13. Condensed Consolidating Financial Information

The following tables include condensed consolidating financial information as of September 30, 2016 and December 31, 2015 and for the three and nine month periods ended September 30, 2016 and 2015 for Penske Automotive Group, Inc. (as the issuer of the 5.75% Notes, the 5.375% Notes, and the 5.50% Notes), guarantor subsidiaries and non-guarantor subsidiaries (primarily representing non-U.S. entities). Guarantor subsidiaries are directly or indirectly 100% owned by PAG, and the guarantees are full and unconditional, and joint and several. The guarantees may be released under certain circumstances upon resale, or transfer by us of the stock of the related guarantor or all or substantially all of the assets of the guarantor to a non-affiliate.

CONDENSED CONSOLIDATING BALANCE SHEET

September 30, 2016


					Penske
	Total				Automotive		Guarantor		Non‑Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
	(In millions)
Cash and cash equivalents	$	89.4	$	—	$	—	$	1.3	$	88.1
Accounts receivable, net		853.9		(441.8)		441.8		360.0		493.9
Inventories		3,279.7		—		—		1,736.6		1,543.1
Other current assets		105.3		—		4.5		32.7		68.1
Assets held for sale		7.5		—		—		7.5		—
Total current assets		4,335.8		(441.8)		446.3		2,138.1		2,193.2
Property and equipment, net		1,587.8		—		3.5		946.7		637.6
Intangible assets		1,725.2		—		—		1,079.7		645.5
Equity method investments		891.3		—		828.2		—		63.1
Other long-term assets		19.3		(2,209.2)		2,215.1		4.3		9.1
Total assets	$	8,559.4	$	(2,651.0)	$	3,493.1	$	4,168.8	$	3,548.5
Floor plan notes payable	$	2,073.2	$	—	$	—	$	1,063.9	$	1,009.3
Floor plan notes payable—non-trade		1,145.1		—		158.9		568.0		418.2
Accounts payable		506.1		—		3.4		159.2		343.5
Accrued expenses		389.2		(441.8)		—		146.5		684.5
Current portion of long-term debt		44.1		—		—		5.9		38.2
Liabilities held for sale		5.1		—		—		5.1		—
Total current liabilities		4,162.8		(441.8)		162.3		1,948.6		2,493.7
Long-term debt		1,833.5		(177.5)		1,542.1		187.9		281.0
Deferred tax liabilities		525.6		—		—		512.7		12.9
Other long-term liabilities		248.8		—		—		62.7		186.1
Total liabilities		6,770.7		(619.3)		1,704.4		2,711.9		2,973.7
Total equity		1,788.7		(2,031.7)		1,788.7		1,456.9		574.8
Total liabilities and equity	$	8,559.4	$	(2,651.0)	$	3,493.1	$	4,168.8	$	3,548.5

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2015


					Penske
	Total				Automotive		Guarantor		Non‑Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
	(In millions)
Cash and cash equivalents	$	62.4	$	—	$	—	$	—	$	62.4
Accounts receivable, net		782.3		(430.4)		430.4		400.8		381.5
Inventories		3,463.5		—		—		1,650.5		1,813.0
Other current assets		85.6		—		3.9		28.3		53.4
Assets held for sale		12.7		—		—		8.5		4.2
Total current assets		4,406.5		(430.4)		434.3		2,088.1		2,314.5
Property and equipment, net		1,520.1		—		4.0		822.0		694.1
Intangible assets		1,731.2		—		—		878.9		852.3
Equity method investments		336.4		—		298.2		—		38.2
Other long-term assets		19.2		(2,253.4)		2,259.9		7.2		5.5
Total assets	$	8,013.4	$	(2,683.8)	$	2,996.4	$	3,796.2	$	3,904.6
Floor plan notes payable	$	2,247.2	$	—	$	—	$	1,295.0	$	952.2
Floor plan notes payable—non-trade		1,132.4		—		154.7		339.8		637.9
Accounts payable		493.8		—		4.8		143.3		345.7
Accrued expenses		378.1		(430.4)		0.1		112.3		696.1
Current portion of long-term debt		28.0		—		—		5.7		22.3
Liabilities held for sale		6.2		—		—		4.4		1.8
Total current liabilities		4,285.7		(430.4)		159.6		1,900.5		2,656.0
Long-term debt		1,247.0		(256.4)		1,001.9		109.2		392.3
Deferred tax liabilities		433.4		—		—		413.4		20.0
Other long-term liabilities		212.4		—		—		68.9		143.5
Total liabilities		6,178.5		(686.8)		1,161.5		2,492.0		3,211.8
Total equity		1,834.9		(1,997.0)		1,834.9		1,304.2		692.8
Total liabilities and equity	$	8,013.4	$	(2,683.8)	$	2,996.4	$	3,796.2	$	3,904.6

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended September 30, 2016


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
	(In millions)
Revenues	$	5,152.0	$	—	$	—	$	2,896.9	$	2,255.1
Cost of sales		4,407.8		—		—		2,457.1		1,950.7
Gross profit		744.2		—		—		439.8		304.4
Selling, general and administrative expenses		581.2		—		3.9		337.3		240.0
Depreciation		21.5		—		0.5		12.4		8.6
Operating income		141.5		—		(4.4)		90.1		55.8
Floor plan interest expense		(11.9)		—		(0.7)		(7.1)		(4.1)
Other interest expense		(25.1)		—		(18.0)		(2.2)		(4.9)
Equity in earnings of affiliates		25.6		—		24.4		—		1.2
Equity in earnings of subsidiaries		—		(127.8)		127.8		—		—
Income from continuing operations before income taxes		130.1		(127.8)		129.1		80.8		48.0
Income taxes		(41.7)		41.4		(41.7)		(32.2)		(9.2)
Income from continuing operations		88.4		(86.4)		87.4		48.6		38.8
Income (loss) from discontinued operations, net of tax		0.1		(0.1)		0.1		0.1		—
Net income		88.5		(86.5)		87.5		48.7		38.8
Other comprehensive income (loss), net of tax		(10.8)		10.2		(10.8)		—		(10.2)
Comprehensive income		77.7		(76.3)		76.7		48.7		28.6
Less: Comprehensive income attributable to non-controlling interests		1.3		(0.3)		0.3		—		1.3
Comprehensive income attributable to Penske Automotive Group common stockholders	$	76.4	$	(76.0)	$	76.4	$	48.7	$	27.3

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended September 30, 2015


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
	(In millions)
Revenues	$	4,960.1	$	—	$	—	$	2,591.2	$	2,368.9
Cost of sales		4,230.9		—		—		2,197.2		2,033.7
Gross profit		729.2		—		—		394.0		335.2
Selling, general and administrative expenses		563.4		—		5.7		302.6		255.1
Depreciation		19.8		—		0.4		10.6		8.8
Operating income		146.0		—		(6.1)		80.8		71.3
Floor plan interest expense		(11.4)		—		(0.7)		(5.6)		(5.1)
Other interest expense		(16.3)		—		(10.6)		(1.3)		(4.4)
Equity in earnings of affiliates		11.0		—		11.0		—		—
Equity in earnings of subsidiaries		—		(134.8)		134.8		—		—
Income from continuing operations before income taxes		129.3		(134.8)		128.4		73.9		61.8
Income taxes		(41.7)		43.8		(41.7)		(29.4)		(14.4)
Income from continuing operations		87.6		(91.0)		86.7		44.5		47.4
(Loss) income from discontinued operations, net of tax		(0.1)		0.1		(0.1)		(0.1)		—
Net income		87.5		(90.9)		86.6		44.4		47.4
Other comprehensive income (loss), net of tax		(42.5)		40.8		(42.5)		—		(40.8)
Comprehensive income		45.0		(50.1)		44.1		44.4		6.6
Less: Comprehensive income attributable to non-controlling interests		1.5		(0.6)		0.6		—		1.5
Comprehensive income attributable to Penske Automotive Group common stockholders	$	43.5	$	(49.5)	$	43.5	$	44.4	$	5.1

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Nine Months Ended September 30, 2016


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
	(In millions)
Revenues	$	15,230.7	$	—	$	—	$	8,113.9	$	7,116.8
Cost of sales		12,991.4		—		—		6,856.0		6,135.4
Gross profit		2,239.3		—		—		1,257.9		981.4
Selling, general and administrative expenses		1,722.8		—		15.2		955.8		751.8
Depreciation		66.8		—		1.3		34.8		30.7
Operating income		449.7		—		(16.5)		267.3		198.9
Floor plan interest expense		(37.8)		—		(2.0)		(21.3)		(14.5)
Other interest expense		(61.8)		—		(43.6)		(2.8)		(15.4)
Equity in earnings of affiliates		43.1		—		39.1		—		4.0
Equity in earnings of subsidiaries		—		(412.8)		412.8		—		—
Income from continuing operations before income taxes		393.2		(412.8)		389.8		243.2		173.0
Income taxes		(128.4)		136.1		(128.4)		(97.9)		(38.2)
Income from continuing operations		264.8		(276.7)		261.4		145.3		134.8
(Loss) income from discontinued operations, net of tax		(1.1)		1.1		(1.1)		(1.0)		(0.1)
Net income		263.7		(275.6)		260.3		144.3		134.7
Other comprehensive income (loss), net of tax		(65.1)		66.2		(65.1)		—		(66.2)
Comprehensive income		198.6		(209.4)		195.2		144.3		68.5
Less: Comprehensive income attributable to non-controlling interests		4.5		(1.1)		1.1		—		4.5
Comprehensive income attributable to Penske Automotive Group common stockholders	$	194.1	$	(208.3)	$	194.1	$	144.3	$	64.0

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Nine Months Ended September 30, 2015


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
	(In millions)
Revenues	$	14,363.6	$	—	$	—	$	7,548.5	$	6,815.1
Cost of sales		12,213.2		—		—		6,372.4		5,840.8
Gross profit		2,150.4		—		—		1,176.1		974.3
Selling, general and administrative expenses		1,652.3		—		18.0		895.9		738.4
Depreciation		57.7		—		1.2		31.2		25.3
Operating income		440.4		—		(19.2)		249.0		210.6
Floor plan interest expense		(32.7)		—		(2.1)		(16.4)		(14.2)
Other interest expense		(49.0)		—		(30.6)		(4.0)		(14.4)
Equity in earnings of affiliates		29.7		—		27.3		—		2.4
Equity in earnings of subsidiaries		—		(410.2)		410.2		—		—
Income from continuing operations before income taxes		388.4		(410.2)		385.6		228.6		184.4
Income taxes		(128.2)		136.3		(128.2)		(91.8)		(44.5)
Income from continuing operations		260.2		(273.9)		257.4		136.8		139.9
(Loss) income from discontinued operations, net of tax		(1.1)		1.7		(1.7)		(1.3)		0.2
Net income		259.1		(272.2)		255.7		135.5		140.1
Other comprehensive income (loss), net of tax		(59.3)		55.6		(59.3)		—		(55.6)
Comprehensive income		199.8		(216.6)		196.4		135.5		84.5
Less: Comprehensive income attributable to non-controlling interests		3.1		0.2		(0.2)		—		3.1
Comprehensive income attributable to Penske Automotive Group common stockholders	$	196.7	$	(216.8)	$	196.6	$	135.5	$	81.4

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended September 30, 2016


			Penske
	Total		Automotive		Guarantor		Non‑Guarantor
	Company		Group		Subsidiaries		Subsidiaries
	(In millions)
Net cash provided by (used in) continuing operating activities	$	457.2	$	(30.2)	$	90.7	$	396.7
Investing activities:
Purchase of equipment and improvements		(171.7)		(0.8)		(103.5)		(67.4)
Acquisition of additional ownership interest in Penske Truck Leasing		(498.5)		(498.5)		—		—
Acquisitions, net		(106.0)		—		—		(106.0)
Other		(9.5)		—		17.0		(26.5)
Net cash used in continuing investing activities		(785.7)		(499.3)		(86.5)		(199.9)
Financing activities:
Net borrowings of long-term debt		119.3		45.0		8.4		65.9
Net borrowings (repayments) of floor plan notes payable—non-trade		12.8		4.2		215.5		(206.9)
Issuance of 5.50% senior subordinated notes		500.0		500.0		—		—
Payment of debt issuance costs		(6.7)		(6.7)		—		—
Repurchases of common stock		(173.6)		(173.6)		—		—
Dividends		(70.3)		(70.3)		—		—
Other		(9.7)		—		—		(9.7)
Distributions from (to) parent		—		230.9		(227.4)		(3.5)
Net cash provided by (used in) continuing financing activities		371.8		529.5		(3.5)		(154.2)
Net cash provided by discontinued operations		3.0		—		0.6		2.4
Effect of exchange rate changes on cash and cash equivalents		(19.3)		—		—		(19.3)
Net change in cash and cash equivalents		27.0		—		1.3		25.7
Cash and cash equivalents, beginning of period		62.4		—		—		62.4
Cash and cash equivalents, end of period	$	89.4	$	—	$	1.3	$	88.1

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended September 30, 2015


			Penske
	Total		Automotive		Guarantor		Non‑Guarantor
	Company		Group		Subsidiaries		Subsidiaries
	(In millions)
Net cash provided by continuing operating activities	$	373.4	$	28.4	$	154.3	$	190.7
Investing activities:
Purchase of equipment and improvements		(151.1)		(1.0)		(74.0)		(76.1)
Acquisitions, net		(85.4)		—		(21.7)		(63.7)
Other		0.2		—		—		0.2
Net cash used in continuing investing activities		(236.3)		(1.0)		(95.7)		(139.6)
Financing activities:
Net (repayments) borrowings of long-term debt		(165.7)		(10.0)		24.0		(179.7)
Net borrowings (repayments) of floor plan notes payable—non-trade		94.6		66.9		(130.1)		157.8
Payment of debt issuance costs		(1.8)		—		—		(1.8)
Repurchases of common stock		(22.0)		(22.0)		—		—
Dividends		(62.3)		(62.3)		—		—
Other		(5.9)		—		—		(5.9)
Distributions from (to) parent		—		—		8.3		(8.3)
Net cash used in continuing financing activities		(163.1)		(27.4)		(97.8)		(37.9)
Net cash provided by discontinued operations		39.7		—		39.2		0.5
Effect of exchange rate changes on cash and cash equivalents		(0.3)		—		—		(0.3)
Net change in cash and cash equivalents		13.4		—		—		13.4
Cash and cash equivalents, beginning of period		36.3		—		—		36.3
Cash and cash equivalents, end of period	$	49.7	$	—	$	—	$	49.7