Note 10 - Segments

3 Months Ended

Mar. 31, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note 10. Segments

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 includes the results of operations of our stand-alone body shop 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 reportable 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, except for the internal allocation within Corporate and other discussed above. Our CODM measures the performance of each operating 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 operating segments.

Certain financial information on a segment basis is as follows (in thousands):

	Three Months Ended March 31,
	2016			2015
Revenues:
Domestic	$	768,902		$	690,682
Import		865,743			760,080
Luxury		346,813			336,993
		1,981,458			1,787,755
Corporate and other		1,403			1,423
	$	1,982,861		$	1,789,178
Segment income*:
Domestic	$	21,730		$	27,294
Import		22,633			17,063
Luxury		4,235			6,645
		48,598			51,002
Corporate and other		30,071			21,976
Depreciation and amortization		(11,663	)		(9,726	)
Other interest expense		(5,459	)		(4,828	)
Other expense, net		(1,526	)		(368	)
Income before income taxes	$	60,021		$	58,056

 *Segment income for each of the segments is defined as Income before income taxes, depreciation and amortization, other interest expense and other expense, net.

Floor plan interest expense:
Domestic	$	6,431		$	4,722
Import		4,299			3,713
Luxury		2,657			2,062
		13,387			10,497
Corporate and other		(7,478	)		(5,848	)
	$	5,909		$	4,649

	March 31, 2016		December 31, 2015
Total assets:
Domestic	$	1,013,079	$	985,374
Import		786,619		725,011
Luxury		449,916		475,305
Corporate and other		1,018,004		1,041,609
	$	3,267,618	$	3,227,299