Note 10 - Segments

6 Months Ended

Jun. 30, 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 June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Revenues:
Domestic	$	826,709		$	768,170		$	1,595,611		$	1,458,853
Import		934,018			855,305			1,799,761			1,615,385
Luxury		371,866			372,500			718,679			709,493
		2,132,593			1,995,975			4,114,051			3,783,731
Corporate and other		746			972			2,149			2,394
	$	2,133,339		$	1,996,947		$	4,116,200		$	3,786,125
Segment income*:
Domestic	$	27,614		$	31,320		$	49,344		$	58,613
Import		28,228			28,149			50,861			45,212
Luxury		9,398			10,801			13,633			17,446
		65,240			70,270			113,838			121,271
Corporate and other		31,563			20,984			61,634			42,961
Depreciation and amortization		(12,503	)		(10,287	)		(24,166	)		(20,013	)
Other interest expense		(5,502	)		(4,972	)		(10,961	)		(9,800	)
Other expense, net		(1,495	)		(356	)		(3,021	)		(724	)
Income before income taxes	$	77,303		$	75,639		$	137,324		$	133,695

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Floor plan interest expense:
Domestic	$	6,183		$	4,920		$	12,615		$	9,642
Import		4,443			3,736			8,742			7,448
Luxury		2,650			2,308			5,308			4,370
		13,276			10,964			26,665			21,460
Corporate and other		(7,067	)		(6,309	)		(14,547	)		(12,156	)
	$	6,209		$	4,655		$	12,118		$	9,304

	June 30, 2016		December 31, 2015
Total assets:
Domestic	$	1,018,942	$	985,374
Import		825,692		725,011
Luxury		472,475		475,305
Corporate and other		1,004,961		1,041,609
	$	3,322,070	$	3,227,299