13. Condensed Consolidating Financial Information

The following tables include condensed consolidating financial information as of September 30, 2017 and December 31, 2016 and for the three and nine month periods ended September 30, 2017 and 2016 for Penske Automotive Group, Inc. (as the issuer of the 5.75% Notes, the 5.375% Notes, the 5.50% Notes, and the 3.75% 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, 2017


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Cash and cash equivalents	$	37.2	$	—	$	—	$	—	$	37.2
Accounts receivable, net		938.8		(458.9)		458.9		420.8		518.0
Inventories		3,770.3		—		—		1,876.7		1,893.6
Other current assets		96.5		—		6.3		18.7		71.5
Assets held for sale		—		—		—		—		—
Total current assets		4,842.8		(458.9)		465.2		2,316.2		2,520.3
Property and equipment, net		2,091.4		—		3.6		1,007.6		1,080.2
Intangible assets		2,133.7		—		—		1,334.8		798.9
Equity method investments		1,184.9		—		1,118.8		—		66.1
Other long-term assets		29.5		(2,596.4)		2,601.8		4.5		19.6
Total assets	$	10,282.3	$	(3,055.3)	$	4,189.4	$	4,663.1	$	4,485.1
Floor plan notes payable	$	2,222.3	$	—	$	—	$	1,104.7	$	1,117.6
Floor plan notes payable — non-trade		1,388.5		—		219.7		634.0		534.8
Accounts payable		609.0		—		4.1		161.2		443.7
Accrued expenses		388.5		(458.9)		1.0		43.3		803.1
Current portion of long-term debt		67.6		—		—		5.4		62.2
Liabilities held for sale		0.7		—		—		0.7		—
Total current liabilities		4,676.6		(458.9)		224.8		1,949.3		2,961.4
Long-term debt		2,170.5		(182.1)		1,852.6		193.8		306.2
Deferred tax liabilities		771.6		—		—		765.9		5.7
Other long-term liabilities		551.6		—		—		59.0		492.6
Total liabilities		8,170.3		(641.0)		2,077.4		2,968.0		3,765.9
Total equity		2,112.0		(2,414.3)		2,112.0		1,695.1		719.2
Total liabilities and equity	$	10,282.3	$	(3,055.3)	$	4,189.4	$	4,663.1	$	4,485.1

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2016


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Cash and cash equivalents	$	24.0	$	—	$	—	$	9.4	$	14.6
Accounts receivable, net		879.0		(447.0)		447.0		483.6		395.4
Inventories		3,408.2		—		—		1,830.5		1,577.7
Other current assets		73.9		—		14.3		14.6		45.0
Assets held for sale		8.4		—		—		8.4		—
Total current assets		4,393.5		(447.0)		461.3		2,346.5		2,032.7
Property and equipment, net		1,806.5		—		3.3		961.0		842.2
Intangible assets		1,711.3		—		—		1,079.6		631.7
Equity method investments		893.4		—		833.7		—		59.7
Other long-term assets		28.3		(2,215.0)		2,220.6		4.1		18.6
Total assets	$	8,833.0	$	(2,662.0)	$	3,518.9	$	4,391.2	$	3,584.9
Floor plan notes payable	$	2,084.5	$	—	$	—	$	1,178.0	$	906.5
Floor plan notes payable — non-trade		1,233.3		—		156.0		623.2		454.1
Accounts payable		497.4		—		4.9		171.9		320.6
Accrued expenses		360.0		(447.0)		0.9		77.2		728.9
Current portion of long-term debt		48.3		—		—		6.0		42.3
Liabilities held for sale		6.1		—		—		6.1		—
Total current liabilities		4,229.6		(447.0)		161.8		2,062.4		2,452.4
Long-term debt		1,828.8		(175.8)		1,577.6		186.0		241.0
Deferred tax liabilities		564.6		—		—		560.9		3.7
Other long-term liabilities		430.5		—		—		65.2		365.3
Total liabilities		7,053.5		(622.8)		1,739.4		2,874.5		3,062.4
Total equity		1,779.5		(2,039.2)		1,779.5		1,516.7		522.5
Total liabilities and equity	$	8,833.0	$	(2,662.0)	$	3,518.9	$	4,391.2	$	3,584.9

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended September 30, 2017


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Revenues	$	5,524.4	$	—	$	—	$	3,047.0	$	2,477.4
Cost of sales		4,701.8		—		—		2,570.2		2,131.6
Gross profit		822.6		—		—		476.8		345.8
Selling, general and administrative expenses		646.1		—		6.3		354.4		285.4
Depreciation		24.3		—		0.4		13.4		10.5
Operating income		152.2		—		(6.7)		109.0		49.9
Floor plan interest expense		(16.4)		—		(1.3)		(9.8)		(5.3)
Other interest expense		(27.8)		—		(19.8)		(2.3)		(5.7)
Equity in earnings of affiliates		30.9		—		30.5		—		0.4
Equity in earnings of subsidiaries		—		(136.3)		136.3		—		—
Income from continuing operations before income taxes		138.9		(136.3)		139.0		96.9		39.3
Income taxes		(44.7)		43.8		(44.7)		(36.0)		(7.8)
Income from continuing operations		94.2		(92.5)		94.3		60.9		31.5
Income from discontinued operations, net of tax		0.1		(0.1)		0.1		0.1		—
Net income		94.3		(92.6)		94.4		61.0		31.5
Other comprehensive income (loss), net of tax		35.3		(31.9)		35.3		—		31.9
Comprehensive income		129.6		(124.5)		129.7		61.0		63.4
Less: Comprehensive income attributable to non-controlling interests		0.6		(0.8)		0.8		—		0.6
Comprehensive income attributable to Penske Automotive Group common stockholders	$	129.0	$	(123.7)	$	128.9	$	61.0	$	62.8

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended September 30, 2016


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
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 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

Nine Months Ended September 30, 2017


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Revenues	$	15,988.9	$	—	$	—	$	8,749.7	$	7,239.2
Cost of sales		13,574.7		—		—		7,351.8		6,222.9
Gross profit		2,414.2		—		—		1,397.9		1,016.3
Selling, general and administrative expenses		1,869.8		—		18.5		1,037.3		814.0
Depreciation		70.0		—		1.2		39.3		29.5
Operating income		474.4		—		(19.7)		321.3		172.8
Floor plan interest expense		(45.6)		—		(3.4)		(27.9)		(14.3)
Other interest expense		(79.2)		—		(54.1)		(6.6)		(18.5)
Equity in earnings of affiliates		70.9		—		68.2		—		2.7
Equity in earnings of subsidiaries		—		(428.6)		428.6		—		—
Income from continuing operations before income taxes		420.5		(428.6)		419.6		286.8		142.7
Income taxes		(136.0)		139.0		(136.0)		(109.8)		(29.2)
Income from continuing operations		284.5		(289.6)		283.6		177.0		113.5
Loss from discontinued operations, net of tax		(0.3)		0.3		(0.3)		(0.3)		—
Net income		284.2		(289.3)		283.3		176.7		113.5
Other comprehensive income (loss), net of tax		101.9		(93.0)		101.9		—		93.0
Comprehensive income		386.1		(382.3)		385.2		176.7		206.5
Less: Comprehensive income attributable to non-controlling interests		3.8		(2.8)		2.8		—		3.8
Comprehensive income attributable to Penske Automotive Group common stockholders	$	382.3	$	(379.5)	$	382.4	$	176.7	$	202.7

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Nine Months Ended September 30, 2016


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
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 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 CASH FLOWS

Nine Months Ended September 30, 2017


			Penske
	Total		Automotive		Guarantor		Non-Guarantor
	Company		Group		Subsidiaries		Subsidiaries
Net cash provided by (used in) continuing operating activities	$	466.8	$	(34.5)	$	359.5	$	141.8
Investing activities:
Purchase of equipment and improvements		(180.1)		(2.4)		(80.0)		(97.7)
Acquisition of additional ownership interest in Penske Truck Leasing		(239.1)		(239.1)		—		—
Acquisitions, net		(449.7)		—		(316.9)		(132.8)
Other		13.3		4.6		9.0		(0.3)
Net cash used in continuing investing activities		(855.6)		(236.9)		(387.9)		(230.8)
Financing activities:
Issuance of 3.75% senior subordinated notes		300.0		300.0		—		—
Net borrowings (repayments) of long-term debt		50.3		(24.0)		8.6		65.7
Net borrowings of floor plan notes payable — non-trade		155.2		63.7		43.2		48.3
Payment of debt issuance costs		(4.0)		(4.0)		—		—
Repurchases of common stock		(18.5)		(18.5)		—		—
Dividends		(80.1)		(80.1)		—		—
Other		(5.8)		(5.8)		—		—
Distributions from (to) parent		—		40.1		(35.5)		(4.6)
Net cash provided by continuing financing activities		397.1		271.4		16.3		109.4
Net cash provided by discontinued operations		2.7		—		2.7		—
Effect of exchange rate changes on cash and cash equivalents		2.2		—		—		2.2
Net change in cash and cash equivalents		13.2		—		(9.4)		22.6
Cash and cash equivalents, beginning of period		24.0		—		9.4		14.6
Cash and cash equivalents, end of period	$	37.2	$	—	$	—	$	37.2

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Nine Months Ended September 30, 2016


			Penske
	Total		Automotive		Guarantor		Non-Guarantor
	Company		Group		Subsidiaries		Subsidiaries
Net cash provided by (used in) continuing operating activities	$	463.3	$	(24.1)	$	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:
Issuance of 5.50% senior subordinated notes		500.0		500.0		—		—
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)
Payment of debt issuance costs		(6.7)		(6.7)		—		—
Repurchases of common stock		(173.6)		(173.6)		—		—
Dividends		(70.3)		(70.3)		—		—
Other		(15.8)		(6.1)		—		(9.7)
Distributions from (to) parent		—		230.9		(227.4)		(3.5)
Net cash provided by (used in) continuing financing activities		365.7		523.4		(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