Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 20, 2019 | Jun. 30, 2018 | |
Document and Entity Information [Line Items] | |||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | SAH | ||
Entity Registrant Name | SONIC AUTOMOTIVE INC | ||
Entity Central Index Key | 1,043,509 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 599.3 | ||
Class A Common stock | |||
Document and Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 30,916,226 | ||
Class B Common stock | |||
Document and Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 12,029,375 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 5,854 | $ 6,352 |
Receivables, net | 438,186 | 482,126 |
Inventories | 1,528,461 | 1,512,745 |
Other current assets | 20,886 | 18,574 |
Total current assets | 1,993,387 | 2,019,797 |
Property and Equipment, net | 1,178,489 | 1,146,881 |
Goodwill | 509,592 | 525,780 |
Other Intangible Assets, net | 69,705 | 74,589 |
Other Assets | 45,634 | 51,471 |
Total Assets | 3,796,807 | 3,818,518 |
Current Liabilities: | ||
Notes payable - floor plan - trade | 821,074 | 804,238 |
Notes payable - floor plan - non-trade | 712,966 | 709,098 |
Trade accounts payable | 114,263 | 129,903 |
Accrued interest | 13,417 | 12,316 |
Other accrued liabilities | 257,823 | 237,963 |
Current maturities of long-term debt | 26,304 | 61,314 |
Total current liabilities | 1,945,847 | 1,954,832 |
Long-Term Debt | 918,779 | 963,389 |
Other Long-Term Liabilities | 75,887 | 61,918 |
Deferred Income Taxes | 33,178 | 51,619 |
Commitments and Contingencies | ||
Stockholders’ Equity: | ||
Class A Convertible Preferred Stock, none issued | 0 | 0 |
Paid-in capital | 745,052 | 732,854 |
Retained earnings | 670,691 | 625,356 |
Accumulated other comprehensive income (loss) | 4,233 | 1,307 |
Treasury stock, at cost; 33,476,159 Class A common stock shares held at December 31, 2018 and 32,290,493 Class A common stock shares held at December 31, 2017 | (597,623) | (573,513) |
Total Stockholders’ Equity | 823,116 | 786,760 |
Total Liabilities and Stockholders’ Equity | 3,796,807 | 3,818,518 |
Class A common stock | ||
Stockholders’ Equity: | ||
Common stock, value | 642 | 635 |
Class B common stock | ||
Stockholders’ Equity: | ||
Common stock, value | $ 121 | $ 121 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Convertible preferred stock issued | 0 | |
Class A common stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 64,197,385 | 63,456,698 |
Common stock, shares outstanding | 30,721,226 | 31,166,205 |
Treasury stock, shares | 33,476,159 | 32,290,493 |
Class B common stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, shares issued | 12,029,375 | 12,029,375 |
Common stock, shares outstanding | 12,029,375 | 12,029,375 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Revenues: | |||
Total revenues | $ 9,951,630 | $ 9,867,208 | $ 9,731,779 |
Cost of Sales: | |||
Total cost of sales | (8,505,505) | (8,409,532) | (8,302,505) |
Gross profit | 1,446,125 | 1,457,676 | 1,429,274 |
Selling, general and administrative expenses | (1,145,325) | (1,147,773) | (1,110,856) |
Impairment charges | (29,514) | (9,394) | (8,063) |
Depreciation and amortization | (93,623) | (88,944) | (77,446) |
Operating income (loss) | 177,663 | 211,565 | 232,909 |
Other income (expense): | |||
Interest expense, floor plan | (48,398) | (36,395) | (27,716) |
Interest expense, other, net | (54,059) | (52,524) | (50,106) |
Other income (expense), net | 106 | (14,522) | 125 |
Total other income (expense) | (102,351) | (103,441) | (77,697) |
Income (loss) from continuing operations before taxes | 75,312 | 108,124 | 155,212 |
Provision for income taxes for continuing operations - benefit (expense) | (22,922) | (13,971) | (60,696) |
Income (loss) from continuing operations | 52,390 | 94,153 | 94,516 |
Discontinued operations: | |||
Income (loss) from discontinued operations before taxes | (1,017) | (1,942) | (2,121) |
Provision for income taxes for discontinued operations - benefit (expense) | 277 | 772 | 798 |
Income (loss) from discontinued operations | (740) | (1,170) | (1,323) |
Net income (loss) | $ 51,650 | $ 92,983 | $ 93,193 |
Basic earnings (loss) per common share: | |||
Earnings (loss) per share from continuing operations (usd per share) | $ 1.23 | $ 2.14 | $ 2.07 |
Earnings (loss) per share from discontinued operations (usd per share) | (0.02) | (0.03) | (0.03) |
Earnings (loss) per common share (usd per share) | $ 1.21 | $ 2.11 | $ 2.04 |
Weighted average common shares outstanding (in shares) | 42,708 | 43,997 | 45,637 |
Diluted earnings (loss) per common share: | |||
Earnings (loss) per share from continuing operations (usd per share) | $ 1.22 | $ 2.12 | $ 2.06 |
Earnings (loss) per share from discontinued operations (usd per share) | (0.02) | (0.03) | (0.03) |
Earnings (loss) per common share (usd per share) | $ 1.20 | $ 2.09 | $ 2.03 |
Weighted average common shares outstanding (in shares) | 42,950 | 44,358 | 45,948 |
New vehicles | |||
Revenues: | |||
Total revenues | $ 4,974,097 | $ 5,295,051 | $ 5,234,505 |
Cost of Sales: | |||
Total cost of sales | (4,732,595) | (5,030,125) | (4,973,911) |
Used vehicles | |||
Revenues: | |||
Total revenues | 2,973,498 | 2,622,053 | 2,533,122 |
Cost of Sales: | |||
Total cost of sales | (2,830,510) | (2,467,150) | (2,374,537) |
Wholesale vehicles | |||
Revenues: | |||
Total revenues | 217,625 | 171,064 | 211,048 |
Cost of Sales: | |||
Total cost of sales | (228,874) | (179,778) | (218,364) |
Total vehicles | |||
Revenues: | |||
Total revenues | 8,165,220 | 8,088,168 | 7,978,675 |
Cost of Sales: | |||
Total cost of sales | (7,791,979) | (7,677,053) | (7,566,812) |
Parts, service and collision repair | |||
Revenues: | |||
Total revenues | 1,380,887 | 1,416,010 | 1,409,819 |
Cost of Sales: | |||
Total cost of sales | (713,526) | (732,479) | (735,693) |
Finance, insurance and other, net | |||
Revenues: | |||
Total revenues | $ 405,523 | $ 363,030 | $ 343,285 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ 51,650 | $ 92,983 | $ 93,193 |
Other comprehensive income (loss) before taxes: | |||
Change in fair value of interest rate swap and rate cap agreements | 2,173 | 6,186 | 5,731 |
Amortization of terminated interest rate swap agreements | (429) | 0 | 0 |
Pension actuarial income (loss) | 2,368 | (429) | (295) |
Total other comprehensive income (loss) before taxes | 4,112 | 5,757 | 5,436 |
Provision for income tax benefit (expense) related to components of other comprehensive income (loss) | (1,186) | (2,188) | (2,066) |
Other comprehensive income (loss) | 2,926 | 3,569 | 3,370 |
Comprehensive income (loss) | $ 54,576 | $ 96,552 | $ 96,563 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Class A common stockCommon stock | Class A common stockTreasury Stock | Class B common stockCommon stock |
Beginning Balance at Dec. 31, 2015 | $ 729,048 | $ 713,118 | $ 457,010 | $ (5,632) | $ 626 | $ (436,195) | $ 121 |
Beginning Balance, Shares at Dec. 31, 2015 | 62,586 | 24,675 | 12,029 | ||||
Shares awarded under stock compensation plans | 27 | 23 | $ 4 | ||||
Shares awarded under stock compensation plans, shares | 381 | ||||||
Purchases of treasury stock | (99,971) | $ (99,971) | |||||
Purchases of treasury stock, shares | (5,588) | ||||||
Income tax benefit associated with stock compensation plans | (2,611) | (2,611) | |||||
Change in fair value of interest rate swap and rate cap agreements net of tax expense | 3,553 | 3,553 | |||||
Pension accrual income, net of tax | (183) | (183) | |||||
Restricted stock amortization | 11,165 | 11,165 | |||||
Net income (loss) | 93,193 | 93,193 | |||||
Dividends declared | (9,057) | (9,057) | |||||
Ending Balance at Dec. 31, 2016 | 725,164 | 721,695 | 541,146 | (2,262) | $ 630 | $ (536,166) | $ 121 |
Ending Balance, Shares at Dec. 31, 2016 | 62,967 | 30,263 | 12,029 | ||||
Shares awarded under stock compensation plans | 45 | 40 | $ 5 | ||||
Shares awarded under stock compensation plans, shares | 490 | ||||||
Purchases of treasury stock | (37,347) | $ (37,347) | |||||
Purchases of treasury stock, shares | (2,027) | ||||||
Change in fair value of interest rate swap and rate cap agreements net of tax expense | 3,835 | 3,835 | |||||
Pension accrual income, net of tax | (266) | (266) | |||||
Restricted stock amortization | 11,119 | 11,119 | |||||
Net income (loss) | 92,983 | 92,983 | |||||
Dividends declared | (8,773) | (8,773) | |||||
Ending Balance at Dec. 31, 2017 | 786,760 | 732,854 | 625,356 | 1,307 | $ 635 | $ (573,513) | $ 121 |
Ending Balance, Shares at Dec. 31, 2017 | 63,457 | 32,290 | 12,029 | ||||
Net income (loss) | 51,650 | 51,650 | |||||
Beginning Balance at Dec. 31, 2017 | 786,760 | 732,854 | 625,356 | 1,307 | $ 635 | $ (573,513) | $ 121 |
Beginning Balance, Shares at Dec. 31, 2017 | 63,457 | 32,290 | 12,029 | ||||
Shares awarded under stock compensation plans | 352 | 345 | $ 7 | ||||
Shares awarded under stock compensation plans, shares | 740 | ||||||
Purchases of treasury stock | (24,110) | $ (24,110) | |||||
Purchases of treasury stock, shares | (1,186) | ||||||
Change in fair value of interest rate swap and rate cap agreements net of tax expense | 1,284 | 1,284 | |||||
Pension accrual income, net of tax | 1,642 | 1,642 | |||||
Restricted stock amortization | 11,853 | 11,853 | |||||
Net income (loss) | 51,650 | ||||||
Dividends declared | (10,233) | (10,233) | |||||
Ending Balance at Dec. 31, 2018 | 823,116 | $ 745,052 | 670,691 | $ 4,233 | $ 642 | $ (597,623) | $ 121 |
Ending Balance, Shares at Dec. 31, 2018 | 64,197 | 33,476 | 12,029 | ||||
Cumulative effect of change in accounting principle | $ 3,918 | $ 3,918 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Tax effect on fair value of interest rate swap and rate cap agreements | $ 460 | $ 2,351 | $ 2,178 |
Tax expense (benefit) associated with change in pension actuarial (income) loss | $ (726) | ||
Dividends declared per common share | $ 0.24 | $ 0.20 | $ 0.20 |
Accumulated Other Comprehensive Income (Loss) | |||
Tax effect on fair value of interest rate swap and rate cap agreements | $ 460 | $ 2,351 | $ 2,178 |
Tax expense (benefit) associated with change in pension actuarial (income) loss | $ 726 | $ 163 | $ 112 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income (loss) | $ 51,650 | $ 92,983 | $ 93,193 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Depreciation and amortization of property and equipment | 93,617 | 88,938 | 77,532 |
Provision for bad debt expense | 531 | 748 | 389 |
Other amortization | 617 | 649 | 649 |
Debt issuance cost amortization | 2,418 | 2,383 | 2,641 |
Debt discount amortization, net of premium amortization | 0 | 157 | 303 |
Stock-based compensation expense | 11,853 | 11,119 | 11,165 |
Deferred income taxes | (20,606) | (27,760) | 14,465 |
Net distributions from equity investee | (225) | (138) | (300) |
Asset impairment charges | 29,514 | 9,394 | 8,063 |
Loss (gain) on disposal of dealerships and property and equipment | (43,164) | (10,194) | (331) |
Loss (gain) on exit of leased dealerships | 1,709 | 2,157 | 1,386 |
Loss (gain) on retirement of debt | 0 | 14,607 | 0 |
Changes in assets and liabilities that relate to operations: | |||
Receivables | 50,351 | (52,989) | (62,894) |
Inventories | (78,701) | 57,250 | 35,545 |
Other assets | 11,288 | 3,266 | 62,538 |
Notes payable - floor plan - trade | 16,836 | (46,299) | (42,929) |
Trade accounts payable and other liabilities | 15,987 | 16,612 | 14,953 |
Total adjustments | 92,025 | 69,900 | 123,175 |
Net cash provided by (used in) operating activities | 143,675 | 162,883 | 216,368 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of businesses, net of cash acquired | 0 | (76,610) | (15,861) |
Purchases of land, property and equipment | (163,619) | (234,245) | (206,232) |
Proceeds from sales of property and equipment | 19,554 | 596 | 1,319 |
Proceeds from sales of dealerships | 128,734 | 38,150 | 0 |
Net cash provided by (used in) investing activities | (15,331) | (272,109) | (220,774) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Net (repayments) borrowings on notes payable - floor plan - non-trade | 3,868 | 33,745 | 49,986 |
Borrowings on revolving credit facilities | 918,967 | 327,070 | 209,287 |
Repayments on revolving credit facilities | (993,967) | (252,070) | (213,490) |
Proceeds from issuance of long-term debt | 21,072 | 302,483 | 103,395 |
Debt issuance costs | (144) | (4,855) | (3,084) |
Principal payments and repurchase of long-term debt | (45,053) | (36,836) | (30,949) |
Repurchase of debt securities | 0 | (210,914) | 0 |
Purchases of treasury stock | (24,110) | (37,347) | (99,971) |
Income tax benefit (expense) associated with stock compensation plans | 0 | 0 | (2,611) |
Issuance of shares under stock compensation plans | 352 | 45 | 27 |
Dividends paid | (9,827) | (8,851) | (8,701) |
Net cash provided by (used in) financing activities | (128,842) | 112,470 | 3,889 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (498) | 3,244 | (517) |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 6,352 | 3,108 | 3,625 |
CASH AND CASH EQUIVALENTS, END OF YEAR | 5,854 | 6,352 | 3,108 |
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES: | |||
Change in fair value of interest rate swap and rate cap agreements (net of tax expense of $460, $2,351 and $2,178 in the years ended December 31, 2018, 2017 and 2016, respectively) | 1,284 | 3,835 | 3,553 |
Cash paid (received) during the period for: | |||
Interest, including amount capitalized | 98,126 | 89,525 | 77,289 |
Income taxes | $ 35,217 | $ 42,907 | $ 28,459 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Statement of Cash Flows [Abstract] | |||
Tax effect on fair value of interest rate swap and rate cap agreements | $ 460 | $ 2,351 | $ 2,178 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | Description of Business and Summary of Significant Accounting Policies Organization and Business - Sonic Automotive, Inc. (“Sonic,” the “Company,” “we,” “us” or “our”) is one of the largest automotive retailers in the United States (as measured by total revenue). As a result of the way we manage our business, we had two operating segments as of December 31, 2018: (1) the Franchised Dealerships Segment and (2) the EchoPark Segment. For management and operational reporting purposes, we group certain businesses together that share management and inventory (principally used vehicles) into “stores.” As of December 31, 2018, we operated 96 stores in the Franchised Dealerships Segment and eight stores in the EchoPark Segment. The Franchised Dealerships Segment consists of 108 new vehicle franchises (representing 23 different brands of cars and light trucks) and 15 collision repair centers in 13 states. The Franchised Dealerships Segment provides comprehensive services, including (1) sales of both new and used cars and light trucks; (2) sales of replacement parts and performance of vehicle maintenance, manufacturer warranty repairs, and paint and collision repair services (collectively, “Fixed Operations”); and (3) arrangement of extended warranties, service contracts, financing, insurance and other aftermarket products (collectively, “finance and insurance” or “F&I”) for our customers. The EchoPark Segment sells used cars and light trucks and arranges F&I product sales for our customers in pre-owned vehicle specialty retail locations. Our EchoPark business operates independently from our franchised dealerships business. Principles of Consolidation - All of our dealership and non-dealership subsidiaries are wholly owned and consolidated in the accompanying consolidated financial statements except for one 50%-owned dealership that is accounted for under the equity method. All material intercompany balances and transactions have been eliminated in the accompanying consolidated financial statements. Recent Accounting Pronouncements - In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09 as well as several subsequent amendments to amend the accounting guidance on revenue recognition. The amendments to the revenue recognition accounting guidance are included in Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers,” and are intended to provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices and improve disclosure requirements. The amendments to this guidance must be applied using either of the following transition methods: (1) a full retrospective approach reflecting the application of the amendments in each prior reporting period with the option to elect certain practical expedients; or (2) a modified retrospective approach with the cumulative effect of initially applying the amendments recognized at the date of adoption (which requires additional footnote disclosures). These amendments were effective for reporting periods beginning after December 15, 2017. On January 1, 2018, we adopted ASC 606 (the “new revenue standard”) using the modified retrospective transition approach applied to contracts not completed as of the date of adoption. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative financial information has not been restated and continues to be reported under the accounting standards in effect for that period. We do not expect the effect of the adoption of the new revenue standard to have a material impact on our net income on an ongoing basis. Under the new revenue standard, revenue is recognized when a customer obtains control of promised goods or services and in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. The principles apply a five-step model that includes: (1) identifying the contract(s) with the customer; (2) identifying the performance obligation(s) in the contract(s); (3) determining the transaction price; (4) allocating the transaction price to the performance obligation(s) in the contract(s); and (5) recognizing revenue as the performance obligation(s) are satisfied. The new revenue standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We do not include the cost of obtaining contracts within the related revenue streams. We have elected the practical expedient to expense the costs to obtain a contract when incurred. During the implementation process, management evaluated its established business processes, revenue transaction streams and accounting policies, and generally expects similar performance obligations to result under the new revenue standard as compared with prior U.S. generally accepted accounting principles ( “ U.S. GAAP ”) . Management identified its material revenue streams to be (1) the sale of new vehicles; (2) the sale of used vehicles to retail customers; (3) the sale of wholesale used vehicles at third-party auctions; (4) the arrangement of vehicle financing and the sale of service and other insurance contracts; and (5) the performance of vehicle maintenance and repair services and the sale of related parts and accessories. As a result of this evaluation during the implementation process, management expects the amounts and timing of revenue recognition to generally remain the same, with the exception of the timing of revenue recognition related to: (1) service and collision repair orders that are incomplete as of a reporting date (“work in process”) and (2) certain retrospective finance and insurance revenue earned in periods subsequent to the completion of the initial performance obligation (“F&I retro revenues”), both of which are subject to accelerated recognition under the new revenue standard. Work in process revenues are recognized over time based on the completed work to date and F&I retro revenues are recognized when the product contract has been executed with the end customer and are estimated each reporting period based on the expected value method using historical and projected data. F&I retro revenues, which represent variable consideration, subject to constraint, are to be included in the transaction price and recognized when or as the performance obligation is satisfied. F&I retro revenues can vary based on a variety of factors, including number of contracts and history of cancellations and claims. Accordingly, we utilize this historical and projected data to constrain the consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Generally, performance conditions are satisfied when the associated vehicle is either delivered or returned to a customer and customer acceptance has occurred or over time as the maintenance and repair services are performed. We do not have any revenue streams with significant financing components as payments are typically received within a short period of time following completion of the performance obligation(s). During the year ended December 31, 2018, we implemented new financial reporting controls during the process of adopting the new revenue standard. Those efforts did not result in any material changes to our internal control process. The cumulative effect of the adjustments to our December 31, 2018 consolidated statements of income and January 1, 2018 consolidated balance sheet for the adoption of ASC 606 was as follows: Income Statement Pre-ASC 606 Results Effects of Adoption of ASC 606 As Reported (In thousands) Revenues: Parts, service and collision repair $ 1,380,506 $ 381 $ 1,380,887 Finance, insurance and other, net $ 396,905 $ 8,618 $ 405,523 Cost of Sales: Parts, service and collision repair $ (713,259) $ (267) $ (713,526) Selling, general and administrative expenses: $ (1,145,294) $ (31) $ (1,145,325) Operating income (loss): $ 168,962 $ 8,701 $ 177,663 Balance Sheet December 31, 2017 Effects of Adoption of ASC 606 January 1, 2018 (In thousands) Assets: Receivables, net $ 482,126 $ 4,590 $ 486,716 Contract assets (1) $ — $ 2,082 $ 2,082 Liabilities: Other accrued liabilities $ 237,963 $ 1,286 $ 239,249 Deferred income taxes $ 51,619 $ 1,468 $ 53,087 Stockholders' Equity: Retained earnings $ 625,356 $ 3,918 $ 629,274 (1) Receivables, net in the accompanying consolidated balance sheets at December 31, 2018 includes approximately $4.7 million related to work in process and a contract asset of approximately $5.4 million related to F&I retro revenues. Changes in contract assets from January 1, 2018 to December 31, 2018 were primarily due to ordinary business activity. In February 2016, the FASB established ASC 842, “Leases,” by issuing ASU 2016-02 (and subsequent amendments via ASU 2018-01, ASU 2018-10 and ASU 2018-11) in order to increase transparency and comparability among organizations by recognizing operating lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The lease standard is effective for us on January 1, 2019. Prior to adoption of the lease standard, only leases classified as capital leases under ASC 840 were recorded in the consolidated balance sheets. Under ASC 842, an entity will classify leases as either finance leases (formerly capital leases) or operating leases, and a right-of-use asset (“ROU asset”) and lease liability are required to be recognized in the consolidated balance sheets for both finance and operating leases with a term longer than 12 months. The lease standard requires a modified retrospective transition approach and provides an optional transition method to either (1) record current existing leases as of the effective date; or (2) record leases existing as of the earliest comparative period presented in the financial statements by recasting comparative period financial statements. We adopted the lease standard as of January 1, 2019 using the effective date as our date of application. As such, financial statement information and disclosures required under the new lease standard will not be provided for dates and periods prior to January 1, 2019. The lease standard provides for a number of optional practical expedients in transition, which include: (1) not requiring an entity to reassess prior conclusions about lease identification, lease classification or initial direct costs; (2) allowing an entity to use a portfolio approach for similar lease assets; (3) allowing an entity to elect an accounting policy to choose not to separate non-lease components of an agreement from lease components (by asset class); (4) allowing the use of hindsight in estimating lease term or assessing impairment of ROU assets; and (5) not requiring an entity to reassess prior conclusions about land easements. We expect to elect all of the practical expedients permitted under the transition guidance within the new standard. The new lease standard also provides practical expedients for ongoing accounting. We expect to elect the short-term lease recognition exemption for our real estate and equipment leases, which means that for those leases that qualify, we will not recognize ROU assets or lease liabilities. As part of the lease standard implementation process, we assessed our existing real estate and equipment lease agreements, identified certain lease components embedded within existing service contracts, evaluated transition guidance and practical expedient elections, implemented lease accounting software and designed internal controls over lease accounting under the new standard. We are still evaluating the possible effects of impairment of certain ROU assets as of the effective date. We estimate that adoption of the new lease standard will result in recording additional operating lease liabilities and corresponding ROU assets ranging from $350.0 million to $400.0 million as of January 1, 2019. We do not expect the adoption of the new lease standard to have a material effect on future results of operations or cash flows. In August 2017, the FASB issued ASU 2017-12 which amends the hedge accounting recognition and presentation requirements in ASC Topic 815, Derivatives and Hedging. This ASU expands and refines hedge accounting for both non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. It also includes certain targeted improvements to simplify the application of current guidance related to hedge accounting. For public companies, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We do not believe the effects of this ASU will materially impact our consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, which allows the reclassification of stranded tax effects, as a result of the Tax Cuts and Jobs Acts of 2017, from accumulated other comprehensive income to retained earnings. For public companies, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We do not believe the effects of this ASU will materially impact our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07 to expand the scope of ASC Topic 718, Compensation - Stock Compensation, to include share-based payment transactions for acquiring goods and services from non-employees. For public companies, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We do not believe the effects of this ASU will materially impact our consolidated financial statements. Reclassifications - Prior to our adoption of ASU 2014-8 beginning with our Quarterly Report on Form 10-Q for the period ended June 30, 2014, individual dealership franchises sold, terminated or classified as held for sale were reported as discontinued operations. The results of operations of these dealership franchises sold or terminated prior to March 31, 2014 are reported as discontinued operations for all periods presented. Dealership franchises sold or terminated on or after March 31, 2014 have not been reclassified to discontinued operations since they did not meet the criteria in ASU 2014-8. If, in future periods, we determine that a dealership franchise should be reclassified from continuing operations to discontinued operations, previously reported consolidated statements of income will be reclassified in order to reflect the most recent classification. Use of Estimates - The preparation of financial statements in conformity with U.S. GAAP requires Sonic’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the accompanying consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates, particularly related to allowance for credit loss, realization of inventory, intangible asset and deferred tax asset values, reserves for tax contingencies, legal matters, reserves for future commission revenue to be returned to the third-party provider for early termination of customer contracts (“chargebacks”), results reported as continuing and discontinued operations, insurance reserves, lease exit accruals and certain accrued expenses. Cash and Cash Equivalents - We classify cash and all highly liquid investments with a maturity of three months or less at the date of purchase, including short-term time deposits and government agency and corporate obligations, as cash and cash equivalents. In the event that we are in a book overdraft cash position as of a reporting date, the book overdraft position is reclassified from cash and cash equivalents to trade accounts payable in the accompanying consolidated balance sheets and is reflected as activity in trade accounts payable and other liabilities in the accompanying consolidated statements of cash flows. We were not in a book overdraft position as of December 31, 2018 and were in a book overdraft position in an amount of approximately $6.9 million, as of December 31, 2017. Revenue Recognition - We record revenue when vehicles are delivered to customers, when vehicle service work is performed and when parts are delivered. Conditions for completing a sale include having an agreement with the customer, including pricing, and the sales price must be reasonably expected to be collected. See the heading “Recent Accounting Pronouncements” above for discussion and impact on our consolidated financial statements as a result of the adoption of ASC 2014-09 effective January 1, 2018. We arrange financing for customers through various financial institutions and receives a commission from the financial institution either in a flat fee amount or in an amount equal to the difference between the interest rates charged to customers and the predetermined interest rates set by the financial institution. We also receive commissions from the sale of various insurance contracts and non-recourse third-party extended service contracts to customers. Under these contracts, the applicable manufacturer or third-party warranty company is directly liable for all warranties provided within the contract. We may be assessed a chargeback fee in the event of early cancellation of a loan or insurance contract by the customer. Finance and insurance commission revenue is recorded net of estimated chargebacks at the time of sale. In addition to up-front commissions from the sale of F&I products, in certain cases we earn additional F&I revenues in future periods subsequent to the completion of the initial performance condition. F&I retro revenues are recognized when the product contract has been executed with the end customer and are estimated each reporting period based on the expected value method using historical and projected data. F&I retro revenues, which represent variable consideration, subject to constraint, are to be included in the transaction price and recognized when or as the performance obligation is satisfied. F&I retro revenues can vary based on a variety of factors, including number of contracts and history of cancellations and claims. Accordingly, we utilize this historical and projected data to constrain the consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. As of December 31, 2018 and 2017, the amounts recorded as allowances for finance, insurance and service contract commission chargeback reserves were approximately $25.8 million and $20.9 million, respectively, and were classified as other accrued liabilities and other long-term liabilities in the accompanying consolidated balance sheets. Floor Plan Assistance - We receive floor plan assistance payments from certain manufacturers. This assistance reduces the carrying value of our new vehicle inventory and is recognized as a reduction of cost of sales at the time the vehicle is sold. Amounts recognized as a reduction of cost of sales were approximately $42.2 million, $45.3 million and $45.0 million for 2018, 2017 and 2016, respectively. Contracts in Transit - Contracts in transit represent customer finance contracts evidencing loans or lease agreements between us, as creditor, and the customer, as borrower, to acquire or lease a vehicle in situations where a third-party finance source has given us initial, non-binding approval to assume our position as creditor. Funding and final approval from the finance source is provided upon the finance source’s review of the loan or lease agreement and related documentation executed by the customer at the dealership. These finance contracts are typically funded within 10 days of the initial approval of the finance transaction given by the third-party finance source. The finance source is not contractually obligated to make the loan or lease to the customer until it gives its final approval and funds the transaction, and until such final approval is given, the contracts in transit represent amounts due from the customer to us. Contracts in transit are included in receivables, net on the accompanying consolidated balance sheets and totaled approximately $227.8 million and $267.6 million at December 31, 2018 and 2017, respectively. Accounts Receivable - In addition to contracts in transit, our accounts receivable primarily consists of amounts due from the manufacturers for repair services performed on vehicles with a remaining factory warranty and amounts due from third parties from the sale of parts. We evaluate receivables for collectability based on the age of the receivable, the credit history of the customer and past collection experience. The allowance for doubtful accounts receivable was not significant at December 31, 2018 and 2017. As of December 31, 2018, there was approximately $1.0 million in accounts receivable in the accompanying consolidated balance sheets related to expected business interruption insurance proceeds for actual expenses incurred as a result of Hurricane Harvey. We did not record any estimate of business interruption insurance proceeds related to lost earnings or other contingent gain amounts related to Hurricane Harvey. Inventories - Inventories of new vehicles, recorded net of manufacturer credits, and used vehicles, including demonstrators, are stated at the lower of specific cost or market. Inventories of parts and accessories are accounted for using the “first-in, first-out” (“FIFO”) method of inventory accounting and are stated at the lower of FIFO cost or market. Other inventories are primarily service loaner vehicles and, to a lesser extent, vehicle chassis, other supplies and capitalized customer work-in-progress (open customer vehicle repair orders). Other inventories are stated at the lower of specific cost (depreciated cost for service loaner vehicles) or market. We assess the valuation of all of our vehicle and parts inventories and maintain a reserve where the cost basis exceeds the fair market value. In making this assessment for new vehicles, used vehicles, service loaners and parts inventory, we consider recent internal and external market data and the age of the vehicles to estimate the inventory’s fair market value. The risk with vehicle inventory is minimized by the fact that vehicles can be transferred within our network of dealerships. The risk with parts inventories is minimized by the fact that excess or obsolete parts can also be transferred within our network of dealerships or can usually be returned to the manufacturer. Recorded inventory reserves were not significant at December 31, 2018 and 2017. Property and Equipment - Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. We amortize leasehold improvements over the shorter of the estimated useful life or the remaining lease life. This lease life includes renewal options if a renewal has been determined to be reasonably assured. The range of estimated useful lives is as follows: Leasehold and land improvements 10-30 years Buildings 10-30 years Parts and service equipment 7-10 years Office equipment and fixtures 3-10 years Company vehicles 3-5 years We review the carrying value of property and equipment and other long-term assets (other than goodwill and franchise assets) for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If such an indication is present, we compare the carrying amount of the asset to the estimated undiscounted cash flows related to that asset. We conclude that an asset is impaired if the sum of such expected future cash flows is less than the carrying amount of the related asset. If we determine an asset is impaired, the impairment loss would be the amount by which the carrying amount of the related asset exceeds its fair value. The fair value of the asset would be determined based on the quoted market prices, if available. If quoted market prices are not available, we determine fair value by using a discounted cash flow model. See Note 4, “Property and Equipment,” for a discussion of impairment charges. Derivative Instruments and Hedging Activities - We utilize derivative financial instruments for the purpose of hedging the risks of certain identifiable and anticipated transactions. Commonly, the types of risks being hedged are those relating to the variability of cash flows caused by fluctuations in interest rates. We document our risk management strategy and hedge effectiveness at the inception of and during the term of each hedge. As of December 31, 2018, we utilized interest rate cap agreements to limit our exposure to increases in LIBOR rates above certain levels. See Note 6, “Long-Term Debt,” for further discussion of derivative instruments and hedging activities. Goodwill - Goodwill is recognized to the extent that the purchase price of the acquisition exceeds the estimated fair value of the net assets acquired, including other identifiable intangible assets. In accordance with “Intangibles - Goodwill and Other” in the ASC, goodwill is tested for impairment at least annually, or more frequently when events or circumstances indicate that impairment might have occurred. The ASC also states that if an entity determines, based on an assessment of certain qualitative factors, that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative goodwill impairment test is unnecessary. For purposes of goodwill impairment testing, we have two reporting units, which consist of: (1) our traditional franchised dealerships and (2) our EchoPark stores. The carrying value of our goodwill totaled approximately $509.6 million at December 31, 2018, $449.6 million of which was related to our franchised dealerships reporting unit and $60.0 million of which was related to our EchoPark reporting unit. For each reporting unit, we utilized the Discounted Cash Flows (“DCF”) method to estimate our enterprise value as of October 1, 2018. The significant assumptions in our DCF model include projected earnings, weighted average cost of capital (and estimates in the weighted average cost of capital inputs) and residual growth rates. In evaluating goodwill for impairment, if the fair value of a reporting unit is less than its carrying value, the difference would represent the amount of required goodwill impairment. To the extent the reporting unit’s earnings decline significantly or there are changes in one or more of these assumptions that would result in lower valuation results, it could cause the carrying value of the reporting unit to exceed its fair value and thus require us to record goodwill impairment. Based on the results of our quantitative test as of October 1, 2018, each reporting unit’s fair value exceeded its carrying value. As a result, we were not required to record goodwill impairment for either of our reporting units. See Note 5, “Intangible Assets and Goodwill,” for further discussion of goodwill. Other Intangible Assets - The principal identifiable intangible assets other than goodwill acquired in an acquisition are rights under franchise or dealer agreements with manufacturers. We classify franchise and dealer agreements as indefinite lived intangible assets as it has been our experience that renewals have occurred without substantial cost or material modifications to the underlying agreements. As such, we believe that our franchise and dealer agreements will contribute to cash flows for an indefinite period, therefore the carrying amount of franchise rights is not amortized. Franchise and dealer agreements acquired on or after July 1, 2001 have been included in other intangible assets, net on the accompanying consolidated balance sheets. Prior to July 1, 2001, franchise and dealer agreements were recorded and amortized as part of goodwill and remain as part of goodwill on the accompanying consolidated balance sheets. Other intangible assets acquired in acquisitions include favorable lease agreements with definite lives which are amortized on a straight-line basis over the remaining lease term. In accordance with “Intangibles - Goodwill and Other” in the ASC, we evaluate other intangible assets for impairment annually (as of October 1) or more frequently if indicators of impairment exist. We utilized a DCF model to estimate the fair value of the franchise assets for each of our franchises with recorded franchise assets. The significant assumptions in our DCF model include projected revenue, weighted average cost of capital (and estimates in the weighted average cost of capital inputs) and residual growth rates. In projecting the franchises’ revenue and growth rates, we developed many assumptions which may include, but are not limited to, revenue growth, internal revenue enhancement initiatives, cost control initiatives, internal investment programs (such as training, technology and infrastructure) and inventory floor plan borrowing rates. Our expectation of revenue growth is in part driven by our estimates of new vehicle industry sales volume in future periods. We believe the historic and projected industry sales volume is a good general indicator of growth or contraction in the retail automotive industry. Based on the October 1, 2018 impairment test, we determined that the fair value of the franchise assets exceeded the carrying value of the franchise assets for all but one of our franchises, resulting in a franchise asset impairment charge of $2.1 million during 2018, which is recorded in impairment charges in the accompanying consolidated statements of income. See Note 5, “Intangible Assets and Goodwill,” for further discussion of franchise and dealer agreements. In evaluating our definite life favorable lease assets for impairment, we considered whether the leased asset was being utilized by the dealership and if the dealership operating activities could recover the value of the recorded favorable lease asset. We evaluated our favorable lease assets for impairment as of October 1, 2018 and determined that no impairment charge was required. Insurance Reserves - We have various self-insured and high deductible casualty and other insurance programs which require the Company to make estimates in determining the ultimate liability it may incur for claims arising under these programs. These insurance reserves are estimated by management using actuarial evaluations based on historical claims experience, claims processing procedures, medical cost trends and, in certain cases, a discount factor. As of December 31, 2018 and 2017, we had approximately $22.9 million and $22.0 million, respectively, reserved for such programs. Lease Exit Accruals - The majority of our dealership properties are subject to long-term operating lease arrangements. When situations arise where the leased properties are no longer utilized in operations, we record accruals for the present value of the lease payments, net of estimated sublease rentals, for the remaining life of the operating leases and other accruals necessary to satisfy the lease commitment to the landlord. These situations could include the relocation of an existing facility or the sale of a dealership when the buyer will not be subleasing the property for either the remaining term of the lease or for an amount of rent equal to our obligation under the lease, or situations in which a store is closed as a result of the associated franchise being terminated by the manufacturer or us and no other operations continue on the leased property. See Note 12, “Commitments and Contingencies,” for further discussion. Income Taxes - Income taxes are provided for the tax effects of transactions reported in the accompanying consolidated financial statements and consist of taxes currently due plus deferred taxes. Deferred taxes are provided at enacted tax rates for the tax effects of carryforward items and temporary differences between the tax basis of assets an |
Business Acquisitions and Dispo
Business Acquisitions and Dispositions | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Business Acquisitions and Dispositions | Business Acquisitions and Dispositions Acquisitions We did not acquire any businesses during 2018. We opened one manufacturer-awarded luxury franchised dealership and three new EchoPark stores during the year ended December 31, 2018. We acquired one pre-owned business (that was subsequently converted to an EchoPark store) for approximately $76.6 million during 2017. We acquired one pre-owned business with three operating locations and related real estate for approximately $15.9 million during 2016, all of which were subsequently closed. These cash outflows were funded by cash from operations and borrowings under our revolving credit and floor plan facilities. Acquisitions are included in the consolidated financial statements from the date of acquisition. Dispositions We disposed of seven dealership franchises during 2018 and three dealership franchises during 2017. We did not dispose of any dealership franchises during 2016. The dispositions during 2018 and 2017 generated cash of approximately $128.7 million and $38.2 million, respectively. In addition to these dispositions, we terminated one luxury franchised dealership and ceased operation at four stores in our EchoPark Segment. In conjunction with dealership dispositions, we have agreed to indemnify the buyers from certain liabilities and costs arising from operations or events that occurred prior to sale but which may or may not have been known at the time of sale, including environmental liabilities and liabilities associated from the breach of representations or warranties made under the agreements. See Note 12, “Commitments and Contingencies,” for further discussion. Prior to our adoption of ASU 2014-8 beginning with our Quarterly Report on Form 10-Q for the period ended June 30, 2014, individual dealership franchises sold, terminated or classified as held for sale were reported as discontinued operations. The results of operations of these dealership franchises sold or terminated prior to March 31, 2014 are reported as discontinued operations for all periods presented. Dealership franchises sold on or after March 31, 2014 have not been reclassified to discontinued operations since they did not meet the criteria in ASU 2014-8. Revenues and other activities associated with disposed dealerships classified as discontinued operations were as follows: Year Ended December 31, 2018 2017 2016 (In thousands) Income (loss) from operations $ (610) $ (735) $ (1,101) Lease exit accrual adjustments and charges (407) (1,207) (1,020) Pre-tax income (loss) $ (1,017) $ (1,942) $ (2,121) Revenues and other activities associated with disposed dealerships that remain in continuing operations were as follows: Year Ended December 31, 2018 2017 2016 (In thousands) Income (loss) from operations $ (8,033) $ (6,109) $ (2,244) Gain (loss) on disposal 39,307 9,974 (47) Lease exit accrual adjustments and charges 959 — (1,020) Property impairment charges (694) (169) (119) Pre-tax income (loss) $ 31,539 $ 3,696 $ (3,430) Total revenues $ 127,213 $ 530,294 $ 579,938 In the ordinary course of business, we evaluate our dealership franchises for possible disposition based on various strategic and performance criteria. As of December 31, 2018, we did not have any franchises classified as held for sale; however, in the future, we may sell franchises that are not currently held for sale. |
Inventories and Related Notes P
Inventories and Related Notes Payable - Floor Plan | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Inventories and Related Notes Payable - Floor Plan | Inventories and Related Notes Payable - Floor Plan Inventories consist of the following: December 31, 2018 December 31, 2017 (In thousands) New vehicles $ 1,027,727 $ 1,017,523 Used vehicles 293,179 294,496 Service loaners 141,542 130,406 Parts, accessories and other 66,013 70,320 Net inventories $ 1,528,461 $ 1,512,745 We finance all of our new and certain of our used vehicle inventory through standardized floor plan facilities with either a syndicate of financial institutions and manufacturer-affiliated finance companies or directly with individual manufacturer-affiliated finance companies and other lending institutions. The new and used vehicle floor plan facilities bear interest at variable rates based on either LIBOR or prime rates, depending on the lender arrangement. The weighted average interest rate for our new vehicle floor plan facilities was 3.10%, 2.37% and 1.85% for 2018, 2017 and 2016, respectively. Our floor plan interest expense related to the new vehicle floor plan arrangements is partially offset by amounts received from manufacturers in the form of floor plan assistance capitalized in inventory and charged against cost of sales when the associated inventory is sold. For 2018, 2017 and 2016, we recognized a reduction in cost of sales of approximately $42.2 million, $45.3 million and $45.0 million, respectively, related to manufacturer floor plan assistance. The weighted average interest rate for our used vehicle floor plan facilities was 2.98%, 2.61% and 1.78% for 2018, 2017 and 2016, respectively. The new and used vehicle floor plan facilities are collateralized by vehicle inventory and other assets, excluding franchise and dealer agreements, of the relevant dealership subsidiary. The new and used vehicle floor plan facilities contain a number of covenants, including, among others, covenants restricting us with respect to the creation of liens and changes in ownership, officers and key management personnel. We were in compliance with all of these restrictive covenants as of December 31, 2018. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment Property and equipment, net consists of the following: December 31, 2018 December 31, 2017 (In thousands) Land $ 381,527 $ 370,828 Building and improvements 989,872 893,768 Software and computer equipment 116,348 147,812 Parts and service equipment 108,040 105,123 Office equipment and fixtures 96,622 96,066 Company vehicles 9,139 9,723 Construction in progress 59,523 54,429 Total, at cost 1,761,071 1,677,749 Less accumulated depreciation (575,720) (527,379) Subtotal 1,185,351 1,150,370 Less assets held for sale (1) (6,862) (3,489) Property and equipment, net $ 1,178,489 $ 1,146,881 (1) Classified in other current assets in the accompanying consolidated balance sheets. Interest capitalized in conjunction with construction projects and software development was approximately $1.5 million, $2.2 million and $2.8 million for 2018, 2017 and 2016, respectively. As of December 31, 2018, commitments for facility construction projects totaled approximately $19.2 million. During 2018, 2017 and 2016, property and equipment impairment charges were recorded as noted in the following table: Year Ended December 31, (In thousands) 2018 $ 27,414 2017 $ 4,894 2016 $ 8,063 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | Intangible Assets and Goodwill The changes in the carrying amount of franchise assets and goodwill for 2018 and 2017 were as follows: Franchise Assets Net Goodwill (In thousands) Balance at December 31, 2016 $ 74,900 $ 472,437 (1) Prior year acquisition allocations — 59,980 Reductions from dispositions (1,400) (5,737) Reductions from impairment (3,600) (900) Balance at December 31, 2017 $ 69,900 $ 525,780 (2) Additions through current year acquisitions — — Reductions from dispositions (2,100) (16,188) Reductions from impairment (2,100) — Prior year acquisition allocations — — Balance at December 31, 2018 $ 65,700 $ 509,592 (2) (1) Net of accumulated impairment losses of $796.7 million. (2) Net of accumulated impairment losses of $797.6 million. Goodwill We had no impairment of goodwill in 2018. We impaired approximately $0.9 million of goodwill in 2017 related to the write-off of goodwill due to the closure of two pre-owned vehicle stores that were acquired in 2016. Other Intangible Assets Other intangible assets consist of franchise assets and definite life intangible assets, and is presented net of accumulated amortization on the accompanying consolidated balance sheets. Pursuant to applicable accounting pronouncements, we evaluate our franchise assets and definite life intangible assets for impairment annually (as of October 1) or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the asset below its carrying amount. Franchise asset impairment charges of $2.1 million and $3.6 million for 2018 and 2017, respectively, were recorded in continuing operations based on the impairment evaluations performed. Definite life intangible assets consist of the following: December 31, 2018 December 31, 2017 (In thousands) Favorable lease agreements $ 17,245 $ 17,317 Less accumulated amortization (13,240) (12,628) Definite life intangibles, net $ 4,005 $ 4,689 Amortization expense for definite life intangible assets was approximately $0.6 million in each of 2018, 2017 and 2016. The initial weighted average amortization period for lease agreements and definite life intangible assets outstanding at December 31, 2018 was 18 years. Expiration dates for these lease agreements range between 2021 and 2027. Future amortization expense is as follows: |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consists of the following: December 31, 2018 December 31, 2017 (In thousands) 2016 Revolving Credit Facility (1) $ — $ 75,000 5.0% Senior Subordinated Notes due 2023 (the “5.0% Notes”) 289,273 289,273 6.125% Senior Subordinated Notes due 2027 (the “6.125% Notes”) 250,000 250,000 Mortgage notes to finance companies - fixed rate, bearing interest from 3.51% to 7.03% 215,196 199,972 Mortgage notes to finance companies - variable rate, bearing interest at 1.50 to 2.90 percentage points above one-month or three-month LIBOR 180,959 219,719 Other 20,589 3,947 Subtotal 956,017 1,037,911 Debt issuance costs (10,934) (13,208) Total debt 945,083 1,024,703 Less current maturities (26,304) (61,314) Long-term debt $ 918,779 $ 963,389 (1) The interest rate on the 2016 Revolving Credit Facility (as defined below) was 250 and 225 basis points above LIBOR at December 31, 2018 and 2017. Future maturities of long-term debt are as follows: Principal Year Ending December 31, (In thousands) 2019 $ 26,304 2020 59,756 2021 53,385 2022 43,187 2023 351,314 Thereafter 422,071 Total $ 956,017 2016 Credit Facilities On November 30, 2016, we entered into an amended and restated syndicated revolving credit facility (the “2016 Revolving Credit Facility”) and amended and restated syndicated new and used vehicle floor plan credit facilities (the “2016 Floor Plan Facilities” and, together with the 2016 Revolving Credit Facility, the “2016 Credit Facilities”), which are scheduled to mature on November 30, 2021. Availability under the 2016 Revolving Credit Facility is calculated as the lesser of $250.0 million or a borrowing base calculated based on certain eligible assets, less the aggregate face amount of any outstanding letters of credit under the 2016 Revolving Credit Facility (the “2016 Revolving Borrowing Base”). The 2016 Revolving Credit Facility may be increased at our option up to $300.0 million upon satisfaction of certain conditions. Based on balances as of December 31, 2018, the 2016 Revolving Borrowing Base was approximately $238.8 million. As of December 31, 2018, we had no outstanding borrowings and approximately $14.8 million in outstanding letters of credit under the 2016 Revolving Credit Facility, resulting in total borrowing availability of approximately $223.9 million under the 2016 Revolving Credit Facility. The 2016 Floor Plan Facilities are comprised of a new vehicle revolving floor plan facility (the “2016 New Vehicle Floor Plan Facility”) and a used vehicle revolving floor plan facility (the “2016 Used Vehicle Floor Plan Facility”), subject to a borrowing base, in a combined amount up to $1.015 billion. We may, under certain conditions, request an increase in the 2016 Floor Plan Facilities to a maximum borrowing limit of up to $1.265 billion, which shall be allocated between the 2016 New Vehicle Floor Plan Facility and the 2016 Used Vehicle Floor Plan Facility as we request, with no more than 30% of the aggregate commitments allocated to the commitments under the 2016 Used Vehicle Floor Plan Facility. Outstanding obligations under the 2016 Floor Plan Facilities are guaranteed by us and certain of our subsidiaries and are secured by a pledge of substantially all of our assets and our subsidiaries’ assets. The amounts outstanding under the 2016 Credit Facilities bear interest at variable rates based on specified percentages above LIBOR. We agreed under the 2016 Credit Facilities not to pledge any assets to any third party (other than those explicitly allowed under the amended terms of the 2016 Credit Facilities), including other lenders, subject to certain stated exceptions, including floor plan financing arrangements. In addition, the 2016 Credit Facilities contain certain negative covenants, including covenants which could restrict or prohibit indebtedness, liens, the payment of dividends, capital expenditures and material dispositions and acquisitions of assets as well as other customary covenants and default provisions. Specifically, the 2016 Credit Facilities permit cash dividends on our Class A and Class B Common Stock so long as no event of default (as defined in the 2016 Credit Facilities) has occurred and is continuing and provided that we remain in compliance with all financial covenants under the 2016 Credit Facilities. 5.0% Notes On May 9, 2013, we issued $300.0 million in aggregate principal amount of unsecured senior subordinated 5.0% Notes which mature on May 15, 2023. The 5.0% Notes were issued at a price of 100.0% of the principal amount thereof. Our used the net proceeds from the issuance of the 5.0% Notes to repurchase all of the outstanding 9.0% Senior Subordinated Notes due 2018. Remaining proceeds from the issuance of the 5.0% Notes were used for general corporate purposes. Balances outstanding under the 5.0% Notes are guaranteed by all of our domestic operating subsidiaries. These guarantees are full and unconditional and joint and several. The parent company has no independent assets or operations. The non-domestic operating subsidiary that is not a guarantor is considered to be minor. Interest on the 5.0% Notes is payable semi-annually in arrears on May 15 and November 15 of each year. During 2016, we repurchased approximately $10.7 million of our outstanding 5.0% Notes for approximately $10.6 million in cash, plus accrued and unpaid interest related thereto. We may redeem the 5.0% Notes, in whole or in part, at any time on or after May 15, 2018 at the following redemption prices, which are expressed as percentages of the principal amount: Redemption Price Beginning on May 15, 2018 102.500 % Beginning on May 15, 2019 101.667 % Beginning on May 15, 2020 100.833 % Beginning on May 15, 2021 and thereafter 100.000 % The indenture governing the 5.0% Notes provides that holders of the 5.0% Notes may require us to repurchase the 5.0% Notes at a purchase price equal to 101.0% of the par value of the 5.0% Notes, plus accrued and unpaid interest, if any, to the date of purchase if we undergo a Change of Control (as defined in the indenture governing the 5.0% Notes). The indenture governing the 5.0% Notes contains certain specified restrictive covenants. We have agreed not to pledge any assets to any third-party lender of senior subordinated debt except under certain limited circumstances. We also have agreed to certain other limitations or prohibitions concerning the incurrence of other indebtedness, guarantees, liens, certain types of investments, certain transactions with affiliates, mergers, consolidations, issuance of preferred stock, cash dividends to stockholders, distributions, redemptions and the sale, assignment, lease, conveyance or disposal of certain assets. Specifically, the indenture governing the 5.0% Notes limits our ability to pay quarterly cash dividends on our Class A and Class B Common Stock in excess of $0.10 per share. We may only pay quarterly cash dividends on our Class A and Class B Common Stock if we comply with the terms of the indenture governing the 5.0% Notes. We were in compliance with all restrictive covenants in the indenture governing the 5.0% Notes as of December 31, 2018. Our obligations under the 5.0% Notes may be accelerated by the holders of 25% of the outstanding principal amount of the 5.0% Notes then outstanding if certain events of default occur, including: (1) defaults in the payment of principal or interest when due; (2) defaults in the performance, or breach, of our covenants under the 5.0% Notes; and (3) certain defaults under other agreements under which we or our subsidiaries have outstanding indebtedness in excess of $50.0 million. Balances under Sonic’s 5.0% Notes are guaranteed by all of Sonic’s operating domestic subsidiaries. These guarantees are full and unconditional and joint and several. The parent company has no independent assets or operations. The non-domestic subsidiary that is not a guarantor is considered to be minor. 6.125% Notes On March 10, 2017, we issued $250.0 million in aggregate principal amount of unsecured senior subordinated 6.125% Notes which mature on March 15, 2027. The 6.125% Notes were issued at a price of 100.0% of the principal amount thereof. We used the net proceeds from the issuance of the 6.125% Notes to repurchase all of the outstanding 7.0% Senior Subordinated Notes due 2022 (the “7.0% Notes”) on March 27, 2017. Remaining proceeds from the issuance of the 6.125% Notes were used for general corporate purposes. Balances outstanding under the 6.125% Notes are guaranteed by all of our domestic operating subsidiaries. These guarantees are full and unconditional and joint and several. The parent company has no independent assets or operations. The non-domestic operating subsidiary that is not a guarantor is considered to be minor. Interest on the 6.125% Notes is payable semi-annually in arrears on March 15 and September 15 of each year. We may redeem the 6.125% Notes, in whole or in part, at any time on or after March 15, 2022 at the following redemption prices, which are expressed as percentages of the principal amount: Redemption Price Beginning on March 15, 2022 103.063 % Beginning on March 15, 2023 102.042 % Beginning on March 15, 2024 101.021 % Beginning on March 15, 2025 and thereafter 100.000 % Before March 15, 2022, we may redeem all or a part of the 6.125% Notes at a redemption price equal to 100.0% of the principal amount of the 6.125% Notes redeemed, plus the Applicable Premium (as defined in the indenture governing the 6.125% Notes) and any accrued and unpaid interest, if any, to the redemption date. In addition, on or before March 15, 2020, we may redeem up to 35% of the aggregate principal amount of the 6.125% Notes at a redemption price equal to 106.125% of the par value of the 6.125% Notes redeemed, plus accrued and unpaid interest, if any, to the redemption date with proceeds from certain equity offerings. The indenture governing the 6.125% Notes also provides that holders of the 6.125% Notes may require us to repurchase the 6.125% Notes at a purchase price equal to 101.0% of the par value of the 6.125% Notes, plus accrued and unpaid interest, if any, to the date of purchase if we undergo a Change of Control (as defined in the indenture governing the 6.125% Notes). The indenture governing the 6.125% Notes contains certain specified restrictive covenants. We have agreed not to pledge any assets to any third-party lender of senior subordinated debt except under certain limited circumstances. We also have agreed to certain other limitations or prohibitions concerning the incurrence of other indebtedness, guarantees, liens, certain types of investments, certain transactions with affiliates, mergers, consolidations, issuance of preferred stock, cash dividends to stockholders, distributions, redemptions and the sale, assignment, lease, conveyance or disposal of certain assets. Specifically, the indenture governing the 6.125% Notes limits our ability to pay quarterly cash dividends on our Class A and Class B Common Stock in excess of $0.12 per share. We may only pay quarterly cash dividends on our Class A and Class B Common Stock if we comply with the terms of the indenture governing the 6.125% Notes. We were in compliance with all restrictive covenants in the indenture governing the 6.125% Notes as of December 31, 2018. Our obligations under the 6.125% Notes may be accelerated by the holders of 25% of the outstanding principal amount of the 6.125% Notes then outstanding if certain events of default occur, including: (1) defaults in the payment of principal or interest when due; (2) defaults in the performance, or breach, of our covenants under the 6.125% Notes; and (3) certain defaults under other agreements under which we or our subsidiaries have outstanding indebtedness in excess of $50.0 million. Balances under Sonic’s 6.125% Notes are guaranteed by all of Sonic’s operating domestic subsidiaries. These guarantees are full and unconditional and joint and several. The parent company has no independent assets or operations. The non-domestic subsidiary that is not a guarantor is considered to be minor. Mortgage Notes During 2018, we obtained approximately $21.1 million in mortgage financing related to three of our operating locations. As of December 31, 2018, the weighted average interest rate was 4.70% and the total outstanding mortgage principal balance was approximately $396.2 million, related to approximately 50% of our operating locations. These mortgage notes require monthly payments of principal and interest through their respective maturities, are secured by the underlying properties and contain certain cross-default provisions. Maturity dates for these mortgage notes range between 2019 and 2033. Covenants We agreed under the 2016 Credit Facilities not to pledge any assets to any third party (other than those explicitly allowed under the amended terms of the 2016 Credit Facilities), including other lenders, subject to certain stated exceptions, including floor plan financing arrangements. In addition, the 2016 Credit Facilities contain certain negative covenants, including covenants which could restrict or indebtedness, liens, prohibit the payment of dividends, capital expenditures and material dispositions and acquisitions of assets, as well as other customary covenants and default provisions. We were in compliance with the financial covenants under the 2016 Credit Facilities as of December 31, 2018. Financial covenants include required specified ratios (as each is defined in the 2016 Credit Facilities) of: Covenant Minimum Consolidated Liquidity Ratio Minimum Consolidated Fixed Charge Coverage Ratio Maximum Consolidated Total Lease Adjusted Leverage Ratio Required ratio 1.05 1.20 5.75 December 31, 2018 actual 1.10 1.43 5.25 The 2016 Credit Facilities contain events of default, including cross defaults to other material indebtedness, change of control events and other events of default customary for syndicated commercial credit facilities. Upon the future occurrence of an event of default, we could be required to immediately repay all outstanding amounts under the 2016 Credit Facilities. After giving effect to the applicable restrictions on the payment of dividends under our debt agreements, as of December 31, 2018, we had at least $171.1 million of net income and retained earnings free of such restrictions. We were in compliance with all restrictive covenants as of December 31, 2018. In addition, many of our facility leases are governed by a guarantee agreement between the landlord and us that contains financial and operating covenants. The financial covenants under the guarantee agreement are identical to those under the 2016 Credit Facilities with the exception of one financial covenant related to the ratio of EBTDAR to rent (as defined in the guarantee agreement) with a required ratio of no less than 1.50 to 1.00. As of December 31, 2018, the ratio was 3.36 to 1.00. Derivative Instruments and Hedging Activities Prior to March 9, 2018, we had outstanding interest rate cash flow swap agreements to effectively convert a portion of our LIBOR-based variable rate debt to a fixed rate (these interest rate cash flow swap agreements were terminated on March 9, 2018 with a net $4.8 million payment to us from the counterparties that is being amortized into interest expense, other, net in the accompanying consolidated statements of income over the initial term of the interest rate swap agreements). As of both December 31, 2018 and 2017, we had interest rate cap agreements to limit our exposure to increases in LIBOR rates above certain levels. Under the terms of these cash flow swaps and interest rate cap agreements, interest rates reset monthly. We paid cash premiums of approximately $2.8 million and $1.9 million in the years ended December 31, 2018 and 2017, respectively, upon entering into new interest rate cap agreements, and the cash premiums were reflected in operating cash flows for the periods in which the premiums were paid. The unamortized premium amounts related to the outstanding interest rate caps were approximately $4.6 million and $1.9 million as of December 31, 2018 and 2017, respectively, and will be amortized through interest expense, other, net in the accompanying consolidated statements of income over the remaining term of the interest rate cap agreements. The fair value of the interest rate cap positions at December 31, 2018 was a net asset of approximately $4.8 million, with approximately $1.8 million included in other current assets and approximately $3.0 million included in other assets in the accompanying consolidated balance sheets. The fair value of the interest rate swap and interest rate cap positions at December 31, 2017 was an asset of approximately $4.7 million, with approximately $0.9 million included in other current assets and approximately $5.1 million included in other assets in the accompanying consolidated balance sheets, offset partially by approximately $1.0 million included in other accrued liabilities and approximately $0.3 million included in other long-term liabilities in the accompanying consolidated balance sheets. Under the terms of these agreements, we will receive and pay interest based on the following: Notional Amount Pay Rate (1) Receive Rate (1) (2) Start Date Maturing Date (In millions) $ 375.0 2.000% one-month LIBOR July 1, 2018 June 30, 2019 $ 375.0 3.000% one-month LIBOR July 1, 2018 June 30, 2019 $ 312.5 2.000% one-month LIBOR July 1, 2019 June 30, 2020 $ 250.0 3.000% one-month LIBOR July 1, 2019 June 30, 2020 $ 225.0 3.000% one-month LIBOR July 1, 2020 June 30, 2021 $ 150.0 2.000% one-month LIBOR July 1, 2020 July 1, 2021 $ 250.0 3.000% one-month LIBOR July 1, 2021 July 1, 2022 (1) Under these interest rate caps, no payment will occur unless the stated receive rate exceeds the stated pay rate. If this occurs, a net payment to us from the counterparty based on the spread between the receive rate and the pay rate will be recognized as a reduction of interest expense, other, net in the accompanying consolidated statements of income. (2) The one-month LIBOR rate was approximately 2.503% at December 31, 2018. The interest rate caps are designated as cash flow hedges, and the changes in the fair value of these instruments are recorded in other comprehensive income (loss) in the accompanying consolidated statements of comprehensive income and are disclosed in the supplemental schedule of non-cash financing activities in the accompanying consolidated statements of cash flows. The incremental interest income or expense (the difference between interest paid and interest received) related to these instruments was income of approximately $0.2 million for 2018 and expense of approximately $3.1 million and $5.5 million for 2017 and 2016, respectively, and is included in interest expense, other, net in the accompanying consolidated statements of income and the interest amount is disclosed in the supplemental disclosures of cash flow information in the accompanying consolidated statements of cash flows. The estimated net benefit expected to be reclassified out of accumulated other |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes for continuing operations - benefit (expense) consists of the following: Year Ended December 31, 2018 2017 2016 (In thousands) Current: Federal $ (37,028) $ (34,877) $ (43,655) State (7,411) (7,292) (3,766) Total current (44,439) (42,169) (47,421) Deferred 21,517 28,198 (13,275) Total provision for income taxes for continuing operations - benefit (expense) $ (22,922) $ (13,971) $ (60,696) The provision for income taxes for continuing operations – benefit (expense) includes a benefit of $28.4 million related to the remeasurement of the net deferred tax liability as of December 31, 2017, due to a reduction in the U.S. statutory federal income tax rate from 35.0% to 21.0% (beginning in 2018) that was signed into law in December 2017. The effect of this benefit is shown separately in the following rate reconciliation table. The reconciliation of the U.S. statutory federal income tax rate with our federal and state overall effective income tax rate from continuing operations is as follows: Year Ended December 31, 2018 2017 2016 U.S. statutory federal income tax rate 21.00 % 35.00 % 35.00 % Effective state income tax rate 4.60 % 4.58 % 2.04 % Valuation allowance adjustments 0.20 % (0.59) % 0.85 % Uncertain tax positions 0.17 % 0.71 % 0.17 % Effect of change in future U.S. statutory federal income tax rate 0.00 % (26.27) % 0.00 % Non-deductible compensation 3.06 % 0.23 % 0.15 % Other 1.41 % (0.74) % 0.90 % Effective income tax rate 30.44 % 12.92 % 39.11 % Deferred income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Significant components of our deferred tax assets and liabilities are as follows: December 31, 2018 December 31, 2017 (In thousands) Deferred tax assets: Accruals and reserves $ 24,948 $ 24,320 State net operating loss carryforwards 12,687 12,689 Basis difference in property and equipment 11,515 — Interest and state taxes associated with the liability for uncertain income tax positions 1,175 1,126 Other 1,778 712 Total deferred tax assets 52,103 38,847 Deferred tax liabilities: Fair value of interest rate swaps and caps (462) (696) Basis difference in inventories (838) (965) Basis difference in property and equipment — (2,467) Basis difference in goodwill (69,646) (73,803) Other (2,544) (1,636) Total deferred tax liabilities (73,490) (79,567) Valuation allowance (8,138) (7,985) Net deferred tax asset (liability) $ (29,525) $ (48,705) Net long-term deferred tax asset balances were approximately $3.7 million and $2.9 million at December 31, 2018 and 2017, respectively, and are recorded in other assets on the accompanying consolidated balance sheets. Net long-term deferred tax liability balances were approximately $33.2 million and $51.6 million at December 31, 2018 and 2017, respectively, and are recorded in deferred income taxes on the accompanying consolidated balance sheets. We have approximately $277.3 million in gross state net operating loss carryforwards that will expire between 2019 and 2038. Management reviews these carryforward positions, the time remaining until expiration and other opportunities to realize these carryforwards in making an assessment as to whether it is more likely than not that these carryforwards will be realized. The results of future operations, regulatory framework of the taxing authorities and other related matters cannot be predicted with certainty and, therefore, differences from the assumptions used in the development of management’s judgment could occur. As of December 31, 2018, we had recorded a valuation allowance amount of approximately $8.1 million related to certain state net operating loss carryforward deferred tax assets as we determined that we would not be able to generate sufficient state taxable income in the related entities to realize the accumulated net operating loss carryforward balances. At January 1, 2018, we had liabilities of approximately $5.3 million recorded related to unrecognized tax benefits. Included in the liabilities related to unrecognized tax benefits at January 1, 2018, was approximately $0.6 million related to interest and penalties which we have estimated may be paid as a result of our tax positions. It is our policy to classify the expense related to interest and penalties to be paid on underpayments of income taxes within income tax expense. A summary of the changes in the liability related to our unrecognized tax benefits is presented below. 2018 2017 2016 (In thousands) Unrecognized tax benefit liability, January 1 (1) $ 4,645 $ 4,357 $ 4,755 New positions — 653 — Prior period positions: Increases 7 491 939 Decreases (199) (539) (415) Increases from current period positions 714 692 615 Settlements Lapse of statute of limitations (69) (781) (1,290) Other (197) (228) (247) Unrecognized tax benefit liability, December 31 (2) $ 4,901 $ 4,645 $ 4,357 (1) Excludes accrued interest and penalties of $0.6 million, $0.8 million and $1.1 million at January 1, 2018, 2017 and 2016, respectively. (2) Excludes accrued interest and penalties of $0.6 million, $0.6 million and $0.8 million at December 31, 2018, 2017 and 2016, respectively. Amount presented is net of state net operating losses of $0.0 million, $0.1 million and $0.3 million at December 31, 2018, 2017 and 2016, respectively. Approximately $4.9 million and $4.7 million of the unrecognized tax benefits as of December 31, 2018 and 2017, respectively, would ultimately affect the income tax rate if recognized. Included in the December 31, 2018 recorded liability is approximately $0.6 million related to interest and penalties which we have estimated may be paid as a result of our tax positions. We do not anticipate any significant changes in our unrecognized tax benefit liability within the next 12 months. Sonic and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. Sonic’s 2015 through 2018 U.S. federal income tax returns remain open to examination by the U.S. Internal Revenue Service. Sonic and its subsidiaries’ state income tax returns remain open to examination by state taxing authorities for years ranging from 2014 to 2018. The primary effect of the change in the U.S. federal income tax rate from 35.0% to 21.0% as required by the Tax Cuts and Jobs Act (the “Act”) related to the adjustment of deferred income tax balances. In periods prior to the year ended December 31, 2017, the income tax benefit or expense related to the reversal of deferred income tax assets and liabilities was expected to be realized at a federal rate of 35.0%. Because of the Act, the reversal of deferred income tax asset and liabilities in subsequent periods is recorded assuming a federal income tax rate of 21.0%. There were no significant provisional amounts considered in our recorded income tax balances at December 31, 2018. However, as the Act was signed into law on December 22, 2017, clarifications of the Act’s provisions may be issued at later dates that alter our understanding of the Act’s provisions and thus may affect recorded income tax balances. Interpretations related to the Act’s provisions concerning depreciation, interest and compensation deductibility could impact recorded income tax balances. |
Related Parties
Related Parties | 12 Months Ended |
Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Parties | Related Parties Certain of our dealerships purchase the zMAX micro-lubricant from Oil-Chem Research Corporation (“Oil-Chem”), a subsidiary of Speedway Motorsports, Inc. (“SMI”), for resale to Fixed Operations customers of our dealerships in the ordinary course of business. Sonic’s Executive Chairman, Mr. O. Bruton Smith, is also the Executive Chairman of SMI, and Mr. Smith’s son, Mr. Marcus G. Smith, a greater than 10% beneficial owner of Sonic, is the Chief Executive Officer and President of SMI. Total purchases from Oil-Chem by our dealerships were approximately $1.6 million, $1.9 million and $2.1 million in 2018, 2017 and 2016, respectively. We also engaged in other transactions with various SMI subsidiaries, consisting primarily of (1) merchandise and apparel purchases from SMISC Holdings, Inc. (d/b/a SMI Properties) for approximately $0.9 million in each of 2018, 2017 and 2016 and (2) vehicle sales to various SMI subsidiaries for approximately $0.2 million in each of 2018, 2017 and 2016. We participate in various aircraft-related transactions with Sonic Financial Corporation (“SFC”), a privately held company controlled by Mr. O. Bruton Smith and his family. Such transactions include, but are not limited to, the use of aircraft owned by SFC for business-related travel by our executives, a management agreement with SFC for storage and maintenance of aircraft leased by us from unrelated third parties and the use of our aircraft for business-related travel by certain affiliates of SFC. We incurred net expenses of approximately $0.3 million, $0.4 million and $0.5 million in 2018, 2017 and 2016, respectively, in aircraft-related transactions with these related parties. |
Capital Structure and Per Share
Capital Structure and Per Share Data | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Capital Structure and Per Share Data | Capital Structure and Per Share Data Preferred Stock - We have 3,000,000 shares of “blank check” preferred stock authorized with such designations, rights and preferences as may be determined from time to time by our Board of Directors. our Board of Directors has designated 300,000 shares of preferred stock as Class A Convertible Preferred Stock, par value $0.10 per share (the “Preferred Stock”), which is divided into 100,000 shares of Series I Preferred Stock, 100,000 shares of Series II Preferred Stock and 100,000 shares of Series III Preferred Stock. There were no shares of Preferred Stock issued or outstanding at December 31, 2018 or 2017. Common Stock - We have two classes of common stock. We authorized 100,000,000 shares of Class A Common Stock at a par value of $0.01 per share. Class A Common Stock entitles its holder to one vote per share. We have also authorized 30,000,000 shares of Class B Common Stock at a par value of $0.01 per share. Class B Common Stock entitles its holder to 10 votes per share, except in certain circumstances. Each share of Class B Common Stock is convertible into one share of Class A Common Stock either upon voluntary conversion at the option of the holder, or automatically upon the occurrence of certain events, as provided in our charter. The two classes of common stock share equally in dividends and in the event of liquidation. Share Repurchases - Prior to December 31, 2018, our Board of Directors had authorized us to expend up to $695.0 million to repurchase shares of our Class A Common Stock. As of December 31, 2018, we had repurchased a total of approximately 33.5 million shares of Class A Common Stock at an average price per share of approximately $17.85 and had redeemed 13,801.5 shares of the Preferred Stock at an average price of $1,000 per share. As of December 31, 2018, we had approximately $83.6 million remaining under our Board’s authorization. Per Share Data - The calculation of diluted earnings per share considers the potential dilutive effect of stock options and shares under our stock compensation plans and Class A Common Stock purchase warrants. Certain of our non-vested restricted stock and restricted stock units contain rights to receive non-forfeitable dividends and, thus, are considered participating securities and are included in the two-class method of computing earnings per share. The following table illustrates the dilutive effect of such items on earnings per share for 2018, 2017 and 2016: Year Ended December 31, 2018 Income (Loss) Income (Loss) From Continuing Operations From Discontinued Operations Net Income (Loss) Weighted Average Shares Amount Per Share Amount Amount Per Share Amount Amount Per Share Amount (In thousands, except per share amounts) Earnings (loss) and shares 42,708 $ 52,390 $ (740) $ 51,650 Effect of participating securities: Non-vested restricted stock (50) — (50) Basic earnings (loss) and shares 42,708 $ 52,340 $ 1.23 $ (740) $ (0.02) $ 51,600 $ 1.21 Effect of dilutive securities: Stock compensation plans 242 Diluted earnings (loss) and shares 42,950 $ 52,340 $ 1.22 $ (740) $ (0.02) $ 51,600 $ 1.20 Year Ended December 31, 2017 Income (Loss) Income (Loss) From Continuing Operations From Discontinued Operations Net Income (Loss) Weighted Average Shares Amount Per Share Amount Amount Per Share Amount Amount Per Share Amount (In thousands, except per share amounts) Earnings (loss) and shares 43,997 $ 94,153 $ (1,170) $ 92,983 Effect of participating securities: Non-vested restricted stock (85) — (85) Basic earnings (loss) and shares 43,997 $ 94,068 $ 2.14 $ (1,170) $ (0.03) $ 92,898 $ 2.11 Effect of dilutive securities: Stock compensation plans 361 Diluted earnings (loss) and shares 44,358 $ 94,068 $ 2.12 $ (1,170) $ (0.03) $ 92,898 $ 2.09 Year Ended December 31, 2016 Income (Loss) Income (Loss) From Continuing From Discontinued Net Weighted Amount Per Amount Per Amount Per (In thousands, except per share amounts) Earnings (loss) and shares 45,637 $ 94,516 $ (1,323) $ 93,193 Effect of participating securities: Non-vested restricted stock and restricted stock units (52) — (52) Basic earnings (loss) and shares 45,637 $ 94,464 $ 2.07 $ (1,323) $ (0.03) $ 93,141 $ 2.04 Effect of dilutive securities: Stock compensation plans 311 Diluted earnings (loss) and shares 45,948 $ 94,464 $ 2.06 $ (1,323) $ (0.03) $ 93,141 $ 2.03 |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans Substantially all of our employees are eligible to participate in a 401(k) plan. Contributions by us to the 401(k) plan were approximately $9.2 million, $8.0 million and $8.0 million in 2018, 2017 and 2016, respectively. Stock Compensation Plans We currently have three active stock compensation plans: the Sonic Automotive, Inc. 2004 Stock Incentive Plan (the “2004 Plan”), the Sonic Automotive, Inc. 2012 Stock Incentive Plan (the “2012 Plan”) and the Sonic Automotive, Inc. 2012 Formula Restricted Stock and Deferral Plan for Non-Employee Directors (the “2012 Formula Plan”). Collectively, these plans are referred to as the “Stock Plans.” Effective February 19, 2014, new grants of equity awards under the 2004 Plan were no longer permitted. Stock options outstanding, non-vested restricted stock awards and restricted stock units previously granted under the 2004 Plan were unaffected by this change in plan status. During the second quarter of 2012, our stockholders voted to approve the 2012 Plan and the 2012 Formula Plan, with authorization for issuance of 2,000,000 shares of Class A Common Stock and 300,000 shares of Class A Common Stock, respectively. During the second quarter of 2015, our stockholders voted to increase the number of shares of Class A Common Stock authorized for issuance under the 2012 Plan from 2,000,000 shares to 4,000,000 shares. During the second quarter of 2017, our stockholders voted to increase the number of shares of Class A Common Stock authorized for issuance under the 2012 Formula Plan from 300,000 shares to 500,000 shares. The Stock Plans were adopted by our Board of Directors in order to attract and retain key personnel. Under the 2012 Plan, options to purchase shares of Class A Common Stock may be granted to key employees of Sonic and its subsidiaries and to officers, directors, consultants and other individuals providing services to us. The options are granted at the fair market value of our Class A Common Stock at the date of grant, typically vest over a period ranging from six months to three years, are exercisable upon vesting and typically expire 10 years from the date of grant. The 2012 Plan also authorizes the issuance of restricted stock awards and restricted stock units. Restricted stock award and restricted stock unit grants under the 2012 Plan typically vest over a period ranging from one A summary of the status of the stock options related to the Stock Plans is presented below: Options Outstanding Exercise Price Per Share (Low - High) Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In thousands, except per share data, term in years) Balance at December 31, 2017 228 $ 1.81 - 1.81 $ 1.81 1.3 $ 3,787 Exercised (195) $ 1.81 - 1.81 $ 1.81 Forfeited — $ — — $ — Balance at December 31, 2018 33 $ 1.81 - 1.81 $ 1.81 0.3 $ 392 Exercisable 33 $ 1.81 - 1.81 $ 1.81 0.3 $ 392 Year Ended December 31, 2018 2017 2016 (In thousands) Intrinsic value of stock options exercised $ 3,564 $ 425 $ 250 We recognize compensation expense within selling, general and administrative expenses related to the stock options granted under the Stock Plans. No stock option compensation expense was recognized during 2018, 2017 or 2016 as all previous stock option grants were completely vested prior to December 31, 2012. A summary of the status of non-vested restricted stock award and restricted stock unit grants related to the Stock Plans is presented below: Non-Vested Restricted Stock Awards and Restricted Stock Units Weighted Average Grant Date Fair Value per Share (In thousands, except per share data) Balance at December 31, 2017 2,199 $ 21.76 Granted 704 $ 19.55 Forfeited (197) $ 22.82 Vested (545) $ 20.98 Balance at December 31, 2018 2,161 $ 21.20 During 2018, approximately 664,000 restricted stock units were awarded to our executive officers and other key associates under the 2012 Plan. These awards were made in connection with establishing the objective performance criteria for 2018 incentive compensation and vest over three years. The majority of the restricted stock units awarded to executive officers and other key associates are subject to forfeiture, in whole or in part, based upon specified measures of Sonic’s earnings per share performance for 2018, continuation of employment and compliance with any restrictive covenants contained in an agreement between us and the respective executive officer or other key associate. Also in 2018, approximately 40,000 non-vested restricted stock awards were granted to our Board of Directors pursuant to the 2012 Formula Plan and vest on the earlier of the first anniversary of the grant date or the day before the next annual meeting of our stockholders. We recognized compensation expense within selling, general and administrative expenses related to restricted stock units and restricted stock awards of approximately $11.9 million, $11.1 million and $11.2 million in 2018, 2017 and 2016, respectively. Tax benefits recognized related to restricted stock unit and restricted stock award compensation expense were approximately $3.0 million, $4.2 million and $4.2 million for 2018, 2017 and 2016, respectively. Total compensation cost related to non-vested restricted stock units and restricted stock awards not yet recognized at December 31, 2018 was approximately $32.7 million and is expected to be recognized over a weighted average period of approximately 6.9 years. Supplemental Executive Retirement Plan On December 7, 2009, the Compensation Committee of our Board of Directors approved and adopted the Sonic Automotive, Inc. Supplemental Executive Retirement Plan (the “SERP”) to be effective as of January 1, 2010. The SERP is a non-qualified deferred compensation plan that is unfunded for federal tax purposes. The SERP included 12 active or former members of senior management at December 31, 2018. The purpose of the SERP is to attract and retain key members of management by providing a retirement benefit in addition to the benefits provided by our tax-qualified and other non-qualified deferred compensation plans. The following table sets forth the status of the SERP: Year Ended December 31, 2018 2017 Change in projected benefit obligation: (In thousands) Obligation at January 1, $ 13,556 $ 11,233 Service cost 1,933 1,711 Interest cost 470 448 Actuarial loss (gain) (2,368) 429 Amendments/settlements/curtailments loss (gain) — — Benefits paid (265) (265) Obligation at December 31, (1) $ 13,326 $ 13,556 Accumulated benefit obligation $ 10,191 $ 10,204 (1) For 2018, approximately $0.3 million is included in other accrued liabilities and approximately $13.0 million is included in other long-term liabilities in the accompanying consolidated balance sheets. For 2017, approximately $0.3 million is included in other accrued liabilities and approximately $13.3 million is included in other long-term liabilities in the accompanying consolidated balance sheets. Year Ended December 31, 2018 2017 (In thousands) Change in fair value of plan assets: Plan assets at January 1, $ — $ — Actual return on plan assets — — Employer contributions 265 265 Benefits paid (265) (265) Plan assets at December 31, — — Funded status recognized $ (13,326) $ (13,556) The following table provides the cost components of the SERP: Year Ended December 31, 2018 2017 (In thousands) Service cost $ 1,933 $ 1,711 Interest cost 470 448 Net pension expense (benefit) $ 2,403 $ 2,159 The weighted average assumptions used to determine the benefit obligation and net periodic benefit costs consist of: As of December 31, 2018 2017 Discount rate 4.36 % 3.50 % Rate of compensation increase 3.00 % 3.00 % The estimated future benefit payments expected to be paid for each of the next five years and the sum of the payments expected for the next five years thereafter are: Estimated Future Benefit Payments Year Ending December 31, (In thousands) 2019 $ 265 2020 $ 362 2021 $ 362 2022 $ 362 2023 $ 362 2024 - 2028 $ 2,122 Multiemployer Benefit Plan Five of our dealership subsidiaries currently make fixed-dollar contributions to the Automotive Industries Pension Plan (the “AI Pension Plan”) pursuant to collective bargaining agreements between our subsidiaries and the International Association of Machinists (the “IAM”) and the International Brotherhood of Teamsters (the “IBT”). The AI Pension Plan is a “multiemployer plan” as defined under the Employee Retirement Income Security Act of 1974, as amended, and our five dealership subsidiaries are among approximately 199 employers that are obligated to make contributions to the AI Pension Plan pursuant to collective bargaining agreements with the IAM, the IBT and other unions. The risks of participating in this multiemployer pension plan are different from single-employer plans in the following aspects: • assets contributed to the multiemployer pension plan by one employer may be used to provide benefits to employees of other participating employers; • if a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and • if we choose to stop participating in the multiemployer pension plan, we may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability. Our participation in the AI Pension Plan for 2018, 2017 and 2016 is outlined in the table below. The “EIN/Pension Plan Number” column provides the Employee Identification Number (the “EIN”). Unless otherwise noted, the most recent Pension Protection Act of 2006 (the “PPA”) zone status available in the years ended December 31, 2018 and 2017 is for the plan’s year-end at December 31, 2017 and 2016, respectively. The zone status is based on information that we received from the AI Pension Plan. Among other factors, plans in the red zone are generally less than 65% funded (“Critical Status”), plans in the yellow zone are less than 80% funded and plans in the green zone are at least 80% funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which a Financial Improvement Plan (“FIP”) or a Rehabilitation Plan (“RP”) is either pending or has been implemented. The last column lists the expiration dates of the collective bargaining agreements to which the plan is subject. The number of employees covered by the AI Pension Plan increased 0.5% from December 31, 2016 to December 31, 2017 and decreased 1.0% from December 31, 2017 to December 31, 2018, affecting the period-to-period comparability of the contributions for 2018, 2017 and 2016. Pension Protection Act Zone Status FIP/RP Status Sonic Contributions Surcharge Imposed Collective Bargaining Agreement Expiration Date Pension Fund EIN/Pension Plan Number 2018 2017 Pending /Implemented Year Ended December 31, 2018 2017 2016 (In thousands) AI Pension Plan 94-1133245 Red Red RP Implemented $176 $171 $150 Yes Between Our participating dealership subsidiaries were not listed in the AI Pension Plan’s Form 5500 as providing more than 5% of the total contributions for the plan years ended December 31, 2018 and December 31, 2017. In June 2006, we received information that the AI Pension Plan was substantially underfunded as of December 31, 2005. In July 2007, we received updated information that the AI Pension Plan continued to be substantially underfunded as of December 31, 2006, with the amount of such underfunding increasing versus year end 2005. In March 2008, the Board of Trustees of the AI Pension Plan notified participants, participating employers and local unions that the AI Pension Plan’s actuary, in accordance with the requirements of the PPA, had issued a certification that the AI Pension Plan was in Critical Status effective with the plan year commencing January 1, 2008. In conjunction with the AI Pension Plan’s Critical Status, the Board of Trustees of the AI Pension Plan adopted a RP that implemented reductions or eliminations of certain adjustable benefits that were previously available under the AI Pension Plan (including some forms of early retirement benefits, and disability and death benefits, among other items), and also implemented a requirement on all participating employers to increase employer contributions to the AI Pension Plan for a seven-year period which commenced in 2013. As of April 2015, the AI Pension Plan’s actuary certified that the AI Pension Plan remained in Critical Status for the plan year commencing January 1, 2015. According to publicly available information, in September 2016, the AI Pension Plan made a formal application for approval of suspension of benefits with the U.S. Treasury Department, which, if approved by the U.S. Treasury Department, would have implemented a benefit reduction effective July 1, 2017 for participants in the AI Pension Plan. The filing included an Actuarial Certification of Plan Status as of January 1, 2016 that the AI Pension Plan previously filed with the U.S. Internal Revenue Service on March 30, 2016, which reported that the AI Pension Plan was in critical and declining status as of January 1, 2016 and further notified that the AI Pension Plan is making the scheduled progress in meeting the requirements of the plan’s previously adopted RP. The September 2016 filing with the U.S. Treasury Department also included an Actuarial Certification of Plan Solvency as of July 1, 2016 with the actuarial firm’s projection that the proposed suspensions of benefits are reasonably estimated to enable the AI Pension Plan to avoid insolvency assuming the proposed suspensions of benefits continue indefinitely. In May 2017, the U.S. Treasury Department denied the application to suspend benefits but noted that it remains willing to discuss the issues presented in the September 2016 formal application for suspension of benefits. Under applicable federal law, any employer contributing to a multiemployer pension plan that completely ceases participating in the plan while the plan is underfunded is subject to payment of such employer’s assessed share of the aggregate unfunded vested benefits of the plan. In certain circumstances, an employer can be assessed withdrawal liability for a partial withdrawal from a multiemployer pension plan. In addition, if the financial condition of the AI Pension Plan were to continue to deteriorate to the point that the AI Pension Plan is forced to terminate and be administered by the Pension Benefit Guaranty Corporation (the “PBGC”), the participating employers could be subject to assessments by the PBGC to cover the participating employers’ assessed share of the unfunded vested benefits. If any of these adverse events were to occur in the future, it could result in a substantial withdrawal liability assessment to us. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements In determining fair value, we use various valuation approaches including market, income and/or cost approaches. “Fair Value Measurements and Disclosures” in the ASC establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of inputs as follows: Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access. Assets utilizing Level 1 inputs include marketable securities that are actively traded, including our stock or public bonds. Level 2 – Valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. Assets and liabilities utilizing Level 2 inputs include cash flow swap instruments and deferred compensation plan balances. Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value measurement. Asset and liability measurements utilizing Level 3 inputs include those used in estimating fair value of non-financial assets and non-financial liabilities in purchase acquisitions, those used in assessing impairment of property, plant and equipment and other intangibles and those used in the reporting unit valuation in the annual goodwill impairment evaluation. The availability of observable inputs can vary and is affected by a wide variety of factors. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment required by us in determining fair value is greatest for assets and liabilities categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed is determined based on the lowest level input (Level 3 being the lowest level) that is significant to the fair value measurement. Fair value is a market-based measure considered from the perspective of a market participant who holds the asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are not readily available, our own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. We use inputs that are current as of the measurement date, including during periods when the market may be abnormally high or abnormally low. Accordingly, fair value measurements can be volatile based on various factors that may or may not be within our control. Assets and liabilities recorded at fair value in the accompanying consolidated balance sheets as of December 31, 2018 and 2017 are as follows: Fair Value Based on Significant Other Observable Inputs (Level 2) December 31, 2018 December 31, 2017 (In thousands) Assets: Cash surrender value of life insurance policies (1) $ 31,395 $ 33,747 Cash flow swaps and interest rate caps designated as hedges (2) 4,839 5,968 Total assets $ 36,234 $ 39,715 Liabilities: Cash flow swaps designated as hedges (3) $ — $ 1,286 Deferred compensation plan (4) 19,848 18,417 Total liabilities $ 19,848 $ 19,703 (1) Included in other assets in the accompanying consolidated balance sheets. (2) As of December 31, 2018, approximately $1.8 million and $3.0 million were included in other current assets and other assets, respectively, in the accompanying consolidated balance sheets. As of December 31, 2017, approximately $0.9 million and $5.1 million were included in other current assets and other assets, respectively, in the accompanying consolidated balance sheets. (3) As of December 31, 2017, approximately $1.0 million and $0.3 million were included in other accrued liabilities and other long-term liabilities, respectively, in the accompanying consolidated balance sheets. (4) Included in other long-term liabilities in the accompanying consolidated balance sheets. The carrying value of assets and liabilities measured at fair value on a non-recurring basis but not completely adjusted to fair value in the accompanying consolidated balance sheets as of December 31, 2018, are included in the table below. Certain components of long-lived assets held and used have been adjusted to fair value through impairment charges as discussed in Note 4, “Property and Equipment” and Note 5, “Intangible Assets and Goodwill.” Balance as ofBalance as of SignificantUnobservableInputs(Level 3) as ofSignificant Total Gains /(Losses) for theYear EndedTotal Gains/ (In thousands) Long-lived assets held and used (1) $ 1,178,489 $ 1,178,489 $ (26,604) Goodwill (2) $ 509,592 $ 509,592 $ — Franchise assets (2) $ 65,700 $ 65,700 $ (2,100) (1) See Note 1, “Description of Business and Summary of Significant Accounting Policies,” and Note 4, “Property and Equipment.” (2) See Note 1, “Description of Business and Summary of Significant Accounting Policies,” and Note 5, “Intangible Assets and Goodwill.” As of December 31, 2018 and 2017, the fair values of our financial instruments, including receivables, notes receivable from finance contracts, notes payable - floor plan, trade accounts payable, borrowings under the revolving credit facilities and certain mortgage notes, approximated their carrying values due either to length of maturity or existence of variable interest rates that approximate prevailing market rates. The fair value and carrying value of our fixed rate long-term debt were as follows: December 31, 2018 December 31, 2017 Fair Value Carrying Value Fair Value Carrying Value (In thousands) 5.0% Notes (1) $ 262,515 $ 289,273 $ 279,148 $ 289,273 6.125% Notes (1) $ 216,250 $ 250,000 $ 248,750 $ 250,000 Mortgage Notes (2) $ 218,402 $ 215,196 $ 203,031 $ 199,972 Other (2) $ 20,437 $ 20,588 $ 3,760 $ 3,947 (1) As determined by market quotations as of December 31, 2018 and 2017, respectively (Level 1). (2) As determined by DCF (Level 3). |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Facility and Equipment Leases For 2018, we recognized approximately $1.7 million of lease exit expense, which consists of $0.5 million of interest expense and $1.2 million related to adjustments to lease exit accruals recorded in previous years for the present value of the lease payments, net of estimated sublease rentals, for the remaining life of the operating leases and other accruals necessary to satisfy the lease commitment to the landlord. A summary of the activity of these operating lease accruals consists of the following: (In thousands) Balance at December 31, 2017 $ 6,478 Lease exit expense (1) 1,709 Payments (2) (2,973) Lease buyout/other (3) (580) Balance at December 31, 2018 $ 4,634 (1) Expense of approximately $0.1 million is recorded in interest expense, other, net and expense of approximately $1.2 million is recorded in selling, general and administrative expenses in the accompanying consolidated statements of income. In addition, expense of approximately $0.4 million is recorded in income (loss) from discontinued operations in the accompanying consolidated statements of income. (2) Amount is recorded as an offset to rent expense in selling, general and administrative expenses, with approximately $1.0 million recorded in continuing operations and approximately $2.0 million recorded in income (loss) from discontinued operations in the accompanying consolidated statements of income. (3) Amount represents cash paid to settle deferred maintenance costs related to terminating and exiting leased properties. The majority of our dealership facilities are subject to long-term operating lease arrangements. These facility lease arrangements normally have 15- to 20-year terms with one or two five Future minimum lease payments for facility leases and future receipts from subleases as required under non-cancelable operating leases for both continuing and discontinued operations based on current interest rates in effect are as follows: Future Minimum Lease Payments, Net Future Receipts from Subleases Year Ending December 31, (In thousands) 2019 $ 89,162 $ (13,430) 2020 $ 73,188 $ (10,508) 2021 $ 58,858 $ (8,534) 2022 $ 44,526 $ (7,232) 2023 $ 41,095 $ (7,013) Thereafter $ 175,265 $ (13,116) Total lease expense for continuing operations for 2018, 2017 and 2016 was approximately $89.2 million, $100.6 million and $94.6 million, respectively. Total lease expense, net of lease exit accrual adjustments for discontinued operations for 2018, 2017 and 2016 was approximately $0.6 million, $1.3 million and $0.9 million, respectively. The total net contingent rent benefit related to a decrease in interest rates since the underlying leases commenced was approximately $1.6 million, $1.7 million and $1.8 million for continuing operations for 2018, 2017 and 2016, respectively, and was approximately $0.1 million for discontinued operations for each of 2018, 2017 and 2016. Many of our facility operating leases are subject to affirmative and financial covenant provisions related to a subordination and guaranty agreement executed with the landlord of many of our facility properties. The required financial covenants related to certain lease agreements are as follows: Covenant Minimum Consolidated Liquidity Ratio Minimum Consolidated Fixed Charge Coverage Ratio Maximum Consolidated Total Lease Adjusted Leverage Ratio Minimum EBTDAR to Rent Ratio Required ratio 1.05 1.20 5.75 1.50 December 31, 2018 actual 1.10 1.43 5.25 3.36 Guarantees and Indemnifications In accordance with the terms of our operating lease agreements, our dealership subsidiaries, acting as lessees, generally agree to indemnify the lessor from certain exposure arising as a result of the use of the leased premises, including environmental exposure and repairs to leased property upon termination of the lease. In addition, we have generally agreed to indemnify the lessor in the event of a breach of the lease by the lessee. In connection with dealership dispositions and facility relocations, certain of our subsidiaries have assigned or sublet to the buyer their interests in real property leases associated with such dealerships. In general, the subsidiaries retain responsibility for the performance of certain obligations under such leases, including rent payments and repairs to leased property upon termination of the lease, to the extent that the assignee or sublessee does not perform. These obligations are included within the “Future Minimum Lease Payments, Net” column in the table above. In the event the assignees or sublessees do not perform their obligations, we remain liable for the lease payments. As of December 31, 2018, the total amount relating to this risk was approximately $59.8 million, which is the total of the “Future Receipts from Subleases” column in the table above. However, there are situations in which we have assigned a lease to the buyer and we were not able to obtain a release from the landlord. In these situations, although we are no longer the primary obligor, we are contingently liable if the buyer does not perform under the lease terms. However, in accordance with the terms of the assignment and sublease agreements, the assignees and sublessees have generally agreed to indemnify us and our subsidiaries in the event of non-performance. Additionally, in connection with certain dispositions, we have obtained indemnifications from the parent company or owners of these assignees and sublessees in the event of non-performance. In accordance with the terms of agreements entered into for the sale of our dealerships, we generally agree to indemnify the buyer from certain liabilities and costs arising subsequent to the date of sale, including environmental exposure and exposure resulting from the breach of representations or warranties made in accordance with the agreement. While our exposure with respect to environmental remediation and repairs is difficult to quantify, our maximum exposure associated with these general indemnifications was approximately $13.2 million at December 31, 2018. These indemnifications typically expire within a period of one We also guarantee the floor plan commitments of our 50%-owned joint venture, the amount of which was approximately $4.3 million at December 31, 2018. Legal Matters We are involved, and expect to continue to be involved, in numerous legal and administrative proceedings arising out of the conduct of our business, including regulatory investigations and private civil actions brought by plaintiffs purporting to represent a potential class or for which a class has been certified. Although we vigorously defends ourselves in all legal and administrative proceedings, the outcomes of pending and future proceedings arising out of the conduct of our business, including litigation with customers, employment-related lawsuits, contractual disputes, class actions, purported class actions and actions brought by governmental authorities, cannot be predicted with certainty. An unfavorable resolution of one or more of these matters could have a material adverse effect on our business, financial condition, results of operations, cash flows or prospects. Included in other accrued liabilities and other long-term liabilities in the accompanying consolidated balance sheet at December 31, 2018 were approximately $2.4 million in reserves that we were holding for pending proceedings. Included in other accrued liabilities and other long-term liabilities in the accompanying consolidated balance sheet at December 31, 2017 were approximately $3.2 million for such reserves. Except as reflected in such reserves, we are currently unable to estimate a range of reasonably possible loss, or a range of reasonably possible loss in excess of the amount accrued, for pending proceedings. Earnout Consideration In association with the acquisition of a business in 2017, we entered into an earnout agreement whereby the seller may be entitled to certain variable earnout payments, subject to certain restrictions, based on the acquired business achieving specified earnings targets over a 10-year period, not to exceed a maximum aggregate earnout payment of $80.0 million. We will recognize the accrual of any such variable earnout payments as compensation expense as earned. We have recorded approximately $23.3 million in earnout accruals as of December 31, 2018, with approximately $7.7 million and $15.6 million recorded in other accrued liabilities and other long-term liabilities, respectively, in the accompanying consolidated balance sheets. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) The changes in accumulated other comprehensive income (loss) by component for 2018 are as follows: Gains and (Losses) on Cash Flow Hedges Defined Benefit Pension Plan Total Accumulated Other Comprehensive Income (Loss) (In thousands) Balance at December 31, 2017 $ 1,750 $ (443) $ 1,307 Other comprehensive income (loss) before reclassifications (1) 1,517 1,642 3,159 Amounts reclassified out of accumulated other comprehensive income (loss) (2) (233) — (233) Net current-period other comprehensive income (loss) 1,284 1,642 2,926 Balance at December 31, 2018 $ 3,034 1,199 $ 4,233 (1) Net of tax expense of $548 related to gains on cash flow hedges and tax expense of $726 related to the defined benefit pension plan. (2) Net of tax benefit of $88 related to gains on cash flow hedges. See the heading “Derivative Instruments and Hedging Activities” in Note 6, “Long-Term Debt,” for further discussion of our cash flow hedges. For further discussion of our defined benefit pension plan, see Note 10, “Employee Benefit Plans.” |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information As of December 31, 2018, we had two operating segments: (1) retail automotive franchises that sell new vehicles and buy and sell used vehicles, sell replacement parts, perform vehicle repair and maintenance services, and arrange finance and insurance products (the “Franchised Dealerships Segment”) and (2) pre-owned vehicle specialty retail locations that provide customers an opportunity to search, buy, service, finance and sell pre-owned vehicles (the “EchoPark Segment”). The operating segments identified above are the business activities of Sonic for which discrete financial information is available and for which operating results are regularly reviewed by our chief operating decision maker to assess operating performance and allocate resources. Our chief operating decision maker is a group of three individuals consisting of: (1) the Company’s Chief Executive Officer; (2) the Company’s Chief Financial Officer; and (3) the Company’s President. We have determined that our operating segments also represent our reportable segments. Reportable segment revenues, segment income (loss), floor plan interest expense, depreciation and amortization, capital expenditures and assets are as follows: Year Ended December 31, 2018 2017 2016 (In thousands) Revenues: Franchised Dealerships Segment $ 9,251,453 $ 9,612,899 $ 9,590,752 EchoPark Segment 700,177 254,309 141,027 Total revenues $ 9,951,630 $ 9,867,208 $ 9,731,779 Year Ended December 31, 2018 2017 2016 (In thousands) Segment income (loss) (1): Franchised Dealerships Segment (2) $ 181,730 $ 197,121 $ 218,769 EchoPark Segment (3) (52,465) (21,951) (13,576) Total segment income (loss) 129,265 175,170 205,193 Interest expense, other, net (54,059) (52,524) (50,106) Other income (expense), net 106 (14,522) 125 Income (loss) from continuing operations before taxes $ 75,312 $ 108,124 $ 155,212 (1) Segment income (loss) for each segment is defined as operating income (loss) less interest expense, floor plan. (2) For the year ended December 31, 2018, the above amount includes approximately $38.9 million of net gain on the disposal of franchised dealerships, offset partially by approximately $27.9 million of impairment expense, approximately $4.0 million of storm-related physical damage costs, approximately $1.7 million of legal costs, approximately $1.6 million of executive transition costs and approximately $1.4 million of lease exit charges. For the year ended December 31, 2017, the above amount includes approximately $14.6 million of net loss on the extinguishment of debt, approximately $8.9 million of storm-related physical damage and legal costs, approximately $7.5 million of impairment expense, approximately $0.7 million of double-carry interest and approximately $0.3 million of lease exit charges, offset partially by approximately $10.0 million of net gain on the disposal of franchised dealerships. For the year ended December 31, 2016, the above amount includes approximately $11.7 million of storm-related physical damage and legal costs, approximately $7.9 million of impairment expense and approximately $0.2 million of lease exit charges. (3) For the year ended December 31, 2018, the above amount includes approximately $32.5 million of long-term compensation-related charges and approximately $1.6 million of impairment expense. For the year ended December 31, 2017, the above amount includes approximately $1.9 million of impairment expense, approximately $1.3 million of long-term compensation-related charges, approximately $0.6 million of lease exit charges and approximately $0.2 million of storm-related physical damage and legal costs. Year Ended December 31, 2018 2017 2016 (In thousands) Floor plan interest expense: Franchised Dealerships Segment $ 46,126 $ 35,030 $ 26,631 EchoPark Segment 2,272 1,365 1,085 Total floor plan interest expense $ 48,398 $ 36,395 $ 27,716 Year Ended December 31, 2018 2017 2016 (In thousands) Depreciation and amortization: Franchised Dealerships Segment $ 85,849 $ 83,741 $ 73,591 EchoPark Segment 7,774 5,203 3,855 Total depreciation and amortization $ 93,623 $ 88,944 $ 77,446 Year Ended December 31, 2018 2017 2016 (In thousands) Capital expenditures: Franchised Dealerships Segment $ 116,854 $ 195,220 $ 166,405 EchoPark Segment 46,765 39,025 39,827 Total capital expenditures $ 163,619 $ 234,245 $ 206,232 December 31, 2018 2017 (In thousands) Assets: Franchised Dealerships Segment $ 1,861,144 $ 1,930,336 EchoPark Segment 245,648 200,289 Corporate and other: Cash and Cash Equivalents 5,854 6,352 Goodwill, Net 509,592 525,780 Other Intangible Assets, Net 69,705 74,589 Other Corporate and Other Assets 1,104,864 1,081,172 Total assets $ 3,796,807 $ 3,818,518 |
Summary of Quarterly Financial
Summary of Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Summary of Quarterly Financial Data (Unaudited) | Summary of Quarterly Financial Data (Unaudited) The following table summarizes our results of operations as presented in the accompanying consolidated statements of income by quarter for 2018 and 2017: First Quarter Second Quarter Third Quarter Fourth Quarter (In thousands, except per share data) Year Ended December 31, 2018 Total revenues (1) $ 2,400,773 $ 2,505,749 $ 2,470,849 $ 2,574,259 Gross profit (1) $ 352,499 $ 362,375 $ 360,536 $ 370,715 Net income (loss) (2) $ (2,194) $ 16,905 $ 15,118 $ 21,821 Earnings (loss) per common share - Basic (2) (3) $ (0.05) $ 0.40 $ 0.35 $ 0.51 Earnings (loss) per common share - Diluted (2) (3) $ (0.05) $ 0.39 $ 0.35 $ 0.51 Year Ended December 31, 2017 Total revenues (1) $ 2,287,822 $ 2,405,746 $ 2,505,701 $ 2,667,939 Gross profit (1) $ 350,346 $ 360,618 $ 362,622 $ 384,090 Net income (loss) (2) $ (541) $ 12,132 $ 19,440 $ 61,952 Earnings (loss) per common share - Basic (2) (3) $ (0.01) $ 0.27 $ 0.45 $ 1.43 Earnings (loss) per common share - Diluted (2) (3) $ (0.01) $ 0.27 $ 0.44 $ 1.42 (1) Results are for continuing operations. (2) Results include both continuing operations and discontinued operations. (3) The sum of net income per common share for the quarters may not equal the full year amount due to weighted average common shares being calculated on a quarterly versus annual basis. Our operations are subject to seasonal variations. The first quarter normally contributes less operating profit than the second and third quarters, while the fourth quarter normally contributes the highest operating profit of any quarter. Weather conditions, the timing of manufacturer incentive programs and model changeovers cause seasonality and may adversely affect vehicle demand and, consequently, our profitability. Comparatively, parts and service demand remains more stable throughout the year. Net income for the fourth quarter ended December 31, 2018 includes approximately $15.6 million of pre-tax impairment charges related to property and equipment, capitalized software projects, dealership facility construction projects and franchise asset write-offs, offset partially by a benefit of approximately $0.8 million related to pre-tax lease exit accrual adjustments. Net income for the third quarter ended September 30, 2018 includes approximately $1.6 million of pre-tax executive transition costs, pre-tax charges of approximately $1.2 million related to storm-related physical damage and approximately $0.3 million of pre-tax costs related to the sale of franchised dealerships. Net income for the second quarter ended June 30, 2018 includes approximately $38.0 million of pre-tax gain related to the sale of franchised dealerships and a pre-tax benefit of approximately $2.6 million related to lease exit accrual adjustments, offset partially by approximately $23.3 million of pre-tax long-term compensation costs, approximately $10.3 million of pre-tax impairment charges related to certain construction projects and approximately $3.1 million of pre-tax charges related to storm-related physical damage and legal costs. Net income for the first quarter ended March 31, 2018 includes approximately $9.2 million of pre-tax long-term compensation costs, approximately $4.8 million of pre-tax lease exit charges, pre-tax impairment charges of approximately $3.6 million related to certain construction projects and approximately $1.5 million of pre-tax legal costs, offset partially by a pre-tax net gain of approximately $1.2 million related to the sale of franchised dealerships. Net income for the fourth quarter ended December 31, 2017 includes a tax benefit of approximately $28.4 million related to the deferred income tax impact of the change in U.S. statutory federal income tax rate from 35.0% in 2017 to 21.0% in periods thereafter, a pre-tax benefit of approximately $1.4 million related to storm damage and a pre-tax gain of approximately $1.5 million from the sale of dealership franchises, offset partially by approximately $6.1 million of pre-tax impairment charges related to franchise assets, dealership facility construction projects and other property and equipment write-offs and approximately $1.5 million of pre-tax legal and other charges. Net income for the third quarter ended September 30, 2017 includes approximately $8.5 million of pre-tax gain from the sale of dealership franchises, offset partially by pre-tax charges of approximately $3.0 million related to storm damage, pre-tax charges of approximately $1.0 million related to legal and other accrual adjustments and approximately $0.2 million of pre-tax impairment charges related to dealership facility construction projects. Net income for the second quarter ended June 30, 2017 includes pre-tax charges of approximately $4.6 million related to storm damage, approximately $2.6 million of pre-tax impairment charges related to goodwill and certain construction project costs, approximately $1.0 million of pre-tax legal accruals and settlements and approximately $1.0 million of pre-tax lease exit charges. Net income for the first quarter ended March 31, 2017 includes a pre-tax charge of approximately $15.3 million related to the extinguishment of the 7.0% Notes (including double-carry interest), pre-tax charges of approximately $2.4 million related to storm damage and approximately $0.5 million of pre-tax impairment charges related to the write-off of certain construction project costs, offset partially by a $1.1 million net benefit from legal settlements. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Subsequent to December 31, 2018, we disposed of two franchised dealerships, which generated cash proceeds of approximately $108.6 million. Subsequent to December 31, 2018, our Board of Directors approved a cash dividend on all outstanding shares of Class A and Class B Common Stock of $0.10 per share for stockholders of record on March 15, 2019 to be paid on April 15, 2019. |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Organization and Business | Organization and Business - Sonic Automotive, Inc. (“Sonic,” the “Company,” “we,” “us” or “our”) is one of the largest automotive retailers in the United States (as measured by total revenue). As a result of the way we manage our business, we had two operating segments as of December 31, 2018: (1) the Franchised Dealerships Segment and (2) the EchoPark Segment. For management and operational reporting purposes, we group certain businesses together that share management and inventory (principally used vehicles) into “stores.” As of December 31, 2018, we operated 96 stores in the Franchised Dealerships Segment and eight stores in the EchoPark Segment. The Franchised Dealerships Segment consists of 108 new vehicle franchises (representing 23 different brands of cars and light trucks) and 15 collision repair centers in 13 states. The Franchised Dealerships Segment provides comprehensive services, including (1) sales of both new and used cars and light trucks; (2) sales of replacement parts and performance of vehicle maintenance, manufacturer warranty repairs, and paint and collision repair services (collectively, “Fixed Operations”); and (3) arrangement of extended warranties, service contracts, financing, insurance and other aftermarket products (collectively, “finance and insurance” or “F&I”) for our customers. The EchoPark Segment sells used cars and light trucks and arranges F&I product sales for our customers in pre-owned vehicle specialty retail locations. Our EchoPark business operates independently from our franchised dealerships business. |
Principles of Consolidation | Principles of Consolidation - All of our dealership and non-dealership subsidiaries are wholly owned and consolidated in the accompanying consolidated financial statements except for one 50%-owned dealership that is accounted for under the equity method. All material intercompany balances and transactions have been eliminated in the accompanying consolidated financial statements. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements - In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09 as well as several subsequent amendments to amend the accounting guidance on revenue recognition. The amendments to the revenue recognition accounting guidance are included in Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers,” and are intended to provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices and improve disclosure requirements. The amendments to this guidance must be applied using either of the following transition methods: (1) a full retrospective approach reflecting the application of the amendments in each prior reporting period with the option to elect certain practical expedients; or (2) a modified retrospective approach with the cumulative effect of initially applying the amendments recognized at the date of adoption (which requires additional footnote disclosures). These amendments were effective for reporting periods beginning after December 15, 2017. On January 1, 2018, we adopted ASC 606 (the “new revenue standard”) using the modified retrospective transition approach applied to contracts not completed as of the date of adoption. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative financial information has not been restated and continues to be reported under the accounting standards in effect for that period. We do not expect the effect of the adoption of the new revenue standard to have a material impact on our net income on an ongoing basis. Under the new revenue standard, revenue is recognized when a customer obtains control of promised goods or services and in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. The principles apply a five-step model that includes: (1) identifying the contract(s) with the customer; (2) identifying the performance obligation(s) in the contract(s); (3) determining the transaction price; (4) allocating the transaction price to the performance obligation(s) in the contract(s); and (5) recognizing revenue as the performance obligation(s) are satisfied. The new revenue standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We do not include the cost of obtaining contracts within the related revenue streams. We have elected the practical expedient to expense the costs to obtain a contract when incurred. During the implementation process, management evaluated its established business processes, revenue transaction streams and accounting policies, and generally expects similar performance obligations to result under the new revenue standard as compared with prior U.S. generally accepted accounting principles ( “ U.S. GAAP ”) . Management identified its material revenue streams to be (1) the sale of new vehicles; (2) the sale of used vehicles to retail customers; (3) the sale of wholesale used vehicles at third-party auctions; (4) the arrangement of vehicle financing and the sale of service and other insurance contracts; and (5) the performance of vehicle maintenance and repair services and the sale of related parts and accessories. As a result of this evaluation during the implementation process, management expects the amounts and timing of revenue recognition to generally remain the same, with the exception of the timing of revenue recognition related to: (1) service and collision repair orders that are incomplete as of a reporting date (“work in process”) and (2) certain retrospective finance and insurance revenue earned in periods subsequent to the completion of the initial performance obligation (“F&I retro revenues”), both of which are subject to accelerated recognition under the new revenue standard. Work in process revenues are recognized over time based on the completed work to date and F&I retro revenues are recognized when the product contract has been executed with the end customer and are estimated each reporting period based on the expected value method using historical and projected data. F&I retro revenues, which represent variable consideration, subject to constraint, are to be included in the transaction price and recognized when or as the performance obligation is satisfied. F&I retro revenues can vary based on a variety of factors, including number of contracts and history of cancellations and claims. Accordingly, we utilize this historical and projected data to constrain the consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Generally, performance conditions are satisfied when the associated vehicle is either delivered or returned to a customer and customer acceptance has occurred or over time as the maintenance and repair services are performed. We do not have any revenue streams with significant financing components as payments are typically received within a short period of time following completion of the performance obligation(s). During the year ended December 31, 2018, we implemented new financial reporting controls during the process of adopting the new revenue standard. Those efforts did not result in any material changes to our internal control process. The cumulative effect of the adjustments to our December 31, 2018 consolidated statements of income and January 1, 2018 consolidated balance sheet for the adoption of ASC 606 was as follows: Income Statement Pre-ASC 606 Results Effects of Adoption of ASC 606 As Reported (In thousands) Revenues: Parts, service and collision repair $ 1,380,506 $ 381 $ 1,380,887 Finance, insurance and other, net $ 396,905 $ 8,618 $ 405,523 Cost of Sales: Parts, service and collision repair $ (713,259) $ (267) $ (713,526) Selling, general and administrative expenses: $ (1,145,294) $ (31) $ (1,145,325) Operating income (loss): $ 168,962 $ 8,701 $ 177,663 Balance Sheet December 31, 2017 Effects of Adoption of ASC 606 January 1, 2018 (In thousands) Assets: Receivables, net $ 482,126 $ 4,590 $ 486,716 Contract assets (1) $ — $ 2,082 $ 2,082 Liabilities: Other accrued liabilities $ 237,963 $ 1,286 $ 239,249 Deferred income taxes $ 51,619 $ 1,468 $ 53,087 Stockholders' Equity: Retained earnings $ 625,356 $ 3,918 $ 629,274 (1) Receivables, net in the accompanying consolidated balance sheets at December 31, 2018 includes approximately $4.7 million related to work in process and a contract asset of approximately $5.4 million related to F&I retro revenues. Changes in contract assets from January 1, 2018 to December 31, 2018 were primarily due to ordinary business activity. In February 2016, the FASB established ASC 842, “Leases,” by issuing ASU 2016-02 (and subsequent amendments via ASU 2018-01, ASU 2018-10 and ASU 2018-11) in order to increase transparency and comparability among organizations by recognizing operating lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The lease standard is effective for us on January 1, 2019. Prior to adoption of the lease standard, only leases classified as capital leases under ASC 840 were recorded in the consolidated balance sheets. Under ASC 842, an entity will classify leases as either finance leases (formerly capital leases) or operating leases, and a right-of-use asset (“ROU asset”) and lease liability are required to be recognized in the consolidated balance sheets for both finance and operating leases with a term longer than 12 months. The lease standard requires a modified retrospective transition approach and provides an optional transition method to either (1) record current existing leases as of the effective date; or (2) record leases existing as of the earliest comparative period presented in the financial statements by recasting comparative period financial statements. We adopted the lease standard as of January 1, 2019 using the effective date as our date of application. As such, financial statement information and disclosures required under the new lease standard will not be provided for dates and periods prior to January 1, 2019. The lease standard provides for a number of optional practical expedients in transition, which include: (1) not requiring an entity to reassess prior conclusions about lease identification, lease classification or initial direct costs; (2) allowing an entity to use a portfolio approach for similar lease assets; (3) allowing an entity to elect an accounting policy to choose not to separate non-lease components of an agreement from lease components (by asset class); (4) allowing the use of hindsight in estimating lease term or assessing impairment of ROU assets; and (5) not requiring an entity to reassess prior conclusions about land easements. We expect to elect all of the practical expedients permitted under the transition guidance within the new standard. The new lease standard also provides practical expedients for ongoing accounting. We expect to elect the short-term lease recognition exemption for our real estate and equipment leases, which means that for those leases that qualify, we will not recognize ROU assets or lease liabilities. As part of the lease standard implementation process, we assessed our existing real estate and equipment lease agreements, identified certain lease components embedded within existing service contracts, evaluated transition guidance and practical expedient elections, implemented lease accounting software and designed internal controls over lease accounting under the new standard. We are still evaluating the possible effects of impairment of certain ROU assets as of the effective date. We estimate that adoption of the new lease standard will result in recording additional operating lease liabilities and corresponding ROU assets ranging from $350.0 million to $400.0 million as of January 1, 2019. We do not expect the adoption of the new lease standard to have a material effect on future results of operations or cash flows. In August 2017, the FASB issued ASU 2017-12 which amends the hedge accounting recognition and presentation requirements in ASC Topic 815, Derivatives and Hedging. This ASU expands and refines hedge accounting for both non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. It also includes certain targeted improvements to simplify the application of current guidance related to hedge accounting. For public companies, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We do not believe the effects of this ASU will materially impact our consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, which allows the reclassification of stranded tax effects, as a result of the Tax Cuts and Jobs Acts of 2017, from accumulated other comprehensive income to retained earnings. For public companies, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We do not believe the effects of this ASU will materially impact our consolidated financial statements. In June 2018, the FASB issued ASU 2018-07 to expand the scope of ASC Topic 718, Compensation - Stock Compensation, to include share-based payment transactions for acquiring goods and services from non-employees. For public companies, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We do not believe the effects of this ASU will materially impact our consolidated financial statements. |
Reclassifications | Reclassifications - Prior to our adoption of ASU 2014-8 beginning with our Quarterly Report on Form 10-Q for the period ended June 30, 2014, individual dealership franchises sold, terminated or classified as held for sale were reported as discontinued operations. The results of operations of these dealership franchises sold or terminated prior to March 31, 2014 are reported as discontinued operations for all periods presented. Dealership franchises sold or terminated on or after March 31, 2014 have not been reclassified to discontinued operations since they did not meet the criteria in ASU 2014-8. If, in future periods, we determine that a dealership franchise should be reclassified from continuing operations to discontinued operations, previously reported consolidated statements of income will be reclassified in order to reflect the most recent classification. |
Use of Estimates | Use of Estimates - The preparation of financial statements in conformity with U.S. GAAP requires Sonic’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the accompanying consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates, particularly related to allowance for credit loss, realization of inventory, intangible asset and deferred tax asset values, reserves for tax contingencies, legal matters, reserves for future commission revenue to be returned to the third-party provider for early termination of customer contracts (“chargebacks”), results reported as continuing and discontinued operations, insurance reserves, lease exit accruals and certain accrued expenses. |
Cash and Cash Equivalents | Cash and Cash Equivalents - We classify cash and all highly liquid investments with a maturity of three months or less at the date of purchase, including short-term time deposits and government agency and corporate obligations, as cash and cash equivalents. In the event that we are in a book overdraft cash position as of a reporting date, the book overdraft position is reclassified from cash and cash equivalents to trade accounts payable in the accompanying consolidated balance sheets and is reflected as activity in trade accounts payable and other liabilities in the accompanying consolidated statements of cash flows. We were not in a book overdraft position as of December 31, 2018 and were in a book overdraft position in an amount of approximately $6.9 million, as of December 31, 2017. |
Revenue Recognition | Revenue Recognition - We record revenue when vehicles are delivered to customers, when vehicle service work is performed and when parts are delivered. Conditions for completing a sale include having an agreement with the customer, including pricing, and the sales price must be reasonably expected to be collected. See the heading “Recent Accounting Pronouncements” above for discussion and impact on our consolidated financial statements as a result of the adoption of ASC 2014-09 effective January 1, 2018. We arrange financing for customers through various financial institutions and receives a commission from the financial institution either in a flat fee amount or in an amount equal to the difference between the interest rates charged to customers and the predetermined interest rates set by the financial institution. We also receive commissions from the sale of various insurance contracts and non-recourse third-party extended service contracts to customers. Under these contracts, the applicable manufacturer or third-party warranty company is directly liable for all warranties provided within the contract. We may be assessed a chargeback fee in the event of early cancellation of a loan or insurance contract by the customer. Finance and insurance commission revenue is recorded net of estimated chargebacks at the time of sale. In addition to up-front commissions from the sale of F&I products, in certain cases we earn additional F&I revenues in future periods subsequent to the completion of the initial performance condition. F&I retro revenues are recognized when the product contract has been executed with the end customer and are estimated each reporting period based on the expected value method using historical and projected data. F&I retro revenues, which represent variable consideration, subject to constraint, are to be included in the transaction price and recognized when or as the performance obligation is satisfied. F&I retro revenues can vary based on a variety of factors, including number of contracts and history of cancellations and claims. Accordingly, we utilize this historical and projected data to constrain the consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue will not occur when the uncertainty associated with the variable consideration is subsequently resolved. As of December 31, 2018 and 2017, the amounts recorded as allowances for finance, insurance and service contract commission chargeback reserves were approximately $25.8 million and $20.9 million, respectively, and were classified as other accrued liabilities and other long-term liabilities in the accompanying consolidated balance sheets. |
Floor Plan Assistance | Floor Plan Assistance - We receive floor plan assistance payments from certain manufacturers. This assistance reduces the carrying value of our new vehicle inventory and is recognized as a reduction of cost of sales at the time the vehicle is sold. Amounts recognized as a reduction of cost of sales were approximately $42.2 million, $45.3 million and $45.0 million for 2018, 2017 and 2016, respectively. |
Contracts in Transit | Contracts in Transit - Contracts in transit represent customer finance contracts evidencing loans or lease agreements between us, as creditor, and the customer, as borrower, to acquire or lease a vehicle in situations where a third-party finance source has given us initial, non-binding approval to assume our position as creditor. Funding and final approval from the finance source is provided upon the finance source’s review of the loan or lease agreement and related documentation executed by the customer at the dealership. These finance contracts are typically funded within 10 days of the initial approval of the finance transaction given by the third-party finance source. The finance source is not contractually obligated to make the loan or lease to the customer until it gives its final approval and funds the transaction, and until such final approval is given, the contracts in transit represent amounts due from the customer to us. Contracts in transit are included in receivables, net on the accompanying consolidated balance sheets and totaled approximately $227.8 million and $267.6 million at December 31, 2018 and 2017, respectively. |
Accounts Receivable | Accounts Receivable - In addition to contracts in transit, our accounts receivable primarily consists of amounts due from the manufacturers for repair services performed on vehicles with a remaining factory warranty and amounts due from third parties from the sale of parts. We evaluate receivables for collectability based on the age of the receivable, the credit history of the customer and past collection experience. The allowance for doubtful accounts receivable was not significant at December 31, 2018 and 2017. As of December 31, 2018, there was approximately $1.0 million in accounts receivable in the accompanying consolidated balance sheets related to expected business interruption insurance proceeds for actual expenses |
Inventories | Inventories - Inventories of new vehicles, recorded net of manufacturer credits, and used vehicles, including demonstrators, are stated at the lower of specific cost or market. Inventories of parts and accessories are accounted for using the “first-in, first-out” (“FIFO”) method of inventory accounting and are stated at the lower of FIFO cost or market. Other inventories are primarily service loaner vehicles and, to a lesser extent, vehicle chassis, other supplies and capitalized customer work-in-progress (open customer vehicle repair orders). Other inventories are stated at the lower of specific cost (depreciated cost for service loaner vehicles) or market. |
Property and Equipment | Property and Equipment - Property and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. We amortize leasehold improvements over the shorter of the estimated useful life or the remaining lease life. This lease life includes renewal options if a renewal has been determined to be reasonably assured. The range of estimated useful lives is as follows: Leasehold and land improvements 10-30 years Buildings 10-30 years Parts and service equipment 7-10 years Office equipment and fixtures 3-10 years Company vehicles 3-5 years We review the carrying value of property and equipment and other long-term assets (other than goodwill and franchise assets) for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If such an indication is present, we compare the carrying amount of the asset to the estimated undiscounted cash flows related to that asset. We conclude that an asset is impaired if the sum of such expected future cash flows is less than the carrying amount of the related asset. If we determine an asset is impaired, the impairment loss would be the amount by which the carrying amount of the related asset exceeds its fair value. The fair value of the asset would be determined based on the quoted market prices, if available. If quoted market prices are not available, we determine fair value by using a discounted cash flow model. See Note 4, “Property and Equipment,” for a discussion of impairment charges. |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities - We utilize derivative financial instruments for the purpose of hedging the risks of certain identifiable and anticipated transactions. Commonly, the types of risks being hedged are those relating to the variability of cash flows caused by fluctuations in interest rates. We document our risk management strategy and hedge effectiveness at the inception of and during the term of each hedge. As of December 31, 2018, we utilized interest rate cap agreements to limit our exposure to increases in LIBOR rates above certain levels. See Note 6, “Long-Term Debt,” for further discussion of derivative instruments and hedging activities. |
Goodwill | Goodwill - Goodwill is recognized to the extent that the purchase price of the acquisition exceeds the estimated fair value of the net assets acquired, including other identifiable intangible assets. In accordance with “Intangibles - Goodwill and Other” in the ASC, goodwill is tested for impairment at least annually, or more frequently when events or circumstances indicate that impairment might have occurred. The ASC also states that if an entity determines, based on an assessment of certain qualitative factors, that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative goodwill impairment test is unnecessary. For purposes of goodwill impairment testing, we have two reporting units, which consist of: (1) our traditional franchised dealerships and (2) our EchoPark stores. The carrying value of our goodwill totaled approximately $509.6 million at December 31, 2018, $449.6 million of which was related to our franchised dealerships reporting unit and $60.0 million of which was related to our EchoPark reporting unit. For each reporting unit, we utilized the Discounted Cash Flows (“DCF”) method to estimate our enterprise value as of October 1, 2018. The significant assumptions in our DCF model include projected earnings, weighted average cost of capital (and estimates in the weighted average cost of capital inputs) and residual growth rates. In evaluating goodwill for impairment, if the fair value of a reporting unit is less than its carrying value, the difference would represent the amount of required goodwill impairment. To the extent the reporting unit’s earnings decline significantly or there are changes in one or more of these assumptions that would result in lower valuation results, it could cause the carrying value of the reporting unit to exceed its fair value and thus require us to record goodwill impairment. Based on the results of our quantitative test as of October 1, 2018, each reporting unit’s fair value exceeded its carrying value. As a result, we were not required to record goodwill impairment for either of our reporting units. See Note 5, “Intangible Assets and Goodwill,” for further discussion of goodwill. |
Other Intangible Assets | Other Intangible Assets - The principal identifiable intangible assets other than goodwill acquired in an acquisition are rights under franchise or dealer agreements with manufacturers. We classify franchise and dealer agreements as indefinite lived intangible assets as it has been our experience that renewals have occurred without substantial cost or material modifications to the underlying agreements. As such, we believe that our franchise and dealer agreements will contribute to cash flows for an indefinite period, therefore the carrying amount of franchise rights is not amortized. Franchise and dealer agreements acquired on or after July 1, 2001 have been included in other intangible assets, net on the accompanying consolidated balance sheets. Prior to July 1, 2001, franchise and dealer agreements were recorded and amortized as part of goodwill and remain as part of goodwill on the accompanying consolidated balance sheets. Other intangible assets acquired in acquisitions include favorable lease agreements with definite lives which are amortized on a straight-line basis over the remaining lease term. In accordance with “Intangibles - Goodwill and Other” in the ASC, we evaluate other intangible assets for impairment annually (as of October 1) or more frequently if indicators of impairment exist. We utilized a DCF model to estimate the fair value of the franchise assets for each of our franchises with recorded franchise assets. The significant assumptions in our DCF model include projected revenue, weighted average cost of capital (and estimates in the weighted average cost of capital inputs) and residual growth rates. In projecting the franchises’ revenue and growth rates, we developed many assumptions which may include, but are not limited to, revenue growth, internal revenue enhancement initiatives, cost control initiatives, internal investment programs (such as training, technology and infrastructure) and inventory floor plan borrowing rates. Our expectation of revenue growth is in part driven by our estimates of new vehicle industry sales volume in future periods. We believe the historic and projected industry sales volume is a good general indicator of growth or contraction in the retail automotive industry. Based on the October 1, 2018 impairment test, we determined that the fair value of the franchise assets exceeded the carrying value of the franchise assets for all but one of our franchises, resulting in a franchise asset impairment charge of $2.1 million during 2018, which is recorded in impairment charges in the accompanying consolidated statements of income. See Note 5, “Intangible Assets and Goodwill,” for further discussion of franchise and dealer agreements. In evaluating our definite life favorable lease assets for impairment, we considered whether the leased asset was being utilized by the dealership and if the dealership operating activities could recover the value of the recorded favorable lease asset. We evaluated our favorable lease assets for impairment as of October 1, 2018 and determined that no impairment charge was required. |
Insurance Reserves | Insurance Reserves - We have various self-insured and high deductible casualty and other insurance programs which require the Company to make estimates in determining the ultimate liability it may incur for claims arising under these programs. These insurance reserves are estimated by management using actuarial evaluations based on historical claims experience, claims processing procedures, medical cost trends and, in certain cases, a discount factor. As of December 31, 2018 and 2017, we had approximately $22.9 million and $22.0 million, respectively, reserved for such programs. |
Lease Exit Accruals | Lease Exit Accruals - The majority of our dealership properties are subject to long-term operating lease arrangements. When situations arise where the leased properties are no longer utilized in operations, we record accruals for the present value of the lease payments, net of estimated sublease rentals, for the remaining life of the operating leases and other accruals necessary to satisfy the lease commitment to the landlord. These situations could include the relocation of an existing facility or the sale of a dealership when the buyer will not be subleasing the property for either the remaining term of the lease or for an amount of rent equal to our obligation under the lease, or situations in which a store is closed as a result of the associated franchise being terminated by the manufacturer or us and no other operations continue on the leased property. See Note 12, “Commitments and Contingencies,” for further discussion. |
Income Taxes | Income Taxes - Income taxes are provided for the tax effects of transactions reported in the accompanying consolidated financial statements and consist of taxes currently due plus deferred taxes. Deferred taxes are provided at enacted tax rates for the tax effects of carryforward items and temporary differences between the tax basis of assets and liabilities and their reported amounts. As a matter of course, the Company is regularly audited by various taxing authorities and, from time to time, these audits result in proposed assessments where the ultimate resolution may result in the Company owing additional taxes. |
Concentrations of Credit and Business Risk | Concentrations of Credit and Business Risk - Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash on deposit with financial institutions. At times, amounts invested with financial institutions exceed Federal Deposit Insurance Corporation insurance limits. Concentrations of credit risk with respect to receivables are limited primarily to receivables from automobile manufacturers, totaling approximately $93.8 million and $102.5 million at December 31, 2018 and 2017, respectively, and receivables from financial institutions (which include manufacturer-affiliated finance companies and commercial banks), totaling approximately $258.7 million and $299.6 million at December 31, 2018 and 2017, respectively. Credit risk arising from trade receivables from commercial customers is reduced by the large number of customers comprising the trade receivables balances. We participate in a program with two of our manufacturer-affiliated finance companies and one commercial bank wherein we maintain a deposit balance with the lender that earns floor plan interest rebates based on the agreed upon rate. This deposit balance is not designated as a prepayment of notes payable - floor plan, nor is it our intent to use this amount to offset principal amounts owed under notes payable - floor plan in the future, although we have the right and ability to do so. We did not have a deposit balance as of December 31, 2018 and had a deposit balance of $3.0 million as of December 31, 2017. These deposits are classified in other current assets in the accompanying consolidated balance sheets due to restrictions on our availability to withdraw these funds under certain circumstances. Changes in this deposit balance are classified as changes in other assets in the cash flows from operating activities section of the accompanying consolidated statements of cash flows. The interest rebate as a result of this deposit balance is classified as a reduction in interest expense, floor plan in the accompanying consolidated statements of income. In 2018, no interest expense reduction was recognized. In 2017 and 2016, the reduction in interest expense, floor plan was approximately $0.5 million and $0.6 million, respectively. We are subject to a concentration of risk in the event of financial distress or other adverse events related to any of the automobile manufacturers whose franchised dealerships are included in our brand portfolio. We purchase our new vehicle inventory from various automobile manufacturers at the prevailing prices available to all franchised dealerships. In addition, we finance a substantial portion of our new vehicle inventory with manufacturer-affiliated finance companies. Our results of operations could be adversely affected by the manufacturers’ inability to supply our dealerships with an adequate supply of new vehicle inventory and related floor plan financing. We also have concentrations of risk related to the geographic markets in which our dealerships operate. Changes in overall economic, retail automotive or regulatory environments in one or more of these markets could adversely impact the results of our operations. |
Financial Instruments and Market Risks | Financial Instruments and Market Risks - As of December 31, 2018 and 2017, the fair values of our financial instruments including receivables, notes receivable from finance contracts, notes payable - floor plan, trade accounts payable, borrowings under the revolving credit facilities and certain mortgage notes approximated their carrying values due either to length of maturity or existence of variable interest rates that approximate prevailing market rates. See Note 11, “Fair Value Measurements,” for further discussion of the fair value and carrying value of our fixed rate long-term debt and other financial instruments. We have variable rate notes payable - floor plan, revolving credit facilities and other variable rate notes that expose us to risks caused by fluctuations in the underlying interest rates. The counterparties to our interest rate cap agreements are large financial institutions. We could be exposed to loss in the event of non-performance by any of these counterparties. See further discussion in Note 6, “Long-Term Debt.” |
Advertising | Advertising - We expense advertising costs in the period incurred, net of earned cooperative manufacturer credits that represent reimbursements for specific, identifiable and incremental advertising costs. Advertising expense amounted to approximately $63.1 million, $61.6 million and $61.7 million for 2018, 2017 and 2016, respectively, and is classified as selling, general and administrative expenses in the accompanying consolidated statements of income. We have cooperative advertising reimbursement agreements with certain automobile manufacturers we represent. These agreements require us to provide the manufacturer with support for qualified, actual advertising expenditures in order to receive reimbursement under the agreements. It is uncertain whether or not we would maintain the same level of advertising expenditures if these manufacturers discontinued their cooperative programs. Cooperative manufacturer credits classified as an offset to advertising expenses were approximately $26.7 million, $26.0 million and $26.2 million for 2018, 2017 and 2016, respectively. |
Segment Information | Segment Information - We have determined we have two reporting segments: (1) the Franchised Dealerships Segment and (2) the EchoPark Segment, for purposes of reporting financial condition and results of operations. The Franchised Dealerships Segment is comprised of retail automotive franchises that sell new vehicles and buy and sell used vehicles, sell replacement parts, perform vehicle repair and maintenance services, and arrange finance and insurance products. The EchoPark Segment is comprised of pre-owned vehicle specialty retail locations that provide customers an opportunity to search, buy, service, finance and sell pre-owned vehicles. |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Schedule of Cumulative Effect of Adjustments | The cumulative effect of the adjustments to our December 31, 2018 consolidated statements of income and January 1, 2018 consolidated balance sheet for the adoption of ASC 606 was as follows: Income Statement Pre-ASC 606 Results Effects of Adoption of ASC 606 As Reported (In thousands) Revenues: Parts, service and collision repair $ 1,380,506 $ 381 $ 1,380,887 Finance, insurance and other, net $ 396,905 $ 8,618 $ 405,523 Cost of Sales: Parts, service and collision repair $ (713,259) $ (267) $ (713,526) Selling, general and administrative expenses: $ (1,145,294) $ (31) $ (1,145,325) Operating income (loss): $ 168,962 $ 8,701 $ 177,663 Balance Sheet December 31, 2017 Effects of Adoption of ASC 606 January 1, 2018 (In thousands) Assets: Receivables, net $ 482,126 $ 4,590 $ 486,716 Contract assets (1) $ — $ 2,082 $ 2,082 Liabilities: Other accrued liabilities $ 237,963 $ 1,286 $ 239,249 Deferred income taxes $ 51,619 $ 1,468 $ 53,087 Stockholders' Equity: Retained earnings $ 625,356 $ 3,918 $ 629,274 |
Range of Estimated Useful Lives | The range of estimated useful lives is as follows: Leasehold and land improvements 10-30 years Buildings 10-30 years Parts and service equipment 7-10 years Office equipment and fixtures 3-10 years Company vehicles 3-5 years |
Business Acquisitions and Dis_2
Business Acquisitions and Dispositions (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Business Combinations [Abstract] | |
Revenues and Other Activities Associated with Disposed Dealerships Classified as Discontinued Operations | Revenues and other activities associated with disposed dealerships classified as discontinued operations were as follows: Year Ended December 31, 2018 2017 2016 (In thousands) Income (loss) from operations $ (610) $ (735) $ (1,101) Lease exit accrual adjustments and charges (407) (1,207) (1,020) Pre-tax income (loss) $ (1,017) $ (1,942) $ (2,121) |
Revenues and Other Activities Associated with Disposed Dealerships That Remain in Continuing Operations | Revenues and other activities associated with disposed dealerships that remain in continuing operations were as follows: Year Ended December 31, 2018 2017 2016 (In thousands) Income (loss) from operations $ (8,033) $ (6,109) $ (2,244) Gain (loss) on disposal 39,307 9,974 (47) Lease exit accrual adjustments and charges 959 — (1,020) Property impairment charges (694) (169) (119) Pre-tax income (loss) $ 31,539 $ 3,696 $ (3,430) Total revenues $ 127,213 $ 530,294 $ 579,938 |
Inventories and Related Notes_2
Inventories and Related Notes Payable - Floor Plan (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Inventory Disclosure [Abstract] | |
Components of Inventories | Inventories consist of the following: December 31, 2018 December 31, 2017 (In thousands) New vehicles $ 1,027,727 $ 1,017,523 Used vehicles 293,179 294,496 Service loaners 141,542 130,406 Parts, accessories and other 66,013 70,320 Net inventories $ 1,528,461 $ 1,512,745 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Components of Property and Equipment, Net | Property and equipment, net consists of the following: December 31, 2018 December 31, 2017 (In thousands) Land $ 381,527 $ 370,828 Building and improvements 989,872 893,768 Software and computer equipment 116,348 147,812 Parts and service equipment 108,040 105,123 Office equipment and fixtures 96,622 96,066 Company vehicles 9,139 9,723 Construction in progress 59,523 54,429 Total, at cost 1,761,071 1,677,749 Less accumulated depreciation (575,720) (527,379) Subtotal 1,185,351 1,150,370 Less assets held for sale (1) (6,862) (3,489) Property and equipment, net $ 1,178,489 $ 1,146,881 (1) Classified in other current assets in the accompanying consolidated balance sheets. |
Property and Equipment Impairment Charges | During 2018, 2017 and 2016, property and equipment impairment charges were recorded as noted in the following table: Year Ended December 31, (In thousands) 2018 $ 27,414 2017 $ 4,894 2016 $ 8,063 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in Carrying Amount of Franchise Assets and Goodwill | The changes in the carrying amount of franchise assets and goodwill for 2018 and 2017 were as follows: Franchise Assets Net Goodwill (In thousands) Balance at December 31, 2016 $ 74,900 $ 472,437 (1) Prior year acquisition allocations — 59,980 Reductions from dispositions (1,400) (5,737) Reductions from impairment (3,600) (900) Balance at December 31, 2017 $ 69,900 $ 525,780 (2) Additions through current year acquisitions — — Reductions from dispositions (2,100) (16,188) Reductions from impairment (2,100) — Prior year acquisition allocations — — Balance at December 31, 2018 $ 65,700 $ 509,592 (2) (1) Net of accumulated impairment losses of $796.7 million. (2) Net of accumulated impairment losses of $797.6 million. |
Definite Life Intangible Assets | Definite life intangible assets consist of the following: December 31, 2018 December 31, 2017 (In thousands) Favorable lease agreements $ 17,245 $ 17,317 Less accumulated amortization (13,240) (12,628) Definite life intangibles, net $ 4,005 $ 4,689 |
Future Amortization Expense | Future amortization expense is as follows: Year Ending December 31, (In thousands) 2019 $ 609 2020 609 2021 475 2022 408 2023 408 Thereafter 1,496 Total $ 4,005 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-term debt consists of the following: December 31, 2018 December 31, 2017 (In thousands) 2016 Revolving Credit Facility (1) $ — $ 75,000 5.0% Senior Subordinated Notes due 2023 (the “5.0% Notes”) 289,273 289,273 6.125% Senior Subordinated Notes due 2027 (the “6.125% Notes”) 250,000 250,000 Mortgage notes to finance companies - fixed rate, bearing interest from 3.51% to 7.03% 215,196 199,972 Mortgage notes to finance companies - variable rate, bearing interest at 1.50 to 2.90 percentage points above one-month or three-month LIBOR 180,959 219,719 Other 20,589 3,947 Subtotal 956,017 1,037,911 Debt issuance costs (10,934) (13,208) Total debt 945,083 1,024,703 Less current maturities (26,304) (61,314) Long-term debt $ 918,779 $ 963,389 |
Future Maturities of Long-Term Debt | Future maturities of long-term debt are as follows: Principal Year Ending December 31, (In thousands) 2019 $ 26,304 2020 59,756 2021 53,385 2022 43,187 2023 351,314 Thereafter 422,071 Total $ 956,017 |
Debt Instrument [Line Items] | |
Financial Covenants Include Required Specified Ratios | We were in compliance with the financial covenants under the 2016 Credit Facilities as of December 31, 2018. Financial covenants include required specified ratios (as each is defined in the 2016 Credit Facilities) of: Covenant Minimum Consolidated Liquidity Ratio Minimum Consolidated Fixed Charge Coverage Ratio Maximum Consolidated Total Lease Adjusted Leverage Ratio Required ratio 1.05 1.20 5.75 December 31, 2018 actual 1.10 1.43 5.25 |
Summary of Interest Received and Paid under Term of Cash Flow Swap | Under the terms of these agreements, we will receive and pay interest based on the following: Notional Amount Pay Rate (1) Receive Rate (1) (2) Start Date Maturing Date (In millions) $ 375.0 2.000% one-month LIBOR July 1, 2018 June 30, 2019 $ 375.0 3.000% one-month LIBOR July 1, 2018 June 30, 2019 $ 312.5 2.000% one-month LIBOR July 1, 2019 June 30, 2020 $ 250.0 3.000% one-month LIBOR July 1, 2019 June 30, 2020 $ 225.0 3.000% one-month LIBOR July 1, 2020 June 30, 2021 $ 150.0 2.000% one-month LIBOR July 1, 2020 July 1, 2021 $ 250.0 3.000% one-month LIBOR July 1, 2021 July 1, 2022 (1) Under these interest rate caps, no payment will occur unless the stated receive rate exceeds the stated pay rate. If this occurs, a net payment to us from the counterparty based on the spread between the receive rate and the pay rate will be recognized as a reduction of interest expense, other, net in the accompanying consolidated statements of income. (2) The one-month LIBOR rate was approximately 2.503% at December 31, 2018. |
6.125% Notes | |
Debt Instrument [Line Items] | |
Redemption Price, Percentage | We may redeem the 6.125% Notes, in whole or in part, at any time on or after March 15, 2022 at the following redemption prices, which are expressed as percentages of the principal amount: Redemption Price Beginning on March 15, 2022 103.063 % Beginning on March 15, 2023 102.042 % Beginning on March 15, 2024 101.021 % Beginning on March 15, 2025 and thereafter 100.000 % |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Provision for Income Taxes for Continuing Operations - Benefit (Expense) | The provision for income taxes for continuing operations - benefit (expense) consists of the following: Year Ended December 31, 2018 2017 2016 (In thousands) Current: Federal $ (37,028) $ (34,877) $ (43,655) State (7,411) (7,292) (3,766) Total current (44,439) (42,169) (47,421) Deferred 21,517 28,198 (13,275) Total provision for income taxes for continuing operations - benefit (expense) $ (22,922) $ (13,971) $ (60,696) |
Reconciliation of Statutory Federal Income Tax Rate with Federal and State Overall Effective Income Tax Rate from Continuing Operations | The reconciliation of the U.S. statutory federal income tax rate with our federal and state overall effective income tax rate from continuing operations is as follows: Year Ended December 31, 2018 2017 2016 U.S. statutory federal income tax rate 21.00 % 35.00 % 35.00 % Effective state income tax rate 4.60 % 4.58 % 2.04 % Valuation allowance adjustments 0.20 % (0.59) % 0.85 % Uncertain tax positions 0.17 % 0.71 % 0.17 % Effect of change in future U.S. statutory federal income tax rate 0.00 % (26.27) % 0.00 % Non-deductible compensation 3.06 % 0.23 % 0.15 % Other 1.41 % (0.74) % 0.90 % Effective income tax rate 30.44 % 12.92 % 39.11 % |
Components of Deferred Tax Assets and Liabilities | Significant components of our deferred tax assets and liabilities are as follows: December 31, 2018 December 31, 2017 (In thousands) Deferred tax assets: Accruals and reserves $ 24,948 $ 24,320 State net operating loss carryforwards 12,687 12,689 Basis difference in property and equipment 11,515 — Interest and state taxes associated with the liability for uncertain income tax positions 1,175 1,126 Other 1,778 712 Total deferred tax assets 52,103 38,847 Deferred tax liabilities: Fair value of interest rate swaps and caps (462) (696) Basis difference in inventories (838) (965) Basis difference in property and equipment — (2,467) Basis difference in goodwill (69,646) (73,803) Other (2,544) (1,636) Total deferred tax liabilities (73,490) (79,567) Valuation allowance (8,138) (7,985) Net deferred tax asset (liability) $ (29,525) $ (48,705) |
Summary of Changes in Liability Related to Unrecognized Tax Benefits | A summary of the changes in the liability related to our unrecognized tax benefits is presented below. 2018 2017 2016 (In thousands) Unrecognized tax benefit liability, January 1 (1) $ 4,645 $ 4,357 $ 4,755 New positions — 653 — Prior period positions: Increases 7 491 939 Decreases (199) (539) (415) Increases from current period positions 714 692 615 Settlements Lapse of statute of limitations (69) (781) (1,290) Other (197) (228) (247) Unrecognized tax benefit liability, December 31 (2) $ 4,901 $ 4,645 $ 4,357 (1) Excludes accrued interest and penalties of $0.6 million, $0.8 million and $1.1 million at January 1, 2018, 2017 and 2016, respectively. (2) Excludes accrued interest and penalties of $0.6 million, $0.6 million and $0.8 million at December 31, 2018, 2017 and 2016, respectively. Amount presented is net of state net operating losses of $0.0 million, $0.1 million and $0.3 million at December 31, 2018, 2017 and 2016, respectively. |
Capital Structure and Per Sha_2
Capital Structure and Per Share Data (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Earnings Per Share [Abstract] | |
Dilutive Effect on Earnings Per Share | The following table illustrates the dilutive effect of such items on earnings per share for 2018, 2017 and 2016: Year Ended December 31, 2018 Income (Loss) Income (Loss) From Continuing Operations From Discontinued Operations Net Income (Loss) Weighted Average Shares Amount Per Share Amount Amount Per Share Amount Amount Per Share Amount (In thousands, except per share amounts) Earnings (loss) and shares 42,708 $ 52,390 $ (740) $ 51,650 Effect of participating securities: Non-vested restricted stock (50) — (50) Basic earnings (loss) and shares 42,708 $ 52,340 $ 1.23 $ (740) $ (0.02) $ 51,600 $ 1.21 Effect of dilutive securities: Stock compensation plans 242 Diluted earnings (loss) and shares 42,950 $ 52,340 $ 1.22 $ (740) $ (0.02) $ 51,600 $ 1.20 Year Ended December 31, 2017 Income (Loss) Income (Loss) From Continuing Operations From Discontinued Operations Net Income (Loss) Weighted Average Shares Amount Per Share Amount Amount Per Share Amount Amount Per Share Amount (In thousands, except per share amounts) Earnings (loss) and shares 43,997 $ 94,153 $ (1,170) $ 92,983 Effect of participating securities: Non-vested restricted stock (85) — (85) Basic earnings (loss) and shares 43,997 $ 94,068 $ 2.14 $ (1,170) $ (0.03) $ 92,898 $ 2.11 Effect of dilutive securities: Stock compensation plans 361 Diluted earnings (loss) and shares 44,358 $ 94,068 $ 2.12 $ (1,170) $ (0.03) $ 92,898 $ 2.09 Year Ended December 31, 2016 Income (Loss) Income (Loss) From Continuing From Discontinued Net Weighted Amount Per Amount Per Amount Per (In thousands, except per share amounts) Earnings (loss) and shares 45,637 $ 94,516 $ (1,323) $ 93,193 Effect of participating securities: Non-vested restricted stock and restricted stock units (52) — (52) Basic earnings (loss) and shares 45,637 $ 94,464 $ 2.07 $ (1,323) $ (0.03) $ 93,141 $ 2.04 Effect of dilutive securities: Stock compensation plans 311 Diluted earnings (loss) and shares 45,948 $ 94,464 $ 2.06 $ (1,323) $ (0.03) $ 93,141 $ 2.03 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Retirement Benefits [Abstract] | |
Status of Stock Options Related to Stock Plans | A summary of the status of the stock options related to the Stock Plans is presented below: Options Outstanding Exercise Price Per Share (Low - High) Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In thousands, except per share data, term in years) Balance at December 31, 2017 228 $ 1.81 - 1.81 $ 1.81 1.3 $ 3,787 Exercised (195) $ 1.81 - 1.81 $ 1.81 Forfeited — $ — — $ — Balance at December 31, 2018 33 $ 1.81 - 1.81 $ 1.81 0.3 $ 392 Exercisable 33 $ 1.81 - 1.81 $ 1.81 0.3 $ 392 |
Schedule Intrinsic Value of Options Exercised | Year Ended December 31, 2018 2017 2016 (In thousands) Intrinsic value of stock options exercised $ 3,564 $ 425 $ 250 |
Status of Non-Vested Restricted Stock and Restricted Stock Unit Grants Related to Stock Plans | A summary of the status of non-vested restricted stock award and restricted stock unit grants related to the Stock Plans is presented below: Non-Vested Restricted Stock Awards and Restricted Stock Units Weighted Average Grant Date Fair Value per Share (In thousands, except per share data) Balance at December 31, 2017 2,199 $ 21.76 Granted 704 $ 19.55 Forfeited (197) $ 22.82 Vested (545) $ 20.98 Balance at December 31, 2018 2,161 $ 21.20 |
Status of Supplemental Executive Retirement Plan | The following table sets forth the status of the SERP: Year Ended December 31, 2018 2017 Change in projected benefit obligation: (In thousands) Obligation at January 1, $ 13,556 $ 11,233 Service cost 1,933 1,711 Interest cost 470 448 Actuarial loss (gain) (2,368) 429 Amendments/settlements/curtailments loss (gain) — — Benefits paid (265) (265) Obligation at December 31, (1) $ 13,326 $ 13,556 Accumulated benefit obligation $ 10,191 $ 10,204 (1) For 2018, approximately $0.3 million is included in other accrued liabilities and approximately $13.0 million is included in other long-term liabilities in the accompanying consolidated balance sheets. For 2017, approximately $0.3 million is included in other accrued liabilities and approximately $13.3 million is included in other long-term liabilities in the accompanying consolidated balance sheets. |
Schedule of Funded Status | Year Ended December 31, 2018 2017 (In thousands) Change in fair value of plan assets: Plan assets at January 1, $ — $ — Actual return on plan assets — — Employer contributions 265 265 Benefits paid (265) (265) Plan assets at December 31, — — Funded status recognized $ (13,326) $ (13,556) |
Cost Components of Supplemental Executive Retirement Plan | The following table provides the cost components of the SERP: Year Ended December 31, 2018 2017 (In thousands) Service cost $ 1,933 $ 1,711 Interest cost 470 448 Net pension expense (benefit) $ 2,403 $ 2,159 |
Weighted Average Assumptions Used to Determine Benefit Obligation and Net Periodic Benefit Costs | The weighted average assumptions used to determine the benefit obligation and net periodic benefit costs consist of: As of December 31, 2018 2017 Discount rate 4.36 % 3.50 % Rate of compensation increase 3.00 % 3.00 % |
Estimated Future Benefit Payments | The estimated future benefit payments expected to be paid for each of the next five years and the sum of the payments expected for the next five years thereafter are: Estimated Future Benefit Payments Year Ending December 31, (In thousands) 2019 $ 265 2020 $ 362 2021 $ 362 2022 $ 362 2023 $ 362 2024 - 2028 $ 2,122 |
Schedule of Multiemployer Pension Plans Affecting Period-to-Period Comparability of Contributions | Our participation in the AI Pension Plan for 2018, 2017 and 2016 is outlined in the table below. The “EIN/Pension Plan Number” column provides the Employee Identification Number (the “EIN”). Unless otherwise noted, the most recent Pension Protection Act of 2006 (the “PPA”) zone status available in the years ended December 31, 2018 and 2017 is for the plan’s year-end at December 31, 2017 and 2016, respectively. The zone status is based on information that we received from the AI Pension Plan. Among other factors, plans in the red zone are generally less than 65% funded (“Critical Status”), plans in the yellow zone are less than 80% funded and plans in the green zone are at least 80% funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which a Financial Improvement Plan (“FIP”) or a Rehabilitation Plan (“RP”) is either pending or has been implemented. The last column lists the expiration dates of the collective bargaining agreements to which the plan is subject. The number of employees covered by the AI Pension Plan increased 0.5% from December 31, 2016 to December 31, 2017 and decreased 1.0% from December 31, 2017 to December 31, 2018, affecting the period-to-period comparability of the contributions for 2018, 2017 and 2016. Pension Protection Act Zone Status FIP/RP Status Sonic Contributions Surcharge Imposed Collective Bargaining Agreement Expiration Date Pension Fund EIN/Pension Plan Number 2018 2017 Pending /Implemented Year Ended December 31, 2018 2017 2016 (In thousands) AI Pension Plan 94-1133245 Red Red RP Implemented $176 $171 $150 Yes Between |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Recorded at Fair Value | Assets and liabilities recorded at fair value in the accompanying consolidated balance sheets as of December 31, 2018 and 2017 are as follows: Fair Value Based on Significant Other Observable Inputs (Level 2) December 31, 2018 December 31, 2017 (In thousands) Assets: Cash surrender value of life insurance policies (1) $ 31,395 $ 33,747 Cash flow swaps and interest rate caps designated as hedges (2) 4,839 5,968 Total assets $ 36,234 $ 39,715 Liabilities: Cash flow swaps designated as hedges (3) $ — $ 1,286 Deferred compensation plan (4) 19,848 18,417 Total liabilities $ 19,848 $ 19,703 (1) Included in other assets in the accompanying consolidated balance sheets. (2) As of December 31, 2018, approximately $1.8 million and $3.0 million were included in other current assets and other assets, respectively, in the accompanying consolidated balance sheets. As of December 31, 2017, approximately $0.9 million and $5.1 million were included in other current assets and other assets, respectively, in the accompanying consolidated balance sheets. (3) As of December 31, 2017, approximately $1.0 million and $0.3 million were included in other accrued liabilities and other long-term liabilities, respectively, in the accompanying consolidated balance sheets. (4) Included in other long-term liabilities in the accompanying consolidated balance sheets. |
Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis | The carrying value of assets and liabilities measured at fair value on a non-recurring basis but not completely adjusted to fair value in the accompanying consolidated balance sheets as of December 31, 2018, are included in the table below. Certain components of long-lived assets held and used have been adjusted to fair value through impairment charges as discussed in Note 4, “Property and Equipment” and Note 5, “Intangible Assets and Goodwill.” Balance as ofBalance as of SignificantUnobservableInputs(Level 3) as ofSignificant Total Gains /(Losses) for theYear EndedTotal Gains/ (In thousands) Long-lived assets held and used (1) $ 1,178,489 $ 1,178,489 $ (26,604) Goodwill (2) $ 509,592 $ 509,592 $ — Franchise assets (2) $ 65,700 $ 65,700 $ (2,100) (1) See Note 1, “Description of Business and Summary of Significant Accounting Policies,” and Note 4, “Property and Equipment.” (2) See Note 1, “Description of Business and Summary of Significant Accounting Policies,” and Note 5, “Intangible Assets and Goodwill.” |
Fair Value and Carrying Value of Fixed Rate Long-Term Debt | The fair value and carrying value of our fixed rate long-term debt were as follows: December 31, 2018 December 31, 2017 Fair Value Carrying Value Fair Value Carrying Value (In thousands) 5.0% Notes (1) $ 262,515 $ 289,273 $ 279,148 $ 289,273 6.125% Notes (1) $ 216,250 $ 250,000 $ 248,750 $ 250,000 Mortgage Notes (2) $ 218,402 $ 215,196 $ 203,031 $ 199,972 Other (2) $ 20,437 $ 20,588 $ 3,760 $ 3,947 (1) As determined by market quotations as of December 31, 2018 and 2017, respectively (Level 1). (2) As determined by DCF (Level 3). |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of Lease Exit Accruals | A summary of the activity of these operating lease accruals consists of the following: (In thousands) Balance at December 31, 2017 $ 6,478 Lease exit expense (1) 1,709 Payments (2) (2,973) Lease buyout/other (3) (580) Balance at December 31, 2018 $ 4,634 (1) Expense of approximately $0.1 million is recorded in interest expense, other, net and expense of approximately $1.2 million is recorded in selling, general and administrative expenses in the accompanying consolidated statements of income. In addition, expense of approximately $0.4 million is recorded in income (loss) from discontinued operations in the accompanying consolidated statements of income. (2) Amount is recorded as an offset to rent expense in selling, general and administrative expenses, with approximately $1.0 million recorded in continuing operations and approximately $2.0 million recorded in income (loss) from discontinued operations in the accompanying consolidated statements of income. (3) Amount represents cash paid to settle deferred maintenance costs related to terminating and exiting leased properties. |
Future Minimum Lease Payments for both Continuing and Discontinued Operations | Future minimum lease payments for facility leases and future receipts from subleases as required under non-cancelable operating leases for both continuing and discontinued operations based on current interest rates in effect are as follows: Future Minimum Lease Payments, Net Future Receipts from Subleases Year Ending December 31, (In thousands) 2019 $ 89,162 $ (13,430) 2020 $ 73,188 $ (10,508) 2021 $ 58,858 $ (8,534) 2022 $ 44,526 $ (7,232) 2023 $ 41,095 $ (7,013) Thereafter $ 175,265 $ (13,116) |
Financial Covenants Related to Amended Subordination and Guaranty Agreement | Many of our facility operating leases are subject to affirmative and financial covenant provisions related to a subordination and guaranty agreement executed with the landlord of many of our facility properties. The required financial covenants related to certain lease agreements are as follows: Covenant Minimum Consolidated Liquidity Ratio Minimum Consolidated Fixed Charge Coverage Ratio Maximum Consolidated Total Lease Adjusted Leverage Ratio Minimum EBTDAR to Rent Ratio Required ratio 1.05 1.20 5.75 1.50 December 31, 2018 actual 1.10 1.43 5.25 3.36 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Summary of Changes in Accumulated Other Comprehensive Income (Loss) | The changes in accumulated other comprehensive income (loss) by component for 2018 are as follows: Gains and (Losses) on Cash Flow Hedges Defined Benefit Pension Plan Total Accumulated Other Comprehensive Income (Loss) (In thousands) Balance at December 31, 2017 $ 1,750 $ (443) $ 1,307 Other comprehensive income (loss) before reclassifications (1) 1,517 1,642 3,159 Amounts reclassified out of accumulated other comprehensive income (loss) (2) (233) — (233) Net current-period other comprehensive income (loss) 1,284 1,642 2,926 Balance at December 31, 2018 $ 3,034 1,199 $ 4,233 (1) Net of tax expense of $548 related to gains on cash flow hedges and tax expense of $726 related to the defined benefit pension plan. (2) Net of tax benefit of $88 related to gains on cash flow hedges. |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Reporting [Abstract] | |
Summary of Reportable Operating Segment | Reportable segment revenues, segment income (loss), floor plan interest expense, depreciation and amortization, capital expenditures and assets are as follows: Year Ended December 31, 2018 2017 2016 (In thousands) Revenues: Franchised Dealerships Segment $ 9,251,453 $ 9,612,899 $ 9,590,752 EchoPark Segment 700,177 254,309 141,027 Total revenues $ 9,951,630 $ 9,867,208 $ 9,731,779 Year Ended December 31, 2018 2017 2016 (In thousands) Segment income (loss) (1): Franchised Dealerships Segment (2) $ 181,730 $ 197,121 $ 218,769 EchoPark Segment (3) (52,465) (21,951) (13,576) Total segment income (loss) 129,265 175,170 205,193 Interest expense, other, net (54,059) (52,524) (50,106) Other income (expense), net 106 (14,522) 125 Income (loss) from continuing operations before taxes $ 75,312 $ 108,124 $ 155,212 (1) Segment income (loss) for each segment is defined as operating income (loss) less interest expense, floor plan. (2) For the year ended December 31, 2018, the above amount includes approximately $38.9 million of net gain on the disposal of franchised dealerships, offset partially by approximately $27.9 million of impairment expense, approximately $4.0 million of storm-related physical damage costs, approximately $1.7 million of legal costs, approximately $1.6 million of executive transition costs and approximately $1.4 million of lease exit charges. For the year ended December 31, 2017, the above amount includes approximately $14.6 million of net loss on the extinguishment of debt, approximately $8.9 million of storm-related physical damage and legal costs, approximately $7.5 million of impairment expense, approximately $0.7 million of double-carry interest and approximately $0.3 million of lease exit charges, offset partially by approximately $10.0 million of net gain on the disposal of franchised dealerships. For the year ended December 31, 2016, the above amount includes approximately $11.7 million of storm-related physical damage and legal costs, approximately $7.9 million of impairment expense and approximately $0.2 million of lease exit charges. (3) For the year ended December 31, 2018, the above amount includes approximately $32.5 million of long-term compensation-related charges and approximately $1.6 million of impairment expense. For the year ended December 31, 2017, the above amount includes approximately $1.9 million of impairment expense, approximately $1.3 million of long-term compensation-related charges, approximately $0.6 million of lease exit charges and approximately $0.2 million of storm-related physical damage and legal costs. Year Ended December 31, 2018 2017 2016 (In thousands) Floor plan interest expense: Franchised Dealerships Segment $ 46,126 $ 35,030 $ 26,631 EchoPark Segment 2,272 1,365 1,085 Total floor plan interest expense $ 48,398 $ 36,395 $ 27,716 Year Ended December 31, 2018 2017 2016 (In thousands) Depreciation and amortization: Franchised Dealerships Segment $ 85,849 $ 83,741 $ 73,591 EchoPark Segment 7,774 5,203 3,855 Total depreciation and amortization $ 93,623 $ 88,944 $ 77,446 Year Ended December 31, 2018 2017 2016 (In thousands) Capital expenditures: Franchised Dealerships Segment $ 116,854 $ 195,220 $ 166,405 EchoPark Segment 46,765 39,025 39,827 Total capital expenditures $ 163,619 $ 234,245 $ 206,232 December 31, 2018 2017 (In thousands) Assets: Franchised Dealerships Segment $ 1,861,144 $ 1,930,336 EchoPark Segment 245,648 200,289 Corporate and other: Cash and Cash Equivalents 5,854 6,352 Goodwill, Net 509,592 525,780 Other Intangible Assets, Net 69,705 74,589 Other Corporate and Other Assets 1,104,864 1,081,172 Total assets $ 3,796,807 $ 3,818,518 |
Summary of Quarterly Financia_2
Summary of Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Quarterly Financial Information Disclosure [Abstract] | |
Consolidated Statements of Income by Quarter | The following table summarizes our results of operations as presented in the accompanying consolidated statements of income by quarter for 2018 and 2017: First Quarter Second Quarter Third Quarter Fourth Quarter (In thousands, except per share data) Year Ended December 31, 2018 Total revenues (1) $ 2,400,773 $ 2,505,749 $ 2,470,849 $ 2,574,259 Gross profit (1) $ 352,499 $ 362,375 $ 360,536 $ 370,715 Net income (loss) (2) $ (2,194) $ 16,905 $ 15,118 $ 21,821 Earnings (loss) per common share - Basic (2) (3) $ (0.05) $ 0.40 $ 0.35 $ 0.51 Earnings (loss) per common share - Diluted (2) (3) $ (0.05) $ 0.39 $ 0.35 $ 0.51 Year Ended December 31, 2017 Total revenues (1) $ 2,287,822 $ 2,405,746 $ 2,505,701 $ 2,667,939 Gross profit (1) $ 350,346 $ 360,618 $ 362,622 $ 384,090 Net income (loss) (2) $ (541) $ 12,132 $ 19,440 $ 61,952 Earnings (loss) per common share - Basic (2) (3) $ (0.01) $ 0.27 $ 0.45 $ 1.43 Earnings (loss) per common share - Diluted (2) (3) $ (0.01) $ 0.27 $ 0.44 $ 1.42 (1) Results are for continuing operations. (2) Results include both continuing operations and discontinued operations. (3) The sum of net income per common share for the quarters may not equal the full year amount due to weighted average common shares being calculated on a quarterly versus annual basis. |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies - Additional Information (Details) | 12 Months Ended | ||||
Dec. 31, 2018USD ($)StoreSegmentreporting_unitDealershipsBrandFranchiseCollisionState | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Jan. 01, 2019USD ($) | Jan. 01, 2018USD ($) | |
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||
Number of operating segments | Segment | 2 | ||||
Number of new vehicle dealerships | Dealerships | 108 | ||||
Number of states | State | 13 | ||||
Number of different brands of cars and light trucks | Brand | 23 | ||||
Number of collision repair centers | Collision | 15 | ||||
Book overdraft position | $ 0 | $ 6,900,000 | |||
Revenue allowances for commission reserves | 25,800,000 | 20,900,000 | |||
Amount recognized for floor plan assistance | $ 42,200,000 | 45,300,000 | $ 45,000,000 | ||
Term for funding of finance contracts | 10 days | ||||
Contracts in transit included in receivables, net | $ 227,800,000 | 267,600,000 | |||
Receivables, net | $ 438,186,000 | 482,126,000 | $ 486,716,000 | ||
Number of reporting units | reporting_unit | 2 | ||||
Goodwill | $ 509,592,000 | 525,780,000 | 472,437,000 | ||
Insurance reserves | 22,900,000 | 22,000,000 | |||
Concentrations of credit risk with respect to receivables are limited primarily to receivables from automobile manufacturers | 93,800,000 | 102,500,000 | |||
Deposits | 0 | 3,000,000 | |||
Reduction in interest expense | 0 | 500,000 | 600,000 | ||
Advertising expense | 63,100,000 | 61,600,000 | 61,700,000 | ||
Cooperative manufacturer credits advertising expenses | $ 26,700,000 | 26,000,000 | $ 26,200,000 | ||
Number of reportable Segment | Segment | 2 | ||||
Expected business interruption insurance proceeds | |||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||
Receivables, net | $ 1,000,000 | ||||
Financial institutions | |||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||
Concentrations of credit risk with respect to receivables are limited primarily to receivables from financial institutions | 258,700,000 | 299,600,000 | |||
Franchise assets | |||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||
Franchise asset impairment charge | 2,100,000 | 3,600,000 | |||
Continuing operations | Franchise assets | |||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||
Franchise asset impairment charge | $ 2,100,000 | $ 3,600,000 | |||
Number of franchises resulted in asset impairment charge | Franchise | 1 | ||||
Dealership | |||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||
Percentage of dealership that is accounted for under the equity method | 50.00% | ||||
Franchised dealerships | |||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||
Goodwill | $ 449,600,000 | ||||
EchoPark | |||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||
Goodwill | $ 60,000,000 | ||||
Franchised dealerships | |||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||
Number of stores | Store | 96 | ||||
Minimum | ASU 2016-02 | Subsequent event | |||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||
Operating lease liabilities | $ 350,000,000 | ||||
ROU assets | 350,000,000 | ||||
Maximum | ASU 2016-02 | Subsequent event | |||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | |||||
Operating lease liabilities | 400,000,000 | ||||
ROU assets | $ 400,000,000 |
Description of Business and S_5
Description of Business and Summary of Significant Accounting Policies - Cumulative Effect of Adjustments for Adoption of ASC 606 (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 01, 2018 | |
Revenues: | ||||
Total revenues | $ 9,951,630 | $ 9,867,208 | $ 9,731,779 | |
Cost of Sales: | ||||
Total cost of sales | (8,505,505) | (8,409,532) | (8,302,505) | |
Selling, general and administrative expenses | (1,145,325) | |||
Operating income (loss) | 177,663 | 211,565 | 232,909 | |
Assets: | ||||
Receivables, net | 438,186 | 482,126 | $ 486,716 | |
Contract assets | 2,082 | |||
Liabilities: | ||||
Other accrued liabilities | 257,823 | 237,963 | 239,249 | |
Deferred income taxes | 53,087 | |||
Stockholders’ Equity: | ||||
Retained earnings | 670,691 | 625,356 | 629,274 | |
Work in process | 4,700 | |||
Parts, service and collision repair | ||||
Revenues: | ||||
Total revenues | 1,380,887 | 1,416,010 | 1,409,819 | |
Cost of Sales: | ||||
Total cost of sales | (713,526) | (732,479) | (735,693) | |
Finance, insurance and other, net | ||||
Revenues: | ||||
Total revenues | 405,523 | 363,030 | $ 343,285 | |
Pre-ASC 606 Results | ||||
Cost of Sales: | ||||
Selling, general and administrative expenses | (1,145,294) | |||
Operating income (loss) | 168,962 | |||
Pre-ASC 606 Results | Parts, service and collision repair | ||||
Revenues: | ||||
Total revenues | 1,380,506 | |||
Cost of Sales: | ||||
Total cost of sales | (713,259) | |||
Pre-ASC 606 Results | Finance, insurance and other, net | ||||
Revenues: | ||||
Total revenues | 396,905 | |||
Pre-ASC 606 Results | Previously reported | ||||
Assets: | ||||
Receivables, net | 482,126 | |||
Contract assets | 0 | |||
Liabilities: | ||||
Other accrued liabilities | 237,963 | |||
Deferred income taxes | 51,619 | |||
Stockholders’ Equity: | ||||
Retained earnings | $ 625,356 | |||
ASU 2014-09 | Finance, insurance and other, net | ||||
Assets: | ||||
Contract assets | 5,400 | |||
ASU 2014-09 | Effects of Adoption of ASC 606 | ||||
Cost of Sales: | ||||
Selling, general and administrative expenses | (31) | |||
Operating income (loss) | 8,701 | |||
ASU 2014-09 | Effects of Adoption of ASC 606 | Parts, service and collision repair | ||||
Revenues: | ||||
Total revenues | 381 | |||
Cost of Sales: | ||||
Total cost of sales | (267) | |||
ASU 2014-09 | Effects of Adoption of ASC 606 | Finance, insurance and other, net | ||||
Revenues: | ||||
Total revenues | $ 8,618 | |||
ASU 2014-09 | Effects of Adoption of ASC 606 | Effects of Adoption of ASC 606 | ||||
Assets: | ||||
Receivables, net | 4,590 | |||
Contract assets | 2,082 | |||
Liabilities: | ||||
Other accrued liabilities | 1,286 | |||
Deferred income taxes | 1,468 | |||
Stockholders’ Equity: | ||||
Retained earnings | $ 3,918 |
Description of Business and S_6
Description of Business and Summary of Significant Accounting Policies - Range of Estimated Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Leasehold and Land Improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 10 years |
Leasehold and Land Improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 30 years |
Buildings | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 10 years |
Buildings | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 30 years |
Parts and service equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 7 years |
Parts and service equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 10 years |
Office equipment and fixtures | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 3 years |
Office equipment and fixtures | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 10 years |
Company vehicles | Minimum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 3 years |
Company vehicles | Maximum | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Business Acquisitions and Dis_3
Business Acquisitions and Dispositions - Additional Information (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($)DealershipsStoreFranchise | Dec. 31, 2017USD ($)Dealerships | Dec. 31, 2016USD ($)StoreDealerships | |
Business Acquisition [Line Items] | |||
Number of franchise dealerships opened | 1 | ||
Number of stores opened | Store | 3 | ||
Number of franchises disposed | 7 | 3 | 0 |
Cash generated from disposition | $ | $ 128,700 | $ 38,200 | |
Number of franchises terminated | 1 | ||
Number of terminated stores | Store | 4 | ||
Number of dealerships held for sale | Franchise | 0 | ||
Pre-owned vehicle store | |||
Business Acquisition [Line Items] | |||
Business acquisition, consideration amount | $ | $ 76,600 | ||
Number of businesses acquired | 1 | ||
Operating locations and related real estate | |||
Business Acquisition [Line Items] | |||
Business acquisition, consideration amount | $ | $ 15,900 | ||
Operating locations | Store | 3 |
Business Acquisitions and Dis_4
Business Acquisitions and Dispositions - Revenues and Other Activities Associated with Disposed Dealerships Classified as Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Lease exit accrual adjustments and charges | $ (2,600) | $ (4,800) | $ (1,000) | |||
Pre-tax income (loss) | $ (1,017) | $ (1,942) | $ (2,121) | |||
Discontinued operations | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Income (loss) from operations | (610) | (735) | (1,101) | |||
Lease exit accrual adjustments and charges | (407) | (1,207) | (1,020) | |||
Pre-tax income (loss) | $ (1,017) | $ (1,942) | $ (2,121) |
Business Acquisitions and Dis_5
Business Acquisitions and Dispositions - Revenues and Other Activities Associated with Disposed Dealerships That Remain in Continuing Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Lease exit accrual adjustments and charges | $ (2,600) | $ (4,800) | $ (1,000) | |||
Disposed dealerships that remain in continuing operations | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Income (loss) from operations | $ (8,033) | $ (6,109) | $ (2,244) | |||
Gain (loss) on disposal | 39,307 | 9,974 | (47) | |||
Lease exit accrual adjustments and charges | 959 | 0 | (1,020) | |||
Property impairment charges | (694) | (169) | (119) | |||
Pre-tax income (loss) | 31,539 | 3,696 | (3,430) | |||
Total revenues | $ 127,213 | $ 530,294 | $ 579,938 |
Inventories and Related Notes_3
Inventories and Related Notes Payable - Floor Plan - Components of Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Inventory Disclosure [Abstract] | ||
New vehicles | $ 1,027,727 | $ 1,017,523 |
Used vehicles | 293,179 | 294,496 |
Service loaners | 141,542 | 130,406 |
Parts, accessories and other | 66,013 | 70,320 |
Net inventories | $ 1,528,461 | $ 1,512,745 |
Inventories and Related Notes_4
Inventories and Related Notes Payable - Floor Plan - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |||
Average interest rate for new vehicle floor plan facilities | 3.10% | 2.37% | 1.85% |
Amount recognized for floor plan assistance | $ 42.2 | $ 45.3 | $ 45 |
Average interest rate for used vehicle floor plan facilities | 2.98% | 2.61% | 1.78% |
Property and Equipment - Compon
Property and Equipment - Components of Property and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Total, at cost | $ 1,761,071 | $ 1,677,749 |
Less accumulated depreciation | (575,720) | (527,379) |
Subtotal | 1,185,351 | 1,150,370 |
Less assets held for sale | (6,862) | (3,489) |
Property and equipment, net | 1,178,489 | 1,146,881 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Total, at cost | 381,527 | 370,828 |
Building and improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total, at cost | 989,872 | 893,768 |
Software and computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total, at cost | 116,348 | 147,812 |
Parts and service equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total, at cost | 108,040 | 105,123 |
Office equipment and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total, at cost | 96,622 | 96,066 |
Company vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Total, at cost | 9,139 | 9,723 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Total, at cost | $ 59,523 | $ 54,429 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |||
Interest capitalized in conjunction with construction projects and software development | $ 1.5 | $ 2.2 | $ 2.8 |
Commitments for facility construction projects | $ 19.2 |
Property and Equipment - Impair
Property and Equipment - Impairment Charges (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |||
Property and equipment impairment charges | $ 27,414 | $ 4,894 | $ 8,063 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Changes in Carrying Amount of Franchise Assets and Goodwill (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Net Goodwill | |||
Beginning balance | $ 525,780,000 | $ 472,437,000 | |
Additions through current year acquisitions | 0 | ||
Prior year acquisition allocations | 0 | 59,980,000 | |
Reductions from dispositions | (16,188,000) | (5,737,000) | |
Reductions from impairment | 0 | (900,000) | |
Ending balance | 509,592,000 | 525,780,000 | |
Net of accumulated impairment losses | 797,600,000 | 797,600,000 | $ 796,700,000 |
Franchise assets | |||
Franchise Assets | |||
Beginning balance | 69,900,000 | 74,900,000 | |
Additions through current year acquisitions | 0 | ||
Prior year acquisition allocations | 0 | ||
Reductions from dispositions | (2,100,000) | (1,400,000) | |
Reductions from impairment | (2,100,000) | (3,600,000) | |
Ending balance | 65,700,000 | 69,900,000 | |
Continuing operations | Franchise assets | |||
Franchise Assets | |||
Reductions from impairment | $ (2,100,000) | $ (3,600,000) |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Additional Information (Details) | 12 Months Ended | ||
Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($)store | |
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill impairment | $ 0 | $ 900,000 | |
Definite lived intangible assets, amortization expense | $ 600,000 | 600,000 | $ 600,000 |
Lease Agreements | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted-average amortization period | 18 years | ||
Franchise assets | |||
Finite-Lived Intangible Assets [Line Items] | |||
Indefinite life Intangible asset, impairment charge | $ 2,100,000 | 3,600,000 | |
Franchise assets | Discontinued operations | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill impairment | 900,000 | ||
Number of stores | store | 2 | ||
Franchise assets | Continuing operations | |||
Finite-Lived Intangible Assets [Line Items] | |||
Indefinite life Intangible asset, impairment charge | $ 2,100,000 | $ 3,600,000 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill - Definite Life Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Favorable lease agreements | $ 17,245 | $ 17,317 |
Less accumulated amortization | (13,240) | (12,628) |
Definite life intangibles, net | $ 4,005 | $ 4,689 |
Intangible Assets and Goodwil_5
Intangible Assets and Goodwill - Future Amortization Expense (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2,019 | $ 609 | |
2,020 | 609 | |
2,021 | 475 | |
2,022 | 408 | |
2,023 | 408 | |
Thereafter | 1,496 | |
Definite life intangibles, net | $ 4,005 | $ 4,689 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Mar. 10, 2017 | May 09, 2013 |
Debt Instrument [Line Items] | ||||
Other | $ 20,589 | $ 3,947 | ||
Subtotal | 956,017 | 1,037,911 | ||
Debt issuance costs | (10,934) | (13,208) | ||
Total debt | 945,083 | 1,024,703 | ||
Less current maturities | (26,304) | (61,314) | ||
Long-Term Debt | 918,779 | 963,389 | ||
Mortgage notes | ||||
Debt Instrument [Line Items] | ||||
Mortgage notes to finance companies - fixed rate, bearing interest from 3.51% to 7.03% | 215,196 | 199,972 | ||
Mortgage notes to finance companies - variable rate, bearing interest at 1.50 to 2.90 percentage points above one-month or three-month LIBOR | 180,959 | 219,719 | ||
Subtotal | $ 396,200 | |||
Mortgage notes | Minimum | ||||
Debt Instrument [Line Items] | ||||
Mortgage notes to finance companies-fixed rate, percentage | 3.51% | |||
Mortgage notes to finance companies-variable rate, percentage | 1.50% | |||
Mortgage notes | Maximum | ||||
Debt Instrument [Line Items] | ||||
Mortgage notes to finance companies-fixed rate, percentage | 7.03% | |||
Mortgage notes to finance companies-variable rate, percentage | 2.90% | |||
2016 Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
2016 Revolving Credit Facility | $ 0 | $ 75,000 | ||
Basis points | 2.50% | 2.25% | ||
5.0% Senior Subordinated Notes due 2023 | ||||
Debt Instrument [Line Items] | ||||
Senior Subordinated Notes | $ 289,273 | $ 289,273 | ||
Total debt | $ 289,273 | $ 289,273 | ||
Stated interest rate on debt agreement | 5.00% | 5.00% | 5.00% | |
6.125% Notes | ||||
Debt Instrument [Line Items] | ||||
Senior Subordinated Notes | $ 250,000 | $ 250,000 | ||
Total debt | $ 250,000 | $ 250,000 | ||
Stated interest rate on debt agreement | 6.125% | 6.125% | 6.125% |
Long-Term Debt - Future Maturit
Long-Term Debt - Future Maturities of Long-Term Debt (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Debt Disclosure [Abstract] | |
2,019 | $ 26,304 |
2,020 | 59,756 |
2,021 | 53,385 |
2,022 | 43,187 |
2,023 | 351,314 |
Thereafter | 422,071 |
Total | $ 956,017 |
Long-Term Debt Long-Term Debt -
Long-Term Debt Long-Term Debt - 2016 Credit Facilities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
2016 Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
2016 Revolving Credit Facility | $ 0 | $ 75,000,000 |
Revolving Credit Facility | 2016 Revolving Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Current borrowing capacity | 250,000,000 | |
Maximum borrowing capacity | 300,000,000 | |
Borrowing base | 238,800,000 | |
2016 Revolving Credit Facility | 0 | |
Letters of credit outstanding amount | 14,800,000 | |
Borrowing availability amount | 223,900,000 | |
Revolving Credit Facility | 2016 Floor Plan Facilities | ||
Line of Credit Facility [Line Items] | ||
Current borrowing capacity | 1,015,000,000 | |
Maximum borrowing capacity | $ 1,265,000,000 | |
Revolving Credit Facility | 2016 Used Vehicle Floor Plan Facility | ||
Line of Credit Facility [Line Items] | ||
Allocation of credit facility increase, percentage | 30.00% |
Long-Term Debt - Notes Narrativ
Long-Term Debt - Notes Narrative (Details) | Mar. 10, 2017USD ($)$ / shares | May 09, 2013USD ($)$ / shares | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)Location | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Mar. 27, 2017 | Jul. 02, 2012 |
Debt Instrument [Line Items] | ||||||||
Outstanding mortgage principal balance | $ 956,017,000 | $ 1,037,911,000 | ||||||
Loss on repurchase of debt instrument | $ (15,300,000) | 0 | $ 14,607,000 | $ 0 | ||||
Mortgage notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Mortgage financing aggregate | $ 21,100,000 | |||||||
Number of operating locations related to mortgage financing | Location | 3 | |||||||
Debt weighted average interest rate on note | 4.70% | |||||||
Outstanding mortgage principal balance | $ 396,200,000 | |||||||
Percentage of operating locations related to mortgage financing | 50.00% | |||||||
6.125% Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Stated interest rate on debt agreement | 6.125% | 6.125% | 6.125% | |||||
Principal amount | $ 250,000,000 | |||||||
Notes issued at a price of principal amount | 100.00% | |||||||
Notes redemption price percentage of the principal amount | 100.00% | |||||||
Redemption Price | 106.125% | |||||||
Notes redemption price percentage of the par value due to change of control | 101.00% | |||||||
Debt instrument maximum allowed dividends per share (usd per share) | $ / shares | $ 0.12 | |||||||
Outstanding principal amount of the 6.125% notes | 25.00% | |||||||
6.125% Notes | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Notes redemption price percentage of the principal amount | 35.00% | |||||||
6.125% Notes | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Indebtedness with outstanding balance under other agreements | $ 50,000,000 | |||||||
7.0% Senior Subordinated Notes due 2022 | ||||||||
Debt Instrument [Line Items] | ||||||||
Stated interest rate on debt agreement | 7.00% | 7.00% | 7.00% | 7.00% | ||||
5.0% Senior Subordinated Notes due 2023 | ||||||||
Debt Instrument [Line Items] | ||||||||
Stated interest rate on debt agreement | 5.00% | 5.00% | 5.00% | |||||
Principal amount | $ 300,000,000 | |||||||
Notes issued at a price of principal amount | 100.00% | |||||||
Notes redemption price percentage of the par value due to change of control | 101.00% | |||||||
Debt instrument maximum allowed dividends per share (usd per share) | $ / shares | $ 0.10 | |||||||
Outstanding principal amount of the 6.125% notes | 25.00% | |||||||
Outstanding notes repurchased amount | 10,700,000 | |||||||
Repurchase amount paid in cash, plus accrued and unpaid interest related thereto | $ 10,600,000 | |||||||
5.0% Senior Subordinated Notes due 2023 | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Indebtedness with outstanding balance under other agreements | $ 50,000,000 | |||||||
9.0% Senior Subordinated Notes due 2018 | ||||||||
Debt Instrument [Line Items] | ||||||||
Stated interest rate on debt agreement | 9.00% |
Long-Term Debt - Redemption Pri
Long-Term Debt - Redemption Price, Percentage (Details) | 12 Months Ended |
Dec. 31, 2018 | |
5.0% Senior Subordinated Notes due 2023 | Beginning on May 15, 2018 | |
Debt Instrument, Redemption [Line Items] | |
Redemption Price | 102.50% |
5.0% Senior Subordinated Notes due 2023 | Beginning on May 15, 2019 | |
Debt Instrument, Redemption [Line Items] | |
Redemption Price | 101.667% |
5.0% Senior Subordinated Notes due 2023 | Beginning on May 15, 2020 | |
Debt Instrument, Redemption [Line Items] | |
Redemption Price | 100.833% |
5.0% Senior Subordinated Notes due 2023 | Beginning on May 15, 2021 and thereafter | |
Debt Instrument, Redemption [Line Items] | |
Redemption Price | 100.00% |
6.125% Notes | |
Debt Instrument, Redemption [Line Items] | |
Redemption Price | 106.125% |
6.125% Notes | Beginning on March 15, 2022 | |
Debt Instrument, Redemption [Line Items] | |
Redemption Price | 103.063% |
6.125% Notes | Beginning on March 15, 2023 | |
Debt Instrument, Redemption [Line Items] | |
Redemption Price | 102.042% |
6.125% Notes | Beginning on March 15, 2024 | |
Debt Instrument, Redemption [Line Items] | |
Redemption Price | 101.021% |
6.125% Notes | Beginning on March 15, 2025 and thereafter | |
Debt Instrument, Redemption [Line Items] | |
Redemption Price | 100.00% |
Long-Term Debt - Financial Cove
Long-Term Debt - Financial Covenants Include Required Specified Ratios (Details) | Dec. 31, 2018 |
Line of Credit Facility [Line Items] | |
Minimum Consolidated Liquidity Ratio | 110.00% |
Minimum Consolidated Fixed Charge Coverage Ratio | 143.00% |
Maximum Consolidated Total Lease Adjusted Leverage Ratio | 525.00% |
Required ratio | |
Line of Credit Facility [Line Items] | |
Minimum Consolidated Liquidity Ratio | 105.00% |
Minimum Consolidated Fixed Charge Coverage Ratio | 120.00% |
Maximum Consolidated Total Lease Adjusted Leverage Ratio | 575.00% |
Long-Term Debt Long-Term Debt_2
Long-Term Debt Long-Term Debt - Covenants (Details) | Dec. 31, 2018USD ($) |
Line of Credit Facility [Line Items] | |
Minimum EBTDAR to rent ratio | 336.00% |
Required ratio | |
Line of Credit Facility [Line Items] | |
Minimum EBTDAR to rent ratio | 150.00% |
2016 Credit facility | |
Line of Credit Facility [Line Items] | |
Minimum EBTDAR to rent ratio | 336.00% |
2016 Credit facility | Required ratio | |
Line of Credit Facility [Line Items] | |
Minimum EBTDAR to rent ratio | 150.00% |
2016 Credit facility | Minimum | |
Line of Credit Facility [Line Items] | |
Net income and retained earnings free of restrictions | $ 171,100,000 |
Long-Term Debt - Derivative Ins
Long-Term Debt - Derivative Instruments and Hedging Activities Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Mar. 09, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Derivatives, Fair Value [Line Items] | ||||
Cash premiums paid | $ 2.8 | $ 1.9 | ||
Unamortized premium | 4.6 | 1.9 | ||
Incremental interest expense | 0.2 | 3.1 | $ 5.5 | |
Net benefit expected to be reclassified | 2.9 | |||
Designated as hedging instrument | Cash flow swaps and interest rate caps | ||||
Derivatives, Fair Value [Line Items] | ||||
Net cash proceeds | $ 4.8 | |||
Derivative asset, fair value of interest rate swap and cap positions | 4.8 | |||
Designated as hedging instrument | Interest rate swap | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative liability, fair value of interest rate swap and cap positions | 4.7 | |||
Designated as hedging instrument | Other current assets | Cash flow swaps and interest rate caps | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative asset, fair value of interest rate swap and cap positions | 1.8 | |||
Designated as hedging instrument | Other current assets | Interest rate swap | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative liability, fair value of interest rate swap and cap positions | 0.9 | |||
Designated as hedging instrument | Other assets | Cash flow swaps and interest rate caps | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative asset, fair value of interest rate swap and cap positions | $ 3 | |||
Designated as hedging instrument | Other assets | Interest rate swap | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative asset, fair value of interest rate swap and cap positions | 5.1 | |||
Designated as hedging instrument | Other accrued liabilities | Interest rate swap | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative liability, fair value of interest rate swap and cap positions | 1 | |||
Designated as hedging instrument | Other long-term liabilities | Interest rate swap | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative liability, fair value of interest rate swap and cap positions | $ 0.3 |
Long-Term Debt - Summary of Int
Long-Term Debt - Summary of Interest Received and Paid under Term of Cash Flow Swap (Details) | Dec. 31, 2018USD ($) |
Derivatives, Fair Value [Line Items] | |
Payment of interest rate | $ 0 |
One-month LIBOR rate | 2.503% |
Cash Flow Swap A | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 3.750 |
Pay Rate | 2.00% |
Cash Flow Swap B | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 3.750 |
Pay Rate | 3.00% |
Cash Flow Swap C | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 3.125 |
Pay Rate | 2.00% |
Cash Flow Swap D | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 2.500 |
Pay Rate | 3.00% |
Cash Flow Swap E | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 2.250 |
Pay Rate | 3.00% |
Cash Flow Swap F | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 1.500 |
Pay Rate | 2.00% |
Cash Flow Swap G | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 2.500 |
Pay Rate | 3.00% |
Income Taxes - Provision for In
Income Taxes - Provision for Income Taxes for Continuing Operations - Benefit (Expense) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Current: | |||
Federal | $ (37,028) | $ (34,877) | $ (43,655) |
State | (7,411) | (7,292) | (3,766) |
Total current | (44,439) | (42,169) | (47,421) |
Deferred | 21,517 | 28,198 | (13,275) |
Total provision for income taxes for continuing operations - benefit (expense) | $ (22,922) | $ (13,971) | $ (60,696) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2017 | Dec. 31, 2018 | Jan. 01, 2018 | |
Income Taxes [Line Items] | ||||
Provision for income taxes benefit (expense) related to remeasurement of net deferred tax liability | $ (28,400) | $ 28,400 | ||
Net long-term deferred tax asset | 2,900 | 2,900 | $ 3,700 | |
Net long-term deferred tax liability | 51,619 | 51,619 | 33,178 | |
Gross deferred tax assets related to state net operating loss carryforwards | 277,300 | |||
Valuation allowance related to certain state net operating loss carryforward deferred tax assets | 8,100 | |||
Liabilities recorded related to unrecognized tax benefits | $ 5,300 | |||
Liabilities related to interest and penalties | 600 | $ 600 | ||
Unrecognized tax benefit that would affect income tax rate if recognized | $ 4,700 | $ 4,700 | $ 4,900 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of the Statutory Federal Income Tax Rate with Federal and State Overall Effective Income Tax Rate from Continuing Operations (Details) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
U.S. statutory federal income tax rate | 21.00% | 35.00% | 35.00% |
Effective state income tax rate | 4.60% | 4.58% | 2.04% |
Valuation allowance adjustments | 0.20% | (0.59%) | 0.85% |
Uncertain tax positions | 0.17% | 0.71% | 0.17% |
Effect of change in future U.S. statutory federal income tax rate | 0.00% | (26.27%) | 0.00% |
Non-deductible compensation | 3.06% | 0.23% | 0.15% |
Other | 1.41% | (0.74%) | 0.90% |
Effective income tax rate | 30.44% | 12.92% | 39.11% |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | ||
Accruals and reserves | $ 24,948 | $ 24,320 |
State net operating loss carryforwards | 12,687 | 12,689 |
Basis difference in property and equipment | 11,515 | 0 |
Interest and state taxes associated with the liability for uncertain income tax positions | 1,175 | 1,126 |
Other | 1,778 | 712 |
Other | 52,103 | 38,847 |
Deferred tax liabilities: | ||
Fair value of interest rate swaps and caps | (462) | (696) |
Basis difference in inventories | (838) | (965) |
Basis difference in property and equipment | 0 | (2,467) |
Basis difference in goodwill | (69,646) | (73,803) |
Other | (2,544) | (1,636) |
Total deferred tax liabilities | (73,490) | (79,567) |
Valuation allowance | (8,138) | (7,985) |
Net deferred tax asset (liability) | $ (29,525) | $ (48,705) |
Income Taxes - Summary of Chang
Income Taxes - Summary of Changes in Liability Related to Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | ||||
Unrecognized tax benefit liability, Beginning Balance | $ 4,645 | $ 4,357 | $ 4,755 | |
New positions | 0 | 653 | 0 | |
Prior period positions: | ||||
Increases | 7 | 491 | 939 | |
Decreases | (199) | (539) | (415) | |
Increases from current period positions | 714 | 692 | 615 | |
Lapse of statute of limitations | (69) | (781) | (1,290) | |
Other | (197) | (228) | (247) | |
Unrecognized tax benefit liability, Ending Balance | 4,901 | 4,645 | 4,357 | |
Accrued interest and penalties | 600 | 600 | 800 | $ 1,100 |
State | ||||
Schedule Of Unrecognized Tax Benefits [Line Items] | ||||
Net operating losses | $ 0 | $ 100 | $ 300 |
Related Parties - Additional In
Related Parties - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
SFC | |||
Related Party Transaction [Line Items] | |||
Aggregate annual rent for leased aircraft usage | $ 0.3 | $ 0.4 | $ 0.5 |
Oil-Chem | |||
Related Party Transaction [Line Items] | |||
Purchase from related party | 1.6 | 1.9 | 2.1 |
SMISC Holdings, Inc. | |||
Related Party Transaction [Line Items] | |||
Purchase from related party | 0.9 | 0.9 | 0.9 |
SMI subsidiaries | |||
Related Party Transaction [Line Items] | |||
Vehicle sales to related party | $ 0.2 | $ 0.2 | $ 0.2 |
Minimum | Mr. Marcus G. Smith | SFC | |||
Related Party Transaction [Line Items] | |||
Ownership percentage | 10.00% |
Capital Structure and Per Sha_3
Capital Structure and Per Share Data - Additional Information (Details) | 12 Months Ended | |
Dec. 31, 2018USD ($)ClassVote$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | |
Capital Structure And Per Share Data [Line Items] | ||
Preferred stock shares authorized | 3,000,000 | |
Preferred stock, issued | 0 | |
Number of classes of common stock | Class | 2 | |
Class A convertible preferred stock | ||
Capital Structure And Per Share Data [Line Items] | ||
Preferred stock shares authorized | 300,000 | |
Preferred Stock par value (in dollars per share) | $ / shares | $ 0.10 | |
Preferred stock shares redeemed | 13,801.5 | |
Preferred stock redemption price (in dollars per share) | $ / shares | $ 1,000 | |
Series I Preferred Stock | ||
Capital Structure And Per Share Data [Line Items] | ||
Preferred stock authorized (in shares) | 100,000 | |
Series II Preferred Stock | ||
Capital Structure And Per Share Data [Line Items] | ||
Preferred stock authorized (in shares) | 100,000 | |
Series III Preferred Stock | ||
Capital Structure And Per Share Data [Line Items] | ||
Preferred stock authorized (in shares) | 100,000 | |
Class A common stock | ||
Capital Structure And Per Share Data [Line Items] | ||
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 |
Common stock, number of votes per share | Vote | 1 | |
Number of shares of class A common stock issuable against each share of class B common stock | 1 | |
Authorized amount expend on repurchase of shares | $ | $ 695,000,000 | |
Common stock class A, shares repurchased | 33,476,159 | 32,290,493 |
Common stock class A, share repurchase price per share (in dollars per share) | $ / shares | $ 17.85 | |
Remaining authorized amount | $ | $ 83,600,000 | |
Class B common stock | ||
Capital Structure And Per Share Data [Line Items] | ||
Common stock, shares authorized | 30,000,000 | 30,000,000 |
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 |
Common stock, number of votes per share | Vote | 10 |
Capital Structure and Per Sha_4
Capital Structure and Per Share Data - Dilutive Effect on Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | Jan. 01, 2018 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Earnings Per Share [Abstract] | ||||||||||||
Weighted Average Shares (in shares) | 42,708 | 43,997 | 45,637 | |||||||||
Weighted Average Shares, Stock compensation plans (in shares) | 242 | 361 | 311 | |||||||||
Weighted Average Shares, Diluted (in shares) | 42,950 | 44,358 | 45,948 | |||||||||
Income (Loss) From Continuing Operations | $ 52,390 | $ 94,153 | $ 94,516 | |||||||||
Income (Loss) From Continuing Operations, Non-vested restricted stock, Amount | (50) | (85) | (52) | |||||||||
Income (Loss) From Continuing Operations, Basic, Amount | 52,340 | 94,068 | 94,464 | |||||||||
Income (Loss) From Continuing Operations Diluted, Amount | $ 52,340 | $ 94,068 | $ 94,464 | |||||||||
Income (Loss) From Continuing Operations, Basic, Per Share Amount (usd per share) | $ 1.23 | $ 2.14 | $ 2.07 | |||||||||
Income (Loss) From Continuing Operations, Diluted (usd per share) | $ 1.22 | $ 2.12 | $ 2.06 | |||||||||
Income (Loss) From Discontinued Operations, Earnings (loss), Amount | $ (740) | $ (1,170) | $ (1,323) | |||||||||
Income (Loss) From Discontinued Operations, Non-vested restricted stock, Amount | 0 | 0 | 0 | |||||||||
Income (Loss) From Discontinued Operations, Basic earnings (loss), Amount | (740) | (1,170) | (1,323) | |||||||||
Income (Loss) From Discontinued Operations, Diluted earnings (loss), Amount | $ (740) | $ (1,170) | $ (1,323) | |||||||||
Income (Loss) From Discontinued Operations, Basic earnings (loss), Per Share Amount (usd per share) | $ (0.02) | $ (0.03) | $ (0.03) | |||||||||
Income (Loss) From Discontinued Operations, Diluted earnings (loss), Per Share Amount (usd per share) | $ (0.02) | $ (0.03) | $ (0.03) | |||||||||
Net Income (Loss), Amount | $ 51,650 | $ 21,821 | $ 15,118 | $ 16,905 | $ (2,194) | $ 61,952 | $ 19,440 | $ 12,132 | $ (541) | $ 51,650 | $ 92,983 | $ 93,193 |
Net Income (Loss), Non-vested restricted stock, Amount | (50) | (85) | (52) | |||||||||
Net Income (Loss), Basic, Amount | 51,600 | 92,898 | 93,141 | |||||||||
Net Income (Loss), Diluted, Amount | $ 51,600 | $ 92,898 | $ 93,141 | |||||||||
Earnings (loss) per common share (usd per share) | $ 0.51 | $ 0.35 | $ 0.40 | $ (0.05) | $ 1.43 | $ 0.45 | $ 0.27 | $ (0.01) | $ 1.21 | $ 2.11 | $ 2.04 | |
Earnings (loss) per common share (usd per share) | $ 0.51 | $ 0.35 | $ 0.39 | $ (0.05) | $ 1.42 | $ 0.44 | $ 0.27 | $ (0.01) | $ 1.20 | $ 2.09 | $ 2.03 |
Employee Benefit Plans - Additi
Employee Benefit Plans - Additional Information (Details) | 12 Months Ended | |||||
Dec. 31, 2018USD ($)EmployerPlansMembersshares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Jun. 30, 2017shares | Jun. 30, 2015shares | Jun. 30, 2012shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of active stock compensation plans | Plans | 3 | |||||
Restricted stock shares | shares | 704,000 | |||||
Number of employers obligated to make contribution under multiemployer plan | Employer | 199 | |||||
Number of employee increase / (decrease) under multiemployer benefit percentage | (1.00%) | 0.50% | ||||
Total contributions of multi employer Plan | 5.00% | |||||
SERP | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Members of senior management | Members | 12 | |||||
Options | Selling, general and administrative expenses | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Compensation expense | $ | $ 0 | $ 0 | $ 0 | |||
Restricted stock units and restricted stock awards | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Tax benefit recognized | $ | 3,000,000 | 4,200,000 | 4,200,000 | |||
Restricted stock units and restricted stock awards | Selling, general and administrative expenses | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Compensation expense | $ | 11,900,000 | 11,100,000 | 11,200,000 | |||
Restricted stock units and restricted stock awards | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Compensation expense not yet recognized | $ | $ 32,700,000 | |||||
Total compensation cost related to non-vested options expected to be recognized over weighted average period | 6 years 10 months 24 days | |||||
401(k) plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Employer contribution | $ | $ 9,200,000 | $ 8,000,000 | $ 8,000,000 | |||
2012 Formula Plan | Restricted stock awards | Board of Directors | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Restricted stock shares | shares | 40,000 | |||||
2012 Formula Plan | Class A common stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares authorized | shares | 500,000 | 300,000 | ||||
2012 Plan | Restricted stock units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock award vesting period | 3 years | |||||
2012 Plan | Restricted stock units | Executive officers and other key associates | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Restricted stock shares | shares | 664,000 | |||||
2012 Plan | Class A common stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares authorized | shares | 4,000,000 | 2,000,000 | ||||
2012 Formula Plan and 2004 Plan | Class A common stock | Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock option expiration period | 10 years | |||||
2012 Formula Plan and 2004 Plan | Class A common stock | Options | Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock award vesting period | 6 months | |||||
2012 Formula Plan and 2004 Plan | Class A common stock | Options | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock award vesting period | 3 years | |||||
2012 Formula Plan and 2004 Plan | Class A common stock | Restricted stock awards and restricted stock units | Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock award vesting period | 1 year | |||||
2012 Formula Plan and 2004 Plan | Class A common stock | Restricted stock awards and restricted stock units | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Stock award vesting period | 3 years |
Employee Benefit Plans - Status
Employee Benefit Plans - Status of Stock Options Related to Stock Plans (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options Outstanding Beginning Balance | 228,000 | ||
Options Outstanding Exercised | (195,000) | ||
Options Outstanding Forfeited | 0 | ||
Options Outstanding Exercisable | 33,000 | ||
Options Outstanding Ending Balance | 33,000 | 228,000 | |
Weighted Average Exercise Price Per Share, Beginning Balance | $ 1.81 | ||
Weighted Average Exercise Price Per Share, Exercised | 1.81 | ||
Weighted Average Exercise Price Per Share, Forfeited | 0 | ||
Weighted Average Exercise Price Per Share, Ending Balance | 1.81 | $ 1.81 | |
Weighted Average Exercise Price Per Share, Exercisable | $ 1.81 | ||
Weighted Average Remaining Contractual Term | 3 months 18 days | 1 year 3 months 18 days | |
Weighted Average Remaining Contractual Term, Exercisable | 3 months 18 days | ||
Aggregate Intrinsic Value, Beginning Balance | $ 392 | $ 3,787 | |
Aggregate Intrinsic Value, Exercisable | 392 | ||
Intrinsic value of stock options exercised | $ 3,564 | $ 425 | $ 250 |
Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Exercise Price Per Share, Beginning Balance | $ 1.81 | ||
Exercise Price Per Share, Exercised | 1.81 | ||
Exercise Price Per Share, Forfeited | 0 | ||
Exercise Price Per Share, Ending Balance | 1.81 | $ 1.81 | |
Exercise Price Per Share, Exercisable | 1.81 | ||
Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Exercise Price Per Share, Beginning Balance | 1.81 | ||
Exercise Price Per Share, Exercised | 1.81 | ||
Exercise Price Per Share, Forfeited | 0 | ||
Exercise Price Per Share, Ending Balance | 1.81 | $ 1.81 | |
Exercise Price Per Share, Exercisable | $ 1.81 |
Employee Benefit Plans - Stat_2
Employee Benefit Plans - Status of Non-Vested Restricted Stock and Restricted Stock Unit Grants Related to Stock Plans (Details) shares in Thousands | 12 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Retirement Benefits [Abstract] | |
Non-vested Restricted Stock Awards and Restricted Stock Units, Beginning Balance | shares | 2,199 |
Non-vested Restricted Stock Awards and Restricted Stock Units, Granted | shares | 704 |
Non-vested Restricted Stock Awards and Restricted Stock Units, Forfeited | shares | (197) |
Non-vested Restricted Stock Awards and Restricted Stock Units, Vested | shares | (545) |
Non-vested Restricted Stock Awards and Restricted Stock Units, Ending Balance | shares | 2,161 |
Weighted Average Grant Date Fair Value per Share, Beginning Balance | $ / shares | $ 21.76 |
Weighted Average Grant Date Fair Value per Share, Granted | $ / shares | 19.55 |
Weighted Average Grant Date Fair Value per Share, Forfeited | $ / shares | 22.82 |
Weighted Average Grant Date Fair Value per Share, Vested | $ / shares | 20.98 |
Weighted Average Grant Date Fair Value per Share, Ending Balance | $ / shares | $ 21.20 |
Employee Benefit Plans - Stat_3
Employee Benefit Plans - Status of Supplemental Executive Retirement Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Jan. 01, 2018 | |
Change in fair value of plan assets: | |||
Plan assets at January 1, | $ 0 | ||
Actual return on plan assets | 0 | $ 0 | |
Plan assets at December 31, | 0 | ||
Other Long-Term Liabilities | 75,887 | 61,918 | |
Other accrued liabilities | 257,823 | 237,963 | $ 239,249 |
SERP | |||
Change in projected benefit obligation: | |||
Obligation at beginning of year | 13,556 | 11,233 | |
Service cost | 1,933 | 1,711 | |
Interest cost | 470 | 448 | |
Actuarial loss (gain) | (2,368) | 429 | |
Amendments/settlements/curtailments loss (gain) | 0 | 0 | |
Benefits paid | (265) | (265) | |
Obligation at end of year | 13,326 | 13,556 | |
Accumulated benefit obligation | 10,191 | 10,204 | |
Change in fair value of plan assets: | |||
Plan assets at January 1, | 0 | 0 | |
Employer contributions | 265 | 265 | |
Benefits paid | (265) | (265) | |
Plan assets at December 31, | 0 | 0 | |
Funded status recognized | (13,326) | (13,556) | |
Other Long-Term Liabilities | 13,000 | 13,300 | |
Other accrued liabilities | $ 300 | $ 300 |
Employee Benefit Plans - Cost C
Employee Benefit Plans - Cost Components of Supplemental Executive Retirement Plan (Details) - SERP - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | $ 1,933 | $ 1,711 |
Interest cost | 470 | 448 |
Net pension expense (benefit) | $ 2,403 | $ 2,159 |
Employee Benefit Plans - Weight
Employee Benefit Plans - Weighted Average Assumptions Used to Determine Benefit Obligation and Net Periodic Benefit Costs (Details) | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Retirement Benefits [Abstract] | ||
Discount rate | 4.36% | 3.50% |
Rate of compensation increase | 3.00% | 3.00% |
Employee Benefit Plans - Estima
Employee Benefit Plans - Estimated Future Benefit Payments (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Retirement Benefits [Abstract] | |
2,019 | $ 265 |
2,020 | 362 |
2,021 | 362 |
2,022 | 362 |
2,023 | 362 |
2024 - 2028 | $ 2,122 |
Employee Benefit Plans - Schedu
Employee Benefit Plans - Schedule of Multi-Employer Pension Plans Affecting Period-to-Period Comparability of Contributions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Retirement Benefits [Abstract] | |||
Pension Fund | AI Pension Plan | ||
EIN/Pension Plan Number | 941,133,245 | ||
Pension Protection Act Zone Status | Red | Red | |
FIP/RP Status | Implemented | ||
Sonic Contributions | $ 176 | $ 171 | $ 150 |
Surcharge Imposed | Yes | ||
Collective-Bargaining Agreement Expiration Date | Between<br/>October 2021<br/>and February 2022 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Recorded at Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 |
Other current assets | ||
Assets: | ||
Cash flow swaps and interest rate caps designated as hedges | $ 1,800 | $ 900 |
Other assets | ||
Assets: | ||
Cash flow swaps and interest rate caps designated as hedges | 3,000 | 5,100 |
Other accrued liabilities | ||
Liabilities: | ||
Cash flow swaps designated as hedges | 1,000 | |
Other long-term liabilities | ||
Liabilities: | ||
Cash flow swaps designated as hedges | 300 | |
Fair Value Based on Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Cash surrender value of life insurance policies | 31,395 | 33,747 |
Cash flow swaps and interest rate caps designated as hedges | 4,839 | 5,968 |
Total assets | 36,234 | 39,715 |
Liabilities: | ||
Cash flow swaps designated as hedges | 0 | 1,286 |
Deferred compensation plan | 19,848 | 18,417 |
Total liabilities | $ 19,848 | $ 19,703 |
Fair Value Measurements - Ass_2
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items] | |||
Total Gain (loss) on long-lived assets held and used | $ (27,414,000) | $ (4,894,000) | $ (8,063,000) |
Total Gain (loss) on goodwill | 0 | $ (900,000) | |
Non-recurring basis | |||
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items] | |||
Long-lived assets held and used | 1,178,489,000 | ||
Goodwill | 509,592,000 | ||
Franchise assets | 65,700,000 | ||
Total Gain (loss) on long-lived assets held and used | (26,604,000) | ||
Total Gain (loss) on goodwill | 0 | ||
Total Gain (loss) on franchise assets | (2,100,000) | ||
Non-recurring basis | Significant Unobservable Inputs (Level 3) as of December 31, 2018 | |||
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items] | |||
Long-lived assets held and used | 1,178,489,000 | ||
Goodwill | 509,592,000 | ||
Franchise assets | $ 65,700,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value and Carrying Value of Fixed Rate Long-Term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2018 | Dec. 31, 2017 | Mar. 10, 2017 | May 09, 2013 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term Debt, Carrying Value | $ 945,083 | $ 1,024,703 | ||
5.0% Notes | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term Debt, Fair Value | 262,515 | 279,148 | ||
Long-term Debt, Carrying Value | $ 289,273 | $ 289,273 | ||
Stated interest rate on debt agreement | 5.00% | 5.00% | 5.00% | |
6.125% Notes | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term Debt, Fair Value | $ 216,250 | $ 248,750 | ||
Long-term Debt, Carrying Value | $ 250,000 | $ 250,000 | ||
Stated interest rate on debt agreement | 6.125% | 6.125% | 6.125% | |
Mortgage Notes | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term Debt, Fair Value | $ 218,402 | $ 203,031 | ||
Long-term Debt, Carrying Value | 215,196 | 199,972 | ||
Other | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-term Debt, Fair Value | 20,437 | 3,760 | ||
Long-term Debt, Carrying Value | $ 20,588 | $ 3,947 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($)Option | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Contingencies And Commitments [Line Items] | |||
Lease exit expense | $ 1,700 | ||
Interest Expense | 500 | ||
Lease exit accrued cost | $ 1,200 | ||
Operating lease term for dealership facilities, minimum | 15 years | ||
Operating lease term for dealership facilities, maximum | 20 years | ||
Operating lease number of renewal options, minimum | Option | 1 | ||
Operating lease number of renewal options, maximum | Option | 2 | ||
Operating lease period of renewal options, minimum | 5 years | ||
Operating lease period of renewal options, maximum | 10 years | ||
Percentage of lease facility based on capitalization rates | 10.00% | ||
Lease expense for continuing operation | $ 89,200 | $ 100,600 | $ 94,600 |
Lease expense from discontinuing operation net of lease exit accrual adjustments | 600 | 1,300 | 900 |
Leases, net contingent rent benefit related to decrease in interest rates from continuing operation | 1,600 | 1,700 | 1,800 |
Leases net contingent rent benefit related to decrease in interest rates from discontinuing operation | 100 | 100 | $ 100 |
Obligations under subleases, if subleases do not perform | 59,800 | ||
Maximum exposure associated with general indemnifications | 13,200 | ||
Contingent liability reserve balance after reduction | 4,300 | ||
Maximum aggregate earnout payment | 80,000 | ||
Earnout accrual | 23,300 | ||
Earnout accrual recorded in other accrued liabilities | 7,700 | ||
Earnout accrual recorded in other long-term liabilities | 15,600 | ||
Other accrued liabilities | |||
Contingencies And Commitments [Line Items] | |||
Amount reserved for pending proceedings | $ 2,400 | $ 3,200 | |
Dealership | |||
Contingencies And Commitments [Line Items] | |||
Joint venture ownership percentage | 50.00% | ||
Minimum | |||
Contingencies And Commitments [Line Items] | |||
General indemnifications expiration period | 1 year | ||
Maximum | |||
Contingencies And Commitments [Line Items] | |||
General indemnifications expiration period | 3 years |
Commitments and Contingencies_2
Commitments and Contingencies - Summary of Lease Exit Accruals (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | |
Beginning balance | $ 6,478 |
Lease exit expense | 1,709 |
Payments | (2,973) |
Lease buyout/other | (580) |
Ending balance | 4,634 |
Component of lease exit expense in interest expense, other, net | 100 |
Component of lease exit expense in selling, general and administrative expenses | 1,200 |
Component of lease exit expense in income (loss) from operations and the sale of dealerships | 400 |
Component of lease exit payments in selling, general and administrative expenses | 1,000 |
Component of lease exit payments in income (loss) from operations and the sale of dealerships | $ 2,000 |
Commitments and Contingencies_3
Commitments and Contingencies - Future Minimum Lease Payments for both Continuing and Discontinued Operations (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,019 | $ 89,162 |
2,020 | 73,188 |
2,021 | 58,858 |
2,022 | 44,526 |
2,023 | 41,095 |
Thereafter | 175,265 |
2,019 | (13,430) |
2,020 | (10,508) |
2,021 | (8,534) |
2,022 | (7,232) |
2,023 | (7,013) |
Thereafter | $ (13,116) |
Commitments and Contingencies_4
Commitments and Contingencies - Financial Covenants Related to Amended Subordination and Guaranty Agreement (Details) | Dec. 31, 2018 |
Subordination Agreement And Additional Financial Covenant [Line Items] | |
Minimum Consolidated Liquidity Ratio | 110.00% |
Minimum Consolidated Fixed Charge Coverage Ratio | 143.00% |
Maximum Consolidated Total Lease Adjusted Leverage Ratio | 525.00% |
Minimum EBTDAR to rent ratio | 336.00% |
Required ratio | |
Subordination Agreement And Additional Financial Covenant [Line Items] | |
Minimum Consolidated Liquidity Ratio | 105.00% |
Minimum Consolidated Fixed Charge Coverage Ratio | 120.00% |
Maximum Consolidated Total Lease Adjusted Leverage Ratio | 575.00% |
Minimum EBTDAR to rent ratio | 150.00% |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) - Summary of Changes in Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | $ 786,760 | $ 725,164 | $ 729,048 |
Other comprehensive income (loss) before reclassifications | 3,159 | ||
Amounts reclassified out of accumulated other comprehensive income (loss) | (233) | ||
Other comprehensive income (loss) | 2,926 | 3,569 | 3,370 |
Ending Balance | 823,116 | 786,760 | 725,164 |
Other comprehensive income (loss) before reclassifications, tax expense | 548 | ||
Tax benefit associated with change in pension actuarial loss | 726 | ||
Amounts reclassified out of accumulated other comprehensive income (loss), tax expense | 88 | ||
Gains and (Losses) on Cash Flow Hedges | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | 1,750 | ||
Other comprehensive income (loss) before reclassifications | 1,517 | ||
Amounts reclassified out of accumulated other comprehensive income (loss) | (233) | ||
Other comprehensive income (loss) | 1,284 | ||
Ending Balance | 3,034 | 1,750 | |
Defined Benefit Pension Plan | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | (443) | ||
Other comprehensive income (loss) before reclassifications | 1,642 | ||
Amounts reclassified out of accumulated other comprehensive income (loss) | 0 | ||
Other comprehensive income (loss) | 1,642 | ||
Ending Balance | 1,199 | (443) | |
Accumulated Other Comprehensive Income (Loss) | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | 1,307 | (2,262) | (5,632) |
Ending Balance | 4,233 | 1,307 | (2,262) |
Tax benefit associated with change in pension actuarial loss | $ (726) | $ (163) | $ (112) |
Segment Information - Additiona
Segment Information - Additional Information (Details) | 12 Months Ended |
Dec. 31, 2018Segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Segment Information - Summary o
Segment Information - Summary of Reportable Operating Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | ||||||||||||
Total revenues | $ 2,574,259 | $ 2,470,849 | $ 2,505,749 | $ 2,400,773 | $ 2,667,939 | $ 2,505,701 | $ 2,405,746 | $ 2,287,822 | $ 9,951,630 | $ 9,867,208 | $ 9,731,779 | |
Operating income (loss) | 177,663 | 211,565 | 232,909 | |||||||||
Interest expense, other, net | (54,059) | (52,524) | (50,106) | |||||||||
Other income (expense), net | 106 | (14,522) | 125 | |||||||||
Income (loss) from continuing operations before taxes | 75,312 | 108,124 | 155,212 | |||||||||
Segment Schedule Footnotes | ||||||||||||
Asset impairment charges | 15,600 | 10,300 | 3,600 | 6,100 | 200 | 2,600 | 500 | 29,514 | 9,394 | 8,063 | ||
Storm-related physical damage | 1,200 | 1,400 | 3,000 | $ 4,600 | 2,400 | |||||||
Legal costs | 1,500 | |||||||||||
Executive transition costs | $ 1,600 | |||||||||||
Loss (gain) on retirement of debt | $ (15,300) | 0 | 14,607 | 0 | ||||||||
Storm-related physical damage and legal costs | 3,100 | |||||||||||
Nonrecurring Compensation Expense | 23,300 | 9,200 | ||||||||||
Total floor plan interest expense | 48,398 | 36,395 | 27,716 | |||||||||
Total depreciation and amortization | 93,623 | 88,944 | 77,446 | |||||||||
Total capital expenditures | 163,619 | 234,245 | 206,232 | |||||||||
Total assets | 3,796,807 | 3,818,518 | 3,796,807 | 3,818,518 | ||||||||
Cash and cash equivalents | 5,854 | 6,352 | 5,854 | 6,352 | 3,108 | $ 3,625 | ||||||
Goodwill, Net | 509,592 | 525,780 | 509,592 | 525,780 | 472,437 | |||||||
Other Intangible Assets, net | 69,705 | 74,589 | 69,705 | 74,589 | ||||||||
Other Corporate and Other Assets | 1,104,864 | 1,081,172 | 1,104,864 | 1,081,172 | ||||||||
Franchised Dealerships Segment | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Total revenues | 9,251,453 | 9,612,899 | 9,590,752 | |||||||||
Segment Schedule Footnotes | ||||||||||||
Gain (loss) on disposal | $ 38,000 | $ 1,200 | 1,500 | $ 8,500 | ||||||||
Total floor plan interest expense | 46,126 | 35,030 | 26,631 | |||||||||
Total depreciation and amortization | 85,849 | 83,741 | 73,591 | |||||||||
Total capital expenditures | 116,854 | 195,220 | 166,405 | |||||||||
Total assets | 1,861,144 | 1,930,336 | 1,861,144 | 1,930,336 | ||||||||
EchoPark Segment | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Total revenues | 700,177 | 254,309 | 141,027 | |||||||||
Segment Schedule Footnotes | ||||||||||||
Total floor plan interest expense | 2,272 | 1,365 | 1,085 | |||||||||
Total depreciation and amortization | 7,774 | 5,203 | 3,855 | |||||||||
Total capital expenditures | 46,765 | 39,025 | 39,827 | |||||||||
Total assets | $ 245,648 | $ 200,289 | 245,648 | 200,289 | ||||||||
Operating segments | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Operating income (loss) | 129,265 | 175,170 | 205,193 | |||||||||
Operating segments | Franchised Dealerships Segment | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Operating income (loss) | 181,730 | 197,121 | 218,769 | |||||||||
Operating segments | Franchised Dealerships Segment | Income (loss) from continuing operations before taxes | ||||||||||||
Segment Schedule Footnotes | ||||||||||||
Gain (loss) on disposal | 38,900 | 10,000 | ||||||||||
Asset impairment charges | 27,900 | 7,500 | 7,900 | |||||||||
Storm-related physical damage | 4,000 | |||||||||||
Legal costs | 1,700 | |||||||||||
Executive transition costs | 1,600 | |||||||||||
Lease exit charges | 1,400 | 300 | 200 | |||||||||
Loss (gain) on retirement of debt | 14,600 | |||||||||||
Storm-related physical damage and legal costs | 8,900 | 11,700 | ||||||||||
Double-carry interest expense | 700 | |||||||||||
Operating segments | EchoPark Segment | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Operating income (loss) | (52,465) | (21,951) | (13,576) | |||||||||
Operating segments | EchoPark Segment | Income (loss) from continuing operations before taxes | ||||||||||||
Segment Schedule Footnotes | ||||||||||||
Asset impairment charges | 1,600 | 1,900 | ||||||||||
Lease exit charges | 600 | |||||||||||
Storm-related physical damage and legal costs | 200 | |||||||||||
Nonrecurring Compensation Expense | 32,500 | 1,300 | ||||||||||
Reconciling items | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Interest expense, other, net | (54,059) | (52,524) | (50,106) | |||||||||
Other income (expense), net | $ 106 | $ (14,522) | $ 125 |
Summary of Quarterly Financia_3
Summary of Quarterly Financial Data (Unaudited) - Consolidated Statements of Income by Quarter (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 01, 2018 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||
Total revenues | $ 2,574,259 | $ 2,470,849 | $ 2,505,749 | $ 2,400,773 | $ 2,667,939 | $ 2,505,701 | $ 2,405,746 | $ 2,287,822 | $ 9,951,630 | $ 9,867,208 | $ 9,731,779 | |
Gross profit | 370,715 | 360,536 | 362,375 | 352,499 | 384,090 | 362,622 | 360,618 | 350,346 | 1,446,125 | 1,457,676 | 1,429,274 | |
Net income (loss) | $ 51,650 | $ 21,821 | $ 15,118 | $ 16,905 | $ (2,194) | $ 61,952 | $ 19,440 | $ 12,132 | $ (541) | $ 51,650 | $ 92,983 | $ 93,193 |
Earnings (loss) per common share - Basic (usd per share) | $ 0.51 | $ 0.35 | $ 0.40 | $ (0.05) | $ 1.43 | $ 0.45 | $ 0.27 | $ (0.01) | $ 1.21 | $ 2.11 | $ 2.04 | |
Earnings (loss) per common share - Diluted (usd per share) | $ 0.51 | $ 0.35 | $ 0.39 | $ (0.05) | $ 1.42 | $ 0.44 | $ 0.27 | $ (0.01) | $ 1.20 | $ 2.09 | $ 2.03 |
Summary of Quarterly Financia_4
Summary of Quarterly Financial Data (Unaudited) - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Condensed Unaudited Quarterly Financial Data [Line Items] | |||||||||||
Asset impairment charges | $ 15,600 | $ 10,300 | $ 3,600 | $ 6,100 | $ 200 | $ 2,600 | $ 500 | $ 29,514 | $ 9,394 | $ 8,063 | |
Lease exit accrual adjustments and charges | 2,600 | 4,800 | 1,000 | ||||||||
Executive transition costs | $ 1,600 | ||||||||||
Storm-related physical damage | 1,200 | 1,400 | 3,000 | 4,600 | 2,400 | ||||||
Long-term compensation costs | 23,300 | 9,200 | |||||||||
Storm-related physical damage and legal costs | 3,100 | ||||||||||
Legal costs | $ 1,500 | ||||||||||
Tax benefit related to deferred income tax impact of change in U.S. federal tax income rate | (28,400) | 28,400 | |||||||||
Legal and other | 1,500 | 1,000 | $ 1,000 | ||||||||
Pre-tax charge related to the extinguishment of debt | 15,300 | $ 0 | $ (14,607) | $ 0 | |||||||
Net benefit from legal settlements | $ 1,100 | ||||||||||
7.0% Senior Subordinated Notes Expired | |||||||||||
Condensed Unaudited Quarterly Financial Data [Line Items] | |||||||||||
Stated interest rate on debt agreement | 7.00% | ||||||||||
Franchised dealerships | |||||||||||
Condensed Unaudited Quarterly Financial Data [Line Items] | |||||||||||
Lease exit accrual adjustments and charges | $ 800 | ||||||||||
Costs to sell | $ 300 | ||||||||||
Pre-tax gain (loss) on disposal | 38,000 | $ 1,200 | 1,500 | 8,500 | |||||||
Gain (loss) on disposal | $ 38,000 | $ 1,200 | $ 1,500 | $ 8,500 |
Subsequent Events (Details)
Subsequent Events (Details) | Feb. 21, 2019USD ($) | Feb. 21, 2019USD ($)store | Dec. 31, 2018USD ($)Dealerships | Dec. 31, 2017USD ($)Dealerships | Dec. 31, 2016Dealerships |
Subsequent Event [Line Items] | |||||
Number of franchises disposed | Dealerships | 7 | 3 | 0 | ||
Cash generated from disposition | $ 128,700,000 | $ 38,200,000 | |||
Subsequent event | |||||
Subsequent Event [Line Items] | |||||
Number of franchises disposed | store | 2 | ||||
Cash generated from disposition | $ 108,600,000 | ||||
Subsequent event | Class A and Class B Common Stock | |||||
Subsequent Event [Line Items] | |||||
Dividends (usd per share) | $ 0.10 |