13. Condensed Consolidating Financial Information

The following tables include condensed consolidating financial information as of June 30, 2018 and December 31, 2017 and for the three and six month periods ended June 30, 2018 and 2017 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

June 30, 2018


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Cash and cash equivalents	$	45.8	$	—	$	—	$	0.4	$	45.4
Accounts receivable, net		919.6		(472.2)		472.2		421.5		498.1
Inventories		3,895.1		—		—		1,893.0		2,002.1
Other current assets		97.5		—		6.0		20.4		71.1
Total current assets		4,958.0		(472.2)		478.2		2,335.3		2,616.7
Property and equipment, net		2,144.9		—		2.7		1,019.3		1,122.9
Intangible assets		2,174.8		—		—		1,328.7		846.1
Equity method investments		1,279.2		—		1,209.9		—		69.3
Other long-term assets		13.6		(2,784.9)		2,789.8		4.3		4.4
Total assets	$	10,570.5	$	(3,257.1)	$	4,480.6	$	4,687.6	$	4,659.4
Floor plan notes payable	$	2,278.0	$	—	$	—	$	1,221.5	$	1,056.5
Floor plan notes payable — non-trade		1,325.7		—		198.4		503.2		624.1
Accounts payable		680.0		—		4.2		163.5		512.3
Accrued expenses		529.7		(472.2)		1.1		163.9		836.9
Current portion of long-term debt		92.3		—		—		5.0		87.3
Liabilities held for sale		0.7		—		—		0.7		—
Total current liabilities		4,906.4		(472.2)		203.7		2,057.8		3,117.1
Long-term debt		2,059.6		(148.0)		1,751.1		191.2		265.3
Deferred tax liabilities		530.8		—		—		529.8		1.0
Other long-term liabilities		547.9		—		—		64.4		483.5
Total liabilities		8,044.7		(620.2)		1,954.8		2,843.2		3,866.9
Total equity		2,525.8		(2,636.9)		2,525.8		1,844.4		792.5
Total liabilities and equity	$	10,570.5	$	(3,257.1)	$	4,480.6	$	4,687.6	$	4,659.4

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2017


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Cash and cash equivalents	$	45.7	$	—	$	—	$	14.8	$	30.9
Accounts receivable, net		954.9		(463.6)		463.6		523.8		431.1
Inventories		3,944.1		—		—		1,935.0		2,009.1
Other current assets		81.8		—		7.3		16.8		57.7
Total current assets		5,026.5		(463.6)		470.9		2,490.4		2,528.8
Property and equipment, net		2,108.6		—		3.3		1,032.9		1,072.4
Intangible assets		2,134.5		—		—		1,334.6		799.9
Equity method investments		1,256.6		—		1,186.9		—		69.7
Other long-term assets		14.4		(2,772.7)		2,777.8		4.6		4.7
Total assets	$	10,540.6	$	(3,236.3)	$	4,438.9	$	4,862.5	$	4,475.5
Floor plan notes payable	$	2,343.2	$	—	$	—	$	1,272.4	$	1,070.8
Floor plan notes payable — non-trade		1,418.6		—		196.6		601.9		620.1
Accounts payable		641.6		—		3.9		194.4		443.3
Accrued expenses		523.5		(463.6)		1.0		165.2		820.9
Current portion of long-term debt		72.8		—		—		5.5		67.3
Liabilities held for sale		0.7		—		—		0.7		—
Total current liabilities		5,000.4		(463.6)		201.5		2,240.1		3,022.4
Long-term debt		2,090.4		(150.2)		1,809.4		191.6		239.6
Deferred tax liabilities		481.5		—		—		480.1		1.4
Other long-term liabilities		540.3		—		—		64.7		475.6
Total liabilities		8,112.6		(613.8)		2,010.9		2,976.5		3,739.0
Total equity		2,428.0		(2,622.5)		2,428.0		1,886.0		736.5
Total liabilities and equity	$	10,540.6	$	(3,236.3)	$	4,438.9	$	4,862.5	$	4,475.5

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended June 30, 2018


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Revenues	$	5,940.3	$	—	$	—	$	3,071.8	$	2,868.5
Cost of sales		5,050.5		—		—		2,582.3		2,468.2
Gross profit		889.8		—		—		489.5		400.3
Selling, general and administrative expenses		675.4		—		6.6		359.7		309.1
Depreciation		25.7		—		0.4		13.7		11.6
Operating income		188.7		—		(7.0)		116.1		79.6
Floor plan interest expense		(19.9)		—		(1.8)		(12.3)		(5.8)
Other interest expense		(28.6)		—		(18.9)		(2.0)		(7.7)
Equity in earnings of affiliates		36.0		—		35.0		—		1.0
Equity in earnings of subsidiaries		—		(168.3)		168.3		—		—
Income from continuing operations before income taxes		176.2		(168.3)		175.6		101.8		67.1
Income taxes		(41.0)		39.4		(41.0)		(27.4)		(12.0)
Income from continuing operations		135.2		(128.9)		134.6		74.4		55.1
Income from discontinued operations, net of tax		—		—		—		—		—
Net income		135.2		(128.9)		134.6		74.4		55.1
Other comprehensive (loss) income, net of tax		(72.8)		68.1		(72.8)		—		(68.1)
Comprehensive income		62.4		(60.8)		61.8		74.4		(13.0)
Less: Comprehensive (loss) income attributable to non-controlling interests		(0.5)		1.1		(1.1)		—		(0.5)
Comprehensive income attributable to Penske Automotive Group common stockholders	$	62.9	$	(61.9)	$	62.9	$	74.4	$	(12.5)

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended June 30, 2017


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Revenues	$	5,383.4	$	—	$	—	$	3,034.8	$	2,348.6
Cost of sales		4,566.1		—		—		2,550.4		2,015.7
Gross profit		817.3		—		—		484.4		332.9
Selling, general and administrative expenses		622.0		—		6.2		344.5		271.3
Depreciation		23.3		—		0.4		13.2		9.7
Operating income		172.0		—		(6.6)		126.7		51.9
Floor plan interest expense		(15.5)		—		(1.1)		(9.7)		(4.7)
Other interest expense		(26.4)		—		(17.8)		(2.2)		(6.4)
Equity in earnings of affiliates		26.8		—		25.2		—		1.6
Equity in earnings of subsidiaries		—		(156.6)		156.6		—		—
Income from continuing operations before income taxes		156.9		(156.6)		156.3		114.8		42.4
Income taxes		(50.2)		50.3		(50.2)		(41.2)		(9.1)
Income from continuing operations		106.7		(106.3)		106.1		73.6		33.3
Income from discontinued operations, net of tax		0.2		(0.2)		0.2		0.2		—
Net income		106.9		(106.5)		106.3		73.8		33.3
Other comprehensive income, net of tax		40.5		(37.6)		40.5		—		37.6
Comprehensive income		147.4		(144.1)		146.8		73.8		70.9
Less: Comprehensive income attributable to non-controlling interests		2.4		(1.6)		1.6		—		2.4
Comprehensive income attributable to Penske Automotive Group common stockholders	$	145.0	$	(142.5)	$	145.2	$	73.8	$	68.5

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Six Months Ended June 30, 2018


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Revenues	$	11,687.2	$	—	$	—	$	5,928.3	$	5,758.9
Cost of sales		9,933.0		—		—		4,977.5		4,955.5
Gross profit		1,754.2		—		—		950.8		803.4
Selling, general and administrative expenses		1,338.5		—		12.8		703.0		622.7
Depreciation		51.3		—		0.8		27.3		23.2
Operating income		364.4		—		(13.6)		220.5		157.5
Floor plan interest expense		(38.8)		—		(3.4)		(23.6)		(11.8)
Other interest expense		(58.4)		—		(39.7)		(3.9)		(14.8)
Equity in earnings of affiliates		53.3		—		51.0		—		2.3
Equity in earnings of subsidiaries		—		(325.9)		325.9		—		—
Income from continuing operations before income taxes		320.5		(325.9)		320.2		193.0		133.2
Income taxes		(77.6)		79.2		(77.6)		(52.4)		(26.8)
Income from continuing operations		242.9		(246.7)		242.6		140.6		106.4
Income from discontinued operations, net of tax		0.1		(0.1)		0.1		0.1		—
Net income		243.0		(246.8)		242.7		140.7		106.4
Other comprehensive (loss) income, net of tax		(41.0)		36.6		(41.0)		—		(36.6)
Comprehensive income		202.0		(210.2)		201.7		140.7		69.8
Less: Comprehensive (loss) income attributable to non-controlling interests		(0.8)		1.1		(1.1)		—		(0.8)
Comprehensive income attributable to Penske Automotive Group common stockholders	$	202.8	$	(211.3)	$	202.8	$	140.7	$	70.6

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Six Months Ended June 30, 2017


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Revenues	$	10,464.5	$	—	$	—	$	5,702.7	$	4,761.8
Cost of sales		8,872.9		—		—		4,781.6		4,091.3
Gross profit		1,591.6		—		—		921.1		670.5
Selling, general and administrative expenses		1,223.7		—		12.2		682.9		528.6
Depreciation		45.7		—		0.8		25.9		19.0
Operating income		322.2		—		(13.0)		212.3		122.9
Floor plan interest expense		(29.2)		—		(2.1)		(18.1)		(9.0)
Other interest expense		(51.4)		—		(34.3)		(4.3)		(12.8)
Equity in earnings of affiliates		40.0		—		37.7		—		2.3
Equity in earnings of subsidiaries		—		(292.3)		292.3		—		—
Income from continuing operations before income taxes		281.6		(292.3)		280.6		189.9		103.4
Income taxes		(91.3)		95.2		(91.3)		(73.8)		(21.4)
Income from continuing operations		190.3		(197.1)		189.3		116.1		82.0
Loss from discontinued operations, net of tax		(0.4)		0.4		(0.4)		(0.4)		—
Net income		189.9		(196.7)		188.9		115.7		82.0
Other comprehensive income, net of tax		66.6		(61.1)		66.6		—		61.1
Comprehensive income		256.5		(257.8)		255.5		115.7		143.1
Less: Comprehensive income attributable to non-controlling interests		3.2		(2.0)		2.0		—		3.2
Comprehensive income attributable to Penske Automotive Group common stockholders	$	253.3	$	(255.8)	$	253.5	$	115.7	$	139.9

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Six Months Ended June 30, 2018


			Penske
	Total		Automotive		Guarantor		Non-Guarantor
	Company		Group		Subsidiaries		Subsidiaries
Net cash provided by (used in) continuing operating activities	$	417.0	$	(24.5)	$	357.2	$	84.3
Investing activities:
Purchase of equipment and improvements		(118.8)		(0.4)		(68.4)		(50.0)
Proceeds from sale of dealerships		58.4		—		55.9		2.5
Proceeds from sale-leaseback transactions		5.8		—		—		5.8
Acquisitions, net		(168.6)		—		—		(168.6)
Other		(3.0)		(1.9)		—		(1.1)
Net cash (used in) provided by continuing investing activities		(226.2)		(2.3)		(12.5)		(211.4)
Financing activities:
Net borrowings (repayments) of long-term debt		23.1		(73.0)		(56.5)		152.6
Net (repayments) borrowings of floor plan notes payable — non-trade		(92.9)		1.8		(98.8)		4.1
Repurchases of common stock		(55.8)		(55.8)		—		—
Dividends		(59.0)		(59.0)		—		—
Other		(6.1)		(0.3)		(5.8)		—
Distributions from (to) parent		—		213.1		(198.2)		(14.9)
Net cash (used in) provided by continuing financing activities		(190.7)		26.8		(359.3)		141.8
Net cash provided by discontinued operations		0.2		—		0.2		—
Effect of exchange rate changes on cash and cash equivalents		(0.2)		—		—		(0.2)
Net change in cash and cash equivalents		0.1		—		(14.4)		14.5
Cash and cash equivalents, beginning of period		45.7		—		14.8		30.9
Cash and cash equivalents, end of period	$	45.8	$	—	$	0.4	$	45.4

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Six Months Ended June 30, 2017


			Penske
	Total		Automotive		Guarantor		Non-Guarantor
	Company		Group		Subsidiaries		Subsidiaries
Net cash provided by (used in) continuing operating activities	$	320.5	$	(50.5)	$	252.6	$	118.4
Investing activities:
Purchase of equipment and improvements		(113.4)		(1.4)		(49.4)		(62.6)
Proceeds from sale of dealerships		9.0		—		9.0		—
Acquisitions, net		(431.9)		—		(316.9)		(115.0)
Other		6.0		6.0		—		—
Net cash (used in) provided by continuing investing activities		(530.3)		4.6		(357.3)		(177.6)
Financing activities:
Net borrowings of long-term debt		137.9		83.0		10.8		44.1
Net borrowings of floor plan notes payable — non-trade		131.3		29.6		80.2		21.5
Repurchases of common stock		(8.5)		(8.5)		—		—
Dividends		(52.4)		(52.4)		—		—
Other		(5.8)		(5.8)		—		—
Distributions from (to) parent		—		—		3.7		(3.7)
Net cash provided by continuing financing activities		202.5		45.9		94.7		61.9
Net cash provided by discontinued operations		2.5		—		2.5		—
Effect of exchange rate changes on cash and cash equivalents		1.5		—		—		1.5
Net change in cash and cash equivalents		(3.3)		—		(7.5)		4.2
Cash and cash equivalents, beginning of period		24.0		—		9.4		14.6
Cash and cash equivalents, end of period	$	20.7	$	—	$	1.9	$	18.8