13. Condensed Consolidating Financial Information

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

September 30, 2018


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Cash and cash equivalents	$	37.6	$	—	$	—	$	3.4	$	34.2
Accounts receivable, net		953.4		(477.0)		477.0		435.1		518.3
Inventories		3,783.4		—		—		1,897.7		1,885.7
Other current assets		91.8		—		5.0		17.2		69.6
Total current assets		4,866.2		(477.0)		482.0		2,353.4		2,507.8
Property and equipment, net		2,178.2		—		2.7		1,034.5		1,141.0
Intangible assets		2,164.5		—		—		1,328.7		835.8
Equity method investments		1,299.7		—		1,235.3		—		64.4
Other long-term assets		18.3		(2,719.5)		2,724.9		4.2		8.7
Total assets	$	10,526.9	$	(3,196.5)	$	4,444.9	$	4,720.8	$	4,557.7
Floor plan notes payable	$	2,169.5	$	—	$	—	$	1,193.7	$	975.8
Floor plan notes payable — non-trade		1,359.0		—		173.3		551.8		633.9
Accounts payable		633.8		—		5.5		173.7		454.6
Accrued expenses		570.2		(477.0)		1.2		187.1		858.9
Current portion of long-term debt		92.7		—		—		5.0		87.7
Liabilities held for sale		0.7		—		—		0.7		—
Total current liabilities		4,825.9		(477.0)		180.0		2,112.0		3,010.9
Long-term debt		1,993.3		(92.5)		1,652.9		189.0		243.9
Deferred tax liabilities		547.9		—		—		545.0		2.9
Other long-term liabilities		547.8		—		—		64.5		483.3
Total liabilities		7,914.9		(569.5)		1,832.9		2,910.5		3,741.0
Total equity		2,612.0		(2,627.0)		2,612.0		1,810.3		816.7
Total liabilities and equity	$	10,526.9	$	(3,196.5)	$	4,444.9	$	4,720.8	$	4,557.7

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 September 30, 2018


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Revenues	$	5,658.6	$	—	$	—	$	3,061.9	$	2,596.7
Cost of sales		4,806.0		—		—		2,584.1		2,221.9
Gross profit		852.6		—		—		477.8		374.8
Selling, general and administrative expenses		662.8		—		6.3		356.6		299.9
Depreciation		25.9		—		0.4		14.0		11.5
Operating income		163.9		—		(6.7)		107.2		63.4
Floor plan interest expense		(20.2)		—		(1.9)		(12.7)		(5.6)
Other interest expense		(28.3)		—		(19.1)		(2.3)		(6.9)
Equity in earnings of affiliates		41.7		—		40.7		—		1.0
Equity in earnings of subsidiaries		—		(144.2)		144.2		—		—
Income from continuing operations before income taxes		157.1		(144.2)		157.2		92.2		51.9
Income taxes		(27.1)		24.8		(27.1)		(14.6)		(10.2)
Income from continuing operations		130.0		(119.4)		130.1		77.6		41.7
Income from discontinued operations, net of tax		0.1		(0.1)		0.1		0.1		—
Net income		130.1		(119.5)		130.2		77.7		41.7
Other comprehensive (loss) income, net of tax		(17.5)		19.8		(17.5)		—		(19.8)
Comprehensive income		112.6		(99.7)		112.7		77.7		21.9
Less: Comprehensive (loss) income attributable to non-controlling interests		(0.2)		0.1		(0.1)		—		(0.2)
Comprehensive income attributable to Penske Automotive Group common stockholders	$	112.8	$	(99.8)	$	112.8	$	77.7	$	22.1

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, 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

Nine Months Ended September 30, 2018


					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Revenues	$	17,345.8	$	—	$	—	$	8,990.2	$	8,355.6
Cost of sales		14,739.0		—		—		7,561.6		7,177.4
Gross profit		2,606.8		—		—		1,428.6		1,178.2
Selling, general and administrative expenses		2,001.3		—		19.1		1,059.6		922.6
Depreciation		77.2		—		1.2		41.3		34.7
Operating income		528.3		—		(20.3)		327.7		220.9
Floor plan interest expense		(59.0)		—		(5.3)		(36.3)		(17.4)
Other interest expense		(86.7)		—		(58.8)		(6.2)		(21.7)
Equity in earnings of affiliates		95.0		—		91.7		—		3.3
Equity in earnings of subsidiaries		—		(470.1)		470.1		—		—
Income from continuing operations before income taxes		477.6		(470.1)		477.4		285.2		185.1
Income taxes		(104.7)		104.0		(104.7)		(67.0)		(37.0)
Income from continuing operations		372.9		(366.1)		372.7		218.2		148.1
Income from discontinued operations, net of tax		0.2		(0.2)		0.2		0.2		—
Net income		373.1		(366.3)		372.9		218.4		148.1
Other comprehensive (loss) income, net of tax		(58.5)		56.4		(58.5)		—		(56.4)
Comprehensive income		314.6		(309.9)		314.4		218.4		91.7
Less: Comprehensive (loss) income attributable to non-controlling interests		(1.0)		1.2		(1.2)		—		(1.0)
Comprehensive income attributable to Penske Automotive Group common stockholders	$	315.6	$	(311.1)	$	315.6	$	218.4	$	92.7

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, 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 CASH FLOWS

Nine Months Ended September 30, 2018


			Penske
	Total		Automotive		Guarantor		Non-Guarantor
	Company		Group		Subsidiaries		Subsidiaries
Net cash provided by (used in) continuing operating activities	$	535.9	$	16.1	$	356.2	$	163.6
Investing activities:
Purchase of equipment and improvements		(188.5)		(2.3)		(95.1)		(91.1)
Proceeds from sale of dealerships		58.4		—		55.9		2.5
Proceeds from sale-leaseback transactions		10.7		—		—		10.7
Acquisitions, net		(168.6)		—		—		(168.6)
Other		(3.5)		(2.4)		—		(1.1)
Net cash (used in) provided by continuing investing activities		(291.5)		(4.7)		(39.2)		(247.6)
Financing activities:
Net borrowings (repayments) of long-term debt		(41.0)		(172.0)		41.6		89.4
Net (repayments) borrowings of floor plan notes payable — non-trade		(59.6)		(23.3)		(50.1)		13.8
Repurchases of common stock		(55.8)		(55.8)		—		—
Dividends		(89.7)		(89.7)		—		—
Other		(6.2)		(0.3)		(5.9)		—
Distributions from (to) parent		—		329.7		(314.3)		(15.4)
Net cash (used in) provided by continuing financing activities		(252.3)		(11.4)		(328.7)		87.8
Net cash provided by discontinued operations		0.3		—		0.3		—
Effect of exchange rate changes on cash and cash equivalents		(0.5)		—		—		(0.5)
Net change in cash and cash equivalents		(8.1)		(0.0)		(11.4)		3.3
Cash and cash equivalents, beginning of period		45.7		—		14.8		30.9
Cash and cash equivalents, end of period	$	37.6	$	(0.0)	$	3.4	$	34.2

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)
Proceeds from sale of dealerships		9.0		—		9.0		—
Acquisition of additional ownership interest in Penske Truck Leasing		(239.1)		(239.1)		—		—
Acquisitions, net		(449.7)		—		(316.9)		(132.8)
Other		4.3		4.6		—		(0.3)
Net cash (used in) provided by 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