Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 27, 2018 | Jun. 30, 2017 | |
Document and Entity Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
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 | $ 592.7 | ||
Common Class A [Member] | |||
Document and Entity Information [Line Items] | |||
Entity Common Stock, Shares Outstanding | 30,384,481 | ||
Common Class B [Member] | |||
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, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash and cash equivalents | $ 6,352 | $ 3,108 |
Receivables, net | 482,126 | 430,242 |
Inventories | 1,512,745 | 1,570,701 |
Other current assets | 18,574 | 26,993 |
Total current assets | 2,019,797 | 2,031,044 |
Property and Equipment, net | 1,146,881 | 1,010,380 |
Goodwill | 525,780 | 472,437 |
Other Intangible Assets, net | 74,589 | 80,233 |
Other Assets | 51,471 | 45,242 |
Total Assets | 3,818,518 | 3,639,336 |
Current Liabilities: | ||
Notes payable - floor plan - trade | 804,238 | 850,537 |
Notes payable - floor plan - non-trade | 709,098 | 675,353 |
Trade accounts payable | 129,903 | 117,740 |
Accrued interest | 12,316 | 13,265 |
Other accrued liabilities | 237,963 | 236,982 |
Current maturities of long-term debt | 61,314 | 43,003 |
Total current liabilities | 1,954,832 | 1,936,880 |
Long-Term Debt | 963,389 | 839,675 |
Other Long-Term Liabilities | 61,918 | 61,170 |
Deferred Income Taxes | 51,619 | 76,447 |
Commitments and Contingencies | ||
Stockholders’ Equity: | ||
Class A convertible preferred stock, none issued | ||
Paid-in capital | 732,854 | 721,695 |
Retained earnings | 625,356 | 541,146 |
Accumulated other comprehensive income (loss) | 1,307 | (2,262) |
Treasury stock, at cost; 32,290,493 Class A common stock shares held at December 31, 2017 and 30,263,196 Class A common stock shares held at December 31, 2016 | (573,513) | (536,166) |
Total Stockholders’ Equity | 786,760 | 725,164 |
Total Liabilities and Stockholders’ Equity | 3,818,518 | 3,639,336 |
Common Class A [Member] | ||
Stockholders’ Equity: | ||
Common stock, value | 635 | 630 |
Common Class B [Member] | ||
Stockholders’ Equity: | ||
Common stock, value | $ 121 | $ 121 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Convertible preferred stock issued | 0 | 0 |
Common Class A [Member] | ||
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 63,456,698 | 62,967,061 |
Common stock, shares outstanding | 31,166,205 | 32,703,865 |
Treasury stock, shares | 32,290,493 | 30,263,196 |
Common Class B [Member] | ||
Common stock, par value | $ 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, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenues: | |||
New vehicles | $ 5,295,051 | $ 5,234,505 | $ 5,265,401 |
Used vehicles | 2,622,053 | 2,533,122 | 2,512,024 |
Wholesale vehicles | 171,064 | 211,048 | 155,339 |
Total vehicles | 8,088,168 | 7,978,675 | 7,932,764 |
Parts, service and collision repair | 1,416,010 | 1,409,819 | 1,364,947 |
Finance, insurance and other, net | 363,030 | 343,285 | 326,588 |
Total revenues | 9,867,208 | 9,731,779 | 9,624,299 |
Cost of Sales: | |||
New vehicles | (5,030,125) | (4,973,911) | (4,997,472) |
Used vehicles | (2,467,150) | (2,374,537) | (2,349,982) |
Wholesale vehicles | (179,778) | (218,364) | (162,707) |
Total vehicles | (7,677,053) | (7,566,812) | (7,510,161) |
Parts, service and collision repair | (732,479) | (735,693) | (699,526) |
Total cost of sales | (8,409,532) | (8,302,505) | (8,209,687) |
Gross profit | 1,457,676 | 1,429,274 | 1,414,612 |
Selling, general and administrative expenses | (1,147,773) | (1,110,856) | (1,110,565) |
Impairment charges | (9,394) | (8,063) | (17,955) |
Depreciation and amortization | (88,944) | (77,446) | (68,799) |
Operating income (loss) | 211,565 | 232,909 | 217,293 |
Other income (expense): | |||
Interest expense, floor plan | (36,395) | (27,716) | (21,326) |
Interest expense, other, net | (52,524) | (50,106) | (50,910) |
Other income (expense), net | (14,522) | 125 | 99 |
Total other income (expense) | (103,441) | (77,697) | (72,137) |
Income (loss) from continuing operations before taxes | 108,124 | 155,212 | 145,156 |
Provision for income taxes for continuing operations - benefit (expense) | (13,971) | (60,696) | (57,065) |
Income (loss) from continuing operations | 94,153 | 94,516 | 88,091 |
Discontinued operations: | |||
Income (loss) from discontinued operations before taxes | (1,942) | (2,121) | (2,883) |
Provision for income taxes for discontinued operations - benefit (expense) | 772 | 798 | 1,103 |
Income (loss) from discontinued operations | (1,170) | (1,323) | (1,780) |
Net income (loss) | $ 92,983 | $ 93,193 | $ 86,311 |
Basic earnings (loss) per common share: | |||
Earnings (loss) per share from continuing operations | $ 2.14 | $ 2.07 | $ 1.74 |
Earnings (loss) per share from discontinued operations | (0.03) | (0.03) | (0.03) |
Earnings (loss) per common share | $ 2.11 | $ 2.04 | $ 1.71 |
Weighted average common shares outstanding | 43,997 | 45,637 | 50,489 |
Diluted earnings (loss) per common share: | |||
Earnings (loss) per share from continuing operations | $ 2.12 | $ 2.06 | $ 1.73 |
Earnings (loss) per share from discontinued operations | (0.03) | (0.03) | (0.03) |
Earnings (loss) per common share | $ 2.09 | $ 2.03 | $ 1.70 |
Weighted average common shares outstanding | 44,358 | 45,948 | 50,883 |
Dividends declared per common share | $ 0.20 | $ 0.20 | $ 0.11 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement Of Income And Comprehensive Income [Abstract] | |||
Net income (loss) | $ 92,983 | $ 93,193 | $ 86,311 |
Other comprehensive income (loss) before taxes: | |||
Change in fair value of interest rate swap and rate cap agreements | 6,186 | 5,731 | 540 |
Pension actuarial income (loss) | (429) | (295) | 737 |
Total other comprehensive income (loss) before taxes | 5,757 | 5,436 | 1,277 |
Provision for income tax benefit (expense) related to components of other comprehensive income (loss) | (2,188) | (2,066) | (485) |
Other comprehensive income (loss) | 3,569 | 3,370 | 792 |
Comprehensive income (loss) | $ 96,552 | $ 96,563 | $ 87,103 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Paid-In Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Common Class A [Member]Common Stock [Member] | Common Class A [Member]Treasury Stock [Member] | Common Class B [Member]Common Stock [Member] |
Beginning Balance at Dec. 31, 2014 | $ 666,718 | $ 697,760 | $ 376,353 | $ (6,424) | $ 620 | $ (401,712) | $ 121 |
Beginning Balance, Shares at Dec. 31, 2014 | 62,047 | (23,156) | 12,029 | ||||
Shares awarded under stock compensation plans | 3,662 | 3,656 | $ 6 | ||||
Shares awarded under stock compensation plans, shares | 518 | ||||||
Purchases of treasury stock | (34,483) | $ (34,483) | |||||
Purchases of treasury stock, shares | (1,519) | ||||||
Income tax benefit associated with stock compensation plans | 1,888 | 1,888 | |||||
Change in fair value of interest rate swap and rate cap agreements, net of tax expense of $205, $2,178 and $2,351 in 2015 and 2016 and 2017 respectively | 335 | 335 | |||||
Pension actuarial income/loss net of tax expense (benefit) of $280, and $112, and $163 in 2015 and 2016 and 2017 respectively | 457 | 457 | |||||
Restricted stock amortization | 9,814 | 9,814 | |||||
Other, shares | 21 | ||||||
Net income (loss) | 86,311 | 86,311 | |||||
Dividends declared | (5,654) | (5,654) | |||||
Ending Balance at Dec. 31, 2015 | 729,048 | 713,118 | 457,010 | (5,632) | $ 626 | $ (436,195) | $ 121 |
Ending 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 expense 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 of $205, $2,178 and $2,351 in 2015 and 2016 and 2017 respectively | 3,553 | 3,553 | |||||
Pension actuarial income/loss net of tax expense (benefit) of $280, and $112, and $163 in 2015 and 2016 and 2017 respectively | (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 of $205, $2,178 and $2,351 in 2015 and 2016 and 2017 respectively | 3,835 | 3,835 | |||||
Pension actuarial income/loss net of tax expense (benefit) of $280, and $112, and $163 in 2015 and 2016 and 2017 respectively | (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 |
CONSOLIDATED STATEMENTS OF STO7
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Tax effect on fair value of interest rate swap and rate cap agreements | $ 2,351 | $ 2,178 | $ 205 |
Tax expense (benefit) associated with change in pension actuarial (income) loss | (163) | ||
Accumulated Other Comprehensive Income (Loss) [Member] | |||
Tax effect on fair value of interest rate swap and rate cap agreements | 2,351 | 2,178 | 205 |
Tax expense (benefit) associated with change in pension actuarial (income) loss | $ (163) | $ (112) | $ 280 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income (loss) | $ 92,983 | $ 93,193 | $ 86,311 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Depreciation and amortization of property and equipment | 88,938 | 77,532 | 68,793 |
Provision for bad debt expense | 748 | 389 | 1,909 |
Other amortization | 649 | 649 | 649 |
Debt issuance cost amortization | 2,383 | 2,641 | 2,489 |
Debt discount amortization, net of premium amortization | 157 | 303 | 199 |
Stock-based compensation expense | 11,119 | 11,165 | 9,814 |
Deferred income taxes | (27,760) | 14,465 | 15,996 |
Net distributions from equity investee | (138) | (300) | (263) |
Asset impairment charges | 9,394 | 8,063 | 17,955 |
Loss (gain) on disposal of dealerships and property and equipment | (10,194) | (331) | (3,089) |
Loss (gain) on exit of leased dealerships | 2,157 | 1,386 | 1,848 |
Loss (gain) on retirement of debt | 14,607 | ||
Changes in assets and liabilities that relate to operations: | |||
Receivables | (52,989) | (62,894) | (9,048) |
Inventories | 57,250 | 35,545 | (291,100) |
Other assets | 3,266 | 62,538 | (19,785) |
Notes payable - floor plan - trade | (46,299) | (42,929) | 181,848 |
Trade accounts payable and other liabilities | 16,612 | 14,953 | 5,190 |
Total adjustments | 69,900 | 123,175 | (16,595) |
Net cash provided by (used in) operating activities | 162,883 | 216,368 | 69,716 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of businesses, net of cash acquired | (76,610) | (15,861) | |
Purchases of land, property and equipment | (234,245) | (206,232) | (173,249) |
Proceeds from sales of property and equipment | 596 | 1,319 | 1,397 |
Proceeds from sales of dealerships | 38,150 | 7,978 | |
Net cash provided by (used in) investing activities | (272,109) | (220,774) | (163,874) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Net (repayments) borrowings on notes payable - floor plan - non-trade | 33,745 | 49,986 | 74,249 |
Borrowings on revolving credit facilities | 327,070 | 209,287 | 402,093 |
Repayments on revolving credit facilities | (252,070) | (213,490) | (397,890) |
Proceeds from issuance of long-term debt | 302,483 | 103,395 | 69,075 |
Debt issuance costs | (4,855) | (3,084) | (491) |
Principal payments and repurchase of long-term debt | (36,836) | (30,949) | (19,424) |
Repurchase of debt securities | (210,914) | ||
Purchases of treasury stock | (37,347) | (99,971) | (34,483) |
Income tax benefit (expense) associated with stock compensation plans | (2,611) | 1,888 | |
Issuance of shares under stock compensation plans | 45 | 27 | 3,662 |
Dividends paid | (8,851) | (8,701) | (5,078) |
Net cash provided by (used in) financing activities | 112,470 | 3,889 | 93,601 |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 3,244 | (517) | (557) |
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 3,108 | 3,625 | 4,182 |
CASH AND CASH EQUIVALENTS, END OF YEAR | 6,352 | 3,108 | 3,625 |
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES: | |||
Change in fair value of interest rate swap and rate cap agreements (net of tax expense of $2,351,$2,178 and $205 in the years ended December 31, 2017, 2016 and 2015, respectively) | 3,835 | 3,553 | 335 |
Cash paid (received) during the period for: | |||
Interest, including amount capitalized | 89,525 | 77,289 | 71,328 |
Income taxes | $ 42,907 | $ 28,459 | $ 38,474 |
CONSOLIDATED STATEMENTS OF CAS9
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Statement Of Cash Flows [Abstract] | |||
Tax effect on fair value of interest rate swap and rate cap agreements | $ 2,351 | $ 2,178 | $ 205 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | 1. Description of Business and Summary of Significant Accounting Policies Organization and Business - Sonic Automotive, Inc. (“Sonic” or the “Company”) is one of the largest automotive retailers in the United States (as measured by total revenue). As of December 31, 2017, Sonic operated 114 new vehicle franchises in 13 states (representing 23 different brands of cars and light trucks), 18 collision repair centers and nine pre-owned stores. As a result of the way management operates the business, Sonic had two operating segments as of December 31, 2017: (1) the Franchised Dealerships Segment and (2) the Pre-Owned Stores Segment. For management and operational reporting purposes, Sonic groups certain franchises together that share management and inventory (principally used vehicles) into “stores.” As of December 31, 2017, Sonic operated 103 stores in the Franchised Dealerships Segment and nine stores in the Pre-Owned Stores Segment. 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, “F&I”) for its customers. The Pre-Owned Stores Segment provides the same services (excluding new vehicle sales and manufacturer warranty repairs) in stand-alone pre-owned vehicle specialty retail locations and includes Sonic’s EchoPark stores. Sonic’s pre-owned stores business operates independently from its franchised dealerships business. Principles of Consolidation - All of Sonic’s 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 standard 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 standard must be applied using either of the following transition methods: (1) a full retrospective approach reflecting the application of the standard 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 adopting the standard recognized at the date of adoption (which requires additional footnote disclosures). These amendments are effective for reporting periods beginning after December 15, 2017. Earlier application is permitted only as of reporting periods beginning after December 15, 2016. Sonic adopted this ASU effective January 1, 2018 using the modified retrospective transition approach applied to contracts not completed as of the date of adoption, with no restatement of comparative periods and a cumulative effect adjustment to retained earnings recognized as of the date of adoption. Under the new 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; (3) determining the transaction price; (4) allocating the transaction price to the performance obligation(s) in the contract; and (5) recognizing revenue as the performance obligation(s) are satisfied. The standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. 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 standard as compared with prior U.S. generally accepted accounting principles and does not expect the adoption of this standard to have a material impact on its consolidated financial statements, revenue recognition practices, accounting policies or internal controls. 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 used vehicles at wholesale auction; (4) arrangement of vehicle financing and the sale of service and other insurance contracts; and (5) the performance of vehicle maintenance and repair services and sale of related parts and accessories. As a result of its analysis 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 revenue”), both of which are subject to accelerated recognition under the new standard. While management is finalizing the cumulative effect adjustment to retained earnings, the expected impact on Sonic’s consolidated financial statements as a result of the changes in revenue recognition practices described above is not expected to be material. Management estimates that the adoption of the new revenue recognition standard will result in a net, after-tax cumulative effect adjustment to increase retained earnings of approximately $3.0 million as of January 1, 2018. In February 2016, the FASB issued ASU 2016-02 to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this ASU require that leases are classified as either finance or operating leases, a right-of-use asset and lease liability is recognized in the statement of financial position, and repayments are classified within operating activities in the statement of cash flows. The amendments in this ASU are to be applied using a modified retrospective approach and are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 (early adoption is permitted). Sonic plans to adopt this ASU effective January 1, 2019. While management is still evaluating the impact of adopting the provisions of this ASU, management expects that upon adoption of this ASU, the presentation of certain items in Sonic’s consolidated financial position, cash flows and other disclosures will be materially impacted, primarily due to the recognition of a right-of-use asset and an associated liability and a change in the timing and classification of certain items in Sonic’s results of operations as a result of the derecognition of the lease liability. In March 2016, the FASB issued ASU 2016-09 to simplify several aspects of the accounting for share-based payment transactions. For public companies, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 (early adoption is permitted). Sonic adopted this ASU effective January 1, 2017. Upon adoption of this ASU, interim period and annual income tax expense is affected by stock option exercises and restricted stock and restricted stock unit vesting activity, potentially creating volatility in Sonic’s effective income tax rate from period to period. See the heading “Income Taxes” below for further discussion of the impact of the adoption of this ASU on Sonic’s effective income tax rate for 2017. In January 2017, the FASB issued ASU 2017-04 to simplify the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. For public companies, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (early adoption is permitted for impairment testing dates after January 1, 2017). Sonic adopted this ASU prior to its impairment test as of October 1, 2017. In August 2017, the FASB issued ASU 2017-12 which amends the hedge accounting recognition and presentation requirements in Accounting Standards Codification (“ASC”) 815. This ASU expands and refines hedge accounting for both nonfinancial 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. Sonic is currently in the process of evaluating the effects of this pronouncement on its consolidated financial statements Reclassifications - Prior to Sonic’s adoption of ASU 2014-08 beginning with its 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 to March 31, 2014 have not been reclassified to discontinued operations since they did not meet the criteria in ASU 2014-08. If, in future periods, Sonic determines 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 date of the accompanying consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. 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 - Sonic classifies 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 Sonic is 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. Sonic was in a book overdraft position in an amount of approximately $6.9 million and $8.0 million, as of December 31, 2017 and 2016, respectively. Revenue Recognition - Sonic records 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 previous heading “Recent Accounting Pronouncements” for discussion of changes to revenue recognition effective January 1, 2018 upon adoption of ASC 2014-09. Sonic arranges 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. Sonic also receives commissions from the sale of various insurance contracts and non-recourse third-party extended service contracts to customers. Sonic 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 the related contract is placed with the financial institution. Sonic also receives commissions from the sale of 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. Commission revenue from the sale of these third-party extended service contracts is recorded net of estimated chargebacks at the time of sale. As of December 31, 2017 and 2016, the amounts recorded as allowances for finance, insurance and service contract commission chargeback reserves were $20.9 million and $19.2 million, respectively, and were classified as other accrued liabilities and other long-term liabilities in the accompanying consolidated balance sheets. Floor Plan Assistance - Sonic receives floor plan assistance payments from certain manufacturers. This assistance reduces the carrying value of Sonic’s 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 $45.3 million, $45.0 million and $42.1 million for 2017, 2016 and 2015, respectively. Contracts in Transit - Contracts in transit represent customer finance contracts evidencing loan agreements or lease agreements between Sonic, as creditor, and the customer, as borrower, to acquire or lease a vehicle in situations where a third-party finance source has given Sonic initial, non-binding approval to assume Sonic’s 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 Sonic. Contracts in transit are included in receivables, net on the accompanying consolidated balance sheets and totaled $267.6 million and $236.4 million at December 31, 2017 and 2016, respectively. Accounts Receivable - In addition to contracts in transit, Sonic’s 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. Sonic evaluates 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, 2017 and 2016. 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. Sonic assesses the valuation of all its vehicle and parts inventories and maintains 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, Sonic considers 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 Sonic’s network of dealerships. The risk with parts inventories is minimized by the fact that excess or obsolete parts can also be transferred within Sonic’s network of dealerships or can usually be returned to the manufacturer. Recorded inventory reserves were not significant at December 31, 2017 and 2016. 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. Sonic amortizes 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 Sonic reviews 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, Sonic compares the carrying amount of the asset to the estimated undiscounted cash flows related to that asset. Sonic concludes 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 Sonic determines 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, Sonic determines 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 - Sonic utilizes 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. Sonic documents its risk management strategy and hedge effectiveness at the inception of and during the term of each hedge. As of December 31, 2017, Sonic utilized interest rate cash flow swap agreements to effectively convert a portion of its LIBOR-based variable rate debt to a fixed rate. In addition, Sonic has interest rate cap agreements to limit its 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, Sonic has two reporting units, which consist of: (1) its traditional franchised dealerships and (2) its pre-owned stores. The carrying value of Sonic’s goodwill totaled approximately $525.8 million at December 31, 2017, $465.8 million of which is related to its franchised dealerships reporting unit and $60.0 million of which is related to its pre-owned stores reporting unit. As the $60.0 million of goodwill carrying value related to the pre-owned stores reporting unit was acquired immediately preceding the testing date, Sonic evaluated impairment on a qualitative basis and determined there was no indication of impairment. For the franchised dealerships reporting unit, Sonic utilized the Market Price (“MP”) method to estimate its enterprise value as of October 1, 2017. The significant inputs in the MP method include debt value, stock price and control premium. 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 inputs 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 Sonic to record goodwill impairment. Based on the results of Sonic’s quantitative test as of October 1, 2017, its franchised dealerships reporting unit’s fair value exceeded its carrying value. As a result, Sonic was not required to record goodwill impairment for either of its 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. Sonic classifies franchise and dealer agreements as indefinite lived intangible assets as it has been Sonic’s experience that renewals have occurred without substantial cost or material modifications to the underlying agreements. As such, Sonic believes that its 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, Sonic evaluates other intangible assets for impairment annually (as of October 1) or more frequently if indicators of impairment exist. Sonic utilized a discounted cash flow (“DCF”) model to estimate the fair value of the franchise assets for each of its franchises with recorded franchise assets. The significant assumptions in Sonic’s 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, Sonic develops 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. Sonic’s expectation of revenue growth is in part driven by its estimates of new vehicle industry sales volume in future periods. Sonic believes the historic and projected industry sales volume is a good indicator of growth or contraction in the retail automotive industry. Based on the October 1, 2017 impairment test, Sonic determined that the fair value of the franchise assets exceeded the carrying value of the franchise assets for all but four of its franchises, resulting in a franchise asset impairment charge of $3.6 million during 2017, 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 its definite life favorable lease assets for impairment, Sonic 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. Sonic evaluated its favorable lease assets for impairment as of October 1, 2017 and determined that no impairment was required. Insurance Reserves - Sonic has 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, 2017 and 2016, Sonic had $22.0 million and $22.7 million, respectively, reserved for such programs. Lease Exit Accruals - The majority of Sonic’s dealership properties are leased under long-term operating lease arrangements. When situations arise where the leased properties are no longer utilized in operations, Sonic records 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 Sonic’s 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 Sonic 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 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. Sonic’s management believes that the Company’s tax positions comply, in all material respects, with applicable tax law and that the Company has adequately provided for any reasonably foreseeable outcome related to these matters. From time to time, Sonic engages in transactions in which the tax consequences may be subject to uncertainty. Significant judgment is required in assessing and estimating the tax consequences of these transactions. Sonic determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, Sonic presumes that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. A tax position that does not meet the more-likely-than-not recognition threshold is measured to determine the amount of benefit to be recognized in the financial statements. The tax position is measured at the largest amount of benefit that is likely to be realized upon ultimate settlement. Sonic adjusts its estimates periodically because of ongoing examinations by and settlements with the various taxing authorities, as well as changes in tax laws, regulations and precedent. See Note 7, “Income Taxes,” for further discussion of Sonic’s uncertain tax positions. Concentrations of Credit and Business Risk - Financial instruments that potentially subject Sonic 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 $102.5 million and $92.8 million at December 31, 2017 and 2016, respectively, and receivables from financial institutions (which include manufacturer-affiliated finance companies and commercial banks), totaling approximately $299.6 million and $265.3 million at December 31, 2017 and 2016, respectively. Credit risk arising from trade receivables from commercial customers is reduced by the large number of customers comprising the trade receivables balances. Sonic participates in a program with two of its manufacturer-affiliated finance companies and one commercial bank wherein Sonic maintains 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 pre-payment of notes payable - floor plan, nor is it Sonic’s intent to use this amount to offset principal amounts owed under notes payable - floor plan in the future, although Sonic has the right and ability to do so. The deposit balance of $3.0 million and $10.0 million as of December 31, 2017 and 2016, respectively, is classified in other current assets in the accompanying consolidated balance sheets, because there are restrictions on Sonic’s 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 2017, 2016 and 2015, the reduction in interest expense, floor plan was approximately $0.5 million, $0.6 million and $1.5 million, respectively. Sonic is 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 Sonic’s brand portfolio. Sonic purchases its new vehicle inventory from various automobile manufacturers at the prevailing prices available to all franchised dealerships. In addition, Sonic finances a substantial portion of its new vehicle inventory with manufacturer-affiliated finance companies. Sonic’s results of operations could be adversely affected by the manufacturers’ inability to supply Sonic’s dealerships with an adequate supply of new vehicle inventory and related floor plan financing. Sonic also has concentrations of risk related to geographic markets in which its dealerships operate. Changes in overall economic, retail automotive or regulatory environments in one or more of these markets could adversely impact Sonic’s results of operations. Financial Instruments and Market Risks - As of December 31, 2017 and 2016, the fair values of Sonic’s 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. Se |
Business Acquisitions and Dispo
Business Acquisitions and Dispositions | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Business Acquisitions and Dispositions | 2. Business Acquisitions and Dispositions Acquisitions Sonic acquired one stand-alone pre-owned vehicle store for approximately $76.6 million during 2017. Goodwill in the amount of $60.0 million related to this acquisition was assigned to the Pre-Owned Stores segment. We anticipate that substantially all of the goodwill recorded in 2017 will be deductible for federal income tax purposes. The purchase agreement requires a deferred payment of $10.0 million after two years from the date of the acquisition to the seller who became an employee of Sonic. The purchase agreement also provides for potential additional variable payments to the employee over a ten-year period based on the financial performance up to a maximum of $80.0 million. Sonic is not obligated to make the variable payments up to a maximum of $80.0 million upon the termination of employment of the employee under certain circumstances. As a result, the deferred and variable amounts, if earned, are treated as compensation arrangements for post-combination services separate from the business combination, pursuant to ASC 805, “Business Combinations,” specifically ASC 805-10-55-25, therefore Sonic will recognize the accrual of the deferred and variable payments as compensation expense as earned. As of December 31, 2017, we had approximately $1.3 million accrued for deferred and variable payments, included in other long-term liabilities. In addition to the stand-alone pre-owned vehicle dealership business discussed above, Sonic opened two new EchoPark stores during the year ended December 31, 2017. Sonic acquired three stand-alone pre-owned vehicle stores and related real estate for approximately $15.9 million during 2016. These cash outflows were funded by cash from operations and borrowings under Sonic’s revolving credit and floor plan facilities. Sonic did not acquire any businesses during 2015. Acquisitions are included in the consolidated financial statements from the date of acquisition. Dispositions Sonic disposed of three dealership franchises during 2017 and four dealership franchises during 2015. Sonic did not dispose of any dealership franchises during 2016. The dispositions during 2017 and 2015 generated cash of approximately $38.2 million and $8.0 million, respectively. In conjunction with dealership dispositions, Sonic has 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 Sonic’s adoption of ASU 2014-08 beginning with its 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 2014-08. Revenues and other activities associated with disposed dealerships classified as discontinued operations were as follows: Year Ended December 31, 2017 2016 2015 (In thousands) Income (loss) from operations $ (741 ) $ (1,100 ) $ (1,421 ) Gain (loss) on disposal 6 (1 ) - Lease exit accrual adjustments and charges (1,207 ) (1,020 ) (1,462 ) Pre-tax income (loss) $ (1,942 ) $ (2,121 ) $ (2,883 ) Total revenues $ - $ - $ - Revenues and other activities associated with disposed dealerships that remain in continuing operations were as follows: Year Ended December 31, 2017 2016 2015 (In thousands) Income (loss) from operations $ (2,329 ) $ (2,154 ) $ (6,214 ) Gain (loss) on disposal 11,188 (47 ) 2,748 Property and equipment impairment charges - (81 ) (6,584 ) Pre-tax income (loss) $ 8,859 $ (2,282 ) $ (10,050 ) Total revenues $ 86,111 $ 127,337 $ 215,629 In the ordinary course of business, Sonic evaluates its dealership franchises for possible disposition based on various strategic and performance criteria. As of December 31, 2017, Sonic did not have any franchises classified as held for sale; however, in the future, Sonic 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, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories and Related Notes Payable - Floor Plan | 3. Inventories and Related Notes Payable - Floor Plan Inventories consist of the following: December 31, 2017 December 31, 2016 (In thousands) New vehicles $ 1,017,523 $ 1,088,814 Used vehicles 294,496 282,288 Service loaners 130,406 128,821 Parts, accessories and other 70,320 70,778 Net inventories $ 1,512,745 $ 1,570,701 Sonic finances all of its new and certain of its used vehicle inventory through standardized floor plan facilities with a syndicate of financial institutions and manufacturer-affiliated finance companies. The new and used vehicle floor plan facilities bear interest at variable rates based on prime or LIBOR rates. The weighted average interest rate for Sonic’s new vehicle floor plan facilities was 2.37%, 1.85% and 1.61% for 2017, 2016 and 2015, respectively. Sonic’s 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. Floor plan assistance received is capitalized in inventory and charged against cost of sales when the associated inventory is sold. For 2017, 2016 and 2015, Sonic recognized a reduction in cost of sales of approximately $45.3 million, $45.0 million and $42.1 million, respectively, related to manufacturer floor plan assistance. The weighted average interest rate for Sonic’s used vehicle floor plan facilities was 2.61%, 1.78% and 1.72% for 2017, 2016 and 2015, respectively. The new and used vehicle floor plan facilities are collateralized by vehicle inventories 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 Sonic with respect to the creation of liens and changes in ownership, officers and key management personnel. Sonic was in compliance with all of these restrictive covenants as of December 31, 2017. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2017 | |
Property Plant And Equipment [Abstract] | |
Property and Equipment | 4. Property and Equipment Property and equipment, net consists of the following: December 31, 2017 December 31, 2016 (In thousands) Land $ 370,828 $ 306,457 Building and improvements 893,768 777,766 Software and computer equipment 147,812 128,366 Parts and service equipment 105,123 93,901 Office equipment and fixtures 96,066 86,216 Company vehicles 9,723 9,107 Construction in progress 54,429 62,982 Total, at cost 1,677,749 1,464,795 Less accumulated depreciation (527,379 ) (450,184 ) Subtotal 1,150,370 1,014,611 Less assets held for sale (1) (3,489 ) (4,231 ) Property and equipment, net $ 1,146,881 $ 1,010,380 (1) Classified in other current assets in the accompanying consolidated balance sheets. Interest capitalized in conjunction with construction projects and software development was approximately $2.2 million, $2.8 million and $1.9 million for 2017, 2016 and 2015, respectively. As of December 31, 2017, commitments for facility construction projects totaled approximately $31.9 million. During 2017, 2016 and 2015, property and equipment impairment charges were recorded as noted in the following table: Year Ended December 31, (In thousands) 2017 $ 4,894 2016 $ 8,063 2015 $ 12,210 Impairment charges were due to the abandonment of construction and software development projects, the abandonment and disposal of dealership equipment or Sonic’s estimate that based on historical and projected operating losses for certain dealerships, these dealerships would not be able to recover recorded property and equipment asset balances. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | 5. Intangible Assets and Goodwill The changes in the carrying amount of franchise assets and goodwill for 2017 and 2016 were as follows: Franchise Assets Net Goodwill (In thousands) Balance at December 31, 2015 $ 74,900 $ 471,493 (1) Prior year acquisition allocations - 944 Balance at December 31, 2016 $ 74,900 $ 472,437 (1) Additions through current year acquisitions - 60,024 Reductions from dispositions (1,400 ) (5,737 ) Reductions from impairment (3,600 ) (900 ) Prior year acquisition allocations - (44 ) Balance at December 31, 2017 $ 69,900 $ 525,780 (2) (1) Net of accumulated impairment losses of $796,725. (2) Net of accumulated impairment losses of $797,625. Goodwill Sonic impaired approximately $0.9 million of goodwill in 2017 related to the write-off of goodwill due to the closure of two stand-alone pre-owned vehicle stores that were acquired in 2016. There was no impairment of goodwill in 2016. Other Intangible Assets Other intangible assets consists 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, Sonic evaluates its 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 $3.6 million and $3.3 million for 2017 and 2015, respectively, were recorded in continuing operations based on the impairment evaluations performed. There were no franchise asset impairment charges in 2016, and no definite life intangible asset impairment charges in 2017, 2016 and 2015. Definite life intangible assets consist of the following: December 31, 2017 December 31, 2016 (In thousands) Favorable lease agreements $ 17,317 $ 17,318 Less accumulated amortization (12,628 ) (11,985 ) Definite life intangibles, net $ 4,689 $ 5,333 Amortization expense for definite life intangible assets was approximately $0.6 million in each of 2017, 2016 and 2015. The initial weighted average amortization period for lease agreements and definite life intangible assets outstanding at December 31, 2017 was 17 years. Expiration dates for these lease agreements range between 2020 and 2027. Future amortization expense is as follows: Year Ending December 31, (In thousands) 2018 $ 644 2019 644 2020 614 2021 475 2022 408 Thereafter 1,904 Total $ 4,689 |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | 6. Long-Term Debt Long-term debt consists of the following: December 31, 2017 December 31, 2016 (In thousands) 2016 Revolving Credit Facility (1) $ 75,000 $ - 7.0% Senior Subordinated Notes due 2022 (the “7.0% Notes”) (2) - 200,000 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 - Mortgage notes to finance companies - fixed rate, bearing interest from 3.51% to 7.03% 199,972 176,369 Mortgage notes to finance companies - variable rate, bearing interest at 1.50 to 2.90 percentage points above one-month or three-month LIBOR 219,719 227,342 Net debt discount and premium (3) - (1,258 ) Debt issuance costs (13,208 ) (13,328 ) Other 3,947 4,280 Total debt $ 1,024,703 $ 882,678 Less current maturities (61,314 ) (43,003 ) Long-term debt $ 963,389 $ 839,675 (1) The interest rate on the 2016 Revolving Credit Facility was 225 basis points above LIBOR at December 31, 2017 and 2016. (2) Sonic repurchased all of the 7.0% Notes outstanding on March 27, 2017. See the heading “7.0% Notes” below for further information. (3) Long-term debt at December 31, 2016 includes a $1.1 million discount associated with the 7.0% Notes and a $0.2 million discount associated with mortgage notes payable. Future maturities of long-term debt are as follows: Principal/ Net of Discount/ Premium (1) Year Ending December 31, (In thousands) 2018 $ 61,314 2019 25,179 2020 57,919 2021 126,532 2022 40,617 Thereafter 726,350 Total $ 1,037,911 (1) There were no premium/discount amounts recorded at December 31, 2017. 2016 Credit Facilities On November 30, 2016, Sonic 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. The 2016 Credit Facilities extended the scheduled maturity date, increased availability under the 2016 Revolving Credit Facility by $25.0 million and increased availability under the 2016 Floor Plan Facilities by $215.0 million, among other things. 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 Sonic’s option up to $300.0 million upon satisfaction of certain conditions. Based on balances as of December 31, 2017, the 2016 Revolving Borrowing Base was approximately $247.6 million. As of December 31, 2017, Sonic had approximately $75.0 million outstanding borrowings and approximately $17.3 million in outstanding letters of credit under the 2016 Revolving Credit Facility, resulting in total borrowing availability of approximately $155.3 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. Sonic 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 Sonic requests, 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 Sonic and certain of its subsidiaries and are secured by a pledge of substantially all of the assets of Sonic and its subsidiaries. The amounts outstanding under the 2016 Credit Facilities bear interest at variable rates based on specified percentages above LIBOR. Sonic 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 Sonic’s 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 Sonic remains in compliance with all financial covenants under the 2016 Credit Facilities. 7.0% Notes On July 2, 2012, Sonic issued $200.0 million in aggregate principal amount of unsecured senior subordinated 7.0% Notes which were scheduled to mature on July 15, 2022. On March 27, 2017, Sonic repurchased all of the outstanding 7.0% Notes using net proceeds from the issuance of the 6.125% Notes. Sonic paid approximately $213.7 million in cash, including an early redemption premium and accrued and unpaid interest, to extinguish the 7.0% Notes and recognized a loss of approximately $14.6 million on the repurchase of the 7.0% Notes, recorded in other income (expense), net in the accompanying consolidated statements of income. For the period during which both the 7.0% Notes and the 6.125% Notes were outstanding, Sonic incurred double-carry interest expense of approximately $0.7 million. 6.125% Notes On March 10, 2017, Sonic 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. Sonic used the net proceeds from the issuance of the 6.125% Notes to repurchase all of the outstanding 7.0% Notes on March 27, 2017. Remaining proceeds from the issuance of the 6.125% Notes will be used for general corporate purposes. The 6.125% Notes are guaranteed by Sonic’s domestic operating subsidiaries. Interest on the 6.125% Notes is payable semi-annually in arrears on March 15 and September 15 of each year. Sonic 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, Sonic 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, Sonic 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 Sonic 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 Sonic undergoes 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. Sonic has agreed not to pledge any assets to any third-party lender of senior subordinated debt except under certain limited circumstances. Sonic also has 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 Sonic’s ability to pay quarterly cash dividends on its Class A and Class B common stock in excess of $0.12 per share. Sonic may only pay quarterly cash dividends on its Class A and Class B common stock if Sonic complies with the terms of the indenture governing the 6.125% Notes. Sonic was in compliance with all restrictive covenants in the indenture governing the 6.125% Notes as of December 31, 2017. Sonic’s 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 Sonic’s covenants under the 6.125% Notes; and (3) certain defaults under other agreements under which Sonic or its subsidiaries have outstanding indebtedness in excess of $50.0 million. 5.0% Notes On May 9, 2013, Sonic 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. Sonic 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. The 5.0% Notes are guaranteed by Sonic’s domestic operating subsidiaries. Interest on the 5.0% Notes is payable semi-annually in arrears on May 15 and November 15 of each year. During 2016, Sonic repurchased approximately $10.7 million of its outstanding 5.0% Notes for approximately $10.6 million in cash, plus accrued and unpaid interest related thereto. Sonic 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 % Before May 15, 2018, Sonic may redeem all or a part of the aggregate principal amount of the 5.0% Notes at a redemption price equal to 100% of the principal amount of the 5.0% Notes redeemed, plus the Applicable Premium (as defined in the indenture governing the 5.0% Notes) and any accrued and unpaid interest, if any, to the redemption date. The indenture governing the 5.0% Notes also provides that holders of the 5.0% Notes may require Sonic 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 Sonic undergoes 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. Sonic has agreed not to pledge any assets to any third-party lender of senior subordinated debt except under certain limited circumstances. Sonic also has 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 Sonic’s ability to pay quarterly cash dividends on Sonic’s Class A and Class B common stock in excess of $0.10 per share. Sonic may only pay quarterly cash dividends on Sonic’s Class A and Class B common stock if Sonic complies with the terms of the indenture governing the 5.0% Notes. Sonic was in compliance with all restrictive covenants in the indenture governing the 5.0% Notes as of December 31, 2017. Sonic’s 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 Sonic’s covenants under the 5.0% Notes; and (3) certain defaults under other agreements under which Sonic or its subsidiaries have outstanding indebtedness in excess of $50.0 million. Mortgage Notes During 2017, Sonic obtained approximately $52.5 million in mortgage financing related to 10 of its operating locations. As of December 31, 2017, the weighted average interest rate was 4.22% and the total outstanding mortgage principal balance was approximately $419.7 million, related to approximately 45% of Sonic’s 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 2018 and 2033. Covenants Sonic 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 the payment of dividends, capital expenditures and material dispositions of assets, as well as other customary covenants and default provisions. Sonic was in compliance with the covenants under the 2016 Credit Facilities as of December 31, 2017. 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, 2017 actual 1.13 1.65 4.72 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, Sonic 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 its debt agreements, as of December 31, 2017, Sonic had at least $148.7 million of net income and retained earnings free of such restrictions. Sonic was in compliance with all restrictive covenants as of December 31, 2017. In addition, many of Sonic’s facility leases are governed by a guarantee agreement between the landlord and Sonic 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, 2017, the ratio was 3.85 to 1.00. Derivative Instruments and Hedging Activities Sonic has interest rate cash flow swap agreements to effectively convert a portion of its LIBOR-based variable rate debt to a fixed rate. In addition, Sonic has interest rate cap agreements to limit its exposure to increases in LIBOR rates above certain levels. Under the terms of these cash flow swaps and interest rate caps, interest rates reset monthly. The fair value of these interest rate swap and rate cap positions at December 31, 2017 was a net asset of approximately $4.7 million, with approximately $5.1 million included in other assets and approximately $0.9 million included in other current 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. was a net liability of approximately $3.7 million, with approximately $4.1 million included in other accrued liabilities and approximately $2.4 million included in other long-term liabilities in the accompanying consolidated balance sheets, offset partially by approximately $2.8 million included in other assets in the accompanying consolidated balance sheets. Notional Amount Pay Rate Receive Rate (1) Maturing Date (In millions) $ 250.0 1.887% one-month LIBOR June 30, 2018 $ 125.0 1.900% one-month LIBOR July 1, 2018 $ 50.0 (2) 2.320% one-month LIBOR July 1, 2019 $ 200.0 (2) 2.313% one-month LIBOR July 1, 2019 $ 100.0 (3) 1.384% one-month LIBOR July 1, 2020 $ 125.0 (2) 1.158% one-month LIBOR July 1, 2019 $ 150.0 (3) 1.310% one-month LIBOR July 1, 2020 $ 125.0 1.020% one-month LIBOR July 1, 2018 $ 62.5 (4) 2.000% (5) one-month LIBOR July 1, 2021 $ 62.5 (4) 2.000% (5) one-month LIBOR July 1, 2021 $ 62.5 (4) 2.000% (5) one-month LIBOR July 1, 2021 $ 62.5 (4) 2.000% (5) one-month LIBOR July 1, 2021 (1) The one-month LIBOR rate was approximately1.564% at December 31, 2017. (2) The effective date of these forward-starting swaps is July 2, 2018. (3) The effective date of these forward-starting swaps is July 1, 2019. (4) The notional amount of these interest rate caps adjusts over the term of the agreement as follows: $62.5 million from September 1, 2017 to June 30, 2018, $93.75 million from July 1, 2018 to June 30, 2019, $78.125 million from July 1, 2019 to June 30, 2020 and $37.5 million from July 1, 2020 to July 1, 2021. (5) 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 Sonic 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. For the interest rate swaps and rate caps that qualify as cash flow hedges, 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 expense (the difference between interest paid and interest received) related to these instruments was approximately $3.1 million, $5.5 million and $7.8 million for 2017, 2016 and 2015, respectively, and is included in interest expense, other, net in the accompanying consolidated statements of income and the interest paid amount is disclosed in the supplemental disclosures of cash flow information in the accompanying consolidated statements of cash flows. The estimated net expense expected to be reclassified out of accumulated other comprehensive income (loss) into results of operations during the next 12 months is approximately $0.1 million. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. Income Taxes The provision for income taxes for continuing operations - benefit (expense) consists of the following: Year Ended December 31, 2017 2016 2015 (In thousands) Current: Federal $ (34,877 ) $ (43,655 ) $ (36,241 ) State (7,292 ) (3,766 ) (6,414 ) Total current (42,169 ) (47,421 ) (42,655 ) Deferred 28,198 (13,275 ) (14,410 ) Total provision for income taxes for continuing operations - benefit (expense) $ (13,971 ) $ (60,696 ) $ (57,065 ) The provision for income taxes for continuing operations – (benefit) expense includes a $28.4 million benefit 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 Sonic’s federal and state overall effective income tax rate from continuing operations is as follows: Year Ended December 31, 2017 2016 2015 U.S. statutory federal income tax rate 35.00 % 35.00 % 35.00 % Effective state income tax rate 4.58 % 2.04 % 3.26 % Valuation allowance adjustments (0.59 %) 0.85 % (0.45 %) Uncertain tax positions 0.71 % 0.17 % (0.14 %) Effect of change in future U.S. statutory federal income tax rate (26.27 %) 0.00 % 0.00 % Other (0.51 %) 1.05 % 1.64 % Effective income tax rate 12.92 % 39.11 % 39.31 % 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 Sonic’s deferred tax assets and liabilities are as follows: December 31, 2017 December 31, 2016 (In thousands) Deferred tax assets: Accruals and reserves $ 24,320 $ 34,884 State net operating loss carryforwards 12,689 10,777 Fair value of interest rate swaps - 1,406 Interest and state taxes associated with the liability for uncertain income tax positions 1,126 1,746 Other 712 774 Total deferred tax assets 38,847 49,587 Deferred tax liabilities: Fair value of interest rate swaps (696 ) - Basis difference in inventories (965 ) (1,506 ) Basis difference in property and equipment (2,467 ) (9,335 ) Basis difference in goodwill (73,803 ) (101,999 ) Other (1,636 ) (3,540 ) Total deferred tax liabilities (79,567 ) (116,380 ) Valuation allowance (7,985 ) (7,211 ) Net deferred tax asset (liability) $ (48,705 ) $ (74,004 ) Net long-term deferred tax asset balances were approximately $2.9 million and $2.4 million at December 31, 2017 and 2016, respectively, and are recorded in other assets on the accompanying consolidated balance sheets. Net long-term deferred tax liability balances were approximately $51.6 million and $76.4 million at December 31, 2017 and 2016, respectively, and are recorded in deferred income taxes on the accompanying consolidated balance sheets. Sonic has approximately $282.0 million in gross state net operating loss carryforwards that will expire between 2018 and 2037. 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, 2017, Sonic had recorded a valuation allowance amount of approximately $8.0 million related to certain state net operating loss carryforward deferred tax assets as Sonic determined that it 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, 2017, Sonic had liabilities of approximately $5.2 million recorded related to unrecognized tax benefits. Included in the liabilities related to unrecognized tax benefits at January 1, 2017, was approximately $0.8 million related to interest and penalties which Sonic has estimated may be paid as a result of its tax positions. It is Sonic’s 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 Sonic’s unrecognized tax benefits is presented below. 2017 2016 2015 (In thousands) Unrecognized tax benefit liability, January 1 (1) $ 4,357 $ 4,755 $ 5,740 New positions 653 - - Prior period positions: Increases 491 939 175 Decreases (539 ) (415 ) - Increases from current period positions 692 615 184 Settlements - - - Lapse of statute of limitations (781 ) (1,290 ) (1,114 ) Other (228 ) (247 ) (230 ) Unrecognized tax benefit liability, December 31 (2) $ 4,645 $ 4,357 $ 4,755 (1) Excludes accrued interest and penalties of $0.8 million, $1.1 million and $1.2 million at January 1, 2017, 2016 and 2015, respectively. (2) Excludes accrued interest and penalties of $0.6 million, $0.8 million and $1.1 million at December 31, 2017, 2016 and 2015, respectively. Amount presented is net of state net operating losses of $0.1 million, $0.3 million and $0.6 million at December 31, 2017, 2016 and 2015, respectively. Approximately $4.7 million and $3.3 million of the unrecognized tax benefits as of December 31, 2017 and 2016, respectively, would ultimately affect the income tax rate if recognized. Included in the December 31, 2017 recorded liability is approximately $0.6 million related to interest and penalties which Sonic has estimated may be paid as a result of its tax positions. Sonic does not anticipate any significant changes in its 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 2014 through 2017 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 2013 to 2017. The primary effect of the change in the U.S. federal income tax rate from 35% to 21% as required by the 2017 Tax Cuts and Jobs Act (the “Act”) related to the adjustment of deferred income tax balances. In periods prior to 2018, 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%. Because of the Act, at December 31, 2017, the reversal of deferred income tax asset and liabilities in subsequent periods is recorded assuming a federal income tax rate of 21%. There were no significant provisional amounts considered in Sonic’s recorded income tax balances at December 31, 2017. However, as the Act was signed into law on December 22, 2017, clarifications of the Act’s provisions may be issued in 2018 that alter Sonic’s 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, 2017 | |
Related Party Transactions [Abstract] | |
Related Parties | 8. Related Parties Certain of Sonic’s 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 Sonic’s 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 Sonic dealerships were approximately $1.9 million, $2.1 million and $2.1 million in 2017, 2016 and 2015, respectively. Sonic 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 2017, 2016 and 2015 and (2) vehicle sales to various SMI subsidiaries for approximately $0.2 million in both 2017 and 2016 and $0.1 million in 2015. Sonic participates in various aircraft-related transactions with Sonic Financial Corporation (“SFC”). Such transactions include, but are not limited to, the use of aircraft owned by SFC for business-related travel by Sonic executives, a management agreement with SFC for storage and maintenance of aircraft leased by Sonic from unrelated third parties and the use of Sonic’s aircraft for business-related travel by certain affiliates of SFC. Sonic incurred net expenses of approximately $0.4 million, $0.5 million and $0.6 million in 2017, 2016 and 2015, 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, 2017 | |
Earnings Per Share [Abstract] | |
Capital Structure and Per Share Data | 9. Capital Structure and Per Share Data Preferred Stock - Sonic has 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 the Board of Directors. The 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, 2017, 2016 and 2015. Common Stock - Sonic has two classes of common stock. Sonic has 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. Sonic has 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 Sonic’s charter. The two classes of common stock share equally in dividends and in the event of liquidation. Share Repurchases - Prior to December 31, 2017, Sonic’s Board of Directors had authorized Sonic to expend up to $695.0 million to repurchase shares of its Class A common stock. As of December 31, 2017, Sonic had repurchased a total of approximately 32.3 million shares of Class A common stock at an average price per share of approximately $17.76 and had redeemed 13,801.5 shares of the Preferred Stock at an average price of $1,000 per share. As of December 31, 2017, Sonic had approximately $107.7 million remaining under the Board’s authorization. Per Share Data - The calculation of diluted earnings per share considers the potential dilutive effect of stock options and shares under Sonic’s stock compensation plans and Class A common stock purchase warrants. Certain of Sonic’s 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 2017, 2016 and 2015: Year Ended December 31, 2017 Income (Loss) Income (Loss) From Continuing From Discontinued Net Operations Operations Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount 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 Operations Operations Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (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 (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 Year Ended December 31, 2015 Income (Loss) Income (Loss) From Continuing From Discontinued Net Operations Operations Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) Earnings (loss) and shares 50,489 $ 88,091 $ (1,780 ) $ 86,311 Effect of participating securities: Non-vested restricted stock and restricted stock units (36 ) - (36 ) Basic earnings (loss) and shares 50,489 $ 88,055 $ 1.74 $ (1,780 ) $ (0.03 ) $ 86,275 $ 1.71 Effect of dilutive securities: Stock compensation plans 394 Diluted earnings (loss) and shares 50,883 $ 88,055 $ 1.73 $ (1,780 ) $ (0.03 ) $ 86,275 $ 1.70 In addition to the stock options included in the tables above, options to purchase approximately 0.2 million and 0.4 million shares of Class A common stock were outstanding as of December 31, 2016 and 2015, respectively, but were not included in the computation of diluted net income per share because the options were not dilutive. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2017 | |
Compensation And Retirement Disclosure [Abstract] | |
Employee Benefit Plans | 10. Employee Benefit Plans Substantially all of the employees of Sonic are eligible to participate in a 401(k) plan. Contributions by Sonic to the 401(k) plan were approximately $8.0 million, $8.0 million and $7.7 million in 2017, 2016 and 2015, respectively. Stock Compensation Plans Sonic currently has three active stock compensation plans: the Sonic Automotive, Inc. 2004 Stock Incentive Plan (the “2004 Plan”), The Stock Plans were adopted by the Board of Directors in order to attract and retain key personnel. Under the 2012 Plan and the 2004 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 Sonic. The options are granted at the fair market value of Sonic’s 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 and the 2004 Plan also authorized the issuance of restricted stock awards and restricted stock units. Restricted stock award and restricted stock unit grants under the 2012 Plan and the 2004 Plan typically vest over a period ranging from one to three years, but may be longer in certain cases. The 2012 Formula Plan provides for grants of restricted stock awards or deferred restricted stock units to non-employee directors and restrictions on those shares expire on the earlier of the first anniversary of the grant date or the day before the next annual meeting of Sonic’s stockholders. Individuals holding non-vested restricted stock awards under the 2012 Plan, the 2012 Formula Plan and the 2004 Plan have voting rights and certain grants may receive dividends on non-vested shares. Individuals holding restricted stock units as of December 31, 2017 granted under the 2012 Plan and the 2004 Plan do not have voting or dividend rights. Sonic issues new shares of Class A common stock to employees and directors to satisfy its option exercise and stock grant obligations. To offset the effects of these transactions, Sonic has historically repurchased shares of its Class A common stock after considering cash flow, market conditions and other factors. 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, 2016 439 $ 1.81 - 30.07 $ 13.42 1.4 $ 5,327 Exercised (25 ) $ 1.81 - 1.81 $ 1.81 Forfeited (186 ) $ 28.04 - 30.07 $ 29.14 Balance at December 31, 2017 228 $ 1.81 - 1.81 $ 1.81 1.3 $ 3,787 Exercisable 228 $ 1.81 - 1.81 $ 1.81 1.3 $ 3,787 Year Ended December 31, 2017 2016 2015 (In thousands) Intrinsic value of stock options exercised $ 425 $ 250 $ 2,511 Sonic recognizes 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 2017, 2016 or 2015 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, 2016 2,180 $ 20.86 Granted 600 $ 22.88 Forfeited (131 ) $ 16.59 Vested (450 ) $ 20.42 Balance at December 31, 2017 2,199 $ 21.76 During 2017, approximately 560,000 restricted stock units were awarded to Sonic’s executive officers and other key associates under the 2012 Plan. These awards were made in connection with establishing the objective performance criteria for 2017 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 2017, continuation of employment and compliance with any restrictive covenants contained in an agreement between Sonic and the respective executive officer or other key associate. Also in 2017, approximately 40,000 non-vested restricted stock awards were granted to Sonic’s 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 Sonic’s stockholders. Sonic recognized compensation expense within selling, general and administrative expenses related to restricted stock units and restricted stock awards of approximately $11.1 million, $11.2 million and $9.8 million in 2017, 2016 and 2015, respectively. Tax benefits recognized related to restricted stock units and restricted stock awards compensation expense were approximately $4.2 million, $4.2 million and $3.7 million for 2017, 2016 and 2015, respectively. Total compensation cost related to non-vested restricted stock units and restricted stock awards not yet recognized at December 31, 2017 was approximately $34.2 Supplemental Executive Retirement Plan On December 7, 2009, the Compensation Committee of Sonic’s 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 nonqualified deferred compensation plan that is unfunded for federal tax purposes. The SERP included 12 active or former members of senior management at December 31, 2017. 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 Sonic’s tax-qualified and other nonqualified deferred compensation plans. The following table sets forth the status of the SERP: Year Ended December 31, 2017 2016 (In thousands) Change in projected benefit obligation: Obligation at January 1, $ 11,233 $ 9,234 Service cost 1,711 1,590 Interest cost 448 383 Actuarial loss (gain) 429 295 Amendments/settlements/curtailments loss (gain) - - Benefits paid (265 ) (269 ) Obligation at December 31, (1) $ 13,556 $ 11,233 Accumulated benefit obligation $ 10,204 $ 8,557 (1) Approximately $13.3 million is included in other long-term liabilities and approximately $0.3 million is included in other accrued liabilities in the accompanying consolidated balance sheets. Year Ended December 31, 2017 2016 (In thousands) Change in fair value of plan assets: Plan assets at January 1, $ - $ - Actual return on plan assets - - Employer contributions 265 269 Benefits paid (265 ) (269 ) Plan assets at December 31, - - Funded status recognized $ (13,556 ) $ (11,233 ) The following table provides the cost components of the SERP: Year Ended December 31, 2017 2016 (In thousands) Service cost $ 1,711 $ 1,590 Interest cost 448 383 Net pension expense (benefit) $ 2,159 $ 1,973 The weighted average assumptions used to determine the benefit obligation and net periodic benefit costs consist of: As of December 31, 2017 2016 Discount rate 3.50 % 4.04 % 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) 2018 $ 265 2019 $ 265 2020 $ 363 2021 $ 363 2022 $ 363 2023 - 2027 $ 1,968 Multiemployer Benefit Plan Six of Sonic’s dealership subsidiaries currently make fixed-dollar contributions to the Automotive Industries Pension Plan (the “AI Pension Plan”) pursuant to collective bargaining agreements between Sonic’s 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 Sonic’s six dealership subsidiaries are among approximately 201 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 Sonic chooses to stop participating in the multiemployer pension plan, Sonic may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability. Sonic’s participation in the AI Pension Plan for 2017, 2016 and 2015 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, 2017 and 2016 is for the plan’s year-end at December 31, 2016 and 2015, respectively. The zone status is based on information that Sonic 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 2.6% from December 31, 2015 to December 31, 2016 and increased 0.5% from December 31, 2016 to December 31, 2017, affecting the period-to-period comparability of the contributions for 2017, 2016 and 2015. Pension Protection Act Zone Status FIP/RP Status Sonic Contributions Collective Bargaining Pension EIN/Pension Pending / Year Ended December 31, Surcharge Agreement Fund Plan Number 2017 2016 Implemented 2017 2016 2015 Imposed Expiration Date (1) (In thousands) AI Pension Plan 94-1133245 Red Red RP Implemented $ 171 $ 150 $ 140 Yes Between May 21, 2018 and November 15, 2018 (1) Collective bargaining agreement expiration dates vary by union and dealership. Dates shown represent the range of the earliest and latest stated expirations for Sonic’s union employees, noting certain of Sonic’s collective bargaining agreements are expired as of December 31, 2017 and are currently under negotiation. Sonic’s 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, 2016 and December 31, 2015. In June 2006, Sonic received information that the AI Pension Plan was substantially underfunded as of December 31, 2005. In July 2007, Sonic 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 rehabilitation plan 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 rehabilitation plan. 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 Sonic. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 11. Fair Value Measurements In determining fair value, Sonic uses 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 Sonic. Unobservable inputs are inputs that reflect Sonic’s 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 Sonic has the ability to access. Assets utilizing Level 1 inputs include marketable securities that are actively traded, including Sonic’s 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 Sonic 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, Sonic’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date. Sonic uses 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 Sonic’s control. Assets and liabilities recorded at fair value in the accompanying consolidated balance sheets as of December 31, 2017 and 2016 are as follows: Fair Value Based on Significant Other Observable Inputs (Level 2) December 31, 2017 December 31, 2016 (In thousands) Assets: Cash surrender value of life insurance policies (1) $ 33,747 $ 31,475 Cash flow swaps and interest rate caps designated as hedges (2) 5,968 2,772 Total assets $ 39,715 $ 34,247 Liabilities: Cash flow swaps designated as hedges (3) $ 1,286 $ 6,135 Cash flow swaps not designated as hedges (4) - 346 Deferred compensation plan (5) 18,417 14,824 Total liabilities $ 19,703 $ 21,305 (1) Included in other assets in the accompanying consolidated balance sheets. (2) 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. As of December 31, 2016, approximately $2.8 million was included in other assets 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. As of December 31, 2016, approximately $3.7 million and $2.4 million were included in other accrued liabilities and other long-term liabilities, respectively, in the accompanying consolidated balance sheets. (4) Included in other accrued liabilities in the accompanying consolidated balance sheets. (5) 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, 2017, 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.” Significant Unobservable Total Gains / Inputs (Losses) for the Balance as of (Level 3) as of Year Ended December 31, 2017 December 31, 2017 December 31, 2017 (In thousands) Long-lived assets held and used (1) $ 1,146,881 $ 1,146,881 $ (4,894 ) Goodwill (2) $ 525,780 $ 525,780 $ (899 ) Franchise assets (2) $ 69,900 $ 69,900 $ (3,600 ) (1) See Note 1, “Description of Business and Summary of Significant Accounting Policies,” and Note 4, “Property and Equipment,” for discussion. (2) See Note 1, “Description of Business and Summary of Significant Accounting Policies,” and Note 5, “Intangible Assets and Goodwill,” for discussion. As of December 31, 2017 and 2016, the fair values of Sonic’s 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, approximate 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 Sonic’s fixed rate long-term debt were as follows: December 31, 2017 December 31, 2016 Fair Value Carrying Value Fair Value Carrying Value (In thousands) 7.0% Notes (1) (2) $ - $ - $ 211,000 $ 198,871 5.0% Notes (1) $ 279,148 $ 289,273 $ 284,934 $ 289,273 6.125% Notes (1) $ 248,750 $ 250,000 $ - $ - Mortgage Notes (3) $ 203,031 $ 199,972 $ 185,979 $ 176,369 Other (3) $ 3,760 $ 3,947 $ 4,057 $ 4,280 (1) As determined by market quotations as of December 31, 2017 and 2016, respectively (Level 1). (2) Sonic repurchased all of the 7.0% Notes outstanding on March 27, 2017. (3) As determined by discounted cash flows (Level 3). |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 12. Commitments and Contingencies Facility and Equipment Leases For 2017, Sonic recognized approximately $2.2 million of lease exit expense, which consists of $0.6 million of interest expense and $1.6 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, 2016 $ 9,790 Lease exit expense (1) 2,157 Payments (2) (3,592 ) Lease buyout/other (3) (1,877 ) Balance at December 31, 2017 $ 6,478 (1) Expense of approximately $0.1 million is recorded in interest expense, other, net and expense of approximately $0.9 million is recorded in selling, general and administrative expenses in the accompanying consolidated statements of income. In addition, expense of approximately $1.2 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 $1.1 million in continuing operations and $2.5 million 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. Sonic leases facilities for the majority of its dealership operations under operating lease arrangements. These facility lease arrangements normally have 15- to 20-year terms with one or two five- to 10-year renewal options and do not contain provisions for contingent rent related to the dealership’s operations. Many of the leases are subject to the provisions of a guaranty and subordination agreement that contains financial and affirmative covenants. Sonic was in compliance with these covenants at December 31, 2017. Approximately 10% of these facility leases have payments that may vary based on interest rates. 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) 2018 $ 86,941 $ (10,535 ) 2019 $ 73,080 $ (8,828 ) 2020 $ 47,761 $ (7,191 ) 2021 $ 35,636 $ (5,827 ) 2022 $ 26,760 $ (4,377 ) Thereafter $ 95,949 $ (10,982 ) Total lease expense for continuing operations for 2017, 2016 and 2015 was approximately $100.6 million, $ 94.6 Many of Sonic’s 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 its 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, 2017 actual 1.13 1.65 4.72 3.85 Guarantees and Indemnifications In accordance with the terms of Sonic’s operating lease agreements, Sonic’s 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, Sonic has 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 Sonic’s subsidiaries have assigned or sublet to the buyer its 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 in the table above. In the event the assignees or sublessees do not perform their obligations, Sonic remains liable for the lease payments. As of December 31, 2017, the total amount relating to this risk was approximately $47.7 million, which is the total of the future receipts from subleases in the table above under the heading “Facility and Equipment Leases.” However, there are situations in which Sonic has assigned a lease to the buyer and Sonic was not able to obtain a release from the landlord. In these situations, although Sonic is no longer the primary obligor, Sonic is 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 Sonic and its subsidiaries in the event of non-performance. Additionally, in connection with certain dispositions, Sonic has 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 Sonic’s dealerships, Sonic generally agrees 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 Sonic’s exposure with respect to environmental remediation and repairs is difficult to quantify, Sonic’s maximum exposure associated with these general indemnifications was approximately $5.0 million at December 31, 2017. These indemnifications expire within a period of one year following the date of sale. The estimated fair value of these indemnifications was not material and the amount recorded for this contingency was not significant at December 31, 2017. Sonic also guarantees the floor plan commitments of its 50%-owned joint venture, the amount of which was approximately $2.8 million at December 31, 2017. Legal Matters Sonic is involved, and expects to continue to be involved, in numerous legal and administrative proceedings arising out of the conduct of its 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 Sonic vigorously defends itself in all legal and administrative proceedings, the outcomes of pending and future proceedings arising out of the conduct of Sonic’s 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 Sonic’s business, financial condition, results of operations, cash flows or prospects. Included in other accrued liabilities and other long-term liabilities at December 31, 2017 was approximately $3.0 million and $0.2 million, respectively, in reserves that Sonic was holding for pending proceedings. Included in other accrued liabilities and other long-term liabilities at December 31, 2016 was approximately $0.3 million and $0.2 million, respectively, for such reserves. Except as reflected in such reserves, Sonic is 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. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | 13. Accumulated Other Comprehensive Income (Loss) The changes in accumulated other comprehensive income (loss) by component for 2017 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, 2016 $ (2,085 ) $ (177 ) $ (2,262 ) Other comprehensive income (loss) before reclassifications (1) 1,718 (266 ) 1,452 Amounts reclassified out of accumulated other comprehensive income (loss) (2) 2,117 - 2,117 Net current-period other comprehensive income (loss) 3,835 (266 ) 3,569 Balance at December 31, 2017 $ 1,750 $ (443 ) $ 1,307 (1) Net of tax expense of $1,053 related to gains on cash flow hedges and tax benefit of $163 related to the defined benefit pension plan. (2) Net of tax expense of $1,298 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 Sonic’s cash flow hedges. For further discussion of Sonic’s defined benefit pension plan, see Note 10, “Employee Benefit Plans.” |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | 14. Segment Information As of December 31, 2017, Sonic 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) stand-alone pre-owned vehicle specialty retail locations that provide customers an opportunity to search, buy, service, finance and sell pre-owned vehicles (the “Pre-Owned Stores 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 Sonic’s chief operating decision maker to assess operating performance and allocate resources. Sonic’s chief operating decision maker is a group of three individuals consisting of: (1) the Company’s Chief Executive Officer and President; (2) the Company’s Executive Vice President and Chief Financial Officer; and (3) the Company’s Executive Vice President of Operations. Sonic has determined that its operating segments also represent its 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, 2017 2016 2015 (In thousands) Revenues: Franchised Dealerships Segment $ 9,612,899 $ 9,590,752 $ 9,547,236 Pre-Owned Stores Segment 254,309 141,027 77,063 Total consolidated revenues $ 9,867,208 $ 9,731,779 $ 9,624,299 Year Ended December 31, 2017 2016 2015 (In thousands) Segment income (loss) (1): Franchised Dealerships Segment $ 196,897 $ 218,769 $ 213,224 Pre-Owned Stores Segment (21,727 ) (13,576 ) (17,257 ) Total segment income (loss) 175,170 205,193 195,967 Interest expense, other, net (52,524 ) (50,106 ) (50,910 ) Other income (expense), net (14,522 ) 125 99 Income (loss) from continuing operations before taxes $ 108,124 $ 155,212 $ 145,156 (1) Segment income (loss) for each segment is defined as operating income less floor plan interest expense. Year Ended December 31, 2017 2016 2015 (In thousands) Floor plan interest expense: Franchised Dealerships Segment $ 35,030 $ 26,631 $ 20,727 Pre-Owned Stores Segment 1,365 1,085 599 Total floor plan interest expense $ 36,395 $ 27,716 $ 21,326 Year Ended December 31, 2017 2016 2015 (In thousands) Depreciation and amortization: Franchised Dealerships Segment $ 83,741 $ 73,591 $ 65,766 Pre-Owned Stores Segment 5,203 3,855 3,033 Total depreciation and amortization $ 88,944 $ 77,446 $ 68,799 Year Ended December 31, 2017 2016 2015 (In thousands) Capital expenditures: Franchised Dealerships Segment $ 195,220 $ 166,405 $ 148,593 Pre-Owned Stores Segment 39,025 39,827 24,656 Total capital expenditures $ 234,245 $ 206,232 $ 173,249 December 31, 2017 2016 (In thousands) Assets: Franchised Dealerships Segment $ 1,930,336 $ 2,079,297 Pre-Owned Stores Segment 200,500 144,605 Corporate and other: Cash and Cash Equivalents 6,352 3,108 Goodwill, Net 525,780 472,437 Other Intangible Assets, Net 74,589 80,233 Other Corporate and Other Assets 1,080,961 859,656 Total assets $ 3,818,518 $ 3,639,336 |
Summary of Quarterly Financial
Summary of Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Summary of Quarterly Financial Data (Unaudited) | 15. Summary of Quarterly Financial Data (Unaudited) The following table summarizes Sonic’s results of operations as presented in the accompanying consolidated statements of income by quarter for 2017 and 2016: First Quarter Second Quarter Third Quarter Fourth Quarter (In thousands, except per share data) 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 Year Ended December 31, 2016 Total revenues (1) $ 2,234,626 $ 2,382,312 $ 2,557,928 $ 2,556,913 Gross profit (1) $ 345,150 $ 353,305 $ 359,085 $ 371,734 Net income (loss) (2) $ 14,624 $ 22,822 $ 18,111 $ 37,636 Earnings (loss) per common share - Basic (2) (3) $ 0.31 $ 0.50 $ 0.40 $ 0.84 Earnings (loss) per common share - Diluted (2) (3) $ 0.31 $ 0.50 $ 0.40 $ 0.83 (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. 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. Parts and service demand remains more stable throughout the year. 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 $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. Net income for the fourth quarter ended December 31, 2016 includes a pre-tax benefit of approximately $14.8 million related to a manufacturer legal settlement and a pre-tax benefit of approximately $0.4 million related to storm damage and other accrual adjustments, offset partially by pre-tax impairment charges of approximately $1.8 million primarily related to the write-off of certain construction project costs and pre-tax charges of approximately $0.5 million related to lease exit accrual adjustments in discontinued operations. Net income for the third quarter ended September 30, 2016 includes approximately $6.1 million of pre-tax impairment charges related to dealership facility construction projects and pre-tax charges of $1.0 million related to lease exit accrual adjustments in discontinued operations, offset partially by a pre-tax benefit of approximately $2.3 million related to storm damage. Net income for the first quarter ended March 31, 2016 includes pre-tax charges of approximately $6.0 million related to storm damage, offset partially by a pre-tax benefit of approximately $0.5 million related to lease exit accrual adjustments in discontinued operations. |
Description of Business and S25
Description of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Organization and Business | Organization and Business - Sonic Automotive, Inc. (“Sonic” or the “Company”) is one of the largest automotive retailers in the United States (as measured by total revenue). As of December 31, 2017, Sonic operated 114 new vehicle franchises in 13 states (representing 23 different brands of cars and light trucks), 18 collision repair centers and nine pre-owned stores. As a result of the way management operates the business, Sonic had two operating segments as of December 31, 2017: (1) the Franchised Dealerships Segment and (2) the Pre-Owned Stores Segment. For management and operational reporting purposes, Sonic groups certain franchises together that share management and inventory (principally used vehicles) into “stores.” As of December 31, 2017, Sonic operated 103 stores in the Franchised Dealerships Segment and nine stores in the Pre-Owned Stores Segment. 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, “F&I”) for its customers. The Pre-Owned Stores Segment provides the same services (excluding new vehicle sales and manufacturer warranty repairs) in stand-alone pre-owned vehicle specialty retail locations and includes Sonic’s EchoPark stores. Sonic’s pre-owned stores business operates independently from its franchised dealerships business. |
Principles of Consolidation | Principles of Consolidation - All of Sonic’s 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 standard 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 standard must be applied using either of the following transition methods: (1) a full retrospective approach reflecting the application of the standard 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 adopting the standard recognized at the date of adoption (which requires additional footnote disclosures). These amendments are effective for reporting periods beginning after December 15, 2017. Earlier application is permitted only as of reporting periods beginning after December 15, 2016. Sonic adopted this ASU effective January 1, 2018 using the modified retrospective transition approach applied to contracts not completed as of the date of adoption, with no restatement of comparative periods and a cumulative effect adjustment to retained earnings recognized as of the date of adoption. Under the new 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; (3) determining the transaction price; (4) allocating the transaction price to the performance obligation(s) in the contract; and (5) recognizing revenue as the performance obligation(s) are satisfied. The standard also requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. 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 standard as compared with prior U.S. generally accepted accounting principles and does not expect the adoption of this standard to have a material impact on its consolidated financial statements, revenue recognition practices, accounting policies or internal controls. 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 used vehicles at wholesale auction; (4) arrangement of vehicle financing and the sale of service and other insurance contracts; and (5) the performance of vehicle maintenance and repair services and sale of related parts and accessories. As a result of its analysis 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 revenue”), both of which are subject to accelerated recognition under the new standard. While management is finalizing the cumulative effect adjustment to retained earnings, the expected impact on Sonic’s consolidated financial statements as a result of the changes in revenue recognition practices described above is not expected to be material. Management estimates that the adoption of the new revenue recognition standard will result in a net, after-tax cumulative effect adjustment to increase retained earnings of approximately $3.0 million as of January 1, 2018. In February 2016, the FASB issued ASU 2016-02 to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments in this ASU require that leases are classified as either finance or operating leases, a right-of-use asset and lease liability is recognized in the statement of financial position, and repayments are classified within operating activities in the statement of cash flows. The amendments in this ASU are to be applied using a modified retrospective approach and are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018 (early adoption is permitted). Sonic plans to adopt this ASU effective January 1, 2019. While management is still evaluating the impact of adopting the provisions of this ASU, management expects that upon adoption of this ASU, the presentation of certain items in Sonic’s consolidated financial position, cash flows and other disclosures will be materially impacted, primarily due to the recognition of a right-of-use asset and an associated liability and a change in the timing and classification of certain items in Sonic’s results of operations as a result of the derecognition of the lease liability. In March 2016, the FASB issued ASU 2016-09 to simplify several aspects of the accounting for share-based payment transactions. For public companies, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 (early adoption is permitted). Sonic adopted this ASU effective January 1, 2017. Upon adoption of this ASU, interim period and annual income tax expense is affected by stock option exercises and restricted stock and restricted stock unit vesting activity, potentially creating volatility in Sonic’s effective income tax rate from period to period. See the heading “Income Taxes” below for further discussion of the impact of the adoption of this ASU on Sonic’s effective income tax rate for 2017. In January 2017, the FASB issued ASU 2017-04 to simplify the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. For public companies, this ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 (early adoption is permitted for impairment testing dates after January 1, 2017). Sonic adopted this ASU prior to its impairment test as of October 1, 2017. In August 2017, the FASB issued ASU 2017-12 which amends the hedge accounting recognition and presentation requirements in Accounting Standards Codification (“ASC”) 815. This ASU expands and refines hedge accounting for both nonfinancial 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. Sonic is currently in the process of evaluating the effects of this pronouncement on its consolidated financial statements |
Reclassifications | Reclassifications - Prior to Sonic’s adoption of ASU 2014-08 beginning with its 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 to March 31, 2014 have not been reclassified to discontinued operations since they did not meet the criteria in ASU 2014-08. If, in future periods, Sonic determines 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 date of the accompanying consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. 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 - Sonic classifies 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 So nic is 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. Sonic was in a book overdraft position in an amount of approximately $6.9 million and $8.0 million, as of December 31, 2017 and 2016, respectively. |
Revenue Recognition | Revenue Recognition - Sonic records 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 previous heading “Recent Accounting Pronouncements” for discussion of changes to revenue recognition effective January 1, 2018 upon adoption of ASC 2014-09. Sonic arranges 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. Sonic also receives commissions from the sale of various insurance contracts and non-recourse third-party extended service contracts to customers. Sonic 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 the related contract is placed with the financial institution. Sonic also receives commissions from the sale of 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. Commission revenue from the sale of these third-party extended service contracts is recorded net of estimated chargebacks at the time of sale. As of December 31, 2017 and 2016, the amounts recorded as allowances for finance, insurance and service contract commission chargeback reserves were $20.9 million and $19.2 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 - Sonic receives floor plan assistance payments from certain manufacturers. This assistance reduces the carrying value of Sonic’s 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 $45.3 million, $45.0 million and $42.1 million for 2017, 2016 and 2015, respectively. |
Contracts in Transit | Contracts in Transit - Contracts in transit represent customer finance contracts evidencing loan agreements or lease agreements between Sonic, as creditor, and the customer, as borrower, to acquire or lease a vehicle in situations where a third-party finance source has given So nic initial, non-binding approval to assume Sonic’s 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 Sonic. Contracts in transit are included in receivables, net on the accompanying consolidated balance sheets and totaled $267.6 million and $236.4 million at December 31, 2017 and 2016, respectively. |
Accounts Receivable | Accounts Receivable - In addition to contracts in transit, Sonic’s 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 . Sonic evaluates 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, 2017 and 2016. |
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. Sonic assesses the valuation of all its vehicle and parts inventories and maintains 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, Sonic considers 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 Sonic’s network of dealerships. The risk with parts inventories is minimized by the fact that excess or obsolete parts can also be transferred within Sonic’s network of dealerships or can usually be returned to the manufacturer. Recorded inventory reserves were not significant at December 31, 2017 and 2016. |
Property and Equipment | Property and Equipment - Property and equipment are stated at cost. Depreciation and amo rtization are computed using the straight-line method over the estimated useful lives of the assets. Sonic amortizes 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 Sonic reviews 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, Sonic compares the carrying amount of the asset to the estimated undiscounted cash flows related to that asset. Sonic concludes 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 Sonic determines 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, Sonic determines 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 - Sonic utilizes 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. Sonic documents its risk management strategy and hedge effectiveness at the inception of and during the term of each hedge. As of December 31, 2017, Sonic utilized interest rate cash flow swap agreements to effectively convert a portion of its LIBOR-based variable rate debt to a fixed rate. In addition, Sonic has interest rate cap agreements to limit its 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 “Inta ngibles - 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, Sonic has two reporting units, which consist of: (1) its traditional franchised dealerships and (2) its pre-owned stores. The carrying value of Sonic’s goodwill totaled approximately $525.8 million at December 31, 2017, $465.8 million of which is related to its franchised dealerships reporting unit and $60.0 million of which is related to its pre-owned stores reporting unit. As the $60.0 million of goodwill carrying value related to the pre-owned stores reporting unit was acquired immediately preceding the testing date, Sonic evaluated impairment on a qualitative basis and determined there was no indication of impairment. For the franchised dealerships reporting unit, Sonic utilized the Market Price (“MP”) method to estimate its enterprise value as of October 1, 2017. The significant inputs in the MP method include debt value, stock price and control premium. 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 inputs 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 Sonic to record goodwill impairment. Based on the results of Sonic’s quantitative test as of October 1, 2017, its franchised dealerships reporting unit’s fair value exceeded its carrying value. As a result, Sonic was not required to record goodwill impairment for either of its 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. Sonic cla ssifies franchise and dealer agreements as indefinite lived intangible assets as it has been Sonic’s experience that renewals have occurred without substantial cost or material modifications to the underlying agreements. As such, Sonic believes that its 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, Sonic evaluates other intangible assets for impairment annually (as of October 1) or more frequently if indicators of impairment exist. Sonic utilized a discounted cash flow (“DCF”) model to estimate the fair value of the franchise assets for each of its franchises with recorded franchise assets. The significant assumptions in Sonic’s 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, Sonic develops 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. Sonic’s expectation of revenue growth is in part driven by its estimates of new vehicle industry sales volume in future periods. Sonic believes the historic and projected industry sales volume is a good indicator of growth or contraction in the retail automotive industry. Based on the October 1, 2017 impairment test, Sonic determined that the fair value of the franchise assets exceeded the carrying value of the franchise assets for all but four of its franchises, resulting in a franchise asset impairment charge of $3.6 million during 2017, 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 its definite life favorable lease assets for impairment, Sonic 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. Sonic evaluated its favorable lease assets for impairment as of October 1, 2017 and determined that no impairment was required. |
Insurance Reserves | Insurance Reserves - Sonic has 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, 2017 and 2016, Sonic had $22.0 million and $22.7 million, respectively, reserved for such programs. |
Lease Exit Accruals | Lease Exit Accruals - The majority of Sonic’s dealership properties are leased under long-term operating lease arrangements. When situations arise where the leased properties are no longe r utilized in operations, Sonic records 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 Sonic’s 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 Sonic 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 th e 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. Sonic’s management believes that the Company’s tax positions comply, in all material respects, with applicable tax law and that the Company has adequately provided for any reasonably foreseeable outcome related to these matters. From time to time, Sonic engages in transactions in which the tax consequences may be subject to uncertainty. Significant judgment is required in assessing and estimating the tax consequences of these transactions. Sonic determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, Sonic presumes that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. A tax position that does not meet the more-likely-than-not recognition threshold is measured to determine the amount of benefit to be recognized in the financial statements. The tax position is measured at the largest amount of benefit that is likely to be realized upon ultimate settlement. Sonic adjusts its estimates periodically because of ongoing examinations by and settlements with the various taxing authorities, as well as changes in tax laws, regulations and precedent. See Note 7, “Income Taxes,” for further discussion of Sonic’s uncertain tax positions. |
Concentrations of Credit and Business Risk | Concentrations of Credit and Business Risk - Financial instruments that potentially subject Sonic to concentrations of credit risk consist principally of cash on deposit with financial institutions. At tim es, 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 $102.5 million and $92.8 million at December 31, 2017 and 2016, respectively, and receivables from financial institutions (which include manufacturer-affiliated finance companies and commercial banks), totaling approximately $299.6 million and $265.3 million at December 31, 2017 and 2016, respectively. Credit risk arising from trade receivables from commercial customers is reduced by the large number of customers comprising the trade receivables balances. Sonic participates in a program with two of its manufacturer-affiliated finance companies and one commercial bank wherein Sonic maintains 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 pre-payment of notes payable - floor plan, nor is it Sonic’s intent to use this amount to offset principal amounts owed under notes payable - floor plan in the future, although Sonic has the right and ability to do so. The deposit balance of $3.0 million and $10.0 million as of December 31, 2017 and 2016, respectively, is classified in other current assets in the accompanying consolidated balance sheets, because there are restrictions on Sonic’s 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 2017, 2016 and 2015, the reduction in interest expense, floor plan was approximately $0.5 million, $0.6 million and $1.5 million, respectively. Sonic is 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 Sonic’s brand portfolio. Sonic purchases its new vehicle inventory from various automobile manufacturers at the prevailing prices available to all franchised dealerships. In addition, Sonic finances a substantial portion of its new vehicle inventory with manufacturer-affiliated finance companies. Sonic’s results of operations could be adversely affected by the manufacturers’ inability to supply Sonic’s dealerships with an adequate supply of new vehicle inventory and related floor plan financing. Sonic also has concentrations of risk related to geographic markets in which its dealerships operate. Changes in overall economic, retail automotive or regulatory environments in one or more of these markets could adversely impact Sonic’s results of operations. |
Financial Instruments and Market Risks | Financial Instruments and Market Risks - As of Dece mber 31, 2017 and 2016, the fair values of Sonic’s 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 Sonic’s fixed rate long-term debt and other financial instruments. Sonic has variable rate notes payable - floor plan, revolving credit facilities and other variable rate notes that expose Sonic to risks caused by fluctuations in the underlying interest rates. The counterparties to Sonic’s interest rate swap and interest rate cap agreements are large financial institutions. Sonic 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 - Sonic expenses advertising costs in t he period incurred, net of earned cooperative manufacturer credits that represent reimbursements for specific, identifiable and incremental advertising costs. Advertising expense amounted to approximately $61.6 million, $61.7 million and $61.6 million for 2017, 2016 and 2015, respectively, and is classified as selling, general and administrative expenses in the accompanying consolidated statements of income. Sonic has cooperative advertising reimbursement agreements with certain automobile manufacturers it represents. These agreements require Sonic 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 Sonic 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 $26.0 million, $26.2 million and $24.2 million for 2017, 2016 and 2015, respectively. |
Segment Information | Segment Information - Sonic has determined it has two reporting segments: (1) the Franchised Dealerships Segment and (2) the Pre-Owned Stores 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 Pre-Owned Stores Segment is comprised of stand-alone 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 S26
Description of Business and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
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 Dis27
Business Acquisitions and Dispositions (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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, 2017 2016 2015 (In thousands) Income (loss) from operations $ (741 ) $ (1,100 ) $ (1,421 ) Gain (loss) on disposal 6 (1 ) - Lease exit accrual adjustments and charges (1,207 ) (1,020 ) (1,462 ) Pre-tax income (loss) $ (1,942 ) $ (2,121 ) $ (2,883 ) Total revenues $ - $ - $ - |
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, 2017 2016 2015 (In thousands) Income (loss) from operations $ (2,329 ) $ (2,154 ) $ (6,214 ) Gain (loss) on disposal 11,188 (47 ) 2,748 Property and equipment impairment charges - (81 ) (6,584 ) Pre-tax income (loss) $ 8,859 $ (2,282 ) $ (10,050 ) Total revenues $ 86,111 $ 127,337 $ 215,629 |
Inventories and Related Notes28
Inventories and Related Notes Payable - Floor Plan (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Components of Inventories | Inventories consist of the following: December 31, 2017 December 31, 2016 (In thousands) New vehicles $ 1,017,523 $ 1,088,814 Used vehicles 294,496 282,288 Service loaners 130,406 128,821 Parts, accessories and other 70,320 70,778 Net inventories $ 1,512,745 $ 1,570,701 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Property Plant And Equipment [Abstract] | |
Components of Property and Equipment, Net | Property and equipment, net consists of the following: December 31, 2017 December 31, 2016 (In thousands) Land $ 370,828 $ 306,457 Building and improvements 893,768 777,766 Software and computer equipment 147,812 128,366 Parts and service equipment 105,123 93,901 Office equipment and fixtures 96,066 86,216 Company vehicles 9,723 9,107 Construction in progress 54,429 62,982 Total, at cost 1,677,749 1,464,795 Less accumulated depreciation (527,379 ) (450,184 ) Subtotal 1,150,370 1,014,611 Less assets held for sale (1) (3,489 ) (4,231 ) Property and equipment, net $ 1,146,881 $ 1,010,380 (1) Classified in other current assets in the accompanying consolidated balance sheets. |
Property and Equipment Impairment Charges | During 2017, 2016 and 2015, property and equipment impairment charges were recorded as noted in the following table: Year Ended December 31, (In thousands) 2017 $ 4,894 2016 $ 8,063 2015 $ 12,210 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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 2017 and 2016 were as follows: Franchise Assets Net Goodwill (In thousands) Balance at December 31, 2015 $ 74,900 $ 471,493 (1) Prior year acquisition allocations - 944 Balance at December 31, 2016 $ 74,900 $ 472,437 (1) Additions through current year acquisitions - 60,024 Reductions from dispositions (1,400 ) (5,737 ) Reductions from impairment (3,600 ) (900 ) Prior year acquisition allocations - (44 ) Balance at December 31, 2017 $ 69,900 $ 525,780 (2) (1) Net of accumulated impairment losses of $796,725. (2) Net of accumulated impairment losses of $797,625. |
Definite Life Intangible Assets | Definite life intangible assets consist of the following: December 31, 2017 December 31, 2016 (In thousands) Favorable lease agreements $ 17,317 $ 17,318 Less accumulated amortization (12,628 ) (11,985 ) Definite life intangibles, net $ 4,689 $ 5,333 |
Future Amortization Expense | Future amortization expense is as follows: Year Ending December 31, (In thousands) 2018 $ 644 2019 644 2020 614 2021 475 2022 408 Thereafter 1,904 Total $ 4,689 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Instrument [Line Items] | |
Long-Term Debt | Long-term debt consists of the following: December 31, 2017 December 31, 2016 (In thousands) 2016 Revolving Credit Facility (1) $ 75,000 $ - 7.0% Senior Subordinated Notes due 2022 (the “7.0% Notes”) (2) - 200,000 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 - Mortgage notes to finance companies - fixed rate, bearing interest from 3.51% to 7.03% 199,972 176,369 Mortgage notes to finance companies - variable rate, bearing interest at 1.50 to 2.90 percentage points above one-month or three-month LIBOR 219,719 227,342 Net debt discount and premium (3) - (1,258 ) Debt issuance costs (13,208 ) (13,328 ) Other 3,947 4,280 Total debt $ 1,024,703 $ 882,678 Less current maturities (61,314 ) (43,003 ) Long-term debt $ 963,389 $ 839,675 (1) The interest rate on the 2016 Revolving Credit Facility was 225 basis points above LIBOR at December 31, 2017 and 2016. (2) Sonic repurchased all of the 7.0% Notes outstanding on March 27, 2017. See the heading “7.0% Notes” below for further information. (3) Long-term debt at December 31, 2016 includes a $1.1 million discount associated with the 7.0% Notes and a $0.2 million discount associated with mortgage notes payable. |
Future Maturities of Long-Term Debt | Future maturities of long-term debt are as follows: Principal/ Net of Discount/ Premium (1) Year Ending December 31, (In thousands) 2018 $ 61,314 2019 25,179 2020 57,919 2021 126,532 2022 40,617 Thereafter 726,350 Total $ 1,037,911 |
Financial Covenants Include Required Specified Ratios | Sonic was in compliance with the covenants under the 2016 Credit Facilities as of December 31, 2017. 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, 2017 actual 1.13 1.65 4.72 |
Summary of Interest Received and Paid under Term of Cash Flow Swap | Under the terms of these agreements, Sonic will receive and pay interest based on the following: Notional Amount Pay Rate Receive Rate (1) Maturing Date (In millions) $ 250.0 1.887% one-month LIBOR June 30, 2018 $ 125.0 1.900% one-month LIBOR July 1, 2018 $ 50.0 (2) 2.320% one-month LIBOR July 1, 2019 $ 200.0 (2) 2.313% one-month LIBOR July 1, 2019 $ 100.0 (3) 1.384% one-month LIBOR July 1, 2020 $ 125.0 (2) 1.158% one-month LIBOR July 1, 2019 $ 150.0 (3) 1.310% one-month LIBOR July 1, 2020 $ 125.0 1.020% one-month LIBOR July 1, 2018 $ 62.5 (4) 2.000% (5) one-month LIBOR July 1, 2021 $ 62.5 (4) 2.000% (5) one-month LIBOR July 1, 2021 $ 62.5 (4) 2.000% (5) one-month LIBOR July 1, 2021 $ 62.5 (4) 2.000% (5) one-month LIBOR July 1, 2021 (1) The one-month LIBOR rate was approximately1.564% at December 31, 2017. (2) The effective date of these forward-starting swaps is July 2, 2018. (3) The effective date of these forward-starting swaps is July 1, 2019. (4) The notional amount of these interest rate caps adjusts over the term of the agreement as follows: $62.5 million from September 1, 2017 to June 30, 2018, $93.75 million from July 1, 2018 to June 30, 2019, $78.125 million from July 1, 2019 to June 30, 2020 and $37.5 million from July 1, 2020 to July 1, 2021. (5) 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 Sonic 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. |
6.125% Senior Subordinated Notes due 2027 [Member] | |
Debt Instrument [Line Items] | |
Redemption Price, Percentage | Sonic 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 % |
5.0% Senior Subordinated Notes due 2023 [Member] | |
Debt Instrument [Line Items] | |
Redemption Price, Percentage | Sonic 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 % |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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, 2017 2016 2015 (In thousands) Current: Federal $ (34,877 ) $ (43,655 ) $ (36,241 ) State (7,292 ) (3,766 ) (6,414 ) Total current (42,169 ) (47,421 ) (42,655 ) Deferred 28,198 (13,275 ) (14,410 ) Total provision for income taxes for continuing operations - benefit (expense) $ (13,971 ) $ (60,696 ) $ (57,065 ) |
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 Sonic’s federal and state overall effective income tax rate from continuing operations is as follows: Year Ended December 31, 2017 2016 2015 U.S. statutory federal income tax rate 35.00 % 35.00 % 35.00 % Effective state income tax rate 4.58 % 2.04 % 3.26 % Valuation allowance adjustments (0.59 %) 0.85 % (0.45 %) Uncertain tax positions 0.71 % 0.17 % (0.14 %) Effect of change in future U.S. statutory federal income tax rate (26.27 %) 0.00 % 0.00 % Other (0.51 %) 1.05 % 1.64 % Effective income tax rate 12.92 % 39.11 % 39.31 % |
Components of Deferred Tax Assets and Liabilities | Significant components of Sonic’s deferred tax assets and liabilities are as follows: December 31, 2017 December 31, 2016 (In thousands) Deferred tax assets: Accruals and reserves $ 24,320 $ 34,884 State net operating loss carryforwards 12,689 10,777 Fair value of interest rate swaps - 1,406 Interest and state taxes associated with the liability for uncertain income tax positions 1,126 1,746 Other 712 774 Total deferred tax assets 38,847 49,587 Deferred tax liabilities: Fair value of interest rate swaps (696 ) - Basis difference in inventories (965 ) (1,506 ) Basis difference in property and equipment (2,467 ) (9,335 ) Basis difference in goodwill (73,803 ) (101,999 ) Other (1,636 ) (3,540 ) Total deferred tax liabilities (79,567 ) (116,380 ) Valuation allowance (7,985 ) (7,211 ) Net deferred tax asset (liability) $ (48,705 ) $ (74,004 ) |
Summary of Changes in Liability Related to Unrecognized Tax Benefits | A summary of the changes in the liability related to Sonic’s unrecognized tax benefits is presented below. 2017 2016 2015 (In thousands) Unrecognized tax benefit liability, January 1 (1) $ 4,357 $ 4,755 $ 5,740 New positions 653 - - Prior period positions: Increases 491 939 175 Decreases (539 ) (415 ) - Increases from current period positions 692 615 184 Settlements - - - Lapse of statute of limitations (781 ) (1,290 ) (1,114 ) Other (228 ) (247 ) (230 ) Unrecognized tax benefit liability, December 31 (2) $ 4,645 $ 4,357 $ 4,755 (1) Excludes accrued interest and penalties of $0.8 million, $1.1 million and $1.2 million at January 1, 2017, 2016 and 2015, respectively. (2) Excludes accrued interest and penalties of $0.6 million, $0.8 million and $1.1 million at December 31, 2017, 2016 and 2015, respectively. Amount presented is net of state net operating losses of $0.1 million, $0.3 million and $0.6 million at December 31, 2017, 2016 and 2015, respectively. |
Capital Structure and Per Sha33
Capital Structure and Per Share Data (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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 2017, 2016 and 2015: Year Ended December 31, 2017 Income (Loss) Income (Loss) From Continuing From Discontinued Net Operations Operations Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount 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 Operations Operations Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (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 (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 Year Ended December 31, 2015 Income (Loss) Income (Loss) From Continuing From Discontinued Net Operations Operations Income (Loss) Weighted Per Per Per Average Share Share Share Shares Amount Amount Amount Amount Amount Amount (In thousands, except per share amounts) Earnings (loss) and shares 50,489 $ 88,091 $ (1,780 ) $ 86,311 Effect of participating securities: Non-vested restricted stock and restricted stock units (36 ) - (36 ) Basic earnings (loss) and shares 50,489 $ 88,055 $ 1.74 $ (1,780 ) $ (0.03 ) $ 86,275 $ 1.71 Effect of dilutive securities: Stock compensation plans 394 Diluted earnings (loss) and shares 50,883 $ 88,055 $ 1.73 $ (1,780 ) $ (0.03 ) $ 86,275 $ 1.70 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Compensation And Retirement Disclosure [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, 2016 439 $ 1.81 - 30.07 $ 13.42 1.4 $ 5,327 Exercised (25 ) $ 1.81 - 1.81 $ 1.81 Forfeited (186 ) $ 28.04 - 30.07 $ 29.14 Balance at December 31, 2017 228 $ 1.81 - 1.81 $ 1.81 1.3 $ 3,787 Exercisable 228 $ 1.81 - 1.81 $ 1.81 1.3 $ 3,787 Year Ended December 31, 2017 2016 2015 (In thousands) Intrinsic value of stock options exercised $ 425 $ 250 $ 2,511 |
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, 2016 2,180 $ 20.86 Granted 600 $ 22.88 Forfeited (131 ) $ 16.59 Vested (450 ) $ 20.42 Balance at December 31, 2017 2,199 $ 21.76 |
Status of Supplemental Executive Retirement Plan | The following table sets forth the status of the SERP: Year Ended December 31, 2017 2016 (In thousands) Change in projected benefit obligation: Obligation at January 1, $ 11,233 $ 9,234 Service cost 1,711 1,590 Interest cost 448 383 Actuarial loss (gain) 429 295 Amendments/settlements/curtailments loss (gain) - - Benefits paid (265 ) (269 ) Obligation at December 31, (1) $ 13,556 $ 11,233 Accumulated benefit obligation $ 10,204 $ 8,557 (1) Approximately $13.3 million is included in other long-term liabilities and approximately $0.3 million is included in other accrued liabilities in the accompanying consolidated balance sheets. Year Ended December 31, 2017 2016 (In thousands) Change in fair value of plan assets: Plan assets at January 1, $ - $ - Actual return on plan assets - - Employer contributions 265 269 Benefits paid (265 ) (269 ) Plan assets at December 31, - - Funded status recognized $ (13,556 ) $ (11,233 ) |
Cost Components of Supplemental Executive Retirement Plan | The following table provides the cost components of the SERP: Year Ended December 31, 2017 2016 (In thousands) Service cost $ 1,711 $ 1,590 Interest cost 448 383 Net pension expense (benefit) $ 2,159 $ 1,973 |
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, 2017 2016 Discount rate 3.50 % 4.04 % 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) 2018 $ 265 2019 $ 265 2020 $ 363 2021 $ 363 2022 $ 363 2023 - 2027 $ 1,968 |
Schedule of Multiemployer Pension Plans Affecting Period-to-Period Comparability of Contributions | The number of employees covered by the AI Pension Plan increased 2.6% from December 31, 2015 to December 31, 2016 and increased 0.5% from December 31, 2016 to December 31, 2017, affecting the period-to-period comparability of the contributions for 2017, 2016 and 2015. Pension Protection Act Zone Status FIP/RP Status Sonic Contributions Collective Bargaining Pension EIN/Pension Pending / Year Ended December 31, Surcharge Agreement Fund Plan Number 2017 2016 Implemented 2017 2016 2015 Imposed Expiration Date (1) (In thousands) AI Pension Plan 94-1133245 Red Red RP Implemented $ 171 $ 150 $ 140 Yes Between May 21, 2018 and November 15, 2018 (1) Collective bargaining agreement expiration dates vary by union and dealership. Dates shown represent the range of the earliest and latest stated expirations for Sonic’s union employees, noting certain of Sonic’s collective bargaining agreements are expired as of December 31, 2017 and are currently under negotiation. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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, 2017 and 2016 are as follows: Fair Value Based on Significant Other Observable Inputs (Level 2) December 31, 2017 December 31, 2016 (In thousands) Assets: Cash surrender value of life insurance policies (1) $ 33,747 $ 31,475 Cash flow swaps and interest rate caps designated as hedges (2) 5,968 2,772 Total assets $ 39,715 $ 34,247 Liabilities: Cash flow swaps designated as hedges (3) $ 1,286 $ 6,135 Cash flow swaps not designated as hedges (4) - 346 Deferred compensation plan (5) 18,417 14,824 Total liabilities $ 19,703 $ 21,305 (1) Included in other assets in the accompanying consolidated balance sheets. (2) 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. As of December 31, 2016, approximately $2.8 million was included in other assets 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. As of December 31, 2016, approximately $3.7 million and $2.4 million were included in other accrued liabilities and other long-term liabilities, respectively, in the accompanying consolidated balance sheets. (4) Included in other accrued liabilities in the accompanying consolidated balance sheets. (5) 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, 2017, 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.” Significant Unobservable Total Gains / Inputs (Losses) for the Balance as of (Level 3) as of Year Ended December 31, 2017 December 31, 2017 December 31, 2017 (In thousands) Long-lived assets held and used (1) $ 1,146,881 $ 1,146,881 $ (4,894 ) Goodwill (2) $ 525,780 $ 525,780 $ (899 ) Franchise assets (2) $ 69,900 $ 69,900 $ (3,600 ) (1) See Note 1, “Description of Business and Summary of Significant Accounting Policies,” and Note 4, “Property and Equipment,” for discussion. (2) See Note 1, “Description of Business and Summary of Significant Accounting Policies,” and Note 5, “Intangible Assets and Goodwill,” for discussion. |
Fair Value and Carrying Value of Fixed Rate Long-Term Debt | The fair value and carrying value of Sonic’s fixed rate long-term debt were as follows: December 31, 2017 December 31, 2016 Fair Value Carrying Value Fair Value Carrying Value (In thousands) 7.0% Notes (1) (2) $ - $ - $ 211,000 $ 198,871 5.0% Notes (1) $ 279,148 $ 289,273 $ 284,934 $ 289,273 6.125% Notes (1) $ 248,750 $ 250,000 $ - $ - Mortgage Notes (3) $ 203,031 $ 199,972 $ 185,979 $ 176,369 Other (3) $ 3,760 $ 3,947 $ 4,057 $ 4,280 (1) As determined by market quotations as of December 31, 2017 and 2016, respectively (Level 1). (2) Sonic repurchased all of the 7.0% Notes outstanding on March 27, 2017. (3) As determined by discounted cash flows (Level 3). |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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, 2016 $ 9,790 Lease exit expense (1) 2,157 Payments (2) (3,592 ) Lease buyout/other (3) (1,877 ) Balance at December 31, 2017 $ 6,478 (1) Expense of approximately $0.1 million is recorded in interest expense, other, net and expense of approximately $0.9 million is recorded in selling, general and administrative expenses in the accompanying consolidated statements of income. In addition, expense of approximately $1.2 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 $1.1 million in continuing operations and $2.5 million 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) 2018 $ 86,941 $ (10,535 ) 2019 $ 73,080 $ (8,828 ) 2020 $ 47,761 $ (7,191 ) 2021 $ 35,636 $ (5,827 ) 2022 $ 26,760 $ (4,377 ) Thereafter $ 95,949 $ (10,982 ) |
Financial Covenants Related to Amended Subordination and Guaranty Agreement | 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, 2017 actual 1.13 1.65 4.72 3.85 |
Accumulated Other Comprehensi37
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Summary of Changes in Accumulated Other Comprehensive Income (Loss) | The changes in accumulated other comprehensive income (loss) by component for 2017 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, 2016 $ (2,085 ) $ (177 ) $ (2,262 ) Other comprehensive income (loss) before reclassifications (1) 1,718 (266 ) 1,452 Amounts reclassified out of accumulated other comprehensive income (loss) (2) 2,117 - 2,117 Net current-period other comprehensive income (loss) 3,835 (266 ) 3,569 Balance at December 31, 2017 $ 1,750 $ (443 ) $ 1,307 (1) Net of tax expense of $1,053 related to gains on cash flow hedges and tax benefit of $163 related to the defined benefit pension plan. (2) Net of tax expense of $1,298 related to gains on cash flow hedges. |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
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, 2017 2016 2015 (In thousands) Revenues: Franchised Dealerships Segment $ 9,612,899 $ 9,590,752 $ 9,547,236 Pre-Owned Stores Segment 254,309 141,027 77,063 Total consolidated revenues $ 9,867,208 $ 9,731,779 $ 9,624,299 Year Ended December 31, 2017 2016 2015 (In thousands) Segment income (loss) (1): Franchised Dealerships Segment $ 196,897 $ 218,769 $ 213,224 Pre-Owned Stores Segment (21,727 ) (13,576 ) (17,257 ) Total segment income (loss) 175,170 205,193 195,967 Interest expense, other, net (52,524 ) (50,106 ) (50,910 ) Other income (expense), net (14,522 ) 125 99 Income (loss) from continuing operations before taxes $ 108,124 $ 155,212 $ 145,156 (1) Segment income (loss) for each segment is defined as operating income less floor plan interest expense. Year Ended December 31, 2017 2016 2015 (In thousands) Floor plan interest expense: Franchised Dealerships Segment $ 35,030 $ 26,631 $ 20,727 Pre-Owned Stores Segment 1,365 1,085 599 Total floor plan interest expense $ 36,395 $ 27,716 $ 21,326 Year Ended December 31, 2017 2016 2015 (In thousands) Depreciation and amortization: Franchised Dealerships Segment $ 83,741 $ 73,591 $ 65,766 Pre-Owned Stores Segment 5,203 3,855 3,033 Total depreciation and amortization $ 88,944 $ 77,446 $ 68,799 Year Ended December 31, 2017 2016 2015 (In thousands) Capital expenditures: Franchised Dealerships Segment $ 195,220 $ 166,405 $ 148,593 Pre-Owned Stores Segment 39,025 39,827 24,656 Total capital expenditures $ 234,245 $ 206,232 $ 173,249 December 31, 2017 2016 (In thousands) Assets: Franchised Dealerships Segment $ 1,930,336 $ 2,079,297 Pre-Owned Stores Segment 200,500 144,605 Corporate and other: Cash and Cash Equivalents 6,352 3,108 Goodwill, Net 525,780 472,437 Other Intangible Assets, Net 74,589 80,233 Other Corporate and Other Assets 1,080,961 859,656 Total assets $ 3,818,518 $ 3,639,336 |
Summary of Quarterly Financia39
Summary of Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Consolidated Statements of Income by Quarter | The following table summarizes Sonic’s results of operations as presented in the accompanying consolidated statements of income by quarter for 2017 and 2016: First Quarter Second Quarter Third Quarter Fourth Quarter (In thousands, except per share data) 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 Year Ended December 31, 2016 Total revenues (1) $ 2,234,626 $ 2,382,312 $ 2,557,928 $ 2,556,913 Gross profit (1) $ 345,150 $ 353,305 $ 359,085 $ 371,734 Net income (loss) (2) $ 14,624 $ 22,822 $ 18,111 $ 37,636 Earnings (loss) per common share - Basic (2) (3) $ 0.31 $ 0.50 $ 0.40 $ 0.84 Earnings (loss) per common share - Diluted (2) (3) $ 0.31 $ 0.50 $ 0.40 $ 0.83 (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 S40
Description of Business and Summary of Significant Accounting Policies - Additional Information (Detail) | Jan. 01, 2018USD ($) | Dec. 31, 2017USD ($)DealershipsStateBrandCollisionStoreSegmentFranchise | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | ||||
Number of new vehicle dealerships | Dealerships | 114 | |||
Number of states | State | 13 | |||
Number of different brands of cars and light trucks | Brand | 23 | |||
Number of collision repair centers | Collision | 18 | |||
Number of pre-owned stores | Store | 9 | |||
Number of operating segments | Segment | 2 | |||
Book overdraft position | $ 6,900,000 | $ 8,000,000 | ||
Revenue allowances for commission reserves | 20,900,000 | 19,200,000 | ||
Amount recognized for floor plan assistance | $ 45,300,000 | 45,000,000 | $ 42,100,000 | |
Term for funding of finance contracts | 10 days | |||
Contracts in transit included in receivables, net | $ 267,600,000 | 236,400,000 | ||
Number of reporting units | Franchise | 2 | |||
Goodwill | $ 525,780,000 | 472,437,000 | 471,493,000 | |
Insurance reserves | 22,000,000 | 22,700,000 | ||
Concentrations of credit risk with respect to receivables are limited primarily to receivables from automobile manufacturers | 102,500,000 | 92,800,000 | ||
Deposits | 3,000,000 | 10,000,000 | ||
Reduction in interest expense | 500,000 | 600,000 | 1,500,000 | |
Advertising expense | 61,600,000 | 61,700,000 | 61,600,000 | |
Cooperative manufacturer credits advertising expenses | $ 26,000,000 | 26,200,000 | 24,200,000 | |
Number of reportable Segment | Segment | 2 | |||
Financial Institutions [Member] | ||||
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 | $ 299,600,000 | 265,300,000 | ||
Franchise Assets [Member] | ||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | ||||
Franchise asset impairment charge | 3,600,000 | |||
Continuing Operations [Member] | Franchise Assets [Member] | ||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | ||||
Franchise asset impairment charge | $ 3,600,000 | $ 0 | $ 3,300,000 | |
Number of franchises resulted in asset impairment charge | Franchise | 4 | |||
Accounting Standards Update (“ASU”) 2014-09 [Member] | Subsequent Event [Member] | ||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | ||||
Cumulative effect adjustment to increase retained earnings, net | $ 3,000,000 | |||
Dealership [Member] | ||||
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 Segment [Member] | ||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | ||||
Number of stores | Store | 103 | |||
Goodwill | $ 465,800,000 | |||
Pre-Owned Stores Segment [Member] | ||||
Description Of Business And Summary Of Significant Accounting Policies [Line Items] | ||||
Number of stores | Store | 9 | |||
Goodwill | $ 60,000,000 |
Description of Business and S41
Description of Business and Summary of Significant Accounting Policies - Range of Estimated Useful Lives (Detail) | 12 Months Ended |
Dec. 31, 2017 | |
Leasehold and Land Improvements [Member] | Minimum [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives | 10 years |
Leasehold and Land Improvements [Member] | Maximum [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives | 30 years |
Buildings [Member] | Minimum [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives | 10 years |
Buildings [Member] | Maximum [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives | 30 years |
Parts and Service Equipment [Member] | Minimum [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives | 7 years |
Parts and Service Equipment [Member] | Maximum [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives | 10 years |
Office Equipment and Fixtures [Member] | Minimum [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives | 3 years |
Office Equipment and Fixtures [Member] | Maximum [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives | 10 years |
Company Vehicles [Member] | Minimum [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives | 3 years |
Company Vehicles [Member] | Maximum [Member] | |
Property Plant And Equipment [Line Items] | |
Estimated useful lives | 5 years |
Business Acquisitions and Dis42
Business Acquisitions and Dispositions - Additional Information (Detail) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017USD ($)DealershipsStoreFranchise | Dec. 31, 2016USD ($)DealershipsBusiness | Dec. 31, 2015USD ($)DealershipsFranchise | |
Business Acquisition [Line Items] | |||
Goodwill acquired related to acquisition | $ 60,024 | ||
Number of businesses acquired | Franchise | 0 | ||
Number of franchises disposed | Dealerships | 3 | 0 | 4 |
Cash generated from disposition | $ 38,200 | $ 8,000 | |
Number of franchises classified as held for sale | Franchise | 0 | ||
EchoPark Stores [Member] | |||
Business Acquisition [Line Items] | |||
Number of stores | Store | 2 | ||
Stand-Alone Pre-Owned Vehicle Store [Member] | |||
Business Acquisition [Line Items] | |||
Business acquisition, consideration amount | $ 76,600 | ||
Business acquisition, deferred payment | $ 10,000 | ||
Business acquisition, deferred payment term | 2 years | ||
Business acquisition, additional variable payment term | 10 years | ||
Business combination, accrued for deferred and variable payments | $ 1,300 | ||
Stand-Alone Pre-Owned Vehicle Store [Member] | Maximum [Member] | |||
Business Acquisition [Line Items] | |||
Business acquisition, additional variable payment | 80,000 | ||
Stand-Alone Pre-Owned Vehicle Store [Member] | Maximum [Member] | Employee Termination [Member] | |||
Business Acquisition [Line Items] | |||
Business acquisition, additional variable payment | 80,000 | ||
Stand-Alone Pre-Owned Vehicle Store [Member] | Pre-Owned Stores Segment [Member] | |||
Business Acquisition [Line Items] | |||
Goodwill acquired related to acquisition | $ 60,000 | ||
Stand-Alone Pre-Owned Vehicle Store And Related Real Estate [Member] | |||
Business Acquisition [Line Items] | |||
Business acquisition, consideration amount | $ 15,900 | ||
Number of businesses acquired | Business | 3 |
Business Acquisitions and Dis43
Business Acquisitions and Dispositions - Revenues and Other Activities Associated with Disposed Dealerships Classified as Discontinued Operations (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Business Combinations [Abstract] | |||
Income (loss) from operations | $ (741) | $ (1,100) | $ (1,421) |
Gain (loss) on disposal | 6 | (1) | |
Lease exit accrual adjustments and charges | (1,207) | (1,020) | (1,462) |
Pre-tax income (loss) | $ (1,942) | $ (2,121) | $ (2,883) |
Business Acquisitions and Dis44
Business Acquisitions and Dispositions - Revenues and Other Activities Associated with Disposed Dealerships That Remain in Continuing Operations (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Business Combinations [Abstract] | |||
Income (loss) from operations | $ (2,329) | $ (2,154) | $ (6,214) |
Gain (loss) on disposal | 11,188 | (47) | 2,748 |
Property and equipment impairment charges | (81) | (6,584) | |
Pre-tax income (loss) | 8,859 | (2,282) | (10,050) |
Total revenues | $ 86,111 | $ 127,337 | $ 215,629 |
Inventories and Related Notes45
Inventories and Related Notes Payable - Floor Plan - Components of Inventories (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
New vehicles | $ 1,017,523 | $ 1,088,814 |
Used vehicles | 294,496 | 282,288 |
Service loaners | 130,406 | 128,821 |
Parts, accessories and other | 70,320 | 70,778 |
Net inventories | $ 1,512,745 | $ 1,570,701 |
Inventories and Related Notes46
Inventories and Related Notes Payable - Floor Plan - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Inventory Disclosure [Abstract] | |||
Average interest rate for new vehicle floor plan facilities | 2.37% | 1.85% | 1.61% |
Amount recognized for floor plan assistance | $ 45.3 | $ 45 | $ 42.1 |
Average interest rate for used vehicle floor plan facilities | 2.61% | 1.78% | 1.72% |
Property and Equipment - Compon
Property and Equipment - Components of Property and Equipment, Net (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Property Plant And Equipment [Line Items] | ||
Total, at cost | $ 1,677,749 | $ 1,464,795 |
Less accumulated depreciation | (527,379) | (450,184) |
Subtotal | 1,150,370 | 1,014,611 |
Less assets held for sale | (3,489) | (4,231) |
Property and equipment, net | 1,146,881 | 1,010,380 |
Land [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total, at cost | 370,828 | 306,457 |
Building and Improvements [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total, at cost | 893,768 | 777,766 |
Software and Computer Equipment [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total, at cost | 147,812 | 128,366 |
Office Equipment and Fixtures [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total, at cost | 96,066 | 86,216 |
Parts and Service Equipment [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total, at cost | 105,123 | 93,901 |
Company Vehicles [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total, at cost | 9,723 | 9,107 |
Construction in Progress [Member] | ||
Property Plant And Equipment [Line Items] | ||
Total, at cost | $ 54,429 | $ 62,982 |
Property and Equipment - Additi
Property and Equipment - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property Plant And Equipment [Abstract] | |||
Interest capitalized in conjunction with construction projects and software development | $ 2.2 | $ 2.8 | $ 1.9 |
Commitments for facility construction projects | $ 31.9 |
Property and Equipment - Proper
Property and Equipment - Property and Equipment Impairment Charges (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Continuing Operations [Member] | |||
Property Plant And Equipment [Line Items] | |||
Property and equipment impairment charges | $ 4,894 | $ 8,063 | $ 12,210 |
Intangible Assets and Goodwil50
Intangible Assets and Goodwill - Changes in Carrying Amount of Franchise Assets and Goodwill (Detail) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Indefinite-lived Intangible Assets [Line Items] | ||
Net Goodwill, Beginning balance | $ 472,437,000 | $ 471,493,000 |
Net Goodwill, Additions through current year acquisitions | 60,024,000 | |
Net Goodwill, Reductions from dispositions | (5,737,000) | |
Net Goodwill, Reductions from impairment | (900,000) | 0 |
Net Goodwill, Prior year acquisition allocations | (44,000) | 944,000 |
Net Goodwill, Ending balance | 525,780,000 | 472,437,000 |
Franchise Assets [Member] | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Franchise Assets, Beginning balance | 74,900,000 | 74,900,000 |
Franchise Assets, Reductions from dispositions | (1,400,000) | |
Franchise Assets, Reductions from impairment | (3,600,000) | |
Franchise Assets, Ending balance | $ 69,900,000 | $ 74,900,000 |
Intangible Assets and Goodwil51
Intangible Assets and Goodwill - Changes in Carrying Amount of Franchise Assets and Goodwill (Parenthetical) (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Goodwill And Intangible Assets Disclosure [Abstract] | |||
Net of accumulated impairment losses | $ 797,625 | $ 796,725 | $ 796,725 |
Intangible Assets and Goodwil52
Intangible Assets and Goodwill - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill impairment | $ 900,000 | $ 0 | |
Definite life Intangible asset, impairment charge | 0 | 0 | $ 0 |
Definite lived intangible assets, amortization expense | $ 600,000 | 600,000 | 600,000 |
Lease Agreements [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Weighted-average amortization period | 17 years | ||
Lease Agreements [Member] | Minimum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Expiration period | 2,020 | ||
Lease Agreements [Member] | Maximum [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Expiration period | 2,027 | ||
Franchise Assets [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Indefinite life Intangible asset, impairment charge | $ 3,600,000 | ||
Discontinued Operations [Member] | Franchise Assets [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Goodwill impairment | 900,000 | ||
Continuing Operations [Member] | Franchise Assets [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Indefinite life Intangible asset, impairment charge | $ 3,600,000 | $ 0 | $ 3,300,000 |
Intangible Assets and Goodwil53
Intangible Assets and Goodwill - Definite Life Intangible Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Finite-Lived Intangible Assets [Line Items] | ||
Less accumulated amortization | $ (12,628) | $ (11,985) |
Definite life intangibles, net | 4,689 | 5,333 |
Favorable Lease Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Definite life intangibles, gross | $ 17,317 | $ 17,318 |
Intangible Assets and Goodwil54
Intangible Assets and Goodwill - Future Amortization Expense (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
2,018 | $ 644 | |
2,019 | 644 | |
2,020 | 614 | |
2,021 | 475 | |
2,022 | 408 | |
Thereafter | 1,904 | |
Definite life intangibles, net | $ 4,689 | $ 5,333 |
Long-Term Debt - Long-Term Debt
Long-Term Debt - Long-Term Debt (Detail) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Net debt discount and premium | $ 0 | $ (1,258,000) |
Debt issuance costs | (13,208,000) | (13,328,000) |
Other | 3,947,000 | 4,280,000 |
Total debt | 1,024,703,000 | 882,678,000 |
Less current maturities | (61,314,000) | (43,003,000) |
Long-Term Debt | 963,389,000 | 839,675,000 |
2016 Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
2016 Revolving Credit Facility | 75,000,000 | |
7.0% Senior Subordinated Notes due 2022 [Member] | ||
Debt Instrument [Line Items] | ||
Senior Subordinated Notes | 200,000,000 | |
5.0% Senior Subordinated Notes due 2023 [Member] | ||
Debt Instrument [Line Items] | ||
Senior Subordinated Notes | 289,273,000 | 289,273,000 |
Total debt | 289,273,000 | 289,273,000 |
6.125% Senior Subordinated Notes due 2027 [Member] | ||
Debt Instrument [Line Items] | ||
Senior Subordinated Notes | 250,000,000 | |
Total debt | 250,000,000 | |
Mortgage Notes [Member] | ||
Debt Instrument [Line Items] | ||
Mortgage notes to finance companies - fixed rate, bearing interest from 3.51% to 7.03% | 199,972,000 | 176,369,000 |
Mortgage notes to finance companies - variable rate, bearing interest at 1.50 to 2.90 percentage points above one-month or three-month LIBOR | $ 219,719,000 | $ 227,342,000 |
Long-Term Debt - Long-Term De56
Long-Term Debt - Long-Term Debt (Parenthetical) (Detail) - USD ($) $ in Millions | Dec. 31, 2017 | Mar. 10, 2017 | Dec. 31, 2016 | May 09, 2013 | Jul. 02, 2012 |
7.0% Senior Subordinated Notes due 2022 [Member] | |||||
Debt Instrument [Line Items] | |||||
Stated interest rate on debt agreement | 7.00% | 7.00% | 7.00% | ||
Discount associated with notes | $ 1.1 | ||||
5.0% Senior Subordinated Notes due 2023 [Member] | |||||
Debt Instrument [Line Items] | |||||
Stated interest rate on debt agreement | 5.00% | 5.00% | 5.00% | ||
6.125% Senior Subordinated Notes due 2027 [Member] | |||||
Debt Instrument [Line Items] | |||||
Stated interest rate on debt agreement | 6.125% | 6.125% | 6.125% | ||
2016 Revolving Credit Facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 2.25% | 2.25% | |||
Mortgage Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Discount associated with notes | $ 0.2 | ||||
Mortgage Notes [Member] | Minimum [Member] | |||||
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 [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Mortgage notes to finance companies-fixed rate, percentage | 7.03% | ||||
Mortgage notes to finance companies-variable rate, percentage | 2.90% |
Long-Term Debt - Future Maturit
Long-Term Debt - Future Maturities of Long-Term Debt (Detail) $ in Thousands | Dec. 31, 2017USD ($) |
Debt Disclosure [Abstract] | |
Principal/Net ofDiscount/Premium, 2018 | $ 61,314 |
Principal/Net ofDiscount/Premium, 2019 | 25,179 |
Principal/Net ofDiscount/Premium, 2020 | 57,919 |
Principal/Net ofDiscount/Premium, 2021 | 126,532 |
Principal/Net ofDiscount/Premium, 2022 | 40,617 |
Principal/Net ofDiscount/Premium, Thereafter | 726,350 |
Principal/Net ofDiscount/Premium, Total | $ 1,037,911 |
Long-Term Debt - Future Matur58
Long-Term Debt - Future Maturities of Long-Term Debt (Parenthetical) (Detail) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
Premium/discount amounts | $ 0 | $ 1,258,000 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Detail) | Mar. 27, 2017USD ($) | Mar. 10, 2017USD ($) | Nov. 30, 2016USD ($) | May 09, 2013USD ($) | Jul. 02, 2012USD ($) | Dec. 31, 2017USD ($)Location$ / shares | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Debt Instrument [Line Items] | ||||||||
Loss on repurchase of debt instrument | $ 14,607,000 | |||||||
Minimum EBTDAR to rent ratio | 385.00% | |||||||
Incremental interest expense | $ 3,100,000 | $ 5,500,000 | $ 7,800,000 | |||||
Net expense expected to be reclassified | 100,000 | |||||||
Derivative Instruments and Hedging Activities [Member] | Interest Rate Swap and Interest Rate Cap [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Derivative asset, fair value of interest rate swap and cap positions | 4,700,000 | |||||||
Derivative Instruments and Hedging Activities [Member] | Interest Rate Swap [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Derivative liability, fair value of interest rate swap and cap positions | 3,700,000 | |||||||
Derivative Instruments and Hedging Activities [Member] | Other Current Assets [Member] | Interest Rate Swap and Interest Rate Cap [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Derivative asset, fair value of interest rate swap and cap positions | 900,000 | |||||||
Derivative Instruments and Hedging Activities [Member] | Other Assets [Member] | Interest Rate Swap and Interest Rate Cap [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Derivative asset, fair value of interest rate swap and cap positions | 5,100,000 | |||||||
Derivative Instruments and Hedging Activities [Member] | Other Assets [Member] | Interest Rate Swap [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Derivative asset, fair value of interest rate swap and cap positions | 2,800,000 | |||||||
Derivative Instruments and Hedging Activities [Member] | Other Accrued Liabilities [Member] | Interest Rate Swap and Interest Rate Cap [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Derivative liability, fair value of interest rate swap and cap positions | 1,000,000 | |||||||
Derivative Instruments and Hedging Activities [Member] | Other Accrued Liabilities [Member] | Interest Rate Swap [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Derivative liability, fair value of interest rate swap and cap positions | 4,100,000 | |||||||
Derivative Instruments and Hedging Activities [Member] | Other Long-Term Liabilities [Member] | Interest Rate Swap and Interest Rate Cap [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Derivative liability, fair value of interest rate swap and cap positions | $ 300,000 | |||||||
Derivative Instruments and Hedging Activities [Member] | Other Long-Term Liabilities [Member] | Interest Rate Swap [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Derivative liability, fair value of interest rate swap and cap positions | $ 2,400,000 | |||||||
Mortgage Notes [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt weighted average interest rate on note | 4.22% | |||||||
Number of operating locations related to mortgage financing | Location | 10 | |||||||
Mortgage financing aggregate | $ 52,500,000 | |||||||
Percentage of operating locations related to mortgage financing | 45.00% | |||||||
Outstanding mortgage principal balance | $ 419,700,000 | |||||||
Notes payable due date | between 2018 and 2033 | |||||||
Required Ratio [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Minimum EBTDAR to rent ratio | 150.00% | |||||||
2016 Credit Facility [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Maturity date of revolving credit facility and floor plan facility | Nov. 30, 2021 | |||||||
Minimum EBTDAR to rent ratio | 385.00% | |||||||
2016 Credit Facility [Member] | Required Ratio [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Minimum EBTDAR to rent ratio | 150.00% | |||||||
2016 Credit Facility [Member] | Minimum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Net income and retained earnings free of restrictions | $ 148,700,000 | |||||||
2016 Revolving Credit Facility [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Increased availability under borrowing facility | $ 25,000,000 | |||||||
Current borrowing capacity | 250,000,000 | |||||||
Maximum borrowing capacity | 300,000,000 | |||||||
Borrowing base | 247,600,000 | |||||||
Letters of credit outstanding amount | 17,300,000 | |||||||
2016 Revolving Credit Facility | 75,000,000 | |||||||
Borrowing availability amount | 155,300,000 | |||||||
2016 Floor Plan Facilities [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Increased availability under borrowing facility | $ 215,000,000 | |||||||
Maximum borrowing capacity | 1,015,000,000 | |||||||
Increase in credit facility borrowing capacity | $ 1,265,000,000 | |||||||
2016 Used Vehicle Floor Plan Facility [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Allocation of credit facility increase, percentage | 30.00% | |||||||
7.0% Senior Subordinated Notes Due 2022 [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | $ 200,000,000 | |||||||
Stated interest rate on debt agreement | 7.00% | 7.00% | 7.00% | |||||
Notes maturity date | Jul. 15, 2022 | |||||||
Cash paid to extinguish of debt instrument including early redemption premium and accrued and unpaid interest | $ 213,700,000 | |||||||
Loss on repurchase of debt instrument | $ 14,600,000 | |||||||
7.0% and 6.125% Senior Subordinated Notes [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Double-carry interest expense | $ 700,000 | |||||||
6.125% Senior Subordinated Notes due 2027 [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | $ 250,000,000 | |||||||
Stated interest rate on debt agreement | 6.125% | 6.125% | 6.125% | |||||
Notes maturity date | Mar. 15, 2027 | |||||||
Notes issued at a price of principal amount | 100.00% | |||||||
Notes issued yield maturity, percentage | 6.125% | |||||||
Interest payable description | semi-annually in arrears on March 15 and September 15 of each year. | |||||||
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 | $ / shares | $ 0.12 | |||||||
Restrictive covenants under credit facilities and 6.125% notes | Specifically, the indenture governing the 6.125% Notes limits Sonic’s ability to pay quarterly cash dividends on its Class A and Class B common stock in excess of $0.12 per share. Sonic may only pay quarterly cash dividends on its Class A and Class B common stock if Sonic complies with the terms of the indenture governing the 6.125% Notes. | |||||||
Outstanding principal amount of the 6.125% notes | 25.00% | |||||||
6.125% Senior Subordinated Notes due 2027 [Member] | Maximum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Notes redemption price percentage of the principal amount | 35.00% | |||||||
6.125% Senior Subordinated Notes due 2027 [Member] | Minimum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Indebtedness with outstanding balance under other agreements | $ 50,000,000 | |||||||
5.0% Senior Subordinated Notes due 2023 [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal amount | $ 300,000,000 | |||||||
Stated interest rate on debt agreement | 5.00% | 5.00% | 5.00% | |||||
Notes maturity date | May 15, 2023 | |||||||
Notes issued at a price of principal amount | 100.00% | |||||||
Interest payable description | semi-annually in arrears on May 15 and November 15 of each year | |||||||
Notes redemption price percentage of the 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 | $ / shares | $ 0.10 | |||||||
Restrictive covenants under credit facilities and 6.125% notes | Specifically, the indenture governing the 5.0% Notes limits Sonic’s ability to pay quarterly cash dividends on Sonic’s Class A and Class B common stock in excess of $0.10 per share. Sonic may only pay quarterly cash dividends on Sonic’s Class A and Class B common stock if Sonic complies with the terms of the indenture governing the 5.0% Notes. Sonic was in compliance with all restrictive covenants in the indenture governing the 5.0% Notes as of December 31, 2017. | |||||||
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 [Member] | Minimum [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Indebtedness with outstanding balance under other agreements | $ 50,000,000 | |||||||
9.0% Senior Subordinated Notes due 2018 [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Stated interest rate on debt agreement | 9.00% | |||||||
Convertible senior notes due | 2,018 |
Long-Term Debt - Redemption Pri
Long-Term Debt - Redemption Price, Percentage (Detail) | 12 Months Ended |
Dec. 31, 2017 | |
6.125% Senior Subordinated Notes due 2027 [Member] | |
Debt Instrument Redemption [Line Items] | |
Redemption Price | 106.125% |
6.125% Senior Subordinated Notes due 2027 [Member] | Beginning on March 15, 2022 [Member] | |
Debt Instrument Redemption [Line Items] | |
Redemption Price | 103.063% |
6.125% Senior Subordinated Notes due 2027 [Member] | Beginning on March 15, 2023 [Member] | |
Debt Instrument Redemption [Line Items] | |
Redemption Price | 102.042% |
6.125% Senior Subordinated Notes due 2027 [Member] | Beginning on March 15, 2024 [Member] | |
Debt Instrument Redemption [Line Items] | |
Redemption Price | 101.021% |
6.125% Senior Subordinated Notes due 2027 [Member] | Beginning on March 15, 2025 and Thereafter [Member] | |
Debt Instrument Redemption [Line Items] | |
Redemption Price | 100.00% |
5.0% Senior Subordinated Notes due 2023 [Member] | Beginning on May 15, 2018 [Member] | |
Debt Instrument Redemption [Line Items] | |
Redemption Price | 102.50% |
5.0% Senior Subordinated Notes due 2023 [Member] | Beginning on May 15, 2019 [Member] | |
Debt Instrument Redemption [Line Items] | |
Redemption Price | 101.667% |
5.0% Senior Subordinated Notes due 2023 [Member] | Beginning on May 15, 2020 [Member] | |
Debt Instrument Redemption [Line Items] | |
Redemption Price | 100.833% |
5.0% Senior Subordinated Notes due 2023 [Member] | Beginning on May 15, 2021 and Thereafter [Member] | |
Debt Instrument Redemption [Line Items] | |
Redemption Price | 100.00% |
Long-Term Debt - Financial Cove
Long-Term Debt - Financial Covenants Include Required Specified Ratios (Detail) | Dec. 31, 2017 |
Line Of Credit Facility [Line Items] | |
Minimum Consolidated Liquidity Ratio | 113.00% |
Minimum Consolidated Fixed Charge Coverage Ratio | 165.00% |
Maximum Consolidated Total Lease Adjusted Leverage Ratio | 472.00% |
Required Ratio [Member] | |
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 - Summary of Int
Long-Term Debt - Summary of Interest Received and Paid under Term of Cash Flow Swap (Detail) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Cash Flow Swap [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 250,000,000 |
Pay Rate | 1.887% |
Receive Rate | one-month LIBOR |
Maturing Date | Jun. 30, 2018 |
Cash Flow Swap 1 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 125,000,000 |
Pay Rate | 1.90% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2018 |
Cash Flow Swap 2 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 50,000,000 |
Pay Rate | 2.32% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2019 |
Cash Flow Swap 3 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 200,000,000 |
Pay Rate | 2.313% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2019 |
Cash Flow Swap 4 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 100,000,000 |
Pay Rate | 1.384% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2020 |
Cash Flow Swap 5 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 125,000,000 |
Pay Rate | 1.158% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2019 |
Cash Flow Swap 6 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 150,000,000 |
Pay Rate | 1.31% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2020 |
Cash Flow Swap 7 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 125,000,000 |
Pay Rate | 1.02% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2018 |
Cash Flow Swap 8 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 62,500,000 |
Pay Rate | 2.00% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2021 |
Cash Flow Swap 9 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 62,500,000 |
Pay Rate | 2.00% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2021 |
Cash Flow Swap 10 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 62,500,000 |
Pay Rate | 2.00% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2021 |
Cash Flow Swap 11 [Member] | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 62,500,000 |
Pay Rate | 2.00% |
Receive Rate | one-month LIBOR |
Maturing Date | Jul. 1, 2021 |
Long-Term Debt - Summary of I63
Long-Term Debt - Summary of Interest Received and Paid under Term of Cash Flow Swap (Parenthetical) (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Derivatives, Fair Value [Line Items] | |
One-month LIBOR rate | 1.564% |
Receive Rate | one-month LIBOR |
Cash Flow Swap 2 [Member] | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Swap agreement effective date | Jul. 2, 2018 |
Cash Flow Swap 3 [Member] | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Swap agreement effective date | Jul. 2, 2018 |
Cash Flow Swap 5 [Member] | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Swap agreement effective date | Jul. 2, 2018 |
Cash Flow Swap 4 [Member] | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Swap agreement effective date | Jul. 1, 2019 |
Cash Flow Swap 6 [Member] | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Swap agreement effective date | Jul. 1, 2019 |
Cash Flow Swap 8 [Member] | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Derivative notional amount interest rate caps, remainder of fiscal year | $ 62,500 |
Derivative notional amount interest rate caps, second year | 93,750 |
Derivative notional amount interest rate caps, third year | 78,125 |
Derivative notional amount interest rate caps, fourth year | 37,500 |
Payment of interest rate | $ 0 |
Cash Flow Swap 9 [Member] | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Derivative notional amount interest rate caps, remainder of fiscal year | $ 62,500 |
Derivative notional amount interest rate caps, second year | 93,750 |
Derivative notional amount interest rate caps, third year | 78,125 |
Derivative notional amount interest rate caps, fourth year | 37,500 |
Payment of interest rate | $ 0 |
Cash Flow Swap 10 [Member] | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Derivative notional amount interest rate caps, remainder of fiscal year | $ 62,500 |
Derivative notional amount interest rate caps, second year | 93,750 |
Derivative notional amount interest rate caps, third year | 78,125 |
Derivative notional amount interest rate caps, fourth year | 37,500 |
Payment of interest rate | $ 0 |
Cash Flow Swap 11 [Member] | |
Derivatives, Fair Value [Line Items] | |
Receive Rate | one-month LIBOR |
Derivative notional amount interest rate caps, remainder of fiscal year | $ 62,500 |
Derivative notional amount interest rate caps, second year | 93,750 |
Derivative notional amount interest rate caps, third year | 78,125 |
Derivative notional amount interest rate caps, fourth year | 37,500 |
Payment of interest rate | $ 0 |
Income Taxes - Provision for In
Income Taxes - Provision for Income Taxes for Continuing Operations - Benefit (Expense) (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | |||
Federal | $ (34,877) | $ (43,655) | $ (36,241) |
State | (7,292) | (3,766) | (6,414) |
Total current | (42,169) | (47,421) | (42,655) |
Deferred | 28,198 | (13,275) | (14,410) |
Total provision for income taxes for continuing operations - benefit (expense) | $ (13,971) | $ (60,696) | $ (57,065) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes [Line Items] | |||||
Provision for income taxes (benefit) expense related to remeasurement of net deferred tax liability | $ (28,400) | $ (28,400) | |||
U.S. statutory federal income tax rate | 35.00% | 35.00% | 35.00% | ||
Net long-term deferred tax asset | 2,900 | $ 2,900 | $ 2,400 | ||
Net long-term deferred tax liability | 51,619 | 51,619 | 76,447 | ||
Gross deferred tax assets related to state net operating loss carryforwards | 282,000 | 282,000 | |||
Valuation allowance related to certain state net operating loss carryforward deferred tax assets | 8,000 | 8,000 | |||
Liabilities recorded related to unrecognized tax benefits | 5,200 | ||||
Liabilities related to interest and penalties | 600 | 600 | 800 | ||
Unrecognized tax benefit that would affect income tax rate if recognized | $ 4,700 | $ 4,700 | $ 3,300 | ||
State and Local Jurisdiction [Member] | |||||
Income Taxes [Line Items] | |||||
Operating loss expiration date | Net operating loss carryforwards that will expire between 2018 and 2037 | ||||
Operating loss expiration, beginning year | 2,018 | ||||
Operating loss expiration, ending year | 2,037 | ||||
State and Local Jurisdiction [Member] | Tax Year 2017 [Member] | |||||
Income Taxes [Line Items] | |||||
Income tax examination year | 2,017 | ||||
State and Local Jurisdiction [Member] | Tax Year 2013 [Member] | |||||
Income Taxes [Line Items] | |||||
Income tax examination year | 2,013 | ||||
U.S. Federal Income Tax Authority [Member] | Internal Revenue Service [Member] | Tax Year 2014 [Member] | |||||
Income Taxes [Line Items] | |||||
Income tax examination year | 2,014 | ||||
U.S. Federal Income Tax Authority [Member] | Internal Revenue Service [Member] | Tax Year 2017 [Member] | |||||
Income Taxes [Line Items] | |||||
Income tax examination year | 2,017 | ||||
Scenario, Forecast [Member] | |||||
Income Taxes [Line Items] | |||||
U.S. statutory federal income tax rate | 21.00% |
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 (Detail) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
U.S. statutory federal income tax rate | 35.00% | 35.00% | 35.00% |
Effective state income tax rate | 4.58% | 2.04% | 3.26% |
Valuation allowance adjustments | (0.59%) | 0.85% | (0.45%) |
Uncertain tax positions | 0.71% | 0.17% | (0.14%) |
Effect of change in future U.S. statutory federal income tax rate | (26.27%) | 0.00% | 0.00% |
Other | (0.51%) | 1.05% | 1.64% |
Effective income tax rate | 12.92% | 39.11% | 39.31% |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred tax assets: | ||
Accruals and reserves | $ 24,320 | $ 34,884 |
State net operating loss carryforwards | 12,689 | 10,777 |
Fair value of interest rate swaps | 1,406 | |
Interest and state taxes associated with the liability for uncertain income tax positions | 1,126 | 1,746 |
Other | 712 | 774 |
Total deferred tax assets | 38,847 | 49,587 |
Deferred tax liabilities: | ||
Fair value of interest rate swaps | (696) | |
Basis difference in inventories | (965) | (1,506) |
Basis difference in property and equipment | (2,467) | (9,335) |
Basis difference in goodwill | (73,803) | (101,999) |
Other | (1,636) | (3,540) |
Total deferred tax liabilities | (79,567) | (116,380) |
Valuation allowance | (7,985) | (7,211) |
Net deferred tax asset (liability) | $ (48,705) | $ (74,004) |
Income Taxes - Summary of Chang
Income Taxes - Summary of Changes in Liability Related to Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Unrecognized tax benefit liability, Beginning Balance | $ 4,357 | $ 4,755 | $ 5,740 |
New positions | 653 | ||
Prior period positions: | |||
Increases | 491 | 939 | 175 |
Decreases | (539) | (415) | |
Increases from current period positions | 692 | 615 | 184 |
Lapse of statute of limitations | (781) | (1,290) | (1,114) |
Other | (228) | (247) | (230) |
Unrecognized tax benefit liability, Ending Balance | $ 4,645 | $ 4,357 | $ 4,755 |
Income Taxes - Summary of Cha69
Income Taxes - Summary of Changes in Liability Related to Unrecognized Tax Benefits (Parenthetical) (Detail) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Schedule Of Unrecognized Tax Benefits [Line Items] | ||||
Accrued interest and penalties | $ 0.6 | $ 0.8 | $ 1.1 | $ 1.2 |
State and Local Jurisdiction [Member] | ||||
Schedule Of Unrecognized Tax Benefits [Line Items] | ||||
Net operating losses | $ 0.1 | $ 0.3 | $ 0.6 |
Related Parties - Additional In
Related Parties - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Sonic Financial Corporation [Member] | |||
Related Party Transaction [Line Items] | |||
Aggregate annual rent for leased aircraft usage | $ 0.4 | $ 0.5 | $ 0.6 |
Oil Chem Research Company [Member] | |||
Related Party Transaction [Line Items] | |||
Purchase from related party | 1.9 | 2.1 | 2.1 |
SMISC Holdings, Inc. [Member] | |||
Related Party Transaction [Line Items] | |||
Purchase from related party | 0.9 | 0.9 | 0.9 |
Speedway Motorsports, Inc. [Member] | |||
Related Party Transaction [Line Items] | |||
Vehicle sales to related party | $ 0.2 | $ 0.2 | $ 0.1 |
Minimum [Member] | Mr. Marcus G. Smith [Member] | Sonic Financial Corporation [Member] | |||
Related Party Transaction [Line Items] | |||
Ownership percentage | 10.00% |
Capital Structure and Per Sha71
Capital Structure and Per Share Data - Additional Information (Detail) | 12 Months Ended | ||
Dec. 31, 2017USD ($)ClassVote$ / sharesshares | Dec. 31, 2016$ / sharesshares | Dec. 31, 2015shares | |
Capital Structure And Per Share Data [Line Items] | |||
Preferred stock shares authorized | 3,000,000 | ||
Preferred stock, issued | 0 | 0 | 0 |
Preferred stock, outstanding | 0 | 0 | 0 |
Number of classes of common stock | Class | 2 | ||
Class A Convertible Preferred Stock [Member] | |||
Capital Structure And Per Share Data [Line Items] | |||
Preferred stock shares authorized | 300,000 | ||
Preferred Stock Par Value | $ / shares | $ 0.10 | ||
Preferred stock shares redeemed | 13,801.5 | ||
Preferred stock redemption price | $ / shares | $ 1,000 | ||
Series I Preferred Stock [Member] | |||
Capital Structure And Per Share Data [Line Items] | |||
Class A Convertible Preferred Stock Shares Authorized | 100,000 | ||
Series II Preferred Stock [Member] | |||
Capital Structure And Per Share Data [Line Items] | |||
Class A Convertible Preferred Stock Shares Authorized | 100,000 | ||
Series III Preferred Stock [Member] | |||
Capital Structure And Per Share Data [Line Items] | |||
Class A Convertible Preferred Stock Shares Authorized | 100,000 | ||
Common Class A [Member] | |||
Capital Structure And Per Share Data [Line Items] | |||
Common stock, shares authorized | 100,000,000 | 100,000,000 | |
Common stock, par value | $ / 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 | 32,290,493 | 30,263,196 | |
Common stock class A, share repurchase price per share | $ / shares | $ 17.76 | ||
Remaining authorized amount | $ | $ 107,700,000 | ||
Antidilutive stock options excluded in computation of diluted earnings per share | 200,000 | 400,000 | |
Common Class B [Member] | |||
Capital Structure And Per Share Data [Line Items] | |||
Common stock, shares authorized | 30,000,000 | 30,000,000 | |
Common stock, par value | $ / shares | $ 0.01 | $ 0.01 | |
Common stock, number of votes per share | Vote | 10 |
Capital Structure and Per Sha72
Capital Structure and Per Share Data - Dilutive Effect on Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |||||||||||
Weighted Average Shares, Basic | 43,997 | 45,637 | 50,489 | ||||||||
Weighted Average Shares, Stock compensation plans | 361 | 311 | 394 | ||||||||
Weighted Average Shares, Diluted | 44,358 | 45,948 | 50,883 | ||||||||
Income (Loss) From Continuing Operations, Amount | $ 94,153 | $ 94,516 | $ 88,091 | ||||||||
Participating securities income (loss) from continuing operations non-vested restricted stock and restricted stock units | (85) | (52) | (36) | ||||||||
Income (Loss) From Continuing Operations, Basic, Amount | 94,068 | 94,464 | 88,055 | ||||||||
Income (Loss) From Continuing Operations Diluted, Amount | $ 94,068 | $ 94,464 | $ 88,055 | ||||||||
Income (Loss) From Continuing Operations, Basic, Per Share Amount | $ 2.14 | $ 2.07 | $ 1.74 | ||||||||
Income (Loss) From Continuing Operations, Diluted, Per Share Amount | $ 2.12 | $ 2.06 | $ 1.73 | ||||||||
Income (Loss) From Discontinued Operations, Earnings (loss), Amount | $ (1,170) | $ (1,323) | $ (1,780) | ||||||||
Income (Loss) From Discontinued Operations, Basic earnings (loss), Amount | (1,170) | (1,323) | (1,780) | ||||||||
Income (Loss) From Discontinued Operations, Diluted earnings (loss), Amount | $ (1,170) | $ (1,323) | $ (1,780) | ||||||||
Income (Loss) From Discontinued Operations, Basic earnings (loss), Per Share Amount | $ (0.03) | $ (0.03) | $ (0.03) | ||||||||
Income (Loss) From Discontinued Operations, Diluted earnings (loss), Per Share Amount | $ (0.03) | $ (0.03) | $ (0.03) | ||||||||
Net Income (Loss), Amount | $ 61,952 | $ 19,440 | $ 12,132 | $ (541) | $ 37,636 | $ 18,111 | $ 22,822 | $ 14,624 | $ 92,983 | $ 93,193 | $ 86,311 |
Participating securities net income (loss) non-vested restricted stock and restricted stock units | (85) | (52) | (36) | ||||||||
Net Income (Loss), Basic, Amount | 92,898 | 93,141 | 86,275 | ||||||||
Net Income (Loss), Diluted, Amount | $ 92,898 | $ 93,141 | $ 86,275 | ||||||||
Net Income (Loss), Basic, Per Share Amount | $ 1.43 | $ 0.45 | $ 0.27 | $ (0.01) | $ 0.84 | $ 0.40 | $ 0.50 | $ 0.31 | $ 2.11 | $ 2.04 | $ 1.71 |
Net Income (Loss), Diluted, Per Share Amount | $ 1.42 | $ 0.44 | $ 0.27 | $ (0.01) | $ 0.83 | $ 0.40 | $ 0.50 | $ 0.31 | $ 2.09 | $ 2.03 | $ 1.70 |
Employee Benefit Plans - Additi
Employee Benefit Plans - Additional Information (Detail) | 3 Months Ended | 12 Months Ended | ||||
Jun. 30, 2017shares | Jun. 30, 2015shares | Jun. 30, 2012shares | Dec. 31, 2017USD ($)PlansMembersEmployershares | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Number of active stock compensation plans | Plans | 3 | |||||
Restricted stock shares | shares | 600,000 | |||||
Number of employers obligated to make contribution under multiemployer plan | Employer | 201 | |||||
Pension Protection | 2,006 | 2,006 | 2,006 | |||
Number of employee increase / (decrease) under multiemployer benefit percentage | 0.50% | 2.60% | ||||
Total contributions of multi employer Plan | 5.00% | 5.00% | ||||
Plans In Red Zone [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Multiemployer Benefit AI Pension Plan | Less than 65 percent | |||||
Plans In Yellow Zone [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Multiemployer Benefit AI Pension Plan | Between 65 and less than 80 percent | |||||
Plans In Green Zone [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Multiemployer Benefit AI Pension Plan | At least 80 percent | |||||
Supplemental Employee Retirement Plans, Defined Benefit [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Members of senior management | Members | 12 | |||||
Stock Option [Member] | Selling, General and Administrative Expenses [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Compensation expense | $ | $ 0 | $ 0 | $ 0 | |||
Restricted Stock Units and Restricted Stock Awards [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Tax benefits recognized related to compensation expense | $ | 4,200,000 | 4,200,000 | 3,700,000 | |||
Restricted Stock Units and Restricted Stock Awards [Member] | Selling, General and Administrative Expenses [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Compensation expense | $ | 11,100,000 | 11,200,000 | 9,800,000 | |||
Non-vested Restricted Stock Units and Restricted Stock Awards [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Compensation expense not yet recognized | $ | $ 34,200,000 | |||||
Total compensation cost related to non-vested options expected to be recognized over weighted average period | 7 years 6 months | |||||
401(k) plan [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Employer contribution | $ | $ 8,000,000 | $ 8,000,000 | $ 7,700,000 | |||
2012 Formula Plan [Member] | Restricted Stock [Member] | Director [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Restricted stock shares | shares | 40,000 | |||||
2012 Formula Plan [Member] | Common Class A [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Number of shares authorized | shares | 500,000 | 300,000 | ||||
2012 Plan [Member] | Restricted Stock Units [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Stock award vesting period | 3 years | |||||
2012 Plan [Member] | Restricted Stock Units [Member] | Executive Officer and Other Key Associates [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Restricted stock shares | shares | 560,000 | |||||
2012 Plan [Member] | Common Class A [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Number of shares authorized | shares | 4,000,000 | 2,000,000 | ||||
2004 Stock Incentive Plan and 2012 Formula Plan [Member] | Common Class A [Member] | Stock Option [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Stock option expiration period | 10 years | |||||
2004 Stock Incentive Plan and 2012 Formula Plan [Member] | Common Class A [Member] | Stock Option [Member] | Minimum [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Stock award vesting period | 6 months | |||||
2004 Stock Incentive Plan and 2012 Formula Plan [Member] | Common Class A [Member] | Stock Option [Member] | Maximum [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Stock award vesting period | 3 years | |||||
2004 Stock Incentive Plan and 2012 Formula Plan [Member] | Common Class A [Member] | Non-vested Restricted Stock Awards and Restricted Stock Units [Member] | Minimum [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||||
Stock award vesting period | 1 year | |||||
2004 Stock Incentive Plan and 2012 Formula Plan [Member] | Common Class A [Member] | Non-vested Restricted Stock Awards and Restricted Stock Units [Member] | Maximum [Member] | ||||||
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 (Detail) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Options Outstanding Beginning Balance | 439,000 | ||
Options Outstanding Exercised | (25,000) | ||
Options Outstanding Forfeited | (186,000) | ||
Options Outstanding Ending Balance | 228,000 | 439,000 | |
Options Outstanding Exercisable | 228,000 | ||
Weighted Average Exercise Price Per Share, Beginning Balance | $ 13.42 | ||
Weighted Average Exercise Price Per Share, Exercised | 1.81 | ||
Weighted Average Exercise Price Per Share, Forfeited | 29.14 | ||
Weighted Average Exercise Price Per Share, Ending Balance | 1.81 | $ 13.42 | |
Weighted Average Exercise Price Per Share, Exercisable | $ 1.81 | ||
Weighted Average Remaining Contractual Term | 1 year 3 months 18 days | 1 year 4 months 24 days | |
Weighted Average Remaining Contractual Term, Exercisable | 1 year 3 months 18 days | ||
Aggregate Intrinsic Value, Beginning Balance | $ 3,787 | $ 5,327 | |
Aggregate Intrinsic Value, Exercisable | 3,787 | ||
Intrinsic value of stock options exercised | $ 425 | $ 250 | $ 2,511 |
Minimum [Member] | |||
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 | 28.04 | ||
Exercise Price Per Share, Ending Balance | 1.81 | $ 1.81 | |
Exercise Price Per Share, Exercisable | 1.81 | ||
Maximum [Member] | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Exercise Price Per Share, Beginning Balance | 30.07 | ||
Exercise Price Per Share, Exercised | 1.81 | ||
Exercise Price Per Share, Forfeited | 30.07 | ||
Exercise Price Per Share, Ending Balance | 1.81 | $ 30.07 | |
Exercise Price Per Share, Exercisable | $ 1.81 |
Employee Benefit Plans - Stat75
Employee Benefit Plans - Status of Non-Vested Restricted Stock and Restricted Stock Unit Grants Related to Stock Plans (Detail) shares in Thousands | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Compensation And Retirement Disclosure [Abstract] | |
Non-vested Restricted Stock Awards and Restricted Stock Units, Beginning Balance | shares | 2,180 |
Non-vested Restricted Stock Awards and Restricted Stock Units, Granted | shares | 600 |
Non-vested Restricted Stock Awards and Restricted Stock Units, Forfeited | shares | (131) |
Non-vested Restricted Stock Awards and Restricted Stock Units, Vested | shares | (450) |
Non-vested Restricted Stock Awards and Restricted Stock Units, Ending Balance | shares | 2,199 |
Weighted Average Grant Date Fair Value per Share, Beginning Balance | $ / shares | $ 20.86 |
Weighted Average Grant Date Fair Value per Share, Granted | $ / shares | 22.88 |
Weighted Average Grant Date Fair Value per Share, Forfeited | $ / shares | 16.59 |
Weighted Average Grant Date Fair Value per Share, Vested | $ / shares | 20.42 |
Weighted Average Grant Date Fair Value per Share, Ending Balance | $ / shares | $ 21.76 |
Employee Benefit Plans - Stat76
Employee Benefit Plans - Status of Supplemental Executive Retirement Plan (Detail) - Supplemental Employee Retirement Plans, Defined Benefit [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Change in projected benefit obligation: | ||
Obligation at beginning of year | $ 11,233 | $ 9,234 |
Service cost | 1,711 | 1,590 |
Interest cost | 448 | 383 |
Actuarial loss (gain) | 429 | 295 |
Benefits paid | (265) | (269) |
Obligation at end of year | 13,556 | 11,233 |
Accumulated benefit obligation | 10,204 | 8,557 |
Change in fair value of plan assets: | ||
Employer contributions | 265 | 269 |
Benefits paid | (265) | (269) |
Funded status recognized | $ (13,556) | $ (11,233) |
Employee Benefit Plans - Stat77
Employee Benefit Plans - Status of Supplemental Executive Retirement Plan (Parenthetical) (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Defined Benefit Plan Disclosure [Line Items] | ||
Other long-term liabilities | $ 61,918 | $ 61,170 |
Other accrued liabilities | 237,963 | $ 236,982 |
Supplemental Employee Retirement Plans, Defined Benefit [Member] | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Other long-term liabilities | 13,300 | |
Other accrued liabilities | $ 300 |
Employee Benefit Plans - Cost C
Employee Benefit Plans - Cost Components of Supplemental Executive Retirement Plan (Detail) - Supplemental Employee Retirement Plans, Defined Benefit [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | $ 1,711 | $ 1,590 |
Interest cost | 448 | 383 |
Net pension expense (benefit) | $ 2,159 | $ 1,973 |
Employee Benefit Plans - Weight
Employee Benefit Plans - Weighted Average Assumptions Used to Determine Benefit Obligation and Net Periodic Benefit Costs (Detail) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Compensation And Retirement Disclosure [Abstract] | ||
Discount rate | 3.50% | 4.04% |
Rate of compensation increase | 3.00% | 3.00% |
Employee Benefit Plans - Estima
Employee Benefit Plans - Estimated Future Benefit Payments (Detail) $ in Thousands | Dec. 31, 2017USD ($) |
Compensation And Retirement Disclosure [Abstract] | |
2,018 | $ 265 |
2,019 | 265 |
2,020 | 363 |
2,021 | 363 |
2,022 | 363 |
2023 - 2027 | $ 1,968 |
Employee Benefit Plans - Schedu
Employee Benefit Plans - Schedule of Multi-Employer Pension Plans Affecting Period-to-Period Comparability of Contributions (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Compensation And Retirement Disclosure [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 | $ 171 | $ 150 | $ 140 |
Surcharge Imposed | Yes | ||
Collective-Bargaining Agreement Expiration Date | Between May 21, 2018 and November 15, 2018 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Recorded at Fair Value (Detail) - Fair Value Based on Significant Other Observable Inputs (Level 2) [Member] - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Assets: | ||
Cash surrender value of life insurance policies | $ 33,747 | $ 31,475 |
Cash flow swaps and interest rate caps designated as hedges | 5,968 | 2,772 |
Total assets | 39,715 | 34,247 |
Liabilities: | ||
Cash flow swaps designated as hedges | 1,286 | 6,135 |
Cash flow swaps not designated as hedges | 346 | |
Deferred compensation plan | 18,417 | 14,824 |
Total liabilities | $ 19,703 | $ 21,305 |
Fair Value Measurements - Ass83
Fair Value Measurements - Assets and Liabilities Recorded at Fair Value (Parenthetical) (Detail) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Other Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Cash flow swaps and interest rate caps designated as hedges | $ 5.1 | $ 2.8 |
Other Current Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Cash flow swaps and interest rate caps designated as hedges | 0.9 | |
Other Accrued Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Cash flow swaps designated as hedges | 1 | 3.7 |
Other Long-Term Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Cash flow swaps designated as hedges | $ 0.3 | $ 2.4 |
Fair Value Measurements - Ass84
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis (Detail) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items] | ||
Total Gain (loss) on goodwill | $ (900,000) | $ 0 |
Fair Value, Measurements, Nonrecurring [Member] | ||
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items] | ||
Long-lived assets held and used | 1,146,881,000 | |
Goodwill | 525,780,000 | |
Franchise assets | 69,900,000 | |
Total Gain (loss) on long-lived assets held and used | (4,894,000) | |
Total Gain (loss) on goodwill | (899,000) | |
Total Gain (loss) on franchise assets | (3,600,000) | |
Fair Value, Measurements, Nonrecurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | ||
Fair Value Of Assets And Liabilities Measured On Non Recurring Basis [Line Items] | ||
Long-lived assets held and used | 1,146,881,000 | |
Goodwill | 525,780,000 | |
Franchise assets | $ 69,900,000 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value and Carrying Value of Fixed Rate Long-Term Debt (Detail) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, Carrying Value | $ 1,024,703 | $ 882,678 |
7.0% Senior Subordinated Notes Expired [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, Fair Value | 211,000 | |
Long-term Debt, Carrying Value | 198,871 | |
5.0% Senior Subordinated Notes due 2023 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, Fair Value | 279,148 | 284,934 |
Long-term Debt, Carrying Value | 289,273 | 289,273 |
6.125% Senior Subordinated Notes due 2027 [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, Fair Value | 248,750 | |
Long-term Debt, Carrying Value | 250,000 | |
Mortgage Loan at Fix Interest Rate [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, Fair Value | 203,031 | 185,979 |
Long-term Debt, Carrying Value | 199,972 | 176,369 |
Other [Member] | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Long-term Debt, Fair Value | 3,760 | 4,057 |
Long-term Debt, Carrying Value | $ 3,947 | $ 4,280 |
Fair Value Measurements - Fai86
Fair Value Measurements - Fair Value and Carrying Value of Fixed Rate Long-Term Debt (Parenthetical) (Detail) | Dec. 31, 2017 | Mar. 10, 2017 | Dec. 31, 2016 | May 09, 2013 | Jul. 02, 2012 |
7.0% Senior Subordinated Notes due 2022 [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Stated interest rate on debt agreement | 7.00% | 7.00% | 7.00% | ||
5.0% Senior Subordinated Notes due 2023 [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Stated interest rate on debt agreement | 5.00% | 5.00% | 5.00% | ||
6.125% Senior Subordinated Notes due 2027 [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Stated interest rate on debt agreement | 6.125% | 6.125% | 6.125% |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($)Option | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Contingencies And Commitments [Line Items] | ||||
Lease exit expense | $ 1 | $ 2.2 | ||
Interest Expense | 0.6 | |||
Lease exit accrued cost | $ 1.6 | |||
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 | $ 100.6 | $ 94.6 | $ 98.2 | |
Lease expense from discontinuing operation net of lease exit accrual adjustments | 1.3 | 0.9 | 1.4 | |
Leases, net contingent rent benefit related to decrease in interest rates from continuing operation | 1.7 | 1.8 | 2 | |
Leases net contingent rent benefit related to decrease in interest rates from discontinuing operation | 0.1 | 0.1 | $ 0.1 | |
Obligations under subleases, if subleases do not perform | 47.7 | |||
Maximum exposure associated with general indemnifications | $ 5 | |||
General indemnifications expiration period | 1 year | |||
Contingent liability reserve balance after reduction | $ 2.8 | |||
Other Accrued Liabilities [Member] | ||||
Contingencies And Commitments [Line Items] | ||||
Amount reserved for pending proceedings | 3 | 0.3 | ||
Other Long-Term Liabilities [Member] | ||||
Contingencies And Commitments [Line Items] | ||||
Amount reserved for pending proceedings | $ 0.2 | $ 0.2 | ||
Dealership [Member] | ||||
Contingencies And Commitments [Line Items] | ||||
Joint venture ownership percentage | 50.00% |
Commitments and Contingencies88
Commitments and Contingencies - Summary of Lease Exit Accruals (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Commitments And Contingencies Disclosure [Abstract] | |
Beginning balance | $ 9,790 |
Lease exit expense | 2,157 |
Payments | (3,592) |
Lease buyout/other | (1,877) |
Ending balance | $ 6,478 |
Commitments and Contingencies89
Commitments and Contingencies - Summary of Lease Exit Accruals (Parenthetical) (Detail) $ in Millions | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Commitments And Contingencies Disclosure [Abstract] | |
Component of lease exit expense in interest expense, other, net | $ 0.1 |
Component of lease exit expense in selling, general and administrative expenses | 0.9 |
Component of lease exit expense in income (loss) from operations and the sale of dealerships | 1.2 |
Component of lease exit payments in selling, general and administrative expenses | 1.1 |
Component of lease exit payments in income (loss) from operations and the sale of dealerships | $ 2.5 |
Commitments and Contingencies90
Commitments and Contingencies - Future Minimum Lease Payments for both Continuing and Discontinued Operations (Detail) $ in Thousands | Dec. 31, 2017USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
2,018 | $ 86,941 |
2,019 | 73,080 |
2,020 | 47,761 |
2,021 | 35,636 |
2,022 | 26,760 |
Thereafter | 95,949 |
2,018 | (10,535) |
2,019 | (8,828) |
2,020 | (7,191) |
2,021 | (5,827) |
2,022 | (4,377) |
Thereafter | $ (10,982) |
Commitments and Contingencies91
Commitments and Contingencies - Financial Covenants Related to Amended Subordination and Guaranty Agreement (Detail) | Dec. 31, 2017 |
Subordination Agreement And Additional Financial Covenant [Line Items] | |
Minimum Consolidated Liquidity Ratio | 113.00% |
Minimum Consolidated Fixed Charge Coverage Ratio | 165.00% |
Maximum Consolidated Total Lease Adjusted Leverage Ratio | 472.00% |
Minimum EBTDAR to rent ratio | 385.00% |
Required Ratio [Member] | |
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 Comprehensi92
Accumulated Other Comprehensive Income (Loss) - Summary of Changes in Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | $ 725,164 | $ 729,048 | $ 666,718 |
Other comprehensive income (loss) before reclassifications | 1,452 | ||
Amounts reclassified out of accumulated other comprehensive income (loss) | 2,117 | ||
Other comprehensive income (loss) | 3,569 | 3,370 | 792 |
Ending Balance | 786,760 | 725,164 | 729,048 |
Gains and Losses on Cash Flow Hedges [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | (2,085) | ||
Other comprehensive income (loss) before reclassifications | 1,718 | ||
Amounts reclassified out of accumulated other comprehensive income (loss) | 2,117 | ||
Other comprehensive income (loss) | 3,835 | ||
Ending Balance | 1,750 | (2,085) | |
Defined Benefit Pension Plan [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | (177) | ||
Other comprehensive income (loss) before reclassifications | (266) | ||
Other comprehensive income (loss) | (266) | ||
Ending Balance | (443) | (177) | |
Accumulated Other Comprehensive Income (Loss) [Member] | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Beginning Balance | (2,262) | (5,632) | (6,424) |
Ending Balance | $ 1,307 | $ (2,262) | $ (5,632) |
Accumulated Other Comprehensi93
Accumulated Other Comprehensive Income (Loss) - Summary of Changes in Accumulated Other Comprehensive Income (Loss) (Parenthetical) (Detail) $ in Thousands | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Equity [Abstract] | |
Other comprehensive income (loss) before reclassifications, tax expense | $ 1,053 |
Tax benefit associated with change in pension actuarial loss | 163 |
Amounts reclassified out of accumulated other comprehensive income (loss), tax expense | $ 1,298 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) | 12 Months Ended |
Dec. 31, 2017Segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Segment Information - Summary o
Segment Information - Summary of Reportable Operating Segment (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment Reporting Information [Line Items] | ||||||||||||
Total consolidated revenues | $ 2,667,939 | $ 2,505,701 | $ 2,405,746 | $ 2,287,822 | $ 2,556,913 | $ 2,557,928 | $ 2,382,312 | $ 2,234,626 | $ 9,867,208 | $ 9,731,779 | $ 9,624,299 | |
Total segment income (loss) | 175,170 | 205,193 | 195,967 | |||||||||
Interest expense, other, net | (52,524) | (50,106) | (50,910) | |||||||||
Other income (expense), net | (14,522) | 125 | 99 | |||||||||
Income (loss) from continuing operations before taxes | 108,124 | 155,212 | 145,156 | |||||||||
Total floor plan interest expense | 36,395 | 27,716 | 21,326 | |||||||||
Total depreciation and amortization | 88,944 | 77,446 | 68,799 | |||||||||
Total capital expenditures | 234,245 | 206,232 | 173,249 | |||||||||
Total assets | 3,818,518 | 3,639,336 | 3,818,518 | 3,639,336 | ||||||||
Cash and cash equivalents | 6,352 | 3,108 | 6,352 | 3,108 | 3,625 | $ 4,182 | ||||||
Goodwill, Net | 525,780 | 472,437 | 525,780 | 472,437 | 471,493 | |||||||
Other Intangible Assets, net | 74,589 | 80,233 | 74,589 | 80,233 | ||||||||
Other Corporate and Other Assets | 1,080,961 | 859,656 | 1,080,961 | 859,656 | ||||||||
Franchised Dealerships Segment [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Total consolidated revenues | 9,612,899 | 9,590,752 | 9,547,236 | |||||||||
Total segment income (loss) | 196,897 | 218,769 | 213,224 | |||||||||
Total floor plan interest expense | 35,030 | 26,631 | 20,727 | |||||||||
Total depreciation and amortization | 83,741 | 73,591 | 65,766 | |||||||||
Total capital expenditures | 195,220 | 166,405 | 148,593 | |||||||||
Total assets | 1,930,336 | 2,079,297 | 1,930,336 | 2,079,297 | ||||||||
Goodwill, Net | 465,800 | 465,800 | ||||||||||
Pre-Owned Stores Segment [Member] | ||||||||||||
Segment Reporting Information [Line Items] | ||||||||||||
Total consolidated revenues | 254,309 | 141,027 | 77,063 | |||||||||
Total segment income (loss) | (21,727) | (13,576) | (17,257) | |||||||||
Total floor plan interest expense | 1,365 | 1,085 | 599 | |||||||||
Total depreciation and amortization | 5,203 | 3,855 | 3,033 | |||||||||
Total capital expenditures | 39,025 | 39,827 | $ 24,656 | |||||||||
Total assets | 200,500 | $ 144,605 | 200,500 | $ 144,605 | ||||||||
Goodwill, Net | $ 60,000 | $ 60,000 |
Summary of Quarterly Financia96
Summary of Quarterly Financial Data (Unaudited) - Consolidated Statements of Income by Quarter (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Total revenues | $ 2,667,939 | $ 2,505,701 | $ 2,405,746 | $ 2,287,822 | $ 2,556,913 | $ 2,557,928 | $ 2,382,312 | $ 2,234,626 | $ 9,867,208 | $ 9,731,779 | $ 9,624,299 |
Gross profit | 384,090 | 362,622 | 360,618 | 350,346 | 371,734 | 359,085 | 353,305 | 345,150 | 1,457,676 | 1,429,274 | 1,414,612 |
Net income (loss) | $ 61,952 | $ 19,440 | $ 12,132 | $ (541) | $ 37,636 | $ 18,111 | $ 22,822 | $ 14,624 | $ 92,983 | $ 93,193 | $ 86,311 |
Earnings (loss) per common share - Basic | $ 1.43 | $ 0.45 | $ 0.27 | $ (0.01) | $ 0.84 | $ 0.40 | $ 0.50 | $ 0.31 | $ 2.11 | $ 2.04 | $ 1.71 |
Earnings (loss) per common share - Diluted | $ 1.42 | $ 0.44 | $ 0.27 | $ (0.01) | $ 0.83 | $ 0.40 | $ 0.50 | $ 0.31 | $ 2.09 | $ 2.03 | $ 1.70 |
Summary of Quarterly Financia97
Summary of Quarterly Financial Data (Unaudited) - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Condensed Unaudited Quarterly Financial Data [Line Items] | |||||||||||
Tax benefit related to deferred income tax impact of change in U.S. federal tax income rate | $ (28,400) | $ (28,400) | |||||||||
U.S. statutory federal income tax rate | 35.00% | 35.00% | 35.00% | ||||||||
Pre-tax benefit related to storm damage and other accrual adjustments | 1,400 | $ 400 | $ 2,300 | ||||||||
Pre-tax gain (loss) on disposal | $ 11,188 | $ (47) | $ 2,748 | ||||||||
Asset impairment charges | 6,100 | $ 200 | $ 2,600 | $ 500 | 1,800 | 6,100 | $ 6,000 | 9,394 | $ 8,063 | $ 17,955 | |
Pre-tax legal and other charges | 1,500 | ||||||||||
Pre-tax charges against to natural damages | 3,000 | 4,600 | 2,400 | ||||||||
Pre-tax charges related to legal and other accrual adjustments | 1,000 | ||||||||||
Pre-tax legal accruals and settlements | 1,000 | ||||||||||
Lease exit expense | $ 1,000 | 2,200 | |||||||||
Pre-tax charge related to the extinguishment of debt | $ (14,607) | ||||||||||
Net benefit from legal settlements | 1,100 | ||||||||||
Pre-tax benefit related to manufacturer legal settlement | 14,800 | ||||||||||
Pre-tax benefit (charges) related to lease exit accrual adjustments in discontinued operations | $ (500) | $ (1,000) | $ 500 | ||||||||
7.0% Senior Subordinated Notes Expired [Member] | |||||||||||
Condensed Unaudited Quarterly Financial Data [Line Items] | |||||||||||
Pre-tax charge related to the extinguishment of debt | $ (15,300) | ||||||||||
Stated interest rate on debt agreement | 7.00% | ||||||||||
Franchised Dealerships Segment [Member] | |||||||||||
Condensed Unaudited Quarterly Financial Data [Line Items] | |||||||||||
Pre-tax gain (loss) on disposal | $ 1,500 | $ 8,500 | |||||||||
Scenario, Forecast [Member] | |||||||||||
Condensed Unaudited Quarterly Financial Data [Line Items] | |||||||||||
U.S. statutory federal income tax rate | 21.00% |