia Toyota of Klamath Falls Lithia Scion of Klamath Falls Lithia Klamath Falls Auto Center Lithia Body and Paint of Klamath Falls |
Lithia Medford Hon, Inc. | Oregon | Lithia Honda |
Lithia Motors Support Services, Inc. | Oregon | Lithia’s LAD Travel Service |
Lithia MTLM, Inc. | Oregon | Lithia Toyota Lithia Scion Lithia Toyota Scion |
Lithia of Bend #1, LLC | Oregon | Bend Honda |
Lithia of Bend #2, LLC | Oregon | Chevrolet Cadillac of Bend Lithia Body & Paint of Bend |
Lithia of Eugene, LLC | Oregon | Lithia FIAT of Eugene |
Lithia of Portland, LLC | Oregon | Buick GMC of Portland |
Lithia of Portland I, Inc. | Oregon | Lithia Chrysler Dodge Jeep Ram of Portland Lithia Chrysler Dodge Ram of Portland |
Lithia of Roseburg, Inc. | Oregon | Lithia Chrysler Jeep Dodge of Roseburg Lithia Roseburg Auto Center |
Lithia Oregon Investments - 1, LLC | Oregon | N/A |
Lithia Oregon Investments - 2, LLC | Oregon | N/A |
Lithia Real Estate, Inc. | Oregon | |
Lithia Rose-FT, Inc. | Oregon | Lithia Ford Lincoln of Roseburg Assured Dealer Services of Roseburg |
Lithia SOC, Inc. | Oregon | Lithia Subaru of Oregon City |
LMBB, LLC | Oregon | Mercedes-Benz of Beaverton |
LMBP, LLC | Oregon | Mercedes-Benz of Portland Smart Center of Portland |
LMOP, LLC | Oregon | MINI of Portland |
LSTAR, LLC | Oregon | |
Medford Insurance, LLC | Oregon | |
RFA Holdings, LLC | Oregon | |
Salem-B, LLC | Oregon | BMW of Salem |
Salem-H, LLC | Oregon | Honda of Salem |
Salem-V, LLC | Oregon | Volkswagen of Salem |
Southern Cascades Finance Corporation | Oregon | |
Baierl Auto Parts, Inc. | Pennsylvania | |
Baierl Automotive Corporation | Pennsylvania | Baierl Acura Baierl Automotive |
Baierl Chevrolet, Inc. | Pennsylvania | Baierl Automotive Baierl Budget Cars Baierl Buick Baierl Chevrolet Baierl Chevrolet Cadillac Baierl Cadillac Baierl Collision Center Baierl Daewoo Baierl Honda Baierl Honda Pre-Owned Baierl Isuzu Truck Baierl Kia Baierl Mitsubishi Baierl Subaru Baierl Subaru-Buick Baierl Subaru-Mitsubishi Baierl Truck Depot Baierl Used Car Supercenter Baierl Used Cars |
Baierl Holding Corporation | Pennsylvania | |
Cranberry Automotive, Inc. | Pennsylvania | Baierl Automotive Baierl Toyota-Scion Baierl Toyota |
Elizabeth Collision, LLC | Pennsylvania | |
Lithia Monroeville-A, LLC | Pennsylvania | |
Lithia Monroeville-C, LLC | Pennsylvania | |
Lithia Monroeville-F, LLC | Pennsylvania | |
Lithia Monroeville-V, LLC | Pennsylvania | |
Lithia Moon-S, LLC | Pennsylvania | |
Lithia Moon-V, LLC | Pennsylvania | |
Lithia Pittsburgh-S, LLC | Pennsylvania | |
Lithia Pleasant Hills-T, LLC | Pennsylvania | |
Lithia Uniontown-C, LLC | Pennsylvania | |
Northland Ford Inc. | Pennsylvania | Baierl Ford Baierl Collision Center |
PA Real Estate, LLC | Pennsylvania | |
PA Support Services, LLC | Pennsylvania | |
Zelienople Real Estate I, L.P. | Pennsylvania | |
Zelienople Real Estate, L.L.C. | Pennsylvania | |
Lithia Automotive, Inc. | South Dakota | |
Lithia Bryan Texas, Inc. | Texas | Lithia Chrysler Jeep Dodge of Bryan College Station |
Lithia CJDO, Inc. | Texas | All American Chrysler Jeep Dodge of Odessa |
Lithia CJDSA, Inc. | Texas | All American Chrysler Jeep Dodge of San Angelo All American Autoplex |
Lithia CM, Inc. | Texas | All American Chevrolet of Midland |
Lithia CO, Inc. | Texas | All American Chevrolet of Odessa |
Lithia CSA, Inc. | Texas | All American Chevrolet of San Angelo |
Lithia DMID, Inc. | Texas | All American Chrysler Jeep Dodge of Midland |
Lithia FLCC, LLC | Texas | Access Ford Lincoln of Corpus Christi |
Lithia HMID, Inc. | Texas | Lithia Hyundai of Odessa |
Lithia NSA, Inc. | Texas | Honda of San Angelo All American Autoplex |
Lithia of Abilene, Inc. | Texas | Honda of Abilene |
Lithia of Clear Lake, LLC | Texas | Subaru of Clear Lake |
Lithia of Corpus Christi, Inc. | Texas | Lithia Chrysler Jeep Dodge of Corpus Christi Lithia Dodge of Corpus Christi |
Lithia of Killeen, LLC | Texas | All American Chevrolet of Killeen |
Lithia TA, Inc. | Texas | Lithia Toyota of Abilene Lithia Scion of Abilene |
Lithia TO, Inc. | Texas | Lithia Toyota of Odessa Lithia Scion of Odessa |
Lithia of Bennington - 1, LLC | Vermont | Carbone Ford of Bennington |
Lithia of Bennington - 2, LLC | Vermont | Carbone Hyundai of Bennington |
Lithia of Bennington - 3, LLC | Vermont | Carbone Honda of Bennington |
Lithia of Bennington - 4, LLC | Vermont | Carbone Toyota of Bennington |
Camp Automotive, Inc. | Washington | Camp BMW Camp Chevrolet Subaru of Spokane Camp Cadillac |
Lithia Dodge of Tri-Cities, Inc. | Washington | Lithia Chrysler Jeep Dodge of Tri-Cities |
Lithia of Bellingham, LLC | Washington | Chevrolet Cadillac of Bellingham Chambers Chevrolet Cadillac of Bellingham Chevrolet Buick GMC Cadillac of Bellingham |
Lithia of Seattle, Inc. | Washington | BMW Seattle |
Lithia of Spokane, Inc. | Washington | Mercedes Benz of Spokane |
Lithia of Spokane II, Inc. | Washington | Lithia Chrysler Dodge Jeep Ram of Spokane |
Lithia of Casper, LLC | Wyoming | Greiner Ford Lincoln of Casper |
1. | I have reviewed this annual report on Form 10-K of Lithia Motors, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
1. | I have reviewed this annual report on Form 10-K of Lithia Motors, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
Document And Entity Information - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Feb. 23, 2018 |
Jun. 30, 2017 |
|
Document Information [Line Items] | |||
Entity Registrant Name | LITHIA MOTORS INC | ||
Entity Central Index Key | 0001023128 | ||
Trading Symbol | lad | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Public Float | $ 2,236,488 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Class B common stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 1,000,000 | ||
Class A common stock | |||
Document Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 24,020,790 |
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Allowance for doubtful accounts | $ 7,386 | $ 5,281 |
Accumulated depreciation | $ 197,802 | $ 167,300 |
Preferred stock, par value (in dollars per share) | $ 0 | $ 0 |
Preferred stock, shares authorized (in shares) | 15,000,000 | 15,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Class A common stock | ||
Common stock A and B, par value (in dollars per share) | $ 0 | $ 0 |
Common stock A and B, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock A and B, shares issued (in shares) | 23,968,000 | 23,382,000 |
Common stock A and B, shares outstanding (in shares) | 23,968,000 | 23,382,000 |
Class B common stock | ||
Common stock A and B, par value (in dollars per share) | $ 0 | $ 0 |
Common stock A and B, shares authorized (in shares) | 25,000,000 | 25,000,000 |
Common stock A and B, shares issued (in shares) | 1,000,000 | 1,762,000 |
Common stock A and B, shares outstanding (in shares) | 1,000,000 | 1,762,000 |
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 245,217 | $ 197,058 | $ 182,999 |
Other comprehensive income, net of tax: | |||
Gain on cash flow hedges, net of tax expense of $0, $175 and $399 | 277 | 649 | |
Comprehensive income | $ 245,217 | $ 197,335 | $ 183,648 |
Consolidated Statements of Comprehensive Income (Parentheticals) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Statement of Comprehensive Income [Abstract] | |||
Gain on cash flow hedges, tax expense | $ 0 | $ 175 | $ 399 |
Consolidated Statements of Changes in Stockholders' Equity (Parentheticals) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Statement of Stockholders' Equity [Abstract] | |||
Gain on cash flow hedges, tax expense | $ 0 | $ 175 | $ 399 |
Summary of Significant Accounting Policies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Organization and Business We are one of the largest automotive retailers in the United States and are among the fastest growing companies in the Fortune 500 (#318-2017) with 171 stores representing 30 brands in 18 states. We offer vehicles online and through our nationwide retail network. Our "Growth Powered by People" strategy drives us to innovate and continuously improve the customer experience. Our dealerships are located across the United States. We seek domestic, import and luxury franchises in cities ranging from mid-sized regional markets to metropolitan markets. We evaluate all brands for expansion opportunities provided the market is large enough to support adequate new vehicle sales to justify the required capital investment. Basis of Presentation The accompanying Consolidated Financial Statements reflect the results of operations, the financial position and the cash flows for Lithia Motors, Inc. and its directly and indirectly wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Cash and Cash Equivalents Cash and cash equivalents are defined as cash on hand and cash in bank accounts without restrictions. Accounts Receivable Accounts receivable classifications include the following:
Receivables are recorded at invoice and do not bear interest until they are 60 days past due. The allowance for doubtful accounts represents an estimate of the amount of net losses inherent in our portfolio of accounts receivable as of the reporting date. We estimate an allowance for doubtful accounts based on our historical write-off experience and consider recent delinquency trends and recovery rates. Account balances are charged against the allowance after all appropriate means of collection have been exhausted and the potential for recovery is considered remote. The annual activity for charges and subsequent recoveries is immaterial. See Note 2. Inventories Inventories are valued at the lower of net realizable value or cost, using the specific identification method for new vehicles, pooled approach for used vehicles, and the lower of cost (first-in, first-out) or market method for parts. The cost of new and used vehicle inventories includes the cost of any equipment added, reconditioning and transportation. Certain acquired inventories are valued using the last-in first-out (LIFO) method. The LIFO reserve associated with this inventory as of December 31, 2017 and 2016 was immaterial. Manufacturers reimburse us for holdbacks, floor plan interest assistance and advertising assistance, which are reflected as a reduction in the carrying value of each vehicle purchased. We recognize advertising assistance, floor plan interest assistance, holdbacks, cash incentives and other rebates received from manufacturers that are tied to specific vehicles as a reduction to cost of sales as the related vehicles are sold. Parts purchase discounts that we receive from the manufacturer are reflected as a reduction in the carrying value of the parts purchased from the manufacturer and are recognized as a reduction to cost of goods sold as the related inventory is sold. See Note 3. Property and Equipment Property and equipment are stated at cost and depreciated over their estimated useful lives on the straight-line basis. Leasehold improvements made at the inception of the lease or during the term of the lease are amortized on a straight-line basis over the shorter of the life of the improvement or the remaining term of the lease. The range of estimated useful lives is as follows:
The cost for maintenance, repairs and minor renewals is expensed as incurred, while significant remodels and betterments are capitalized. In addition, interest on borrowings for major capital projects, significant remodels, and betterments are capitalized. Capitalized interest becomes a part of the cost of the depreciable asset and is depreciated according to the estimated useful lives as previously stated. For the years ended December 31, 2017, 2016 and 2015, we recorded capitalized interest of $0.5 million, $0.4 million and $0.5 million, respectively. When an asset is retired, or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is credited or charged to income from operations. Leased property meeting certain criteria are recorded as capital leases. We have capital leases for certain locations, expiring at various dates through December 31, 2050. Our capital leases are included in property and equipment on our Consolidated Balance Sheets. Amortization of capitalized leased assets is computed on a straight-line basis over the term of the lease, unless the lease transfers title or it contains a bargain purchase option, in which case, it is amortized over the asset’s useful life and is included in depreciation expense. Capital lease obligations are recorded as the lesser of the estimated fair market value of the leased property or the net present value of the aggregated future minimum payments and are included in current maturities of long-term debt and long-term debt on our Consolidated Balance Sheets. Interest associated with these obligations is included in other interest expense in the Consolidated Statements of Operations. See Note 7. Long-lived assets held and used by us are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable. We consider several factors when evaluating whether there are indications of potential impairment related to our long-lived assets, including store profitability, overall macroeconomic factors and the impact of our strategic management decisions. If recoverability testing is performed, we evaluate assets to be held and used by comparing the carrying amount of an asset to future net undiscounted cash flows associated with the asset, including its disposition. If such assets are considered to be impaired, the amount by which the carrying amount of the assets exceeds the fair value of the assets is recognized as a charge to income from operations. See Note 4. Goodwill Goodwill represents the excess purchase price over the fair value of net assets acquired which is not allocable to separately identifiable intangible assets. Other identifiable intangible assets, such as franchise rights, are separately recognized if the intangible asset is obtained through contractual or other legal right or if the intangible asset can be sold, transferred, licensed or exchanged. Goodwill is not amortized but tested for impairment at least annually, and more frequently if events or circumstances indicate the carrying amount of the reporting unit more likely than not exceeds fair value. We have the option to qualitatively or quantitatively assess goodwill for impairment and we evaluated our goodwill using a qualitative assessment process. Goodwill is tested for impairment at the reporting unit level. Our reporting units are individual stores as this is the level at which discrete financial information is available and for which operating results are regularly reviewed by our chief operating decision maker to allocate resources and assess performance. We test our goodwill for impairment on October 1 of each year. In 2017, we evaluated our goodwill using a qualitative assessment process. If the qualitative factors determine that it is more likely than not that the fair value of the reporting unit exceeds the carrying amount, goodwill is not impaired. If the qualitative assessment determines it is more likely than not the fair value is less than the carrying amount, the first step of the two-step goodwill impairment test is performed. See Note 5. Franchise Value We enter into agreements (“Franchise Agreements”) with the manufacturers. Franchise value represents a right received under Franchise Agreements with manufacturers and is identified on an individual store basis. We evaluated the useful lives of our Franchise Agreements based on the following factors:
Accordingly, we have determined that our Franchise Agreements will continue to contribute to our cash flows indefinitely and, therefore, have indefinite lives. As an indefinite-lived intangible asset, franchise value is tested for impairment at least annually, and more frequently if events or circumstances indicate the carrying value may exceed fair value. The impairment test for indefinite-lived intangible assets requires the comparison of estimated fair value to carrying value. An impairment charge is recorded to the extent the fair value is less than the carrying value. We have the option to qualitatively or quantitatively assess indefinite-lived intangible assets for impairment. We evaluated our indefinite-lived intangible assets using a qualitative assessment process. We have determined the appropriate unit of accounting for testing franchise value for impairment is each individual store. We test our franchise value for impairment on October 1 of each year. In 2017, we evaluated our franchise value using a qualitative assessment process. If the qualitative factors discussed above determine that it is more likely than not that the fair value of the individual store's franchise value exceeds the carrying amount, the franchise value is not impaired and the second step is not necessary. If the qualitative assessment determines it is more likely than not the fair value is less than the carrying value, then a quantitative valuation of our franchise value is performed and an impairment would be recorded. See Note 5. Equity-Method Investments In 2016 and 2015, we owned investments in certain partnerships which we accounted for under the equity method. These investments are included as a component of other non-current assets in our Consolidated Balance Sheets. We determined that we lacked certain characteristics to direct the operations of the businesses and, as a result, do not qualify to consolidate these investments. Activity related to our equity-method investments is recognized in our Consolidated Statements of Operations as follows:
Periodically, whenever events or circumstances indicate that the carrying amount of assets may be impaired, we evaluate the equity-method investments for indications of loss resulting from an other than temporary decline. If the equity-method investment is determined to be impaired, the amount by which the carrying amount exceeds the fair value of the investment is recognized as a charge to income from operations. See Notes 12 and 17. Advertising We expense production and other costs of advertising as incurred as a component of selling, general and administrative expense. Additionally, manufacturer cooperative advertising credits for qualifying, specifically-identified advertising expenditures are recognized as a reduction of advertising expense. Advertising expense and manufacturer cooperative advertising credits were as follows (in thousands):
Contract Origination Costs Contract origination commissions paid to our employees directly related to the sale of our self-insured lifetime lube, oil and filter service contracts are deferred and charged to expense in proportion to the associated revenue to be recognized. Legal Costs We are a party to numerous legal proceedings arising in the normal course of business. We accrue for certain legal costs, including attorney fees and potential settlement claims related to various legal proceedings that are estimable and probable. See Note 7. Stock-Based Compensation Compensation costs associated with equity instruments exchanged for employee and director services are measured at the grant date, based on the fair value of the award. If there is a performance-based element to the award, the expense is recognized based on the estimated attainment level, estimated time to achieve the attainment level and/or the vesting period. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards. The fair value of non-vested stock awards is based on the intrinsic value on the date of grant. Shares to be issued upon the exercise of stock options and the vesting of stock awards will come from newly issued shares. See Note 10. In January 2017, we adopted ASU 2016-09, which simplifies the accounting for several aspects of share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. As a result, we recorded the following:
Income and Other Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, their respective tax bases, operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance, if needed, reduces deferred tax assets when it is more likely than not that some or all of the deferred tax assets will not be realized. When there are situations with uncertainty as to the timing of the deduction, the amount of the deduction, or the validity of the deduction, we adjust our financial statements to reflect only those tax positions that are more-likely-than-not to be sustained. Positions that meet this criterion are measured using the largest benefit that is more than 50% likely to be realized. Interest and penalties are recorded as income tax provision in the period incurred or accrued when related to an uncertain tax position. See Note 13. We account for all taxes assessed by a governmental authority that are directly imposed on a revenue-producing transaction (i.e., sales, use, value-added) on a net (excluded from revenues) basis. Concentration of Risk and Uncertainties We purchase substantially all of our new vehicles and inventory from various manufacturers at the prevailing prices charged by auto manufacturers to all franchised dealers. Our overall sales could be impacted by the auto manufacturers’ inability or unwillingness to supply dealerships with an adequate supply of popular models. We depend on our manufacturers to provide a supply of vehicles which supports expected sales levels. In the event that manufacturers are unable to supply the needed level of vehicles, our financial performance may be adversely impacted. We depend on our manufacturers to deliver high-quality, defect-free vehicles. In the event that manufacturers experience future quality issues, our financial performance may be adversely impacted. We are subject to a concentration of risk in the event of financial distress, including potential reorganization or bankruptcy, of a major vehicle manufacturer. Our sales volume could be materially adversely impacted by the manufacturers’ or distributors’ inability to supply the stores with an adequate supply of vehicles. We also receive incentives and rebates from our manufacturers, including cash allowances, financing programs, discounts, holdbacks and other incentives. These incentives are recorded as accounts receivable in our Consolidated Balance Sheets until payment is received. Our financial condition could be materially adversely impacted by the manufacturers’ or distributors’ inability to continue to offer these incentives and rebates at substantially similar terms, or to pay our outstanding receivables. We enter into Franchise Agreements with the manufacturers. The Franchise Agreements generally limit the location of the dealership and provide the auto manufacturer approval rights over changes in dealership management and ownership. The auto manufacturers are also entitled to terminate the Franchise Agreement if the dealership is in material breach of the terms. Our ability to expand operations depends, in part, on obtaining consents of the manufacturers for the acquisition of additional dealerships. See also “Goodwill” and “Franchise Value” above. We have a credit facility with a syndicate of 18 financial institutions, including seven manufacturer-affiliated finance companies. Several of these financial institutions also provide vehicle financing for certain new vehicles, vehicles that are designated for use as service loaners and mortgage financing. This credit facility is the primary source of floor plan financing for our new vehicle inventory and also provides used vehicle financing and a revolving line of credit. The term of the facility extends through August 2022. At maturity, our financial condition could be materially adversely impacted if lenders are unable to provide credit that has typically been extended to us or with terms unacceptable to us. Our financial condition could be materially adversely impacted if these providers incur losses in the future or undergo funding limitations. See Note 6. We anticipate continued organic growth and growth through acquisitions. This growth will require additional credit which may be unavailable or with terms unacceptable to us. If these events were to occur, we may not be able to borrow sufficient funds to facilitate our growth. Financial Instruments, Fair Value and Market Risks The carrying amounts of cash equivalents, accounts receivable, trade payables, accrued liabilities and short-term borrowings approximate fair value because of the short-term nature and current market rates of these instruments. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. See Note 12. We have variable rate floor plan notes payable, mortgages and other credit line borrowings that subject us to market risk exposure. At December 31, 2017, we had $2.3 billion outstanding in variable rate debt. These borrowings had interest rates ranging from 2.75% to 4.25% per annum. An increase or decrease in the interest rates would affect interest expense for the period accordingly. The fair value of long-term, fixed interest rate debt is subject to interest rate risk. Generally, the fair value of fixed interest rate debt will increase as interest rates fall because we could refinance for a lower rate. Conversely, the fair value of fixed interest rate debt will decrease as interest rates rise. The interest rate changes affect the fair value, but do not impact earnings or cash flows. We monitor our fixed interest rate debt regularly, refinancing debt that is materially above market rates if permitted. See Note 12. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and related notes to financial statements. Changes in such estimates may affect amounts reported in future periods. Estimates are used in the calculation of certain reserves maintained for charge-backs on estimated cancellations of service contracts; life, accident and disability insurance policies; finance fees from customer financing contracts and uncollectible accounts receivable. We also use estimates in the calculation of various expenses, accruals and reserves, including anticipated losses related to workers’ compensation insurance; anticipated losses related to self-insurance components of our property and casualty and medical insurance; self-insured lifetime lube, oil and filter service contracts; discretionary employee bonuses, the Transition Agreement with Sidney B. DeBoer, our Chairman of the Board; warranties provided on certain products and services; legal reserves and stock-based compensation. We also make certain estimates regarding the assessment of the recoverability of long-lived assets, indefinite-lived intangible assets and deferred tax assets. We offer a limited warranty on the sale of most retail used vehicles. This warranty is based on mileage and time. We also offer a mileage and time based warranty on parts used in our service repair work and on tire purchases. The cost that may be incurred for these warranties is estimated at the time the related revenue is recorded. A reserve for these warranty liabilities is estimated based on current sales levels, warranty experience rates and estimated costs per claim. The annual activity for reserve increases and claims is immaterial. As of December 31, 2017 and 2016, the accrued warranty balance was $0.4 million and $0.4 million, respectively. Fair Value of Assets Acquired and Liabilities Assumed We estimate the fair value of the assets acquired and liabilities assumed in a business combination using various assumptions. The most significant assumptions used relate to determining the fair value of property and equipment and intangible franchise rights. We estimate the fair value of property and equipment based on a market valuation approach. We use prices and other relevant information generated primarily by recent market transactions involving similar or comparable assets, as well as our historical experience in divestitures, acquisitions and real estate transactions. Additionally, we may use a cost valuation approach to value long-lived assets when a market valuation approach is unavailable. Under this approach, we determine the cost to replace the service capacity of an asset, adjusted for physical and economic obsolescence. When available, we use valuation inputs from independent valuation experts, such as real estate appraisers and brokers, to corroborate our estimates of fair value. We estimate the fair value of our franchise rights primarily using the Multi-Period Excess Earnings (“MPEE”) model. The forecasted cash flows used in the MPEE model contain inherent uncertainties, including significant estimates and assumptions related to growth rates, margins, general operating expenses, and cost of capital. We use primarily internally-developed forecasts and business plans to estimate the future cash flows that each franchise will generate. We have determined that only certain cash flows of the store are directly attributable to the franchise rights. We estimate the appropriate interest rate to discount future cash flows to their present value equivalent taking into consideration factors such as a risk-free rate, a peer group average beta, an equity risk premium and a small stock risk premium. Additionally, we also may use a market approach to determine the fair value of our franchise rights. These market data points include our acquisition and divestiture experience and third-party broker estimates. We use a relief-from-royalty method to determine the fair value of a trade name. Future cost savings associated with owning, rather than licensing, a trade name is estimated based on a royalty rate and management’s forecasted sales projections. The discount rate applied to the future cost savings factors an equity market risk premium, small stock risk premium, an average peer group beta, a risk-free interest rate and a premium for forecast risk. Revenue Recognition Revenue from the sale of a vehicle is recognized when a contract is signed by the customer, financing has been arranged or collectibility is reasonably assured and the delivery of the vehicle to the customer is made. We do not allow the return of new or used vehicles, except where mandated by state law. Revenue from parts and service is recognized upon delivery of the parts or service to the customer. We allow for customer returns on sales of our parts inventory up to 30 days after the sale. Most parts returns generally occur within one to two weeks from the time of sale, and are not significant. Finance fees earned for notes placed with financial institutions in connection with customer vehicle financing are recognized, net of estimated charge-backs, as finance and insurance revenue upon acceptance of the credit by the financial institution and recognition of the sale of the vehicle. Insurance income from third party insurance companies for commissions earned on credit life, accident and disability insurance policies sold in connection with the sale of a vehicle are recognized, net of anticipated cancellations, as finance and insurance revenue upon execution of the insurance contract and recognition of the sale of the vehicle. Commissions from third party service contracts are recognized, net of anticipated cancellations, as finance and insurance revenue upon sale of the contracts and recognition of the sale of the vehicle. We also participate in future underwriting profit, pursuant to retrospective commission arrangements, which is recognized in income as earned. Revenue related to self-insured lifetime lube, oil and filter service contracts is deferred and recognized based on expected future claims for service. The expected future claims experience is evaluated periodically to ensure it remains appropriate given actual claims history. Segment Reporting While we have determined that each individual store is a reporting unit, we have aggregated our reporting units into three reportable segments based on their economic similarities: Domestic, Import and Luxury. Our Domestic segment is comprised of retail automotive franchises that sell new vehicles manufactured by Chrysler, General Motors and Ford. Our Import segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Honda, Toyota, Subaru, Nissan and Volkswagen. Our Luxury segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by BMW, Mercedes-Benz and Lexus. The franchises in each segment also sell used vehicles, parts and automotive services, and automotive finance and insurance products. Corporate and other revenue and income include the results of operations of our stand-alone collision center offset by unallocated corporate overhead expenses, such as corporate personnel costs, and certain unallocated reserve and elimination adjustments. Additionally, certain internal corporate expense allocations increase segment income for Corporate and other while decreasing segment income for the other operating segments. These internal corporate expense allocations are used to increase comparability of our dealerships and reflect the capital burden a stand-alone dealership would experience. Examples of these internal allocations include internal rent expense, internal floor plan financing charges, and internal fees charged to offset employees within our corporate headquarters that perform certain dealership functions. We define our chief operating decision maker (“CODM”) to be certain members of our executive management group. Historical and forecasted operational performance is evaluated on a store-by-store basis and on a consolidated basis by the CODM. We derive the operating results of the segments directly from our internal management reporting system. The accounting policies used to derive segment results are substantially the same as those used to determine our consolidated results, excepted for the internal allocation within Corporate and other discussed above. Our CODM measures the performance of each reportable segment based on several metrics, including earnings from operations, and uses these results, in part, to evaluate the performance of, and to allocate resources to, each of the reportable segments. See Note 18. |
Accounts Receivable |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable | Accounts Receivable Accounts receivable consisted of the following (in thousands):
Accounts receivable classifications include the following:
Interest income on auto loan receivables is recognized based on the contractual terms of each loan and is accrued until repayment, charge-off or repossession. Direct costs associated with loan originations are capitalized and expensed as an offset to interest income when recognized on the loans. All other receivables are recorded at invoice and do not bear interest until they are 60 days past due. The allowance for doubtful accounts is estimated based on our historical write-off experience and is reviewed monthly. Consideration is given to recent delinquency trends and recovery rates. Account balances are charged against the allowance after all appropriate means of collection have been exhausted and the potential for recovery is considered remote. The annual activity for charges and subsequent recoveries is immaterial. The long-term portion of accounts receivable was included as a component of other non-current assets in the Consolidated Balance Sheets. |
Inventories |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories The components of inventories consisted of the following (in thousands):
The new vehicle inventory cost is generally reduced by manufacturer holdbacks and incentives, while the related floor plan notes payable are reflective of the gross cost of the vehicle. As of December 31, 2017 and 2016, the carrying value of inventory had been reduced by $19.8 million and $18.1 million, respectively, for assistance received from manufacturers as discussed in Note 1. |
Property and Equipment |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Property and Equipment Property and equipment consisted of the following (in thousands):
Long-lived Asset Impairment Charges In 2015, we recorded $3.6 million of impairment charges associated with certain property and equipment. As the expected future use of these facilities and equipment changed, the long-lived assets were tested for recoverability and were determined to have a carrying value exceeding their fair value. We did not record any impairment charges associated with property and equipment in 2017 or 2016. |
Goodwill and Franchise Value |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Franchise Value | Goodwill and Franchise Value The following is a roll-forward of goodwill (in thousands):
The following is a roll-forward of franchise value (in thousands):
|
Credit Facilities and Long-term Debt |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Credit Facilities and Long-term Debt | Credit Facilities and Long-Term Debt Below is a summary of our outstanding balances on credit facilities and long-term debt (in thousands):
Credit Facility On August 1, 2017, we amended our existing credit facility to increase the total financing commitment to $2.4 billion which matures in August 2022. This syndicated credit facility is comprised of 18 financial institutions, including seven manufacturer-affiliated finance companies. Under our credit facility we are permitted to allocate up to $1.9 billion in new vehicle inventory floor plan financing and up to a total of $500 million in used vehicle inventory floor plan financing and in revolving financing for general corporate purposes, including acquisitions and working capital. This credit facility may be expanded to $2.75 billion total availability, subject to lender approval. All borrowings from, and repayments to, our lending group are presented in the Consolidated Statements of Cash Flows as financing activities. The availability of the revolving line of credit under our syndicated credit facility is determined according to a borrowing base comprised of a portion of certain accounts, receivables, invoices, inventory and equipment. The borrowing base is reduced by the sum of the outstanding aggregate principal balance of new and used vehicle floor plan loans and new and used swing line loans. Our obligations under our revolving syndicated credit facility are secured by a substantial amount of our assets, including our inventory (including new and used vehicles, parts and accessories), equipment, accounts receivable (and other rights to payment) and our equity interests in certain of our subsidiaries. Under our revolving syndicated credit facility, our obligations relating to new vehicle floor plan loans are secured only by collateral owned by borrowers of new vehicle floor plan loans under the credit facility. We have the ability to deposit up to $50 million in cash in Principal Reduction (PR) accounts associated with our new vehicle floor plan commitment. The PR accounts are recognized as offsetting credits against outstanding amounts on our new vehicle floor plan commitment and would reduce interest expense associated with the outstanding principal balance. As of December 31, 2017, we had no balances in our PR accounts. If the outstanding principal balance on our new vehicle inventory floor plan commitment, plus requests on any day, exceeds 95% of the loan commitment, a portion of the revolving line of credit must be reserved. The reserve amount is equal to the lesser of $15.0 million or the maximum revolving line of credit commitment less the outstanding balance on the line less outstanding letters of credit. The reserve amount decreases the revolving line of credit availability and may be used to repay the new vehicle floor plan commitment balance. The interest rate on the credit facility varies based on the type of debt, with the rate of one-month LIBOR plus 1.25% for new vehicle floor plan financing, one-month LIBOR plus 1.50% for used vehicle floor plan financing; and a variable interest rate on the revolving financing ranging from the one-month LIBOR plus 1.25% to 2.50%, depending on our leverage ratio. The annual interest rate associated with our new vehicle floor plan commitment was 2.82% at December 31, 2017. The annual interest rate associated with our used vehicle inventory financing facility and our revolving line of credit was 3.07% at December 31, 2017. Under the terms of our credit facility we are subject to financial covenants and restrictive covenants that limit or restrict our incurring additional indebtedness, making investments, selling or acquiring assets and granting security interests in our assets. Under our credit facility, we are required to maintain the ratios detailed in the following table:
Other Lines of Credit We have other lines of credit with a total financing commitment of $3.5 million for general corporate purposes, including acquisitions and working capital. Substantially all of these other lines of credit mature in 2019 and have interest rates ranging up to 2.94%. As of December 31, 2017, $0.6 million was outstanding on these other lines of credit. Floor Plan Notes Payable We have floor plan agreements with manufacturer-affiliated finance companies for certain new vehicles and vehicles that are designated for use as service loaners. The interest rates on these floor plan notes payable commitments vary by manufacturer and are variable rates. As of December 31, 2017, $116.8 million was outstanding on these agreements at interest rates ranging up to 5.50%. Borrowings from, and repayments to, manufacturer-affiliated finance companies are classified as operating activities in the Consolidated Statements of Cash Flows. Real Estate Mortgages and Other Debt We have mortgages associated with our owned real estate. Interest rates related to this debt ranged from 2.8% to 5.0% at December 31, 2017. The mortgages are payable in various installments through October 2034. As of December 31, 2017, we had fixed interest rates on 78.9% of our outstanding mortgage debt. Our other debt includes capital leases and sellers’ notes. The interest rates associated with our other debt ranged from 3.1% to 8.0% at December 31, 2017. This debt, which totaled $12.5 million at December 31, 2017, is due in various installments through December 2050. 5.25% Senior Notes Due 2025 On July 24, 2017, we issued $300 million in aggregate principal amount of 5.25% Senior Notes due 2025 ("the Notes") to eligible purchasers in a private placement under Rule 144A and Regulation S of the Securities Act of 1933. Interest accrues on the Notes from July 24, 2017 and is payable semiannually on February 1 and August 1. The first interest payment is due on February 1, 2018. We may redeem the Notes in whole or in part at any time prior to August 1, 2020 at a price equal to 100% of the principal amount plus a make-whole premium set forth in the Indenture and accrued and unpaid interest. After August 1, 2020, we may redeem some or all of the Notes subject to the redemption prices set forth in the Indenture. If we experience specific kinds of changes of control, as described in the Indenture, we must offer to repurchase the Notes at 101% of their principal amount plus accrued and unpaid interest to the date of purchase. Future Principal Payments The schedule of future principal payments associated with real estate mortgages, our 5.25% Senior Notes and other debt as of December 31, 2017 was as follows (in thousands):
|
Commitments and Contingencies |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Leases We lease certain facilities under non-cancelable operating and capital leases. These leases expire at various dates through 2050. Certain lease commitments contain fixed payment increases at predetermined intervals over the life of the lease, while other lease commitments are subject to escalation clauses of an amount equal to the increase in the cost of living based on the “Consumer Price Index - U.S. Cities Average - All Items for all Urban Consumers” published by the U.S. Department of Labor, or a substantially equivalent regional index. Lease expense related to operating leases is recognized on a straight-line basis over the life of the lease. The minimum lease payments under our operating and capital leases after December 31, 2017 are as follows (in thousands):
Rent expense, net of sublease income, for all operating leases was $33.4 million, $26.8 million, and $23.8 million for the years ended December 31, 2017, 2016 and 2015, respectively. These amounts are included as a component of selling, general and administrative expenses in our Consolidated Statements of Operations. In connection with dispositions of stores, we occasionally assign or sublet our interests in any real property leases associated with such stores to the purchaser. We often retain responsibility for the performance of certain obligations under such leases to the extent that the assignee or sublessee does not perform. Additionally, we may remain subject to the terms of any guarantees and have correlating indemnification rights against the assignee or sublessee in the event of non-performance, as well as certain other defenses. We may also be called upon to perform other obligations under these leases, such as environmental remediation of the premises or repairs upon termination of the lease. We currently have no reason to believe that we will be called upon to perform any such services; however, there can be no assurance that any future performance required by us under these leases will not have a material adverse effect on our financial condition or results of operations. Charge-Backs for Various Contracts We have recorded a liability of $52.7 million as of December 31, 2017 for our estimated contractual obligations related to potential charge-backs for vehicle service contracts, lifetime oil change contracts and other various insurance contracts that are terminated early by the customer. We estimate that the charge-backs will be paid out as follows (in thousands):
Lifetime Lube, Oil and Filter Contracts We retain the obligation for lifetime lube, oil and filter service contracts sold to our customers and assumed the liability of certain existing lifetime lube, oil and filter contracts. These amounts are recorded as deferred revenues. At the time of sale, we defer the full sale price and recognize the revenue based on the rate we expect future costs to be incurred. As of December 31, 2017, we had a deferred revenue balance of $127.3 million associated with these contracts and estimate the deferred revenue will be recognized as follows (in thousands):
The current portion of this deferred revenue balance is recorded as a component of accrued liabilities in our Consolidated Balance Sheets. We periodically evaluate the estimated future costs of these assumed contracts and record a charge if future expected claim and cancellation costs exceed the deferred revenue to be recognized. As of December 31, 2017, we had a reserve balance of $3.4 million recorded as a component of accrued liabilities and other long-term liabilities in our Consolidated Balance Sheets. The charges associated with this reserve were recognized in 2011 and earlier. Self-insurance Programs We self-insure a portion of our property and casualty insurance, vehicle open lot coverage, medical insurance and workers’ compensation insurance. Third parties are engaged to assist in estimating the loss exposure related to the self-retained portion of the risk associated with these insurances. Additionally, we analyze our historical loss and claims experience to estimate the loss exposure associated with these programs. As of December 31, 2017 and 2016, we had liabilities associated with these programs of $31.2 million and $32.8 million, respectively, recorded as a component of accrued liabilities and other long-term liabilities in our Consolidated Balance Sheets. Litigation We are party to numerous legal proceedings arising in the normal course of our business. Although we do not anticipate that the resolution of legal proceedings arising in the normal course of business or the proceedings described below will have a material adverse effect on our business, results of operations, financial condition, or cash flows, we cannot predict this with certainty. California Wage and Hour Litigations In August 2014, Ms. Holzer filed a complaint in the Central District of California (Holzer v. DCH Auto Group (USA) Inc., Case No. BC558869) alleging that her employer, an affiliate of DCH Auto Group (USA) Inc., failed to provide vehicle finance and sales persons, service advisors, and other clerical and hourly workers accurate and complete wage statements; and statutory meal and rest periods. The complaint also alleges that the employer failed to pay these employees for off-the-clock time worked; and wages due at termination. The plaintiffs also seek attorney fees and costs. The plaintiffs (and several other employees in separate actions) are seeking relief under California’s PAGA provisions. During the pendency of Holzer, related cases were filed that made substantially similar non-technician claims. In January 2017, DCH and all non-technician plaintiffs agreed in principle to settle the representative claims, and this settlement was approved by the California courts in December 2017. DCH Auto Group (USA) Limited must indemnify Lithia Motors, Inc. for losses related to this claim pursuant to the stock purchase agreement between Lithia Motors, Inc. and DCH Auto Group (USA) Limited dated June 14, 2014. We believe the exposure related to this lawsuit, when considered in relation to the terms of the stock purchase agreement, is immaterial to our financial statements. |
Stockholders' Equity |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders’ Equity Class A and Class B Common Stock The shares of Class A common stock are not convertible into any other series or class of our securities. Each share of Class B common stock, however, is freely convertible into one share of Class A common stock at the option of the holder of the Class B common stock. All shares of Class B common stock shall automatically convert to shares of Class A common stock (on a share-for-share basis, subject to adjustment) on the earliest record date for an annual meeting of our stockholders on which the number of shares of Class B common stock outstanding is less than 1% of the total number of shares of common stock outstanding. Shares of Class B common stock may not be transferred to third parties, except for transfers to certain family members and in other limited circumstances. Holders of Class A common stock are entitled to one vote for each share held of record and holders of Class B common stock are entitled to ten votes for each share held of record. The Class A common stock and Class B common stock vote together as a single class on all matters submitted to shareholders. Repurchases of Class A Common Stock Repurchases of our Class A Common Stock occurred under repurchase authorizations granted by our Board of Directors and related to shares withheld as part of the vesting of restricted stock units ("RSUs"). In August 2011, our Board of Directors authorized the repurchase of up to 2 million shares of our Class A common stock and, on July 20, 2012, our Board of Directors authorized the repurchase of 1 million additional shares of our Class A common stock. Effective February 29, 2016, our Board of Directors authorized the repurchase of up to $250 million of our Class A common stock. This authorization replaced the existing authorizations, increasing the total and establishing a maximum dollar rather than share amount. Share repurchases under our authorizations were as follows:
As of December 31, 2017, we had $162.6 million available for repurchases pursuant to our 2016 share repurchase authorization. In addition, during 2017, we repurchased 32,457 shares at an average price of $99.40 per share, for a total of $3.2 million, related to tax withholdings associated with the vesting of RSUs. The repurchase of shares related to tax withholdings associated with stock awards does not reduce the number of shares available for repurchase as approved by our Board of Directors. The following is a summary of our repurchases in the years ended December 31, 2017, 2016 and 2015:
In December 2017, we entered into a structured repurchase agreement involving the use of capped call options for the purchase of our Class A common stock. We paid a fixed sum upon execution of the agreement in exchange for the right to receive either a pre-determined amount of cash or stock. Upon expiration of the agreement, if the closing market price of our common stock is above the pre-determined price, we will have our initial investment returned with a premium in either cash or shares (at our election). If the closing market price of our common stock is at or below the pre-determined price, we will receive the number of shares specified in the agreement. We paid net premiums of $33.4 million in December 2017 to enter this agreement, which was recorded as a reduction of additional paid-in capital and, as of December 31, 2017, the options were outstanding. Dividends We declared and paid dividends on our Class A and Class B Common Stock as follows:
Reclassification From Accumulated Other Comprehensive Loss The reclassification from accumulated other comprehensive loss was as follows (in thousands):
See Note 11. |
401(k) Profit Sharing, Deferred Compensation and Long-term Incentive Plans |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Postemployment Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
401(k) Profit Sharing, Deferred Compensation and Long-Term Incentive Plans | 401(k) Profit Sharing, Deferred Compensation and Long-Term Incentive Plans We have a defined contribution 401(k) plan and trust covering substantially all full-time employees. The annual contribution to the plan is at the discretion of our Board of Directors. Contributions of $5.8 million, $5.4 million, and $5.3 million were recognized for the years ended December 31, 2017, 2016 and 2015, respectively. Employees may contribute to the plan if they meet certain eligibility requirements. We offer a deferred compensation and long-term incentive plan (the “LTIP”) to provide certain employees the ability to accumulate assets for retirement on a tax deferred basis. We may, depending on position, also make discretionary contributions to the LTIP. These discretionary contributions vest between one and seven years based on the employee’s age. Additionally, a participant may defer a portion of his or her compensation and receive the deferred amount upon certain events, including termination or retirement. The following is a summary related to our LTIP (in thousands):
As of December 31, 2017 and 2016, the balance due to participants was $27.9 million and $23.5 million, respectively, and was included as a component of other long-term liabilities in the Consolidated Balance Sheets. |
Stock-Based Compensation |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation 2009 Employee Stock Purchase Plan The 2009 Employee Stock Purchase Plan (the “2009 ESPP”) allows for the issuance of 1,500,000 shares of our Class A common stock. The 2009 ESPP is intended to qualify as an “Employee Stock Purchase Plan” under Section 423 of the Internal Revenue Code of 1986, as amended, and is administered by the Compensation Committee of the Board of Directors. Eligible employees are entitled to defer up to 10% of their base pay for the purchase of stock, up to $25,000 of fair market value of our Class A common stock annually. The purchase price is equal to 85% of the fair market value at the end of the purchase period. Following is information regarding our 2009 ESPP:
Compensation expense related to our 2009 ESPP is calculated based on the 15% discount from the per share market price on the date of grant. 2013 Stock Incentive Plan Our 2013 Stock Incentive Plan, as amended, (the “2013 Plan”) allows for the grant of a total of 3.8 million shares in the form of stock appreciation rights, qualified stock options, nonqualified stock options and shares of restricted stock to our officers, key employees, directors and consultants. The 2013 Plan is administered by the Compensation Committee of the Board of Directors and permits accelerated vesting of outstanding awards upon the occurrence of certain changes in control. As of December 31, 2017, 1,383,827 shares of Class A common stock were available for future grants. As of December 31, 2017, there were no stock appreciation rights, qualified stock options, nonqualified stock options or shares of restricted stock outstanding. Restricted Stock Units (“RSUs”) RSU grants vest over a period of time up to four years from the date of grant. RSU activity was as follows:
We granted 52,056 time-vesting RSUs to members of our Board of Directors and employees in 2017. Each grant entitles the holder to receive shares of our Class A common stock upon vesting. A portion of the RSUs vest over four years, beginning on the second anniversary of the grant date, for employees and vests quarterly for our Board of Directors, over their service period. Certain key employees were granted 110,300 performance and time-vesting RSUs in 2017. Of these, 83,510 shares were earned based on attaining various target levels of operational performance. Based on the levels of performance achieved in 2017, a weighted average attainment level of 57.2% for these RSUs was met. These RSUs will vest over four years from the grant date. Stock-Based Compensation As of December 31, 2017, unrecognized stock-based compensation related to outstanding, but unvested RSUs was $12.5 million, which will be recognized over the remaining weighted average vesting period of 2.1 years. Certain information regarding our stock-based compensation was as follows:
|
Derivative Financial Instruments |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments From time to time, we have entered into interest rate swaps to fix a portion of our interest expense. We do not enter into derivative instruments for any purpose other than to manage interest rate exposure to fluctuations in the one-month LIBOR benchmark. That is, we do not engage in interest rate speculation using derivative instruments. Typically, we designate all interest rate swaps as cash flow hedges and, accordingly, we record the change in fair value for the effective portion of these interest rate swaps in comprehensive income rather than net income until the underlying hedged transaction affects net income. If a swap is no longer designated as a cash flow hedge and the forecasted transaction remains probable or reasonably possible of occurring, the gain or loss recorded in accumulated other comprehensive loss is recognized in income as the forecasted transaction occurs. If the forecasted transaction is probable of not occurring, the gain or loss recorded in accumulated other comprehensive loss is recognized in income immediately. The effect of derivative instruments in our Consolidated Statements of Operations was as follows (in thousands):
We did not have any activity related to the effect of derivative instruments in 2017. |
Fair Value Measurements |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Factors used in determining the fair value of our financial assets and liabilities are summarized into three broad categories:
We determined the carrying value of cash equivalents, accounts receivable, trade payables, accrued liabilities and short-term borrowings approximate their fair values because of the nature of their terms and current market rates of these instruments. We believe the carrying value of our variable rate debt approximates fair value. We have fixed rate debt primarily consisting of amounts outstanding under our senior notes and real estate mortgages. We calculated the estimated fair value of the senior notes using quoted prices for the identical liability (Level 1) and calculated the estimated fair value of the fixed rate real estate mortgages using a discounted cash flow methodology with estimated current interest rates based on a similar risk profile and duration (Level 2). The fixed cash flows are discounted and summed to compute the fair value of the debt. As of December 31, 2017, our real estate mortgages and other debt, which includes capital leases, had maturity dates between January 12, 2019 and December 31, 2050. There were no changes to our valuation techniques during the year ended December 31, 2017. A summary of the aggregate carrying values, excluding unamortized debt issuance cost, and fair values of our long-term fixed interest rate debt is as follows (in thousands):
|
Income Taxes |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Income Tax Provision The income tax provision was as follows (in thousands):
At December 31, 2017 and 2016, we had income taxes receivable of $22.5 million and $2.4 million, respectively, included as a component of other current assets in our Consolidated Balance Sheets. The reconciliation between amounts computed using the federal income tax rate of 35% and our income tax provision is shown in the following tabulation (in thousands):
Deferred Taxes Individually significant components of the deferred tax assets and (liabilities) are presented below (in thousands):
On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code including, but not limited to, bonus depreciation that will allow for full expensing of qualified property, reduction of the U.S. federal corporate tax rate, a new limitation on deductible interest expense, and limitations on the deductibility of certain executive compensation. We remeasured certain federal deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, we are still analyzing certain aspects of the Act and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. At December 31, 2017, we have not completed our accounting for the tax effects of enactment of the Act; however, in certain cases, we have made a reasonable estimate of the effects on our existing deferred tax balances. The provisional amount recorded related to the remeasurement of our deferred tax balance was $32.9 million, which is included as a component of income tax expense from continuing operations. Included in this amount is an estimated $2 million attributable to full expensing on certain assets and the executive compensation limitation. In all cases, we will continue to make and refine our calculations as additional analysis is completed, further guidance is issued, or new information is made available. We consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment. As of December 31, 2017, we had a $0.6 million valuation allowance recorded associated with our deferred tax assets. The entire allowance is associated with state net operating losses primarily generated in previous years. The valuation allowance increased $0.3 million in the current year primarily as a result of establishing allowances related to previously off balance sheet NOLs as part of the January 2017 adoption of ASU 2016-09, "Compensation - Stock Compensation - Improvements to Employee Share-Based Payment Accounting." See Note 1 Summary of Significant Accounting Policies for additional information regarding the adoption of ASU 2016-09. As of December 31, 2017, we had state net operating loss carryforward amounts totaling approximately $2.4 million, tax effected, with expiration dates through 2037. We believe that it is more likely than not that the benefit from certain state NOL carryforward amounts will not be realized. In recognition of this risk, we have recorded a valuation allowance of $0.6 million on the deferred tax assets relating to these state NOL carryforwards. We had $1.0 million, tax effected, in state tax credit carryforwards with expiration dates through 2027. We believe it is more likely than not that the benefits from these state tax credit carryforwards will be realized. Unrecognized Tax Benefits The following is a reconciliation of our unrecognized tax benefits (in thousands):
The unrecognized tax benefits recorded were acquired as part of the acquisition of DCH. We recorded a tax indemnification asset related to the unrecognized tax benefit as we determined the amount would be recoverable from the seller. As anticipated, settlements were reached during the year resulting in cash settlements related to the unrecognized tax benefits. As a result, we have no unrecognized tax benefits recorded as of December 31, 2017. Open tax years at December 31, 2017 included the following:
|
Acquisitions |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | Acquisitions In 2017, we completed the following acquisitions:
Revenue and operating income contributed by the 2017 acquisitions subsequent to the date of acquisition were as follows (in thousands):
In 2016, we completed the following acquisitions:
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 in cash and equity securities for the acquisitions and the preliminary amount of identified assets acquired and liabilities assumed as of the acquisition date (in thousands):
The purchase price allocation for the Baierl Auto Group, DTLA Auto Group, Albany CJD Fiat, Crater Lake Ford Lincoln and Crater Lake Mazda acquisitions is preliminary as we have not obtained all of the detailed information to finalize the opening balance sheet related to real estate purchased, leases assumed and the 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 recognized $6.0 million and $1.0 million, respectively, in acquisition related expenses as a component of selling, general and administrative expenses in the Consolidated Statements of Operations in 2017 and 2016, respectively. 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):
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. |
Related Party Transactions |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Transition Agreement In September 2015, we entered into a transition agreement with Sidney B. DeBoer, our Chairman of the Board, which provided him certain benefits until his death. The agreement has an effective date of January 1, 2016 and the initial payment of these benefits began in the third quarter of 2016. We recorded a charge of $18.3 million in 2015 as a component of selling, general and administrative expense in our Consolidated Statement of Operations related to the present value of estimated future payments due pursuant to this agreement. We believe that this estimate is reasonable; however, actual cash flows could differ materially. We will periodically evaluate whether significant changes in our assumptions have occurred and record an adjustment if future expected cash flows are significantly different than the reserve recorded. The balance associated with this agreement was $16.8 million and $17.3 million as of December 31, 2017 and 2016, respectively, and was included as a component of accrued liabilities and other long-term liabilities in our Consolidated Balance Sheets. |
Net Income Per Share of Class A and Class B Common Stock |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Per Share of Class A and Class B Common Stock | Net Income Per Share of Class A and Class B Common Stock We compute net income per share of Class A and Class B common stock using the two-class method. Under this method, basic net income per share is computed using the weighted average number of common shares outstanding during the period excluding unvested common shares subject to repurchase or cancellation. Diluted net income per share is computed using the weighted average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and unvested restricted shares subject to repurchase or cancellation. The dilutive effect of outstanding stock options and other grants is reflected in diluted earnings per share by application of the treasury stock method. The computation of the diluted net income per share of Class A common stock assumes the conversion of Class B common stock, while the diluted net income per share of Class B common stock does not assume the conversion of those shares. Except with respect to voting and transfer rights, the rights of the holders of our Class A and Class B common stock are identical. Our Restated Articles of Incorporation require that the Class A and Class B common stock must share equally in any dividends, liquidation proceeds or other distribution with respect to our common stock and the Articles of Incorporation can only be amended by a vote of the stockholders. Additionally, Oregon law provides that amendments to our Articles of Incorporation, which would have the effect of adversely altering the rights, powers or preferences of a given class of stock, must be approved by the class of stock adversely affected by the proposed amendment. As a result, the undistributed earnings for each year are allocated based on the contractual participation rights of the Class A and Class B common shares as if the earnings for the year had been distributed. Because the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis. Following is a reconciliation of net income and weighted average shares used for our basic earnings per share (“EPS”) and diluted EPS (in thousands, except per share amounts):
|
Equity-Method Investments |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-Method Investments | Equity-Method Investments In October 2014, we acquired a 99.9% membership interest in a limited liability company managed by U.S. Bancorp Community Development Corporation with an initial equity contribution of $4.1 million. We made additional equity contributions to the entity of $22.9 million in 2015 and $22.8 million in 2016. We were obligated to make $49.8 million of total contributions to the entity over a two-year period ended October 2016, all of which had been made as of December 31, 2016. This investment generated new markets tax credits under the New Markets Tax Credit Program (“NMTC Program”). The NMTC Program was established by Congress in 2000 to spur new or increased investments into operating businesses and real estate projects located in low-income communities. While U.S. Bancorp Community Development Corporation exercised management control over the limited liability company, due to the economic interest we held in the entity, we determined our ownership portion of the entity was appropriately accounted for using the equity method. As of December 31, 2017 and 2016 no amounts related to this equity-method investment were recorded in our Consolidated Balance Sheets. The following amounts related to this equity-method investment were recorded in our Consolidated Statements of Operations (in thousands):
|
Segments |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments | Segments Certain financial information on a segment basis is as follows (in thousands):
*Segment income for each of the segments is defined as Income from operations before income taxes, depreciation and amortization, other interest expense and other (expense) income, net.
|
Recent Accounting Pronouncements |
12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||
Accounting Changes and Error Corrections [Abstract] | |||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board ("FASB") issued accounting standards update ("ASU") 2014-09, "Revenue from Contracts with Customers," which amends the accounting guidance related to revenues. This amendment will replace most of the existing revenue recognition guidance when it becomes effective. The new standard, as amended in July 2015, is effective for fiscal years beginning after December 15, 2017 and entities are allowed to adopt the standard as early as annual periods beginning after December 15, 2016, and interim periods therein. The standard permits the use of either the retrospective or cumulative effect transition method. We have evaluated the effect of this amendment and expect the timing of our revenue recognition to generally remain the same, except as detailed below:
Upon adoption, we plan to record a net, after-tax cumulative effect adjustment to retained earnings which will have an immaterial impact on our financial statements. In February 2016, the FASB issued ASU 2016-02, "Leases." ASU 2016-02 increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and requires disclosing key information about leasing arrangements. The new standard results in the recording of a right-of-use asset and a lease liability for all leases with a term longer than 12 months. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. We intend to adopt this ASU on January 1, 2019. While management is still evaluating the impact of adopting the provisions of this ASU, we expect that it will have a material impact due to the recognition of right-of-use assets and lease liabilities due to real estate leases. We continue to identify and evaluate if there are other leases impacted. The majority of our real estate leases are classified as operating leases under the current guidance. We expect ASU 2016-02 to impact our consolidated balance sheets primarily due to the recognition of a right-of-use asset and an associated lease liability and our consolidated income statement related to the changes in expense recognition. In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments." ASU 2016-15 provides guidance for eight cash flow classification issues to reduce diversity in practice. The clarification includes guidance on items such as debt prepayment or debt extinguishment cost, contingent consideration payment made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies and distributions received from equity method investees. ASU 2016-15 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted. We are evaluating the effect this pronouncement will have on our financial disclosures. In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment." ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. An entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, if applicable. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. The same impairment test also applies to any reporting unit with a zero or negative carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019, on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. We do not expect the adoption of ASU 2017-04 to have a material effect on our financial position, results of operations or cash flows. |
Subsequent Events |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Common Stock Dividend On February 12, 2018, we declared a dividend of $0.27 per share on our Class A and Class B common stock related to our fourth quarter 2017 financial results. The dividend will total approximately $6.8 million and will be paid on March 23, 2018 to shareholders of record on March 9, 2018. Acquisition On January 15, 2018, we acquired the inventory, real property, equipment and intangible assets of Ray Laks Honda, in Orchard Park, New York and Ray Laks Acura, in Buffalo, New York. We paid $26.2 million in cash for these acquisitions. Line of Credit On February 14, 2018, we entered into a Loan Agreement ("Agreement") with U.S. Bank National Association, as lender. The Agreement provides for a maximum revolving line of credit in the amount of $150.0 million, with an interest rate of one-month LIBOR plus 1.50%. The line of credit matures in August 2018 or earlier if we renegotiate the terms of our existing credit facility agreement. |
Summary of Significant Accounting Policies (Policies) |
12 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The accompanying Consolidated Financial Statements reflect the results of operations, the financial position and the cash flows for Lithia Motors, Inc. and its directly and indirectly wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
||||||||||||||||||||||||
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents are defined as cash on hand and cash in bank accounts without restrictions. |
||||||||||||||||||||||||
Accounts Receivable | Accounts Receivable Accounts receivable classifications include the following:
Receivables are recorded at invoice and do not bear interest until they are 60 days past due. The allowance for doubtful accounts represents an estimate of the amount of net losses inherent in our portfolio of accounts receivable as of the reporting date. We estimate an allowance for doubtful accounts based on our historical write-off experience and consider recent delinquency trends and recovery rates. Account balances are charged against the allowance after all appropriate means of collection have been exhausted and the potential for recovery is considered remote. The annual activity for charges and subsequent recoveries is immaterial. See Note 2. |
||||||||||||||||||||||||
Inventories | Inventories Inventories are valued at the lower of net realizable value or cost, using the specific identification method for new vehicles, pooled approach for used vehicles, and the lower of cost (first-in, first-out) or market method for parts. The cost of new and used vehicle inventories includes the cost of any equipment added, reconditioning and transportation. Certain acquired inventories are valued using the last-in first-out (LIFO) method. The LIFO reserve associated with this inventory as of December 31, 2017 and 2016 was immaterial. Manufacturers reimburse us for holdbacks, floor plan interest assistance and advertising assistance, which are reflected as a reduction in the carrying value of each vehicle purchased. We recognize advertising assistance, floor plan interest assistance, holdbacks, cash incentives and other rebates received from manufacturers that are tied to specific vehicles as a reduction to cost of sales as the related vehicles are sold. Parts purchase discounts that we receive from the manufacturer are reflected as a reduction in the carrying value of the parts purchased from the manufacturer and are recognized as a reduction to cost of goods sold as the related inventory is sold. See Note 3. |
||||||||||||||||||||||||
Property and Equipment | Property and Equipment Property and equipment are stated at cost and depreciated over their estimated useful lives on the straight-line basis. Leasehold improvements made at the inception of the lease or during the term of the lease are amortized on a straight-line basis over the shorter of the life of the improvement or the remaining term of the lease. The range of estimated useful lives is as follows:
The cost for maintenance, repairs and minor renewals is expensed as incurred, while significant remodels and betterments are capitalized. In addition, interest on borrowings for major capital projects, significant remodels, and betterments are capitalized. Capitalized interest becomes a part of the cost of the depreciable asset and is depreciated according to the estimated useful lives as previously stated. For the years ended December 31, 2017, 2016 and 2015, we recorded capitalized interest of $0.5 million, $0.4 million and $0.5 million, respectively. When an asset is retired, or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is credited or charged to income from operations. Leased property meeting certain criteria are recorded as capital leases. We have capital leases for certain locations, expiring at various dates through December 31, 2050. Our capital leases are included in property and equipment on our Consolidated Balance Sheets. Amortization of capitalized leased assets is computed on a straight-line basis over the term of the lease, unless the lease transfers title or it contains a bargain purchase option, in which case, it is amortized over the asset’s useful life and is included in depreciation expense. Capital lease obligations are recorded as the lesser of the estimated fair market value of the leased property or the net present value of the aggregated future minimum payments and are included in current maturities of long-term debt and long-term debt on our Consolidated Balance Sheets. Interest associated with these obligations is included in other interest expense in the Consolidated Statements of Operations. See Note 7. Long-lived assets held and used by us are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable. We consider several factors when evaluating whether there are indications of potential impairment related to our long-lived assets, including store profitability, overall macroeconomic factors and the impact of our strategic management decisions. If recoverability testing is performed, we evaluate assets to be held and used by comparing the carrying amount of an asset to future net undiscounted cash flows associated with the asset, including its disposition. If such assets are considered to be impaired, the amount by which the carrying amount of the assets exceeds the fair value of the assets is recognized as a charge to income from operations. See Note 4. |
||||||||||||||||||||||||
Goodwill | Goodwill Goodwill represents the excess purchase price over the fair value of net assets acquired which is not allocable to separately identifiable intangible assets. Other identifiable intangible assets, such as franchise rights, are separately recognized if the intangible asset is obtained through contractual or other legal right or if the intangible asset can be sold, transferred, licensed or exchanged. Goodwill is not amortized but tested for impairment at least annually, and more frequently if events or circumstances indicate the carrying amount of the reporting unit more likely than not exceeds fair value. We have the option to qualitatively or quantitatively assess goodwill for impairment and we evaluated our goodwill using a qualitative assessment process. Goodwill is tested for impairment at the reporting unit level. Our reporting units are individual stores as this is the level at which discrete financial information is available and for which operating results are regularly reviewed by our chief operating decision maker to allocate resources and assess performance. We test our goodwill for impairment on October 1 of each year. In 2017, we evaluated our goodwill using a qualitative assessment process. If the qualitative factors determine that it is more likely than not that the fair value of the reporting unit exceeds the carrying amount, goodwill is not impaired. If the qualitative assessment determines it is more likely than not the fair value is less than the carrying amount, the first step of the two-step goodwill impairment test is performed. See Note 5. |
||||||||||||||||||||||||
Franchise Value | Franchise Value We enter into agreements (“Franchise Agreements”) with the manufacturers. Franchise value represents a right received under Franchise Agreements with manufacturers and is identified on an individual store basis. We evaluated the useful lives of our Franchise Agreements based on the following factors:
Accordingly, we have determined that our Franchise Agreements will continue to contribute to our cash flows indefinitely and, therefore, have indefinite lives. As an indefinite-lived intangible asset, franchise value is tested for impairment at least annually, and more frequently if events or circumstances indicate the carrying value may exceed fair value. The impairment test for indefinite-lived intangible assets requires the comparison of estimated fair value to carrying value. An impairment charge is recorded to the extent the fair value is less than the carrying value. We have the option to qualitatively or quantitatively assess indefinite-lived intangible assets for impairment. We evaluated our indefinite-lived intangible assets using a qualitative assessment process. We have determined the appropriate unit of accounting for testing franchise value for impairment is each individual store. We test our franchise value for impairment on October 1 of each year. In 2017, we evaluated our franchise value using a qualitative assessment process. If the qualitative factors discussed above determine that it is more likely than not that the fair value of the individual store's franchise value exceeds the carrying amount, the franchise value is not impaired and the second step is not necessary. If the qualitative assessment determines it is more likely than not the fair value is less than the carrying value, then a quantitative valuation of our franchise value is performed and an impairment would be recorded. See Note 5. |
||||||||||||||||||||||||
Equity Method Investments | Equity-Method Investments In 2016 and 2015, we owned investments in certain partnerships which we accounted for under the equity method. These investments are included as a component of other non-current assets in our Consolidated Balance Sheets. We determined that we lacked certain characteristics to direct the operations of the businesses and, as a result, do not qualify to consolidate these investments. Activity related to our equity-method investments is recognized in our Consolidated Statements of Operations as follows:
Periodically, whenever events or circumstances indicate that the carrying amount of assets may be impaired, we evaluate the equity-method investments for indications of loss resulting from an other than temporary decline. If the equity-method investment is determined to be impaired, the amount by which the carrying amount exceeds the fair value of the investment is recognized as a charge to income from operations. See Notes 12 and 17. |
||||||||||||||||||||||||
Advertising | Advertising We expense production and other costs of advertising as incurred as a component of selling, general and administrative expense. Additionally, manufacturer cooperative advertising credits for qualifying, specifically-identified advertising expenditures are recognized as a reduction of advertising expense. |
||||||||||||||||||||||||
Contract Origination Costs | Contract Origination Costs Contract origination commissions paid to our employees directly related to the sale of our self-insured lifetime lube, oil and filter service contracts are deferred and charged to expense in proportion to the associated revenue to be recognized. |
||||||||||||||||||||||||
Legal Costs | Legal Costs We are a party to numerous legal proceedings arising in the normal course of business. We accrue for certain legal costs, including attorney fees and potential settlement claims related to various legal proceedings that are estimable and probable. See Note 7. |
||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation Compensation costs associated with equity instruments exchanged for employee and director services are measured at the grant date, based on the fair value of the award. If there is a performance-based element to the award, the expense is recognized based on the estimated attainment level, estimated time to achieve the attainment level and/or the vesting period. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by persons who receive equity awards. The fair value of non-vested stock awards is based on the intrinsic value on the date of grant. Shares to be issued upon the exercise of stock options and the vesting of stock awards will come from newly issued shares. See Note 10. In January 2017, we adopted ASU 2016-09, which simplifies the accounting for several aspects of share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. As a result, we recorded the following:
|
||||||||||||||||||||||||
Income and Other Taxes | Income and Other Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, their respective tax bases, operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance, if needed, reduces deferred tax assets when it is more likely than not that some or all of the deferred tax assets will not be realized. When there are situations with uncertainty as to the timing of the deduction, the amount of the deduction, or the validity of the deduction, we adjust our financial statements to reflect only those tax positions that are more-likely-than-not to be sustained. Positions that meet this criterion are measured using the largest benefit that is more than 50% likely to be realized. Interest and penalties are recorded as income tax provision in the period incurred or accrued when related to an uncertain tax position. See Note 13. We account for all taxes assessed by a governmental authority that are directly imposed on a revenue-producing transaction (i.e., sales, use, value-added) on a net (excluded from revenues) basis. |
||||||||||||||||||||||||
Concentration of Risk and Uncertainties | Concentration of Risk and Uncertainties We purchase substantially all of our new vehicles and inventory from various manufacturers at the prevailing prices charged by auto manufacturers to all franchised dealers. Our overall sales could be impacted by the auto manufacturers’ inability or unwillingness to supply dealerships with an adequate supply of popular models. We depend on our manufacturers to provide a supply of vehicles which supports expected sales levels. In the event that manufacturers are unable to supply the needed level of vehicles, our financial performance may be adversely impacted. We depend on our manufacturers to deliver high-quality, defect-free vehicles. In the event that manufacturers experience future quality issues, our financial performance may be adversely impacted. We are subject to a concentration of risk in the event of financial distress, including potential reorganization or bankruptcy, of a major vehicle manufacturer. Our sales volume could be materially adversely impacted by the manufacturers’ or distributors’ inability to supply the stores with an adequate supply of vehicles. We also receive incentives and rebates from our manufacturers, including cash allowances, financing programs, discounts, holdbacks and other incentives. These incentives are recorded as accounts receivable in our Consolidated Balance Sheets until payment is received. Our financial condition could be materially adversely impacted by the manufacturers’ or distributors’ inability to continue to offer these incentives and rebates at substantially similar terms, or to pay our outstanding receivables. We enter into Franchise Agreements with the manufacturers. The Franchise Agreements generally limit the location of the dealership and provide the auto manufacturer approval rights over changes in dealership management and ownership. The auto manufacturers are also entitled to terminate the Franchise Agreement if the dealership is in material breach of the terms. Our ability to expand operations depends, in part, on obtaining consents of the manufacturers for the acquisition of additional dealerships. See also “Goodwill” and “Franchise Value” above. We have a credit facility with a syndicate of 18 financial institutions, including seven manufacturer-affiliated finance companies. Several of these financial institutions also provide vehicle financing for certain new vehicles, vehicles that are designated for use as service loaners and mortgage financing. This credit facility is the primary source of floor plan financing for our new vehicle inventory and also provides used vehicle financing and a revolving line of credit. The term of the facility extends through August 2022. At maturity, our financial condition could be materially adversely impacted if lenders are unable to provide credit that has typically been extended to us or with terms unacceptable to us. Our financial condition could be materially adversely impacted if these providers incur losses in the future or undergo funding limitations. See Note 6. We anticipate continued organic growth and growth through acquisitions. This growth will require additional credit which may be unavailable or with terms unacceptable to us. If these events were to occur, we may not be able to borrow sufficient funds to facilitate our growth. |
||||||||||||||||||||||||
Financial Instruments, Fair Value and Market Risks | Financial Instruments, Fair Value and Market Risks The carrying amounts of cash equivalents, accounts receivable, trade payables, accrued liabilities and short-term borrowings approximate fair value because of the short-term nature and current market rates of these instruments. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. See Note 12. We have variable rate floor plan notes payable, mortgages and other credit line borrowings that subject us to market risk exposure. At December 31, 2017, we had $2.3 billion outstanding in variable rate debt. These borrowings had interest rates ranging from 2.75% to 4.25% per annum. An increase or decrease in the interest rates would affect interest expense for the period accordingly. The fair value of long-term, fixed interest rate debt is subject to interest rate risk. Generally, the fair value of fixed interest rate debt will increase as interest rates fall because we could refinance for a lower rate. Conversely, the fair value of fixed interest rate debt will decrease as interest rates rise. The interest rate changes affect the fair value, but do not impact earnings or cash flows. We monitor our fixed interest rate debt regularly, refinancing debt that is materially above market rates if permitted. See Note 12. |
||||||||||||||||||||||||
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and related notes to financial statements. Changes in such estimates may affect amounts reported in future periods. Estimates are used in the calculation of certain reserves maintained for charge-backs on estimated cancellations of service contracts; life, accident and disability insurance policies; finance fees from customer financing contracts and uncollectible accounts receivable. We also use estimates in the calculation of various expenses, accruals and reserves, including anticipated losses related to workers’ compensation insurance; anticipated losses related to self-insurance components of our property and casualty and medical insurance; self-insured lifetime lube, oil and filter service contracts; discretionary employee bonuses, the Transition Agreement with Sidney B. DeBoer, our Chairman of the Board; warranties provided on certain products and services; legal reserves and stock-based compensation. We also make certain estimates regarding the assessment of the recoverability of long-lived assets, indefinite-lived intangible assets and deferred tax assets. We offer a limited warranty on the sale of most retail used vehicles. This warranty is based on mileage and time. We also offer a mileage and time based warranty on parts used in our service repair work and on tire purchases. The cost that may be incurred for these warranties is estimated at the time the related revenue is recorded. A reserve for these warranty liabilities is estimated based on current sales levels, warranty experience rates and estimated costs per claim. The annual activity for reserve increases and claims is immaterial. As of December 31, 2017 and 2016, the accrued warranty balance was $0.4 million and $0.4 million, respectively. |
||||||||||||||||||||||||
Fair Value of Assets Acquired and Liabilities Assumed | Fair Value of Assets Acquired and Liabilities Assumed We estimate the fair value of the assets acquired and liabilities assumed in a business combination using various assumptions. The most significant assumptions used relate to determining the fair value of property and equipment and intangible franchise rights. We estimate the fair value of property and equipment based on a market valuation approach. We use prices and other relevant information generated primarily by recent market transactions involving similar or comparable assets, as well as our historical experience in divestitures, acquisitions and real estate transactions. Additionally, we may use a cost valuation approach to value long-lived assets when a market valuation approach is unavailable. Under this approach, we determine the cost to replace the service capacity of an asset, adjusted for physical and economic obsolescence. When available, we use valuation inputs from independent valuation experts, such as real estate appraisers and brokers, to corroborate our estimates of fair value. We estimate the fair value of our franchise rights primarily using the Multi-Period Excess Earnings (“MPEE”) model. The forecasted cash flows used in the MPEE model contain inherent uncertainties, including significant estimates and assumptions related to growth rates, margins, general operating expenses, and cost of capital. We use primarily internally-developed forecasts and business plans to estimate the future cash flows that each franchise will generate. We have determined that only certain cash flows of the store are directly attributable to the franchise rights. We estimate the appropriate interest rate to discount future cash flows to their present value equivalent taking into consideration factors such as a risk-free rate, a peer group average beta, an equity risk premium and a small stock risk premium. Additionally, we also may use a market approach to determine the fair value of our franchise rights. These market data points include our acquisition and divestiture experience and third-party broker estimates. We use a relief-from-royalty method to determine the fair value of a trade name. Future cost savings associated with owning, rather than licensing, a trade name is estimated based on a royalty rate and management’s forecasted sales projections. The discount rate applied to the future cost savings factors an equity market risk premium, small stock risk premium, an average peer group beta, a risk-free interest rate and a premium for forecast risk. |
||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition Revenue from the sale of a vehicle is recognized when a contract is signed by the customer, financing has been arranged or collectibility is reasonably assured and the delivery of the vehicle to the customer is made. We do not allow the return of new or used vehicles, except where mandated by state law. Revenue from parts and service is recognized upon delivery of the parts or service to the customer. We allow for customer returns on sales of our parts inventory up to 30 days after the sale. Most parts returns generally occur within one to two weeks from the time of sale, and are not significant. Finance fees earned for notes placed with financial institutions in connection with customer vehicle financing are recognized, net of estimated charge-backs, as finance and insurance revenue upon acceptance of the credit by the financial institution and recognition of the sale of the vehicle. Insurance income from third party insurance companies for commissions earned on credit life, accident and disability insurance policies sold in connection with the sale of a vehicle are recognized, net of anticipated cancellations, as finance and insurance revenue upon execution of the insurance contract and recognition of the sale of the vehicle. Commissions from third party service contracts are recognized, net of anticipated cancellations, as finance and insurance revenue upon sale of the contracts and recognition of the sale of the vehicle. We also participate in future underwriting profit, pursuant to retrospective commission arrangements, which is recognized in income as earned. Revenue related to self-insured lifetime lube, oil and filter service contracts is deferred and recognized based on expected future claims for service. The expected future claims experience is evaluated periodically to ensure it remains appropriate given actual claims history. |
||||||||||||||||||||||||
Segment Reporting | Segment Reporting While we have determined that each individual store is a reporting unit, we have aggregated our reporting units into three reportable segments based on their economic similarities: Domestic, Import and Luxury. Our Domestic segment is comprised of retail automotive franchises that sell new vehicles manufactured by Chrysler, General Motors and Ford. Our Import segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by Honda, Toyota, Subaru, Nissan and Volkswagen. Our Luxury segment is comprised of retail automotive franchises that sell new vehicles manufactured primarily by BMW, Mercedes-Benz and Lexus. The franchises in each segment also sell used vehicles, parts and automotive services, and automotive finance and insurance products. Corporate and other revenue and income include the results of operations of our stand-alone collision center offset by unallocated corporate overhead expenses, such as corporate personnel costs, and certain unallocated reserve and elimination adjustments. Additionally, certain internal corporate expense allocations increase segment income for Corporate and other while decreasing segment income for the other operating segments. These internal corporate expense allocations are used to increase comparability of our dealerships and reflect the capital burden a stand-alone dealership would experience. Examples of these internal allocations include internal rent expense, internal floor plan financing charges, and internal fees charged to offset employees within our corporate headquarters that perform certain dealership functions. We define our chief operating decision maker (“CODM”) to be certain members of our executive management group. Historical and forecasted operational performance is evaluated on a store-by-store basis and on a consolidated basis by the CODM. We derive the operating results of the segments directly from our internal management reporting system. The accounting policies used to derive segment results are substantially the same as those used to determine our consolidated results, excepted for the internal allocation within Corporate and other discussed above. Our CODM measures the performance of each reportable segment based on several metrics, including earnings from operations, and uses these results, in part, to evaluate the performance of, and to allocate resources to, each of the reportable segments. See Note 18. |
||||||||||||||||||||||||
Recent Accounting Pronouncements | In May 2014, the Financial Accounting Standards Board ("FASB") issued accounting standards update ("ASU") 2014-09, "Revenue from Contracts with Customers," which amends the accounting guidance related to revenues. This amendment will replace most of the existing revenue recognition guidance when it becomes effective. The new standard, as amended in July 2015, is effective for fiscal years beginning after December 15, 2017 and entities are allowed to adopt the standard as early as annual periods beginning after December 15, 2016, and interim periods therein. The standard permits the use of either the retrospective or cumulative effect transition method. We have evaluated the effect of this amendment and expect the timing of our revenue recognition to generally remain the same, except as detailed below:
Upon adoption, we plan to record a net, after-tax cumulative effect adjustment to retained earnings which will have an immaterial impact on our financial statements. In February 2016, the FASB issued ASU 2016-02, "Leases." ASU 2016-02 increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and requires disclosing key information about leasing arrangements. The new standard results in the recording of a right-of-use asset and a lease liability for all leases with a term longer than 12 months. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and interim periods within those annual periods. We intend to adopt this ASU on January 1, 2019. While management is still evaluating the impact of adopting the provisions of this ASU, we expect that it will have a material impact due to the recognition of right-of-use assets and lease liabilities due to real estate leases. We continue to identify and evaluate if there are other leases impacted. The majority of our real estate leases are classified as operating leases under the current guidance. We expect ASU 2016-02 to impact our consolidated balance sheets primarily due to the recognition of a right-of-use asset and an associated lease liability and our consolidated income statement related to the changes in expense recognition. In August 2016, the FASB issued ASU 2016-15, "Classification of Certain Cash Receipts and Cash Payments." ASU 2016-15 provides guidance for eight cash flow classification issues to reduce diversity in practice. The clarification includes guidance on items such as debt prepayment or debt extinguishment cost, contingent consideration payment made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies and distributions received from equity method investees. ASU 2016-15 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. Early adoption is permitted. We are evaluating the effect this pronouncement will have on our financial disclosures. In January 2017, the FASB issued ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment." ASU 2017-04 simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. An entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value, if applicable. The loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. The same impairment test also applies to any reporting unit with a zero or negative carrying amount. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2019, on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed after January 1, 2017. We do not expect the adoption of ASU 2017-04 to have a material effect on our financial position, results of operations or cash flows. |
Summary of Significant Accounting Policies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Estimated Useful Lives | The range of estimated useful lives is as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Advertising Expense and Manufacturer Cooperative Advertising Credits | Advertising expense and manufacturer cooperative advertising credits were as follows (in thousands):
|
Accounts Receivable (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Receivable, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Receivable | Accounts receivable consisted of the following (in thousands):
|
Inventories (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories | The components of inventories consisted of the following (in thousands):
|
Property and Equipment (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and Equipment | Property and equipment consisted of the following (in thousands):
|
Goodwill and Franchise Value (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill | The following is a roll-forward of goodwill (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Franchise Value | The following is a roll-forward of franchise value (in thousands):
|
Credit Facilities and Long-term Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Outstanding Balances on Credit Facilities and Long-term Debt | Below is a summary of our outstanding balances on credit facilities and long-term debt (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt Covenant Terms | Under our credit facility, we are required to maintain the ratios detailed in the following table:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Maturities of Long-term Debt | The schedule of future principal payments associated with real estate mortgages, our 5.25% Senior Notes and other debt as of December 31, 2017 was as follows (in thousands):
|
Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Minimum Lease Payments | The minimum lease payments under our operating and capital leases after December 31, 2017 are as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Estimated Charge Backs | We estimate that the charge-backs will be paid out as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Revenue | As of December 31, 2017, we had a deferred revenue balance of $127.3 million associated with these contracts and estimate the deferred revenue will be recognized as follows (in thousands):
|
Stockholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Repurchased and Retired | Share repurchases under our authorizations were as follows:
The following is a summary of our repurchases in the years ended December 31, 2017, 2016 and 2015:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Dividends Declared | We declared and paid dividends on our Class A and Class B Common Stock as follows:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassification from Accumulated Other Comprehensive Loss | The reclassification from accumulated other comprehensive loss was as follows (in thousands):
|
401(k) Profit Sharing, Deferred Compensation and Long-term Incentive Plans (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Postemployment Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Incentive Plan | The following is a summary related to our LTIP (in thousands):
|
Stock-Based Compensation (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Employee Stock Purchase Plan | Following is information regarding our 2009 ESPP:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restricted Stock Units Activity | RSU grants vest over a period of time up to four years from the date of grant. RSU activity was as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-Based Compensation | Certain information regarding our stock-based compensation was as follows:
|
Derivative Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments | The effect of derivative instruments in our Consolidated Statements of Operations was as follows (in thousands):
We did not have any activity related to the effect of derivative instruments in 2017. |
Fair Value Measurements (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Aggregate Carrying Values and Fair Values of Long-term Fixed Interest Rate Debt | A summary of the aggregate carrying values, excluding unamortized debt issuance cost, and fair values of our long-term fixed interest rate debt is as follows (in thousands):
|
Income Taxes (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income Tax Provision | The income tax provision was as follows (in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Effective Income Tax Rate Reconciliation | The reconciliation between amounts computed using the federal income tax rate of 35% and our income tax provision is shown in the following tabulation (in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Deferred Tax Assets and Liabilities | Individually significant components of the deferred tax assets and (liabilities) are presented below (in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Unrecognized Tax Benefits Roll Forward | The following is a reconciliation of our unrecognized tax benefits (in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Open Tax Years | Open tax years at December 31, 2017 included the following:
|
Acquisitions (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue and Operating Income from Acquisitions | Revenue and operating income contributed by the 2017 acquisitions subsequent to the date of acquisition were as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Consideration Paid for Acquisitions | The following tables summarize the consideration paid in cash and equity securities for the acquisitions and the preliminary amount of identified assets acquired and liabilities assumed as of the acquisition date (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pro Forma Summary | 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):
|
Net Income Per Share of Class A and Class B Common Stock (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | Following is a reconciliation of net income and weighted average shares used for our basic earnings per share (“EPS”) and diluted EPS (in thousands, except per share amounts):
|
Equity-Method Investments (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investment Recorded in Consolidated Statements of Operations | The following amounts related to this equity-method investment were recorded in our Consolidated Statements of Operations (in thousands):
|
Segments (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Certain Information on a Segment Basis | Certain financial information on a segment basis is as follows (in thousands):
*Segment income for each of the segments is defined as Income from operations before income taxes, depreciation and amortization, other interest expense and other (expense) income, net.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of Assets from Segment to Consolidated |
|
Summary of Significant Accounting Policies - Property and Equipment Estimated Useful Lives (Details) |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Minimum | Buildings and improvements | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Minimum | Service equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 5 years |
Minimum | Furniture, office equipment, signs and fixtures | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 3 years |
Maximum | Buildings and improvements | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 40 years |
Maximum | Service equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 15 years |
Maximum | Furniture, office equipment, signs and fixtures | |
Property, Plant and Equipment [Line Items] | |
Estimated useful life | 10 years |
Summary of Significant Accounting Policies - Advertising Expense and Manufacturing Cooperative Advertising Credits (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Advertising expense, gross | $ 116,124 | $ 101,656 | $ 89,736 |
Manufacturer cooperative advertising credits | (22,812) | (20,293) | (19,801) |
Advertising expense, net | $ 93,312 | $ 81,363 | $ 69,935 |
Inventories - Summary of Inventories (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Inventory [Line Items] | ||
Inventories, net | $ 2,132,744 | $ 1,772,587 |
New vehicles | ||
Inventory [Line Items] | ||
Inventories, net | 1,553,751 | 1,338,110 |
Used vehicles | ||
Inventory [Line Items] | ||
Inventories, net | 500,011 | 368,067 |
Parts and accessories | ||
Inventory [Line Items] | ||
Inventories, net | $ 78,982 | $ 66,410 |
Inventories (Narrative) (Details) - USD ($) $ in Millions |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Inventory adjustments | $ 19.8 | $ 18.1 |
Property and Equipment (Narrative) (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Property, Plant and Equipment [Abstract] | |||
Impairment charges | $ 0 | $ 0 | $ 3,600,000 |
Goodwill and Franchise Value - Goodwill (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2008 |
|
Goodwill [Roll Forward] | |||
Balance | $ 259,399 | $ 213,220 | |
Goodwill adjustments | (2,214) | 47,397 | |
Reductions through divestitures | (865) | (1,218) | |
Balance | 256,320 | 259,399 | |
Accumulated impairment losses | $ 299,300 | ||
Domestic | |||
Goodwill [Roll Forward] | |||
Balance | 114,839 | 97,903 | |
Goodwill adjustments | (817) | 18,154 | |
Reductions through divestitures | 0 | (1,218) | |
Balance | 114,022 | 114,839 | |
Import | |||
Goodwill [Roll Forward] | |||
Balance | 106,179 | 84,384 | |
Goodwill adjustments | (1,006) | 21,795 | |
Reductions through divestitures | (865) | 0 | |
Balance | 104,308 | 106,179 | |
Luxury | |||
Goodwill [Roll Forward] | |||
Balance | 38,381 | 30,933 | |
Goodwill adjustments | (391) | 7,448 | |
Reductions through divestitures | 0 | 0 | |
Balance | $ 37,990 | $ 38,381 |
Goodwill and Franchise Value - Franchise Value (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Indefinite-lived Intangible Assets [Roll Forward] | ||
Balance | $ 184,268 | $ 157,699 |
Additions through acquisitions | 495 | 27,087 |
Reductions through divestitures | (518) | |
Adjustments to purchase price allocations | 2,214 | |
Balance | 186,977 | 184,268 |
Adjustments to purchase price allocations | $ (2,214) | $ 47,397 |
Credit Facilities and Long-term Debt - Details of Financial Covenants (Details) |
Dec. 31, 2017 |
---|---|
Debt Disclosure [Abstract] | |
Current ratio, requirement | 1.10 |
Current ratio | 1.21 |
Fixed charge coverage ratio, requirement | 1.20 |
Fixed charge coverage ratio | 2.82 |
Leverage ratio, requirement | 5.00 |
Leverage ratio | 2.59 |
Credit Facilities and Long-term Debt - Future Principal Payments on Long-term Debt (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2018 | $ 18,948 |
2019 | 47,888 |
2020 | 40,236 |
2021 | 43,291 |
2022 | 61,103 |
Thereafter | 571,014 |
Total principal payments | $ 782,480 |
Commitments and Contingencies - Minimum Lease Payments (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2018 | $ 38,357 |
2019 | 34,587 |
2020 | 32,552 |
2021 | 30,673 |
2022 | 28,985 |
Thereafter | 243,242 |
Total minimum lease payments | 408,396 |
Less: sublease rentals | (8,005) |
Future minimum payments, net | $ 400,391 |
Commitments and Contingencies (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Rent expense, net of sublease income | $ 33,400 | $ 26,800 | $ 23,800 |
Charge-back liability | 52,744 | ||
Deferred revenue reserve | 3,400 | ||
Self insurance program liabilities | 31,200 | $ 32,800 | |
Lifetime Oil Contracts | |||
Deferred revenue | $ 127,257 |
Commitments and Contingencies - Charge-backs for Various Contracts (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2018 | $ 27,352 |
2019 | 16,113 |
2020 | 6,382 |
2021 | 2,183 |
2022 | 673 |
Thereafter | 41 |
Total | $ 52,744 |
Commitments and Contingencies - Lifetime Lube, Oil and Filter Contracts Acquired (Details) - Lifetime Oil Contracts $ in Thousands |
Dec. 31, 2017
USD ($)
|
---|---|
Product Information [Line Items] | |
2018 | $ 25,212 |
2019 | 20,048 |
2020 | 15,913 |
2021 | 13,292 |
2022 | 11,368 |
Thereafter | 41,424 |
Total | $ 127,257 |
Stockholders' Equity - Share Repurchases (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | 23 Months Ended | ||
---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2017 |
|
Equity, Class of Treasury Stock [Line Items] | ||||
Shares repurchased in association with tax withholdings on the vesting of RSUs (in shares) | 32,457 | 94,826 | 77,649 | |
Class A common stock | ||||
Equity, Class of Treasury Stock [Line Items] | ||||
Shares repurchased pursuant to repurchase authorizations (in shares) | 329,000 | 1,312,848 | 228,737 | 1,042,725 |
Total purchase price (in thousands) | $ 30,527 | $ 104,370 | $ 24,676 | |
Average purchase price per share (in dollars per share) | $ 92.79 | $ 79.50 | $ 107.88 | $ 83.86 |
Stockholders' Equity - Dividends Declared and Paid (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Equity [Abstract] | |||||||||||||||
Cash dividend declared per Class A and Class B share (in dollars per share) | $ 0.27 | $ 0.27 | $ 0.27 | $ 0.25 | $ 0.25 | $ 0.25 | $ 0.25 | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.16 | |||
Cash dividend paid per Class A and Class B share (in dollars per share) | $ 0.27 | $ 0.27 | $ 0.27 | $ 0.25 | $ 0.25 | $ 0.25 | $ 0.25 | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.20 | $ 0.16 | $ 1.06 | $ 0.95 | $ 0.76 |
Total amount of dividends paid (in thousands) | $ 6,741 | $ 6,751 | $ 6,760 | $ 6,292 | $ 6,308 | $ 6,299 | $ 6,373 | $ 5,151 | $ 5,246 | $ 5,257 | $ 5,266 | $ 4,216 |
Stockholders' Equity - Reclassification From Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Loss on cash flow hedges | $ (39,336) | $ (25,531) | $ (19,534) |
Income tax benefits | 101,852 | 86,465 | 79,705 |
Loss on cash flow hedges, net | 245,217 | 197,058 | 182,999 |
Accumulated Net Gain (Loss) from Cash Flow Hedges Including Portion Attributable to Noncontrolling Interest | Interest Rate Contract | Reclassification out of Accumulated Other Comprehensive Income | |||
Loss on cash flow hedges | 0 | (219) | (449) |
Income tax benefits | 0 | 85 | 174 |
Loss on cash flow hedges, net | $ 0 | $ (134) | $ (275) |
401(k) Profit Sharing, Deferred Compensation and Long-term Incentive Plans (Narrative) (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Defined Contribution Plan Disclosure [Line Items] | |||
Contributions | $ 5.8 | $ 5.4 | $ 5.3 |
Other Noncurrent Liabilities | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Balance due to participants | $ 27.9 | $ 23.5 | |
Minimum | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Discretionary contributions vesting period | 1 year | ||
Maximum | |||
Defined Contribution Plan Disclosure [Line Items] | |||
Discretionary contributions vesting period | 7 years |
401(k) Profit Sharing, Deferred Compensation and Long-term Incentive Plans - Compensation Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Postemployment Benefits [Abstract] | |||
Compensation expense | $ 1,059 | $ 1,081 | $ 1,812 |
Total discretionary contribution | $ 1,730 | $ 1,785 | $ 2,249 |
Guaranteed annual return (in percent) | 5.00% | 5.25% | 5.25% |
Stock-Based Compensation - Summary of 2009 ESPP (Details) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Weighted average per share discount from market value for shares purchased (in dollars per share) | $ 15.20 | $ 13.00 | $ 15.89 |
The 2009 ESPP | |||
Shares purchased pursuant to 2009 ESPP (in shares) | 90,881 | ||
Weighted average per share price of shares purchased (in dollars per share) | $ 86.13 | ||
Weighted average per share discount from market value for shares purchased (in dollars per share) | $ 15.20 | ||
Shares available for purchase pursuant to 2009 ESPP (in shares) | 281,870 |
Stock-Based Compensation - Stock Incentive Plan Activity, Restricted Stock (Details) - Restricted Stock Units (RSUs) |
12 Months Ended |
---|---|
Dec. 31, 2017
$ / shares
shares
| |
RSUs | |
Balance (in shares) | shares | 298,984 |
Granted (in shares) | shares | 162,356 |
Vested (in shares) | shares | (90,215) |
Forfeited (in shares) | shares | (26,321) |
Balance (in shares) | shares | 344,804 |
Weighted average grant date fair value | |
Balance, weighted average grant date fair value (in dollars per share) | $ / shares | $ 80.37 |
Granted, weighted average grant date fair value (in dollars per share) | $ / shares | 99.24 |
Vested, weighted average grant date fair value (in dollars per share) | $ / shares | 69.61 |
Forfeited, weighted average grant date fair value (in dollars per share) | $ / shares | 83.86 |
Balance, weighted average grant date fair value (in dollars per share) | $ / shares | $ 91.81 |
Derivative Financial Instruments - Effect of Derivative Instruments on Consolidated Statements of Operations (Details) - Floor plan interest expense - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||
Interest rate swap contract, amount of gain recognized in accumulated OCI (effective portion) | $ 233 | $ 599 |
Loss on cash flow hedges | (219) | (449) |
Interest rate swap contract, amount of loss recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing) | $ (352) | $ (758) |
Income Taxes (Narrative) (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Operating Loss Carryforwards [Line Items] | ||
Provisional amount related to remeasurement of deferred tax balance | $ 32,900,000 | |
Estimate for full expense on certain assets and executive compensation limitation | 2,000,000 | |
Income taxes receivable | 22,500,000 | $ 2,400,000 |
Valuation allowance | (557,000) | $ (227,000) |
Valuation allowance increase | 300,000 | |
State operating loss carryforwards | 2,400,000 | |
Unrecognized tax benefits | 0 | |
State and Local Jurisdiction | ||
Operating Loss Carryforwards [Line Items] | ||
Valuation allowance, state net operating loss carryforwards | 600,000 | |
State tax credit carryforward | $ 1,000,000 |
Income Taxes - Income Tax Provision (Benefit) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Current: | |||
Federal | $ 95,128 | $ 68,088 | $ 58,408 |
State | 16,883 | 13,884 | 14,572 |
Current income tax expense (benefit) | 112,011 | 81,972 | 72,980 |
Deferred: | |||
Federal | (14,257) | 4,893 | 6,046 |
State | 4,098 | (400) | 679 |
Deferred income tax expense (benefit) | (10,159) | 4,493 | 6,725 |
Total | $ 101,852 | $ 86,465 | $ 79,705 |
Income Taxes - Tax Rate Reconciliation (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Income Tax Disclosure [Abstract] | |||
Federal tax provision at statutory rate | $ 121,474 | $ 99,233 | $ 91,947 |
State taxes, net of federal income tax benefit | 13,308 | 10,784 | 9,357 |
Equity investment basis difference | 0 | 9,470 | 11,048 |
Non-deductible items | 1,316 | 1,436 | 882 |
Permanent differences related to stock-based compensation | (822) | 139 | 156 |
Net change in valuation allowance | 330 | (5,133) | (3,303) |
General business credits | (934) | (27,950) | (29,093) |
Deferred revaluation for change in statutory tax rate | (32,901) | 0 | 0 |
Other | 81 | (1,514) | (1,289) |
Total | $ 101,852 | $ 86,465 | $ 79,705 |
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Deferred tax assets: | ||
Deferred revenue and cancellation reserves | $ 39,397 | $ 49,332 |
Allowances and accruals, including state NOL carryforward amounts | 36,314 | 49,074 |
Credits and other | 1,112 | 1,781 |
Valuation allowance | (557) | (227) |
Total deferred tax assets | 76,266 | 99,960 |
Deferred tax liabilities: | ||
Inventories | (20,926) | (22,253) |
Goodwill | (35,042) | (41,107) |
Property and equipment, principally due to differences in depreciation | (73,399) | (93,943) |
Prepaid expenses and other | (3,176) | (1,732) |
Total deferred tax liabilities | (132,543) | (159,035) |
Total | $ (56,277) | $ (59,075) |
Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Schedule Of Unrecognized Tax Benefits [Roll Forward] | ||
Balance | $ 0 | $ 1,031 |
Decrease related to tax positions taken - prior year | 0 | (1,031) |
Balance | $ 0 | $ 0 |
Income Taxes - Open Tax Years (Details) |
12 Months Ended |
---|---|
Dec. 31, 2017 | |
Domestic Tax Authority | Earliest Tax Year | |
Income Taxes [Line Items] | |
Open tax year | 2014 |
Domestic Tax Authority | Latest Tax Year | |
Income Taxes [Line Items] | |
Open tax year | 2017 |
State and Local Jurisdiction | Earliest Tax Year | |
Income Taxes [Line Items] | |
Open tax year | 2013 |
State and Local Jurisdiction | Latest Tax Year | |
Income Taxes [Line Items] | |
Open tax year | 2017 |
Acquisitions (Narrative) (Details) $ in Millions |
12 Months Ended | ||||
---|---|---|---|---|---|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
Aug. 07, 2017
store
|
May 01, 2017
store
|
Sep. 12, 2016
store
|
|
Business Acquisition [Line Items] | |||||
Acquisition expenses | $ | $ 6.0 | $ 1.0 | |||
Baierl Auto Group | |||||
Business Acquisition [Line Items] | |||||
Number of stores acquired | 8 | ||||
Downtown LA Auto Group | |||||
Business Acquisition [Line Items] | |||||
Number of stores acquired | 7 | ||||
Carbone Auto Group | |||||
Business Acquisition [Line Items] | |||||
Number of stores acquired | 9 |
Acquisitions - Revenue and Operating Income from Acquisitions (Details) $ in Thousands |
12 Months Ended |
---|---|
Dec. 31, 2017
USD ($)
| |
Business Combinations [Abstract] | |
Revenue | $ 617,300 |
Operating income | $ 9,316 |
Acquisitions - Pro Forma Summary of All Acquisitions (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Business Combinations [Abstract] | ||
Revenue | $ 10,879,567 | $ 10,727,906 |
Net income | $ 254,966 | $ 219,756 |
Basic net income per share (in dollars per share) | $ 10.17 | $ 8.65 |
Diluted net income per share (in dollars per share) | $ 10.14 | $ 8.61 |
Related Party Transactions (Details) - Executive Chairman - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Related Party Transaction [Line Items] | |||
Charge to selling, general and administrative expense | $ 18.3 | ||
Accrued Liabilities and Other Long Term Liabilities | |||
Related Party Transaction [Line Items] | |||
Balance due to related parties | $ 16.8 | $ 17.3 |
Equity-Method Investments (Narrative) (Details) - NMTC Program - USD ($) $ in Millions |
1 Months Ended | 12 Months Ended | |
---|---|---|---|
Oct. 31, 2014 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Schedule of Equity Method Investments [Line Items] | |||
Membership interest | 99.90% | ||
Equity contributions | $ 4.1 | $ 22.8 | $ 22.9 |
Total contributions to be paid over obligation term | $ 49.8 | ||
Obligation term | 2 years |
Equity-Method Investments - Equity-method Investment Recorded in Consolidated Statements of Operations (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
Schedule of Equity Method Investments [Line Items] | |||
Tax benefits and credits generated | $ 2,798 | $ (10,138) | $ (12,341) |
NMTC Program | |||
Schedule of Equity Method Investments [Line Items] | |||
Asset impairments to write investment down to fair value | 0 | 13,992 | 16,521 |
Our portion of the partnership’s operating losses | 0 | 8,262 | 6,929 |
Non-cash interest expense related to the amortization of the discounted fair value of future equity contributions | 0 | 185 | 674 |
Tax benefits and credits generated | $ 0 | $ 28,530 | $ 30,831 |
Segments - Segment Assets (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Total assets | $ 4,683,066 | $ 3,844,150 |
Operating Segments | Domestic | ||
Segment Reporting Information [Line Items] | ||
Total assets | 1,338,232 | 1,225,387 |
Operating Segments | Import | ||
Segment Reporting Information [Line Items] | ||
Total assets | 1,137,934 | 959,355 |
Operating Segments | Luxury | ||
Segment Reporting Information [Line Items] | ||
Total assets | 641,118 | 511,779 |
Corporate And Eliminations | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 1,565,782 | $ 1,147,629 |
GRT]?;X*Z7KT,[(V1U@N $ F?$,C=^[@&U'E8HPO%]
M!VN)(/L>LI&0X'42I Z3CO$TC0]ZO%7C[3'>3N,C2],)XH^0PRE-QD3OP+#A
M2F#T(8(+;,P2%Z*WZ% G[E3B3@X\Z?%>C?=BX)&-9W6"N.EX7# 6V3M<2UR@
MX*-EY;"1..]C]!!UWD'E'21O8+R#Z <<^/S*&&\%1P8(V#S9*#@(SD]J^1WO
MJ/*.DC?+SRJ*?GB%20102CS/$H4&L, VJ6R39$N,;9)5O11!E[NQ(W-3[7L0GWATY
M]J:*SM2*=(?B/7JOY>Y-EK-K))IC3E,,7\E.H5DFD;BL$$DBK(N#9FTP2J[X$V]F4OV?L
MI"% U!?;,YYSYLQXG(_6/?L.() 7K8PO:!="?V3,5QUHX6]L#P9O&NNT"&BZ
MEOG>@:@32"O&=[MW3 MI:)DGW]F5N1V"D@;.COA!:^%^G4#9L:![^NIXDFT7
MHH.5>2]:^ KA6W]V:+&%I98:C)?6$ =-0>_WQU,6XU/ =PFC7YU)K.1B[7,T
M/M4%W45!H* *D4'@=H4'4"H2H8R?,R==4D;@^OS*_B'5CK5RUYQG-VC41SS&F*X:N8_1+!D'U)P;=2G/A_<+X-/VPJ/"3XX2^%AVV";),@
M2P39FR5NQ63_)&&KGFIP;9HF3RH[F#3)*^\RL/?I$=F?\&G:OPC72N/)Q09\
MV=3_QMH *&5W@R/4X0=;# 5-B,?W>';3F$U&L/W\@]CRC
*GJ7%^02A&;,
M,6'H"I,M".+5EQ!T*\21?J#3;?I^,\-]I._7T>]NM@7R38$\"N3_"%S_5^)'
M#%UA4A"RZJD$T\5ILJC6HXJ3O/(N WM/XYO\A:=I_\9,QY5%9^W\R\;^MUH[
M\*GLKOP(]?Z#+8: UH7C)W\V:;
M&::1GJ[IR==M@6Q3((L"V;L2TP\E;F&R#T'(JJ<23!NGR:)*#RI.\LJ[#.PM
MC6_R!I^F_1
RN_(CU/D/MA@"&A>.7_S93&,V&4[W
M\P\BRS[MI,O.K1FWRLQ>UC%9%.ABB0;,5N._G@KFYT<650JGK7W]\TP5H?
M*]/]I+X8/=\1/?571-;X@CRNAIN>WVZ&BZ>_LWJ75TWPJHW197_ML-7:J#;(
M^%.[]_8JVYQ?"K4UW>.D?:Z'"Y_AQ>C#>)D5G6_4YO\!4$L#!!0 ( +2!
M5TR<3:UK2@( +$( 9 >&PO=V]R:W-H965T
SG8PX%@P5F+$,08^CFIEY/Z./&"LQ8AD&;(S\F\G,S'@0N.1T1R@OT
RQQD7/6>]R^W0[K
MCRC<(-7]DPZ:9IMGJCU"1>]%C,(