Condensed Consolidating Financial Information

12 Months Ended

Dec. 31, 2019

Condensed Consolidating Financial Information

Condensed Consolidating Financial Information

19. Condensed Consolidating Financial Information

The following tables include condensed consolidating financial information as of December 31, 2019 and 2018 and for the years ended December 31, 2019, 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

December 31, 2019

					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Cash and cash equivalents	$	28.1	$	—	$	—	$	—	$	28.1
Accounts receivable, net		960.3		(497.4)		497.4		508.9		451.4
Inventories		4,260.7		—		—		2,124.9		2,135.8
Other current assets		85.0		—		3.7		22.7		58.6
Total current assets		5,334.1		(497.4)		501.1		2,656.5		2,673.9
Property and equipment, net		2,366.4		—		3.7		1,101.2		1,261.5
Operating lease right-of-use assets		2,360.5		—		9.3		1,574.7		776.5
Intangible assets		2,463.2		—		—		1,633.6		829.6
Equity method investments		1,399.0		—		1,328.8		—		70.2
Other long-term assets		19.5		(2,984.3)		2,996.2		1.4		6.2
Total assets	$	13,942.7	$	(3,481.7)	$	4,839.1	$	6,967.4	$	5,617.9
Floor plan notes payable	$	2,412.5	$	—	$	—	$	1,427.1	$	985.4
Floor plan notes payable — non-trade		1,594.0		—		233.9		522.5		837.6
Accounts payable		638.8		—		6.0		226.9		405.9
Accrued expenses and other current liabilities		701.9		(497.4)		1.6		242.0		955.7
Current portion of long-term debt		103.3		—		13.0		10.7		79.6
Liabilities held for sale		0.5		—		—		0.5		—
Total current liabilities		5,451.0		(497.4)		254.5		2,429.7		3,264.2
Long-term debt		2,257.0		(96.8)		1,757.9		254.5		341.4
Long-term operating lease liabilities		2,301.2		—		8.9		1,545.6		746.7
Deferred tax liabilities		677.9		—		—		668.1		9.8
Other long-term liabilities		444.0		—		6.2		30.9		406.9
Total liabilities		11,131.1		(594.2)		2,027.5		4,928.8		4,769.0
Total equity		2,811.6		(2,887.5)		2,811.6		2,038.6		848.9
Total liabilities and equity	$	13,942.7	$	(3,481.7)	$	4,839.1	$	6,967.4	$	5,617.9

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2018

					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Cash and cash equivalents	$	39.4	$	—	$	—	$	12.9	$	26.5
Accounts receivable, net		929.1		(481.7)		481.7		507.1		422.0
Inventories		4,040.1		—		—		1,961.6		2,078.5
Other current assets		86.6		—		10.6		17.8		58.2
Total current assets		5,095.2		(481.7)		492.3		2,499.4		2,585.2
Property and equipment, net		2,250.0		—		3.9		1,077.7		1,168.4
Intangible assets		2,238.2		—		—		1,422.6		815.6
Equity method investments		1,305.2		—		1,239.9		—		65.3
Other long-term assets		15.9		(2,814.3)		2,821.0		2.9		6.3
Total assets	$	10,904.5	$	(3,296.0)	$	4,557.1	$	5,002.6	$	4,640.8
Floor plan notes payable	$	2,362.2	$	—	$	—	$	1,348.3	$	1,013.9
Floor plan notes payable — non-trade		1,428.6		—		232.3		505.9		690.4
Accounts payable		598.2		—		4.9		196.6		396.7
Accrued expenses		566.6		(481.7)		1.4		160.2		886.7
Current portion of long-term debt		92.0		—		—		6.3		85.7
Liabilities held for sale		0.7		—		—		0.7		—
Total current liabilities		5,048.3		(481.7)		238.6		2,218.0		3,073.4
Long-term debt		2,124.7		(88.6)		1,683.8		225.7		303.8
Deferred tax liabilities		577.8		—		—		570.5		7.3
Other long-term liabilities		519.0		—		—		57.6		461.4
Total liabilities		8,269.8		(570.3)		1,922.4		3,071.8		3,845.9
Total equity		2,634.7		(2,725.7)		2,634.7		1,930.8		794.9
Total liabilities and equity	$	10,904.5	$	(3,296.0)	$	4,557.1	$	5,002.6	$	4,640.8

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Year Ended December 31, 2019

					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Revenues	$	23,179.4	$	—	$	—	$	12,928.7	$	10,250.7
Cost of sales		19,723.9		—		—		10,909.5		8,814.4
Gross profit		3,455.5		—		—		2,019.2		1,436.3
Selling, general and administrative expenses		2,693.2		—		25.9		1,471.2		1,196.1
Depreciation		109.6		—		1.4		59.9		48.3
Operating income		652.7		—		(27.3)		488.1		191.9
Floor plan interest expense		(84.5)		—		(8.0)		(57.1)		(19.4)
Other interest expense		(124.2)		—		(83.4)		(12.6)		(28.2)
Equity in earnings of affiliates		147.5		—		142.3		—		5.2
Equity in earnings of subsidiaries		—		(568.6)		568.6		—		—
Income from continuing operations before income taxes		591.5		(568.6)		592.2		418.4		149.5
Income taxes		(156.7)		150.5		(156.7)		(116.9)		(33.6)
Income from continuing operations		434.8		(418.1)		435.5		301.5		115.9
Income (loss) from discontinued operations, net of tax		0.3		(0.3)		0.3		0.3		—
Net income		435.1		(418.4)		435.8		301.8		115.9
Other comprehensive (loss) income, net of tax		31.4		(20.1)		31.4		—		20.1
Comprehensive income		466.5		(438.5)		467.2		301.8		136.0
Less: Comprehensive income attributable to non-controlling interests		(1.0)		0.3		(0.3)		—		(1.0)
Comprehensive income attributable to Penske Automotive Group common stockholders	$	467.5	$	(438.8)	$	467.5	$	301.8	$	137.0

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Year Ended December 31, 2018

					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Revenues	$	22,785.1	$	—	$	—	$	12,036.6	$	10,748.5
Cost of sales		19,370.2		—		—		10,130.4		9,239.8
Gross profit		3,414.9		—		—		1,906.2		1,508.7
Selling, general and administrative expenses		2,646.3		—		24.9		1,403.7		1,217.7
Depreciation		103.7		—		1.5		56.1		46.1
Operating income		664.9		—		(26.4)		446.4		244.9
Floor plan interest expense		(80.9)		—		(7.2)		(50.7)		(23.0)
Other interest expense		(114.7)		—		(77.8)		(8.8)		(28.1)
Equity in earnings of affiliates		134.8		—		129.5		—		5.3
Equity in earnings of subsidiaries		—		(586.8)		586.8		—		—
Income from continuing operations before income taxes		604.1		(586.8)		604.9		386.9		199.1
Income taxes		(134.3)		130.3		(134.3)		(88.6)		(41.7)
Income from continuing operations		469.8		(456.5)		470.6		298.3		157.4
Income (loss) from discontinued operations, net of tax		0.5		(0.5)		0.5		0.5		—
Net income		470.3		(457.0)		471.1		298.8		157.4
Other comprehensive (loss) income, net of tax		(89.5)		74.9		(89.5)		—		(74.9)
Comprehensive income		380.8		(382.1)		381.6		298.8		82.5
Less: Comprehensive income attributable to non-controlling interests		(2.2)		1.5		(1.5)		—		(2.2)
Comprehensive income attributable to Penske Automotive Group common stockholders	$	383.0	$	(383.6)	$	383.1	$	298.8	$	84.7

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Year Ended December 31, 2017

					Penske
	Total				Automotive		Guarantor		Non-Guarantor
	Company		Eliminations		Group		Subsidiaries		Subsidiaries
Revenues	$	21,386.9	$	—	$	—	$	11,825.9	$	9,561.0
Cost of sales		18,164.4		—		—		9,945.0		8,219.4
Gross profit		3,222.5		—		—		1,880.9		1,341.6
Selling, general and administrative expenses		2,516.0		—		24.5		1,393.3		1,098.2
Depreciation		95.1		—		1.6		53.1		40.4
Operating income		611.4		—		(26.1)		434.5		203.0
Floor plan interest expense		(63.4)		—		(4.9)		(38.5)		(20.0)
Other interest expense		(107.4)		—		(73.5)		(8.9)		(25.0)
Equity in earnings of affiliates		107.6		—		102.8		—		4.8
Equity in earnings of subsidiaries		—		(550.6)		550.6		—		—
Income from continuing operations before income taxes		548.2		(550.6)		548.9		387.1		162.8
Income taxes		64.8		(64.8)		64.8		95.5		(30.7)
Income from continuing operations		613.0		(615.4)		613.7		482.6		132.1
(Loss) income from discontinued operations, net of tax		(0.2)		0.2		(0.2)		(0.2)		—
Net income		612.8		(615.2)		613.5		482.4		132.1
Other comprehensive income (loss), net of tax		107.4		(97.5)		107.4		—		97.5
Comprehensive income		720.2		(712.7)		720.9		482.4		229.6
Less: Comprehensive income attributable to non-controlling interests		2.7		(3.2)		3.2		—		2.7
Comprehensive income attributable to Penske Automotive Group common stockholders	$	717.5	$	(709.5)	$	717.7	$	482.4	$	226.9

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2019

			Penske
	Total		Automotive		Guarantor		Non-Guarantor
	Company		Group		Subsidiaries		Subsidiaries
Net cash provided by (used in) continuing operating activities	$	518.3	$	(79.2)	$	554.2	$	43.3
Investing activities:
Purchase of equipment and improvements		(245.3)		(1.6)		(91.3)		(152.4)
Proceeds from sale of dealerships		22.8		—		16.2		6.6
Proceeds from sale-leaseback transactions		18.9		—		—		18.9
Acquisitions, net		(326.9)		—		(332.7)		5.8
Other		(2.2)		(3.8)		3.4		(1.8)
Net cash used in continuing investing activities		(532.7)		(5.4)		(404.4)		(122.9)
Financing activities:
Net borrowings of long-term debt		130.4		84.9		32.3		13.2
Net borrowings of floor plan notes payable — non-trade		177.5		1.6		28.7		147.2
Payment of debt issuance costs		(0.4)		(0.4)		—		—
Repurchases of common stock		(169.2)		(169.2)		—		—
Dividends		(130.8)		(130.8)		—		—
Other		(4.9)		(4.9)		—		—
Distributions from (to) parent		—		303.4		(224.0)		(79.4)
Net cash provided (used in) by continuing financing activities		2.6		84.6		(163.0)		81.0
Net cash provided by discontinued operations		0.3		—		0.3		—
Effect of exchange rate changes on cash and cash equivalents		0.2		—		—		0.2
Net change in cash and cash equivalents		(11.3)		—		(12.9)		1.6
Cash and cash equivalents, beginning of period		39.4		—		12.9		26.5
Cash and cash equivalents, end of period	$	28.1	$	—	$	—	$	28.1

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2018

			Penske
	Total		Automotive		Guarantor		Non-Guarantor
	Company		Group		Subsidiaries		Subsidiaries
Net cash provided by continuing operating activities	$	614.2	$	3.4	$	535.2	$	75.6
Investing activities:
Purchase of equipment and improvements		(305.6)		(1.2)		(173.9)		(130.5)
Proceeds from sale of dealerships		84.5		—		82.0		2.5
Proceeds from sale-leaseback transactions		10.7		—		—		10.7
Acquisitions, net		(309.1)		—		(140.5)		(168.6)
Other		(5.7)		(3.8)		—		(1.9)
Net cash used in continuing investing activities		(525.2)		(5.0)		(232.4)		(287.8)
Financing activities:
Net borrowings (repayments) of long-term debt		93.5		(142.0)		81.1		154.4
Net borrowings (repayments) of floor plan notes payable — non-trade		10.0		35.6		(96.0)		70.4
Payment of debt issuance costs		(1.9)		(1.9)		—		—
Repurchases of common stock		(68.9)		(68.9)		—		—
Dividends		(121.2)		(121.2)		—		—
Other		(5.8)		(5.8)		—		—
Distributions from (to) parent		—		305.8		(290.3)		(15.5)
Net cash (used in) provided by continuing financing activities		(94.3)		1.6		(305.2)		209.3
Net cash provided by discontinued operations		0.5		—		0.5		—
Effect of exchange rate changes on cash and cash equivalents		(1.5)		—		—		(1.5)
Net change in cash and cash equivalents		(6.3)		—		(1.9)		(4.4)
Cash and cash equivalents, beginning of period		45.7		—		14.8		30.9
Cash and cash equivalents, end of period	$	39.4	$	—	$	12.9	$	26.5

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Year Ended December 31, 2017

			Penske
	Total		Automotive		Guarantor		Non-Guarantor
	Company		Group		Subsidiaries		Subsidiaries
Net cash provided by (used in) continuing operating activities	$	623.0	$	(46.8)	$	643.3	$	26.5
Investing activities:
Purchase of equipment and improvements		(247.0)		(3.2)		(138.0)		(105.8)
Proceeds from sale of dealerships		25.1		—		9.0		16.1
Proceeds from sale-leaseback transactions		22.2		—		—		22.2
Acquisition of additional ownership interest in Penske Truck Leasing		(239.1)		(239.1)		—		—
Acquisitions, net		(449.7)		—		(334.5)		(115.2)
Other		(40.2)		(40.0)		—		(0.2)
Net cash used in continuing investing activities		(928.7)		(282.3)		(463.5)		(182.9)
Financing activities:
Issuance of 3.75% senior subordinated notes		300.0		300.0		—		—
Net (repayments) borrowings of long-term debt		(26.0)		(68.0)		6.4		35.6
Net borrowings of floor plan notes payable — non-trade		185.3		40.6		4.8		139.9
Payment of debt issuance costs		(4.0)		(4.0)		—		—
Repurchases of common stock		(18.5)		(18.5)		—		—
Dividends		(108.4)		(108.4)		—		—
Other		(5.8)		(5.8)		—		—
Distributions from (to) parent		—		193.2		(188.3)		(4.9)
Net cash provided by (used in) continuing financing activities		322.6		329.1		(177.1)		170.6
Net cash provided by discontinued operations		2.7		—		2.7		—
Effect of exchange rate changes on cash and cash equivalents		2.1		—		—		2.1
Net change in cash and cash equivalents		21.7		—		5.4		16.3
Cash and cash equivalents, beginning of period		24.0		—		9.4		14.6
Cash and cash equivalents, end of period	$	45.7	$	—	$	14.8	$	30.9