Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 31, 2017 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | CARS | |
Entity Registrant Name | Cars.com Inc. | |
Entity Central Index Key | 1,683,606 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 71,589,655 |
CONDENSED COMBINED BALANCE SHEE
CONDENSED COMBINED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 1,951 | $ 8,896 |
Accounts receivables, less allowance of $3,272 and $3,527, respectively | 91,445 | 98,303 |
Prepaid expenses and other current assets | 12,104 | 12,342 |
Total current assets | 105,500 | 119,541 |
Property and equipment | ||
Cost | 42,059 | 37,190 |
Less accumulated depreciation | (19,335) | (16,729) |
Net property and equipment | 22,724 | 20,461 |
Intangible and other assets | ||
Goodwill | 788,107 | 788,107 |
Intangible assets, less accumulated amortization of $185,118 and $165,651, respectively | 1,587,902 | 1,607,369 |
Investments and other assets | 11,264 | 11,788 |
Total assets | 2,515,497 | 2,547,266 |
Current liabilities | ||
Accounts payable | 4,424 | 7,844 |
Accrued liabilities | 61,463 | 64,140 |
Total current liabilities | 65,887 | 71,984 |
Noncurrent liabilities | ||
Deferred incentive plans | 2,039 | 3,913 |
Unfavorable contracts liability | 37,785 | 44,085 |
Deferred tax liability | 8,155 | 8,325 |
Other noncurrent liabilities | 2,510 | 1,674 |
Total noncurrent liabilities | 50,489 | 57,997 |
Total liabilities | 116,376 | 129,981 |
Commitments and contingent liabilities | ||
Equity | ||
Parent’s investment, net | 2,399,121 | 2,417,285 |
Total liabilities and equity | $ 2,515,497 | $ 2,547,266 |
CONDENSED COMBINED BALANCE SHE3
CONDENSED COMBINED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Statement Of Financial Position [Abstract] | ||
Accounts receivables, less allowance | $ 3,272 | $ 3,527 |
Intangible assets, less accumulated amortization | $ 185,118 | $ 165,651 |
CONDENSED COMBINED STATEMENTS O
CONDENSED COMBINED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Revenues: | |||
Retail | $ 112,245 | $ 109,605 | |
Wholesale | [1] | 40,929 | 42,884 |
Total | 153,174 | 152,489 | |
Operating expenses: | |||
Product support, technology and operations | 34,819 | 32,709 | |
Marketing and sales | 59,001 | 58,342 | |
General and administrative | 10,345 | 7,502 | |
Affiliate revenue share | 2,361 | 1,994 | |
Amortization of intangible assets | 19,467 | 18,164 | |
Total | 125,993 | 118,711 | |
Operating income | 27,181 | 33,778 | |
Other income (loss), net | 125 | (79) | |
Income before income taxes | 27,306 | 33,699 | |
Provision for income taxes | 418 | ||
Net income | $ 26,888 | $ 33,699 | |
[1] | Wholesale revenue includes revenue generated from our Parent of $2.1 million during both the three months ended March 31, 2017 and 2016 (See Note 9). |
CONDENSED COMBINED STATEMENTS 5
CONDENSED COMBINED STATEMENTS OF INCOME (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
Wholesale revenue from related party | $ 2.1 | $ 2.1 |
CONDENSED COMBINED STATEMENTS 6
CONDENSED COMBINED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 26,888 | $ 33,699 |
Adjustments to reconcile net income to operating cash flows: | ||
Depreciation and amortization | 22,073 | 20,245 |
Amortization of unfavorable contract liability | (6,300) | (6,300) |
(Gain) loss on trading securities related to deferred compensation | (84) | 79 |
Provision for doubtful accounts receivable | 763 | 723 |
Increase (decrease) in operating assets and liabilities | 376 | (22,588) |
Net cash flow provided by operating activities | 43,716 | 25,858 |
Cash flows from investing activities: | ||
Purchase of property and equipment | (5,609) | (2,129) |
Net cash used in investing activities | (5,609) | (2,129) |
Cash flows from financing activities: | ||
Transactions with Parent, net | (45,052) | (23,693) |
Net cash used in financing activities | (45,052) | (23,693) |
(Decrease) increase in cash and cash equivalents | (6,945) | 36 |
Cash and cash equivalents at beginning of period | 8,896 | 100 |
Cash and cash equivalents at end of period | 1,951 | 136 |
Supplemental non-cash information: | ||
Purchases of property and equipment in accrued liabilities and accounts payables | $ 140 | $ 135 |
CONDENSED COMBINED STATEMENTS 7
CONDENSED COMBINED STATEMENTS OF EQUITY $ in Thousands | USD ($) |
Balance at Dec. 31, 2015 | $ 2,304,519 |
Statement Of Stockholders Equity [Abstract] | |
Net income | 33,699 |
Transactions with Parent, net | (23,693) |
Balance at Mar. 31, 2016 | 2,314,525 |
Balance at Dec. 31, 2016 | 2,417,285 |
Statement Of Stockholders Equity [Abstract] | |
Net income | 26,888 |
Transactions with Parent, net | (45,052) |
Balance at Mar. 31, 2017 | $ 2,399,121 |
Separation from Parent, Descrip
Separation from Parent, Description of Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Separation from Parent, description of business and basis of presentation | NOTE 1 Separation from Parent, description of business and basis of presentation Separation from Parent . On September 7, 2016, TEGNA Inc. (“TEGNA” or the “Parent”), our former parent company, announced its plan to separate its digital automotive marketplace business, including Cars.com, LLC, the principal entity through which TEGNA’s digital automotive marketplace business has historically been operated, and DMR Holdings, Inc. (“DealerRater”), a leading automotive dealer review website, from its other digital businesses (the “Separation”). The Separation occurred on May 31, 2017 by means of a spin-off of a newly formed company named Cars.com Inc. (“Cars.com,” the “Company,” “our,” “us,” or “we”), which now owns the digital automotive marketplace business. A Registration Statement on Form 10 relating to the Separation was filed by the Company with the U.S. Securities and Exchange Commission (the “SEC”) on May 5, 2017 and declared effective by the SEC on May 15, 2017 (the “Registration Statement on Form 10”). On May 31, 2017, the Parent completed the Separation through a pro rata distribution to the Parent’s stockholders of all of the outstanding shares of our common stock, and our common stock began trading “regular way” on the New York Stock Exchange on June 1, 2017. Each holder of Parent common stock received one share of our common stock for every three shares of Parent common stock held on May 18, 2017, the record date for the distribution. The Parent structured the distribution to be tax-free to its U.S. stockholders for U.S. federal income tax purposes. Description of business . Cars.com is a leading online destination that helps car shoppers and owners navigate every turn of car ownership. A pioneer in automotive classifieds, the company has evolved into one of the largest digital automotive platforms, connecting consumers with local dealers across the country anytime, anywhere. Through trusted expert content, on-the-lot mobile app features, millions of new and used vehicle listings, a comprehensive set of research tools and the largest database of consumer reviews in the industry, Cars.com helps shoppers buy, sell and service their vehicles. We have approximately 35 million monthly visits to our web properties. Cars.com generates revenue through online subscription advertising products targeting car dealerships through our direct sales force as well as our affiliate sales channels. We also generate revenue through the sale of display advertising to national advertisers. Our website hosts approximately five million vehicle listings and serves approximately 21,000 franchise and independent car dealers in all 50 states. Cars.com properties include DealerRater, Auto.com, PickupTrucks.com™ and NewCars.com©. The Company is headquartered in Chicago, IL. Basis of Presentation . Historically, TEGNA has not disclosed separate combined interim financial statements for Cars.com, LLC. On August 1, 2016, TEGNA purchased 100% of DealerRater, a leading automotive dealer review website. DealerRater was included in the distribution to Cars.com as part of the Separation. The accompanying financial statements combine the activity for the acquired business from the date of acquisition and reflect the application of push down accounting. The accompanying interim financial statements are derived from the historical accounting records of TEGNA and present our financial position, results of operations and cash flows as of the periods presented as if we were a separate entity. These interim financial statements are presented in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial statements. Accordingly, the interim financial statements do not include all information and footnotes normally included in annual financial statements prepared in accordance with U.S. GAAP. Since the Parent’s acquisition of Cars.com, LLC in 2014, Cars.com, LLC has primarily operated as a standalone entity within TEGNA’s broader corporate organization. The historical financial statements include allocations of certain TEGNA corporate expenses. Such costs primarily include insurance and other general corporate overhead expenses and were allocated based on either the actual costs incurred, or Cars.com, LLC’s headcount relative to our Parent’s consolidated headcount. The historical allocated corporate costs were $0.7 million and $0.1 million during the three months ended March 31, 2017 and 2016, respectively. Our management believes that such allocations are reasonable. These allocated expenses relate to the various services that have historically been provided to Cars.com, LLC by our Parent. However, such expenses may not be indicative of the actual level of expense that would have been incurred by Cars.com, LLC if it had operated as an independent, publicly-traded company or the costs expected to be incurred in the future. All of our internal intercompany accounts have been eliminated. All significant intercompany transactions between either (i) us and Parent or (ii) us and Parent affiliates have been included within the financial statements and are considered to be effectively settled through equity contributions or distributions at the time the transactions were recorded. The accumulated net effect of intercompany transactions between either (i) us and Parent or (ii) us and Parent affiliates are included in “Parent’s investment, net.” The total net effect of these intercompany transactions is reflected in the Condensed Combined Statements of Cash Flows as financing activities. These interim financial statements should be read in conjunction with the audited annual financial statements, and notes thereto, as of and for the year ended December 31, 2016 included in our Registration Statement on Form 10. These interim financial statements follow the same accounting policies and methods in their application as the most recent audited financial statements. In the opinion of management, the interim financial statements reflect all adjustments (all of which are of a normal and recurring nature), which are necessary to present fairly the financial position, results of operations and cash flows for the interim periods. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 Summary of significant accounting policies See Note 2 “Summary of significant accounting policies” in Part I, Item 13 of our Registration Statement on Form 10 for a discussion of Cars.com’s significant accounting policies. New Accounting Pronouncements Not Yet Adopted . The Financial Accounting Standards Board (“FASB”) amended the FASB Accounting Standards Codification and created a new Topic 606, Revenue from Contracts with Customers. In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments—Overall The new guidance is effective for us beginning in the first quarter of 2018. In February 2016, the FASB amended the FASB Accounting Standards Codification and created a new Topic 842, Leases In June 2016, the FASB Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326). In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Simplifying the Test for Goodwill Impairment. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets and Liabilities | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill Other Intangible Assets And Liabilities Disclosure [Abstract] | |
Goodwill and Other Intangible Assets and Liabilities | NOTE 3 Goodwill and other intangible assets and liabilities The following table displays goodwill, indefinite-lived intangibles and amortizable intangible assets at March 31, 2017 and December 31, 2016 (in thousands): Gross Accumulated Amortization Net Mar. 31, 2017 Goodwill $ 788,107 $ — $ 788,107 Indefinite-lived intangibles: Trade name 872,320 — 872,320 Amortizable intangible assets: Customer relationships 814,240 (156,889 ) 657,351 Acquired software 71,700 (25,555 ) 46,145 Trade name 9,800 (544 ) 9,256 Non-compete agreements 2,860 (1,430 ) 1,430 Content library 2,100 (700 ) 1,400 Total amortizable intangible assets 900,700 (185,118 ) 715,582 Total $ 2,561,127 $ (185,118 ) $ 2,376,009 Dec. 31, 2016 Goodwill $ 788,107 $ — $ 788,107 Indefinite-lived intangibles: Trade name 872,320 — 872,320 Amortizable intangible assets: Customer relationships 814,240 (140,788 ) 673,452 Acquired software 71,700 (22,798 ) 48,902 Trade name 9,800 (340 ) 9,460 Non-compete agreements 2,860 (1,287 ) 1,573 Content library 2,100 (438 ) 1,662 Total amortizable intangible assets 900,700 (165,651 ) 735,049 Total $ 2,561,127 $ (165,651 ) $ 2,395,476 We also have an intangible liability related to unfavorable wholesale contracts that Cars.Com, LLC entered into as part of the acquisition by TEGNA in October 2014. The unfavorable contract liability as of March 31, 2017 and December 31, 2016 was $63.0 million and $69.3 million, respectively. Liabilities that will be amortized in the next twelve months are recorded in Accrued liabilities, with the remainder recorded in Unfavorable contract liability on the Condensed Combined Balance Sheets. Amortization of the liability is recognized as wholesale revenue on the Condensed Combined Statements of Income. Unfavorable wholesale contract revenue recognized in both the three months ended March 31, 2017 and 2016 was $6.3 million. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2017 | |
Investments Debt And Equity Securities [Abstract] | |
Investments | NOTE 4 Investments We have a 21% ownership interest in RepairPal, Inc. (“RepairPal”), an online marketplace offering consumers a price estimator for car repairs and an ability to research repair shop reviews. We account for our investment under the cost method. While we believe that we have the ability to exercise significant influence, it has been determined that our investment is not substantially similar to common stock on the acquisition date because it has a substantive liquidation preference over RepairPal’s common stock. This factor precludes us from accounting for the investment under the equity method. In May 2016, we purchased $2.2 million of convertible debt issued by RepairPal. The debt accrues interest at an annual rate of 7% and matures in May 2018, at which time the debt converts into shares of preferred stock. The aggregate carrying amount of the investment as of March 31, 2017 and December 31, 2016 was $9.4 million and $9.3 million, respectively. We record these amounts in Investments and other assets on the Condensed Combined Balance Sheets. No events or circumstances occurred that required us to estimate the fair value of the investment. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 5 Income taxes DealerRater, a corporate entity, is subject to federal and state income taxes. Accordingly, income taxes incurred by DealerRater since its acquisition on August 1, 2016 have been recognized in the historical financial statements. We did not have any income taxes for the three months ended March 31, 2016. |
Long-term incentive plan
Long-term incentive plan | 3 Months Ended |
Mar. 31, 2017 | |
Compensation Related Costs [Abstract] | |
Long-term incentive plan | NOTE 6 Long-term incentive plan In June 2001, we established a long-term incentive plan (“LTIP”). Under the plan, at our discretion, we may designate employees to participate and may make annual contributions to the participants’ account. In the three months ended March 31, 2017 and for full-year 2016, we contributed $0.3 million and $0.6 million, respectively. The total amount contributed by us is marked to market quarterly and any unrealized gains (losses) are recognized in Other income, net on the Condensed Combined Statements of Income. Under this plan, deferred compensation expense was $0.2 million and $0.3 million in the three months ended March 31, 2017 and 2016, respectively. The deferred compensation liability was $2.3 million and $3.1 million as of March 31, 2017 and December 31, 2016, respectively. Management does not expect to make any new contributions to LTIP subsequent to the Separation. |
Fair value measurement
Fair value measurement | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair value measurement | NOTE 7 Fair value measurement We measure and record certain assets at fair value in the accompanying financial statements. U.S. GAAP establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs). The hierarchy consists of three levels: Level 1— Quoted market prices in active markets for identical assets or liabilities; Level 2— Inputs other than Level 1 inputs that are either directly or indirectly observable; and Level 3— Unobservable inputs developed using our own estimates and assumptions, which reflect those that a market participant would use. Financial assets that are carried at fair value on a recurring basis in the balance sheet consist of marketable securities held as LTIP investments. The following table presents the LTIP investments carried at fair value as of March 31, 2017 and December 31, 2016, by category on the balance sheet in accordance with the valuation hierarchy defined above (in thousands): Fair value measurement as of Mar. 31, 2017 Level 1 Level 2 Level 3 Total Assets: Mutual funds $ 1,862 $ — $ — $ 1,862 Total $ 1,862 $ — $ — $ 1,862 Investments valued using the net asset value as a practical expedient: Fixed income fund $ 861 Total investments at fair value $ 2,723 Fair value measurement as of Dec. 31, 2016 Level 1 Level 2 Level 3 Total Assets: Mutual funds $ 2,228 $ — $ — $ 2,228 Total $ 2,228 $ — $ — $ 2,228 Investments valued using the net asset value as a practical expedient: Fixed income fund $ 1,031 Total investments at fair value $ 3,259 Fair value for mutual funds is measured using Level 1 inputs and quoted market prices at the reporting date multiplied by the quantity held. Our fixed income fund investment consists of a commingled fund for which quoted market prices are not available. The fair value of the investment represents the net asset value as provided by the trustee. In addition to the financial instruments listed in the table above, we hold other financial instruments, including cash and cash equivalents, receivables and accounts payable. The carrying amounts for these balances approximated their fair values. Certain assets and liabilities are measured at fair value on a nonrecurring basis, and therefore, not included in the tables above. These assets include goodwill and intangible assets and result as acquisitions occur. The amounts assigned to intangible assets and goodwill as they relate to the Company’s acquisitions are based on the Company’s best estimate of the fair value. The Company uses an independent valuation specialist to assist in determining the fair value of the identified intangible assets at acquisition. The fair value of the significant identified intangible assets is generally estimated using a combination of an income approach using the discounted cash flow analysis and market approach using the guideline public company analysis, which represents a Level 3 fair value measurement. The income approach includes a forecast of direct revenues and costs associated with the respective intangible assets and charges for economic returns on tangible and intangible assets utilized in cash flow generation. The market approach also uses forecasted revenue and earnings, as well as comparable public company trading values. Net cash flows attributable to the identified intangible assets are discounted to their present value at a rate commensurate with the perceived risk. |
Share appreciation rights plan
Share appreciation rights plan | 3 Months Ended |
Mar. 31, 2017 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share Appreciation Rights Plan | NOTE 8 Share appreciation rights plan Effective as of January 1, 2012, we established a Share Appreciation Rights Plan (the "SAR Plan"). Eligible participants receive a number of stock appreciation rights annually that entitle the employee to receive the appreciation in the fair market value of a share from the date of grant up to a specified date or dates plus an amount equal to the distributions per share. Deferred compensation is based upon award of stock appreciation rights, the value of which is related to the appreciation in the value of Cars.com. Awards granted in a given year vest to the participant over a three-year period. Benefits paid under the SAR Plan are made in cash, not common stock, at the end of the three-year vesting period from the original grant date. Expense related to the SAR Plan has been recorded in accordance with the accounting standards for share based payments. Due to the cash settlement at the end of the performance period, the awards are classified as a liability and are remeasured each reporting period at fair value. As of March 31, 2017, Cars.com recorded a liability of $2.0 million related to its SAR Plan on its Condensed Combined Balance Sheets. In the three months ended March 31, 2017, no stock appreciation rights were granted to employees. Management does not expect to issue any new grants subsequent to the Separation. |
Related party transactions
Related party transactions | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related party transactions | NOTE 9 Related party transactions We were party to a commercial agreement with our Parent. Revenue earned from this agreement for both the three months ended March 31, 2017 and 2016 was $2.1 million. Prior to the Separation and distribution, Parent utilized a centralized approach to cash management and the financing of its operations, providing funds to its entities as needed. These transactions were recorded in “Parent’s investment, net” when advanced. Accordingly, none of Parent’s Cash and cash equivalents were assigned to us in the Financial Statements. Cash and cash equivalents in our Condensed Combined Balance Sheets represent cash held locally by us. Equity in the Condensed Combined Balance Sheets represents the accumulated balance of transactions between us and Parent, our paid-in-capital, and Parent’s interest in our cumulative retained earnings, and are presented within “Parent’s investment, net”. The amounts comprising the accumulated balance of transactions between us and Parent and Parent affiliates include (i) the cumulative net assets attributed to us by Parent and Parent affiliates and (ii) the cumulative net advances to Parent representing our cumulative funds swept (net of funding provided by Parent and Parent affiliates to us) as part of the centralized cash management program. |
Commitments, contingent liabili
Commitments, contingent liabilities and other matters | 3 Months Ended |
Mar. 31, 2017 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments, contingent liabilities and other matters | NOTE 10 Commitments, contingent liabilities and other matters Commitments In May 2016, we entered into a new lease of a building in Chicago, IL. The lease extends through June 2031 and monthly rental payments under the lease escalate by 2.5% each year throughout the lease. Minimum payments throughout the life of the lease are $57.7 million. Litigation We are defendants from time to time in judicial and administrative proceedings involving matters incidental to our business. We do not believe that any material liability will be imposed as a result of these matters. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 11 Subsequent events Separation from Parent . On May 31, 2017, the Parent completed the Separation through a pro rata distribution to the Parent’s stockholders of all the outstanding shares of our common stock and we made a $650 million cash transfer to Parent. Each holder of Parent common stock received one share of our common stock for every three shares of Parent common stock held on May 18, 2017, the record date for the distribution. The Parent structured the distribution to be tax-free to its U.S. stockholders for U.S. federal income tax purposes. In connection with the Separation and prior to the distribution, we entered into various agreements to effect the Separation and provide a framework for its relationship with Parent after the Separation and distribution, including a separation and distribution agreement, a transition services agreement, a tax matters agreement and an employee matters agreement. These agreements provide for the allocation between Cars.com and Parent of the assets, employees, liabilities and obligations (including investments, property and employee benefits and tax-related assets and liabilities) of Parent and its subsidiaries attributable to periods prior to, at and after Cars.com’s Separation from Parent and govern the relationship between Cars.com and Parent subsequent to the completion of the Separation. A summary of the separation and distribution agreement and these other agreements can be found in the Company’s Registration Statement on Form 10. In connection with the Separation and distribution, on May 30, 2017, we adopted several compensation and benefit plans, including the Cars.com Inc. Omnibus Incentive Compensation Plan (the “Omnibus Plan”). A summary of each of these plans can be found in the Registration Statement on Form 10. At the time of the distribution, we issued equity awards under the Omnibus Plan as a result of the conversion of certain outstanding share-based awards previously granted by Parent into awards denominated in our shares in accordance with the terms of the Separation and distribution agreement and employee matters agreement we entered into with Parent. Term loan and revolving credit facility . On May 31, 2017, we and certain of our domestic wholly-owned subsidiaries (the “Guarantors”) entered into a Credit Agreement (the “Credit Agreement”) with the lenders named therein. The Credit Agreement matures on May 31, 2022 and includes (a) revolving loan commitments in an aggregate principal amount of up to $450,000,000 (of which up to $25,000,000 may be in the form of letters of credit at the request of the Company) and (b) term loans in an aggregate principal amount of $450,000,000. Interest on the borrowings under the Credit Agreement is payable at a base rate or eurocurrency rate, in either case plus an applicable margin and fees which, after the second full fiscal quarter following the closing date, is based upon the Company’s total net leverage ratio. Borrowings under the Credit Agreement were used to fund the payment of a cash payment to TEGNA immediately prior to the distribution, to pay fees and expenses related to the Separation and distribution and related transactions and may also be used for general corporate purposes, including, without limitation, to fund acquisitions, investments and capital expenditures not prohibited under the Credit Agreement. The term loan requires quarterly amortization payments commencing on September 30, 2017. The obligations under the Credit Agreement are guaranteed by the Guarantors and, the Company and the Guarantors secured their respective obligations under the Credit Agreement by granting liens in favor of the agent on substantially all of their assets. The terms of the Credit Agreement include representations and warranties, affirmative and negative covenants (including certain financial covenants) and events of default that are customary for credit facilities of this nature. See a summary of our Credit Agreement in the Registration Statement on Form 10. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
New Accounting Pronouncements Not Yet Adopted | New Accounting Pronouncements Not Yet Adopted . The Financial Accounting Standards Board (“FASB”) amended the FASB Accounting Standards Codification and created a new Topic 606, Revenue from Contracts with Customers. In January 2016, the FASB issued Accounting Standards Update No. 2016-01, Financial Instruments—Overall The new guidance is effective for us beginning in the first quarter of 2018. In February 2016, the FASB amended the FASB Accounting Standards Codification and created a new Topic 842, Leases In June 2016, the FASB Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326). In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Simplifying the Test for Goodwill Impairment. |
Goodwill and Other Intangible20
Goodwill and Other Intangible Assets and Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill Other Intangible Assets And Liabilities Disclosure [Abstract] | |
Summary of Goodwill, Indefinite-Lived Intangibles and Amortizable Intangible Assets | The following table displays goodwill, indefinite-lived intangibles and amortizable intangible assets at March 31, 2017 and December 31, 2016 (in thousands): Gross Accumulated Amortization Net Mar. 31, 2017 Goodwill $ 788,107 $ — $ 788,107 Indefinite-lived intangibles: Trade name 872,320 — 872,320 Amortizable intangible assets: Customer relationships 814,240 (156,889 ) 657,351 Acquired software 71,700 (25,555 ) 46,145 Trade name 9,800 (544 ) 9,256 Non-compete agreements 2,860 (1,430 ) 1,430 Content library 2,100 (700 ) 1,400 Total amortizable intangible assets 900,700 (185,118 ) 715,582 Total $ 2,561,127 $ (185,118 ) $ 2,376,009 Dec. 31, 2016 Goodwill $ 788,107 $ — $ 788,107 Indefinite-lived intangibles: Trade name 872,320 — 872,320 Amortizable intangible assets: Customer relationships 814,240 (140,788 ) 673,452 Acquired software 71,700 (22,798 ) 48,902 Trade name 9,800 (340 ) 9,460 Non-compete agreements 2,860 (1,287 ) 1,573 Content library 2,100 (438 ) 1,662 Total amortizable intangible assets 900,700 (165,651 ) 735,049 Total $ 2,561,127 $ (165,651 ) $ 2,395,476 |
Fair value measurement (Tables)
Fair value measurement (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
LTIP Investments Carried at Fair Value by Category on Balance Sheet in Accordance with Valuation Hierarchy | The following table presents the LTIP investments carried at fair value as of March 31, 2017 and December 31, 2016, by category on the balance sheet in accordance with the valuation hierarchy defined above (in thousands): Fair value measurement as of Mar. 31, 2017 Level 1 Level 2 Level 3 Total Assets: Mutual funds $ 1,862 $ — $ — $ 1,862 Total $ 1,862 $ — $ — $ 1,862 Investments valued using the net asset value as a practical expedient: Fixed income fund $ 861 Total investments at fair value $ 2,723 Fair value measurement as of Dec. 31, 2016 Level 1 Level 2 Level 3 Total Assets: Mutual funds $ 2,228 $ — $ — $ 2,228 Total $ 2,228 $ — $ — $ 2,228 Investments valued using the net asset value as a practical expedient: Fixed income fund $ 1,031 Total investments at fair value $ 3,259 |
Separation from Parent, Descr22
Separation from Parent, Description of Business and Basis of Presentation - Additional Information (Details) Visit in Millions, VehicleListing in Millions, $ in Millions | May 31, 2017 | Mar. 31, 2017USD ($)VisitVehicleListingDealershipState | Mar. 31, 2016USD ($) | Aug. 01, 2016 |
Summary Of Significant Accounting Policies [Line Items] | ||||
Number of web property visits per month | Visit | 35 | |||
Number of vehicle listings hosts in web | VehicleListing | 5 | |||
Number of franchises and independent car dealers served in web | Dealership | 21,000 | |||
Number of states in which Company web operates | State | 50 | |||
Historical allocated corporate costs | $ | $ 0.7 | $ 0.1 | ||
TEGNA Inc | DealerRater | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Percentage of ownership interest acquired | 100.00% | |||
Subsequent Event | TEGNA Inc | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Stock holder of Parent common stock received ratio | 0.3333 |
Goodwill and Other Intangible23
Goodwill and Other Intangible Assets and Liabilities - Summary of Goodwill, Indefinite-Lived Intangibles and Amortizable Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Intangible Assets By Major Class [Line Items] | ||
Goodwill, Gross | $ 788,107 | $ 788,107 |
Goodwill, Net | 788,107 | 788,107 |
Total Amortizable intangible assets, Gross | 900,700 | 900,700 |
Total Amortizable intangible assets, Accumulated Amortization | (185,118) | (165,651) |
Total Amortizable intangible assets, Net | 715,582 | 735,049 |
Intangible assets including goodwill, Gross | 2,561,127 | 2,561,127 |
Intangible assets including goodwill, Accumulated Amortization | (185,118) | (165,651) |
Intangible assets including goodwill, Net | 2,376,009 | 2,395,476 |
Customer Relationships | ||
Intangible Assets By Major Class [Line Items] | ||
Total Amortizable intangible assets, Gross | 814,240 | 814,240 |
Total Amortizable intangible assets, Accumulated Amortization | (156,889) | (140,788) |
Total Amortizable intangible assets, Net | 657,351 | 673,452 |
Acquired Software | ||
Intangible Assets By Major Class [Line Items] | ||
Total Amortizable intangible assets, Gross | 71,700 | 71,700 |
Total Amortizable intangible assets, Accumulated Amortization | (25,555) | (22,798) |
Total Amortizable intangible assets, Net | 46,145 | 48,902 |
Trade Name | ||
Intangible Assets By Major Class [Line Items] | ||
Total Amortizable intangible assets, Gross | 9,800 | 9,800 |
Total Amortizable intangible assets, Accumulated Amortization | (544) | (340) |
Total Amortizable intangible assets, Net | 9,256 | 9,460 |
Non-compete Agreements | ||
Intangible Assets By Major Class [Line Items] | ||
Total Amortizable intangible assets, Gross | 2,860 | 2,860 |
Total Amortizable intangible assets, Accumulated Amortization | (1,430) | (1,287) |
Total Amortizable intangible assets, Net | 1,430 | 1,573 |
Content Library | ||
Intangible Assets By Major Class [Line Items] | ||
Total Amortizable intangible assets, Gross | 2,100 | 2,100 |
Total Amortizable intangible assets, Accumulated Amortization | (700) | (438) |
Total Amortizable intangible assets, Net | 1,400 | 1,662 |
Trade Name | ||
Intangible Assets By Major Class [Line Items] | ||
Indefinite-lived intangibles, Gross | 872,320 | 872,320 |
Indefinite-lived intangibles, Net | $ 872,320 | $ 872,320 |
Goodwill and Other Intangible24
Goodwill and Other Intangible Assets and Liabilities - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Finite Lived Intangible Assets And Liabilities [Line Items] | |||
Unfavorable contracts liability | $ 37,785 | $ 44,085 | |
Unfavorable wholesale contract revenue | 6,300 | $ 6,300 | |
TEGNA Inc | |||
Finite Lived Intangible Assets And Liabilities [Line Items] | |||
Unfavorable contracts liability | $ 63,000 | $ 69,300 |
Investments - Additional Inform
Investments - Additional Information (Details) - USD ($) $ in Millions | 1 Months Ended | ||
May 31, 2016 | Mar. 31, 2017 | Dec. 31, 2016 | |
Schedule Of Gain Loss On Investments Including Marketable Securities And Investments Held At Cost Income Statement Reported Amounts Summary [Line Items] | |||
Aggregate carrying amount of investment | $ 9.4 | $ 9.3 | |
RepairPal, Inc. [Member] | |||
Schedule Of Gain Loss On Investments Including Marketable Securities And Investments Held At Cost Income Statement Reported Amounts Summary [Line Items] | |||
Ownership percentage | 21.00% | ||
RepairPal, Inc. [Member] | Convertible Debt [Member] | |||
Schedule Of Gain Loss On Investments Including Marketable Securities And Investments Held At Cost Income Statement Reported Amounts Summary [Line Items] | |||
Purchase of debt | $ 2.2 | ||
Percentage of annual interest rate | 7.00% | ||
Maturity date of debt | 2018-05 |
Long-Term Incentive Plan - Addi
Long-Term Incentive Plan - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Compensation Related Costs [Abstract] | |||
Contributions to plan by employer | $ 0.3 | $ 0.6 | |
Deferred compensation expense | 0.2 | $ 0.3 | |
Deferred compensation liability | $ 2.3 | $ 3.1 |
Fair value measurement - LTIP I
Fair value measurement - LTIP Investments Carried at Fair Value by Category on Balance Sheet in Accordance with Valuation Hierarchy (Details) - Fair Value Recurring - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Assets: | ||
Fair value measurements, Assets | $ 1,862 | $ 2,228 |
Total investments at fair value | 2,723 | 3,259 |
Mutual Funds | ||
Assets: | ||
Fair value measurements, Assets | 1,862 | 2,228 |
Fixed Income Fund | ||
Assets: | ||
Fair value measurements, Assets | 861 | 1,031 |
Level 1 | ||
Assets: | ||
Fair value measurements, Assets | 1,862 | 2,228 |
Level 1 | Mutual Funds | ||
Assets: | ||
Fair value measurements, Assets | $ 1,862 | $ 2,228 |
Share Appreciation Rights Plan
Share Appreciation Rights Plan - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Dec. 31, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Liability related to SAR plan | $ 2,039 | $ 3,913 |
Share Appreciation Rights Plan | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Award vesting period | 3 years | |
Liability related to SAR plan | $ 2,000 | |
Stock appreciation rights, granted | 0 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Related Party Transactions [Abstract] | ||
Revenue earned from commercial agreement with parent | $ 2.1 | $ 2.1 |
Commitments, Contingent Liabi30
Commitments, Contingent Liabilities and Other Matters - Additional Information (Details) $ in Millions | 1 Months Ended |
May 31, 2016USD ($) | |
Commitments And Contingencies Disclosure [Abstract] | |
Lease expiration date | Jun. 30, 2031 |
Lease escalate percentage per year | 2.50% |
Minimum payments throughout life of lease | $ 57.7 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - USD ($) | May 31, 2017 | Mar. 31, 2017 |
Term Loan And Revolving Credit Facility | ||
Credit agreement maturity date | May 31, 2022 | |
Term Loan | ||
Mode of term loan payment | Quarterly | |
Subsequent Event | Revolving Credit Facility | ||
Aggregate principal amount | $ 450,000,000 | |
Subsequent Event | Letter Of Credit | ||
Aggregate principal amount | 25,000,000 | |
Subsequent Event | Term Loan | ||
Aggregate principal amount | 450,000,000 | |
Spinoff | Subsequent Event | ||
Cash transfer made to parent company | $ 650,000,000 | |
TEGNA Inc | Spinoff | Subsequent Event | ||
Date of separation | May 31, 2017 | |
Share exchange ratio | 33.33% |