Consolidating Condensed Financial Information

6 Months Ended

Jun. 30, 2011

Consolidating Condensed Financial Information [Abstract]

Consolidating Condensed Financial Information

12. Consolidating Condensed Financial Information

The following tables include condensed consolidating financial information as of June 30, 2011 and December 31, 2010 and for the three and six month periods ended June 30, 2011 and 2010 for Penske Automotive Group, Inc. (as the issuer of the Convertible Notes and the 7.75% Notes), guarantor subsidiaries and non-guarantor subsidiaries (primarily representing foreign entities). The condensed consolidating financial information includes certain allocations of balance sheet, income statement and cash flow items which are not necessarily indicative of the financial position, results of operations and cash flows of these entities on a stand-alone basis.

CONDENSED CONSOLIDATING BALANCE SHEET
June 30, 2011

						Penske
	Total					Automotive		Guarantor		Non-Guarantor
	Company		Eliminations			Group		Subsidiaries		Subsidiaries
	(In thousands)
Cash and cash equivalents	$	3,346	$	—		$	—	$	1,455	$	1,891
Accounts receivable, net		365,794		(287,636	)		287,635		191,091		174,704
Inventories		1,456,409		—			—		784,818		671,591
Other current assets		91,772		—			3,529		40,711		47,532
Assets held for sale		56,826		—			—		56,826		—
Total current assets		1,974,147		(287,636	)		291,164		1,074,901		895,718
Property and equipment, net		776,386		—			4,941		475,265		296,180
Intangible assets		1,032,914		—			—		578,196		454,718
Equity method investments		288,028		—			232,836		—		55,192
Other long-term assets		15,404		(1,206,290	)		1,214,041		6,024		1,629
Total assets	$	4,086,879	$	(1,493,926	)	$	1,742,982	$	2,134,386	$	1,703,437
Floor plan notes payable	$	854,224	$	—		$	—	$	428,753	$	425,471
Floor plan notes payable — non-trade		562,906		—			45,200		265,768		251,938
Accounts payable		215,923		—			2,440		76,059		137,424
Accrued expenses		232,431		(287,636	)		2,787		134,202		383,078
Current portion of long-term debt		10,285		—			—		4,366		5,919
Liabilities held for sale		52,480		—			—		52,480		—
Total current liabilities		1,928,249		(287,636	)		50,427		961,628		1,203,830
Long-term debt		706,522		(40,311	)		572,324		53,016		121,493
Deferred tax liabilities		169,993		—			—		156,787		13,206
Other long-term liabilities		161,884		—			—		115,452		46,432
Total liabilities		2,966,648		(327,947	)		622,751		1,286,883		1,384,961
Total equity		1,120,231		(1,165,979	)		1,120,231		847,503		318,476
Total liabilities and equity	$	4,086,879	$	(1,493,926	)	$	1,742,982	$	2,134,386	$	1,703,437

CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2010

						Penske
	Total					Automotive		Guarantor		Non-Guarantor
	Company		Eliminations			Group		Subsidiaries		Subsidiaries
	(In thousands)
Cash and cash equivalents	$	17,868	$	—		$	—	$	15,497	$	2,371
Accounts receivable, net		383,675		(269,021	)		269,021		228,274		155,401
Inventories		1,453,546		—			—		878,571		574,975
Other current assets		68,457		—			1,127		32,371		34,959
Assets held for sale		110,485		—			—		110,485		—
Total current assets		2,034,031		(269,021	)		270,148		1,265,198		767,706
Property and equipment, net		720,834		—			4,957		448,116		267,761
Intangible assets		1,011,889		—			—		489,301		522,588
Equity method investments		288,406		—			234,214		—		54,192
Other long-term assets		14,672		(1,212,538	)		1,222,168		3,088		1,954
Total assets	$	4,069,832	$	(1,481,559	)	$	1,731,487	$	2,205,703	$	1,614,201
Floor plan notes payable	$	922,295	$	—		$	—	$	570,282	$	352,013
Floor plan notes payable — non-trade		492,595		—			25,000		288,274		179,321
Accounts payable		253,424		—			2,186		85,926		165,312
Accrued expenses		202,644		(269,021	)		564		95,970		375,131
Current portion of long-term debt		10,593		—			—		1,264		9,329
Liabilities held for sale		79,455		—			—		79,455		—
Total current liabilities		1,961,006		(269,021	)		27,750		1,121,171		1,081,106
Long-term debt		769,285		(77,593	)		657,884		49,689		139,305
Deferred tax liabilities		178,406		—			—		165,666		12,740
Other long-term liabilities		115,282		—			—		99,238		16,044
Total liabilities		3,023,979		(346,614	)		685,634		1,435,764		1,249,195
Total equity		1,045,853		(1,134,945	)		1,045,853		769,939		365,006
Total liabilities and equity	$	4,069,832	$	(1,481,559	)	$	1,731,487	$	2,205,703	$	1,614,201

CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended June 30, 2011

							Penske
	Total						Automotive			Guarantor			Non-Guarantor
	Company			Eliminations			Group			Subsidiaries			Subsidiaries
	(In thousands)
Revenues	$	2,888,420		$	—		$	—		$	1,659,489		$	1,228,931
Cost of sales		2,424,780			—			—			1,372,419			1,052,361
Gross profit		463,640			—			—			287,070			176,570
Selling, general and administrative expenses		380,350			—			4,790			232,097			143,463
Depreciation		12,093			—			257			6,538			5,298
Operating income (loss)		71,197			—			(5,047	)		48,435			27,809
Floor plan interest expense		(7,113	)		—			(329	)		(3,458	)		(3,326	)
Other interest expense		(10,575	)		—			(5,818	)		(638	)		(4,119	)
Debt discount amortization		—			—			—			—			—
Equity in earnings of affiliates		7,882			—			6,121			—			1,761
Equity in earnings of subsidiaries		—			(65,965	)		65,965			—			—
Income (loss) from continuing operations before income taxes		61,391			(65,965	)		60,892			44,339			22,125
Income taxes		(20,996	)		22,745			(20,996	)		(16,296	)		(6,449	)
Income (loss) from continuing operations		40,395			(43,220	)		39,896			28,043			15,676
(Loss) income from discontinued operations, net of tax		(336	)		336			(336	)		(336	)		—
Net income (loss)		40,059			(42,884	)		39,560			27,707			15,676
Less: Income attributable to non- controlling interests		499			—			—			—			499
Net income (loss) attributable to Penske Automotive Group common stockholders	$	39,560		$	(42,884	)	$	39,560		$	27,707		$	15,177

CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended June 30, 2010

							Penske
	Total						Automotive			Guarantor			Non-Guarantor
	Company			Eliminations			Group			Subsidiaries			Subsidiaries
	(In thousands)
Revenues	$	2,614,602		$	—		$	—		$	1,529,401		$	1,085,201
Cost of sales		2,197,796			—			—			1,272,432			925,364
Gross profit		416,806			—			—			256,969			159,837
Selling, general and administrative expenses		339,676			—			3,497			209,910			126,269
Depreciation		11,516			—			300			6,446			4,770
Operating income (loss)		65,614			—			(3,797	)		40,613			28,798
Floor plan interest expense		(7,983	)		—			—			(5,829	)		(2,154	)
Other interest expense		(12,542	)		—			(8,343	)		(33	)		(4,166	)
Debt discount amortization		(2,428	)		—			(2,428	)		—			—
Equity in earnings of affiliates		4,784			—			3,937			—			847
Gain on debt repurchase		422			—			422			—			—
Equity in earnings of subsidiaries		—			(57,833	)		57,833			—			—
Income (loss) from continuing operations before income taxes		47,867			(57,833	)		47,624			34,751			23,325
Income taxes		(16,628	)		20,192			(16,628	)		(13,554	)		(6,638	)
Income (loss) from continuing operations		31,239			(37,641	)		30,996			21,197			16,687
(Loss) income from discontinued operations, net of tax		(1,555	)		1,555			(1,555	)		(1,555	)		—
Net income (loss)		29,684			(36,086	)		29,441			19,642			16,687
Less: Income attributable to non- controlling interests		243			—			—			—			243
Net income (loss) attributable to Penske Automotive Group common stockholders	$	29,441		$	(36,086	)	$	29,441		$	19,642		$	16,444

CONDENSED CONSOLIDATING STATEMENT OF INCOME
Six Months Ended June 30, 2011

							Penske
	Total						Automotive			Guarantor			Non-Guarantor
	Company			Eliminations			Group			Subsidiaries			Subsidiaries
	(In thousands)
Revenues	$	5,683,907		$	—		$	—		$	3,227,865		$	2,456,042
Cost of sales		4,775,190			—			—			2,678,525			2,096,665
Gross profit		908,717			—			—			549,340			359,377
Selling, general and administrative expenses		738,462			—			9,739			446,030			282,693
Depreciation		24,031			—			542			12,893			10,596
Operating income (loss)		146,224			—			(10,281	)		90,417			66,088
Floor plan interest expense		(14,131	)		—			(462	)		(7,370	)		(6,299	)
Other interest expense		(21,976	)		—			(12,234	)		(1,249	)		(8,493	)
Debt discount amortization		(1,718	)		—			(1,718	)		—			—
Equity in earnings of affiliates		7,904			—			7,352			—			552
Equity in earnings of subsidiaries		—			(133,077	)		133,077			—			—
Income (loss) from continuing operations before income taxes		116,303			(133,077	)		115,734			81,798			51,848
Income taxes		(37,784	)		43,446			(37,784	)		(28,714	)		(14,732	)
Income (loss) from continuing operations		78,519			(89,631	)		77,950			53,084			37,116
(Loss) income from discontinued operations, net of tax		(4,463	)		4,463			(4,463	)		(4,463	)		—
Net income (loss)		74,056			(85,168	)		73,487			48,621			37,116
Less: Income attributable to non- controlling interests		569			—			—			—			569
Net income (loss) attributable to Penske Automotive Group common stockholders	$	73,487		$	(85,168	)	$	73,487		$	48,621		$	36,547

CONDENSED CONSOLIDATING STATEMENT OF INCOME
Six Months Ended June 30, 2010

							Penske
	Total						Automotive			Guarantor			Non-Guarantor
	Company			Eliminations			Group			Subsidiaries			Subsidiaries
	(In thousands)
Revenues	$	5,038,789		$	—		$	—		$	2,856,374		$	2,182,415
Cost of sales		4,221,931			—			—			2,367,531			1,854,400
Gross profit		816,858			—			—			488,843			328,015
Selling, general and administrative expenses		666,039			—			8,075			403,466			254,498
Depreciation		23,374			—			590			12,890			9,894
Operating income (loss)		127,445			—			(8,665	)		72,487			63,623
Floor plan interest expense		(16,125	)		—			—			(11,511	)		(4,614	)
Other interest expense		(25,262	)		—			(16,390	)		(589	)		(8,283	)
Debt discount amortization		(5,343	)		—			(5,343	)		—			—
Equity in earnings of affiliates		4,355			—			4,283			—			72
Gain on debt repurchase		1,027			—			1,027			—			—
Equity in earnings of subsidiaries		—			(110,964	)		110,964			—			—
Income (loss) from continuing operations before income taxes		86,097			(110,964	)		85,876			60,387			50,798
Income taxes		(30,878	)		39,899			(30,878	)		(25,754	)		(14,145	)
Income (loss) from continuing operations		55,219			(71,065	)		54,998			34,633			36,653
(Loss) income from discontinued operations, net of tax		(5,203	)		5,203			(5,203	)		(5,203	)		—
Net income (loss)		50,016			(65,862	)		49,795			29,430			36,653
Less: Income attributable to non- controlling interests		221			—			—			—			221
Net income (loss) attributable to Penske Automotive Group common stockholders	$	49,795		$	(65,862	)	$	49,795		$	29,430		$	36,432

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Six Months Ended June 30, 2011

				Penske
	Total			Automotive			Guarantor			Non-Guarantor
	Company			Group			Subsidiaries			Subsidiaries
	(In thousands)
Net cash from continuing operating activities	$	43,990		$	84,594		$	5,591		$	(46,195	)
Investing activities:
Purchase of equipment and improvements		(51,784	)		(1,308	)		(27,754	)		(22,722	)
Dealership acquisitions, net		(14,011	)		—			(12,331	)		(1,680	)
Other		2,865			—			—			2,865
Net cash from continuing investing activities		(62,930	)		(1,308	)		(40,085	)		(21,537	)
Financing activities:
Repurchase of 3.5% senior subordinated convertible notes		(87,278	)		(87,278	)		—			—
Net borrowings (repayments) of other long-term debt		15,372			—			23,215			(7,843	)
Net borrowings (repayments) of floor plan notes payable — non-trade		70,311			20,200			(30,056	)		80,167
Proceeds from exercises of options, including excess tax benefit		2,698			2,698			—			—
Repurchases of common stock		(12,413	)		(12,413	)		—			—
Dividends		(6,493	)		(6,493	)		—			—
Distributions from (to) parent		—			—			4,245			(4,245	)
Net cash from continuing financing activities		(17,803	)		(83,286	)		(2,596	)		68,079
Net cash from discontinued operations		22,221			—			22,221			—
Net change in cash and cash equivalents		(14,522	)		—			(14,869	)		347
Cash and cash equivalents, beginning of period		17,868			—			16,324			1,544
Cash and cash equivalents, end of period	$	3,346		$	—		$	1,455		$	1,891

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Six Months Ended June 30, 2010

				Penske
	Total			Automotive			Guarantor			Non-Guarantor
	Company			Group			Subsidiaries			Subsidiaries
	(In thousands)
Net cash from continuing operating activities	$	57,526		$	55,493		$	(35,703	)	$	37,736
Investing activities:
Purchase of equipment and improvements		(35,989	)		—			(26,176	)		(9,813	)
Dealership acquisitions, net		(9,362	)		—			(9,362	)		—
Other		—			—			83			(83	)
Net cash from continuing investing activities		(45,351	)		—			(35,455	)		(9,896	)
Financing activities:
Repurchase of 3.5% senior subordinated convertible notes		(113,604	)		(113,604	)		—			—
Net borrowings (repayments) of other long-term debt		18,503			28,000			7,739			(17,236	)
Net borrowings (repayments) of floor plan notes payable — non-trade		73,592			29,900			51,354			(7,662	)
Proceeds from exercises of options, including excess tax benefit		211			211			—			—
Distributions from (to) parent		—			—			473			(473	)
Net cash from continuing financing activities		(21,298	)		(55,493	)		59,566			(25,371	)
Net cash from discontinued operations		12,717			—			12,717			—
Net change in cash and cash equivalents		3,594			—			1,125			2,469
Cash and cash equivalents, beginning of period		14,584			—			12,929			1,655
Cash and cash equivalents, end of period	$	18,178		$	—		$	14,054		$	4,124