UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
☑
FORM 10-Q
þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172022
or
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-13461
Group 1 Automotive, Inc.
(Exact name of registrant as specified in its charter)
DelawareDelaware76-0506313
(State orof other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
  800 Gessner,Suite 50077024
     Houston,TX
800 Gessner, Suite 500
Houston, Texas 77024
(Zip code)
(Address of principal executive offices) (Zip code)
(713) 647-5700
(Registrant's telephone number, including area code)
(713) 647-5700
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTicker symbol(s)Name of exchange on which registered
Common stock, par value $0.01 per shareGPINew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerþ¨Accelerated filer
Non-accelerated filer¨☐Smaller reporting company
Large accelerated filerþ¨☐Accelerated filer
Non-accelerated filer¨(Do not check if a smaller reporting company)¨Smaller reporting company
¨

Emerging growth company
If an emerging growth company, indicate by check mark if that registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  ¨☐    No  þ
As of October 27, 2017,24, 2022, the registrant had 20,859,01914,580,748 shares of common stock par value $0.01, outstanding.


Table of Contents

TABLE OF CONTENTS
 
1
2
3
Item 1.
3
Item 2.
35
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
3723
Item 3.
7948
Item 4.
8149
50
Item 1.
8250
Item 1A.
8250
Item 2.
8251
Item 6.
8252
8453

PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
i
  September 30, 2017 December 31, 2016
  (Unaudited)  
 (In thousands, except per share amounts)
ASSETS
CURRENT ASSETS:    
Cash and cash equivalents $66,883
 $20,992
Contracts-in-transit and vehicle receivables, net 288,200
 269,508
Accounts and notes receivable, net 187,672
 173,364
Inventories, net 1,651,789
 1,651,815
Prepaid expenses and other current assets 38,111
 34,908
Total current assets 2,232,655
 2,150,587
PROPERTY AND EQUIPMENT, net 1,269,397
 1,125,883
GOODWILL 914,224
 876,763
INTANGIBLE FRANCHISE RIGHTS 294,120
 284,876
OTHER ASSETS 20,598
 23,794
Total assets $4,730,994
 $4,461,903
     
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:    
Floorplan notes payable - credit facility and other $1,077,287
 $1,136,654
Offset account related to floorplan notes payable - credit facility (46,248) (59,626)
Floorplan notes payable - manufacturer affiliates 399,804
 392,661
Offset account related to floorplan notes payable - manufacturer affiliates (22,000) (25,500)
Current maturities of long-term debt and short-term financing 80,996
 72,419
Current liabilities from interest rate risk management activities

 823
 3,941
Accounts payable 436,851
 356,099
Accrued expenses 208,770
 176,469
Total current liabilities 2,136,283
 2,053,117
LONG-TERM DEBT, net of current maturities 1,292,689
 1,212,809
DEFERRED INCOME TAXES 181,244
 161,502
LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES 16,157
 20,470
OTHER LIABILITIES 93,474
 83,805
STOCKHOLDERS’ EQUITY:    
Common stock, $0.01 par value, 50,000 shares authorized; 25,523 and 25,663 issued, respectively 255
 257
Additional paid-in capital 288,970
 290,899
Retained earnings 1,141,066
 1,053,301
Accumulated other comprehensive loss (126,415) (146,944)
Treasury stock, at cost; 4,661 and 4,258 shares, respectively (292,729) (267,313)
Total stockholders’ equity 1,011,147
 930,200
Total liabilities and stockholders’ equity $4,730,994
 $4,461,903

GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
  (Unaudited, in thousands, except per share amounts)
REVENUES:        
New vehicle retail sales $1,710,241
 $1,587,952
 $4,496,222
 $4,538,562
Used vehicle retail sales 743,038
 702,620
 2,089,914
 2,106,569
Used vehicle wholesale sales 104,827
 104,218
 308,361
 302,089
Parts and service sales 343,193
 319,676
 994,522
 950,341
Finance, insurance and other, net 110,993
 108,710
 314,297
 316,419
Total revenues 3,012,292
 2,823,176
 8,203,316
 8,213,980
COST OF SALES:        
New vehicle retail sales 1,621,909
 1,507,517
 4,263,752
 4,305,252
Used vehicle retail sales 695,915
 656,652
 1,952,873
 1,963,136
Used vehicle wholesale sales 105,012
 106,077
 308,713
 302,551
Parts and service sales 158,036
 146,262
 458,144
 437,153
Total cost of sales 2,580,872
 2,416,508
 6,983,482
 7,008,092
GROSS PROFIT 431,420
 406,668
 1,219,834
 1,205,888
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 328,327
 299,006
 916,674
 891,692
DEPRECIATION AND AMORTIZATION EXPENSE 15,059
 12,891
 42,758
 38,067
ASSET IMPAIRMENTS 9,526
 10,855
 9,526
 12,812
INCOME FROM OPERATIONS 78,508
 83,916
 250,876
 263,317
OTHER EXPENSE:        
Floorplan interest expense (13,491) (11,135) (38,659) (33,737)
Other interest expense, net (17,874) (17,094) (52,188) (50,729)
INCOME BEFORE INCOME TAXES 47,143
 55,687
 160,029
 178,851
PROVISION FOR INCOME TAXES (17,262) (20,321) (57,076) (62,614)
NET INCOME $29,881
 $35,366
 $102,953
 $116,237
BASIC EARNINGS PER SHARE $1.43
 $1.65
 $4.85
 $5.23
Weighted average common shares outstanding 20,222
 20,568
 20,475
 21,355
DILUTED EARNINGS PER SHARE $1.43
 $1.65
 $4.85
 $5.22
Weighted average common shares outstanding 20,225
 20,578
 20,480
 21,364
CASH DIVIDENDS PER COMMON SHARE $0.24
 $0.23
 $0.72
 $0.68


GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
  (Unaudited, in thousands)
NET INCOME $29,881
 $35,366
 $102,953
 $116,237
Other comprehensive income (loss), net of taxes:        
Foreign currency translation adjustment 8,399
 (6,341) 16,998
 (10,254)
Net unrealized gain (loss) on interest rate risk management activities:        
Unrealized gain (loss) arising during the period, net of tax benefit (provision) of $154, $(713), $1,462 and $9,345, respectively (257) 1,188
 (2,437) (15,575)
Reclassification adjustment for loss included in interest expense, net of tax provision of $1,027, $1,267, $3,581 and $3,822, respectively 1,711
 2,112
 5,968
 6,367
Unrealized gain (loss) on interest rate risk management activities, net of tax 1,454
 3,300
 3,531
 (9,208)
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES 9,853
 (3,041) 20,529
 (19,462)
COMPREHENSIVE INCOME $39,734
 $32,325
 $123,482
 $96,775


GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
  Common Stock 
Additional
Paid-in Capital
 Retained Earnings 
Accumulated
Other
Comprehensive Loss
 Treasury Stock  
  Shares Amount     Total
  (Unaudited, in thousands)
BALANCE, December 31, 2016 25,663
 $257
 $290,899
 $1,053,301
 $(146,944) $(267,313) $930,200
Net income —
 —
 —
 102,953
 —
 —
 102,953
Other comprehensive income, net —
 —
 —
 —
 20,529
 —
 20,529
Acquisition of treasury stock —
 —
 —
 —
 —
 (42,084) (42,084)
Net issuance of treasury shares to employee stock compensation plans (140) (2) (16,502) —
 —
 16,668
 164
Stock-based compensation —
 —
 14,573
 —
 —
 —
 14,573
Cash dividends, net of estimated forfeitures relative to participating securities —
 —
 —
 (15,188) —
 —
 (15,188)
BALANCE, September 30, 2017 25,523
 $255
 $288,970
 $1,141,066
 $(126,415) $(292,729) $1,011,147


GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
  Nine Months Ended September 30,
  2017 2016
  (Unaudited, in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $102,953
 $116,237
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 42,758
 38,067
Deferred income taxes 16,102
 14,347
Asset impairments 9,526
 12,812
Stock-based compensation 14,606
 14,879
Amortization of debt discount and issue costs 2,852
 2,783
Gain on disposition of assets (848) (1,812)
Other (548) 1,039
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:    
Accounts payable and accrued expenses 85,163
 78,905
Accounts and notes receivable (8,892) 370
Inventories 68,454
 60,839
Contracts-in-transit and vehicle receivables (15,273) 49,581
Prepaid expenses and other assets (2,297) 17,957
Floorplan notes payable - manufacturer affiliates (5,164) (19,064)
Deferred revenues 475
 (328)
Net cash provided by operating activities 309,867
 386,612
CASH FLOWS FROM INVESTING ACTIVITIES:    
Cash paid in acquisitions, net of cash received (109,082) (57,327)
Proceeds from disposition of franchises, property and equipment 5,133
 23,072
Purchases of property and equipment, including real estate (144,310) (125,692)
Other 1,526
 2,924
Net cash used in investing activities (246,733) (157,023)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Borrowings on credit facility - floorplan line and other 5,053,598
 5,040,726
Repayments on credit facility - floorplan line and other (5,108,475) (5,147,766)
Borrowings on credit facility - acquisition line 68,085
 220,020
Repayments on credit facility - acquisition line (35,576) (220,020)
Borrowings on other debt 126,316
 37,786
Principal payments on other debt (88,701) (31,832)
Borrowings on debt related to real estate, net of debt issue costs 39,031
 42,654
Principal payments on debt related to real estate (21,269) (18,845)
Employee stock purchase plan purchases, net of employee tax withholdings 4,196
 1,452
Repurchases of common stock, amounts based on settlement date (40,094) (127,606)
Tax effect from stock-based compensation —
 (148)
Dividends paid (15,221) (15,054)
Other —
 (3,420)
Net cash used in financing activities (18,110) (222,053)
EFFECT OF EXCHANGE RATE CHANGES ON CASH 867
 2,345
NET INCREASE IN CASH AND CASH EQUIVALENTS 45,891
 9,881
CASH AND CASH EQUIVALENTS, beginning of period 20,992
 13,037
CASH AND CASH EQUIVALENTS, end of period $66,883
 $22,918
SUPPLEMENTAL CASH FLOW INFORMATION:    
Purchases of property and equipment, including real estate, accrued in accounts payable $10,364
 $19,920

The accompanying notes are an integral part of these consolidated financial statements.
7
Table of Contents
GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

GLOSSARY OF DEFINITIONS


The following are abbreviations and definitions of terms used within this report:
TermsDefinitions
BrexitWithdrawal of the U.K. from the European Union
BRLBrazilian Real (R$)
COVID-19 pandemicCoronavirus disease first emerging in December 2019 and resulting in the ongoing global pandemic in 2020, 2021 and 2022
EPSEarnings per share
F&IFinance, insurance and other
FMCCFord Motor Credit Company
GBPBritish Pound Sterling (£)
LIBORLondon Interbank Offered Rate
OEMOriginal equipment manufacturer
PRUPer retail unit
RSARestricted stock award
SECSecurities and Exchange Commission
SG&ASelling, general and administrative
SOFRSecured Overnight Financing Rate
USDUnited States Dollar ($)
U.K.United Kingdom
U.S.United States of America
U.S. GAAPAccounting principles generally accepted in the U.S.
VSCVehicle service contract
1. INTERIM FINANCIAL INFORMATION
Business








1
Table of Contents
Forward-Looking Statements
This Quarterly Report on Form 10-Q (this “Form 10-Q”) includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (“Securities Act”) and Organization
Group 1 Automotive, Inc., a Delaware corporation, is a leading operatorSection 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). These forward-looking statements include, but are not limited to, statements concerning the Company’s strategy, future operation performance, future liquidity and availability of financing, capital allocation, the completion of future acquisitions and divestitures, business trends in the retail automotive retailing industry with business activities in 15 states in the United States of America ("U.S."), 28 towns in the United Kingdom ("U.K.") and four states in Brazil. Group 1 Automotive, Inc. and its subsidiaries are collectively referred to as the "Company" in these Notes to Consolidated Financial Statements.
The Company, through its regions, sells new and used cars and light trucks; arranges related vehicle financing; sells service and insurance contracts; provides automotive maintenance and repair services; and sells vehicle parts. As of September 30, 2017, the Company’s U.S. retail network consisted of 115 dealerships within the following states: Alabama, California, Florida, Georgia, Kansas, Louisiana, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, Oklahoma, South Carolina, and Texas. The President of U.S. Operations reports directly to the Company's Chief Executive Officer and is responsible for the overall performance of the U.S. region, as well as for overseeing the market directors and dealership general managers. In addition, as of September 30, 2017, the Company had two international regions: (a) the U.K., which consisted of 43 dealerships and (b) Brazil, which consisted of 16 dealerships. The operations of the Company's international regions are structured similar to the U.S. region, each with a regional vice president reporting directly to the Company's Chief Executive Officer.
The Company's operating results are generally subject to seasonal variations, as well as changes in the economic environment. This seasonality is generally attributable to consumer buying trends and the timing of manufacturer new vehicle model introductions. In addition, in some regions of the U.S., vehicle purchases decline during the winter months due to inclement weather. As a result, U.S. revenues and operating income are typically lower in the first and fourth quarters and higher in the second and third quarters. For the U.K., the first and third quarters tend to be stronger, driven by the vehicle license plate change months of March and September. For Brazil, the Company expects higher volumes in the third and fourth calendar quarters. The first quarter in Brazil is generally the weakest, driven by more consumer vacations and activities associated with Carnival. Other factors unrelated to seasonality, such as changes in economic conditions, manufacturer incentive programs, severe weather events and changes in current exchange rates may exaggerate seasonal orregulations. When used in this Form 10-Q, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may” and similar expressions are intended to identify forward-looking statements.
These forward-looking statements are based on the Company’s expectations and beliefs as of the date of this Form 10-Q concerning future developments and their potential effect on the Company. While management believes that these forward-looking statements are reasonable when and as made, there can be no assurance that future developments affecting the Company will be those that are anticipated. The Company’s forward-looking statements involve significant risks and uncertainties that could cause counter-seasonal fluctuationsactual results to differ materially from those in the Company's revenues and operating income.forward-looking statements, including, but not limited to, the risks set forth in Item 1A. Risk Factors of this Form 10-Q.
Basis of Presentation
The accompanying unaudited condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the U.S. ("U.S. GAAP") for interim financialFor additional information and with the instructionsregarding known material factors that could cause actual results to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments of a normal and recurring nature considered necessary for a fair presentation have been included in the accompanying unaudited condensed Consolidated Financial Statements. Due to seasonality and other factors, thediffer from projected results, of operations for the interim period are not necessarily indicative of the results that will be realized for any other interim period or for the entire fiscal year. For further information, refer to the Consolidated Financial Statements and footnotes thereto includedItem 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (“20162021 (the “2021 Form 10-K”)., as well as Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Quantitative and Qualitative Disclosures About Market Risk of this Form 10-Q.
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The Company undertake no responsibility and expressly disclaim any duty, to update any such statements, whether as a result of new information, new developments or otherwise, or to publicly release the result of any revision of the forward-looking statements after the date they are made, except to the extent required by law.
2
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions, except share data)
September 30, 2022December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$20.5 $14.9 
Contracts-in-transit and vehicle receivables, net222.2 218.9 
Accounts and notes receivable, net184.4 177.9 
Inventories1,185.6 1,073.1 
Prepaid expenses24.8 30.6 
Other current assets18.9 50.4 
Current assets classified as held for sale38.6 100.3 
TOTAL CURRENT ASSETS1,695.1 1,666.2 
Property and equipment, net of accumulated depreciation of $534.4 and $513.5, respectively2,037.6 1,957.8 
Operating lease assets246.9 267.8 
Goodwill1,612.2 1,420.2 
Intangible franchise rights482.1 392.3 
Other long-term assets177.6 45.0 
TOTAL ASSETS$6,251.5 $5,749.4 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Floorplan notes payable — credit facility and other, net of offset account of $206.1 and $268.6, respectively
$542.0 $295.0 
Floorplan notes payable — manufacturer affiliates, net of offset account of $12.4 and $3.3, respectively203.9 236.0 
Current maturities of long-term debt141.5 220.4 
Current operating lease liabilities22.8 25.9 
Accounts payable468.0 457.8 
Accrued expenses and other current liabilities263.7 258.6 
Current liabilities classified as held for sale5.2 49.9 
TOTAL CURRENT LIABILITIES1,647.1 1,543.6 
Long-term debt1,800.9 1,815.3 
Long-term operating lease liabilities236.5 256.6 
Deferred income taxes227.7 180.9 
Other long-term liabilities125.2 127.7 
Commitments and Contingencies (Note 12)
STOCKHOLDERS’ EQUITY:
Common stock, $0.01 par value, 50,000,000 shares authorized; 25,239,507 and 25,336,054 shares issued, respectively
0.3 0.3 
Additional paid-in capital336.8 325.8 
Retained earnings2,922.3 2,345.9 
Accumulated other comprehensive income (loss)(4.7)(156.2)
Treasury stock, at cost; 10,020,687 and 8,160,228 shares, respectively
(1,040.5)(690.4)
TOTAL STOCKHOLDERS’ EQUITY2,214.1 1,825.2 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$6,251.5 $5,749.4 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)
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Table of Contents
GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per share data)
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
REVENUES:
New vehicle retail sales$1,883.3 $1,513.9 $5,479.8 $4,828.6 
Used vehicle retail sales1,488.6 1,230.4 4,353.9 3,302.3 
Used vehicle wholesale sales89.6 106.0 278.9 278.0 
Parts and service sales515.6 416.5 1,491.1 1,152.2 
Finance, insurance and other, net186.3 146.0 549.5 431.3 
Total revenues4,163.4 3,412.8 12,153.1 9,992.3 
COST OF SALES:
New vehicle retail sales1,676.7 1,352.4 4,861.6 4,411.4 
Used vehicle retail sales1,412.6 1,133.3 4,100.6 3,038.6 
Used vehicle wholesale sales91.1 98.7 276.8 257.9 
Parts and service sales230.5 189.7 668.5 515.0 
Total cost of sales3,410.8 2,774.1 9,907.4 8,222.9 
GROSS PROFIT752.6 638.7 2,245.8 1,769.5 
Selling, general and administrative expenses450.9 376.3 1,329.6 1,056.2 
Depreciation and amortization expense21.8 19.2 65.9 56.8 
Asset impairments— 1.7 0.8 1.7 
INCOME FROM OPERATIONS279.9 241.5 849.4 654.7 
Floorplan interest expense6.5 4.3 17.7 20.5 
Other interest expense, net19.6 13.1 55.5 39.8 
Other income(3.4)— (3.4)— 
INCOME BEFORE INCOME TAXES257.2 224.1 779.6 594.4 
Provision for income taxes60.2 51.6 182.1 132.2 
Net income from continuing operations197.1 172.5 597.5 462.2 
Net (loss) income from discontinued operations(1.3)(0.4)(2.9)2.8 
NET INCOME$195.7 $172.1 $594.6 $465.0 
BASIC EARNINGS PER SHARE:
Continuing operations$12.61 $9.40 $36.55 $25.16 
Discontinued operations(0.09)(0.02)(0.18)0.15 
Total$12.53 $9.37 $36.38 $25.31 
DILUTED EARNINGS PER SHARE:
Continuing operations$12.57 $9.35 $36.43 $25.05 
Discontinued operations(0.09)(0.02)(0.18)0.15 
Total$12.48 $9.33 $36.25 $25.21 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic15.2 17.8 15.9 17.8 
Diluted15.2 17.8 15.9 17.8 

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)
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Table of Contents
GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(In millions)
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
NET INCOME$195.7 $172.1 $594.6 $465.0 
Other comprehensive income (loss), net of taxes:
Net foreign currency translation adjustments:
Unrealized foreign currency translation adjustments(31.2)(11.5)(59.3)(6.7)
Reclassification of cumulative foreign currency translation adjustments associated with the Brazil Disposal122.8 — 122.8 — 
Reclassification of other cumulative foreign currency translation adjustments1.5 — 1.5 — 
Foreign currency translation adjustments, net of reclassifications93.1 (11.5)65.1 (6.7)
Net unrealized gain (loss) on interest rate risk management activities, net of tax:
Unrealized gain (loss) arising during the period, net of tax (provision) benefit of $(9.8), $0.2, $(26.1) and $(4.9), respectively31.9 (0.6)84.8 16.1 
Reclassification adjustment for (gain) loss included in interest expense, net of tax (provision) benefit of $(0.4), $0.6, $0.5 and $1.9, respectively(1.4)1.8 1.6 6.1 
Reclassification related to de-designated interest rate swaps, net of tax benefit of $—, $—, $— and $0.7, respectively— — — 2.4 
Unrealized gain on interest rate risk management activities, net of tax30.4 1.3 86.4 24.5 
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX123.5 (10.2)151.5 17.9 
COMPREHENSIVE INCOME$319.3 $161.9 $746.1 $482.9 

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)
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GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(In millions, except share and per share data)
 Common StockAdditional
Paid-in Capital		Retained EarningsAccumulated
Other
Comprehensive Income (Loss)		Treasury StockTotal
 SharesAmount
BALANCE, JUNE 30, 202225,258,744 $0.3 $331.8 $2,732.5 $(128.3)$(931.8)$2,004.5 
Net income— — — 195.7 — — 195.7 
Other comprehensive income, net of taxes— — — — 123.5 — 123.5 
Purchases of treasury stock— — — — — (105.4)(105.4)
Net issuance of treasury shares to stock compensation plans and other(19,237)— (1.2)— — (3.3)(4.5)
Stock-based compensation— — 6.2 — — — 6.2 
Dividends declared ($0.38 per share)— — — (6.0)— — (6.0)
BALANCE, SEPTEMBER 30, 202225,239,507 $0.3 $336.8 $2,922.3 $(4.7)$(1,040.5)$2,214.1 
 Common StockAdditional
Paid-in Capital		Retained EarningsAccumulated
Other
Comprehensive Income (Loss)		Treasury StockTotal
 SharesAmount
BALANCE, DECEMBER 31, 202125,336,054 $0.3 $325.8 $2,345.9 $(156.2)$(690.4)$1,825.2 
Net income— — — 594.6 — — 594.6 
Other comprehensive income, net of taxes— — — —��151.5 — 151.5 
Purchases of treasury stock— — — — — (359.5)(359.5)
Net issuance of treasury shares to stock compensation plans and other(96,547)— (10.2)— — 9.4 (0.8)
Stock-based compensation— — 21.2 — — — 21.2 
Dividends declared ($1.11 per share)— — — (18.2)— — (18.2)
BALANCE, SEPTEMBER 30, 202225,239,507 $0.3 $336.8 $2,922.3 $(4.7)$(1,040.5)$2,214.1 






See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)
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GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(In millions, except share and per share data)
 Common StockAdditional
Paid-in Capital		Retained EarningsAccumulated
Other
Comprehensive Income (Loss)		Treasury StockTotal
 SharesAmount
BALANCE, JUNE 30, 202125,357,677 $0.3 $313.6 $2,099.1 $(155.9)$(503.1)$1,754.0 
Net income— — — 172.1 — — 172.1 
Other comprehensive loss, net of taxes— — — — (10.2)— (10.2)
Net issuance of treasury shares to stock compensation plans(14,621)— 0.8 — — 2.3 3.2 
Stock-based compensation— — 5.7 — — — 5.7 
Dividends declared ($0.34 per share)— — — (6.3)— — (6.3)
BALANCE, SEPTEMBER 30, 202125,343,056 $0.3 $320.2 $2,265.0 $(166.1)$(500.8)$1,918.6 
 Common StockAdditional
Paid-in Capital		Retained EarningsAccumulated
Other
Comprehensive Income (Loss)		Treasury StockTotal
 SharesAmount
BALANCE, DECEMBER 31, 202025,433,048 $0.3 $308.3 $1,817.9 $(184.0)$(492.8)$1,449.6 
Net income— — — 465.0 — — 465.0 
Other comprehensive income, net of taxes— — — — 17.9 — 17.9 
Purchases of treasury stock— — — — — (18.6)(18.6)
Net issuance of treasury shares to stock compensation plans(89,992)— (7.1)— — 10.7 3.6 
Stock-based compensation— — 19.0 — — — 19.0 
Dividends declared ($0.98 per share)— — — (17.9)— — (17.9)
BALANCE, SEPTEMBER 30, 202125,343,056 $0.3 $320.2 $2,265.0 $(166.1)$(500.8)$1,918.6 

See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)
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GROUP 1 AUTOMOTIVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
 Nine Months Ended September 30,
 20222021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$594.6 $465.0 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization66.9 57.9 
Change in operating lease assets22.6 18.1 
Deferred income taxes17.4 7.7 
Asset impairments7.1 1.7 
Stock-based compensation21.2 19.0 
Amortization of debt discount and issuance costs2.3 1.8 
Gain on disposition of assets(40.8)(2.1)
Loss on extinguishment of debt— 3.8 
Unrealized loss on derivative instruments— 1.4 
Other1.3 2.0 
Changes in assets and liabilities, net of acquisitions and dispositions:
Accounts payable and accrued expenses51.0 (21.6)
Accounts and notes receivable(7.3)19.2 
Inventories(156.6)643.0 
Contracts-in-transit and vehicle receivables(6.6)43.1 
Prepaid expenses and other assets6.4 (10.0)
Floorplan notes payable — manufacturer affiliates
(23.9)(112.5)
Deferred revenues(0.3)(1.1)
Operating lease liabilities(21.9)(18.9)
Net cash provided by operating activities533.4 1,117.5 
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisitions, net, including repayment of sellers’ floorplan notes payable of $7.7 and $5.3, respectively(424.2)(74.6)
Proceeds from disposition of franchises, property and equipment132.6 19.8 
Purchases of property and equipment(93.3)(88.4)
Proceeds from sale of discontinued operations, net59.4 — 
Other(0.5)(20.4)
Net cash used in investing activities(325.9)(163.5)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on credit facility — floorplan line and other
7,548.3 5,796.1 
Repayments on credit facility — floorplan line and other
(7,294.2)(6,479.2)
Borrowings on credit facility — acquisition line
286.0 67.3 
Repayments on credit facility — acquisition line
(411.3)(59.9)
Debt issuance costs(4.6)— 
Borrowings on other debt296.0 110.0 
Principal payments on other debt(246.5)(143.7)
Proceeds from employee stock purchase plan15.9 11.9 
Payments of tax withholding for stock-based compensation(9.1)(8.3)
Repurchases of common stock, amounts based on settlement date(359.5)(18.6)
Dividends paid(18.1)(17.9)
Other(1.2)— 
Net cash used in financing activities(198.4)(742.2)
Effect of exchange rate changes on cash(7.2)(2.1)
Net increase in cash and cash equivalents1.9 209.7 
CASH AND CASH EQUIVALENTS, beginning of period18.7 87.3 
CASH AND CASH EQUIVALENTS, end of period$20.5 $296.9 
See accompanying Notes to Condensed Consolidated Financial Statements (Unaudited)
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GROUP 1 AUTOMOTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION AND CONSOLIDATION AND ACCOUNTING POLICIES
Basis of Presentation and Consolidation
The accompanying Condensed Consolidated Financial Statements and notes thereto, have been prepared in accordance with U.S. GAAP for interim financial information and in accordance with the rules and regulations of the SEC. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. Results for interim periods are not necessarily indicative of the results that can be expected for a full year and therefore should be read in conjunction with the Company’s audited Financial Statements and notes thereto included within the Company’s 2021 Form 10-K. All business acquisitionsintercompany balances and transactions have been eliminated in consolidation. The accompanying Condensed Consolidated Financial Statements reflect the consolidated accounts of the parent company, Group 1 Automotive, Inc. (the “Company”), and its subsidiaries, all of which are wholly owned.
On November 12, 2021, the Company entered into a Share Purchase Agreement (the “Brazil Agreement”) with Original Holdings S.A. (“Buyer”). Pursuant to the terms and conditions set forth in the Brazil Agreement, Buyer agreed to acquire 100% of the issued and outstanding equity interests of the Company’s Brazilian operations (the “Brazil Disposal Group”) for approximately BRL 510.0 million in cash (the “Brazil Disposal”). On July 1, 2022, the Company completed the Brazil Disposal. The Brazil Disposal Group met the criteria to be reported as held for sale and discontinued operations. Therefore, the related assets, liabilities and operating results of the Brazil Disposal Group are reported as discontinued operations (the “Brazil Discontinued Operations”) for all periods presented. The Brazil Disposal Group was previously included in the Brazil segment. Effective as of the fourth quarter of 2021, the Company is aligned into two reportable segments: U.S. and U.K.Refer to Note 5.Segment Information for additional information on the Company’s segments.
Unless otherwise specified, disclosures in these Condensed Consolidated Financial Statements reflect continuing operations only. Certain prior-period amounts, primarily related to the Brazil Discontinued Operations, have been reclassified in the Condensed Consolidated Financial Statements and accompanying notes to conform to current-period presentation.Refer to Note 4. Discontinued Operations and Other Divestitures for additional information.
Certain amounts in the Condensed Consolidated Financial Statements and the accompanying notes may not compute due to rounding. All computations have been calculated using unrounded amounts for all periods presented. These Condensed Consolidated Financial Statements reflect, in the opinion of management, all normal recurring adjustments necessary to fairly state, in all material respects, the Company’s financial position and results of operations for the periods presented.
Use of Estimates
The preparation of the Company’s financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the balance sheet date and the amounts of revenues and expenses recognized during the reporting period. Management analyzes the Company’s estimates based on historical experience and other assumptions that are believed to be reasonable under the circumstances; however, actual results could differ materially from such estimates. The significant estimates made by management in the accompanying Condensed Consolidated Financial Statements include, but not limited to, inventory valuation adjustments, reserves for future chargebacks on finance, insurance and VSC fees, self-insured property and casualty insurance exposure, the fair value of assets acquired and liabilities assumed in business combinations, the valuation of goodwill and intangible franchise rights and reserves for potential litigation.

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GROUP 1 AUTOMOTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
2. REVENUES
The following tables present the Company’s revenues disaggregated by its geographical segments (in millions):
Three Months Ended September 30, 2022Nine Months Ended September 30, 2022
U.S.U.K.TotalU.S.U.K.Total
New vehicle retail sales$1,586.9 $296.4 $1,883.3 $4,581.8 $898.0 $5,479.8 
Used vehicle retail sales1,212.1 276.5 1,488.6 3,447.6 906.3 4,353.9 
Used vehicle wholesale sales61.3 28.3 89.6 177.6 101.2 278.9 
Total new and used vehicle sales2,860.3 601.2 3,461.5 8,207.0 1,905.5 10,112.5 
Parts and service sales (1)
453.8 61.8 515.6 1,307.7 183.4 1,491.1 
Finance, insurance and other, net (2)
170.2 16.1 186.3 498.1 51.4 549.5 
Total revenues$3,484.3 $679.1 $4,163.4 $10,012.8 $2,140.3 $12,153.1 
Three Months Ended September 30, 2021Nine Months Ended September 30, 2021
U.S.U.K.TotalU.S.U.K.Total
New vehicle retail sales$1,208.5 $305.4 $1,513.9 $3,958.9 $869.7 $4,828.6 
Used vehicle retail sales902.3 328.0 1,230.4 2,481.7 820.5 3,302.3 
Used vehicle wholesale sales68.0 38.1 106.0 179.6 98.4 278.0 
Total new and used vehicle sales2,178.8 671.5 2,850.3 6,620.2 1,788.7 8,408.9 
Parts and service sales (1)
353.1 63.4 416.5 982.0 170.2 1,152.2 
Finance, insurance and other, net (2)
130.5 15.6 146.0 389.4 41.9 431.3 
Total revenues$2,662.4 $750.4 $3,412.8 $7,991.6 $2,000.7 $9,992.3 
(1) The Company has elected not to disclose revenues related to remaining performance obligations on its maintenance and repair services as the duration of these contracts is less than one year.
(2) Includes variable consideration recognized of $5.3 million and $5.1 million during the three months ended September 30, 2022 and 2021, respectively, and $22.2 million and $18.7 million during the nine months ended September 30, 2022 and 2021, respectively, relating to performance obligations satisfied in previous periods presented have been accountedon the Company’s retrospective commission income contracts. Refer to Note 8. Receivables, Net and Contract Assets for using the purchasebalance of the Company’s contract assets associated with revenues from the arrangement of financing and sale of service and insurance contracts.
3. ACQUISITIONS
The Company accounts for business combinations under the acquisition method of accounting, and their results of operations are included fromunder which the effective dates ofCompany allocates the closings of the acquisitions. The allocations of purchase price to the assets acquired and liabilities assumed are assigned and recorded based on estimatesan estimate of fair value.
Prime Acquisition
In November 2021, the Company completed the acquisition of the Prime Automotive Group (“Prime”), including 28 dealerships, certain real estate and three collision centers in the Northeastern U.S. (collectively referred to as the “Prime Acquisition”), for aggregate consideration of $934.2 million.
The Company analyzed and assessed all available information related to property and equipment and property lease contracts, determining the preliminary fair values established in 2021,were appropriate and no material adjustments were recorded to these fair values in the nine months ended September 30, 2022. The Company previously recorded a $33.4 million deposit for the purchase of an additional dealership as part of the Prime Acquisition, which had not closed as of December 31, 2021. As of September 30, 2022, the Company is still waiting for distributor approval to obtain ownership of the additional dealership. Pursuant to the purchase agreement with the seller, the seller initiated legal action against the distributor to compel the approval of the sale of the dealership. In March 2022, upon the contractual release of funds from escrow to the seller related to the dealership, the deposit was recognized as additional consideration paid and reflected as additional goodwill, resulting in total consideration associated with the Prime Acquisition of $967.6 million. If such legal action is resolved within the 12-month measurement period following the acquisition date, the Company will make an adjustment to reflect the fair value of the acquisition of this dealership. The results of the Prime Acquisition are included in the U.S. segment. The goodwill is deductible for income tax purposes.
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GROUP 1 AUTOMOTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
The following table summarizes the consideration paid and aggregate amounts of assets acquired and liabilities assumed (in millions):
Total consideration$967.6 
Identifiable assets acquired and liabilities assumed
Inventories136.7 
Property and equipment266.8 
Intangible franchise rights135.3 
Operating lease assets58.3 
Other assets (1)
62.2 
Total assets acquired659.3 
Operating lease liabilities56.6 
Other liabilities (2)
38.3 
Total liabilities assumed94.9 
Total identifiable net assets564.4 
Goodwill$403.2 
(1) Other assets acquired in connection with the Prime Acquisition include $55.3 million of assets classified as held for sale as of the acquisition date. See the table below for additional details.
(2) Other liabilities assumed in connection with the Prime Acquisition include $1.7 million of liabilities classified as held for sale as of the acquisition date. See the table below for additional details.
Prime assets classified as held for sale as of the acquisition date (in millions)
Inventories$10.4 
Property and equipment28.1 
Operating lease assets1.7 
Goodwill15.1 
Total other assets classified as held for sale$55.3 
Prime liabilities classified as held for sale as of the acquisition date (in millions)
Operating lease liabilities$1.7 
The Company’s Condensed Consolidated Statement of Operations included revenues attributable to Prime for the three and nine months ended September 30, 2022, of $448.0 million and $1.3 billion, respectively, and net income attributable to Prime for the three and nine months ended September 30, 2022 of $34.2 million and $89.0 million, respectively. These revenue and net income amounts attributable to Prime include amounts up to the date of disposal, from certain stores which have been disposed of since the date of the Prime Acquisition.
Other Acquisitions
During the nine months ended September 30, 2022, the Company acquired five dealerships and a collision center in the U.S. Aggregate consideration paid for these dealerships, which were accounted for as business combinations, was $393.0 million, net of cash acquired. Goodwill and franchise rights intangibles associated with these acquisitions totaled $194.0 million and $93.4 million, respectively.
During the nine months ended September 30, 2022, the Company acquired a dealership and related collision center in the U.K. Consideration paid, which was accounted for as a business combination, was $32.8 million, net of cash acquired. Goodwill associated with the acquisition totaled $9.2 million. The accounting for the U.K. acquisition is considered to be preliminary, as the acquisition was announced on September 6, 2022. The Company is continuing to analyze and assess relevant information related to the valuation of property, equipment and intangible assets. Due to the recent timing of the U.K. acquisition, the related amounts are provisional and subject to change withinas the purchase price allocation period (generally one year from the respective acquisition date). All intercompany balances and transactions have been eliminated in consolidation.
Business Segment Information
Company’s fair value assessments are finalized. The Company has three reportable segments:will reflect any such adjustments in subsequent filings with the U.S.SEC.
During the nine months ended September 30, 2021, which includes the activities ofCompany acquired two dealerships in the Company's corporate office,U.S. and seven dealerships in the U.K. and Brazil. The reportable segments are theAggregate consideration paid for these dealerships, which were accounted for as business activitiescombinations, was $74.6 million, net of the Company for which discrete financial information is available and for which operating results are regularly reviewed by its chief operating decision maker to allocate resources and assess performance. The Company's chief operating decision maker is its Chief Executive Officer. See Note 14, "Segment Information," for additional details regarding the Company's reportable segments.cash acquired. Goodwill associated with these acquisitions totaled $41.4 million.
Recently Adopted Accounting Pronouncements
In July 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. The amendments in the accounting standard


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GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

4. DISCONTINUED OPERATIONS AND OTHER DIVESTITURES
replacedBrazil Discontinued Operations
On November 12, 2021, the lowerCompany entered into an agreement to effect the Brazil Disposal. The sale price of cost or market test withapproximately BRL 510.0 million included a lower of cost and net realizable value test. The amendments in this ASU were to be applied prospectively and were effective for interim and annual periods beginning after December 15, 2016. The Company adopted ASU 2015-11 during the first quarter of 2017. The adoption of this ASU did not materially impact its consolidated financial statements or results of operations.
In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The amendment addresses several aspects of the accounting for share-based payment award transactions, including: income tax consequences; classification of awards as either equity or liabilities; and classification on the statement of cash flows. The Company adopted ASU 2016-09 during the first quarter of 2017. The adoption of this ASU did not materially impact its consolidated financial statements or results of operations.
Recently Issued Accounting Pronouncements
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) that amends the accounting guidance on revenue recognition. The amendments in this ASU are intended to provide a framework for addressing revenue issues, improve comparability of revenue recognition practices, and improve disclosure requirements. This ASU sets forth a five-step model for determining when and how revenue is recognized. Under the model, an entity will be required to recognize revenue to depict the transfer of goods or services to a customer at anholdback amount reflecting the consideration it expects to receive in exchange for those goods or services. The amendments in this accounting standard update are effective for interim and annual reporting periods beginning after December 15, 2017. The standard can be adopted either retrospectively to each reporting period presented or as a cumulative effect adjustment as of the dateBrazil Disposition Date (as defined herein), for general representations and warranties, of adoption. To assess the impact of the ASU, the Company established an internal implementation team to review its current accounting policies and practices, identify all material revenue streams, assess the impact of the ASU on its material revenue streams and identify potential differences with current policies and practices.
The team has identified the Company’s material revenue streamsBRL 115.0 million, to be the sale of new and used vehicles; arrangement of associated vehicle financing; the sale of service and insurance contracts; the performance of vehicle maintenance and repair services; and the sale of vehicle parts. The team has reviewed a sample of contracts and other related documents associated with each revenue stream. The team does not anticipate any changes to the timing of revenue recognition for the sale of new and used vehicles. The team is currently evaluating the constraint factorsheld in escrow for a portionperiod of five years from the close of the transaction price for certain service and insurance contracts. The new standard requires that an estimate(the “Brazil Disposal Escrow”).At the conclusion of variable consideration, subjectthe five-year period, the remaining funds held in the Brazil Disposal Escrow will be released to a constraint, bethe Company.This amount has been included in the transaction price and recognized when or as the performance obligation is satisfied. In the event variable consideration is considered fully constrained, recognition will occur once the uncertainties associated with the constraint are determined to be resolved. However, in the event the team's evaluation determines the variable consideration is not fully constrained, revenue would be subject to accelerated recognition under the new standard. As it relates to vehicle maintenance and repair services,proceeds received.
On July 1, 2022 (“Brazil Disposition Date”), the Company currently recognizes revenue onceclosed on the repair service is completed. The team is currently assessing whether revenue will be recognized over time as the services are performed, under the new standard.
The Company’s implementation team is in the final stages of evaluating the additional disclosure requirements of the ASU, as well as the change, if any, to the Company’s underlying accounting and financial reporting systems and processes necessary to support the recognition and disclosure requirements. The Company expects to identify and implement the necessary changes, if any, duringBrazil Disposal. During the fourth quarter of 2017. At this time, based on this review,2021, the Company does not expectrecognized a net loss of $77.5 million on the adoptionBrazil Disposal. During the three and nine months ended September 30, 2022, the Company recognized additional net losses of $3.7 million and $10.0 million on the disposal of the Brazil Disposal Group.
Upon sale of a foreign entity, amounts recorded within Accumulated Other Comprehensive Income (loss) (“AOCI”) on the Condensed Consolidated Balance Sheets, are required to materially impact its consolidated financial statements. The Company will adopt the amendments of this ASU during the first fiscal quarter of 2018, using the modified retrospective approach with a cumulative effect adjustment as ofbe reclassified into earnings on the date of adoption.
In February 2016,disposition.For purposes of determining the FASB issued ASU 2016-02, Leases (Topic 842). The amendmentsnet gain or loss on the Brazil Disposal, the Company included the currency translation adjustments recorded in this ASU relateAOCI as a loss of $122.8 million attributable to the accounting for leasing transactions. This standard requiresBrazil Disposal Group. The loss on sale indicated an impairment of assets, however, the loss was entirely the result of the reclassification of the translation adjustment from AOCI. Prior to the Brazil Disposition Date, the Company recorded a lessee to record on the balance sheetvaluation allowance against the assets and liabilitiesheld for sale for the rightsBrazil Disposal to reflect the expected loss not attributable to a particular asset within the Brazil Disposal Group. On and obligations createdfollowing the Brazil Disposition Date, the Company reclassified into earnings the currency translation loss attributable to the Brazil Disposal Group. The currency translation loss was offset by leases with lease termsthe reversal of more than 12 months. the previously recorded valuation allowance.
In addition, the purchase price of the Brazil Disposal is denominated in BRL, which is subject to foreign currency exchange risk. In order to partially mitigate this standard requires both lessees and lessorsrisk, the Company entered into a foreign currency derivative for the conversion of BRL to disclose certain key information about lease transactions. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company isUSD in the processform of evaluating the impact that adoption will have on its consolidated balance sheet and statement of income. However,a costless collar which protects the Company expects that the adoptionfrom significant downside exposure on $70.0 million of the provisions of the ASU will have a significant impact on its consolidated balance sheet, as currently approximately half of its real estate is rented, not owned, via operating leases. Adoption of this ASU is required to be done using a modified retrospective approach.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Creditexpected purchase consideration. Losses (Topic 326) Measurement of Credit Losses on Financial Instruments. The amendment replaces the current incurred loss impairment methodology of recognizing credit losses when a loss is probable, with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to assess credit loss estimates. The standard will be effective for fiscal

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Table of Contents         GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

years beginning after December 15, 2019, with early adoption permitted for periods after December 15, 2018. The Company is currently evaluating the impact that the adoption of the provisions of the ASU will have on its consolidated financial statements or results of operations, but does not expect the amendments in this ASU to materially impact its consolidated financial statements.     
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendment addresses several specific cash flow issuesassociated with the objective of reducing the diversity in practice in how certain cash receipts and cash paymentsforeign currency derivative are presented and classifiedas estimated incremental costs to sell in the statement of cash flows. The standard will be effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently evaluating the impact that the adoption of the provisions of the ASU will have on its consolidated financial statements.     
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, a consensus of the FASB Emerging Issues Task Force ("EITF"). The amendments require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this ASU do not provide a definition of restricted cash or restricted cash equivalents. The standard will be effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company is currently evaluating the impact that the adoption of the provisions of the ASU will have on its consolidated financial statements.
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments in this update clarify the definition of a business in order to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this ASU should be applied prospectivelytable above and are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluatingfully offset by corresponding foreign currency impacts to the impact on its consolidated financial statements as it will depend on the facts and circumstances of any specific future transactions.
In January 2017, the FASB issued ASU 2017-03, Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings. The amendments in this update require the disclosure of the impact that a recently issued ASU will have on the financial statements of a registrant when such standards are to be adopted in a future period. The SEC staff views that a registrant should evaluate ASU's that have not yet been adopted to determine the appropriate financial statement disclosures about the potential material effects of those ASU's on the financial statements when adopted. The Company does not expect the amendments in this ASU to materially impact its consolidated financial statements.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendment eliminates the requirement to calculate the impliedestimated fair value of goodwillproceeds from the disposition. On June 30, 2022, the Company settled the foreign currency derivative for a loss of $8.4 million.
During the three months ended September 30, 2022, the Company received additional proceeds for final working capital adjustments related to measurethe Brazil Disposal of $4.1 million. The resulting gain was recognized within Discontinued Operations and included within the net loss recorded during the three months ended September 30, 2022, as described above.
Additionally, during the three months ended September 30, 2022, the Buyer, with approval by the Company, entered into a goodwill impairment charge. Instead, entities will record an impairment charge basedtax settlement associated with the Brazil Disposal with the Brazilian tax authority for BRL 23.0 million or approximately $4.5 million. The settlement was accrued within Accrued expenses and other current liabilities on the excess of a reporting unit's carrying amount over its fair value.Condensed Consolidated Balance Sheet and recorded as Provision for income taxes within Discontinued Operations and included within the net loss recorded during the three months ended September 30, 2022, as described above. The amendments in this update shouldsettlement will be applied prospectively and are effective for interim and annual periods beginning after December 15, 2019. Earlier application is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact that the adoptionpaid out of the provisionsexisting Brazil Disposal Escrow balance within one year.
As of September 30, 2022, the ASU will haveCompany had a remaining receivable balance of $21.8 million associated with the Brazil Disposal Escrow recorded in Other long-term assets on its consolidated financial statements.
In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): ScopeCondensed Consolidated Balance Sheet, of Modification Accounting. The amendments in this update provide clarity and reduce both diversity in practice and cost and complexity when applyingwhich $7.5 million is expected to be paid to settle the guidanceCompany’s portion of Topic 718 to a changeaccrued liabilities retained subsequent to the terms or conditions of a share-based payment award. UnderBrazil Disposition Date, including the new guidance, an entity will not apply modification accounting to a share-based payment award if all of thetax settlement described above.
The following are the same immediately before and after the change: 1) the award's fair value (or calculated value or intrinsic value, if those measurement methods are used), 2) the award's vesting conditions, and 3) the award's classification as an equity or liability instrument. The amendments in this ASU should be applied prospectively and are effective for fiscal years beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the impact on its consolidated financial statements as it will depend on the facts and circumstances of any specific future transactions.
In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 715): Targeted Improvements to Accounting for Hedging Activities. The amendments in this update better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The guidance eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change intable summarizes the fair value of a hedging instrument to be presented inthe proceeds received from the disposition and net carrying value of the assets disposed as of September 30, 2022 (in millions):

Fair value of proceeds from disposition$92.5 
Net assets disposed48.8 
Gain before currency translation adjustments43.7 
Amount of currency translation loss recorded in AOCI(122.8)
Incremental costs to sell8.4 
Net loss on the Brazil Disposal$(87.5)
10
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

the same income statement line as the hedged item. The guidance also eases the administrative burden of hedge documentation requirements and assessing hedge effectiveness. The amendments to cash flow and net investment hedge relationships should be applied using a modified retrospective approach while the presentation and disclosure requirements are applied prospectively, effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the impact that the adoptionResults of the provisionsBrazil Discontinued Operations were as follows (in millions):
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
REVENUES:
New vehicle retail sales$— $62.3 $109.0 $146.3 
Used vehicle retail sales— 18.0 44.0 40.5 
Used vehicle wholesale sales— 3.3 10.1 8.0 
Parts and service sales— 11.1 23.8 28.2 
Finance, insurance and other, net— 1.7 3.3 4.4 
Total revenues— 96.4 190.2 227.3 
COST OF SALES:
New vehicle retail sales— 56.1 98.5 131.5 
Used vehicle retail sales— 16.4 41.2 36.9 
Used vehicle wholesale sales— 3.1 10.0 7.4 
Parts and service sales— 6.2 14.5 15.9 
Total cost of sales— 81.9 164.2 191.6 
GROSS PROFIT— 14.5 26.1 35.7 
Selling, general and administrative expenses(4.6)8.8 14.8 24.0 
Depreciation and amortization expense— 0.4 0.9 1.1 
Asset impairments0.1 — 6.3 — 
INCOME FROM OPERATIONS — DISCONTINUED OPERATIONS4.5 5.3 4.0 10.6 
Floorplan interest expense— 0.4 1.4 0.7 
Other interest (income) expense, net(0.7)0.1 (1.1)0.8 
Loss on extinguishment of debt— 3.8 — 3.8 
Other expenses1.5 — 1.5 — 
INCOME BEFORE INCOME TAXES — DISCONTINUED OPERATIONS3.7 0.9 2.2 5.2 
Provision for income taxes5.0 1.3 5.1 2.4 
NET (LOSS) INCOME — DISCONTINUED OPERATIONS$(1.3)$(0.4)$(2.9)$2.8 
The following table presents cash flows from operating and investing activities for the Brazil Discontinued Operations (in millions):
Nine Months Ended September 30,
20222021
Net cash provided by operating activities — discontinued operations$26.6 $8.1 
Net cash provided by (used in) investing activities — discontinued operations$59.1 $(1.4)
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Assets and liabilities of the ASU will haveBrazil Discontinued Operations were as follows (in millions):
September 30, 2022December 31, 2021
Cash and cash equivalents$— $3.7 
Contracts-in-transit and vehicle receivables, net— 2.3 
Accounts and notes receivable, net— 11.8 
Inventories— 37.2 
Prepaid expenses— 1.9 
Other current assets1.3 — 
Current assets of discontinued operations1.3 56.9 
Property and equipment, net— 22.3 
Operating lease assets— 2.4 
Other long-term assets21.8 7.8 
Non-current assets of discontinued operations21.8 32.5 
Total assets, before valuation allowance23.2 89.5 
Valuation allowance— (76.4)
Total assets, net of valuation allowance$23.2 $13.0 
Floorplan notes payable — credit facility and other$— $3.3 
Floorplan notes payable — manufacturer affiliates— 20.1 
Current operating lease liabilities— 2.5 
Accounts payable— 13.7 
Accrued expenses and other current liabilities7.5 8.7 
Current liabilities of discontinued operations$7.5 $48.3 
Assets and Liabilities Held for Sale
Assets and liabilities classified as held for sale consisted of the following (in millions):
September 30, 2022December 31, 2021
Current assets classified as held for sale
Brazil Discontinued Operations$— $13.0 
Prime Acquisition (1)
7.4 52.3 
Other (2)
31.2 34.9 
Total current assets classified as held for sale$38.6 $100.3 
Current liabilities classified as held for sale
Brazil Discontinued Operations$— $48.3 
Prime Acquisition (1)
1.2 1.6 
Other4.0 — 
Total current liabilities classified as held for sale$5.2 $49.9 
(1) For additional details on its consolidated financial statements.current assets and current liabilities classified as held for sale in connection with the Prime Acquisition as of the acquisition date, refer to Note 3. Acquisitions.
(2) Includes $11.3 million and $9.9 million of goodwill reclassified to assets held for sale as of September 30, 2022 and December 31, 2021, respectively.


Other Divestitures
2. ACQUISITIONS AND DISPOSITIONSThe Company’s dispositions generally consist of dealership assets and related real estate. Gains and losses on dispositions are recorded in Selling, general and administrative expenses in the Condensed Consolidated Statements of Operations.
During the nine months ended September 30, 2017,2022, the Company acquired 12 U.K.recorded a net pre-tax gain totaling $31.3 million related to the disposition of five dealerships inclusive of 14representing five franchises and opened one dealership for one awarded franchise in the U.K. In addition, the Company acquired three dealerships in the U.S., inclusive of four franchises, and opened one dealership for one awarded franchise in the U.S. and added motorcycles to an existing BMWThe dispositions reduced goodwill by $36.9 million. The Company also terminated one franchise representing one dealership in Brazil. Aggregate consideration paid for these dealerships totaled $120.2 million, including the associated real estate and goodwill. Also included in the consideration paid was $11.2 millionU.K.
14
Table of cash received in the acquisition of the dealerships. The purchase prices have been allocated based upon the consideration paid and the estimated fair values of the assets acquired and liabilities assumed at the acquisition dates. The allocation of the purchase prices are preliminary and based on estimates and assumptions that are subject to change within the purchase price allocation periods (generally one year from the respective acquisition date). In addition, during the nine months ended September 30, 2017, the Company disposed of two dealerships in Brazil representing two franchises.Contents
GROUP 1 AUTOMOTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
During the nine months ended September 30, 2016,2021, the Company acquired 12 U.K.recorded a net pre-tax gain totaling $1.8 million related to the disposition of two dealerships inclusive of 15 franchises.representing two franchises and one franchise within an existing dealership in the U.S. The dispositions reduced goodwill by $2.2 million. The Company also acquiredterminated one franchise representing one dealership and opened two dealerships in Brazil for one acquired and one previously awarded franchise. Aggregate consideration paid for these dealerships totaled $61.2 million, including the associated real estate and goodwill, as well as $3.9 million of cash received in the acquisition of the dealerships. The purchase prices were allocated based upon the consideration paid and the estimated fair values of the assets acquired and liabilities assumed at the acquisition dates. In addition, during the nine months ended September 30, 2016, the Company disposed of four U.S. dealerships and four dealerships in Brazil. As a result of these U.S. and Brazil dispositions, a net pretax gain of $1.8 million and a net pretax loss of $0.8 million, respectively, were recognized for the nine months ended September 30, 2016.U.K.
3. DERIVATIVE INSTRUMENTS AND RISK MANAGEMENT ACTIVITIES5. SEGMENT INFORMATION
The periodic interest rates of the Revolving Credit Facility (as defined in Note 8, “Credit Facilities”) and certain variable-rate real estate related borrowings in the U.S. are indexed to the one-month London Inter Bank Offered Rate (“LIBOR”), plus an associated company credit risk rate. In order to minimize the earnings variability related to fluctuations in these periodic interest rates, the Company employs an interest rate hedging strategy, whereby it enters into arrangements with various financial institutional counterparties with investment grade credit ratings, swapping its variable interest rate exposure for a fixed interest rate over terms not to exceed the related variable-rate debt.
The Company presents the fair value of all interest rate derivative instruments on its Consolidated Balance Sheets. The Company measures the fair value of its interest rate derivative instruments utilizing an income approach valuation technique, converting future amounts of cash flows to a single present value in order to obtain a transfer exit price within the bid and ask spread that is most representative of the fair value of its derivative instruments. In measuring fair value, the Company utilizes the option-pricing Black-Scholes present value technique for all of its derivative instruments. This option-pricing technique utilizes a one-month LIBOR forward yield curve, obtained from an independent external service provider, matched to the identical maturity term of the instrument being measured. Observable inputs utilized in the income approach valuation technique incorporate identical contractual notional amounts, fixed coupon rates, periodic terms for interest payments and contract maturity. The fair value estimate of the interest rate derivative instruments also considers the credit risk of the Company for instruments in a liability position or the counterparty for instruments in an asset position. The credit risk is calculated by using the spread between the one-month LIBOR yield curve and the relevant average 10 and 20-year rate according to Standard and Poor’s. The Company has determined the valuation measurement inputs of these derivative instruments to maximize the use of observable inputs that market participants would use in pricing similar or identical instruments and market data obtained from independent sources, which is readily observable or can be corroborated by observable market data for substantially the full term of the derivative instrument. Further, the valuation measurement inputs minimize the use of unobservable inputs. Accordingly, the Company has classified the derivatives within Level 2 of the hierarchy framework as described by Accounting Standards Codification ("ASC") 820, Fair Value Measurement.

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The related gains or losses on these interest rate derivative instruments are deferred in stockholders’ equity as a component of accumulated other comprehensive loss. These deferred gains and losses are recognized in income in the period in which the related items being hedged are recognized in expense. However, to the extent that the change in value of a derivative contract does not perfectly offset the change in the value of the items being hedged, that ineffective portion is immediately recognized in other income or expense. Monthly contractual settlements of these swap positions are recognized as floorplan or other interest expense in the Company’s accompanying Consolidated Statements of Operations. All of the Company’s interest rate derivative instruments are designated as cash flow hedges. As of September 30, 2017, all of2022, the Company had two reportable segments: the U.S. and the U.K. The Company defines its segments as those operations whose results the Company’s derivative instrumentsChief Executive Officer, who is the chief operating decision maker, regularly reviews to analyze performance and allocate resources. Each segment is comprised of retail automotive franchises that were in effect were determined to be effective. The Company had no gains or lossessell new and used cars and light trucks; arrange related to ineffectiveness or amounts excluded from effectiveness testing recognized in the Consolidated Statements of Operationsvehicle financing; sell service and insurance contracts; provide automotive maintenance and repair services; and sell vehicle parts.
Selected reportable segment data is as follows for both the three and nine months ended September 30, 2017 or 2016, respectively.2022 and 2021 (in millions):
The Company held interest rate derivative instruments in effect as of September 30, 2017 of $823.9 million in notional value that fixed its underlying one-month LIBOR at a weighted average rate of 2.5%. The Company records the majority of the impact of the periodic settlements of these swaps as a component of floorplan interest expense. For the three months ended September 30, 2017 and 2016, the impact of the Company’s interest rate hedges in effect increased floorplan interest expense by $2.3 million and $2.8 million, respectively. For the nine months ended September 30, 2017 and 2016, the impact of the Company’s interest rate hedges in effect increased floorplan interest expense by $8.0 million and $8.4 million, respectively. Total floorplan interest expense, inclusive of the aforementioned impact of the Company's interest rate hedges, was $13.5 million and $11.1 million for the three months ended September 30, 2017 and 2016, respectively, and $38.7 million and $33.7 million for the nine months ended September 30, 2017 and 2016, respectively.
Three Months Ended September 30, 2022Nine Months Ended September 30, 2022
U.S.U.K.TotalU.S.U.K.Total
Total revenues$3,484.3 $679.1 $4,163.4 $10,012.8 $2,140.3 $12,153.1 
Income before income taxes$231.5 $25.7 $257.2 $703.8 $75.9 $779.6 
In addition to the $823.9 million of swaps in effect as of September 30, 2017, the Company held 12 additional interest rate derivative instruments with forward start dates between December 2017 and December 2020 and expiration dates between December 2020 and December 2030. The aggregate notional value of these 12 forward-starting swaps was $625.0 million, and the weighted average interest rate was 2.2%. The combination of the interest rate derivative instruments currently in effect and these forward-starting derivative instruments is structured such that the notional value in effect at any given time through December 2030 does not exceed $918.4 million, which is less than the Company's expectation for variable-rate debt outstanding during such period.
Three Months Ended September 30, 2021Nine Months Ended September 30, 2021
U.S.U.K.TotalU.S.U.K.Total
Total revenues$2,662.4 $750.4 $3,412.8 $7,991.6 $2,000.7 $9,992.3 
Income before income taxes$195.5 $28.7 $224.1 $532.1 $62.3 $594.4 
As of September 30, 2017 and December 31, 2016, the Company reflected liabilities from interest rate risk management activities of $17.0 million and $24.4 million, respectively, in its Consolidated Balance Sheets. In addition, as of September 30, 2017 and December 31, 2016, the Company reflected $7.7 million and $9.5 million, respectively, of assets from interest rate risk management activities in Other Assets in the Consolidated Balance Sheets. Included in Accumulated Other Comprehensive Loss at September 30, 2017 and 2016 were accumulated unrealized losses, net of income taxes, totaling $5.8 million and $28.7 million, respectively, related to these interest rate derivative instruments.
The following table presents the impact during the current and comparative prior year periods for the Company's interest rate derivative instruments on its Consolidated Statements of Operations and Consolidated Balance Sheets.
  
Amount of Unrealized Income (Loss), Net of Tax, Recognized in Other Comprehensive Income (Loss)

  Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationship 2017 2016
  (In thousands)
Interest rate derivative instruments $(2,437) $(15,575)
     
  
Amount of Loss Reclassified from Other Comprehensive Income (Loss) into Statements of Operations

Location of Loss Reclassified from Other Comprehensive Income (Loss) into Statements of Operations Nine Months Ended September 30,
 2017 2016
  (In thousands)
Floorplan interest expense $(7,995) $(8,414)
Other interest expense (1,554) (1,775)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The amount of loss expected to be reclassified out of other comprehensive income (loss) into earnings as additional floorplan interest expense or other interest expense in the next twelve months is $9.5 million.
4. STOCK-BASED COMPENSATION PLANS
The Company provides stock-based compensation benefits to employees and non-employee directors pursuant to its 2014 Long Term Incentive Plan (the "Incentive Plan"), as well as to employees pursuant to its Employee Stock Purchase Plan, as amended (the "Purchase Plan", formerly named the 1998 Employee Stock Purchase Plan).
2014 Long Term Incentive Plan
The Incentive Plan provides for the grant of options (including options qualified as incentive stock options under the Internal Revenue Code of 1986 and options that are non-qualified), restricted stock, performance awards, bonus stock, and phantom stock to the Company's employees, consultants, non-employee directors and officers. The Incentive Plan expires on May 21, 2024. The terms of the awards (including vesting schedules) are established by the Compensation Committee of the Company’s Board of Directors. As of September 30, 2017, there were 1,074,695 shares available for issuance under the Incentive Plan.
Restricted Stock Awards
Under the Incentive Plan, the Company grants to non-employee directors and certain employees restricted stock awards or, at their election, restricted stock units at no cost to the recipient. Restricted stock awards qualify as participating securities as each award contains non-forfeitable rights to dividends. As such, the two-class method is required for the computation of earnings per share. See Note 5, “Earnings Per Share,” for further details. Restricted stock awards are considered outstanding at the date of grant but are subject to vesting periods upon issuance of up to five years. Restricted stock units are considered vested at the time of issuance. However, since they convey no voting rights, they are not considered outstanding when issued. Restricted stock units settle in cash upon the termination of the grantees’ employment or directorship. In the event an employee or non-employee director terminates his or her employment or directorship with the Company prior to the lapse of the restrictions, the shares, in most cases, will be forfeited to the Company. The Company issues new shares or treasury shares, if available, when restricted stock vests. Compensation expense for restricted stock awards is calculated based on the market price of the Company’s common stock at the date of grant and recognized over the requisite service period. Forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period. This estimate is adjusted annually based on the extent to which actual or expected forfeitures differ from the previous estimate.
A summary of the restricted stock awards as of September 30, 2017, along with the changes during the nine months then ended, is as follows:
  Awards 
Weighted Average
Grant Date
Fair Value
Nonvested at December 31, 2016 850,422
 $67.25
Granted 205,789
 75.04
Vested (252,015) 70.55
Forfeited (93,818) 68.67
Nonvested at September 30, 2017 710,378
 $68.16
Employee Stock Purchase Plan
The Purchase Plan authorizes the issuance of up to 4.5 million shares of common stock and provides that no options to purchase shares may be granted under the Purchase Plan after May 19, 2025. The Purchase Plan is available to all employees of the Company and its participating subsidiaries and is a qualified plan as defined by Section 423 of the Internal Revenue Code. At the end of each fiscal quarter (the “Option Period”) during the term of the Purchase Plan, employees can acquire shares of common stock from the Company at 85% of the fair market value of the common stock on the first or the last day of the Option Period, whichever is lower. As of September 30, 2017, there were 1,166,445 shares available for issuance under the Purchase Plan. During the nine months ended September 30, 2017 and 2016, the Company issued 96,098 and 125,154 shares, respectively, of common stock to employees participating in the Purchase Plan. With respect to shares issued under the Purchase Plan, the Company's Board of Directors has authorized specific share repurchases to fund the shares issuable under the Purchase Plan.
The weighted average per share fair value of employee stock purchase rights issued pursuant to the Purchase Plan was $16.69 and $13.05 for the nine months ended September 30, 2017 and 2016, respectively. The fair value of stock purchase

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

rights is calculated using the grant date stock price, the value of the embedded call option and the value of the embedded put option.
Stock-Based Compensation
Total stock-based compensation cost was $4.1 million and $4.7 million for the three months ended September 30, 2017 and 2016, respectively, and $14.6 million and $14.9 million for the nine months ended September 30, 2017 and 2016, respectively. Cash received from Purchase Plan purchases was $5.5 million and $5.6 million for the nine months ended September 30, 2017 and 2016, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

5.6. EARNINGS PER SHARE
The two-class method is utilized for the computation of the Company's earnings per share (“EPS”).Company’s EPS. The two-class method requires a portion of net income to be allocated to participating securities, which are unvested awards of share-based payments with non-forfeitable rights to receive dividends or dividend equivalents.that are paid in cash. The Company’s restricted stock awardsRSAs are participating securities. Income allocated to these participating securities is excluded from net earnings available to common shares, as shown in the table below. Basic EPS is computed by dividing net income available to basic common shares by the weighted average number of basic common shares outstanding during the period. Diluted EPS is computed by dividing net income available to diluted common shares by the weighted average number of dilutive common shares outstanding during the period.
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GROUP 1 AUTOMOTIVE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
The following table sets forth the calculation of EPS on total net income for the three and nine months ended September 30, 20172022 and 2016.2021 (in millions, except share and per share data):
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Weighted average basic common shares outstanding15,189,333 17,753,957 15,886,739 17,753,042 
Dilutive effect of stock-based awards and employee stock purchases59,115 82,298 57,145 76,940 
Weighted average dilutive common shares outstanding15,248,448 17,836,255 15,943,883 17,829,982 
Basic:
Net income$195.7 $172.1 $594.6 $465.0 
Less: Earnings allocated to participating securities from continued operations5.5 5.7 16.8 15.6 
Less: (Loss) earnings allocated to participating securities from discontinued operations— — (0.1)0.1 
Net income available to basic common shares$190.3 $166.4 $577.9 $449.4 
Basic earnings per common share$12.53 $9.37 $36.38 $25.31 
Diluted:
Net income$195.7 $172.1 $594.6 $465.0 
Less: Earnings allocated to participating securities from continued operations5.4 5.7 16.7 15.5 
Less: (Loss) earnings allocated to participating securities from discontinued operations— — (0.1)0.1 
Net income available to diluted common shares$190.3 $166.4 $578.0 $449.4 
Diluted earnings per common share$12.48 $9.33 $36.25 $25.21 
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
  (In thousands, except per share amounts)
Weighted average basic common shares outstanding 20,222
 20,568
 20,475
 21,355
Dilutive effect of employee stock purchases, net of assumed repurchase of treasury stock 3
 10
 5
 9
Weighted average dilutive common shares outstanding 20,225
 20,578
 20,480
 21,364
Basic:        
Net Income $29,881
 $35,366
 $102,953
 $116,237
Less: Earnings allocated to participating securities 1,024
 1,427
 3,660
 4,652
 Earnings available to basic common shares $28,857
 $33,939
 $99,293
 $111,585
 Basic earnings per common share $1.43
 $1.65
 $4.85
 $5.23
Diluted:        
Net Income $29,881
 $35,366
 $102,953
 $116,237
Less: Earnings allocated to participating securities 1,023
 1,426
 3,659
 4,651
 Earnings available to diluted common shares $28,858
 $33,940
 $99,294
 $111,586
 Diluted earnings per common share $1.43
 $1.65
 $4.85
 $5.22
7. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the most advantageous market in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value:
6. INCOME TAXES•Level 1 — Quoted prices for identical assets or liabilities in active markets.
•Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets and liabilities; quoted prices in markets that are not active; or model-derived valuations or other inputs that are observable or that can be corroborated by observable market data for substantially the full term of the assets or liabilities.
•Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Cash and Cash Equivalents, Contracts-In-Transit and Vehicle Receivables, Accounts and Notes Receivable, Accounts Payable, Variable Rate Long-Term Debt and Floorplan Notes Payable
The fair values of these financial instruments approximate their carrying values due to the short-term nature of the instruments and/or the existence of variable interest rates.
Fixed Rate Long-Term Debt
The Company is subjectestimates the fair value of its $750.0 million 4.00% Senior Notes due August 2028 (“4.00% Senior Notes”) using quoted prices for the identical liability (Level 1) and estimates the fair value of its fixed-rate mortgage facilities using a present value technique based on current market interest rates for similar types of financial instruments (Level 2). Refer to U.S. federalNote 9. Debt for further discussion of the Company’s long-term debt arrangements.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
The carrying value and fair value of the Company’s 4.00% Senior Notes and fixed rate mortgages were as follows (in millions):
September 30, 2022December 31, 2021
Carrying Value (1)
Fair Value
Carrying Value (1)
Fair Value
4.00% Senior Notes$750.0 $603.5 $750.0 $748.4 
Real estate related101.2 90.8 81.3 78.7 
Total$851.2 $694.3 $831.3 $827.1 
(1) Carrying value excludes unamortized debt issuance costs.
Derivative Financial Instruments
The Company holds interest rate swaps to hedge against variability of interest payments indexed to SOFR. The Company’s interest rate swaps are measured at fair value utilizing a SOFR forward yield curve matched to the identical maturity term of the instrument being measured. Observable inputs utilized in the income taxesapproach valuation technique incorporate identical contractual notional amounts, fixed coupon rates, periodic terms for interest payments and income taxes in numerous U.S. states. In addition,contract maturity. The fair value of the interest rate swaps also considers the credit risk of the Company for instruments in a liability position or the counterparty for instruments in an asset position. The credit risk is subjectcalculated using the spread between the SOFR yield curve and the relevant interest rate according to income taxrating agencies. The inputs to the fair value measurements reflect Level 2 of the hierarchy framework.
Assets and liabilities associated with the Company’s interest rate swaps, as reflected gross in the U.K.Condensed Consolidated Balance Sheets, were as follows (in millions):
 September 30, 2022December 31, 2021
Assets:
Other current assets$0.2 $— 
Other long-term assets115.4 13.8 
Total assets$115.6 $13.8 
Liabilities:
Accrued expenses and other current liabilities$— $0.1 
Other long-term liabilities— 11.1 
Total liabilities$— $11.2 
Interest rate swaps designated as cash flow hedges and Brazil relative tothe related gains or losses are deferred in stockholders’ equity as a component of AOCI in the Company’s Condensed Consolidated Balance Sheets. The deferred gains or losses are recognized in income in the period in which the related items being hedged are recognized in expense. Monthly contractual settlements of the positions are recognized as Floorplaninterest expense or Other interest expense, net, in the Company’s Condensed Consolidated Statements of Operations. Gains or losses for periods where future forecasted hedged transactions are deemed probable of not occurring are reclassified from AOCI intoincome as Floorplaninterest expense.
As of September 30, 2022, the Company held 41 interest rate swaps designated as cash flow hedges with a total notional value of $949.1 million that fixed its foreign subsidiaries. The Company's effective income taxunderlying SOFR at a weighted average rate of 36.6%1.23%. The Company also held 2 additional interest rate swaps designated as cash flow hedges with forward start dates beginning in December 2023, that had an aggregate notional value of $100.0 million and a weighted average interest rate of 0.94% as of September 30, 2022. The maturity dates of the Company’s designated interest rate swaps with forward start dates range between December 2027 and December 2028. As of September 30, 2021, the Company held 33 interest rate swaps designated as cash flow hedges with a total notional value of $686.1 million that fixed the underlying one-month LIBOR at a weighted average rate of 1.37%. The Company transitioned from the use of LIBOR to SOFR subsequent to September 30, 2021.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
The following tables present the impact of the Company’s interest rate swaps designated as cash flow hedges (in millions):
 Amount of Unrealized Income (Loss), Net of Tax, Recognized in Other Comprehensive Income (Loss)
Three Months Ended September 30,Nine Months Ended September 30,
Derivatives in Cash Flow Hedging Relationship2022202120222021
Interest rate swaps$31.9 $(0.6)$84.8 $16.1 
 Amount Reclassified from Other Comprehensive Income (Loss) into Statements of Operations
Statement of Operations ClassificationThree Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Floorplan interest expense$0.7 $(1.4)$(1.4)$(5.0)
Other interest expense, net$1.2 $(1.0)$(0.7)$(2.9)
The amount of gain expected to be reclassified out of AOCI into earnings as an offset to Floorplan interest expense or Other interest expense, net in the next twelve months is $24.0 million.
8. RECEIVABLES, NET AND CONTRACT ASSETS
The Company’s receivables, net and contract assets consisted of the following (in millions):
September 30, 2022December 31, 2021
Contracts-in-transit and vehicle receivables, net:
Contracts-in-transit$132.7 $143.8 
Vehicle receivables90.2 75.6 
Total contracts-in-transit and vehicle receivables222.9 219.4 
Less: allowance for doubtful accounts0.7 0.5 
Total contracts-in-transit and vehicle receivables, net$222.2 $218.9 
Accounts and notes receivable, net:
Manufacturer receivables$86.4 $76.9 
Parts and service receivables65.8 58.6 
F&I receivables27.6 29.8 
Other10.6 17.0 
Total accounts and notes receivable190.3 182.2 
Less: allowance for doubtful accounts5.9 4.3 
Total accounts and notes receivable, net$184.4 $177.9 
Within Other current assets and Other long-term assets:
Total contract assets (1)
$44.7 $37.5 
(1) No allowance for doubtful accounts was recorded for contract assets as of September 30, 2022 or December 31, 2021.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
9. DEBT
Debt consisted of the following (in millions):
September 30, 2022December 31, 2021
4.00% Senior Notes due August 15, 2028$750.0 $750.0 
Acquisition Line200.0 329.3 
Other Debt:
Real estate related807.7 627.7 
Finance leases174.5 172.7 
Other20.9 166.9 
Total other debt1,003.0 967.4 
Total debt1,953.0 2,046.7 
Less: unamortized debt issuance costs10.711.0
Less: current maturities141.5220.4
Total long-term debt$1,800.9 $1,815.3 
Acquisition Line
The proceeds of the Acquisition Line (as defined in Note 10. Floorplan Notes Payable) are used for working capital, general corporate and acquisition purposes.As of September 30, 2022, borrowings under the Acquisition Line, a component of the Revolving Credit Facility (as defined in Note 10. Floorplan Notes Payable), totaled $200.0 million. The average interest rate on this facility was 2.90% during the three months ended September 30, 2017 was more than the U.S. federal statutory rate of 35.0%, due primarily to the taxes provided for in U.S. state jurisdictions, valuation allowances provided for net operating losses and other deferred tax assets in certain U.S. states and in Brazil and unrecognized tax benefits with respect to uncertain tax positions, partially offset by income generated in the U.K., which is taxed at a lower statutory rate. 2022.
Real Estate Related
The Company's effective income tax rate of 35.7% of pretax income for the nine months ended September 30, 2017, was more than the U.S. federal statutory rate of 35.0%, as taxes provided forCompany has mortgage loans in the U.S. state jurisdictions and valuation allowances provided for net operating losses and other deferred tax assets in certain U.S. states and in Brazil and unrecognized tax benefits with respect to uncertain tax positions, were substantially offset by (a) income generated in the U.K., which is taxed at a lower statutory rate, (b) the tax impact of dealership dispositions that are paid in Brazil, and (c) excess tax deductions for restricted stock resulting from the adoption of ASU 2016-09 during the nine months ended September 30, 2017.
For the three and nine months ended September 30, 2017, the Company's effective tax rate increased to 36.6% and 35.7%, respectively, as compared to 36.5% and 35.0% for the three and nine months ended September 30, 2016, respectively. This increase was primarily due to the mix effect resulting from taxes provided for in foreign jurisdictions, changes to valuation allowances provided for net operating losses and other deferred tax assets in certain U.S. states and in Brazil and unrecognized tax benefits with respect to uncertain tax positions during the three and nine months ended September 30, 2017, partially offset by excess tax deductions for restricted stock resulting from the adoption of ASU 2016-09 during the nine months ended September 30, 2017, as well as the tax impact of dealership dispositions in Brazil during the nine months ended September 30, 2016.
installments. As of September 30, 2017,2022, borrowings outstanding under these facilities totaled $807.7 million, gross of debt issuance costs, comprised of $718.7 million in the U.S. and $89.0 million in the U.K.
Bridge Facility
In connection with the Prime Acquisition, the Company recorded $1.2 million unrecognized tax benefits, including $0.2 millionentered into a commitment letter with Wells Fargo Bank (“Bridge Facility”) to provide a portion of related interest and penalty.the debt financing. As of December 31, 2016,2021, borrowings outstanding under the Bridge Facility totaled $140.0 million, and is reflected within Other, under Other Debt in the table above, and reflected within current maturities. During the three months ended March 31, 2022, the Company had no unrecognized tax benefits with respect to uncertain

paid off the total outstanding borrowings under the Bridge Facility of $140.0 million.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

10. FLOORPLAN NOTES PAYABLE
tax positions and did not incur any interest and penalties. Consistent with prior treatment of tax related assessments, the Company recognizes interest and penalties related to uncertain tax positions in income tax expense.
The Company's taxable years 2013 and subsequent remain open for examination in the U.S. The Company's taxable years 2015 and subsequent remain open in the U.K. and taxable years 2012 and subsequent remain open in Brazil.

7. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS
Accounts andCompany’s floorplan notes receivablepayable consisted of the following:following (in millions):
September 30, 2022December 31, 2021
Revolving Credit Facility — floorplan notes payable$702.3 $511.7 
Revolving Credit Facility — floorplan notes payable offset account(206.1)(268.6)
Revolving Credit Facility — floorplan notes payable, net496.2 243.1 
Other non-manufacturer facilities45.8 51.9 
Floorplan notes payable — credit facility and other, net$542.0 $295.0 
FMCC Facility$31.4 $22.8 
FMCC Facility offset account(12.4)(3.3)
FMCC Facility, net19.0 19.5 
Other manufacturer affiliate facilities184.9 216.5 
Floorplan notes payable — manufacturer affiliates, net$203.9 $236.0 
  September 30, 2017 December 31, 2016
  (unaudited)  
  (In thousands)
Amounts due from manufacturers $111,768
 $95,754
Parts and service receivables 38,523
 35,318
Finance and insurance receivables 23,681
 24,866
Other 16,643
 20,322
Total accounts and notes receivable 190,615
 176,260
Less allowance for doubtful accounts 2,943
 2,896
Accounts and notes receivable, net $187,672
 $173,364
Inventories consisted of the following:
  September 30, 2017 December 31, 2016
  (unaudited)  
  (In thousands)
New vehicles $1,095,792
 $1,156,383
Used vehicles 344,271
 294,812
Rental vehicles 138,501
 131,080
Parts, accessories and other 81,912
 77,762
Total inventories 1,660,476
 1,660,037
Less lower of cost or net realizable value allowance 8,687
 8,222
Inventories, net $1,651,789
 $1,651,815
New, used and rental vehicles are valued at the lower of specific cost or net realizable value and are removed from inventory using the specific identification method. Parts and accessories are valued at lower of cost (determined on either a first-in, first-out or an average cost basis) or net realizable value.

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Property and equipment consisted of the following:
  Estimated Useful Lives in Years September 30, 2017 December 31, 2016
  (unaudited)
    (dollars in thousands)
Land — $448,554
 $400,163
Buildings 25 to 50 669,416
 553,961
Leasehold improvements varies 181,336
 170,060
Machinery and equipment 7 to 20 116,174
 100,164
Furniture and fixtures 3 to 10 99,880
 87,691
Company vehicles 3 to 5 11,691
 11,632
Construction in progress — 44,323
 66,658
Total   1,571,374
 1,390,329
Less accumulated depreciation   301,977
 264,446
Property and equipment, net   $1,269,397
 $1,125,883
During the nine months ended September 30, 2017, the Company incurred $71.0 million of capital expenditures for the construction of new or expanded facilities and the purchase of equipment and other fixed assets in the maintenance of the Company’s dealerships and facilities, excluding $15.9 million of capital expenditures accrued as of December 31, 2016. As of September 30, 2017, the Company had accrued $10.4 million of capital expenditures. In addition, the Company purchased real estate (including land and buildings) during the nine months ended September 30, 2017 associated with existing dealership operations totaling $67.8 million. And, in conjunction with the acquisition of dealerships and franchises in the nine months ended September 30, 2017, the Company acquired $29.2 million of real estate and other property and equipment.
8. CREDIT FACILITIES
In the U.S., the Company has a $1.8 billion revolving syndicated credit arrangement that matures on June 17, 2021 and is comprised of 24 financial institutions, including six manufacturer-affiliated finance companies (“RevolvingFloorplan Notes Payable — Credit Facility”). The Company also has a $300.0 million floorplan financing arrangement (“FMCC Facility”) with Ford Motor Credit Company (“FMCC”) for financing of new Ford vehicles in the U.S. and other floorplan financing arrangements with several other automobile manufacturers for financing of a portion of its U.S. rental vehicle inventory. In the U.K., the Company has financing arrangements with BMW Financial Services NA, LLC ("BMWFS"), Volkswagen Finance, Toyota Motor Credit Corporation, FMCC and a third-party financial institution for financing of its new, used and rental vehicles. In Brazil, the Company has financing arrangements for new, used, and rental vehicles with several financial institutions, most of which are manufacturer affiliated. Within the Company's Consolidated Balance Sheets, Floorplan notes payable - credit facility and other primarily reflects amounts payable for the purchase of specific new, used and rental vehicle inventory (with the exception of new and rental vehicle purchases financed through lenders affiliated with the respective manufacturer) whereby financing is provided by the Revolving Credit Facility. Floorplan notes payable - manufacturer affiliates reflects amounts related to the purchase of vehicles whereby financing is provided by the FMCC Facility the financing of a portion of the Company's rental vehicles in the U.S., as well as the financing of new, used, and rental vehicles with manufacturer affiliates in both the U.K. and Brazil. Payments on the floorplan notes payable are generally due as the vehicles are sold. As a result, these obligations are reflected in the accompanying Consolidated Balance Sheets as current liabilities.

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Revolving Credit FacilityAcquisition Line
The Company's Revolving Credit Facility provides a total borrowing capacity of $1.8 billion and expires on June 17, 2021. The Revolving Credit Facility consists of two tranches, providing a maximum of $1.75 billion for U.S. vehicle inventory floorplan financing (“Floorplan Line”), as well as a maximum of $360.0 million and a minimum of $50.0 million for working capital and general corporate purposes, including acquisitions (“Acquisition Line”). The capacity under these two tranches can be re-designated within the overall $1.8 billion commitment, subject to the aforementioned limits. Up to $125.0 millionproceeds of the Acquisition Line can be borrowed(as defined in either euros or British pound sterling. The Revolving Credit Facility can be expanded to a maximum commitment of $2.1 billion, subject to participating lender approval. TheNote 10. Floorplan Line bears interest at rates equal to the LIBOR plus 125 basis pointsNotes Payable) are used for new vehicle inventoryworking capital, general corporate and the LIBOR plus 150 basis points for used vehicle inventory. The Acquisition Line bears interest at the LIBOR plus 150 basis points plus a margin that ranges from zero to 100 basis points, depending on the Company's total adjusted leverage ratio, for borrowings in U.S. dollars and a LIBOR equivalent plus 125 to 250 basis points, depending on the Company's total adjusted leverage ratio, on borrowings in euros or British pound sterling. The Floorplan Line requires a commitment fee of 0.15% per annum on the unused portion. Amounts borrowed by the Company under the Floorplan Line for specific vehicle inventory are to be repaid upon the sale of the vehicle financed, and in no case is a borrowing for a vehicle to remain outstanding for greater than one year. The Acquisition Line also requires a commitment fee ranging from 0.20% to 0.45% per annum, depending on the Company’s total adjusted leverage ratio, based on a minimum commitment of $50.0 million less outstanding borrowings. In conjunction with the Revolving Credit Facility, the Company has $4.5 million of related unamortized costs asacquisition purposes.As of September 30, 2017, which are included in Prepaid expenses and other current assets and Other Assets on the accompanying Consolidated Balance Sheets and amortized over the term of the facility.
After considering the outstanding balance of $1,017.2 million at September 30, 2017, the Company had $422.8 million of available floorplan borrowing capacity under the Floorplan Line. Included in the $422.8 million available2022, borrowings under the Acquisition Line, a component of the Revolving Credit Facility (as defined in Note 10. Floorplan Line was $46.2 million of immediately available funds.Notes Payable), totaled $200.0 million. The weighted average interest rate on this facility was 2.90% during the Floorplan Line was 2.5% and 2.0% as ofthree months ended September 30, 2017 and December 31, 2016, respectively, excluding the impact of the Company’s interest rate derivative instruments. With regards to the Acquisition Line, there were $33.5 million borrowings outstanding as of September 30, 2017 and no borrowings outstanding as of December 31, 2016. After considering $29.3 million of outstanding letters of credit and other factors included2022.
Real Estate Related
The Company has mortgage loans in the Company’s available borrowing base calculation, there was $297.1 million of available borrowing capacity underU.S. and the Acquisition Line as of September 30, 2017. The amount of available borrowing capacity under the Acquisition Line is limited from time to time based upon certain debt covenants.
All of the U.S. dealership-owning subsidiariesU.K. that are co-borrowers under the Revolving Credit Facility. The Company’s obligations under the Revolving Credit Facility are secured by essentially all of the Company's U.S. personal property (other than equity interestspaid in dealership-owning subsidiaries), including all motor vehicle inventory and proceeds from the disposition of dealership-owning subsidiaries, excluding inventory financed directly with manufacturer-affiliates and other third-party financing institutions. The Revolving Credit Facility contains a number of significant covenants that, among other things, restrict the Company’s ability to make disbursements outside of the ordinary course of business, dispose of assets, incur additional indebtedness, create liens on assets, make investments and engage in mergers or consolidations. The Company is also required to comply with specified financial tests and ratios defined in the Revolving Credit Facility, such as the fixed charge coverage and total adjusted leverage ratios. Further, the Revolving Credit Facility restricts the Company’s ability to make certain payments, such as dividends or other distributions of assets, properties, cash, rights, obligations or securities (“Restricted Payments”). The Restricted Payments cannot exceed the sum of $208.5 million plus (or minus if negative) (a) one-half of the aggregate consolidated net income for the period beginning on April 1, 2014 and ending on the date of determination and (b) the amount of net cash proceeds received from the sale of capital stock after June 2, 2014 and ending on the date of determination less (c) cash dividends and share repurchases after June 2, 2014 (“Credit Facility Restricted Payment Basket”). For purposes of the calculation of the Credit Facility Restricted Payment Basket, net income represents such amounts per the Consolidated Financial Statements adjusted to exclude the Company’s foreign operations, non-cash interest expense, non-cash asset impairment charges, and non-cash stock-based compensation.installments. As of September 30, 2017, the Credit Facility Restricted Payment Basket totaled $134.4 million. The Company was in compliance with all applicable covenants and ratios under the Revolving Credit Facility as of September 30, 2017.
Ford Motor Credit Company Facility
The FMCC Facility provides for the financing of, and is collateralized by, the Company’s Ford new vehicle inventory in the U.S., including affiliated brands. This arrangement provides for $300.0 million of floorplan financing and is an evergreen arrangement that may be canceled with 30 days' notice by either party. As of September 30, 2017, the Company had an outstanding balance of $131.7 million under the FMCC Facility with an available floorplan borrowing capacity of $168.3 million. Included in the $168.3 million available borrowings under the FMCC Facility was $22.0 million of immediately

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available funds. This facility bears interest at a rate of Prime plus 150 basis points minus certain incentives. The interest rate on the FMCC Facility was 5.75% before considering the applicable incentives as of September 30, 2017.
Other Credit Facilities
The Company has credit facilities with BMWFS, Volkswagen Finance, Toyota Motor Credit Corporation, FMCC and a third-party financial institution for the financing of new, used and rental vehicle inventories related to its U.K. operations. These facilities are denominated in British pound sterling and are evergreen arrangements that may be canceled with notice by either party and bear interest at a base rate, plus a surcharge that varies based upon the type of vehicle being financed. As of September 30, 2017,2022, borrowings outstanding under these facilities totaled $123.1$807.7 million, gross of debt issuance costs, comprised of $718.7 million in the U.S. and $89.0 million in the U.K.
Bridge Facility
In connection with annual interest rates charged onthe Prime Acquisition, the Company entered into a commitment letter with Wells Fargo Bank (“Bridge Facility”) to provide a portion of the debt financing. As of December 31, 2021, borrowings outstanding under these facilities, after the grace periodBridge Facility totaled $140.0 million, and is reflected within Other, under Other Debt in the table above, and reflected within current maturities. During the three months ended March 31, 2022, the Company paid off the total outstanding borrowings under the Bridge Facility of zero to 30 days, ranging from 1.25% to 3.95%.$140.0 million.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
10. FLOORPLAN NOTES PAYABLE
The Company has credit facilities with financial institutions in Brazil, most of which are affiliated with the manufacturers, for the financing of new, used and rental vehicle inventories related to its Brazilian operations. These facilities are denominated in Brazilian real and have renewal terms ranging from one month to twelve months. They may be canceled with notice by either party and bear interest at a benchmark rate, plus a surcharge that varies based upon the type of vehicle being financed. As of September 30, 2017, borrowings outstanding under these facilities totaled $22.5 million, with annual interest rates charged on borrowings outstanding under these facilities, after the grace period of zero to 90 days, ranging from 12.67% to 18.86%.
Excluding rental vehicles financed through the Revolving Credit Facility, financing for U.S. rental vehicles is typically obtained directly from the automobile manufacturers. These financing arrangements generally require small monthly payments and mature in varying amounts over a period of two years. Rental vehicles are typically transferred to used vehicle inventory when they are removed from service and repayment of the borrowing is required at that time. As of September 30, 2017, borrowings outstanding under these rental vehicle facilities totaled $114.3 million, with interest rates that vary up to 5.75%.
9. LONG-TERM DEBT
The Company carries its long-term debt at face value, net of applicable discounts and capitalized debt issuance costs. Long-term debtCompany’s floorplan notes payable consisted of the following:following (in millions):
September 30, 2022December 31, 2021
Revolving Credit Facility — floorplan notes payable$702.3 $511.7 
Revolving Credit Facility — floorplan notes payable offset account(206.1)(268.6)
Revolving Credit Facility — floorplan notes payable, net496.2 243.1 
Other non-manufacturer facilities45.8 51.9 
Floorplan notes payable — credit facility and other, net$542.0 $295.0 
FMCC Facility$31.4 $22.8 
FMCC Facility offset account(12.4)(3.3)
FMCC Facility, net19.0 19.5 
Other manufacturer affiliate facilities184.9 216.5 
Floorplan notes payable — manufacturer affiliates, net$203.9 $236.0 
  September 30, 2017 December 31, 2016
  (dollars in thousands)
5.00% Senior Notes (aggregate principal of $550,000 at September 30, 2017 and December 31, 2016) $541,658
 $540,465
5.25% Senior Notes (aggregate principal of $300,000 at September 30, 2017 and December 31, 2016) 296,009
 295,591
Acquisition Line 33,508
 —
Real Estate Related and Other Long-Term Debt 411,439
 385,358
Capital lease obligations related to real estate, maturing in varying amounts through June 2034 with a weighted average interest rate of 9.4% and 9.9%, respectively 52,738
 47,613
  1,335,352
 1,269,027
Less current maturities of long-term debt 42,663
 56,218
  $1,292,689
 $1,212,809
Included in current maturities of long-term debt and short-term financing in the Company's Consolidated Balance Sheets as of September 30, 2017, and December 31, 2016, was $38.3 million and $16.2 million, respectively, of short-term financing that was due within one year.
5.00% SeniorFloorplan Notes
On June 2, 2014, the Company issued $350.0 million aggregate principal amount of its 5.00% senior notes due 2022 ("5.00% Notes"). Subsequently, on September 9, 2014, the Company issued an additional $200.0 million of 5.00% Notes at a discount of 1.5% from face value. The 5.00% Notes will mature on June 1, 2022 and pay interest semiannually, in arrears, in cash on each June 1 and December 1, beginning December 1, 2014. On or after June 1, 2017, the Company may redeem some or all of the 5.00% Notes at specified prices, plus accrued and unpaid interest. The Company may be required to purchase the 5.00% Notes if it sells certain assets or triggers the change in control provisions defined in the 5.00% Notes indenture. The 5.00% Notes are senior unsecured obligations and rank equal in right of payment to all of the Company's existing and future senior unsecured debt and senior in right of payment to all of its future subordinated debt. The 5.00% Notes are guaranteed by substantially all of the Company's U.S. subsidiaries. The U.S. subsidiary guarantees rank equally in the right of payment to all of the Company's U.S. subsidiary guarantor’s existing and future subordinated debt. In addition, the 5.00% Notes are

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structurally subordinated to the liabilities of its non-guarantor subsidiaries and are subject to customary covenants, including a restricted payment basket and debt limitations. The restricted payment basket calculation under the terms of the 5.00% Notes is the same as under the Payable — Credit Facility Restricted Payment Basket. The 5.00% Notes were registered with the Securities and Exchange Commission in June 2015. The 5.00% Notes are presented net of unamortized underwriters' fees, discount and debt issuance costs, which are being amortized over a period of eight years in conjunction with the term of the 5.00% Notes, of $8.3 million as of September 30, 2017.
5.25% Senior Notes
On December 8, 2015, the Company issued 5.25% senior unsecured notes with a face amount of $300.0 million due to mature on December 15, 2023 (“5.25% Notes”). The 5.25% Notes pay interest semiannually, in arrears, in cash on each June 15 and December 15, beginning June 15, 2016. Using proceeds of certain equity offerings, the Company may redeem up to 35% of the 5.25% Notes prior to December 15, 2018, subject to certain conditions, at a redemption price equal to 105% of principal amount of the 5.25% Notes plus accrued and unpaid interest. Otherwise, the Company may redeem some or all of the 5.25% Notes prior to December 15, 2018 at a redemption price equal to 100% of the principal amount of the 5.25% Notes redeemed, plus an applicable make-whole premium, and plus accrued and unpaid interest. On or after December 15, 2018, the Company may redeem some or all of the 5.25% Notes at specified prices, plus accrued and unpaid interest. The Company may be required to purchase the 5.25% Notes if it sells certain assets or triggers the change in control provisions defined in the 5.25% Notes indenture. The 5.25% Notes are senior unsecured obligations and rank equal in right of payment to all of the Company’s existing and future senior unsecured debt and senior in right of payment to all of its future subordinated debt. The 5.25% Notes are guaranteed by substantially all of the Company’s U.S. subsidiaries. The U.S. subsidiary guarantees rank equally in the right of payment to all of the Company’s U.S. subsidiary guarantor’s existing and future subordinated debt. In addition, the 5.25% Notes are structurally subordinated to the liabilities of its non-guarantor subsidiaries and are subject to customary covenants, including a restricted payment basket and debt limitations. The restricted payment basket calculation under the terms of the 5.25% Notes is the same as under the Credit Facility Restricted Payment Basket. The 5.25% Notes are presented net of unamortized underwriters' fees and debt issuance costs, which are being amortized over a period of eight years in conjunction with the term of the 5.25% Notes, of $4.0 million as of September 30, 2017.
Acquisition Line
SeeThe proceeds of the Acquisition Line (as defined in Note 8, "Credit Facilities,"10. Floorplan Notes Payable) are used for further discussion onworking capital, general corporate and acquisition purposes.As of September 30, 2022, borrowings under the Company's RevolvingAcquisition Line, a component of the Revolving Credit Facility and Acquisition Line.(as defined in Note 10. Floorplan Notes Payable), totaled $200.0 million. The average interest rate on this facility was 2.90% during the three months ended September 30, 2022.
Real Estate Related and Other Long-Term Debt
The Company as well as certain of its wholly-owned subsidiaries, has entered into separate term mortgage loans in the U.S. with three of its manufacturer-affiliated finance partners, Toyota Motor Credit Corporation, BMWFS and FMCC, as well as several third-party financial institutions. These mortgage loans may be expanded for borrowings related to specific buildings and/or properties andthe U.K. that are guaranteed by the Company. Each mortgage loan was madepaid in connection with, and is secured by mortgage liens on, the real property owned by the Company that is mortgaged under the loans. The mortgage loans bear interest at fixed rates between 3.00% and 4.69%, and at variable indexed rates plus a spread between 1.50% and 2.50% per annum. The mortgage loans consist of 56 term loans for an aggregate principal amount of $371.8 million.installments. As of September 30, 2017,2022, borrowings outstanding under these mortgage loansfacilities totaled $318.5$807.7 million, with $29.4 million classified as a current maturitygross of long-term debt. For the nine months ended September 30, 2017, the Company made additional net borrowings and principal payments of $10.2 million and $13.7 million, respectively. These mortgage loans are presented net of unamortized underwriters' fees, discount and debt issuance costs, which are being amortized overcomprised of $718.7 million in the termsU.S. and $89.0 million in the U.K.
Bridge Facility
In connection with the Prime Acquisition, the Company entered into a commitment letter with Wells Fargo Bank (“Bridge Facility”) to provide a portion of the mortgage loans,debt financing. As of $0.6December 31, 2021, borrowings outstanding under the Bridge Facility totaled $140.0 million, and is reflected within Other, under Other Debt in the table above, and reflected within current maturities. During the three months ended March 31, 2022, the Company paid off the total outstanding borrowings under the Bridge Facility of $140.0 million.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
10. FLOORPLAN NOTES PAYABLE
The Company’s floorplan notes payable consisted of the following (in millions):
September 30, 2022December 31, 2021
Revolving Credit Facility — floorplan notes payable$702.3 $511.7 
Revolving Credit Facility — floorplan notes payable offset account(206.1)(268.6)
Revolving Credit Facility — floorplan notes payable, net496.2 243.1 
Other non-manufacturer facilities45.8 51.9 
Floorplan notes payable — credit facility and other, net$542.0 $295.0 
FMCC Facility$31.4 $22.8 
FMCC Facility offset account(12.4)(3.3)
FMCC Facility, net19.0 19.5 
Other manufacturer affiliate facilities184.9 216.5 
Floorplan notes payable — manufacturer affiliates, net$203.9 $236.0 
Floorplan Notes Payable — Credit Facility
Revolving Credit Facility
On March 9, 2022, in the U.S., the Company entered into an amended revolving syndicated credit arrangement with 21 participating financial institutions that matures on March 9, 2027 (“Revolving Credit Facility”). On August 18, 2022, the company entered into a first amendment on the twelfth amended Revolving Credit Facility. In addition to extending the term, the amendment increases the availability to $2.0 billion, with the ability to increase to $2.4 billion, as further described below. The Revolving Credit Facility currently consists of two tranches: (i) a $1.2 billion maximum capacity tranche for U.S. vehicle inventory floorplan financing (“U.S. Floorplan Line”) which the outstanding balance, net of offset account discussed below, is reported in Floorplan notes payable — credit facility and other, net;and (ii) an$800.0 million maximum capacity tranche (“Acquisition Line”), which is not due until maturity of the Revolving Credit Facility and is therefore classified in Long-termdebt on the Condensed Consolidated Balance Sheets — refer to Note 9. Debt for additional discussion. The capacity under these two tranches can be re-designated within the overall $2.0 billion commitment. The Acquisition Line includes a $100.0 million sub-limit for letters of credit and $50.0 million minimum capacity tranche. The Company had $12.2 million in letters of credit outstanding as of both September 30, 2022 and December 31, 2021.
The U.S. Floorplan Line bears interest at rates equal to SOFR plus 120 basis points for new vehicle inventory and SOFR plus 150 basis points for used vehicle inventory. The weighted average interest rate on the U.S. Floorplan Line was 4.25% as of September 30, 2017.2022, excluding the impact of the Company’s interest rate swap derivative instruments. The agreements provideAcquisition Line bears interest at SOFR or a SOFR equivalent plus 110 to 210 basis points, depending on the Company’s total adjusted leverage ratio, on borrowings in USD, Euros or GBP. The U.S. Floorplan Line requires a commitment fee of 0.15% per annum on the unused portion. Amounts borrowed by the Company under the U.S. Floorplan Line for monthly paymentsspecific vehicle inventory are to be repaid upon the sale of the vehicle financed and in no case is a borrowing for a vehicle to remain outstanding for greater than one year. The Acquisition Line requires a commitment fee ranging from 0.15% to 0.40% per annum, depending on the Company’s total adjusted leverage ratio, based on 15 or 20-year amortization schedulesa minimum commitment of $50.0 million less outstanding borrowings.
In conjunction with the amendment to the Revolving Credit Facility described above, the Company incurred $3.7 million in additional debt issuance costs. The Company had $5.3 million and mature between November 2017$2.6 million of related unamortized debt issuance costs as of September 30, 2022 and December 2024. These mortgage loans31, 2021, respectively, which are cross-collateralized included in Prepaid expenses and cross-defaultedOther long-term assets in the Company’s Condensed Consolidated Balance Sheets and amortized over the term of the facility.
Floorplan Notes Payable — Manufacturer Affiliates
FMCC Facility
The Company has a $300.0 million floorplan arrangement with FMCC for financing of new Ford vehicles in the mortgagesU.S. (the “FMCC Facility”). This facility bears interest at the U.S. prime rate which was 6.25% as of each respective financial institution.September 30, 2022.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)
Other Manufacturer Facilities
The Company has entered into 16 separate term mortgage loansother credit facilities in the U.S. and the U.K. with other third-party financial institutions which are secured by the Company’s U.K. properties. These mortgage loans (collectively, “U.K. Notes”) are denominated in British pound sterling and are being repaid in monthly installments that will mature by September 2034. As of September 30, 2017, borrowings under the U.K. Notes totaled $80.4 million,affiliated with $7.4 million classified as a current maturity of long-term debt in the accompanying Consolidated Balance Sheets. For the nine months ended September 30, 2017, the Company made additional borrowings and principal payments of $28.9 million and $3.9 million, respectively, associated with the U.K. Notes.
In addition to the real estate related and other long-term debt, the Company also has two short-term revolving working capital loan agreements and an unsecured loan agreement with third-party financial institutions in the U.K. and U.S., respectively. As of September 30, 2017, short-term borrowings under the U.K. and U.S. third-party loans totaled $13.2 million and $25.1 million, respectively, and are included in current maturities of long-term debt and short-term financing in the Company's Consolidated Balance Sheets. For the nine months ended September 30, 2017, the Company made additional borrowings of $5.1 million and $25.1 million under the U.K. and U.S. third-party loans, respectively, and no principal payments.

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The Company has a separate term mortgage loan in Brazil with a third-party financial institution (the "Brazil Note"). The Brazil Note is denominated in Brazilian real and is secured by one of the Company’s Brazilian properties, as well as a guarantee from the Company. The Brazil Note is being repaid in monthly installments that will mature by April 2025. As of September 30, 2017, borrowings under the Brazil Note totaled $3.6 million, with $0.3 million classified as a current maturity of long-term debt in the accompanying Consolidated Balance Sheets. For the nine months ended September 30, 2017, the Company made no additional borrowings and made principal payments of $0.4 million associated with the Brazil Note.
The Company also has a working capital loan agreement with a third-party financial institution in Brazil. The principal balance on this loan is due by February 2020 with interest only payments being made quarterly until the due date. As of September 30, 2017, borrowings outstanding under the Brazilian third-party loan totaled $7.0 million, which are classified as long-term debt in the accompanying Consolidated Balance Sheets. For the nine months ended September 30, 2017, the Company made no additional borrowings or principal payments.
Fair Value of Long-Term Debt
The Company's outstanding 5.00% Notes had a fair value of $570.5 million and $548.4 million as of September 30, 2017 and December 31, 2016, respectively. The Company's outstanding 5.25% Notes had a fair value of $304.4 million and $297.0 million as of September 30, 2017 and December 31, 2016, respectively. The Company's fixed interest rate borrowings included in real estate related and other long-term debt totaled $88.4 million and $93.9 million as of September 30, 2017 and December 31, 2016, respectively. The fair value of such fixed interest rate borrowings was $88.6 million and $94.5 million as of September 30, 2017 and December 31, 2016, respectively. The fair value estimates are based on Level 2 inputs of the fair value hierarchy available as of September 30, 2017 and December 31, 2016. The Company determined the estimated fair value of its long-term debt using available market information and commonly accepted valuation methodologies. Considerable judgment is required in interpreting market data to develop the estimates of fair value. Accordingly, these estimates are not necessarily indicative of the amounts that the Company, or holders of the instruments, could realize in a current market exchange. The use of different assumptions and/or estimation methodologies could have a material effect on estimated fair values. The carrying value of the Company’s variable rate debt approximates fair value due to the short-term nature of the interest rates.
10. FAIR VALUE MEASUREMENTS
ASC 820 defines fair value as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; requires disclosure of the extent to which fair value is used to measure financial and non-financial assets and liabilities, the inputs utilized in calculating valuation measurements, and the effect of the measurement of significant unobservable inputs on earnings, or changes in net assets, as of the measurement date; and establishes a three-level valuation hierarchy based upon the transparency of inputs utilized in the measurement and valuation of financial assets or liabilities as of the measurement date:
•Level 1 — unadjusted, quoted pricesmanufacturers for identical assets or liabilities in active markets;
•Level 2 — quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs other than quoted market prices that are observable or that can be corroborated by observable market data by correlation; and
•Level 3 — unobservable inputs based upon the reporting entity’s internally developed assumptions that market participants would use in pricing the asset or liability.
The Company’s financial instruments consist primarily of cash and cash equivalents, contracts-in-transit and vehicle receivables, accounts and notes receivable, investments in debt and equity securities, accounts payable, credit facilities, long-term debt and interest rate derivative instruments. The fair values of cash and cash equivalents, contracts-in-transit and vehicle receivables, accounts and notes receivable, accounts payable, and credit facilities approximate their carrying values due to the short-term nature of these instruments and/or the existence of variable interest rates. The Company evaluated its assets and liabilities for those that met the criteria of the disclosure requirements and fair value framework of ASC 820 and identified demand obligations, interest rate derivative instruments, and investment balances in certain financial institutions as having met such criteria.
The Company periodically invests in unsecured, corporate demand obligations with manufacturer-affiliated finance companies, which bear interest at a variable rate and are redeemable on demand by the Company. Therefore, the Company has classified these demand obligations as cash and cash equivalents in the accompanying Consolidated Balance Sheets. The Company determined that the valuation measurement inputs of these instruments include inputs other than quoted market prices, that are observable or that can be corroborated by observable data by correlation. Accordingly, the Company has classified these instruments within Level 2 of the hierarchy framework.

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In addition, the Company maintains an investment balance with certain of the financial institutions in Brazil that provide credit facilities for the financing of new, used and rental vehicle inventories. The investment balances bear interest at a variable rate and are redeemable by the CompanyAs of September 30, 2022, borrowings outstanding under these facilities totaled $184.9 million, comprised of $104.4 million in the future under certain conditions. The Company has classified these investment balances as long-term assetsU.S., with annual interest rates ranging from less than 1% to approximately 7%, and $80.5 million in the accompanyingU.K., with annual interest rates ranging from approximately 2% to 6%.
Offset Accounts
Offset accounts consist of immediately available cash used to pay down the U.S. Floorplan Line and FMCC Facility, and therefore offset the respective outstanding balances in the Company’s Condensed Consolidated Balance Sheets. The Company determined thatoffset accounts are the valuation measurement inputsCompany’s primary options for the short-term investment of these instruments include inputs other than quoted market prices, that are observable or that can be corroborated by observable data by correlation. Accordingly,excess cash.
11. CASH FLOW INFORMATION
Non-Cash Activities
The accrual for capital expenditures increased $0.4 million and $2.1 million during the Company has classified these instruments within Level 2nine months ended September 30, 2022 and 2021, respectively.
Interest and Income Taxes Paid
Cash paid for interest, including the monthly settlement of the hierarchy framework.
The Company's derivative financial instruments are recorded at fair market value. SeeCompany’s interest rate swaps, was $73.8 million and $59.9 million for the nine months ended September 30, 2022 and 2021, respectively. Refer to Note 3, "Derivative 7. Financial Instruments and Risk Management Activities"Fair Value Measurements for further details regarding the Company's derivative financial instruments. See Note 9, "Long-term Debt" for details regarding the fair valuediscussion of the Company's long-term debt.Company’s interest rate swaps.
AssetsCash paid for income taxes, net of refunds, was $155.9 million and liabilities recorded at fair value, within Level 2 of$100.7 million for the hierarchy framework, in the accompanying balance sheets as ofnine months ended September 30, 20172022 and December 31, 2016, respectively, were as follows:2021, respectively.
  As of September 30, 2017 As of December 31, 2016
  (In thousands)
Assets:    
Investments $708
 $3,254
Demand obligations 13
 12
Interest rate derivative financial instruments 7,701
 9,484
Total $8,422
 $12,750
Liabilities:    
Interest rate derivative financial instruments $16,979
 $24,411
Total $16,979
 $24,411
11.12. COMMITMENTS AND CONTINGENCIES
From time to time, the Company’s dealerships are named in various types of litigation involving customer claims, employment matters, class action claims, purported class action claims, as well as claims involving the manufacturermanufacturers of automobiles, contractual disputes, vehicle related incidents and other matters arising in the ordinary course of business. Due to the nature of the automotive retailing business, theThe Company may be involved in legal proceedings or suffer losses that could have a material adverse effect on the Company’s business.results of operations, financial condition or cash flows. In the normal course of business, the Company is required to respond to customer, employee and other third-party complaints. Amounts that have been accrued or paid related to the settlement of litigation are included in selling, general and administrative expenses in the Company’s Consolidated Statements of Operations. In addition, the manufacturers of the vehicles that the Company sells and services have audit rights allowing them to review the validity of amounts claimed for incentive, rebate or warranty-related items and charge the Company back for amounts determined to be invalid payments under the manufacturers’ programs, subject to the Company’s right to appeal any such decision. Amounts that have been accrued or paid related to the settlement of manufacturer chargebacks of recognized incentives and rebates are included in cost of sales in the Company’s Consolidated Statements of Operations, while such amounts for manufacturer chargebacks of recognized warranty-related items are included as a reduction of Revenues in the Company’s Consolidated Statements of Operations.
Legal Proceedings
In late June 2016, Volkswagen agreed to pay up to an aggregate of $14.7 billion to settle claims stemming from the diesel emissions scandal, including claims from customers and automotive dealers. In October 2016, the Company received notification from Volkswagen that it is entitled to receive, in the aggregate, approximately $13.2 million in connection with the Company's current and prior ownership of seven Volkswagen dealerships in the U.S. The Company accepted and executed the offer in the fourth quarter of 2016 and received half of the compensation in a lump sum amount in January 2017 with the remaining amount to be paid over 18 months. The Company has received eight of the remaining 18 monthly installments asAs of September 30, 2017. The Company recognized the entire settlement as an offset to Selling, General and Administrative Expenses ("SG&A") in the Consolidated Statements of Operations for the year ended December 31, 2016. Also, in conjunction with the Volkswagen diesel emissions scandal, Volkswagen agreed in March 2017 to settle allegations of damages by2022, the Company relative to its three Audi branded dealerships. The Company received the cash and recognized the settlement as an offset to SG&A in the accompanying Consolidated Statements of Operations for the nine months ended September 30, 2017.
Currently, the Company iswas not party to any legal proceedings that, individually or in the aggregate, are reasonably expected to have a material adverse effect on the Company'sCompany’s results of operations, financial condition or cash flows, including

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

class action lawsuits.flows. However, the results of current or future matters cannot be predicted with certainty, andcertainty; an unfavorable resolution of one or more of such matters could have a material adverse effect on the Company'sCompany’s results of operations, financial condition or cash flows.
Other Matters
The Company, acting through its subsidiaries, is the lessee under many real estate leases that provide for the use by the Company’s subsidiaries of their respective dealership premises. Pursuant to these leases, the Company’s subsidiaries generally agree to indemnify the lessor and other parties from certain liabilities arising as a result of the use of the leased premises, including environmental liabilities, or a breach of the lease by the lessee. Additionally, from time to time, the Company enters into agreements in connection with the sale of assets or businesses in which it agrees to indemnify the purchaser, or other parties, from certain liabilities or costs arising in connection with the assets or business. Also, in the ordinary course of business in connection with purchases or sales of goods and services, the Company enters into agreements that may contain indemnification provisions. In the event that an indemnification claim is asserted, liability would be limited by the terms of the applicable agreement.
From time to time, primarily in connection with dealership dispositions where the Company’s subsidiaries subletCompany did not own the real estate and was a tenant, it assigned the lease to the dealership purchaser the subsidiaries’ interests in any real property leases associated with such dealerships and continue to be primarily obligated on the lease. In these situations, the Company’s subsidiaries retain primary responsibilitybut remained liable as a guarantor for the performance of certain obligations under such leases. To the extent that the Company remains primarily responsible under such leases, a quantification of such lease obligations is included in the Company's disclosure of future minimumremaining lease payments for non-cancelable operating leases in Note 18, "Operating Leases" to "Item 8. Financial Statements and Supplementary Data" of the 2016 Form 10-K.
In certain instances, also in connection with dealership dispositions, the Company’s subsidiaries assign to the dealership purchaser the subsidiaries’ interests in any real property leases associated with such dealerships. The Company’s subsidiaries may retain secondary responsibility for the performance of certain obligations under such leases to the extent that the assignee does not perform, if such performance is required following the assignment of the lease. Additionally, the Company and its subsidiaries may remain subject to the terms of a guaranty made by the Company and its subsidiaries in connection with such leases. In these circumstances, the Company generally has indemnification rights against the assignee in the event of non-performance under these leases, as well as certain defenses. Thenon-payment by the purchaser. Although the Company and its subsidiaries also may be called on to perform other obligations under these leases, such as environmental remediation of the leased premises or repair of the leased premises upon termination of the lease. However, potential environmental liabilities are generally known at the time of the sale of the dealership if not previously remediated. The Company does not have any known material environmental commitments or contingencies and presently has no reason to believe that it or its subsidiaries will be called upon to perform under any such assigned leases, the Company estimates that lessee remaining rental obligations were $38.0 million as of September 30, 2022. In certain instances, the Company obtains collateral support for the rental obligations that the Company remains obligated for upon sale of a dealership to a lessee. Total associated letters of credit issued on to so perform. Although not estimated to be material, the Company’s exposure under these leases is difficult to estimate and there can be no assurance that any performancebehalf of the lessee where the Company or its subsidiaries required under these leases would not have a material adverse effect onis the Company’s business, financial condition, or cash flows.

beneficiary was $2.9 million as of September 30, 2022.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

12. INTANGIBLE FRANCHISE RIGHTS AND GOODWILL
The following is a roll-forward of the Company’s intangible franchise rights and goodwill accounts by reportable segment:
 Intangible Franchise Rights 
 U.S. U.K. Brazil Total 
 (In thousands) 
BALANCE, December 31, 2016$260,534
 $17,337
 $7,005
 $284,876
 
Additions through acquisitions8,035
 8,762
 —
 16,797
 
Impairments(9,526) —
 —
 (9,526) 
Currency translation—
 1,771
 202
 1,973
 
BALANCE, September 30, 2017$259,043
 $27,870
 $7,207
 $294,120
 
 Goodwill 
 U.S. U.K. Brazil Total 
 (In thousands) 
BALANCE, December 31, 2016$805,935
 $57,054
 $13,774
 $876,763
(1) 
Additions through acquisitions29,171
 3,737
 95
 33,003
 
Disposals—
 —
 (933) (933) 
Currency translation—
 5,008
 401
 5,409
 
Tax adjustments(18) —
 —
 (18) 
BALANCE, September 30, 2017$835,088
 $65,799
 $13,337
 $914,224
(1) 
(1) Net of accumulated impairment of $97.8 million.
The Company evaluates intangible franchise rights and goodwill assets for impairment annually or more frequently if events or circumstances indicate possible impairment. During the three months ended September 30, 2017, the Company identified circumstances indicating possible impairment of some individual franchise rights, requiring a quantitative assessment. The Company did not identify any such circumstances relative to the goodwill for each of its reporting units. Based on the results of the Company's assessment, the Company determined that the fair value of the franchise rights on one of its U.S. dealerships was below its respective carrying value, resulting in franchise asset impairment charges of $9.5 million. This was recognized as an asset impairment in the Company's Consolidated Statements of Operations during the three months ended September 30, 2017.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

13. ACCUMULATED OTHER COMPREHENSIVE LOSSINCOME (LOSS)
Changes in the balances of each component of accumulatedAccumulated other comprehensive loss for the nine months ended September 30, 2017 and 2016 were as follows:
  Nine Months Ended September 30, 2017
  Accumulated foreign currency translation loss Accumulated loss on interest rate swaps Total
  (In thousands)
Balance, December 31, 2016 $(137,613) $(9,331) $(146,944)
Other comprehensive income (loss) before reclassifications:     
Pre-tax 16,998
 (3,899) 13,099
Tax effect —
 1,462
 1,462
Amounts reclassified from accumulated other comprehensive income to:     

Floorplan interest expense (pre-tax) —
 7,995
 7,995
Other interest expense (pre-tax) —
 1,554
 1,554
Tax effect —
 (3,581) (3,581)
Net current period other comprehensive income 16,998
 3,531
 20,529
Balance, September 30, 2017 $(120,615) $(5,800) $(126,415)
  Nine Months Ended September 30, 2016
  Accumulated foreign currency translation loss Accumulated loss on interest rate swaps Total
  (In thousands)
Balance, December 31, 2015 $(118,532) $(19,452) $(137,984)
Other comprehensive loss before reclassifications:      
Pre-tax (10,254) (24,920) (35,174)
Tax effect —
 9,345
 9,345
Amounts reclassified from accumulated other comprehensive loss to:      
Floorplan interest expense (pre-tax) —
 8,414
 8,414
Other interest expense (pre-tax) —
 1,775
 1,775
Tax effect —
 (3,822) (3,822)
Net current period other comprehensive loss (10,254) (9,208) (19,462)
Balance, September 30, 2016 $(128,786) $(28,660) $(157,446)

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14. SEGMENT INFORMATION
As of September 30, 2017, the Company had three reportable segments: (1) the U.S., (2) the U.K., and (3) Brazil. Each of the reportable segments is comprised of retail automotive franchises, which sell new and used cars and light trucks; arranges related vehicle financing; sells service and insurance contracts; provides automotive maintenance and repair services; and sells vehicle parts. The vast majority of the Company's corporate activities are associated with the operations of the U.S. operating segment and therefore the corporate financial results are included within the U.S. reportable segment.
Reportable segment revenue, income (loss) before income taxes, (provision) benefit for income taxes and net income (loss) were as follows for the three and nine months ended September 30, 2017 and 2016:(in millions):
Nine Months Ended September 30, 2022
Accumulated Income (Loss) On Foreign Currency TranslationAccumulated Income (Loss) On Interest Rate SwapsTotal
Balance, December 31, 2021$(158.2)$2.0 $(156.2)
Other comprehensive income (loss) before reclassifications:
Pre-tax(59.3)110.9 51.6 
Tax effect— (26.1)(26.1)
Amount reclassified from accumulated other comprehensive income (loss):
Floorplan interest expense (pre-tax)— 1.4 1.4 
Other interest expense, net (pre-tax)— 0.7 0.7 
Cumulative foreign currency translation adjustments associated with the Brazil Disposal122.8 — 122.8 
Other cumulative foreign currency translation adjustments1.5 — 1.5 
Benefit for income taxes— (0.5)(0.5)
Net current period other comprehensive income65.1 86.4 151.5 
Balance, September 30, 2022$(93.1)$88.4 $(4.7)
Nine Months Ended September 30, 2021
Accumulated Income (Loss) On Foreign Currency TranslationAccumulated Income (Loss) On Interest Rate SwapsTotal
Balance, December 31, 2020$(151.6)$(32.5)$(184.0)
Other comprehensive income (loss) before reclassifications:
Pre-tax(6.7)21.0 14.4 
Tax effect— (4.9)(4.9)
Amount reclassified from accumulated other comprehensive income (loss):
Floorplan interest expense (pre-tax)— 5.0 5.0 
Other interest expense (pre-tax)— 2.9 2.9 
Reclassification related to de-designated interest rate swaps (pre-tax)— 3.1 3.1 
Benefit for income taxes— (2.6)(2.6)
Net current period other comprehensive (loss) income(6.7)24.5 17.9 
Balance, September 30, 2021$(158.2)$(7.9)$(166.1)

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 Three Months Ended September 30, 2017  Nine Months Ended September 30, 2017
 U.S. U.K. Brazil Total  U.S. U.K. Brazil Total
 (In thousands)  (In thousands)
Total revenues (1)
$2,301,959
 $590,726
 $119,607
 $3,012,292
  $6,393,368
 $1,478,156
 $331,792
 $8,203,316
Income before income taxes41,133
 5,435
 575
 47,143
  142,808
 15,745
 1,476
 160,029
(Provision) benefit for income taxes(16,258) (1,105) 101
 (17,262)  (54,301) (2,781) 6
 (57,076)
Net income (2)
24,875
 4,330
 676
 29,881
  88,507
 12,964
 1,482
 102,953
(1) Includes the impact of chargeback reserves for finance and insurance revenues associated with catastrophic events of $6.6 million for the three and nine months ended September 30, 2017, in the U.S. segment.
(2) Includes the following, after tax: loss due to catastrophic events of $9.0 million and $9.4 million, inclusive of the finance and insurance chargeback reserve noted above, for the three and nine months ended September 30, 2017, respectively, in the U.S. segment and asset impairment charges of $5.9 million for the three and nine months ended September 30, 2017, respectively, in the U.S. segment.
 Three Months Ended September 30, 2016  Nine Months Ended September 30, 2016
 U.S. U.K. Brazil Total  U.S. U.K. Brazil Total
 (In thousands)  (In thousands)
Total revenues$2,274,723
 $435,976
 $112,447
 $2,823,176
  $6,563,739
 $1,335,663
 $314,578
 $8,213,980
Income (loss) before income taxes52,619
 3,922
 (854) 55,687
  164,607
 17,371
 (3,127) 178,851
(Provision) benefit for income taxes(19,722) (702) 103
 (20,321)  (61,406) (3,458) 2,250
 (62,614)
Net income (loss) (1)
32,897
 3,220
 (751) 35,366
  103,201
 13,913
 (877) 116,237
(1) Includes the following, after tax: asset impairment charges of $6.7 million and $7.7 million for the three and nine months ended September 30, 2016, respectively, in the U.S. segment; loss due to catastrophic events of $0.3 million and $3.7 million for the three and nine months ended September 30, 2016, respectively, in the U.S. segment; gain on real estate and dealership transactions of $0.7 million and $1.1 million for the three and nine months ended September 30, 2016, respectively, in the U.S. segment; and foreign deferred income tax benefit of $1.7 million for the nine months ended September 30, 2016 in the Brazil segment.
Reportable segment total assets as of September 30, 2017 and December 31, 2016, were as follows:
 As of September 30, 2017
 U.S. U.K. Brazil Total
 (In thousands)
Total assets$3,890,087
 $698,103
 $142,804
 $4,730,994
 As of December 31, 2016
 U.S. U.K. Brazil Total
 (In thousands)
Total assets$3,855,701
 $482,937
 $123,265
 $4,461,903



26
Table of Contents         GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

15. 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 months ended September 30, 2017 and 2016, for Group 1 Automotive, Inc.’s (as issuer of the 5.00% Notes) guarantor subsidiaries and non-guarantor subsidiaries (representing foreign entities). The condensed consolidating financial information includes certain allocations of balance sheet, statement of operations and cash flows items that are not necessarily indicative of the financial position, results of operations or cash flows of these entities had they operated on a stand-alone basis. In accordance with Rule 3-10 of Regulation S-X, condensed consolidated financial statements of non-guarantors are not required. The Company has no assets or operations independent of its subsidiaries. Obligations under the 5.00% Notes are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by the Company’s current wholly owned domestic subsidiaries and certain of the Company’s future domestic subsidiaries, with the exception of the Company’s “minor” subsidiaries (as defined by Rule 3-10 of Regulation S-X). There are no significant restrictions on the ability of the Company or subsidiary guarantors for the Company to obtain funds from its subsidiary guarantors by dividend or loan. None of the subsidiary guarantors’ assets represent restricted assets pursuant to SEC Rule 4-08(e)(3) of Regulation S-X.
CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 2017
 Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
 (Unaudited, in thousands)
ASSETS
CURRENT ASSETS:         
Cash and cash equivalents$—
 $8,646
 $58,237
 $—
 $66,883
Contracts-in-transit and vehicle receivables, net—
 213,638
 74,562
 —
 288,200
Accounts and notes receivable, net—
 139,013
 48,659
 —
 187,672
Intercompany accounts receivable33,508
 12,451
 —
 (45,959) —
Inventories, net—
 1,334,340
 317,449
 —
 1,651,789
Prepaid expenses and other current assets216
 6,157
 31,738
 —
 38,111
Total current assets33,724
 1,714,245
 530,645
 (45,959) 2,232,655
PROPERTY AND EQUIPMENT, net—
 1,086,863
 182,534
 —
 1,269,397
GOODWILL—
 835,089
 79,135
 —
 914,224
INTANGIBLE FRANCHISE RIGHTS—
 259,043
 35,077
 —
 294,120
INVESTMENT IN SUBSIDIARIES2,971,551
 —
 —
 (2,971,551) —
OTHER ASSETS—
 12,408
 8,190
 —
 20,598
Total assets$3,005,275
 $3,907,648
 $835,581
 $(3,017,510) $4,730,994
          
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:         
Floorplan notes payable — credit facility and other$—
 $1,063,464
 $13,823
 $—
 $1,077,287
Offset account related to floorplan notes payable - credit facility—
 (46,248) —
 —
 (46,248)
Floorplan notes payable — manufacturer affiliates—
 267,990
 131,814
 —
 399,804
Offset account related to floorplan notes payable - manufacturer affiliates—
 (22,000) —
 —
 (22,000)
Current maturities of long-term debt and short-term financing25,054
 34,403
 21,539
 —
 80,996
Current liabilities from interest rate risk management activities—
 823
 —
 —
 823
Accounts payable—
 214,278
 222,573
 —
 436,851
Intercompany accounts payable972,583
 —
 45,959
 (1,018,542) —
Accrued expenses—
 176,196
 32,574
 —
 208,770
Total current liabilities997,637
 1,688,906
 468,282
 (1,018,542) 2,136,283
LONG-TERM DEBT, net of current maturities871,175
 327,132
 94,382
 —
 1,292,689
LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES—
 16,157
 —
 —
 16,157
DEFERRED INCOME TAXES AND OTHER LIABILITIES(1,100) 264,501
 11,317
 —
 274,718
STOCKHOLDERS’ EQUITY:        
Group 1 stockholders’ equity1,137,563
 2,583,535
 261,600
 (2,971,551) 1,011,147
Intercompany note receivable—
 (972,583) —
 972,583
 —
Total stockholders’ equity1,137,563
 1,610,952
 261,600
 (1,998,968) 1,011,147
Total liabilities and stockholders’ equity$3,005,275
 $3,907,648
 $835,581
 $(3,017,510) $4,730,994

27
Table of Contents         GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 2016
 Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
 (In thousands)
ASSETS
CURRENT ASSETS:         
Cash and cash equivalents$—
 $8,039
 $12,953
 $—
 $20,992
Contracts-in-transit and vehicle receivables, net—
 241,097
 28,411
 —
 269,508
Accounts and notes receivable, net—
 140,985
 32,379
 —
 173,364
Intercompany accounts receivable—
 8,929
 —
 (8,929) —
Inventories, net—
 1,386,871
 264,944
 —
 1,651,815
Prepaid expenses and other current assets516
 7,188
 27,204
 —
 34,908
Total current assets516
 1,793,109
 365,891
 (8,929) 2,150,587
PROPERTY AND EQUIPMENT, net—
 990,084
 135,799
 —
 1,125,883
GOODWILL—
 805,935
 70,828
 —
 876,763
INTANGIBLE FRANCHISE RIGHTS—
 260,534
 24,342
 —
 284,876
INVESTMENT IN SUBSIDIARIES2,787,328
 —
 —
 (2,787,328) —
OTHER ASSETS—
 19,313
 4,481
 —
 23,794
Total assets$2,787,844
 $3,868,975
 $601,341
 $(2,796,257) $4,461,903
          
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:         
Floorplan notes payable — credit facility and other$—
 $1,131,718
 $4,936
 $—
 $1,136,654
Offset account related to floorplan notes payable - credit facility—
 (59,626) —
 —
 (59,626)
Floorplan notes payable — manufacturer affiliates—
 281,747
 110,914
 —
 392,661
Offset account related to floorplan notes payable - manufacturer affiliates—
 (25,500) —
 —
 (25,500)
Current maturities of long-term debt and short-term financing—
 44,659
 27,760
 —
 72,419
Current liabilities from interest rate risk management activities

—
 3,941
 —
 —
 3,941
Accounts payable—
 211,050
 145,049
 —
 356,099
Intercompany accounts payable875,662
 —
 8,929
 (884,591) —
Accrued expenses—
 156,648
 19,821
 —
 176,469
Total current liabilities875,662
 1,744,637
 317,409
 (884,591) 2,053,117
LONG-TERM DEBT, net of current maturities836,056
 324,540
 52,213
 —
 1,212,809
LIABILITIES FROM INTEREST RATE RISK MANAGEMENT ACTIVITIES—
 20,470
 —
 —
 20,470
DEFERRED INCOME TAXES AND OTHER LIABILITIES(1,020) 240,348
 5,979
 —
 245,307
STOCKHOLDERS’ EQUITY:         
Group 1 stockholders’ equity1,077,146
 2,414,642
 225,740
 (2,787,328) 930,200
Intercompany note receivable—
 (875,662) —
 875,662
 —
Total stockholders’ equity1,077,146
 1,538,980
 225,740
 (1,911,666) 930,200
Total liabilities and stockholders’ equity$2,787,844
 $3,868,975
 $601,341
 $(2,796,257) $4,461,903

28
Table of Contents         GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 30, 2017
 Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
 (Unaudited, in thousands)
REVENUES:$—
 $2,301,958
 $710,334
 $—
 $3,012,292
COST OF SALES:—
 1,948,390
 632,482
 —
 2,580,872
GROSS PROFIT—
 353,568
 77,852
 —
 431,420
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES433
 259,119
 68,775
 —
 328,327
DEPRECIATION AND AMORTIZATION EXPENSE—
 12,380
 2,679
 —
 15,059
ASSET IMPAIRMENTS—
 9,526
 —
 —
 9,526
INCOME (LOSS) FROM OPERATIONS(433) 72,543
 6,398
 —
 78,508
OTHER EXPENSE:        

Floorplan interest expense—
 (12,014) (1,477) —
 (13,491)
Other interest expense, net

 (16,726) (1,148) —
 (17,874)
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES(433) 43,803
 3,773
 —
 47,143
BENEFIT (PROVISION) FOR INCOME TAXES163
 (16,423) (1,002) —
 (17,262)
EQUITY IN EARNINGS OF SUBSIDIARIES30,151
 —
 —
 (30,151) —
NET INCOME (LOSS)$29,881
 $27,380
 $2,771
 $(30,151) $29,881
COMPREHENSIVE INCOME—
 1,454
 8,399
 —
 9,853
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT$29,881
 $28,834
 $11,170
 $(30,151) $39,734




























29
Table of Contents         GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)



CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended September 30, 2017
 Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
 (Unaudited, in thousands)
REVENUES:$—
 $6,393,367
 $1,809,949
 $—
 $8,203,316
COST OF SALES:—
 5,378,731
 1,604,751
 —
 6,983,482
GROSS PROFIT—
 1,014,636
 205,198
 —
 1,219,834
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES2,932
 733,744
 179,998
 —
 916,674
DEPRECIATION AND AMORTIZATION EXPENSE—
 35,873
 6,885
 —
 42,758
ASSET IMPAIRMENTS—
 9,526
 —
 —
 9,526
INCOME (LOSS) FROM OPERATIONS(2,932) 235,493
 18,315
 —
 250,876
OTHER EXPENSE:         
Floorplan interest expense—
 (34,954) (3,705) —
 (38,659)
Other interest expense, net—
 (49,568) (2,620) —
 (52,188)
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES(2,932) 150,971
 11,990
 —
 160,029
BENEFIT (PROVISION) FOR INCOME TAXES1,100
 (55,402) (2,774) —
 (57,076)
EQUITY IN EARNINGS OF SUBSIDIARIES104,785
 —
 —
 (104,785) —
NET INCOME (LOSS)$102,953
 $95,569
 $9,216
 $(104,785) $102,953
OTHER COMPREHENSIVE INCOME, NET OF TAXES—
 3,531
 16,998
 —
 20,529
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT$102,953
 $99,100
 $26,214
 $(104,785) $123,482



30
Table of Contents         GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended September 30, 2016
 Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
 (Unaudited, in thousands)
REVENUES:$—
 $2,274,723
 $548,453
 $—
 $2,823,176
COST OF SALES:—
 1,927,997
 488,511
 —
 2,416,508
GROSS PROFIT—
 346,726
 59,942
 —
 406,668
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES435
 244,450
 54,121
 —
 299,006
DEPRECIATION AND AMORTIZATION EXPENSE—
 11,061
 1,830
 —
 12,891
ASSET IMPAIRMENTS—
 10,855
 —
 —
 10,855
INCOME (LOSS) FROM OPERATIONS(435) 80,360
 3,991
 —
 83,916
OTHER EXPENSE:         
Floorplan interest expense—
 (9,979) (1,156) —
 (11,135)
Other interest expense, net—
 (16,376) (718) —
 (17,094)
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES(435) 54,005
 2,117
 —
 55,687
BENEFIT (PROVISION) FOR INCOME TAXES164
 (19,884) (601) —
 (20,321)
EQUITY IN EARNINGS OF SUBSIDIARIES35,637
 —
 —
 (35,637) —
NET INCOME (LOSS)$35,366
 $34,121
 $1,516
 $(35,637) $35,366
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXES—
 (6,341) 3,300
 —
 (3,041)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT$35,366
 $27,780
 $4,816
 $(35,637) $32,325




























31
Table of Contents         GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended September 30, 2016
 Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Elimination Total Company
 (Unaudited, in thousands)
REVENUES:$—
 $6,563,739
 $1,650,241
 $—
 $8,213,980
COST OF SALES:—
 5,539,707
 1,468,385
 —
 7,008,092
GROSS PROFIT—
 1,024,032
 181,856
 —
 1,205,888
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES2,243
 730,776
 158,673
 —
 891,692
DEPRECIATION AND AMORTIZATION EXPENSE—
 32,298
 5,769
 —
 38,067
ASSET IMPAIRMENTS—
 12,389
 423
 —
 12,812
INCOME (LOSS) FROM OPERATIONS(2,243) 248,569
 16,991
 —
 263,317
OTHER EXPENSE:         
Floorplan interest expense—
 (30,428) (3,309) —
 (33,737)
Other interest expense, net—
 (48,501) (2,228) —
 (50,729)
INCOME (LOSS) BEFORE INCOME TAXES AND EQUITY IN EARNINGS OF SUBSIDIARIES(2,243) 169,640
 11,454
 —
 178,851
BENEFIT (PROVISION) FOR INCOME TAXES841
 (62,246) (1,209) —
 (62,614)
EQUITY IN EARNINGS OF SUBSIDIARIES117,639
 —
 —
 (117,639) —
NET INCOME (LOSS)$116,237
 $107,394
 $10,245
 $(117,639) $116,237
OTHER COMPREHENSIVE LOSS, NET OF TAXES—
 (9,208) (10,254) —
 (19,462)
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO PARENT$116,237
 $98,186
 $(9) $(117,639) $96,775


32
Table of Contents         GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)



CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended September 30, 2017
 Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Company
 (Unaudited, in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:       
Net cash provided by operating activities$102,951
 $188,979
 $17,937
 $309,867
CASH FLOWS FROM INVESTING ACTIVITIES:       
Cash paid in acquisitions, net of cash received—
 (62,475) (46,607) (109,082)
Proceeds from disposition of franchises, property and equipment—
 2,807
 2,326
 5,133
Purchases of property and equipment, including real estate—
 (131,622) (12,688) (144,310)
Other—
 1,526
 —
 1,526
Net cash used in investing activities—
 (189,764) (56,969) (246,733)
CASH FLOWS FROM FINANCING ACTIVITIES:       
Borrowings on credit facility - floorplan line and other—
 5,053,598
 —
 5,053,598
Repayments on credit facility - floorplan line and other—
 (5,108,475) —
 (5,108,475)
Borrowings on credit facility - acquisition line68,085
 —
 —
 68,085
Repayments on credit facility - acquisition line(35,576) —
 —
 (35,576)
Borrowings on other debt25,054
 —
 101,262
 126,316
Principal payments on other debt—
 (787) (87,914) (88,701)
Borrowings on debt related to real estate—
 10,156
 28,875
 39,031
Principal payments on debt related to real estate—
 (16,819) (4,450) (21,269)
Employee stock purchase plan purchases, net of employee tax withholdings4,196
 —
 —
 4,196
Repurchases of common stock, amounts based on settlement date(40,094) —
 —
 (40,094)
Dividends paid(15,221) —
 —
 (15,221)
Borrowings (repayments) with subsidiaries74,826
 (110,857) 36,031
 —
Investment in subsidiaries(184,221) 174,576
 9,645
 —
Net cash provided by (used in) financing activities(102,951) 1,392
 83,449
 (18,110)
EFFECT OF EXCHANGE RATE CHANGES ON CASH—
 —
 867
 867
NET INCREASE IN CASH AND CASH EQUIVALENTS—
 607
 45,284
 45,891
CASH AND CASH EQUIVALENTS, beginning of period—
 8,039
 12,953
 20,992
CASH AND CASH EQUIVALENTS, end of period$—
 $8,646
 $58,237
 $66,883


33
Table of Contents         GROUP 1 AUTOMOTIVE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Nine Months Ended September 30, 2016
 Group 1 Automotive, Inc. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Company
 (Unaudited, in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:       
Net cash provided by operating activities$116,237
 $269,096
 $1,279
 $386,612
CASH FLOWS FROM INVESTING ACTIVITIES:       
Cash paid in acquisitions, net of cash received—
 —
 (57,327) (57,327)
Proceeds from disposition of franchises, property and equipment—
 21,735
 1,337
 23,072
Purchases of property and equipment, including real estate—
 (110,495) (15,197) (125,692)
Other—
 2,653
 271
 2,924
Net cash used in investing activities—
 (86,107) (70,916) (157,023)
CASH FLOWS FROM FINANCING ACTIVITIES:       
Borrowings on credit facility - floorplan line and other—
 5,040,726
 —
 5,040,726
Repayments on credit facility - floorplan line and other—
 (5,147,766) —
 (5,147,766)
Borrowings on credit facility - acquisition line220,020
 —
 —
 220,020
Repayments on credit facility - acquisition line(220,020) —
 —
 (220,020)
Borrowings on other debt—
 —
 37,786
 37,786
Principal payments on other debt—
 (692) (31,140) (31,832)
Borrowings on debt related to real estate, net of debt issue costs—
 42,654
 —
 42,654
Principal payments on debt related to real estate—
 (14,941) (3,904) (18,845)
Employee stock purchase plan purchases, net of employee tax withholdings1,452
 —
 —
 1,452
Repurchases of common stock, amounts based on settlement date(127,606) —
 —
 (127,606)
Tax effect from stock-based compensation(148) —
 —
 (148)
Dividends paid(15,054) —
 —
 (15,054)
Other(2,997) (423) —
 (3,420)
Borrowings (repayments) with subsidiaries241,050
 (245,906) 4,856
 —
Investment in subsidiaries(212,934) 142,166
 70,768
 —
Net cash provided by (used in) financing activities(116,237) (184,182) 78,366
 (222,053)
EFFECT OF EXCHANGE RATE CHANGES ON CASH—
 —
 2,345
 2,345
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS—
 (1,193) 11,074
 9,881
CASH AND CASH EQUIVALENTS, beginning of period—
 6,338
 6,699
 13,037
CASH AND CASH EQUIVALENTS, end of period$—
 $5,145
 $17,773
 $22,918

CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Form 10-Q”) includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Forward-looking statements may appear throughout this report including, but not limited to, the following sections: "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Quantitative and Qualitative Disclosures About Market Risk." This information includes statements regarding our strategy, plans, goals or current expectations with respect to, among other things:
•our future operating performance;
•our ability to maintain or improve our margins;
•operating cash flows and availability of capital;
•the completion of future acquisitions and divestitures;
•the future revenues of acquired dealerships;
•future stock repurchases, refinancing of debt, and dividends;
•future capital expenditures;
•changes in sales volumes and availability of credit for customer financing in new and used vehicles and sales volumes in the parts and service markets;
•business trends in the retail automotive industry, including the level of manufacturer incentives, new and used vehicle retail sales volume, customer demand, interest rates and changes in industry-wide inventory levels;
•availability of financing for inventory, working capital, real estate and capital expenditures; and
•implementation of international and domestic trade tariffs.
Although we believe that the expectations reflected in these forward-looking statements are reasonable when and as made, we cannot assure you that these expectations will prove to be correct. When used in this Form 10-Q, the words “anticipate,” “believe,” “estimate,” “expect,” "intend," “may” and similar expressions, as they relate to our company and management, are intended to identify forward-looking statements, which are generally not historical in nature. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us. While management believes that these forward-looking statements are reasonable as and when made, there can be no assurance that future developments affecting us will be those that we anticipate. All comments concerning our expectations for future revenues and operating results are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Our forward-looking statements involve significant risks and uncertainties (some of which are beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Known material factors that could cause actual results to differ from those in the forward-looking statements for a number of reasons, including:
•future deterioration in the economic environment, including consumer confidence, interest rates, the prices of oil and gasoline, the level of manufacturer incentives and the availability of consumer credit may affect the demand for new and used vehicles, replacement parts, maintenance and repair services and finance and insurance products;
•adverse domestic and international developments such as war, terrorism, political conflicts or other hostilities may adversely affect the demand for our products and services;
•the existing and future regulatory environment, including legislation related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, climate control changes legislation, and unexpected litigation or adverse legislation, including changes in state franchise laws, may impose additional costs on us or otherwise adversely affect us;
•a concentration of risk associated with our principal automobile manufacturers, especially Toyota, Nissan, Honda, BMW, Ford, Daimler, General Motors, Chrysler, and Volkswagen, because of financial distress, bankruptcy, natural disasters that disrupt production or other reasons, may not continue to produce or make available to us vehicles that are in high demand by our customers or provide financing, insurance, advertising or other assistance to us;
•restructuring by one or more of our principal manufacturers, up to and including bankruptcy may cause us to suffer financial loss in the form of uncollectible receivables, devalued inventory or loss of franchises;
•requirements imposed on us by our manufacturers may require dispositions, limit our acquisitions or increases in the level of capital expenditures related to our dealership facilities;

•our existing and/or new dealership operations may not perform at expected levels or achieve expected improvements;
•our failure to achieve expected future cost savings or future costs may be higher than we expect;
•manufacturer quality issues, including the recall of vehicles, may negatively impact vehicle sales and brand reputation;
•available capital resources, increases in cost of financing (such as higher interest rates) and our various debt agreements may limit our ability to complete acquisitions, complete construction of new or expanded facilities, repurchase shares or pay dividends;
•our ability to refinance or obtain financing in the future may be limited and the cost of financing could increase significantly;
•foreign exchange controls and currency fluctuations;
•new accounting standards could materially impact our reported earnings per share;
•our ability to acquire new dealerships and successfully integrate those dealerships into our business;
•the impairment of our goodwill, our indefinite-lived intangibles and our other long-lived assets;
•natural disasters, adverse weather events and other catastrophic events;
•our foreign operations and sales in the U.K. and Brazil, which pose additional risks;
•the inability to adjust our cost structure and inventory levels to offset any reduction in the demand for our products and services;
•loss of our key personnel;
•competition in our industry may impact our operations or our ability to complete additional acquisitions;
•the failure to achieve expected sales volumes from our new franchises;
•insurance costs could increase significantly and all of our losses may not be covered by insurance; and
•our inability to obtain inventory of new and used vehicles and parts, including imported inventory, at the cost, or in the volume, we expect.
For additional information regarding known material factors that could cause our actual results to differ from our projected results, please see Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016 (the "2016 Form 10-K"), as well as "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures About Market Risk."
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no responsibility to publicly release the result of any revision of our forward-looking statements after the date they are made.


Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
This Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements because of various factors. See “Cautionary Statement about Forward-Looking Statements.”
In the preparation of our financial statements and reporting of our operating results in accordance with United States generally accepted accounting principles ("U.S. GAAP"), certain non-core business items are required toor MD&A, should be presented. Examples of items that we consider non-core include non-cash asset impairment charges, gains and losses on dealership, franchise or real estate transactions, and catastrophic events such as hail storms, hurricanes, and snow storms. In order to improve the transparency of our disclosures, provide a meaningful presentation of results from our core business operations and improve period-over-period comparability, we have included certain adjusted financial measures that exclude the impact of these non-core business items. These adjusted measures are not measures of financial performance under U.S. GAAP, but are instead considered non-GAAP financial performance measures.
In addition, management evaluates our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our underlying business and results of operations, consistent with how we evaluate our performance. We calculate constant currency percentages by converting our current period reported results for entities reporting in currencies other than United States dollars using comparative period exchange rates rather than the actual exchange rates in effect during the respective periods. The constant currency performance measures should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP.
Our management uses these adjusted measuresread in conjunction with U.S. GAAP financial measuresthe accompanying unaudited Condensed Consolidated Financial Statements and the notes thereto, as well as our 2021 Form 10-K.
Unless the context requires otherwise, references to assess our“we,” “us” and “our” are intended to mean the business including communication with our Boardand operations of Directors, investorsGroup 1 Automotive, Inc. and industry analysts concerning financial performance. Therefore, we believe these adjusted financial measures are relevant and useful to users of the following financial information. For further explanation and reconciliation to the most directly comparable U.S. GAAP measures, see "Non-GAAP Financial Measures" below.its subsidiaries.
Overview
We are a leading operator in the automotive retail industry. Through our dealerships,omni-channel platform, we sell new and used cars and light trucks; arrange related vehicle financing; sell service and insurance contracts; provide automotive maintenance and repair services; and sell vehicle parts. We operate in geographically diverse markets that extend across 17 states in the U.S. and 35 towns and cities in the U.K. As of September 30, 2022, our retail network consisted of 148 dealerships in the U.S. and 55 dealerships in the U.K.
On November 12, 2021, we entered into a Share Purchase Agreement (the “Brazil Agreement”) with Original Holdings S.A. (“Buyer”). Pursuant to the terms and conditions set forth in the Brazil Agreement, Buyer agreed to acquire 100% of the issued and outstanding equity interests of our Brazilian operations (the “Brazil Disposal Group”) for approximately BRL 510 million in cash (the “Brazil Disposal”). The Brazil Disposal Group met the criteria to be reported as discontinued operations. Therefore, the related assets, liabilities and operating results of the Brazil Disposal Group are reported as discontinued operations (the “Brazil Discontinued Operations”) for all periods presented. On July 1, 2022, we completed the Brazil Disposal. Refer to Note 4. Discontinued Operations and Other Divestitures within our Notes to Condensed Consolidated Financial Statements, for additional information.
Recent Events
Our operations are aligned into three geographic regions:manufacturers’ production continues at reduced levels as a result of global semiconductor and other parts shortages, which is impacting new vehicle unit sales in all our markets. Conversely, the United States ("U.S."shortage of new vehicles has led to sharply higher new vehicle sales prices and gross margins. Our new vehicle days’ supply of inventory was approximately 16 days as of the quarter ended September 30, 2022 (“Current Quarter”), as compared to 13 days as of the United Kingdom ("U.K."quarter ended September 30, 2021 (“Prior Year Quarter”) and Brazil. Our President.
In August 2022, we announced certain upcoming management changes, including the retirement of U.S. Operations reports directly to our Chief Executive Officer Earl J. Hesterberg, effective as of December 31, 2022, and is responsiblethe promotion of Daryl Kenningham to succeed Mr. Hesterberg, effective January 1, 2023. Please see our Current Report on Form 8-K, filed with the SEC on August 24, 2022, for additional information.
On February 24, 2022, Russia launched a military invasion of Ukraine (the “Russia and Ukraine Conflict”). The ongoing Russia and Ukraine Conflict has provoked strong reactions from the overall performanceU.S., the U.K., the European Union and various other countries around the world, including the imposition of broad financial and economic sanctions against Russia. While the length, impact and outcome of the U.S. region,ongoing military conflict and these sanctions on the Russian and global economies remain uncertain, they have already resulted in significant volatility in financial markets, an increase in energy and commodity prices globally and further disruption of the global supply chain for certain raw materials and manufactured goods, including vehicle parts.
The Russia and Ukraine Conflict and other geopolitical conflicts, as well as related international responses, have exacerbated inflationary pressures, including causing increases in the prices for overseeinggoods and services and global supply chain disruptions, which have resulted and may continue to result in shortages in materials and services. Such shortages have resulted and may continue to result in inflationary cost increases for labor, fuel, materials and services, and could continue to cause costs to increase as well as result in the dealership operations management. The operationsscarcity of certain materials. In particular, the Company's international regions are structured similarRussia and Ukraine Conflict has further impacted the ability of certain OEMs to produce new vehicles and new vehicle parts, which may result in continued disruptions to the U.S. region, each with a regional vice president reporting directly to the Company's Chief Executive Officer. As such, our three reportable segments are the U.S., which includes the activitiessupply of our corporate office, the U.K.new and Brazil.
As of September 30, 2017, we owned and operated 228 franchises, representing 32 brands of automobiles, at 174 dealership locations and 47 collision centers worldwide. We own 151 franchises at 115 dealerships and 29 collision centers in the U.S., 56 franchises at 43 dealerships and 11 collision centers in the U.K., and 21 franchises at 16 dealerships and seven collision centers in Brazil. Our U.S. operations are primarily located in major metropolitan areas in Alabama, California, Florida, Georgia, Kansas, Louisiana, Maryland, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, Oklahoma, South Carolina and Texas in the U.S., in 28 towns of the U.K. and in key metropolitan markets in the states of Sao Paulo, Parana, Mato Grosso do Sul and Santa Catarina in Brazil.
Outlookused vehicles.
During the nine months ended September 30, 2017, industry new vehicle registrations2022 (“Current Year”), the global economy experienced rising inflation and an increase in gasoline and energy prices. In response to inflationary pressures and macroeconomic conditions, the U.S. Federal Reserve, along with other central banks, including in the U.K., continued to increase interest rates throughout 2022. Additionally, U.S. Gross Domestic Product (“GDP”) shrank for the second consecutive quarter as of the quarter ended June 30,2022, indicating that the U.S. economy may be entering a recession. The impact of these macroeconomic developments on our operations cannot be predicted with certainty.
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Table of Contents
In addition to the macroeconomic issues described above, the U.K. faces additional political and economic uncertainty as a result of recent leadership changes in the country’s government. This uncertainty has led to increased foreign currency exchange rate volatility for the country’s currency. During the Current Quarter, the GBP to USD foreign currency exchange rate has declined 1.9%8.3% from £1 to $1.21 at June 30, 2022, to £1 to $1.11 at September 30, 2022, and as compared to the same period a year ago. In response, and particularly givenPrior Year Quarter, the headwinds we have recently experienced in most of our energy-dependent markets, we are focused on opportunitiesGBP to enhance our operating results by: (a) improving our new and used vehicle gross profit per unit sold; (b) continuingUSD foreign currency exchange rate has declined 17.3%, from £1 to focus on our higher margin parts and service business, implementing strategic selling methods, and improving operational efficiencies; (c) investing capital where necessary to support our anticipated growth, particularly in our parts and service business; and (d) further leveraging our revenue and gross profit growth through the continued implementation of cost efficiencies. More recently, Hurricane Harvey had a significantly negative impact on our U.S. operations, particularly in Southeast Texas, resulting in loss of business and other storm-related issues during the three months ended$1.35 at September 30, 2017. However, in the aftermath of the storm, we experienced a substantial lift in new and used vehicle sales. In the short-term, we expect2021, to continue£1 to realize a notable improvement in our new and used vehicle sales in the impacted markets, as well as to experience growth in our aftersales operations with the continued recovery from Hurricane Harvey.

In terms of gross domestic product ("GDP"), the U.K. economy represents the fifth largest economy in the world. In June 2016, the majority vote in favor of the Referendum of the United Kingdom’s Membership of the European Union (E.U.) (referred to as "Brexit"), advising for the exit of the U.K. from the European Union, initially created much uncertainty in the U.K., as well as the global markets. The overall U.K. economy and, more specifically, retail automotive industry sales were further disrupted in 2017 by the U.K. general election in June 2017, as well as multiple acts of violence and terrorism. As a result, the U.K. industry's new vehicle sales have experienced more volatility than normal. Industry new vehicle registrations in the U.K. decreased 3.9% in the nine months ended$1.11 at September 30, 2017, as compared to the same period a year ago. We expect industry sales to remain volatile in the near future and potentially down for the full year 2017. In addition, the announcement of Brexit initially caused significant exchange rate fluctuations that resulted in the weakening of the British pound sterling, in which we conduct business in the U.K., against the U.S. dollar and other global currencies. The weakening of the British pound sterling has and may continue to adversely affect our results of operations as reported under U.S. GAAP, as well as have a negative impact on the pricing and affordability of the vehicles in the U.K. Volatility in exchange rates may continue in the short term.2022.
In terms of GDP, the Brazilian economy represents the ninth largest economy in the world. At present, the Brazilian economy is in a recession and, though it has recently exhibited signs of recovery, continues to face many challenges. Industry new vehicle registrations in Brazil increased 7.9% for the nine months ended September 30, 2017 as compared to the same period a year ago. We expect macro-economic conditions in Brazil, as well as retail automotive industry sales, to remain challenged in the near term. As a result, we are focused on continued implementation of cost efficiencies and leveraging our structure with dealership acquisitions. Longer term, we expect sustained improvements in industry sales volumes and are utilizing a strategy of aligning with growing brands. We expect that the net impact to our profitability of this adjustment to our portfolio, as well as of a more efficient organizational structure, will be positive.
We expect that our consolidated operations will continue to consistently generate positive cash flow in the future and we are focused on maximizing the return that we generate from our invested capital, as well as positioning our balance sheet to take advantage of investment opportunities as they arise. Our capital allocation strategy is dynamic and dependent on a variety of market conditions and, as such, we will continue to monitor the relative value of dealership acquisitions, share repurchases and shareholder dividends in the future. However, we remain committed to our growth-by-acquisition strategy and, over the long term, we believe that significant opportunities exist to enhance our portfolio with dealership acquisitions in the U.S., U.K. and Brazil that provide satisfactory returns on our investment. We will continue to pursue dealership investment opportunities that we believe will add value for our stockholders.
We continue to closely scrutinize all planned future capital spending and work closely with our manufacturer partners to make prudent capital investment decisions that are expected to generate an adequate return and/or improve the customer experience. We anticipate that our capital spending for the year of 2017 will be less than $120.0 million. This amount excludes real estate purchases associated with franchise acquisitions and lease buy-outs.
Financial and Operational Highlights
Our operating results reflect the combined performance of each of our interrelated business activities, which include the sale of new vehicles, used vehicles, finance and insurance products, and parts, as well as maintenance, repair and collision restoration services. Historically, each of these activities has been directly or indirectly impacted by a variety of supply/demand factors, including vehicle inventories, consumer confidence, discretionary spending levels, availability and affordability of consumer credit, manufacturer incentives, weather patterns, fuel prices and interest rates. For example, during periods of sustained economic downturn or significant supply/demand imbalances, new vehicle sales may be negatively impacted as consumers tend to shift their purchases to used vehicles. Some consumers may even delay their purchasing decisions altogether, electing instead to continue to maintain and repair their existing vehicles. In such cases, however, we believe the new vehicle sales impact on our overall business is mitigated by our ability to offer other products and services, such as used vehicles and parts, as well as maintenance, repair and collision services. In addition, our ability to expediently adjust our cost structure in response to changes in new vehicle sales volumes also tempers the negative impact of such volume changes.
In the U.S., we generally experience higher volumes of vehicle sales and service in the second and third calendar quarters of each year. This seasonality is generally attributable to consumer buying trends and the timing of manufacturer new vehicle model introductions. In addition, in some regions of the U.S., vehicle purchases decline during the winter months due to inclement weather. As a result, our U.S. revenues and operating income are typically lower in the first and fourth calendar quarters and higher in the second and third quarters. For the U.K., the first and third quarters' sales volumes tend to be stronger, driven by the vehicle license plate change months of March and September. For Brazil, we expect higher sales volumes in the third and fourth quarters. The first quarter is generally the weakest, driven by heavy consumer vacations and activities associated with Carnival. Other factors unrelated to seasonality, such as changes in economic conditions, manufacturer incentive programs, the impact of severe weather events, or changes in currency exchange rates, may exaggerate seasonal or cause counter-seasonal fluctuations in our reported consolidated revenues and consolidated operating income.

For the three months ended September 30, 2017, our total revenues increased 6.7% from 2016 levels to $3.0 billion, reflecting a 35.5% increase in the U.K., combined with an increase of 6.3% and 1.2% in Brazil and the U.S., respectively. The increase in the U.K. was primarily the result of 30.7% increase in new vehicle retail sales driven by the acquisition of a dealership group in July of 2017 combined with same store total revenue growth of 8.8%. Our results in the U.S. were bolstered, particularly in our Houston and Beaumont markets, as a result of increased sales for replacement vehicles following the devastation of Hurricane Harvey. For the nine months ended September 30, 2017, our total revenues decreased 0.1% to $8.2 billion, reflecting a 2.6% decline in the U.S., partially offset by a 10.7% and 5.5% increase in the U.K. and Brazil, respectively. In the U.S., the 2.6% decline in total revenues was primarily explained by a 5.2% decline in used vehicle retail sales and 2.8% decline in new vehicle retail sales. The increase in Brazil was a result of an 18.7% growth in used vehicle retail revenues and overall growth in used vehicle wholesale revenues.
For the three months ended September 30, 2017, our total gross profit improved $24.8 million, or 6.1%, to $431.4 million from 2016 levels, primarily as a result of 33.9%, 14.5% and 2.0% increases in the U.K., Brazil and U.S., respectively. The strong performance in the U.K. is primarily explained by increases in gross profit of 46.6%, 42.9%, and 22.6% in total used vehicle sales, finance and insurance business lines and new vehicle retail sales. In Brazil, total gross profit increased as a result of a 26.7% improvement in our finance and insurance business lines combined with an improvement of 22.0% and 11.9% in our parts and service business lines and used vehicle retail sales, respectively. In the U.S., total gross profit increased primarily due to a 7.7% improvement in our new vehicle gross profit reflecting higher volumes coupled with improved profitability per unit. For the nine months ended September 30, 2017, our total gross profit increased 1.2% over the prior year period to $1.2 billion, primarily as a result of $7.1 million, or 21.3%, increase in Brazil, coupled with a $16.3 million, or 10.9%, increase in the U.K. The improvement in gross profit in Brazil is primarily a result of 69.1% and 24.5% improvements in used and new vehicle gross profit per units sold, respectively. The improvement in the U.K. primarily reflects a 15.8% gross profit growth in our finance and insurance businesses, coupled with a 14.2% and 13.0% gross profit improvement in our parts and services business lines and used vehicle retail sales, respectively. The U.S. gross profit results for the three and nine months ended September 30, 2017 included a reserve for anticipated chargebacks specifically related to finance and insurance contracts expected to be canceled on vehicles flooded in Hurricane Harvey. The total reserve recognized was $6.6 million. Adjusting for this reserve, the U.S. gross profit improved 3.9% for the three months ended September 30, 2017 and declined 0.3% for the nine months ended September 30, 2017.
Selling, General and Administrative expenses ("SG&A") rose 9.8% to $328.3 million in the third quarter of 2017, as compared to the 2016 levels, primarily as a result of increases of 34.8%, 6.2%, and 1.9% in the U.K., U.S. and Brazil, respectively. The increase in the U.K. was primarily as a result of the acquisition of a group of dealerships in July 2017. For the nine months ended September 30, 2017, SG&A rose 2.8% over the prior year period, driven by increases of 15.4%, 7.1%, and 0.6% in the U.K., Brazil and the U.S., respectively. Included in SG&A for the U.S., for the three and nine months ended September 30, 2017, was $8.1 million and $8.8 million, respectively, in charges primarily related to inventory losses and property damages incurred as a result of Hurricane Harvey. On an adjusted basis, total SG&A rose 6.4% and 2.4% for the three and nine months ended September 30, 2017, respectively.
As a result, our net income declined for the three months ended September 30, 2017 by 15.5% to $29.9 million and diluted earnings per share dropped 13.3% to $1.43. For the nine months ended September 30, 2017, net income declined 11.4% to $103.0 million and diluted earnings per share decreased 7.1% to $4.85. Our operating results as reported on a U.S. GAAP basis for the three months ended September 30, 2017 were impacted by the following non-core items: $14.7 million in losses associated with catastrophic events on a pre-tax basis ($9.0 million on an after-tax basis), $9.5 million of non-cash impairment charges on a pre-tax basis ($5.9 million on an after-tax basis), $0.8 million associated with real estate and dealership transactions ($0.5 million on an after-tax basis), $0.8 million of allowance for uncertain tax purposes, and a $0.7 million loss associated with a legal settlement ($0.5 million on an after-tax basis). For the nine months ended September 30, 2017, our operating results on a U.S. GAAP basis were impacted by the following non-core items: $15.3 million in losses associated with catastrophic events on a pre-tax basis ($9.4 million on an after-tax basis), $9.5 million of non-cash impairment charges on a pre-tax basis ($5.9 million on an after-tax basis), $0.8 million associated with real estate and dealership transactions ($0.5 million on an after-tax basis), $0.8 million of allowance for uncertain tax purposes, and $0.3 million of acquisition costs, partially offset by a $1.1 million gain associated with legal settlements ($0.7 million on an after-tax basis). On a comparable basis, our operating results as reported on a U.S. GAAP basis for the three months ended September 30, 2016 were negatively impacted by the following non-core items: $10.8 million of non-cash impairment charges on a pre-tax basis ($6.7 million on an after-tax basis), $0.5 million of losses related to catastrophic events on a pre-tax basis ($0.3 million on an after-tax basis), and a $0.3 million charge for a foreign transaction tax in Brazil on both a pre-tax and after-tax basis, partially offset by a $1.1 million pre-tax gain related to real estate and dealership transactions ($0.7 million on an after-tax basis). For the nine months ended September 30, 2016, our operating results were negatively impacted by the following non-core items: $12.3 million of non-cash impairment charges on a pre-tax basis ($7.7 million on an after-tax basis), $5.9 million of losses related to catastrophic events on a pre-tax basis ($3.7 million on an after-tax basis), $0.6 million of acquisition costs on both a pre-tax and after-tax basis, and a $0.3 million charge for a foreign transaction tax in Brazil on both a pre-tax and after-tax basis, partially offset by a $1.7

million benefit related to foreign deferred income taxes on an after-tax basis and $1.0 million of net gains related to real estate and dealership transactions on a pre-tax basis ($0.3 million on an after-tax basis). Adjusting for those items, our adjusted net income rose 11.1% for the three months ended September 30, 2017 to $46.6 million and declined 5.7% for the nine months ended September 30, 2017 to $119.2 million. Adjusted earnings per diluted share improved 13.8% for the three months ended September 30, 2017 to $2.23 and decreased 1.1% for the nine months ended September 30, 2017 to $5.62. These non-core items have been excluded from our U.S. GAAP results in the following discussion of "adjusted" results. Please see "Non-GAAP Financial Measures" for further explanation and reconciliation of the U.S. GAAP and non-GAAP data.




Key Performance Indicators
Consolidated Statistical Data
The following table highlights certain of the key performance indicators we use to manage our business.
  Three Months Ended September 30, Nine Months Ended September 30,
  2017 2016 2017 2016
Unit Sales        
Retail Sales        
New Vehicle 48,321
 45,597
 127,487
 130,022
Used Vehicle 34,349
 33,012
 97,918
 98,754
Total Retail Sales 82,670
 78,609
 225,405
 228,776
Wholesale Sales 14,967
 15,027
 43,571
 43,077
Total Vehicle Sales 97,637
 93,636
 268,976
 271,853
Gross Margin        
New Vehicle Retail Sales 5.2% 5.1% 5.2% 5.1%
Total Used Vehicle Sales 5.5% 5.5% 5.7% 5.9%
Parts and Service Sales 54.0% 54.2% 53.9% 54.0%
Total Gross Margin 14.3% 14.4% 14.9% 14.7%
Adjusted Total gross margin 14.5% 14.4% 14.9% 14.7%
SG&A (1) as a % of Gross Profit
 76.1% 73.5% 75.1% 73.9%
Adjusted SG&A (1) as a % of Gross Profit (2)
 72.8% 73.6% 74.0% 73.5%
Operating Margin 2.6% 3.0% 3.1% 3.2%
Adjusted Operating Margin (2)
 3.5% 3.3% 3.4% 3.4%
Pretax Margin 1.6% 2.0% 2.0% 2.2%
Adjusted Pretax Margin (2)
 2.4% 2.3% 2.3% 2.4%
Finance and Insurance Revenues per Retail Unit Sold $1,343
 $1,383
 $1,394
 $1,383
Adjusted Finance and Insurance Revenues per Retail Unit Sold (2)
 $1,422
 $1,383
 $1,423
 $1,383
(1)
Selling, general and administrative expenses.
(2)
See "Non-GAAP Financial Measures" for more details.
The following discussion briefly highlights certain of the results and trends occurring within our business. Throughout the following discussion, references may be made to Same Store results and variances, which are discussed in more detail in the “Results of Operations” section that follows.
Our consolidated revenues from new vehicle retail sales increased 7.7% for the three months ended September 30, 2017, as compared to the same period in 2016, consisting of increases of 3.3%, 30.7% and 2.3% in the U.S., U.K, and Brazil, respectively. The increase in our consolidated new vehicle retail revenues was primarily driven by a 6.0% increase in our new vehicle retail unit sales coupled with a 1.6% increase in our average new vehicle retail sales price. In the U.S., industry new vehicle registrations declined 1.0% during the quarter ended September 30, 2017 as compared to the same period a year ago. Our U.S. new vehicle retail unit sales outperformed the industry and increased 1.5% for the three months ended September 30,

2017, as compared to the same period in 2016, largely explained by a 16.4% increase in our Houston and Beaumont markets as a result of demand for replacement vehicles due to flooding from Hurricane Harvey, which damaged hundreds of thousands of vehicles in the region. These increases were partially offset by continued weakness in our other oil dependent markets. Our average new vehicle retail sales price in the U.S. increased 1.8% for the quarter ended September 30, 2017 as compared to 2016. The increase in our average U.S. new vehicle retail sales price was primarily due to the shift in the mix of new retail units sold, as our truck unit sales increased to 61.1% of total new vehicle retail units sold for the three months ended September 30, 2017 as compared to 55.9% last year, generally correlating with lower gas prices but bolstered this quarter by the increased demand for trucks in our hurricane impacted markets of Houston and Beaumont. Our U.K. revenues from new vehicle retail sales increased 30.7% for the three months ended September 30, 2017 as compared to a year ago, primarily reflecting the acquisition of the Beadles dealership group in early July. In the U.K., industry sales experienced a decline of 8.9% for the three months ended September 30, 2017 as compared to the same period last year. The decrease in industry sales in the U.K. was a result of economic and political uncertainty, as well as confusion surrounding air quality plans that has led to a drop in demand for diesel vehicles. Our U.K. operations significantly outperformed the industry for the third quarter of 2017 as compared to last year, growing 2.9% in Same Store new vehicle retail unit sales and reflecting continued successful execution by our operating team on key initiatives and a favorable brand mix. For the three months ended September 30, 2017, Brazil new vehicle retail revenues increased 2.3%, however on a constant currency basis, new vehicle retail revenues remained relatively flat as compared to last year as the decline in new vehicle retail unit sales of 10.3% was offset by an 11.3% improvement in the average new vehicle retail sales price on a constant currency basis, when compared to the same period in 2016. The decline in new vehicle unit sales in Brazil was the result of our strategy of balancing volumes while protecting our margins. For the nine months ended September 30, 2017, our consolidated revenues from new vehicle retail sales declined 0.9%, as compared to the same period in 2016, reflecting declines in the U.S. and Brazil of 2.8%, and 1.2%, respectively, partially offset by an improvement of 7.9% in the U.K. In the U.S., the decline in revenues was primarily attributable to continued weakness in demand in our largely energy-dependent markets. In Brazil, new vehicle retail revenues declined due to our luxury mix, where the industry has been weak, and the focus on improving margins. The increase in the U.K. new vehicle retail revenues primarily reflects acquisition activity and the continued successful execution by our operating team on key initiatives. Consolidated new vehicle retail gross margin increased 10 basis points to 5.2% for both the three and nine months ended September 30, 2017, as compared to the same periods last year. In the U.S., our new vehicle retail gross margin improved 20 and 10 basis points, respectively, to 5.1% for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. Our new vehicle gross profit per retail unit (“PRU”) in the U.S. increased 6.1% and 3.8%, respectively, for the three and nine months ended September 30, 2017 as compared to the same periods last year partially driven by performance in our Hurricane Harvey impacted markets of Houston and Beaumont. Our new vehicle retail gross margin in the U.K. declined 40 and 20 basis points, respectively, for the three and nine months ended September 30, 2017, as compared to the same periods a year ago. In Brazil, our gross margin declined 10 basis points to 5.7% for the three months ended September 30, 2017 and improved 10 basis points to 5.8% for the nine months ended September 30, 2017 as compared to 2016 as a result of our operating team's disciplined approach to new vehicle pricing that focused on balancing volume with increased gross profit per unit. As a result, we improved new vehicle gross profit PRU sold in Brazil by 11.1% and 24.5%, respectively, for the three and nine months ended September 30, 2017, as compared to last year.
Our used vehicle results are directly affected by economic conditions, the level of manufacturer incentives on new vehicles and new vehicle financing, the number and quality of trade-ins and lease turn-ins, the availability of consumer credit, and our ability to effectively manage the level and quality of our overall used vehicle inventory. Our total revenues from used vehicle retail sales increased 5.8% for the three months ended September 30, 2017 and declined 0.8% for the nine months ended September 30, 2017, as compared to the same periods in 2016 reflecting improvements in the U.K. and Brazil, partially offset by a decline in the U.S. In the U.S., used vehicle retail revenues declined 2.3% and 5.2%, respectively, for the three and nine months ended September 30, 2017, as a result of a decrease in used vehicle retail units sold of 3.3% and 5.5%, partially offset by an increase in the average used vehicle retail price of 1.0% and 0.3%, respectively, as compared to the same periods last year. The decline in used vehicle retail units sold in the U.S. was partially a result of energy market weakness and a lag in used vehicle replacement demand in our hurricane impacted markets, as well as an overall lack of used vehicle inventory caused by the decline in industry new vehicle sales volume and the resulting lower used vehicle trade-in volume. Unlike the sales activity we experienced in our new vehicle business in our hurricane impacted markets of Houston and Beaumont, many used car customers delayed purchases on replacement of flooded vehicles until settlement of insurance claims were finalized, which tempered used vehicle sales in September 2017. The U.K. generated increases in used vehicle retail revenues of 47.9% and 18.3% for the three and nine months ended September 30, 2017, respectively, as a result of the increases in used vehicle retail unit sales of 46.1% for the third quarter of 2017 and 28.0% for the first nine months of 2017, as compared to the same periods in 2016. This improvement was primarily driven by a strong performance by our operating team and the impact of dealership acquisitions. Further, the enactment of the U.K. road tariff in April 2017 lowered taxes associated with used vehicles purchases relative to new vehicle, resulting in a shift in consumer demand towards used vehicles. The increase in revenues in the U.K., as reported in U.S. dollars, was slightly tempered by the unfavorable change of exchange rates between periods. On a constant currency basis, used vehicle retail revenues improved 48.3% and 28.8% for the three and nine months ended

September 30, 2017, respectively, as compared to the same periods last year. In Brazil, our used vehicle retail revenues increased by 13.4% and 18.7%, respectively, during the three and nine months ended September 30, 2017 as compared to the same periods in 2016. The increase in Brazil for the quarter ended September 30, 2017 was due to an increase in the average used vehicle retail sales price of 10.9%, coupled with a 2.3% increase in the used vehicle retail units. For the nine months ended September 30, 2017, the increase in used vehicle retail revenues for Brazil was a result of an increase in the average used vehicle retail sales price of 35.0%, which was partially offset by a 12.0% decrease in the used vehicle retail units. These improvements primarily reflect an increased focus by our operations team and enhanced processes that have been implemented. Total used vehicle retail gross profit increased 2.5% for the three month ended September 30, 2017 as compared to the same period last year as a result of a 4.1% improvement in total used vehicle retail unit sales which was partially offset by a 1.4% decline in total used vehicle retail gross profit PRU. For the nine months ended September 30, 2017 as compared to the same period a year ago, our total used vehicle gross profit decreased 4.5% primarily as a result of a 3.6% decline in total used vehicle retail gross profit PRU coupled with a 0.8% decline in total used vehicle retail unit sales. We generated improvements in used vehicle retail gross profit PRU in our Brazil operations for the three and nine months ended September 30, 2017 of 9.4% and 69.1%, respectively, as compared to the same periods a year ago which were primarily due to improved sales processes and the overall strong performance of our operating team. In the U.S., used vehicle gross profit PRU increased 0.1% for the three months ended September 30, 2017 and decreased 3.0% for the nine months ended September 30, 2017 as compared to the same periods in 2016. In the U.K., used vehicle retail gross profit PRU declined 2.8% and 11.7%, respectively, for the three and nine month ended September 30, 2017. The decline in the U.K. for the quarter and nine months ended September 30, 2017 was primarily the result of acquisition activity, as we work to integrate our sales processes and procedures into the newly acquired dealerships.
Our total parts and service revenue increased 7.4% and 4.6%, respectively, for the three and nine months ended September 30, 2017, as compared to the same periods in 2016. This growth was primarily driven by increases in our customer pay parts and service, warranty parts and service, wholesale parts and service and collision parts and service. These increases were primarily due to the execution of key management initiatives, dealership acquisition activity, expansion of our operating capacity and an increase in the number of late-model vehicles in operation, which tend to more consistently return to the dealership for warranty, maintenance and repair services. Our overall parts and service revenue was negatively impacted by the loss of over a week of business in our hurricane impacted markets along the Gulf and Atlantic coasts due to both store closures and lack of demand, as thousands of customers were either out of town or tending to property clean-up. Additionally, our collision revenues were also negatively impacted as most repairs in the Houston and Beaumont markets were delayed through the month of September due to the lack of rental car availability for our collision customers. During the first nine months of 2017, our warranty parts and service revenues were bolstered particularly by manufacturers' high volume recall campaigns in the U.S. for our Lexus, Nissan, and Ford brands. Our parts and service gross margin declined 20 basis points for three months ended September 30, 2017, as compared to a year ago, driven by a decrease in the U.S. of 100 basis points that was partially offset by increases in the U.K. and Brazil of 160 and 780 basis points, respectively. For the nine months ended September 30, 2017, our parts and service gross margin declined 10 basis points compared to a year ago as the decline of 80 basis points in the U.S. was partially offset by improvements in the U.K. and Brazil of 240 and 790 basis points, respectively. The decline in our U.S. parts and service gross margin was primarily due to declines in internal reconditioning service, which we report as 100.0% margin. The increases in the U.K reflect higher margins in our warranty parts and service, customer pay parts and service and wholesale parts businesses as compared to the same period last year. In Brazil, the increases were primarily as a result of improvements in our customer-pay parts and service and collision portions of the business, as well as the discontinuation of our wholesale parts business, which is a relatively lower margin business.
Our consolidated finance and insurance revenues PRU sold, decreased 2.9% for the three months ended September 30, 2017 and increased 0.8% for the nine months ended September 30, 2017, as compared to the same periods in 2016. After adjusting for $6.6 million in chargeback expense for reserves associated with expected finance and insurance product cancellations on vehicles sold by us and damaged by flooding from Hurricane Harvey, adjusted consolidated finance and insurance revenues PRU sold increased 2.8% and 2.9%, respectively, for the three and nine months ended September 30, 2017, as compared to the same periods last year. Growth in income per contract on many of our product offerings was partially offset by a decline in penetration rates on our retail finance fees, coupled with the mix effect of a relatively greater contribution from the U.K. In the U.S., on an adjusted basis, we generated a 5.4% and 5.2% increase in finance and insurance revenues PRU to $1,673 and $1,667, respectively, for the three and nine months ended September 30, 2017, as compared to the same periods last year. In Brazil, finance and insurance revenues PRU improved 35.7% and 58.7%, respectively, for the three and nine months ended September 30, 2017 to $673 and $684 as compared to the same periods in 2016. In the U.K., finance and insurance revenues PRU improved 5.9% for the three months ended September 30, 2017 and declined 4.7% for the nine months ended September 30, 2017 as compared to last year. This decline for the nine months ended September 30, 2017 was due to the change in exchange rates, as on a constant currency basis, finance and insurance revenues PRU in the U.K. increased 3.6%, as compared to last year.

Our total consolidated gross margin decreased 10 basis points for the three months ended September 30, 2017 to 14.3%, as compared to the same period in 2016. On an adjusted basis, our consolidated gross margin increased 10 basis points to 14.5% for the same comparable period as declines in the parts and service business were more than offset by improvements in the new vehicle sector of our business. For the nine months ended September 30, 2017, total consolidated gross margin increased 20 basis points to 14.9% as compared to the same period last year as improvement in our new vehicle business more than offset a decline in our used vehicle and parts and service business.
Our consolidated SG&A expenses increased in absolute dollars by 9.8% and 2.8% for the three and nine months ended September 30, 2017, respectively, as compared to the same periods in 2016. In the U.S., for the quarter, the increase in SG&A expense was driven by a $7.7 million increase in expenses related to catastrophic events, a $2.0 million increase in net loss on dealership transactions, and a $0.7 million legal settlement. In addition, SG&A expense increased in the U.S. as the result of the impact of higher volumes and gross profits on compensation expense and other selling expenses. For the three months and nine months ended September 30, 2017, our consolidated SG&A expenses as a percentage of gross profit increased 260 basis points to 76.1% and 120 basis points to 75.1%, respectively, as compared to the same periods a year ago. On an adjusted basis, our consolidated SG&A expenses as a percentage of gross profit decreased by 80 basis points to 72.8% for the three months ended September 30, 2017 when compared to a year ago, reflecting higher gross profit in all three segments and our ability to leverage our cost structure. For the nine months ended September 30, 2017, our adjusted consolidated SG&A expense as a percentage of gross profit increased 50 basis points to 74.0%, as compared to the same period in 2016. This increase was primarily due to the mix effect of our growing U.K. operations that inherently have a higher cost structure.
The combination of all of these factors resulted in an operating margin of 2.6% and 3.1%, respectively, for the three and nine months ended September 30, 2017, which declined 40 and 10 basis points, respectively, from the comparable periods in the prior year. On an adjusted basis, operating margin improved 20 basis points for the three months ended September 30, 2017 to 3.5%, and remained flat at 3.4% for the nine months ended September 30, 2017, as compared to the same period in 2016.
For the three and nine months ended September 30, 2017, floorplan interest expense increased 21.2% and 14.6%, respectively, as compared to the same periods in 2016, primarily driven by increases in the average London Interbank Offered Rate (“LIBOR”) interest rate since the fourth quarter of 2016 that resulted in higher U.S. floorplan interest expense. The impact of the increase in LIBOR was partially offset by declines in our U.S. weighted average borrowings when compared to 2016. Other interest expense, for the three and nine months ended September 30, 2017, increased 4.6% and 2.9%, respectively, as compared to the same periods in 2016, primarily explained by incremental mortgage borrowings.
We address these items further, and other variances between the periods presented, in the “Results of Operations” section below.


Critical Accounting Policies and Accounting Estimates
The preparationFor discussion of our Consolidated Financial Statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions. In particular, to evaluate the carrying value of goodwill and intangible franchise rights for impairment, we must estimate the fair market value of the net assets of each of our reporting units and our intangible franchise rights, using estimates, assumptions and unobservable inputs that require us to use our knowledge of (1) the industry, (2) recent transactions and (3) reasonable performance expectations for our operations.
We disclosed certain critical accounting policies and accounting estimates, inrefer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 20162021 Form 10-K, and10-K. There have been no significantmaterial changes have occurredto our critical accounting policies or accounting estimates since that time.December 31, 2021.

Results of Operations
The "Same Store"“same store” amounts presented below include the results of dealerships and corporate headquarters for the identical months in each comparative period, presented in comparison, commencing with the first full month in which we owned the dealership was owned by us and, in the case of dispositions,dealership. Amounts related to divestitures are excluded from each comparative period, ending with the last full month it wasin which we owned the dealership. Same store results provide a measurement of our ability to grow revenues and profitability of our existing stores and also provide a metric for peer group comparisons. For these reasons, same store results allow management to manage and monitor the performance of the business and is also useful to investors.
We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our underlying business and results of operations, consistent with how we evaluate our performance. We calculate constant currency percentages by us. converting our current period reported results for entities reporting in currencies other than USD using comparative period exchange rates rather than the actual exchange rates in effect during the respective periods. The constant currency performance measures should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP. Additionally, we caution investors not to place undue reliance on non-GAAP measures, but also to consider them with the most directly comparable U.S. GAAP measures. Our management also uses constant currency and adjusted cash flows from operating, investing and financing activities in conjunction with U.S. GAAP financial measures to assess our business, including communication with our Board of Directors, investors and industry analysts concerning financial performance. We disclose these non-GAAP measures and the related reconciliations because we believe investors use these metrics in evaluating longer-term period-over-period performance. These metrics also allow investors to better understand and evaluate the information used by management to assess operating performance.
Certain amounts in the financial statements may not compute due to rounding. All computations have been calculated using unrounded amounts for all periods presented.


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The following table summarizestables summarize our combined Same Store results for the three and nine months ended September 30, 2017, as compared to 2016. Same Store results also include the activities of our corporate headquarters.

Total Same Store Data
(dollars in thousands, except per unit amounts)
  Three Months Ended September 30,  Nine Months Ended September 30,
  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016
Revenues                 
New Vehicle Retail $1,632,489
 4.3% 4.2% $1,564,571
  $4,364,999
 (2.0)% (1.0)% $4,452,137
Used Vehicle Retail 701,226
 1.4% 1.3% 691,715
  2,015,330
 (2.3)% (1.1)% 2,061,772
Used Vehicle Wholesale 95,935
 (6.6)% (6.6)% 102,722
  292,131
 (0.4)% 2.0% 293,234
Parts and Service 331,540
 5.1% 5.0% 315,570
  970,961
 4.3% 5.0% 930,493
Finance, Insurance and Other 106,839
 (0.1)% (0.1)% 106,914
  306,875
 (1.1)% (0.6)% 310,435
Total Revenues $2,868,029
 3.1% 3.0% $2,781,492
  $7,950,296
 (1.2)% (0.2)% $8,048,071
Cost of Sales                 
New Vehicle Retail $1,548,248
 4.2% 4.1% $1,485,200
  $4,139,043
 (2.0)% (1.0)% $4,222,485
Used Vehicle Retail 655,929
 1.5% 1.4% 646,339
  1,881,359
 (2.1)% (0.9)% 1,920,788
Used Vehicle Wholesale 96,189
 (8.0)% (8.0)% 104,549
  292,204
 (0.3)% 2.0% 293,217
Parts and Service 152,684
 5.8% 5.7% 144,345
  447,504
 4.7% 5.2% 427,395
Total Cost of Sales $2,453,050
 3.1% 2.9% $2,380,433
  $6,760,110
 (1.5)% (0.5)% $6,863,885
Gross Profit $414,979
 3.5% 3.4% $401,059
  $1,190,186
 0.5% 1.2% $1,184,186
SG&A $313,146
 6.6% 6.5% $293,749
  $885,579
 2.2% 3.0% $866,513
Adjusted SG&A (1)
 $303,479
 3.6% 3.5% $293,025
  $876,814
 2.0% 2.8% $859,391
Depreciation and Amortization Expenses $14,239
 12.6% 12.6% $12,643
  $41,058
 10.9% 11.7% $37,036
Floorplan Interest Expense $13,246
 19.3% 19.3% $11,100
  $37,930
 14.0% 14.7% $33,282
Gross Margin                 
New Vehicle Retail 5.2%     5.1%  5.2%     5.2%
Total Used Vehicle 5.7%     5.5%  5.8%     6.0%
Parts and Service 53.9%     54.3%  53.9%     54.1%
Total Gross Margin 14.5%     14.4%  15.0%     14.7%
Adjusted Total Gross Margin (1)
 14.7%     14.4%         
Adjusted Finance, Insurance and Other, Net (1)
 $113,389
 6.1% 6.0% $106,914
  $313,425
 1.0% 1.5% $310,435
Adjusted Total Revenue (1)
 $2,874,579
 3.3% 3.2% $2,781,492
  $7,956,846
 (1.1)% (0.1)% $8,048,071
Adjusted Gross Profit (1)
 $421,529
 5.1% 5.0% $401,059
  $1,196,736
 1.1% 1.8% $1,184,186
SG&A as a % of Gross Profit 75.5%     73.2%  74.4%     73.2%
Adjusted SG&A as a % of Gross Profit (1)
 72.0%     73.1%  73.3%     72.6%
Operating Margin 2.7%     3.0%  3.2%     3.3%
Adjusted Operating Margin(1)
 3.6%     3.4%  3.5%     3.6%
Finance and Insurance Revenues per Retail Unit Sold $1,372
 (1.3)% (1.3)% $1,390
  $1,415
 1.4% 2.0% $1,395
Adjusted Finance and Insurance Revenues per Retail Unit Sold (1)
 $1,456
 4.7% 4.7% $1,390
  $1,445
 3.6% 4.2% $1,395
(1)See "Non-GAAP Financial Measures" for more details.


The discussion that follows provides explanation for the variances noted above. Each table presents by primary income statement line item comparative financial and non-financial data of our Same Store locations, those locations acquired or disposed of (“Transactions”) during the periods and the consolidated company for the three and nine months ended September 30, 2017 and 2016.
Our Same Store operating results as reported on a U.S. GAAP basis for the three months ended September 30, 2017 were negatively impacted by the following non-core items (on a pre-tax basis): $14.7 million in losses associated with catastrophic events, $9.5 million of non-cash impairment charges, $0.8 million of net losses related to real estate and dealership transactions, and $0.7 million associated with a legal settlement. For the nine months ended September 30, 2017, our Same Store operating results were impacted by the following non-core items (on a pre-tax basis): $15.4 million in losses related to catastrophic events, $9.5 million of non-cash impairment charges, $0.8 million of net losses related to real estate and dealership transactions, $0.3 million in acquisition costs, partially offset by $1.1 million gain associated with legal settlements. On a comparable basis, our Same Store operating results as reported on a U.S. GAAP basis for the three months ended September 30, 2016 were negatively impacted by the following non-core items (on a pre-tax basis): $10.8 million of non-cash impairment charges, $0.5 million of losses related to catastrophic events, and $0.3 million of foreign transaction tax. Our Same Store operating results on a reported basis and on a same store basis:
Reported Operating Data — Consolidated
(In millions, except unit data)
Three Months Ended September 30,
20222021Increase/ (Decrease)% ChangeCurrency Impact on Current Period ResultsConstant Currency % Change
Revenues:
New vehicle retail sales$1,883.3 $1,513.9 $369.5 24.4 %$(53.8)28.0 %
Used vehicle retail sales1,488.6 1,230.4 258.3 21.0 %(47.3)24.8 %
Used vehicle wholesale sales89.6 106.0 (16.5)(15.5)%(4.9)(11.0)%
Total used1,578.2 1,336.4 241.8 18.1 %(52.2)22.0 %
Parts and service sales515.6 416.5 99.1 23.8 %(10.7)26.4 %
F&I, net186.3 146.0 40.3 27.6 %(2.8)29.5 %
Total revenues$4,163.4 $3,412.8 $750.6 22.0 %$(119.5)25.5 %
Gross profit: 
New vehicle retail sales$206.7 $161.5 $45.2 28.0 %$(4.9)31.0 %
Used vehicle retail sales76.1 97.0 (21.0)(21.6)%(2.7)(18.9)%
Used vehicle wholesale sales(1.5)7.4 (8.9)(120.8)%— (121.4)%
Total used74.5 104.4 (29.9)(28.6)%(2.6)(26.1)%
Parts and service sales285.1 226.8 58.4 25.7 %(6.3)28.5 %
F&I, net186.3 146.0 40.3 27.6 %(2.8)29.5 %
Total gross profit$752.6 $638.7 $113.9 17.8 %$(16.6)20.4 %
Gross margin:
New vehicle retail sales11.0 %10.7 %0.3 %
Used vehicle retail sales5.1 %7.9 %(2.8)%
Used vehicle wholesale sales(1.7)%7.0 %(8.7)%
Total used4.7 %7.8 %(3.1)%
Parts and service sales55.3 %54.4 %0.9 %
Total gross margin18.1 %18.7 %(0.6)%
Units sold:
Retail new vehicles sold39,237 33,365 5,872 17.6 %
Retail used vehicles sold48,427 42,514 5,913 13.9 %
Wholesale used vehicles sold9,456 10,960 (1,504)(13.7)%
Total used57,883 53,474 4,409 8.2 %
Average sales price per unit sold:
New vehicle retail$47,999 $45,373 $2,626 5.8 %$(1,370)8.8 %
Used vehicle retail$30,740 $28,941 $1,799 6.2 %$(977)9.6 %
Gross profit per unit sold:
New vehicle retail sales$5,267 $4,840 $427 8.8 %$(125)11.4 %
Used vehicle retail sales$1,571 $2,282 $(712)(31.2)%$(55)(28.8)%
Used vehicle wholesale sales$(162)$673 $(835)(124.1)%$5 (124.8)%
Total used$1,288 $1,953 $(665)(34.1)%$(45)(31.7)%
F&I PRU$2,125 $1,925 $201 10.4 %$(32)12.1 %
Other:
SG&A expenses$450.9 $376.3 $74.7 19.8 %$(11.3)22.9 %
SG&A as % gross profit59.9 %58.9 %1.0 %
Floorplan expense:
Floorplan interest expense$6.5 $4.3 $2.2 50.1 %$(0.2)55.1 %
Less: floorplan assistance (1)
13.9 12.2 1.8 14.4 %— 14.4 %
Net floorplan expense$(7.4)$(7.8)$0.4 $(0.2)
(1) Floorplan assistance is included within Gross profit — New vehicle retail sales above and Cost of sales — New vehicle retail sales in our Condensed Consolidated Statements of Operations.
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Same Store Operating Data — Consolidated
(In millions, except unit data)
Three Months Ended September 30,
20222021Increase/ (Decrease)% ChangeCurrency Impact on Current Period ResultsConstant Currency % Change
Revenues:
New vehicle retail sales$1,534.6 $1,487.1 $47.5 3.2 %$(52.8)6.7 %
Used vehicle retail sales1,271.4 1,213.6 57.8 4.8 %(46.8)8.6 %
Used vehicle wholesale sales76.5 104.6 (28.2)(26.9)%(4.8)(22.3)%
Total used1,347.9 1,318.3 29.6 2.2 %(51.6)6.2 %
Parts and service sales438.8 408.6 30.2 7.4 %(10.1)9.9 %
F&I, net155.6 143.0 12.6 8.8 %(2.8)10.8 %
Total revenues$3,476.9 $3,357.0 $119.9 3.6 %$(117.4)7.1 %
Gross profit: 
New vehicle retail sales$163.7 $158.1 $5.6 3.6 %$(4.8)6.6 %
Used vehicle retail sales64.0 96.3 (32.2)(33.5)%(2.6)(30.8)%
Used vehicle wholesale sales(1.2)7.3 (8.5)(115.9)%— (116.5)%
Total used62.9 103.6 (40.7)(39.3)%(2.6)(36.9)%
Parts and service sales239.0 222.1 16.8 7.6 %(6.0)10.3 %
F&I, net155.6 143.0 12.6 8.8 %(2.8)10.8 %
Total gross profit$621.2 $626.9 $(5.7)(0.9)%$(16.2)1.7 %
Gross margin:
New vehicle retail sales10.7 %10.6 %— %
Used vehicle retail sales5.0 %7.9 %(2.9)%
Used vehicle wholesale sales(1.5)%7.0 %(8.5)%
Total used4.7 %7.9 %(3.2)%
Parts and service sales54.5 %54.4 %0.1 %
Total gross margin17.9 %18.7 %(0.8)%
Units sold:
Retail new vehicles sold32,249 32,734 (485)(1.5)%
Retail used vehicles sold41,684 41,866 (182)(0.4)%
Wholesale used vehicles sold7,911 10,755 (2,844)(26.4)%
Total used49,595 52,621 (3,026)(5.8)%
Average sales price per unit sold:
New vehicle retail$47,586 $45,431 $2,155 4.7 %$(1,638)8.3 %
Used vehicle retail$30,502 $28,988 $1,513 5.2 %$(1,122)9.1 %
Gross profit per unit sold:
New vehicle retail sales$5,078 $4,831 $247 5.1 %$(149)8.2 %
Used vehicle retail sales$1,536 $2,299 $(764)(33.2)%$(62)(30.5)%
Used vehicle wholesale sales$(147)$682 $(829)(121.6)%$6 (122.4)%
Total used$1,267 $1,969 $(702)(35.6)%$(52)(33.0)%
F&I PRU$2,105 $1,917 $188 9.8 %$(38)11.8 %
Other:
SG&A expenses$386.3 $368.4 $17.9 4.9 %$(11.1)7.9 %
SG&A as % gross profit62.2 %58.8 %3.4 %

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Reported Operating Data — Consolidated
(In millions, except unit data)
Nine Months Ended September 30,
20222021Increase/ (Decrease)% ChangeCurrency Impact on Current Period ResultsConstant Currency % Change
Revenues:
New vehicle retail sales$5,479.8 $4,828.6 $651.1 13.5 %$(97.6)15.5 %
Used vehicle retail sales4,353.9 3,302.3 1,051.7 31.8 %(91.5)34.6 %
Used vehicle wholesale sales278.9 278.0 0.9 0.3 %(10.0)3.9 %
Total used4,632.8 3,580.3 1,052.5 29.4 %(101.4)32.2 %
Parts and service sales1,491.1 1,152.2 338.9 29.4 %(19.0)31.1 %
F&I, net549.5 431.3 118.2 27.4 %(5.4)28.7 %
Total revenues$12,153.1 $9,992.3 $2,160.8 21.6 %$(223.4)23.9 %
Gross profit: 
New vehicle retail sales$618.2 $417.2 $201.0 48.2 %$(9.0)50.3 %
Used vehicle retail sales253.4 263.7 (10.3)(3.9)%(5.0)(2.0)%
Used vehicle wholesale sales2.1 20.1 (18.0)(89.7)%0.2 (90.6)%
Total used255.5 283.7 (28.3)(10.0)%(4.8)(8.3)%
Parts and service sales822.6 637.2 185.4 29.1 %(11.3)30.9 %
F&I, net549.5 431.3 118.2 27.4 %(5.4)28.7 %
Total gross profit$2,245.8 $1,769.5 $476.3 26.9 %$(30.6)28.6 %
Gross margin:
New vehicle retail sales11.3 %8.6 %2.6 %
Used vehicle retail sales5.8 %8.0 %(2.2)%
Used vehicle wholesale sales0.7 %7.2 %(6.5)%
Total used5.5 %7.9 %(2.4)%
Parts and service sales55.2 %55.3 %(0.1)%
Total gross margin18.5 %17.7 %0.8 %
Units sold:
Retail new vehicles sold114,792 110,499 4,293 3.9 %
Retail used vehicles sold141,140 124,559 16,581 13.3 %
Wholesale used vehicles sold28,069 31,268 (3,199)(10.2)%
Total used169,209 155,827 13,382 8.6 %
Average sales price per unit sold:
New vehicle retail$47,736 $43,698 $4,038 9.2 %$(850)11.2 %
Used vehicle retail$30,848 $26,512 $4,337 16.4 %$(648)18.8 %
Gross profit per unit sold:
New vehicle retail sales$5,385 $3,776 $1,609 42.6 %$(79)44.7 %
Used vehicle retail sales$1,795 $2,117 $(322)(15.2)%$(35)(13.5)%
Used vehicle wholesale sales$73 $642 $(568)(88.6)%$6 (89.5)%
Total used$1,510 $1,821 $(311)(17.1)%$(29)(15.5)%
F&I PRU$2,147 $1,835 $312 17.0 %$(21)18.2 %
Other:
SG&A expenses$1,329.6 $1,056.2 $273.3 25.9 %$(20.6)27.8 %
SG&A as % gross profit59.2 %59.7 %(0.5)%
Floorplan expense:
Floorplan interest expense$17.7 $20.5 $(2.8)(13.7)%$(0.4)(11.7)%
Less: floorplan assistance (1)
42.1 40.6 1.5 3.6 %— 3.6 %
Net floorplan expense$(24.4)$(20.1)$(4.3)$(0.4)
(1) Floorplan assistance is included within Gross Profit — New vehicle retail sales above and Cost of Sales — New vehicle retail sales in our Condensed Consolidated Statements of Operations.

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Same Store Operating Data — Consolidated
(In millions, except unit data)
Nine Months Ended September 30,
20222021Increase/ (Decrease)% ChangeCurrency Impact on Current Period ResultsConstant Currency % Change
Revenues:
New vehicle retail sales$4,468.0 $4,759.1 $(291.2)(6.1)%$(93.3)(4.2)%
Used vehicle retail sales3,701.3 3,262.1 439.2 13.5 %(86.0)16.1 %
Used vehicle wholesale sales234.9 275.0 (40.1)(14.6)%(9.5)(11.1)%
Total used3,936.2 3,537.1 399.1 11.3 %(95.5)14.0 %
Parts and service sales1,271.6 1,132.4 139.2 12.3 %(17.5)13.8 %
F&I, net462.2 424.3 37.8 8.9 %(5.2)10.1 %
Total revenues$10,137.8 $9,852.9 $284.9 2.9 %$(211.5)5.0 %
Gross profit: 
New vehicle retail sales$493.9 $410.4 $83.6 20.4 %$(8.6)22.5 %
Used vehicle retail sales212.9 261.2 (48.3)(18.5)%(4.7)(16.7)%
Used vehicle wholesale sales1.0 19.9 (18.9)(94.9)%0.2 (95.7)%
Total used213.9 281.1 (67.2)(23.9)%(4.5)(22.3)%
Parts and service sales688.9 625.8 63.1 10.1 %(10.6)11.8 %
F&I, net462.2 424.3 37.8 8.9 %(5.2)10.1 %
Total gross profit$1,858.9 $1,741.6 $117.3 6.7 %$(28.9)8.4 %
Gross margin:
New vehicle retail sales11.1 %8.6 %2.4 %
Used vehicle retail sales5.8 %8.0 %(2.3)%
Used vehicle wholesale sales0.4 %7.2 %(6.8)%
Total used5.4 %7.9 %(2.5)%
Parts and service sales54.2 %55.3 %(1.1)%
Total gross margin18.3 %17.7 %0.7 %
Units sold:
Retail new vehicles sold93,713 108,897 (15,184)(13.9)%
Retail used vehicles sold120,077 122,933 (2,856)(2.3)%
Wholesale used vehicles sold22,885 30,827 (7,942)(25.8)%
Total used142,962 153,760 (10,798)(7.0)%
Average sales price per unit sold:
New vehicle retail$47,677 $43,703 $3,974 9.1 %$(995)11.4 %
Used vehicle retail$30,824 $26,535 $4,289 16.2 %$(716)18.9 %
Gross profit per unit sold:
New vehicle retail sales$5,271 $3,769 $1,502 39.9 %$(92)42.3 %
Used vehicle retail sales$1,773 $2,124 $(352)(16.6)%$(39)(14.7)%
Used vehicle wholesale sales$44 $646 $(601)(93.1)%$7 (94.2)%
Total used$1,496 $1,828 $(332)(18.2)%$(32)(16.4)%
F&I PRU$2,162 $1,830 $331 18.1 %$(24)19.4 %
Other:
SG&A expenses$1,133.4 $1,038.2 $95.2 9.2 %$(19.5)11.0 %
SG&A as % gross profit61.0 %59.6 %1.4 %
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Reported Operating Data — U.S.
(In millions, except unit data)
Three Months Ended September 30,
20222021Increase/(Decrease)% Change
Revenues:
New vehicle retail sales$1,586.9 $1,208.5 $378.4 31.3 %
Used vehicle retail sales1,212.1 902.3 309.8 34.3 %
Used vehicle wholesale sales61.3 68.0 (6.7)(9.8)%
Total used1,273.4 970.3 303.1 31.2 %
Parts and service sales453.8 353.1 100.7 28.5 %
F&I, net170.2 130.5 39.8 30.5 %
Total revenues$3,484.3 $2,662.4 $821.9 30.9 %
Gross profit:
New vehicle retail sales$180.7 $140.0 $40.7 29.1 %
Used vehicle retail sales60.6 73.1 (12.5)(17.1)%
Used vehicle wholesale sales(1.3)3.2 (4.5)(139.3)%
Total used59.3 76.3 (17.0)(22.2)%
Parts and service sales249.0 188.2 60.7 32.3 %
F&I, net170.2 130.5 39.8 30.5 %
Total gross profit$659.3 $535.0 $124.3 23.2 %
Gross margin:
New vehicle retail sales11.4 %11.6 %(0.2)%
Used vehicle retail sales5.0 %8.1 %(3.1)%
Used vehicle wholesale sales(2.1)%4.8 %(6.8)%
Total used4.7 %7.9 %(3.2)%
Parts and service sales54.9 %53.3 %1.6 %
Total gross margin18.9 %20.1 %(1.2)%
Units sold:
Retail new vehicles sold31,745 25,984 5,761 22.2 %
Retail used vehicles sold38,172 31,704 6,468 20.4 %
Wholesale used vehicles sold6,453 6,758 (305)(4.5)%
Total used44,625 38,462 6,163 16.0 %
Average sales price per unit sold:
New vehicle retail$49,990 $46,510 $3,480 7.5 %
Used vehicle retail$31,754 $28,461 $3,293 11.6 %
Gross profit per unit sold:
New vehicle retail sales$5,693 $5,388 $304 5.7 %
Used vehicle retail sales$1,588 $2,305 $(717)(31.1)%
Used vehicle wholesale sales$(197)$478 $(675)(141.2)%
Total used$1,330 $1,984 $(654)(33.0)%
F&I PRU$2,435 $2,261 $174 7.7 %
Other:
SG&A expenses$385.8 $308.7 $77.1 25.0 %
SG&A as % gross profit58.5 %57.7 %0.8 %
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Same Store Operating Data — U.S.
(In millions, except unit data)
Three Months Ended September 30,
20222021Increase/(Decrease)% Change
Revenues:
New vehicle retail sales$1,242.6 $1,181.8 $60.8 5.1 %
Used vehicle retail sales997.2 885.6 111.6 12.6 %
Used vehicle wholesale sales48.4 66.6 (18.2)(27.3)%
Total used1,045.6 952.2 93.4 9.8 %
Parts and service sales380.2 348.0 32.1 9.2 %
F&I, net139.6 127.4 12.2 9.6 %
Total revenues$2,808.0 $2,609.4 $198.6 7.6 %
Gross profit:
New vehicle retail sales$138.2 $136.7 $1.6 1.2 %
Used vehicle retail sales48.8 72.3 (23.5)(32.5)%
Used vehicle wholesale sales(0.9)3.2 (4.1)(128.4)%
Total used47.9 75.5 (27.6)(36.6)%
Parts and service sales204.1 184.9 19.2 10.4 %
F&I, net139.6 127.4 12.2 9.6 %
Total gross profit$529.9 $524.5 $5.4 1.0 %
Gross margin:
New vehicle retail sales11.1 %11.6 %(0.4)%
Used vehicle retail sales4.9 %8.2 %(3.3)%
Used vehicle wholesale sales(1.9)%4.8 %(6.7)%
Total used4.6 %7.9 %(3.3)%
Parts and service sales53.7 %53.1 %0.6 %
Total gross margin18.9 %20.1 %(1.2)%
Units sold:
Retail new vehicles sold24,854 25,353 (499)(2.0)%
Retail used vehicles sold31,518 31,056 462 1.5 %
Wholesale used vehicles sold4,925 6,553 (1,628)(24.8)%
Total used36,443 37,609 (1,166)(3.1)%
Average sales price per unit sold:
New vehicle retail$49,996 $46,613 $3,383 7.3 %
Used vehicle retail$31,640 $28,516 $3,124 11.0 %
Gross profit per unit sold:
New vehicle retail sales$5,562 $5,390 $172 3.2 %
Used vehicle retail sales$1,549 $2,329 $(780)(33.5)%
Used vehicle wholesale sales$(184)$486 $(670)(137.8)%
Total used$1,315 $2,008 $(693)(34.5)%
F&I PRU$2,477 $2,259 $218 9.7 %
Other:
SG&A expenses$322.7 $302.0 $20.7 6.9 %
SG&A as % gross profit60.9 %57.6 %3.3 %

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Table of Contents
U.S. GAAP basis for the nine months endedRegion — Three Months Ended September 30, 2016 were negatively impacted by the following non-core items (on a pre-tax basis): $12.3 million of non-cash impairment charges, $5.9 million of losses related2022 Compared to catastrophic events, $0.6 million of acquisition costs, and $0.4 million of net loss related to real estate and dealership transactions, and $0.3 million of foreign transaction tax. These non-core items have been excluded from our U.S. GAAP results in the2021
The following discussion of "adjusted" results. Please see "Non-GAAP Financial Measures" for further explanationour U.S. operating results is on an as reported and reconciliationsame store basis. The difference between as reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings.
Revenues
Total revenues in the U.S. during the Current Quarter increased $821.9 million, or 30.9%, as compared to the Prior Year Quarter. This increase was driven by the acquisition of stores and higher same store revenues.
Total same store revenues in the Same Store U.S. GAAPduring the Current Quarter increased $198.6 million, or 7.6%, as compared to Prior Year Quarter. This increase was primarily driven by higher same store revenues from new and non-GAAP data.

used vehicle retail sales, parts and service sales and F&I, net, partially offset by lower same store revenues from used vehicle wholesale sales.
New Vehicle Retail Dataand used vehicle retail revenues benefited from the sale of approximately 7,700 units from our online digital platform, AcceleRide®, during the Current Quarter, representing a 47.0% increase as compared to the Prior Year Quarter.
(dollarsNew vehicle retail same store revenues outperformed the Prior Year Quarter. A shortage in thousands, except per unit amounts)
  Three Months Ended September 30,  Nine Months Ended September 30,
  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016
Retail Unit Sales                 
Same Stores                 
U.S. 34,917
 2.5%   34,080
  93,090
 (3.7)%   96,676
U.K. 8,573
 2.9%   8,331
  23,853
 3.9%   22,956
Brazil 2,155
 0.1%   2,152
  5,864
 (12.3)%   6,690
Total Same Stores 45,645
 2.4%   44,563
  122,807
 (2.8)%   126,322
Transactions 2,676
     1,034
  4,680
     3,700
Total 48,321
 6.0%   45,597
  127,487
 (1.9)%   130,022
Retail Sales Revenues                 
Same Stores   
             
U.S. $1,283,050
 3.6% N/A $1,238,239
  $3,441,300
 (1.8)% N/A $3,505,583
U.K. 270,750
 6.5% 6.2% 254,246
  719,059
 (3.7)% 4.6% 746,389
Brazil 78,689
 9.2% 6.5% 72,086
  204,640
 2.2% (7.8)% 200,165
Total Same Stores 1,632,489
 4.3% 4.2% 1,564,571
  4,364,999
 (2.0)% (1.0)% 4,452,137
Transactions 77,752
     23,381
  131,223
     86,425
Total $1,710,241
 7.7% 7.5% $1,587,952
  $4,496,222
 (0.9)% 0.2% $4,538,562
Gross Profit                 
Same Stores                 
U.S. $65,712
 7.2% N/A $61,270
  $173,908
 (0.9)% N/A $175,554
U.K. 14,065
 1.0% 0.5% 13,919
  40,190
 (5.9)% 2.2% 42,704
Brazil 4,464
 6.7% 4.2% 4,182
  11,858
 4.1% (6.2)% 11,394
Total Same Stores 84,241
 6.1% 5.9% 79,371
  225,956
 (1.6)% (0.6)% 229,652
Transactions 4,091
     1,064
  6,514
     3,658
Total $88,332
 9.8% 9.6% $80,435
  $232,470
 (0.4)% 0.8% $233,310
Gross Profit per Retail Unit Sold                 
Same Stores 
 
             
U.S. $1,882
 4.7% N/A $1,798
  $1,868
 2.9% N/A $1,816
U.K. $1,641
 (1.8)% (2.3)% $1,671
  $1,685
 (9.4)% (1.6)% $1,860
Brazil $2,071
 6.6% 4.0% $1,943
  $2,022
 18.7% 7.0% $1,703
Total Same Stores $1,846
 3.6% 3.4% $1,781
  $1,840
 1.2% 2.2% $1,818
Transactions $1,529
     $1,029
  $1,392
     $989
Total $1,828
 3.6% 3.4% $1,764
  $1,823
 1.6% 2.8% $1,794
Gross Margin                 
Same Stores                 
U.S. 5.1%     4.9%  5.1%     5.0%
U.K. 5.2%     5.5%  5.6%     5.7%
Brazil 5.7%     5.8%  5.8%     5.7%
Total Same Stores 5.2% 
   5.1%  5.2%     5.2%
Transactions 5.3%     4.6%  5.0%     4.2%
Total 5.2%     5.1%  5.2%     5.1%

Same Store New Vehicle Unit Sales
The following table sets forth our Same Storenew vehicle supply continued to drive strong pricing in the Current Quarter, mitigating the modestly lower new vehicle retail unit sales. Supply chain issues, including an ongoing semiconductor and vehicle parts shortage, and other logistics challenges, continued into the Current Quarter for OEMs, leading to sustained lower vehicle production and deliveries of fewer vehicles to dealerships. We ended the Current Quarter with a U.S. new vehicle inventory supply of 15 days, 4 days higher than the Prior Year Quarter.
Used vehicle retail same store revenues outperformed the Prior Year Quarter, driven by strong used vehicle retail pricing due to increased demand, coupled with a modest increase in retail used vehicle unit sales. Used vehicle wholesale same store revenues underperformed due to a decline in wholesale used vehicle unit sales. We have increased our efforts to sell more used vehicles through retail sales volumechannels rather than the wholesale market as a result of the increased demand and pricing of used vehicle retail sales described above.
Parts and service same store revenues outperformed the Prior Year Quarter, driven by manufacturer:increases across all business lines, reflecting increased business activity and increased same store technician headcount as a result of our technician recruiting and retention efforts providing greater capacity to meet increased demand.
F&I, net same store revenues outperformed the Prior Year Quarter, primarily driven by higher income per contract on finance, VSCs and other product offerings, as well as improved penetration rates on our other product offerings.
  Three Months Ended September 30,  Nine Months Ended September 30,
  2017 % Increase/(Decrease) 2016  2017 % Increase/(Decrease) 2016
Toyota/Scion/Lexus (1)
 12,592
 9.0% 11,548
  31,787
 (0.7)% 32,017
Volkswagen/Audi/Porsche 5,859
 14.2% 5,132
  15,027
 7.8% 13,946
BMW/MINI 5,544
 (8.0)% 6,024
  16,016
 (6.3)% 17,100
Ford/Lincoln 4,776
 (3.2)% 4,932
  13,813
 (4.0)% 14,382
Honda/Acura 4,367
 8.9% 4,010
  11,768
 (0.9)% 11,875
Nissan 3,150
 7.4% 2,933
  9,183
 8.9% 8,433
Chevrolet/GMC/Buick/Cadillac 2,938
 (12.1)% 3,342
  7,914
 (19.7)% 9,859
Chrysler/Dodge/Jeep/RAM 1,878
 0.9% 1,861
  4,959
 (6.3)% 5,294
Hyundai/Kia 1,838
 0.8% 1,824
  4,907
 (7.6)% 5,312
Mercedes-Benz/smart/Sprinter 1,628
 (15.9)% 1,935
  4,842
 (9.4)% 5,346
Other 1,075
 5.2% 1,022
  2,591
 (6.1)% 2,758
Total 45,645
 2.4% 44,563
  122,807
 (2.8)% 126,322
Gross Profit
(1) The Scion brand was discontinued by ToyotaTotal gross profit in the U.S. during the third quarter of 2016.
In total, our Same Store new vehicle retail unit salesCurrent Quarter increased 2.4% for the three months ended September 30, 2017,$124.3 million, or 23.2%, as compared to the same period in 2016. The increase wasPrior Year Quarter, primarily driven by improvementsthe acquisition of 2.5%, 2.9%, and 0.1%stores.
Total same store gross profit in the U.S., U.K., and Brazil, respectively. Overall, during the U.S. industry sales declinedCurrent Quarter increased $5.4 million, or 1.0% for the three months ended September 30, 2017, as compared to the same period a year ago. ThePrior Year Quarter. This increase in our U.S. new vehicle retail unit sales was primarily due to increased sales in Houston and Beaumont in September as a result of replacement demand caused by flooding from Hurricane Harvey which damaged hundreds of thousands of vehicles in the region. For the three months ended September 30, 2017, our unit sales in our hurricane impacted markets of Houston and Beaumont were up 16.4%, collectively, when compared to the same period a year ago. These gains were partially offset by softness in the energy markets of Texas and Oklahoma, as well as an overall decline in new vehicle retail demand in the industry compared to 2016. U.K. industry sales were down 8.9% for the three months ended September 30, 2017, as compared to the same period in 2016. Our Same Store U.K. new vehicle sales outperformed the U.K. auto industry, increasing 2.9% for the three months ended September 30, 2017 as compared to the same period last year. The strong performance in the U.K. is primarily attributable to our brand portfolio and our management team. We experienced a 0.1% increase in our Same Store new vehicle retail unit sales in Brazil, which was weaker than the overall industry, reflecting our intentional efforts to prioritize margins over volume. For the nine months ended September 30, 2017, as compared to the same period in 2016, total Same Store new vehicle retail unit sales decreased 2.8%, primarily driven by decreases of 3.7% in the U.S.higher same store gross profit from parts and 12.3% in Brazil, partially offset by a 3.9% increase in the U.K. The decline was primarily a result of weaker demand in our energy dependent markets in the U.S.service sales, F&I, net and our focus on margins in Brazil.
Our total Same Store new vehicle retail sales, revenue increased 4.3% forpartially offset by lower same store gross profit from used vehicle retail and wholesale sales.
New vehicle retail same store gross profit outperformed the three months ended September 30, 2017, as compared to the same period in 2016, reflecting increases in the U.S., U.K., and Brazil. The 3.6% increase in U.S. Same Store new vehicle revenue was primarily due to thePrior Year Quarter, driven by an increase in new vehicle retail units of 2.5%, coupled withsame store gross profit per unit sold, partially offset by a 1.1% increasemodest decrease in the averagesame store retail new vehicle retail sales price to $36,746.unit sales. The increase in U.S. Same Store average new vehicle retail sales price was primarily due to a mix shift in sales from cars to trucks, generally driven by lower gas prices, but bolstered this quarter by the increased demand for trucks in the hurricane impacted markets. For the third quarter of 2017, U.S. Same Store new vehicle retail truck sales represented 60.9% of total Same Store new vehicle retail units sold, as compared to 56.3% for the same period last year. Our U.K. Same Store new vehicle retail revenues increased 6.5% for the three months ended September 30, 2017, as compared to the same period last year, explained by a 3.5% increase in average new vehicle retail sales price and the 2.9% increase in new vehicle retail units sold. Our Brazil Same Storesame store gross profit per unit sold reflects the strong demand resulting from the shortage of new vehicle inventory discussed above. The inventory shortage also drove the decrease in same store retail sales revenue increased 9.2% fornew vehicle unit sales.
Used vehicle retail same store gross profit underperformed the three months ended September 30, 2017 as compared to last year,Prior Year Quarter, driven by a 9.0% increasedecrease in the average newused vehicle retail sales price and the 0.1% increase in new vehicle retail units. For the nine months ended September 30, 2017, total Same Store new vehicle retail sales revenues decreased 2.0% as compared to the same period in 2016, primarily driven by a 1.8% and 3.7% decrease in the U.S. and U.K., respectively,store gross profit per unit sold, partially offset by a 2.2% increase in Brazil.modestly higher same store retail used vehicle unit sales. The decrease in new vehicles sales revenue in the U.S. primarily relates to a decrease of 3.7% in newsame store used vehicle retail units. The decline in new vehicles sales revenue in the U.K. primarily relates to a deterioration of 7.3% in the average new vehicle retail sales price, which is more than explained by an unfavorable change in exchange rates between periods as, on a constant currency basis, new vehicle retail revenue per retail unit increased 0.7% when compared to the same period in the previous year. The 2.2% increase in new vehicle sales revenues in the Brazil is more than explained by the change in exchange rates between periods as, on a constant

currency basis, new vehicle sales revenues decreased 7.8%. This decreasegross profit was driven by a 12.3% reduction in newinflationary impacts on our used vehicle retail unit sales, reflecting our decision to focus on improving margins. The level of retail sales, as well as our own ability to retain or grow market share during any future period, is difficult to predict.customers and higher used vehicle acquisition prices.
Our total Same Store newused vehicle wholesale same store gross profit increased 6.1% forunderperformed the three months ended September 30, 2017, as compared to the same period in 2016, reflecting increases in the U.S., U.K., and Brazil. In the U.S., Same Store new vehicle gross profit increased 7.2%, explained by a 2.5% increase in new vehicle retail units and a 4.7% increase in gross profit PRU to $1,882. The increase in new vehicle gross profit PRU was driven by high demand in our Houston and Beaumont markets, bolstered by increased demand for trucks, as a result of the impact of Hurricane Harvey. For the three months ended September 30, 2017, our Same Store new vehicle gross profit in the U.K. increased 1.0%, as a 2.9% increase in Same Store new vehicle retail units sales was partially offset by a 1.8% decline in Same Store new vehicle gross profit PRU. In Brazil, Same Store new vehicle gross profit increased 6.7% for the three months ended September 30, 2017 as compared to the same period in 2016. The increase in gross profit in Brazil was primarily due to a 6.6% increase in new vehicle gross profit PRU and a 0.1% increase in retail unit sales volume. The increase in new vehicle gross profit PRU was primarily driven by strategic initiatives focused around improving new vehicle gross profit per retail unit sold. Our total Same Store new vehicle gross margin for the three months ended September 30, 2017, as compared to the same period in 2016, increased 10 basis points from 5.1% to 5.2%. For the nine months ended September 30, 2017, as compared to the same period a year ago, total Same Store new vehicle gross profit decreased by 1.6%Prior Year Quarter, driven by a decrease of 0.9% in the U.S.,used vehicle wholesale same store gross profit per unit sold, coupled with a 5.9% decrease in used vehicle same store wholesale unit sales. The decreases in wholesale gross profit per unit sold and in wholesale units were driven by efforts to sell more used vehicles through retail sales rather than the U.K.,wholesale market as described above.
Parts and partially offset by an increase of 4.1% in Brazil. The decline inservice same store gross profit outperformed the U.S was primarily due to persistent demand weakness in our energy dependent markets. The decrease in the U.K. was more than explained by the change in exchange rates between periodsPrior Year Quarter, as on a constant currency basis new vehicledescribed above for parts and service same store revenues.
F&I, net same store gross profit increased 2.2%9.6%, as described above for F&I, net same store revenues.
Total same store gross margin decreased 123 basis points, primarily due to a 3.9% increase in retail unit sales volume. The increase in Brazil was more than explained driven by the change in exchange rates between periods as on a constant currency basis, new vehicle gross profit declined 6.2% resulting from the 12.3% decline in newlower same store used vehicle retail sales volume. For the nine months ended September 30, 2017, our total Same Store new vehicle gross margin remained unchanged at 5.2%, when compared to the same period in 2016.caused by inflationary impacts on our used vehicle customers and higher used vehicle acquisition prices.
Most manufacturers offer interest assistance to offset floorplan interest charges incurred in connection with inventory purchases. This assistance varies by manufacturer, but generally provides for a defined amount, adjusted periodically for changes in market interest rates, regardless
31
Table of our actual floorplan interest rate or the length of time for which the inventory is financed. We record these incentives as a reduction of new vehicle cost of sales as the vehicles are sold, impacting the gross profit and gross margin detailed above. The total assistance recognized in cost of sales during the three months ended September 30, 2017 and 2016 was $13.6 million and $13.0 million, respectively. The amount of interest assistance we recognize in a given period is primarily a function of: (a) the mix of units being sold, as U.S. domestic brands tend to provide more assistance, (b) the specific terms of the respective manufacturers' interest assistance programs and market interest rates, (c) the average wholesale price of inventory sold, and (d) our rate of inventory turnover. Over the past three years, consolidated manufacturers' interest assistanceContents
SG&A Expenses
SG&A as a percentage of our total consolidated floorplan interest expense has ranged from 88.0% in the first quarter of 2017 to 139.9% in the third quarter of 2015. In the U.S., manufacturers' interest assistance was 110.7% of floorplan interest expense in the third quarter of 2017gross profit increased 83 and 332 basis points on an as compared to 128.5% in the third quarter of 2016.
We decreased our new vehicle inventory levels by $60.6 million, or 5.2%, from $1,156.4 million as of December 31, 2016 to $1,095.8 million as of September 30, 2017. As compared to September 30, 2016, our inventory levels have decreased by $70.3 million, or 6.0%. These decreases were driven by the U.S., primarily as a result of increased sales activity during September 2017 in our hurricane impacted markets of Houstonreported and Beaumont. Our consolidated days' supply of new vehicle inventory decreased to 44 days as of September 30, 2017, which was down from 62 days as of to December 31, 2016 and down from 59 days as of September 30, 2016.

Used Vehicle Retail Data
(dollars in thousands, except per unit amounts)
  Three Months Ended September 30,  Nine Months Ended September 30,
  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016
Retail Unit Sales                 
Same Stores                 
U.S. 26,093
 (2.6)%   26,800
  76,156
 (4.3)%   79,587
U.K. 5,094
 9.7%   4,643
  15,015
 9.5%   13,718
Brazil 1,028
 11.5%   922
  2,925
 0.8%   2,901
Total Same Stores 32,215
 (0.5)%   32,365
  94,096
 (2.2)%   96,206
Transactions 2,134
     647
  3,822
     2,548
Total 34,349
 4.1%   33,012
  97,918
 (0.8)%   98,754
Retail Sales Revenues                 
Same Stores                 
U.S. $557,657
 (1.9)% N/A $568,306
  $1,614,613
 (4.2)% N/A $1,684,837
U.K. 120,723
 15.3% 15.6% 104,692
  336,591
 3.2% 12.4% 326,141
Brazil 22,846
 22.1% 19.0% 18,717
  64,126
 26.2% 13.4% 50,794
Total Same Stores 701,226
 1.4% 1.3% 691,715
  2,015,330
 (2.3)% (1.1)% 2,061,772
Transactions 41,812
     10,905
  74,584
     44,797
Total $743,038
 5.8% 5.7% $702,620
  $2,089,914
 (0.8)% 0.6% $2,106,569
Gross Profit                 
Same Stores                 
U.S. $37,638
 (3.3)% N/A $38,909
  $112,216
 (7.3)% N/A $121,040
U.K. 5,970
 18.6% 19.0% 5,034
  17,047
 0.7% 10.1% 16,926
Brazil 1,689
 17.9% 14.9% 1,433
  4,708
 56.0% 43.8% 3,018
Total Same Stores 45,297
 (0.2)% (0.2)% 45,376
  133,971
 (5.0)% (4.1)% 140,984
Transactions 1,826
     592
  3,070
     2,449
Total $47,123
 2.5% 2.5% $45,968
  $137,041
 (4.5)% (3.5)% $143,433
Gross Profit per Unit Sold                 
Same Stores                 
U.S. $1,442
 (0.7)% N/A $1,452
  $1,474
 (3.1)% N/A $1,521
U.K. $1,172
 8.1% 8.5% $1,084
  $1,135
 (8.0)% 0.6% $1,234
Brazil $1,643
 5.7% 3.1% $1,554
  $1,610
 54.8% 42.6% $1,040
Total Same Stores $1,406
 0.3% 0.2% $1,402
  $1,424
 (2.8)% (2.0)% $1,465
Transactions $856
     $915
  $803
     $961
Total $1,372
 (1.4)% (1.5)% $1,392
  $1,400
 (3.6)% (2.7)% $1,452
Gross Margin                 
Same Stores                 
U.S. 6.7%     6.8%  7.0%     7.2%
U.K. 4.9%     4.8%  5.1%     5.2%
Brazil 7.4%     7.7%  7.3%     5.9%
Total Same Stores 6.5% 
   6.6%  6.6%     6.8%
Transactions 4.4%     5.4%  4.1%     5.5%
Total 6.3%     6.5%  6.6%     6.8%

Used Vehicle Wholesale Data
(dollars in thousands, except per unit amounts)
  Three Months Ended September 30,  Nine Months Ended September 30,
  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016
Wholesale Unit Sales                 
Same Stores                 
U.S. 9,672
 (10.7)%   10,832
  29,315
 (3.2)%   30,271
U.K. 3,795
 6.5%   3,563
  11,039
 2.2%   10,803
Brazil 242
 (14.5)%   283
  723
 14.0%   634
Total Same Stores 13,709
 (6.6)%   14,678
  41,077
 (1.5)%   41,708
Transactions 1,258
     349
  2,494
     1,369
Total 14,967
 (0.4)%   15,027
  43,571
 1.1%   43,077
Wholesale Sales Revenues                 
Same Stores                 
U.S. $62,552
 (15.5)% N/A $74,020
  $199,320
 (1.3)% N/A $202,003
U.K. 30,565
 9.6% 9.8% 27,891
  84,564
 (5.4)% 3.1% 89,360
Brazil 2,818
 247.5% 239.0% 811
  8,247
 340.8% 301.7% 1,871
Total Same Stores 95,935
 (6.6)% (6.6)% 102,722
  292,131
 (0.4)% 2.0% 293,234
Transactions 8,892
     1,496
  16,230
     8,855
Total $104,827
 0.6% 0.6% $104,218
  $308,361
 2.1% 4.8% $302,089
Gross Profit                 
Same Stores                 
U.S. $(138) 90.7% N/A $(1,477)  $(232) (8.9)% N/A $(213)
U.K. (332) 18.8% 17.3% (409)  (494) (637.0)% (1,035.6)% 92
Brazil 216
 266.1% 258.5% 59
  653
 373.2% 330.1% 138
Total Same Stores (254) 86.1% 85.5% (1,827)  (73) (529.4)% (3,053.6)% 17
Transactions 69
     (32)  (279)     (479)
Total $(185) 90.0% 89.3% $(1,859)  $(352) 23.8% (381.7)% $(462)
Gross Profit per Wholesale Unit Sold                 
Same Stores                 
U.S. $(14) 89.7% N/A $(136)  $(8) (14.3)% N/A $(7)
                  
U.K. $(87) 24.3% 22.3% $(115)  $(45) (600.0)% (1,015.6)% $9
Brazil $893
 329.3% 319.2% $208
  $903
 314.2% 277.1% $218
Total Same Stores $(19) 84.7% 84.5% $(124)  $(2) —% (3,099.0)% $—
Transactions $55
     $(92)  $(112)     $(350)
Total $(12) 90.3% 89.2% $(124)  $(8) 27.3% (376.2)% $(11)
Gross Margin                 
Same Stores                 
U.S. (0.2)%     (2.0)%  (0.1)%     (0.1)%
U.K. (1.1)%     (1.5)%  (0.6)%     0.1%
Brazil 7.7%     7.3%  7.9%     7.4%
Total Same Stores (0.3)% 
   (1.8)%  —%     —%
Transactions 0.8%     (2.1)%  (1.7)%     (5.4)%
Total (0.2)%     (1.8)%  (0.1)%     (0.2)%

Total Used Vehicle Data
(dollars in thousands, except per unit amounts)
  Three Months Ended September 30,  Nine Months Ended September 30,
  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016
Used Vehicle Unit Sales                 
Same Stores                 
U.S. 35,765
 (5.0)%   37,632
  105,471
 (4.0)%   109,858
U.K. 8,889
 8.3%   8,206
  26,054
 6.3%   24,521
Brazil 1,270
 5.4%   1,205
  3,648
 3.2%   3,535
Total Same Stores 45,924
 (2.4)%   47,043
  135,173
 (2.0)%   137,914
Transactions 3,392
     996
  6,316
     3,917
Total 49,316
 2.7%   48,039
  141,489
 (0.2)%   141,831
Sales Revenues                 
Same Stores                 
U.S. $620,209
 (3.4)% N/A $642,326
  $1,813,933
 (3.9)% N/A $1,886,840
U.K. 151,288
 14.1% 14.4% 132,583
  421,155
 1.4% 10.4% 415,501
Brazil 25,664
 31.4% 28.1% 19,528
  72,373
 37.4% 23.6% 52,665
Total Same Stores 797,161
 0.3% 0.3% 794,437
  2,307,461
 (2.0)% (0.7)% 2,355,006
Transactions 50,704
     12,401
  90,814
     53,652
Total $847,865
 5.1% 5.1% $806,838
  $2,398,275
 (0.4)% 1.1% $2,408,658
Gross Profit                 
Same Stores                 
U.S. $37,500
 0.2% N/A $37,432
  $111,984
 (7.3)% N/A $120,827
U.K. 5,638
 21.9% 22.2% 4,625
  16,553
 (2.7)% 4.4% 17,018
Brazil 1,905
 27.7% 24.5% 1,492
  5,361
 69.9% 56.3% 3,156
Total Same Stores 45,043
 3.4% 3.4% 43,549
  133,898
 (5.0)% (4.5)% 141,001
Transactions 1,895
     560
  2,791
     1,970
Total $46,938
 6.4% 6.3% $44,109
  $136,689
 (4.4)% (4.7)% $142,971
Gross Profit per Unit Sold                 
Same Stores                 
U.S. $1,049
 5.4% N/A $995
  $1,062
 (3.5)% N/A $1,100
U.K. $634
 12.4% 12.8% $564
  $635
 (8.5)% (1.7)% $694
Brazil $1,500
 21.2% 18.2% $1,238
  $1,470
 64.6% 51.5% $893
Total Same Stores $981
 5.9% 5.9% $926
  $991
 (3.0)% (2.5)% $1,022
Transactions $559
     $562
  $442
 
   $503
Total $952
 3.7% 3.6% $918
  $966
 (4.2)% (4.5)% $1,008
Gross Margin                 
Same Stores                 
U.S. 6.0%     5.8%  6.2%     6.4%
U.K. 3.7%     3.5%  3.9%     4.1%
Brazil 7.4%     7.6%  7.4%     6.0%
Total Same Stores 5.7%     5.5%  5.8%     6.0%
Transactions 3.7%     4.5%  3.1%     3.7%
Total 5.5%     5.5%  5.7%     5.9%


In addition to factors such as general economic conditions and consumer confidence, our used vehicle business is affected by the level of manufacturer incentives on new vehicles and new vehicle financing, the number and quality of used vehicle trade-ins and lease turn-ins, the availability of consumer credit, and our ability to effectively manage the level and quality of our overall used vehicle inventory.
Our total Same Store used vehicle retail revenues increased $9.5 million, or 1.4%, for the three months ended September 30, 2017, assame store basis, respectively, compared to the same period in 2016, reflecting a 1.8% increase in average used vehicle retail selling price to $21,767, partially offset by 0.5% decrease in total Same Store used vehicle retail unit sales. The increase in our total Same Store used vehicle retail revenues wasPrior Year Quarter, primarily driven by increases in the U.K. and Brazil that were partially offset by a declineSG&A expenses.
Total SG&A expenses in the U.S. Induring the U.K., Same Store used vehicle retail revenuesCurrent Quarter increased by $16.0$77.1 million, or 15.3%25.0%, for the quarter ended September 30, 2017. The increase in Same Store used vehicle retail revenue was driven by a 9.7% increase in Same Store used vehicle retail unit sales and a 5.1% increase in the Same Store average used vehicle retail sales price. These increases were primarily driven by a strong performance from our operating team, as well as the road tariff that went into effect in April 2017 that lowered associated taxes on used vehicles relative to new vehicles, shifting consumer demand towards used vehicles. In Brazil, for the three months ended September 30, 2017, Same Store used vehicle retail revenues increased 22.1%, reflecting a 9.5% increase in the average used vehicle retail selling price, coupled with 11.5% increase in Same Store used vehicle retail unit sales. These improvements reflect an increased focus by our operations team and enhanced processes that are being implemented. In the U.S., Same Store used vehicle retail revenues decreased $10.6 million, or 1.9%, reflecting a 2.6% decrease in Same Store used vehicle retail unit sales, partially offset by 0.8%, or $167, increase in the average used vehicle retail sales price. The decline in Same Store used vehicle retail unit sales was driven by a 2.8% decline in sales in our energy dependent markets which was partially caused by a lag in vehicle replacement demand in our hurricane impacted markets of Houston and Beaumont. For the nine months ended September 30, 2017, our total Same Store used vehicle retail revenues declined 2.3%, primarily as a result of a 2.2% decrease in used vehicle retail unit sales. The decline in our total Same Store retail sales revenue and Same Store retail unit sales can be more than explained by energy market weakness. On a constant currency basis, our total Same Store used vehicle retail revenues declined 1.1% for the nine months ended September 30, 2017 as compared to the Prior Year Quarter, primarily driven by the acquisition of stores. Total same period last year.store SG&A expenses in the U.S. during the Current Quarter, increased $20.7 million, or 6.9%, as compared to the Prior Year Quarter, primarily driven by increased labor costs, favorable non-recurring legal settlements in the Prior Year Quarter, and an increase in other variable expenses associated with the rise in certain business activities described above.
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Table of Contents
Reported Operating Data — U.S.
(In total, our millions, except unit data)
Nine Months Ended September 30,
20222021Increase/(Decrease)% Change
Revenues:
New vehicle retail sales$4,581.8 $3,958.9 $622.9 15.7 %
Used vehicle retail sales3,447.6 2,481.7 965.9 38.9 %
Used vehicle wholesale sales177.6 179.6 (1.9)(1.1)%
Total used3,625.3 2,661.3 963.9 36.2 %
Parts and service sales1,307.7 982.0 325.7 33.2 %
F&I, net498.1 389.4 108.7 27.9 %
Total revenues$10,012.8 $7,991.6 $2,021.2 25.3 %
Gross profit: 
New vehicle retail sales$538.5 $362.6 $175.9 48.5 %
Used vehicle retail sales203.0 210.7 (7.8)(3.7)%
Used vehicle wholesale sales3.8 13.6 (9.7)(71.7)%
Total used206.8 224.3 (17.5)(7.8)%
Parts and service sales713.1 535.1 178.0 33.3 %
F&I, net498.1 389.4 108.7 27.9 %
Total gross profit$1,956.5 $1,511.4 $445.1 29.5 %
Gross margin:
New vehicle retail sales11.8 %9.2 %2.6 %
Used vehicle retail sales5.9 %8.5 %(2.6)%
Used vehicle wholesale sales2.2 %7.6 %(5.4)%
Total used5.7 %8.4 %(2.7)%
Parts and service sales54.5 %54.5 %— %
Total gross margin19.5 %18.9 %0.6 %
Units sold:
Retail new vehicles sold92,870 89,183 3,687 4.1 %
Retail used vehicles sold110,635 96,143 14,492 15.1 %
Wholesale used vehicles sold18,513 19,804 (1,291)(6.5)%
Total used129,148 115,947 13,201 11.4 %
Average sales price per unit sold:
New vehicle retail$49,335 $44,391 $4,945 11.1 %
Used vehicle retail$31,162 $25,813 $5,349 20.7 %
Gross profit per unit sold:
New vehicle retail sales$5,799 $4,066 $1,733 42.6 %
Used vehicle retail sales$1,834 $2,192 $(357)(16.3)%
Used vehicle wholesale sales$207 $685 $(478)(69.8)%
Total used$1,601 $1,934 $(333)(17.2)%
F&I PRU$2,448 $2,101 $346 16.5 %
Other:
SG&A expenses$1,133.0 $883.0 $250.1 28.3 %
SG&A as % gross profit57.9 %58.4 %(0.5)%

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Same Store used vehicle retail total gross profit for the three months endedOperating Data — U.S.
(In millions, except unit data)
Nine Months Ended September 30,
20222021Increase/(Decrease)% Change
Revenues:
New vehicle retail sales$3,623.5 $3,889.8 $(266.3)(6.8)%
Used vehicle retail sales2,869.8 2,442.5 427.3 17.5 %
Used vehicle wholesale sales139.9 176.7 (36.8)(20.8)%
Total used3,009.7 2,619.2 390.5 14.9 %
Parts and service sales1,104.8 970.4 134.4 13.9 %
F&I, net413.6 382.5 31.1 8.1 %
Total revenues$8,151.7 $7,861.9 $289.7 3.7 %
Gross profit:
New vehicle retail sales$419.5 $355.8 $63.7 17.9 %
Used vehicle retail sales166.9 208.3 (41.3)(19.9)%
Used vehicle wholesale sales2.6 13.3 (10.8)(80.7)%
Total used169.5 221.6 (52.1)(23.5)%
Parts and service sales589.0 527.5 61.4 11.6 %
F&I, net413.6 382.5 31.1 8.1 %
Total gross profit$1,591.5 $1,487.4 $104.1 7.0 %
Gross margin:
New vehicle retail sales11.6 %9.1 %2.4 %
Used vehicle retail sales5.8 %8.5 %(2.7)%
Used vehicle wholesale sales1.8 %7.6 %(5.7)%
Total used5.6 %8.5 %(2.8)%
Parts and service sales53.3 %54.4 %(1.1)%
Total gross margin19.5 %18.9 %0.6 %
Units sold:
Retail new vehicles sold73,307 87,597 (14,290)(16.3)%
Retail used vehicles sold92,490 94,574 (2,084)(2.2)%
Wholesale used vehicles sold14,104 19,388 (5,284)(27.3)%
Total used106,594 113,962 (7,368)(6.5)%
Average sales price per unit sold:
New vehicle retail$49,429 $44,406 $5,024 11.3 %
Used vehicle retail$31,029 $25,826 $5,202 20.1 %
Gross profit per unit sold:
New vehicle retail sales$5,722 $4,062 $1,660 40.9 %
Used vehicle retail sales$1,805 $2,202 $(397)(18.0)%
Used vehicle wholesale sales$182 $688 $(506)(73.5)%
Total used$1,590 $1,945 $(355)(18.2)%
F&I PRU$2,495 $2,100 $395 18.8 %
Other:
SG&A expenses$949.8 $869.0 $80.8 9.3 %
SG&A as % gross profit59.7 %58.4 %1.3 %

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U.S. Region — Nine Months Ended September 30, 2017 decreased 0.2%2022 Compared to 2021
The following discussion of our U.S. operating results is on an as reported and same store basis. The difference between as reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings.
Revenues
Total revenues in the U.S. during the Current Year increased $2.0 billion, or 25.3%, as compared to the same period in 2016, reflecting a decline2021 (“Prior Year”), primarily driven by the acquisition of stores.
Total same store revenues in the U.S. thatduring the Current Year increased $289.7 million, or 3.7%, as compared to the Prior Year. This increase was primarily driven by higher same store revenues from used vehicle retail sales, parts and service sales and F&I, net, partially offset by improvements in the U.K.lower same store revenues from new vehicle retail and Brazil. In the U.S., Same Store used vehicle gross profit decreasedwholesale sales.
New and used vehicle retail revenues benefited from the sale of approximately 20,300 units from our online digital platform, AcceleRide®, during the Current Year, representing approximately a 36.8% increase as compared to the Prior Year.
New vehicle retail same store revenues underperformed the Prior Year, driven by 3.3%,a shortage in new vehicle supply, leading to fewer unit sales. The shortage of new vehicle inventory continues to drive strong pricing, which partially mitigated the revenue impact of lower new vehicle unit sales. Supply chain issues, including an ongoing semiconductor and vehicle parts shortage, and other logistics challenges, continued into the Current Year for OEMs, leading to sustained lower vehicle production and deliveries of fewer vehicles to dealerships.
Used vehicle retail same store revenues outperformed the Prior Year, despite a modest decline in unit sales, as increased demand drove prices higher. Used vehicle wholesale same store revenues declined primarily driven by a decline in Same Storeunit sales driven by efforts to sell more used vehicles through retail sales rather than the wholesale market as a result of the increased demand and pricing of used vehicle retail unit sales of 2.6%, coupled withdescribed above.
Parts and service same store revenues outperformed the Prior Year, primarily driven by increases in customer pay, wholesale and collision revenues reflecting increased business activity and increased same store technician headcount through our technician recruiting and retention efforts providing greater capacity to meet increased demand. These increases were partially offset by a decrease in Same Storewarranty revenues, due to fewer new vehicles sold as a result of new vehicle shortages described above.
F&I, net same store revenues outperformed the Prior Year, primarily driven by higher income per contract on finance, VSCs and other product offerings and improved penetration rates, partially offset by a decrease from fewer same store new and used vehicle unit sales.
Gross Profit
Total gross profit PRUin the U.S. during the Current Year increased $445.1 million, or 29.5%, as compared to the Prior Year, primarily driven by the acquisition of 0.7%stores and higher same store results.
Total same store gross profit in the U.S. during the Current Year increased $104.1 million, or 7.0%, or $10. Inas compared to the U.K., Same StorePrior Year, primarily driven by higher same store gross profit from new vehicle retail sales, parts and service sales and F&I, net.
New vehicle retail same store gross profit outperformed the Prior Year, driven by an increase in new vehicle retail same store gross profit per unit sold, partially offset by a decrease in same store retail new vehicle unit sales. The increase in new vehicle retail same store gross profit per unit sold reflects the strong pricing resulting from the shortage of new vehicle inventory discussed above.
Used vehicle retail same store gross profit underperformed the Prior Year, driven by a decrease in used vehicle retail same store gross profit increased 18.6%. This improvement can be explained by the increase of 8.1% and 9.7% in Same Store gross profit PRU and retailper unit sales, respectively, resulting from improving used vehicle industry conditions and a strong performance by our operating teams. In Brazil, the increase of 17.9% in Same Store used vehicle retail gross profit resulted from a 5.7% increase in Same Store used vehicle retail gross profit PRU,sold, coupled with an 11.5% increasea decrease in Same Storesame store retail used vehicle retail unit sales. The improvementdecrease in Same Storesame store used vehicle retail gross profit and gross profit PRU in Brazil is primarily a result of the implementation of new and improved sales processes by our local operating team. For the nine months ended September 30, 2017, as compared to the same period in 2016, total Same Store used vehicle retail gross profit decreased 5.0%, as a result of a decrease in Same Store used vehicle retail units and gross profit PRU of 2.2% and 2.8%, respectively.
During the three months ended September 30, 2017, total Same Store used vehicle wholesale revenue decreased 6.6%, as compared to the same period in 2016, driven by a decline in the U.S. and partially offset by increases in the U.K. and Brazil. In the U.S., the 15.5% decrease in Same Store used vehicle wholesale revenue for the three months ended September 30, 2017 was the result of a 10.7% decrease in Same Store wholesale used vehicle unit sales primarilywas driven by strategic initiatives to sell more vehicles through retail channels and lower our relianceinflationary impacts on the auction markets. In addition,used vehicle customers coupled with higher used vehicle acquisition costs.
Our used vehicle wholesale average sales price decreased insame store gross profit underperformed the U.S.Prior Year, driven by 5.4%. In the U.K., Same Store used vehicle wholesale revenue increased 9.6%, which is explained by the 6.5% increase in Same Store wholesale used vehicle units sales coupled with a 2.9% increasedecrease in used vehicle wholesale average sales price. In Brazil, Same Store used vehicle wholesale revenue increased primarily as a result of an improvement in Same Store used vehicle wholesale average sales price, partially offset bysame store gross profit per unit sold, coupled with a decrease in Same Storesame store wholesale used vehicle unit sales. For the nine months ended September 30, 2017, as compared to the same period in 2016, total Same Store used vehicle wholesale revenue was relatively flat as a 1.5%The decrease in Same Store used vehicle wholesale unit sales was offset by a 1.2% increase in Same Store average used vehicle wholesale selling price.
Our total Same Store used vehicle wholesale gross profit increased 86.1% from a loss of $1.8 million for the three months ended September 30, 2016 to a loss of $0.3 million for the comparable period in 2017. This improvement was driven by a 84.7%, or $105, increase in our Same Store used vehicle wholesale gross profit per unit from a loss of $124 per unit for the three months ended September 30, 2016 to a loss of $19 per unit for the same period this year, coupled with a decreasesold and in total Same Storewholesale used vehicle wholesale units of 6.6%. In the U.S., used vehicle wholesale gross profit increased 90.7% for the three months ended September 30, 2017, primarily as a result of an 89.7% increase in wholesale gross profit per unit to a loss of $14,

coupled with a 10.7% decline in used vehicle wholesale units in 2017 as compared to the same period in 2016. The increase in used vehicle wholesale gross profit for the three months ended September 30, 2017, corresponds with a 3.9% increase in the Same Store used vehicle market prices during the third quarter of 2017, as reflected in the Manheim index. In the U.K., the 18.8% increase in Same Store used vehicle wholesale gross profitsales was driven by efforts to sell more used vehicles through retail sales rather than the increase of 24.3% in Same Store used vehicle wholesale market as described above.
Parts and service same store gross profit per unit to a loss of $87, partially offset byoutperformed the 6.5% growth in used vehicle wholesale units. In Brazil, the increase in Same Store used vehicle wholesalePrior Year, as described above for parts and service revenues.
F&I, net same store gross profit wasoutperformed the Prior Year, as described above for F&I, net same store revenues.
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Total same store gross margin increased 60 basis points, primarily driven by the increase in Same Store used vehicle wholesale gross profit per unit from a profit of $208 to $893. For the nine months ended September 30, 2017, our total Same Store used vehicle wholesale gross profit decreased primarily as a result of a decline in Same Store wholesale unit sales in the U.S., as compared to the same period in 2016.
As of September 30, 2017, we increased our used vehicle inventory levels by $49.5 million, or 16.8%, from December 31, 2016 and by $29.0 million, or 9.2% from September 30, 2016 to $344.3 million, primarily reflecting increased levels in the U.K. as a result of dealership acquisitions and increased trade-in activity resulting from improvedhigher new vehicle retail sales prices outpacing new vehicle costs of sales. Our consolidated days' supply of used vehicle inventory decreased to 32 days, as of September 30, 2017, as compared to 35 days as of December 31, 2016 and 34 days as of September 30, 2016. In the U.S., days' supply of used vehicle inventory decreased by three days from September 30, 2016 to 30 days as of September 30, 2017.
Parts and Service Data
(dollars in thousands)
  Three Months Ended September 30,  Nine Months Ended September 30,
  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016
Parts and Services Revenue                 
Same Stores                 
U.S. $281,735
 4.7% N/A $269,072
  $835,188
 4.9% N/A $796,455
U.K. 37,360
 5.7% 6.0% 35,360
  101,479
 (3.4)% 5.1% 105,032
Brazil 12,445
 11.7% 9.0% 11,138
  34,294
 18.2% 6.9% 29,006
Total Same Stores 331,540
 5.1% 5.0% 315,570
  970,961
 4.3% 5.0% 930,493
Transactions 11,653
     4,106
  23,561
     19,848
Total $343,193
 7.4% 7.3% $319,676
  $994,522
 4.6% 5.4% $950,341
Gross Profit                 
Same Stores                 
U.S. $151,481
 2.9% N/A $147,215
  $449,262
 3.5% N/A $433,879
U.K. 21,710
 10.3% 10.6% 19,683
  58,473
 1.0% 9.7% 57,903
Brazil 5,665
 30.9% 27.8% 4,327
  15,722
 38.9% 25.5% 11,316
Total Same Stores 178,856
 4.5% 4.4% 171,225
  523,457
 4.0% 4.8% 503,098
Transactions 6,301
     2,189
  12,921
     10,090
Total $185,157
 6.8% 6.7% $173,414
  $536,378
 4.5% 5.4% $513,188
Gross Margin                 
Same Stores                 
U.S. 53.8%     54.7%  53.8%     54.5%
U.K. 58.1%     55.7%  57.6%     55.1%
Brazil 45.5%     38.8%  45.8%     39.0%
Total Same Stores 53.9%     54.3%  53.9%     54.1%
Transactions 54.1%     53.3%  54.8%     50.8%
Total 54.0%     54.2%  53.9%     54.0%
Our total Same Store parts and service revenues increased $16.0 million, or 5.1%, to $331.5 million for the three months ended September 30, 2017, as compared to the same period in 2016, driven by growth in the U.S., U.K. and Brazil. For the three months ended September 30, 2017, our U.S. Same Store parts and service revenue increased 4.7%, or $12.7 million, despite losing over a week of sales in key markets as a result of Hurricanes Harvey and Irma, reflecting a 3.5%This increase in customer-pay parts and service revenue, a 8.2% increase in warranty parts and service revenues, a 0.7% increase in collision revenue, and a 6.4% increase in wholesale parts revenues, when compared to the same period in 2016. The growth in our

warranty and customer-pay parts and service revenue in the U.S. was supported by the continued progress we are making in adding service technicians and advisors, and expanding shop capacity where applicable. In addition, the increase in warranty parts and service revenue in the U.S. was driven by high volume recall campaigns within our Nissan, Ford, and Lexus brands that initiated during the second quarter of 2017. The increase in collision revenue was primarily attributable to strategic initiatives that continue to enhance our operational processes, the addition of technicians to increase operating capacity and the expansion of direct repair programs with insurance companies. Our collision revenues were negatively impacted as most repairs in our Houston and Beaumont markets were delayed through the month of September due to the lack of rental car availability.
Our U.K. Same Store parts and service revenues increased 5.7%, or $2.0 million, for the three months ended September 30, 2017, as compared to 2016. We realized a 10.6% increase in our Same Store parts and service revenues, reflecting a 3.1% increase in customer-pay parts and service revenue, a 7.0% increase in warranty parts and service revenues, an 8.4% increase in collision revenue, and an 11.1% increase in wholesale parts revenues, when compared to the same period in 2016. We grew our warranty parts and service revenue in the U.K. due to an increase in high volume recalls within our BMW and Audi brands that occurred during the third quarter of 2017, management initiatives designed to enhance processes and increase productivity, and the expansion of our service capacity through an increase in the number of technicians by 5.9%.
Our Same Store parts and service revenues in Brazil increased 11.7%, or $1.3 million, for the three months ended September 30, 2017, compared to the same period 2016. The increase in Brazil Same Store parts and service revenues was driven by an 8.6% increase in customer-pay parts and service revenue, a 28.1% increase in warranty parts and service revenue, and a 15.7% increase in our collision revenue, partially offset by a strategic decision to exit the wholesale parts business in Brazil at the end of 2016.
Our total Same Store parts and service revenue improved $40.5 million, or 4.3%, to $971.0 million for the nine months ended September 30, 2017, as compared to the same period in 2016 primarily reflecting increases in the U.S and Brazil that were partially offset by a decrease in U.K. business. Forsame store used vehicle gross margin, driven by inflationary impacts on our used vehicle customers and the nine months ended September 30, 2017, our U.S.ongoing new vehicle supply shortage increasing acquisition costs for used vehicles, as well as a decrease in same store parts and service revenues improved 4.9%gross margin primarily as a result of a 3.8% increase in customer-pay parts and service revenues, a 3.1% increase in wholesale parts revenues, a 10.5% increase in warranty parts and service revenues, and a 3.0% increase in collision revenues. For the nine months ended September 30, 2017, our Brazil Same Store parts and service revenues increased 18.2%, as we experienced improvements in our customer-pay parts and service, warranty parts and service, and collision businesses, when compared to the same period a year ago. Our U.K. same store parts and service revenues decreased 3.4%, which is more than explained by changes in exchange rates between periods. On a constant currency basis, our U.K. parts and service business improved 5.1% over the prior year, reflecting growth in all areas of the business.
Our total Same Store parts and service gross profit for the three months ended September 30, 2017 increased 4.5%, as compared to the same period in 2016. This increase in gross profit was driven by increases of 30.9% in Brazil, 10.3% in the U.K. and 2.9% in the U.S. The increase in Same Store parts and service gross profit in Brazil primarily reflects improvements in our warranty parts and service revenue due to an implementation of new processes and strong performance in our Honda and BMW brands. In the U.K, the increase in Same Store parts and service gross profit was primarily associated with improvements in our wholesale parts revenues driven by a growth of presence for Jaguar and Ford brands. The increases in the U.S. was driven by improvements in our warranty, wholesale parts revenues, and customer-pay parts and service primarily reflecting continued efforts to improve internal processes. For the nine months ended September 30, 2017, our total Same Store gross profit increased 4.0%, as compared to the same period a year ago, primarily driven by increases of 38.9% in Brazil, 3.5% in the U.S. and 1.0% in the U.K. The increases in Brazil, the U.S. and the U.K. were driven by our customer-pay parts and service, warranty parts and service and collision businesses.labor costs.
For the three months ended September 30, 2017, our total Same Store parts and service gross margin declined 40 basis points compared to the same period in 2016. This result was driven by a 90 basis-point decrease in the U.S., partially offset by 240 and 670 basis-point improvements in the U.K. and Brazil, respectively. The decline in the U.S. primarily reflects a decrease in internal work between the parts and service departments of our dealerships and the new and used vehicle departments, as a result of a decline in total retail vehicle sales volumes for the third quarter of 2017 as compared to the same period in 2016. The increase in the U.K. reflects higher margins in all aspects of the parts and service business as compared to the same period last year. The increase in Same Store parts and service gross margin in Brazil was the result of improved profitability in our customer-pay parts and service and collision businesses. Both the U.K. and Brazil increases reflect the impact of strategic initiatives implemented by our respective operating teams. For the nine months ended September 30, 2017, our total Same Store parts and service gross margin declined 20 basis points compared to the same period in 2016. This decline was driven by our U.S. Same Store parts and service gross margin that declined by 70 basis-points reflecting a decline in the internal work mentioned above.

Finance and Insurance Data
(dollars in thousands, except per unit amounts)
  Three Months Ended September 30,  Nine Months Ended September 30,
  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016
Retail New and Used Unit Sales                 
Same Stores                 
U.S. 61,010
 0.2%   60,880
  169,246
 (4.0)%   176,263
U.K. 13,667
 5.3%   12,974
  38,868
 6.0%   36,674
Brazil 3,183
 3.5%   3,074
  8,789
 (8.4)%   9,591
Total Same Stores 77,860
 1.2%   76,928
  216,903
 (2.5)%   222,528
Transactions 4,810
     1,681
  8,502
     6,248
Total 82,670
 5.2%   78,609
  225,405
 (1.5)%   228,776
Retail Finance Fees                 
Same Stores                 
U.S. $30,942
 (0.5)% N/A $31,082
  $86,095
 (5.8)% N/A $91,407
U.K. 5,358
 11.0% 10.9% 4,829
  15,635
 7.6% 17.0% 14,524
Brazil 650
 50.5% 46.7% 432
  1,615
 61.0% 46.7% 1,003
Total Same Stores 36,950
 1.7% 1.6% 36,343
  103,345
 (3.4)% (2.2)% 106,934
Transactions 2,298
     420
  3,527
     1,614
Total $39,248
 6.8% 6.7% $36,763
  $106,872
 (1.5)% (0.2)% $108,548
Vehicle Service Contract Fees                 
Same Stores                 
U.S. $35,658
 (4.4)% N/A $37,308
  $106,853
 —% N/A $106,878
U.K. 145
 (7.6)% (7.7)% 157
  469
 25.4% 35.6% 374
Brazil —
 —% —% —
  —
 —% —% —
Total Same Stores 35,803
 (4.4)% (4.4)% 37,465
  107,322
 0.1% 0.1% 107,252
Transactions 303
     477
  463
     1,247
Total $36,106
 (4.8)% (4.8)% $37,942
  $107,785
 (0.7)% (0.6)% $108,499
Insurance and Other                 
Same Stores                 
U.S. $28,595
 1.1% N/A $28,295
  $81,516
 (0.1)% N/A $81,634
U.K. 3,984
 9.2% 9.1% 3,648
  10,394
 (9.1)% (1.2)% 11,440
Brazil 1,507
 29.6% 26.4% 1,163
  4,298
 35.4% 22.3% 3,175
Total Same Stores 34,086
 3.0% 2.8% 33,106
  96,208
 —% 0.5% 96,249
Transactions 1,553
     899
  3,432
     3,123
Total $35,639
 4.8% 4.7% $34,005
  $99,640
 0.3% 0.9% $99,372
Total Finance and Insurance Revenues                 
Same Stores                 
U.S. $95,195
 (1.5)% N/A $96,685
  $274,464
 (1.9)% N/A $279,919
U.K. 9,487
 9.9% 9.8% 8,634
  26,498
 0.6% 9.4% 26,338
Brazil 2,157
 35.2% 31.9% 1,595
  5,913
 41.5% 28.1% 4,178
Total Same Stores 106,839
 (0.1)% (0.1)% 106,914
  306,875
 (1.1)% (0.6)% 310,435
Transactions 4,154
     1,796
  7,422
     5,984
Total $110,993
 2.1% 2.0% $108,710
  $314,297
 (0.7)% —% $316,419

Finance and Insurance Revenues per Retail Unit Sold                 
Same Stores                 
U.S. $1,560
 (1.8)% N/A $1,588
  $1,622
 2.1% N/A $1,588
U.K. $694
 4.4% 4.2% $665
  $682
 (5.0)% 3.2% $718
Brazil $678
 30.6% 27.4% $519
  $673
 54.4% 39.8% $436
Total Same Stores $1,372
 (1.3)% (1.3)% $1,390
  $1,415
 1.4% 2.0% $1,395
Transactions $864
 
   $1,068
  $873
 
   $958
Total $1,343
 (2.9)% (3.0)% $1,383
  $1,394
 0.8% 1.5% $1,383
Adjusted Total Finance and Insurance Revenues (1)
                 
Same Stores                 
U.S. $101,745
 5.2% N/A $96,685
  $281,014
 0.4% N/A $279,919
U.K. 9,487
 9.9% 9.8% 8,634
  26,498
 0.6% 9.4% 26,338
Brazil 2,157
 35.2% 31.9% 1,595
  5,913
 41.5% 28.1% 4,178
Total Same Stores 113,389
 6.1% 6.0% 106,914
  313,425
 1.0% 1.5% 310,435
Transactions 4,154
     1,796
  7,422
     5,984
Total $117,543
 8.1% 8.1% $108,710
  $320,847
 1.4% 2.1% $316,419
Adjusted Finance and Insurance Revenues per Retail Unit Sold (1)
                 
Same Stores                 
U.S. $1,668
 5.0% N/A $1,588
  $1,660
 4.5% N/A $1,588
U.K. $694
 4.4% 4.2% $665
  $682
 (5.0)% 3.2% $718
Brazil $678
 30.6% 27.4% $519
  $673
 54.4% 39.8% $436
Total Same Stores $1,456
 4.7% 4.7% $1,390
  $1,445
 3.6% 4.2% $1,395
Transactions $864
     $1,068
  $873
     $958
Total $1,422
 2.8% 2.8% $1,383
  $1,423
 2.9% 3.6% $1,383
(1)
See "Non-GAAP Financial Measures" for more details.
Our total Same Store Finance and Insurance revenues remained relatively flat for the three months ended September 30, 2017, as compared to the same period in 2016. After adjusting for $6.6 million in chargeback expense for reserves associated with expected finance and insurance product cancellations on vehicles sold by the Company and damaged by flooding from Hurricane Harvey, our adjusted total Same Store finance and insurance revenues increased $6.5 million, or 6.1%, to $113.4 million for the three months ended September 30, 2017, as all of our segments experienced improvements compared to the same period in 2016. Our adjusted U.S. Same Store finance and insurance revenue improved $5.1 million, or 5.2%, primarily as a result of increases in income per contract and penetration rates for most of our major U.S. product offerings. Additionally, our U.S. Same Store finance and insurance revenue was bolstered by an increase in retail sales volume. In the U.K., our Same Store finance and insurance revenues increased 9.9%, as compared to the same period in 2016, driven by increases in income per contract for most of our product offerings and a 5.3% increase in our retail sales volume, partially offset by declines in our penetration rates and an increase in our overall chargeback experience. Our Brazil Same Store finance and insurance revenue increased $0.6 million, or 35.2%, for the three months ended September 30, 2017. Our total Same Store finance and insurance revenue PRU declined 1.3% for the quarter ended September 30, 2017, to $1,372, as compared to the same period in 2016. Our adjusted total Same Store finance and insurance revenue PRU improved 4.7% for the quarter ended September 30, 2017, to $1,456. This improvement can be explained by increases in PRU for all of our segments compared to the same period in 2016.
For the nine months ended September 30, 2017, our total Same Store finance and insurance revenues decreased $3.6 million, or 1.1%, as compared to the same period a year ago. On an adjusted basis, our total Same Store finance and insurance revenues increased 1.0%, or $3.0 million, for the nine months ended September 30, 2017, as compared to the same period in 2016, driven by improvements in all three of our segments. Our adjusted U.S. Same Store finance and insurance revenues increased $1.1 million, or 0.4%, for the nine months ended September 30, 2017, as compared to the same period in 2016, as declines in retail sales volumes were more than offset by improvements in penetration rates and income per contract in many of our U.S. product offerings. In the U.K., our Same Store finance and insurance revenues increased $0.2 million, or 0.6%, primarily related to a 6.0% increase in total retail sales volume and improvements in income per contract for our retail finance and vehicle service contract fees. On a constant currency basis, our U.K. Same Store finance and revenue increased 9.4% as compared to the same period in 2016. Our Same Store finance and insurance revenues in Brazil increased 41.5%, or $1.7 million, for the nine months ended September 30, 2017, as compared to the same period in 2016. This improvement was related to increases in penetration rates and income per contract for our retail finance fees. For the nine months ended September 30, 2017, our total Same Store finance and insurance revenues PRU increased 1.4% to $1,415, as compared to the same period in 2016. On an adjusted basis, our total Same Store finance and insurance revenues PRU increased 3.6% to $1,445, as compared

to the same period in 2016, which is explained by improvements in the U.S. and Brazil of 4.5% and 54.4%, respectively, as compared to the same period in 2016. These increases were partially offset by a 5.0% decline in the U.K. that was driven by the change in exchange rates between periods as, on a constant currency basis, Same Store finance and insurance revenues PRU increased 3.2% when compared to the same period in 2016.








Selling, General and Administrative Data
(dollars in thousands)
  Three Months Ended September 30,  Nine Months Ended September 30,
  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016
Personnel                 
Same Stores                 
U.S. $159,819
 2.8% N/A $155,512
  $466,274
 0.9% N/A $462,224
U.K. 24,689
 8.9% 9.1% 22,664
  67,618
 1.5% 10.3% 66,640
Brazil 7,041
 10.6% 7.9% 6,366
  20,103
 28.5% 16.5% 15,650
Total Same Stores 191,549
 3.8% 3.7% 184,542
  553,995
 1.7% 2.5% 544,514
Transactions 8,282
     2,928
  16,490
     13,167
Total $199,831
 6.6% 6.5% $187,470
  $570,485
 2.3% 3.2% $557,681
Advertising                 
Same Stores                 
U.S. $16,886
 (3.8)% N/A $17,545
  $51,355
 2.6% N/A $50,037
U.K. 1,504
 (6.2)% (5.9)% 1,604
  3,979
 (6.7)% 1.3% 4,265
Brazil 195
 (54.3)% (55.5)% 427
  460
 (47.4)% (52.0)% 874
Total Same Stores 18,585
 (5.1)% (5.1)% 19,576
  55,794
 1.1% 1.7% 55,176
Transactions 1,058
     409
  1,778
     1,354
Total $19,643
 (1.7)% (1.7)% $19,985
  $57,572
 1.8% 2.5% $56,530
Rent and Facility Costs                 
Same Stores                 
U.S. $21,018
 5.3% N/A $19,966
  $61,758
 0.9% N/A $61,216
U.K. 4,149
 4.6% 5.1% 3,967
  11,320
 (1.7)% 6.8% 11,515
Brazil 2,253
 12.9% 10.0% 1,996
  6,476
 21.7% 9.6% 5,323
Total Same Stores 27,420
 5.8% 5.6% 25,929
  79,554
 1.9% 2.4% 78,054
Transactions 1,788
     1,213
  4,675
     5,258
Total $29,208
 7.6% 7.5% $27,142
  $84,229
 1.1% 1.7% $83,312
Other SG&A                 
Same Stores                 
U.S. $61,139
 22.0% N/A $50,128
  $158,161
 4.3% N/A $151,685
U.K. 11,196
 5.6% 6.0% 10,601
  30,421
 2.3% 11.0% 29,739
Brazil 3,257
 9.6% 6.8% 2,973
  7,654
 4.2% (5.6)% 7,345
Total Same Stores 75,592
 18.7% 18.6% 63,702
  196,236
 4.0% 4.9% 188,769
Transactions 4,053
     707
  8,152
     5,400
Total $79,645
 23.7% 23.6% $64,409
  $204,388
 5.3% 6.5% $194,169
Total SG&A                 
Same Stores                 
U.S. $258,862
 6.5% N/A $243,151
  $737,548
 1.7% N/A $725,162
U.K. 41,538
 7.0% 7.2% 38,836
  113,338
 1.1% 9.8% 112,159
Brazil 12,746
 8.4% 5.7% 11,762
  34,693
 18.8% 7.6% 29,192
Total Same Stores 313,146
 6.6% 6.5% 293,749
  885,579
 2.2% 3.0% 866,513
Transactions 15,181
     5,257
  31,095
     25,179
Total $328,327
 9.8% 9.7% $299,006
  $916,674
 2.8% 3.7% $891,692

Total Gross Profit                 
Same Stores                 
U.S. $349,888
 2.1% N/A $342,602
  $1,009,618
 (0.1)% N/A $1,010,179
U.K. 50,900
 8.6% 8.6% 46,861
  141,714
 (1.6)% 7.1% 143,963
Brazil 14,191
 22.4% 19.4% 11,596
  38,854
 29.3% 17.0% 30,044
Total Same Stores 414,979
 3.5% 3.4% 401,059
  1,190,186
 0.5% 1.2% 1,184,186
Transactions 16,441
     5,609
  29,648
     21,702
Total $431,420
 6.1% 6.0% $406,668
  $1,219,834
 1.2% 2.0% $1,205,888
SG&A as a % of Gross Profit                 
Same Stores                 
U.S. 74.0%     71.0%  73.1%     71.8%
U.K. 81.6%     82.9%  80.0%     77.9%
Brazil 89.8%     101.4%  89.3%     97.2%
Total Same Stores 75.5%     73.2%  74.4%     73.2%
Transactions 92.3%     93.7%  104.9%     116.0%
Total 76.1%     73.5%  75.1%     73.9%
Adjusted Total SG&A (1)
                 
Same Stores                 
U.S. $249,195
 2.7% N/A $242,701
  $729,071
 1.4% N/A $718,875
U.K. 41,538
 7.0% 7.2% 38,836
  113,050
 1.3% 10.1% 111,598
Brazil 12,746
 11.0% 8.2% 11,488
  34,693
 20.0% 8.6% 28,918
Total Same Stores 303,479
 3.6% 3.5% 293,025
  876,814
 2.0% 2.8% 859,391
Transactions 15,181
     6,433
  31,095
     20,618
Total $318,660
 6.4% 6.4% $299,458
  $907,909
 3.2% 3.4% $880,009
Adjusted SG&A as a % of Gross Profit (1)
                 
Same Stores                 
U.S. 69.9%     70.8%  71.7%     71.2%
U.K. 81.6%     82.9%  79.8%     77.5%
Brazil 89.8%     99.1%  89.3%     96.3%
Total Same Stores 72.0%     73.1%  73.3%     72.6%
Transactions 92.3%     114.7%  104.9%     95.0%
Total 72.8%     73.6%  74.0%     73.5%
                  
Employees 14,200     13,300  14,200     13,300
(1)See "Non-GAAP Financial Measures" for more details.
Our SG&A consists primarily of salaries, commissions and incentive-based compensation, as well as rent and facility costs, advertising, insurance, benefits, utilities and other fixed expenses. We believe that the majority of our personnel, all of our advertising and a portion of certain other expenses are variable and can be adjusted in response to changing business conditions. We continue to aggressively pursue opportunities that take advantage of our size and negotiating leverage with our vendors and service providers in order to more effectively rationalize our cost structure.Expenses
Our total Same Store SG&A increased 6.6% for the three months ended September 30, 2017, as compared to the same period in 2016, explained by increases of 8.4%, 7.0%, and 6.5% in Brazil, the U.K. and the U.S., respectively, as well as the mix effect from our growth in the U.K. operations that inherently have a higher cost structure. After adjusting for non-core Same Store other SG&A charges of $8.1 million related to catastrophic events, $0.8 million in losses on real estate and dealership transactions and $0.7 million associated with a legal settlement, our adjusted total Same Store SG&A increased 3.6% for the three months ended September 30, 2017, as compared to the same period in 2016. On a comparable basis, adjusted total Same Store SG&A for three months ended September 30, 2016 excluded non-core Same Store other SG&A items of $0.5 million in deductible charges related to catastrophic events and $0.3 million in foreign transaction tax. Our total Same Store SG&A increased 2.2% for the nine months ended September 30, 2017, as compared to the same period in 2016, as a result of increases of 18.8%, 1.7%, and 1.1% in Brazil, the U.S. and the U.K., respectively. After adjusting for non-core Same Store

other SG&A items, including a pre-tax gain of $1.1 million related to legal settlements, $8.8 million in charges related to catastrophic events, $0.8 million in losses on real estate and dealership transactions, and $0.3 million of costs related to dealership acquisitions, our adjusted total Same Store SG&A increased 2.0% for the nine months ended September 30, 2017, as compared to the same period in 2016. On a comparable basis, adjusted total Same Store SG&A for nine months ended September 30, 2016 excluded non-core Same Store other SG&A items of $5.9 million in deductible charges related to catastrophic events, $0.6 million in costs related to dealership acquisitions, $0.4 million of losses related to real estate and dealership transactions, and $0.3 million in foreign transaction tax.
Our total Same Store personnel costs increased 3.8% for the three months ended September 30, 2017, to $191.5 million, as compared to the same period in 2016, explained by increases of 2.8%, 8.9%, and 10.6% in the U.S., U.K., and Brazil, respectively. The increase in Same Store personnel costs in the U.S. was primarily explained by an increase in variable commission payments, largely driven by the improved retail new vehicle sales and profitability performance in our Houston and Beaumont markets, as a result of flooding from Hurricane Harvey in September 2017, as well as the impact of non-core charges for disaster pay for our employees who were Hurricane Harvey and Irma victims. The increases in the U.K. and Brazil primarily relate to variable costs associated with an overall improvement in profitability in the region. For the nine months ended September 30, 2017, as compared to the same period in 2016, our total Same Store personnel costs increased 1.7%, more than explained by increases of 0.9%, 28.5%, and 1.5% in the U.S., Brazil, and the U.K., respectively. The increase in Brazil was primarily explained by an increase in variable commission payments as a result of a 10.9% overall increase in revenues.
For the three months ended September 30, 2017, our consolidated Same Store advertising costs decreased 5.1% to $18.6 million, explained by decreases of 3.8%, 54.3%, and 6.2% in the U.S., Brazil, and the U.K., respectively. The decrease in the U.S., for the three months ended September 30, 2017, was the result of initiatives to control costs in response to the overall decline in sales in the retail automotive industry. The decrease in Brazil, for the three months ended September 30, 2017, can be explained by management's cost rationalization efforts through most of 2017. The decrease in the U.K, for the three months ended September 30, 2017, was the result of ongoing initiatives to control costs in response to the decline in the general economy, as well as the retail automotive industry. For the nine months ended September 30, 2017, as compared to the same period in 2016, our consolidated Same Store advertising costs increased 1.1%, to $55.8 million, primarily explained by a 2.6% increase in the U.S., partially offset by decreases of 47.4% and 6.7% in Brazil and the U.K., respectively. The decrease in Brazil was a result of our ongoing efforts to reduce costs and increase margins. The decrease in the U.K. for the nine months ended September 30, 2017 was more than explained by the change in exchange rates, as on a constant currency basis, Same Store advertising costs increased 1.3%.
Our consolidated Same Store rent and facility costs increased 5.8% to $27.4 million for the three months ended September 30, 2017, as compared to the same period a year ago, explained by increases of 5.3%, 12.9%, and 4.6% in the U.S., Brazil, and the U.K., respectively. The increase in the U.S. is more than explained by non-core charges for building and property damage as a result of Hurricanes Harvey and Irma. We continue to execute on our strategy to own more real estate, thereby reducing rent costs, and on initiatives to control costs. The increase in Brazil resulted from additional rent expense incurred as a result of annual increases in rental rates during 2017. The increase in the U.K. was more than explained by an increase in property taxes, as well as rent expense, associated with new facilities. For the nine months ended September 30, 2017, our consolidated Same Store rent and facility costs increased 5.8% to $27.4 million, as compared to the same period a year ago, more than explained by increases of 21.7% and 0.9%, in Brazil and the U.S., respectively, partially offset by a decrease of 1.7% in the U.K. The increase in Brazil resulted from additional rent expense incurred as a result of annual increases in rental rates during 2017. The decrease in the U.K. for the nine months ended September 30, 2017 was more than explained by the change in exchange rates, as on a constant currency basis, Same Store rent and facility costs increased 6.8%, reflecting increases in property taxes and rent expense for new facilities.
For the three months ended September 30, 2017, our total Same Store other SG&A increased 18.7% to $75.6 million as compared to the same period in 2016, resulting from increases of 22.0%, 5.6%, and 9.6% in the U.S., U.K., and Brazil, respectively. The 22.0% increase in the U.S. can be partially attributed to the non-core charges for vehicle damage as a result of Hurricane Harvey. The increases in the U.K. and Brazil were also primarily explained by increases in expenses that generally correlate to the overall growth of gross profit that increased 8.6% and 22.4%, respectively. For the nine months ended September 30, 2017, as compared to 2016, our total Same Store other SG&A increased 4.0% to $196.2 million, reflecting increases of 4.3%, 2.3%, and 4.2% in the U.S., U.K., and Brazil, respectively.
Our total Same Store SG&A as a percentage of gross profit fordeclined 51 basis points and increased 126 basis points on an as reported and same store basis, respectively, compared to the three months ended September 30, 2017,Prior Year. The increase in SG&A as a percentage of gross profit on a same store basis was partially driven by the decline in used vehicle same store gross profit described above as well as the following factors impacting total SG&A.
Total SG&A expenses in the U.S. during the Current Year increased $250.1 million, or 28.3%, as compared to 2016,the Prior Year, primarily driven by the acquisition of stores. Total same store SG&A expenses in the U.S. during the Current Year increased 230$80.8 million, or 9.3%, as compared to the Prior Year, primarily driven by increased labor costs and an increase in other variable expenses associated with the rise in certain business activities.

36
Table of Contents
Reported Operating Data — U.K.
(In millions, except unit data)
Three Months Ended September 30,
20222021Increase/ (Decrease)% ChangeCurrency Impact on Current Period ResultsConstant Currency % Change
Revenues:
New vehicle retail sales$296.4 $305.4 $(9.0)(2.9)%$(53.8)14.7 %
Used vehicle retail sales276.5 328.0 (51.5)(15.7)%(47.3)(1.3)%
Used vehicle wholesale sales28.3 38.1 (9.8)(25.7)%(4.9)(12.9)%
Total used304.8 366.1 (61.3)(16.7)%(52.2)(2.5)%
Parts and service sales61.8 63.4 (1.5)(2.4)%(10.7)14.5 %
F&I, net16.1 15.6 0.5 3.1 %(2.8)21.1 %
Total revenues$679.1 $750.4 $(71.3)(9.5)%$(119.5)6.4 %
Gross profit:
New vehicle retail sales$25.9 $21.5 $4.5 20.8 %$(4.9)43.7 %
Used vehicle retail sales15.5 23.9 (8.5)(35.5)%(2.7)(24.4)%
Used vehicle wholesale sales(0.3)4.1 (4.4)(106.3)%— (107.4)%
Total used15.2 28.1 (12.9)(45.9)%(2.6)(36.6)%
Parts and service sales36.1 38.5 (2.4)(6.2)%(6.3)10.1 %
F&I, net16.1 15.6 0.5 3.1 %(2.8)21.1 %
Total gross profit$93.3 $103.7 $(10.3)(10.0)%$(16.6)6.0 %
Gross margin:
New vehicle retail sales8.8 %7.0 %1.7 %
Used vehicle retail sales5.6 %7.3 %(1.7)%
Used vehicle wholesale sales(0.9)%10.9 %(11.8)%
Total used5.0 %7.7 %(2.7)%
Parts and service sales58.4 %60.8 %(2.4)%
Total gross margin13.7 %13.8 %(0.1)%
Units sold:
Retail new vehicles sold7,492 7,381 111 1.5 %
Retail used vehicles sold10,255 10,810 (555)(5.1)%
Wholesale used vehicles sold3,003 4,202 (1,199)(28.5)%
Total used13,258 15,012 (1,754)(11.7)%
Average sales price per unit sold:
New vehicle retail$39,563 $41,370 $(1,808)(4.4)%$(7,177)13.0 %
Used vehicle retail$26,967 $30,346 $(3,380)(11.1)%$(4,611)4.1 %
Gross profit per unit sold:
New vehicle retail sales$3,464 $2,910 $554 19.0 %$(655)41.6 %
Used vehicle retail sales$1,507 $2,215 $(709)(32.0)%$(259)(20.3)%
Used vehicle wholesale sales$(87)$987 $(1,074)(108.8)%$15 (110.3)%
Total used$1,146 $1,872 $(726)(38.8)%$(197)(28.2)%
F&I PRU$905 $857 $49 5.7 %$(158)24.1 %
Other:
SG&A expenses$65.1 $67.6 $(2.5)(3.6)%$(11.3)13.1 %
SG&A as % gross profit69.8 %65.2 %4.6 %


37
Table of Contents
Same Store Operating Data — U.K.
(In millions, except unit data)
Three Months Ended September 30,
20222021Increase/ (Decrease)% ChangeCurrency Impact on Current Period ResultsConstant Currency % Change
Revenues:
New vehicle retail sales$292.0 $305.4 $(13.4)(4.4)%$(52.8)12.9 %
Used vehicle retail sales274.2 328.0 (53.8)(16.4)%(46.8)(2.2)%
Used vehicle wholesale sales28.1 38.1 (10.0)(26.2)%(4.8)(13.5)%
Total used302.3 366.1 (63.8)(17.4)%(51.6)(3.3)%
Parts and service sales58.7 60.5 (1.9)(3.1)%(10.1)13.6 %
F&I, net16.0 15.6 0.4 2.5 %(2.8)20.4 %
Total revenues$668.9 $747.6 $(78.7)(10.5)%$(117.4)5.2 %
Gross profit:
New vehicle retail sales$25.5 $21.5 $4.0 18.7 %$(4.8)41.1 %
Used vehicle retail sales15.2 23.9 (8.7)(36.5)%(2.6)(25.6)%
Used vehicle wholesale sales(0.3)4.1 (4.4)(106.3)%— (107.3)%
Total used14.9 28.1 (13.1)(46.8)%(2.6)(37.7)%
Parts and service sales34.8 37.2 (2.4)(6.4)%(6.0)9.8 %
F&I, net16.0 15.6 0.4 2.5 %(2.8)20.4 %
Total gross profit$91.2 $102.4 $(11.1)(10.9)%$(16.2)5.0 %
Gross margin:
New vehicle retail sales8.7 %7.0 %1.7 %
Used vehicle retail sales5.5 %7.3 %(1.8)%
Used vehicle wholesale sales(0.9)%10.9 %(11.8)%
Total used4.9 %7.7 %(2.7)%
Parts and service sales59.4 %61.5 %(2.1)%
Total gross margin13.6 %13.7 %(0.1)%
Units sold:
Retail new vehicles sold7,395 7,381 14 0.2 %
Retail used vehicles sold10,166 10,810 (644)(6.0)%
Wholesale used vehicles sold2,986 4,202 (1,216)(28.9)%
Total used13,152 15,012 (1,860)(12.4)%
Average sales price per unit sold:
New vehicle retail$39,485 $41,370 $(1,886)(4.6)%$(7,141)12.7 %
Used vehicle retail$26,972 $30,346 $(3,374)(11.1)%$(4,602)4.0 %
Gross profit per unit sold:
New vehicle retail sales$3,448 $2,910 $539 18.5 %$(650)40.9 %
Used vehicle retail sales$1,496 $2,215 $(719)(32.5)%$(256)(20.9)%
Used vehicle wholesale sales$(87)$987 $(1,074)(108.8)%$15 (110.3)%
Total used$1,137 $1,872 $(735)(39.3)%$(195)(28.9)%
F&I PRU$909 $857 $53 6.1 %$(159)24.7 %
Other:
SG&A expenses$63.6 $66.4 $(2.8)(4.2)%$(11.1)12.4 %
SG&A as % gross profit69.7 %64.9 %4.8 %


38
Table of Contents
U.K. Region — Three Months Ended September 30, 2022 Compared to 2021
The following discussion of our U.K. operating results is on an as reported and same store basis. The difference between as reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings. The GBP to USD foreign currency exchange rate has fluctuated from £1 to $1.35 at September 30, 2021, to £1 to $1.11 at September 30, 2022, or a decline of 17.3%, leading to a decrease in U.K. results when translated from GBP to USD in the Current Quarter when compared to the Prior Year Quarter.
Revenues
Total revenues in the U.K. during the Current Quarter decreased $71.3 million, or 9.5%, as compared to the Prior Year Quarter. This decrease was primarily driven by the negative impact of foreign currency exchange rates, partially offset by the acquisition of stores.
Total same store revenues in the U.K. during the Current Quarter decreased $78.7 million, or 10.5%, as compared to the Prior Year Quarter, primarily driven by the negative impact of foreign currency exchange rates. On a constant currency basis, pointstotal same store revenues increased 5.2%, driven by outperformances across all revenue streams except used vehicle retail and wholesale sales.
New vehicle retail same store revenues, on a constant currency basis, outperformed the Prior Year Quarter. A shortage in new vehicle supply continues to 75.5%drive strong pricing on a constant currency basis. Supply chain issues, including an ongoing semiconductor and vehicle parts shortage, and other logistics challenges, continued into the Current Quarter for OEMs, leading to sustained lower vehicle production and deliveries of fewer vehicles to dealerships. We ended the Current Quarter with a U.K. new vehicle inventory supply of 20 days, which is consistent with the Prior Year Quarter’s new inventory supply of 19 days.
Used vehicle retail same store revenues, on a constant currency basis, underperformed the Prior Year Quarter due to a decline in retail used vehicle unit sales, driven by inflationary impacts on our used vehicle customers and the ongoing new vehicle supply shortage impacting the supply of used vehicles, partially offset by a higher average sales price on a constant currency basis.
Parts and service same store revenues, on a constant currency basis, outperformed the Prior Year Quarter, driven by increases in all of our parts and service business lines reflecting higher business activity as compared to the Prior Year Quarter.
F&I, net same store revenues, on a constant currency basis, outperformed the Prior Year Quarter, driven by improved penetration rates on the majority of our products and higher income per contract on finance and VSCs, partially offset by fewer retail used vehicles sold in the Current Quarter.
Gross Profit
Total gross profit in the U.K. during the Current Quarter decreased $10.3 million, or 10.0%, as compared to the Prior Year Quarter, primarily driven by the negative impact of foreign currency exchange rates.
Total same store gross profit in the U.K. during the Current Quarter decreased $11.1 million, or 10.9%, as compared to the Prior Year Quarter. On a constant currency basis, total same store gross profit increased 5.0%, primarily driven by improvements in gross profit from new vehicle retail sales, parts and service sales and F&I, net.
New vehicle retail same store gross profit, on a 300constant currency basis, pointoutperformed the Prior Year Quarter, driven by an increase in new vehicle retail same store gross profit per unit, resulting from increased prices as discussed above.
Used vehicle retail same store gross profit, on a constant currency basis, underperformed the U.S., partially offsetPrior Year Quarter, driven by improvementsa decrease in same store used vehicle retail gross profit per unit sold, coupled with fewer same store retail used vehicle unit sales. The decrease in same store used vehicle retail gross profit and retail used vehicle unit sales was driven by inflationary impacts on customers, coupled with the ongoing new vehicle supply shortage impacting the supply of 1,160used vehicles.
Parts and 130service same store gross profit, on a constant currency basis, outperformed the Prior Year Quarter, driven by the increases in our parts and service business activities discussed above.
F&I, net same store gross profit, on a constant currency basis, outperformed the Prior Year Quarter as described above for F&I, net same store revenues.
Total same store gross margin in the U.K. decreased 5 basis points, in Brazilprimarily driven by lower same store used vehicle retail gross margin caused by inflationary impacts on our used vehicle customers and the U.K., respectively. The increase inongoing new vehicle supply shortage impacting the U.S. can be more than explainedsupply of used vehicles, and lower parts and service gross margin caused by the non-core charges related to catastrophic events mentioned above. The improvements in Brazil and the U.K. were attributable to the growth in Same Store gross profit, as well as the cost rationalization efforts discussed above. For the nine months ended September 30, 2017, as compared to the same period in 2016, our total Same Store increased labor costs.
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SG&A Expenses
SG&A as a percentage of gross profit increased 120459 and 484 basis points, on an as reported and same store basis, respectively, compared to 74.4%, more than explainedthe Prior Year Quarter, primarily driven by a 210the decline in used vehicle retail and 130 basis point increasesparts and service gross profit as described above, as well as the factors below impacting SG&A.
Total SG&A expenses in the U.K. and U.S., respectively. Offsetting these increases, our Same Store SG&A as a percentage of gross profit in Brazil improved 790

basis points to 89.3% forduring the nine months ended September 30, 2017 compared to a year ago, primarily reflecting continued leverage of our cost structure realized with a growth in gross profit. On an adjusted basis, total Same Store SG&A as a percentage of gross profit improved 110 basis points to 72.0% for the three months ended September 30, 2017, as compared to 2016, driven by improvements of 930, 130, and 90 basis points in Brazil, the U.K. and U.S.Current Quarter decreased $2.5 million, or 3.6%, respectively. For the nine months ended September 30, 2017, as compared to the Prior Year Quarter. Total same periodstore SG&A expenses in 2016, our adjustedthe U.K. during the Current Quarter decreased $2.8 million, or 4.2%, as compared to the Prior Year Quarter. These decreases were primarily driven by the impact of foreign currency exchange rates. On a constant currency basis, total same store SG&A expenses increased 12.4%, primarily driven by increased labor costs, an increase in other variable expenses associated with the rise in certain business activities, including costs associated with recent acquisitions, and Prior Year government COVID-19 assistance, inclusive of the temporary suspension of city tax, which did not recur in the Current Year.
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Reported Operating Data — U.K.
(In millions, except unit data)
Nine Months Ended September 30,
20222021Increase/ (Decrease)% ChangeCurrency Impact on Current Period ResultsConstant Currency % Change
Revenues:
New vehicle retail sales$898.0 $869.7 $28.3 3.3 %$(97.6)14.5 %
Used vehicle retail sales906.3 820.5 85.8 10.5 %(91.5)21.6 %
Used vehicle wholesale sales101.2 98.4 2.8 2.8 %(10.0)12.9 %
Total used1,007.5 919.0 88.6 9.6 %(101.4)20.7 %
Parts and service sales183.4 170.2 13.2 7.7 %(19.0)18.9 %
F&I, net51.4 41.9 9.6 22.8 %(5.4)35.7 %
Total revenues$2,140.3 $2,000.7 $139.6 7.0 %$(223.4)18.1 %
Gross profit: 
New vehicle retail sales$79.6 $54.6 $25.0 45.8 %$(9.0)62.3 %
Used vehicle retail sales50.4 52.9 (2.5)(4.7)%(5.0)4.7 %
Used vehicle wholesale sales(1.8)6.5 (8.3)(127.2)%0.2 (129.9)%
Total used48.7 59.5 (10.8)(18.1)%(4.8)(10.0)%
Parts and service sales109.5 102.1 7.4 7.2 %(11.3)18.3 %
F&I, net51.4 41.9 9.6 22.8 %(5.4)35.7 %
Total gross profit$289.2 $258.1 $31.2 12.1 %$(30.6)23.9 %
Gross margin:
New vehicle retail sales8.9 %6.3 %2.6 %
Used vehicle retail sales5.6 %6.5 %(0.9)%
Used vehicle wholesale sales(1.7)%6.6 %(8.4)%
Total used4.8 %6.5 %(1.6)%
Parts and service sales59.7 %60.0 %(0.3)%
Total gross margin13.5 %12.9 %0.6 %
Units sold:
Retail new vehicles sold21,922 21,316 606 2.8 %
Retail used vehicles sold30,505 28,416 2,089 7.4 %
Wholesale used vehicles sold9,556 11,464 (1,908)(16.6)%
Total used40,061 39,880 181 0.5 %
Average sales price per unit sold:
New vehicle retail$40,962 $40,800 $162 0.4 %$(4,452)11.3 %
Used vehicle retail$29,711 $28,876 $835 2.9 %$(2,999)13.3 %
Gross profit per unit sold:
New vehicle retail sales$3,633 $2,563 $1,070 41.8 %$(412)57.8 %
Used vehicle retail sales$1,653 $1,863 $(210)(11.3)%$(164)(2.5)%
Used vehicle wholesale sales$(185)$568 $(753)(132.6)%$19 (135.9)%
Total used$1,215 $1,491 $(276)(18.5)%$(121)(10.4)%
F&I PRU$981 $842 $139 16.5 %$(103)28.7 %
Other:
SG&A expenses$196.6 $173.3 $23.3 13.4 %$(20.6)25.3 %
SG&A as % gross profit68.0 %67.1 %0.8 %
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Same Store Operating Data — U.K.
(In millions, except unit data)
Nine Months Ended September 30,
20222021Increase/ (Decrease)% ChangeCurrency Impact on Current Period ResultsConstant Currency % Change
Revenues:
New vehicle retail sales$844.5 $869.3 $(24.9)(2.9)%$(93.3)7.9 %
Used vehicle retail sales831.4 819.6 11.8 1.4 %(86.0)11.9 %
Used vehicle wholesale sales95.0 98.3 (3.3)(3.3)%(9.5)6.3 %
Total used926.4 917.9 8.6 0.9 %(95.5)11.3 %
Parts and service sales166.7 161.9 4.8 3.0 %(17.5)13.8 %
F&I, net48.5 41.8 6.7 16.0 %(5.2)28.4 %
Total revenues$1,986.2 $1,991.0 $(4.8)(0.2)%$(211.5)10.4 %
Gross profit:
New vehicle retail sales$74.5 $54.6 $19.9 36.4 %$(8.6)52.2 %
Used vehicle retail sales46.0 52.9 (6.9)(13.1)%(4.7)(4.3)%
Used vehicle wholesale sales(1.6)6.6 (8.1)(123.7)%0.2 (126.1)%
Total used44.4 59.5 (15.0)(25.3)%(4.5)(17.7)%
Parts and service sales99.9 98.3 1.6 1.6 %(10.6)12.4 %
F&I, net48.5 41.8 6.7 16.0 %(5.2)28.4 %
Total gross profit$267.4 $254.2 $13.2 5.2 %$(28.9)16.5 %
Gross margin:
New vehicle retail sales8.8 %6.3 %2.5 %
Used vehicle retail sales5.5 %6.5 %(0.9)%
Used vehicle wholesale sales(1.6)%6.7 %(8.3)%
Total used4.8 %6.5 %(1.7)%
Parts and service sales59.9 %60.7 %(0.8)%
Total gross margin13.5 %12.8 %0.7 %
Units sold:
Retail new vehicles sold20,406 21,300 (894)(4.2)%
Retail used vehicles sold27,587 28,359 (772)(2.7)%
Wholesale used vehicles sold8,781 11,439 (2,658)(23.2)%
Total used36,368 39,798 (3,430)(8.6)%
Average sales price per unit sold:
New vehicle retail$41,383 $40,813 $569 1.4 %$(4,571)12.6 %
Used vehicle retail$30,138 $28,900 $1,238��4.3 %$(3,118)15.1 %
Gross profit per unit sold:
New vehicle retail sales$3,650 $2,563 $1,087 42.4 %$(422)58.9 %
Used vehicle retail sales$1,666 $1,865 $(199)(10.7)%$(169)(1.6)%
Used vehicle wholesale sales$(177)$573 $(750)(130.9)%$18 (133.9)%
Total used$1,221 $1,494 $(273)(18.3)%$(124)(9.9)%
F&I PRU$1,011 $842 $169 20.1 %$(108)32.9 %
Other:
SG&A expenses$183.6 $169.2 $14.4 8.5 %$(19.5)20.0 %
SG&A as % gross profit68.7 %66.6 %2.1 %
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U.K. Region — Nine Months Ended September 30, 2022 Compared to 2021
The following discussion of our U.K. operating results is on an as reported and same store basis. The difference between as reported amounts and same store amounts is related to acquisition and disposition activity, as well as new add-point openings. At the end of 2020, the U.K. experienced a surge in COVID-19 cases, which led to a government-mandated closure of all non-essential businesses beginning January 4, 2021 through April 12, 2021. In mid-April 2021, the COVID-19 restrictions affecting our U.K. dealership showrooms were lifted, and our dealerships were able to reopen.
Revenues
Total revenues in the U.K. during the Current Year increased $139.6 million, or 7.0%, as compared to the Prior Year, primarily driven by the acquisition of stores, partially offset by the negative impact of foreign currency exchange rates.
Total same store revenues in the U.K. during the Current Year decreased $4.8 million, or 0.2%, as compared to the Prior Year, driven by the negative impact of foreign currency exchange rates. On a constant currency basis, total same store revenues increased 10.4%, driven by outperformances across all revenue streams.
New vehicle retail same store revenues, on a constant currency basis, outperformed the Prior Year, driven by increased sales prices, partially offset by a modest decrease in same store retail new vehicle unit sales. Supply chain issues, including an ongoing semiconductor and vehicle parts shortage, and other logistics challenges continue for OEMs, leading to sustained lower vehicle production and deliveries of fewer vehicles to dealerships. The increase in the new vehicle retail same store average sales price per unit sold was driven by both new vehicle shortages, as described above, and strong vehicle demand, which was pent-up over past years due to Brexit and the COVID-19 pandemic.
Used vehicle retail same store revenues, on a constant currency basis, outperformed the Prior Year, despite a modest decline in retail used vehicle unit sales, as increased demand drove higher prices.
Parts and service same store revenues, on a constant currency basis, outperformed the Prior Year, driven by increased business activity across all of our parts and service business lines with the reduction of COVID-19 restrictions compared to the Prior Year.
F&I, net same store revenues, on a constant currency basis, outperformed the Prior Year, driven by improved penetration rates on all finance and other products and higher income per contract for finance and VSCs, partially offset by a decline in same store new and used vehicle retail unit sales.
Gross Profit
Total gross profit in the U.K. during the Current Year increased $31.2 million, or 12.1%, as compared to the Prior Year, primarily driven by the acquisition of stores and higher same store results.
Total same store gross profit in the U.K. during the Current Year increased $13.2 million, or 5.2%, as compared to the Prior Year. On a constant currency basis, total same store gross profit increased 16.5%, driven by improvements in new vehicle retail sales, parts and service sales and F&I, net.
New vehicle retail same store gross profit, on a constant currency basis, outperformed the Prior Year, due to an increase in new vehicle retail same store gross profit per unit sold, resulting from increased prices as discussed above, partially offset by a modest decline in same store retail new vehicle unit sales.
Used vehicle retail same store gross profit, on a constant currency basis, underperformed the Prior Year, due to a decrease in used vehicle retail same store gross profit per unit sold, coupled with a decrease in same store retail used vehicle unit sales. These decreases were driven by inflationary impacts on customers coupled with the ongoing new vehicle supply shortage impacting the supply of used vehicles.
Parts and service same store gross profit, on a constant currency basis, outperformed the Prior Year, driven by the increases in parts and service same store revenues.
F&I, net same store gross profit, on a constant currency basis, outperformed the Prior Year as described above in F&I, net same store revenues.
Total same store gross margin in the U.K. increased 69 basis points, driven by improvements in new vehicle retail gross margin due to higher prices from increased customer demand and vehicle supply constraints. The increase was partially offset by a decrease in same store total used vehicle retail gross margin, resulting from inflationary impacts on our used vehicle customers and the ongoing new vehicle supply shortage increasing acquisition costs for used vehicles.
SG&A Expenses
SG&A as a percentage of gross profit increased 7082 and 211 basis points on an as reported and same store basis, respectively, compared to 73.3%, driven by 230 and 50 basis point increasesthe Prior Year.
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Total SG&A expenses in the U.K. and U.S. Same Storeduring the Current Year increased $23.3 million, or 13.4%, as compared to the Prior Year, primarily driven by increases in same store SG&A and the acquisition of stores. Total same store SG&A expenses in the U.K. during the Current Year increased $14.4 million, or 8.5%, as compared to the Prior Year. On a percentageconstant currency basis, total same store SG&A expenses increased 20.0%. These increases were primarily driven by higher business activity and acquisition costs compared to the Prior Year, as well as government COVID-19 assistance and the related temporary suspension of gross profit, respectively, partially offset bycity tax in the Prior Year which did not recur in the Current Year.
Consolidated Selected Comparisons — Three and Nine Months Ended September 30, 2022 Compared to 2021
The following tables (in millions) and discussion of our results of operations are on a 700consolidated basis, point improvement in Brazil.unless otherwise noted.
Three Months Ended September 30,
20222021Increase/ (Decrease)% Change
Depreciation and amortization expense$21.8 $19.2 $2.6 13.5 %
Floorplan interest expense$6.5 $4.3 $2.2 50.1 %
Other interest expense, net$19.6 $13.1 $6.5 49.9 %
Provision for income taxes$60.2 $51.6 $8.6 16.6 %
Nine Months Ended September 30,
20222021Increase/ (Decrease)% Change
Depreciation and amortization expense$65.9 $56.8 $9.1 16.1 %
Floorplan interest expense$17.7 $20.5 $(2.8)(13.7)%
Other interest expense, net$55.5 $39.8 $15.7 39.5 %
Provision for income taxes$182.1 $132.2 $50.0 37.8 %
Depreciation and Amortization DataExpense
(dollars in thousands)
  Three Months Ended September 30,  Nine Months Ended September 30,
  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016
Same Stores                 
U.S. $12,060
 11.2% N/A $10,843
  $35,140
 11.4% N/A $31,552
U.K. 1,813
 17.1% 17.4% 1,548
  4,888
 5.5% 14.8% 4,632
Brazil 366
 45.2% 42.0% 252
  1,030
 20.9% 8.5% 852
Total Same Stores 14,239
 12.6% 12.6% 12,643
  41,058
 10.9% 11.7% 37,036
Transactions 820
     248
  1,700
     1,031
Total $15,059
 16.8% 16.8% $12,891
  $42,758
 12.3% 13.3% $38,067
Our total Same StoreTotal depreciation and amortization expense increased 12.6%for both the Current Quarter and 10.9% for the three and nine months ended September 30, 2017, respectively, asCurrent Year, was higher compared to the same periodsPrior Year Quarter and Prior Year, primarily attributable to acquired property and equipment in 2016,our U.S. region, as we continue to strategically add dealership-relateddealership related real estate to our investment portfolio and make improvements to our existing facilities intended to enhance the profitability of our dealerships and the overall customer experience. We critically evaluate all planned future capital spending, working closely with our manufacturer partners to maximize the return on our investments.
Floorplan Interest Expense
(dollars in thousands)
  Three Months Ended September 30,  Nine Months Ended September 30,
  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016  2017 % Increase/(Decrease) Constant Currency % Increase/(Decrease) 2016
Same Stores                 
U.S. $11,879
 19.9% N/A $9,911
  $34,767
 15.2% N/A $30,173
U.K. 1,227
 15.4% 15.6% 1,063
  2,988
 2.2% 10.5% 2,925
Brazil 140
 11.1% 8.9% 126
  175
 (4.9)% (4.7)% 184
Total Same Stores 13,246
 19.3% 19.3% 11,100
  37,930
 14.0% 14.7% 33,282
Transactions 245
     35
  729
     455
Total $13,491
 21.2% 21.2% $11,135
  $38,659
 14.6% 15.4% $33,737
Total manufacturer’s assistance $13,561
 4.5% 4.5% $12,979
  $35,745
 (2.9)% (2.7)% $36,818
Our floorplan interest expense fluctuates with changes in our outstanding borrowings outstanding and associated interest rates, which are based on the one-month LIBOR (or Prime rate in some cases) plus a spread inSOFR, the U.S. and U.K. andprime rate or a benchmark rate plus a spread in Brazil.
rate. Outstanding borrowings largely fluctuate based on our levels of new and used vehicle inventory. To mitigate the impact of interest rate fluctuations, we employ an interest rate hedging strategy, whereby we swap variable interest rate exposure on a portion of our borrowings for a fixed interest rate over the term of the variable interest rate debt. As of September 30, 2017, we had interest rate swaps with an aggregate notional amount of $823.9 million in effect that fixed our underlying one-month LIBOR at a weighted average interest rate of 2.5%. The majority of the monthly settlements of these interest rate swap liabilities are recognized as floorplan interest expense. From time to time, we utilize excess cash on hand to pay down our floorplan borrowings, and the resulting interest earned is recognized as an offset to our gross floorplan interest expense.rate.

Our total Same StoreTotal floorplan interest expense during the Current Quarter, increased 19.3% and 14.0% for the three and nine months ended September 30, 2017, respectively,$2.2 million, or 50.1%, as compared to the same periodsPrior Year Quarter, driven primarily by higher new and used vehicle inventories in 2016. These increases were primarily driven by the increasesCurrent Quarter, resulting in our Same Storeadditional floorplan interest expense, and an unrealized gain on interest rate swaps of $0.9 million in the U.S. of 19.9% and 15.2% forPrior Year Quarter which did not recur in the three and nine months ended September 30, 2017, respectively, which are more than explainedCurrent Quarter.
For the Current Year, floorplan interest expense decreased $2.8 million, or 13.7%, as compared to the Prior Year, driven primarily by lower realized losses on our interest rate swap portfolio in the current year, due to increases in LIBORcorresponding interest rates sinceand an unrealized loss on interest rate swaps of $1.4 million in the fourth quarter of 2016.Prior Year which did not recur in the Current Year. These increasesdecreases were partially offset by declinesan increase in our U.S. weighted average borrowings compared to the same periods a year ago. In the U.K., our Same Store floorplan interest expense increased 15.4%on used vehicles due to an increase in used vehicle inventories between periods.
Refer to Note 7. Financial Instruments and 2.2%, respectively,Fair Value Measurements within our Notes to Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2017, more than explained by increases in our weighted average borrowings, partially offset by decreases in our weighted averageadditional discussion of interest rates.rate swaps.
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Other Interest Expense, netNet
Other interest expense, net consists of interest charges primarily on our 4.00% Senior Notes, real estate related debt working capital lines of credit and our other long-term debt, partially offset by interest income. For
Other interest expense, net during the three months ended September 30, 2017, other interest expenses netCurrent Quarter, increased $0.8$6.5 million, or 4.6%49.9%, to $17.9 million, as compared to the same period in 2016. This increase was primarily attributable to an increase in the weighted average interest rates associated with real estate and other long-term debt.Prior Year Quarter. For the nine months ended September 30, 2017,Current Year, other interest expense, net, increased $1.5$15.7 million, or 2.9%39.5%, to $52.2 million, as compared to the same periodPrior Year. The increase in 2016.other interest expense, net during the Current Quarter and Current Year, was primarily attributable to the additional 4.00% Senior Notes issued in October 2021 and an increase in borrowings used to acquire property in our U.S. region, primarily related to the Prime Acquisition. Refer to Note 9. Debt within our Notes to Condensed Consolidated Financial Statements for additional discussion of our debt.
Provision for Income Taxes
OurProvision for income taxes of $60.2 million during the Current Quarter increased by $8.6 million, or 16.6%, as compared to the Prior Year Quarter. For the Current Year, our provision for income taxes decreased $3.1of $182.1 million to $17.3increased by $50.0 million, for the three months ended September 30, 2017,or 37.8%, as compared to the same periodPrior Year. The tax expense increases in 2016the Current Quarter and $5.5 million to $57.1 million for the nine months ended September 30, 2017,Current Year, as compared to the same period in 2016. These decreasesPrior Year, were primarily due to the decline of pretaxhigher pre-tax book income in 2017. For the three months ended September 30, 2017, ourincome. Our Current Quarter effective tax rate increased to 36.6%23.4% from 36.5%23.0%, as compared to the same period in 2016. For the nine months ended September 30, 2017, our effectivePrior Year Quarter. The tax rate increased to 35.7% from 35.0% from the same period in 2016. These increases wereincrease was primarily due to the increase of state income tax expense due to the mix effect resulting from taxes provided for in foreign jurisdictions, changes to valuation allowances provided for net operating losses and other deferred tax assets in certain U.S. states and in Brazil, and unrecognized tax benefits with respect to uncertain tax positions. The impact of these items wasdomestic earnings following the Prime Acquisition, partially offset by excess tax deductions for restricted stock resulting from the adoption of ASU 2016-09 during the nine months ended September 30, 2017.
After adjusting for the impact of unrecognized tax benefits with respect to uncertain tax positions, our adjusted effective tax rate decreased to 36.0% from 36.5% foran increase in foreign earnings taxed at lower rates in the three months ended September 30, 2017,Current Quarter as compared to the same period in 2016. For the nine months ended September 30, 2017, our adjusted effective tax rate decreased to 35.5% from 35.8% for the same period in 2016. These decreases were primarily due to the aforementioned items related to the tax rates and the mix effect of the growth in the U.K., which has a lower statutory rate than the U.S. and Brazil, relative to the rest of the company.Prior Year Quarter.
We expect our effective tax rate for the full-yearremainder of 2017 will2022 to be between 35.0%23.5 % and 36.0%24.0%. We believebelieve that it is more likely than notmore-likely-than-not that our deferred tax assets, net of valuation allowances provided, will be realized, based primarily on assumptions of our future taxable income, and taxes available in carry back periods.considering future reversals of existing taxable temporary differences.

Liquidity and Capital Resources
Our liquidity and capital resources are primarily derived from cash on hand, cash temporarily invested as a pay down of our U.S. Floorplan Line and FMCC Facility (defined below) levels (refer to Note 10. Floorplan Notes Payable in our Notes to Condensed Consolidated Financial Statements for additional information), cash from operations, borrowings under our credit facilities, which provide vehicle floorplan financing, working capital, and dealership and real estate acquisition financing and proceeds from debt and equity offerings. Based on current facts and circumstances, we believeWe anticipate we will have adequategenerate sufficient cash flow,flows from operations, coupled with cash on hand and available borrowing capacity under our credit facilities, to fund our current operations,working capital expendituresrequirements, service our debt and acquisitions formeet any other recurring operating expenditures.
Available Liquidity Resources
We had the remainderfollowing sources of 2017. If economicliquidity available (in millions):
September 30, 2022
Cash and cash equivalents$20.5 
Floorplan offset accounts218.5 
Available capacity under Acquisition Line551.2 
Total liquidity$790.3 
Cash Flows
We arrange our new and business conditions deteriorate or if our capital expenditures or acquisition plans for 2017 change, we may need to access the private or public capital markets to obtain additional funding.
Cash on Hand. As of September 30, 2017, our total cash on hand was $66.9 million. The balance of cash on hand excludes $68.2 million of immediately available funds used to pay down our Floorplan Line and FMCC Facility (defined below) as of September 30, 2017. We use the pay down of our Floorplan Line and FMCC Facility as a channel for the short-term investment of excess cash.
Cash Flows. With respect to all new vehicle floorplan borrowings in the normal course of business, the manufacturers of the vehicles draft our credit facilities directly. No cash flows to or from us. With respect to borrowings for used vehicle financing, we finance up to 85% of the value of our used vehicle inventory floorplan financing through lenders affiliated with our vehicle manufacturers and our Revolving Credit Facility (as defined in Note 10. Floorplan Notes Payable in the U.S., and the funds flow directlyNotes to us from the lender. All borrowings from, and repayments to,Condensed Consolidated Financial Statements). In accordance with U.S. GAAP, we report floorplan financed with lenders affiliated with our vehicle manufacturers (excluding the cash flows from or to manufacturer-affiliated lenders participating in our syndicated lending group) are presented within Cash Flows from Operating Activities on in the Condensed Consolidated Statements of Cash Flows in conformityFlows. We report floorplan financed with U.S. GAAP. All borrowings from, and repayments to, the Revolving Credit Facility (defined below) (including the cash flows from or to manufacturer-affiliated lenders participating in the facility) and other credit facilities in the U.K. and Brazil unaffiliated with our manufacturer partners, (collectively, "Non-OEM Floorplan Credit Facilities"), are presented within Cash Flows from Financing Activities in conformity with U.S. GAAP. However, the incurrenceCondensed Consolidated Statements of all floorplan notes payable represents an activity necessaryCash Flows. Refer to acquire inventoryNote 10. Floorplan Notes Payable within our Notes to Condensed Consolidated Financial Statements for resale, resulting in a trade payable. Our decision to utilizeadditional discussion of our Revolving Credit Facility does not substantially alter the process by which our vehicle inventory is financed, nor does it significantly impact the economics of our vehicle procurement activities. Therefore,Facility.
However, we believe that all floorplan financing of inventory purchases in the normal course of business should correspond with the related inventory activity and be classified as an operating activity. As a result, we use the non-GAAP measure "Adjusted“Adjusted net cash provided byby/used in operating activities," which makes such reclassification,activities” and “Adjusted net cash provided by/used in financing activities” to further evaluate our cash flows. We believe that this classification eliminates excess volatility in our operating cash flows prepared in accordance with U.S. GAAP and avoids the potential to mislead the users of our financial statements.
GAAP. In addition, because the majority of ourfloorplan financing associated with dealership acquisitions and dispositions are negotiated as asset purchases, we do not assume transfer of liabilities for floorplan financing in the execution of the transactions. Therefore, borrowings and repayments of all floorplan financing associated with dealership acquisition and disposition are characterized as either operating or financing activities in our statement of cash flows presented in conformity with U.S. GAAP, depending on the relationship described above. However, the floorplan financing activity is so closely related to the inventory acquisition process that we believe the presentation of all acquisition and disposition related floorplan financing activities should be classified as investing activity to correspond with the associated inventory activity, and we have made such adjustments in our adjusted operating cash flow presentations.
The following tables set forth selected historical information regarding cash flows from our Consolidated Statements of Cash Flows on a GAAP andactivities on an adjusted non-GAAP basis. For further explanation and reconciliationbasis to eliminate excess volatility in our operating cash flows prepared in accordance with U.S. GAAP.
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Table of Contents
The following table reconciles cash flows on a U.S. GAAP basis to the most directly comparable GAAP measures, see "Non-GAAP Financial Measures" below.corresponding adjusted amounts (in millions):
Nine Months Ended September 30,
20222021% Change
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities:$533.4 $1,117.5 (52.3)%
Change in Floorplan notes payable — credit facilities and other, excluding floorplan offset and net acquisitions and dispositions187.8 (511.2)
Change in Floorplan notes payable — manufacturer affiliates associated with net acquisitions and dispositions and floorplan offset activity9.1 (12.5)
Adjusted net cash provided by operating activities$730.3 $593.8 23.0 %
CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash used in investing activities:$(325.9)$(163.5)(99.3)%
Change in cash paid for acquisitions, associated with Floorplan notes payable7.7 5.3 
Change in proceeds from disposition of franchises, property and equipment, associated with Floorplan notes payable(3.9)(6.4)
Adjusted net cash used in investing activities$(322.1)$(164.6)(95.7)%
CASH FLOWS FROM FINANCING ACTIVITIES:
Net cash used in financing activities:$(198.4)$(742.2)73.3 %
Change in Floorplan notes payable, excluding floorplan offset(200.7)524.8 
Adjusted net cash used in financing activities$(399.1)$(217.4)(83.5)%
  Nine Months Ended September 30,
GAAP Basis 2017 2016
  (In thousands)
Net cash provided by operating activities $309,867
 $386,612
Net cash used in investing activities (246,733) (157,023)
Net cash used in financing activities (18,110) (222,053)
Effect of exchange rate changes on cash 867
 2,345
Net increase in cash and cash equivalents $45,891
 $9,881

  Nine Months Ended September 30,
Adjusted, Non-GAAP Basis 2017 2016
  (In thousands)
Adjusted net cash provided by operating activities $231,582
 $237,793
Adjusted net cash used in investing activities (232,000) (167,468)
Adjusted net cash provided by (used in) financing activities 45,442
 (62,789)
Effect of exchange rate changes on cash 867
 2,345
Net increase in cash and cash equivalents $45,891
 $9,881
Sources and Uses of Liquidity from Operating Activities — Nine Months Ended September 30, 2022 Compared to 2021
For the nine months ended September 30, 2017, we generated $309.9 million ofCurrent Year, net cash flow fromprovided by operating activities.activities decreased by $584.1 million, as compared to the Prior Year. On an adjusted basis for the same period, we generated $231.6 million inadjusted net cash flow fromprovided by operating activities increased by $136.4 million. The increase on an adjusted basis was primarily consisting of $103.0driven by an $809.3 million increase in adjusted net floorplan borrowings and a $129.6 million increase in net income, as well as non-cash adjustments related to depreciation and amortization of $42.8 million, stock-based compensation of $14.6 million, deferred income taxes of $16.1 million, asset impairments of $9.5 million, and a $44.2 million net change in operating assets and liabilities. Included in the adjusted net changes of operating assets and liabilities were cash inflows of $68.5 million from decreases in inventory levels and $85.2 million from increases in accounts payable and accrued expenses. These cash inflows were partially offset by adjusted cash outflows of $8.9a $799.6 million from the net increase in accountsinventory levels.
Sources and notes receivable, $83.4 millionUses of Liquidity from the net decrease in floorplan borrowings, $15.3 million from increases in vehicle receivables and contracts-in-transit, and $2.3 million from the net increase in prepaid expenses and other assets.Investing Activities — Nine Months Ended September 30, 2022 Compared to 2021
For the nine months ended September 30, 2016, we generated $386.6 million ofCurrent Year, net cash flow from operating activities.used in investing activities increased by $162.3 million, as compared to the Prior Year. On an adjusted basis for the same period, we generated $237.8 million inadjusted net cash flow from operatingused in investing activities increased by $157.5 million, primarily consisting of $116.2driven by a $347.2 million increase in net income, as well as non-cash adjustments related to depreciation and amortization of $38.1 million, stock-based compensation of $14.9 million, deferred income taxes of $14.3 million, asset impairments of $12.8 million, and a $39.4 million net change in operating assets and liabilities. Included in the adjusted net changes of operating assets and liabilities were cash inflows of $0.4 million from the net decrease in accounts and notes receivable, $78.9 million from increases in accounts payable and accrued expenses, $49.6 million from decreases of vehicle receivables and contracts-in-transit, $60.8 million from decreases in inventory levels and $18.0 million from the net decrease in prepaid expenses and other assets. These cash inflows wereacquisition activity, partially offset by adjusted cash outflowsa $115.3 million increase in proceeds from disposition of $167.9 million from the net decrease in floorplan borrowings.
Working Capital. At September 30, 2017, we had $96.4 million of working capital. Changes in our working capital are explained primarily by changes in floorplan notes payable outstanding. Borrowings on our new vehicle floorplan notes payable, subject to agreed upon pay-off terms, are equal to 100% of the factory invoice of the vehicles. Borrowings on our used vehicle floorplan notes payable, subject to agreed upon pay-off terms, are limited to 85% of the aggregate book value of our used vehicle inventory, except in the U.K.franchises and Brazil. At times, we have made payments on our floorplan notes payable using excess cash flow from operations and the proceeds of debt and equity offerings. As needed, we re-borrow the amounts later, up to the limits on the floorplan notes payable discussed above, for working capital, acquisitions, capital expenditures or general corporate purposes.
Sources and Uses of Liquidity from Investing Activities
During the nine months ended September 30, 2017, we used $246.7 million in net cash flow for investing activities. On an adjusted basis for the same period, we used $232.0 million in net cash flow for investing activities, primarily consisting of $94.3 million of cash flows for dealership acquisition activity and $144.3 million for purchases of property and equipment and to construct new and improve existing facilities. Within this total of property and equipment purchases, $71.0a $59.4 million was used for capital expenditures, $67.8 million was used for the purchase of real estate associated with existing dealership operations and $5.5 million represents the net decrease in the accrual for capital expenditures from year-end. These cash outflows were partially offset by cash inflows of $5.1 million related to dispositions of franchises and fixed assets and $1.5 million of other items.
During the nine months ended September 30, 2016, we used $157.0 millionincrease in net cash flow for investing activities. On an adjusted basis forproceeds from the same period, we used $167.5 million in net cash flow for investing activities, primarily consistingsale of $57.3 million of cash flows for dealership acquisition activity and $125.7 million for purchases of property and equipment and to construct new and improve existing facilities, which consisted of $78.9 million for capital expenditures, $34.0 million for the purchase of real estate associated with existing dealership operations and a $12.8 million net decrease in the accrual for capital expenditures from year-end. These cash outflows were partially offset by cash inflows of $12.6 million related to dispositions of franchises and fixed assets and $2.9 million of other items.discontinued operations.

Capital Expenditures
Capital Expenditures.Our capital expenditures include costs to extend the useful lives of current dealership facilities, as well as to start or expand operations. In general, expenditures relating to the construction or expansion of dealership facilities are driven by dealership acquisition activity, new franchises being granted to us by a manufacturer, significant growth in sales at an existing facility, relocation opportunities or manufacturer imaging programs. We critically evaluate all planned future capital spending, working closely with our manufacturer partners to maximize the return on our investments. We forecast our capital expenditures for the full year of 20172022 will be less than $120.0approximately $105.0 million as compared to $99.6 million for the full year in 2021, excluding expenditures related to real estate purchases and future acquisitions, which could generally be funded from excess cash.
Acquisitions. We evaluateFor the expected return on investmentCurrent Year, $93.3 million was used to purchase property and equipment, primarily consisting of $83.7 million in our considerationcapital expenditures and $10.0 million in purchases of potential business purchases. In general, the purchase price, excluding real estate and floorplan liabilities, is approximately 15% to 20% of the annual revenue. Cash needed to complete our acquisitions normally comes from excess working capital, operating cash flows of our dealerships, and borrowings under our floorplan facilities, term loans and our Acquisition Line (defined below).associated with existing dealership operations.
Sources and Uses of Liquidity from Financing Activities — Nine Months Ended September 30, 2022 Compared to 2021
For the nine months ended September 30, 2017, we used $18.1 million inCurrent Year, net cash flow fromused in financing activities.activities decreased by $543.8 million, as compared to the Prior Year. On an adjusted basis for the same period, we generated $45.4 millionadjusted net cash used in financing activities increased by $181.7 million. The increase in net cash flow fromused in financing activities on an adjusted basis was primarily related to cash inflowsdriven by Current Year increases in share repurchases of $16.9$340.9 million and net repayment of debt of $49.6 million, partially offset by increases in net borrowings on our Floorplan lines of $211.6 million (representing the net cash activity in our floorplan offset accounts), $32.5 millionaccount).
46
Table of net borrowings on our Acquisition Line, $17.8 million of net borrowings of real estate debt, and $29.4 million of net borrowings of other debt. These inflows were partially offset by cash outflows of $40.1 million to repurchase our Company's common stock and $15.2 million for dividend payments.Contents
For the nine months ended September 30, 2016, we used $222.1 million in net cash for financing activities. On an adjusted basis for the same period, we used $62.8 million in net cash for financing activities, primarily related to cash outflows of $127.6 million to repurchase our Company's common stock and $15.1 million for dividend payments. These cash outflows were partially offset by cash inflows of $50.4 million in net borrowings on our Floorplan Line (representing the net cash activity in our floorplan offset accounts), $23.8 million in net borrowings of real estate debt, and $7.8 million of net borrowings of other debt.

Credit Facilities, Debt Instruments and Other Financing Arrangements.Arrangements
Our various credit facilities, debt instruments and other financing arrangements are used to finance the purchase of inventory and real estate, provide acquisition funding and provide working capital for general corporate purposes.
Revolving Credit Facility. Our revolving credit facility provides a total borrowing capacity of $1.8 billion and expires on June 17, 2021 (the "Revolving Credit Facility"). The Revolving Credit Facility, which is comprised of 24 financial institutions, including six manufacturer-affiliated finance companies, consists of two tranches, providing a maximum of $1.75 billion for U.S. vehicle inventory floorplan financing (“Floorplan Line”), as well as a maximum of $360.0 million and a minimum of $50.0 million for working capital and general corporate purposes, including acquisitions (“Acquisition Line”). The capacity under these two tranches can be re-designated withinfollowing table summarizes the overall $1.8 billion commitment, subject to the aforementioned limits. Up to $125.0 million of the Acquisition Line can be borrowed in either euros or British pound sterling. The Revolving Credit Facility can be expanded to a maximum commitment of $2.1 billion, subject to participating lender approval. The Floorplan Line bears interest at rates equal to the LIBOR plus 125 basis points for new vehicle inventory and the LIBOR plus 150 basis points for used vehicle inventory. The Acquisition Line bears interest at the LIBOR plus 150 basis points plus a margin that ranges from zero to 100 basis points, depending on our total adjusted leverage ratio, for borrowings in U.S. dollars and a LIBOR equivalent plus 125 to 250 basis points, depending on our total adjusted leverage ratio, on borrowings in euros or British pound sterling. The Floorplan Line requires a commitment feecredit facilities as of 0.15% per annum on the unused portion. The Acquisition Line also requires a commitment fee ranging from 0.20% to 0.45% per annum, depending on our total adjusted leverage ratio, based on a minimum commitment of $50.0 million less outstanding borrowings.
After considering the outstanding balance of $1,017.2 million at September 30, 2017, we had $422.8 million of2022 (in millions):
Total
Commitment		OutstandingAvailable
U.S. Floorplan Line (1)
$1,200.0 $496.2 $703.8 
Acquisition Line (2)
763.4 212.2 551.2 
Total revolving credit facility1,963.4 708.4 1,255.0 
FMCC Facility (3)
300.0 19.0 281.0 
Total U.S. credit facilities (4)
$2,263.4 $727.4 $1,536.0 
(1) The available floorplan borrowing capacity under the Floorplan Line. Included in the $422.8 million available borrowings under the Floorplan Line was $46.2balance at September 30, 2022, includes $206.1 million of immediately available funds. The weighted average interest rate on the Floorplan Line was 2.5% asremaining available balance can be used for vehicle inventory financing.
(2) The outstanding balance of September 30, 2017, excluding the impact of our interest rate derivative instruments. With regards$212.2 million is related to the Acquisition Line, there were $33.5 million borrowings outstanding as of September 30, 2017. After considering $29.3 million of outstanding letters of credit of $12.2 million and other factors included$200.0 million in our available borrowing base calculation, there was $297.1 million of available borrowing capacityborrowings. The borrowings outstanding under the Acquisition Line as of September 30, 2017.included $200.0 million USD borrowings. The amount of available borrowing capacity under the Acquisition Line isborrowings may be limited from time to time, based uponon certain debt covenants.
All of our U.S. dealership-owning subsidiaries are co-borrowers under the Revolving Credit Facility. Our obligations under the Revolving Credit Facility are secured by essentially all of our U.S. personal property (other than equity interests in dealership-owning subsidiaries), including all motor vehicle inventory and proceeds from the disposition of dealership-owning

subsidiaries, excluding inventory financed directly with manufacturer-affiliates and other third-party financing institutions. (3) The Revolving Credit Facility contains a number of significant covenants that, among other things, restrict our ability to make disbursements outside of the ordinary course of business, dispose of assets, incur additional indebtedness, create liens on assets, make investments and engage in mergers or consolidations. We are also required to comply with specified financial tests and ratios defined in the Revolving Credit Facility, such as the fixed charge coverage and total adjusted leverage ratios. Further, the Revolving Credit Facility restricts our ability to make certain payments, such as dividends or other distributions of assets, properties, cash, rights, obligations or securities (“Restricted Payments”). The Restricted Payments cannot exceed the sum of $208.5 million plus (or minus if negative) (a) one-half of the aggregate consolidated net income for the period beginning on April 1, 2014 and ending on the date of determination and (b) the amount of net cash proceeds received from the sale of capital stock after June 2, 2014 and ending on the date of determination less (c) cash dividends and share repurchases after June 2, 2014 (“Credit Facility Restricted Payment Basket”). For purposes of the calculation of the Credit Facility Restricted Payment Basket, net income represents such amounts per our consolidated financial statements, adjusted to exclude our foreign operations, non-cash interest expense, non-cash asset impairment charges, and non-cash stock-based compensation. As ofavailable balance at September 30, 2017, the Credit Facility Restricted Payment Basket totaled $134.4 million.
As of September 30, 2017, we were in compliance with all our financial covenants, including:
As of September 30, 2017
RequiredActual
Total Adjusted Leverage Ratio< 5.503.72
Fixed Charge Coverage Ratio> 1.202.43
Based upon our current five-year operating and financial projections, we believe that we will remain compliant with such covenants in the future.
Ford Motor Credit Company Facility. Our floorplan financing arrangement ("FMCC Facility") with Ford Motor Credit Company ("FMCC") provides for the financing of, and is collateralized by, our U.S. Ford new vehicle inventory, including affiliated brands. This arrangement provides for $300.0 million of floorplan financing and is an evergreen arrangement that may be canceled with 30 days' notice by either party. As of September 30, 2017, we had an outstanding balance of $131.7 million under the FMCC Facility with an available floorplan borrowing capacity of $168.3 million. Included in the $168.3 million available borrowings under the FMCC Facility was $22.02022, includes $12.4 million of immediately available funds. This facility bears interest at a rateThe remaining available balance can be used for Ford new vehicle inventory financing.
(4) The outstanding balance excludes $230.7 million of Prime plus 150 basis points minus certain incentives. The interest rate on the FMCC Facility was 5.75% before considering the applicable incentives as of September 30, 2017.
The following table summarizes the positionborrowings with manufacturer-affiliates and third-party financial institutions for foreign and rental vehicle financing not associated with any of our U.S. credit facilities.
We have other credit facilities as of September 30, 2017. 
  As of September 30, 2017
U.S. Credit Facilities 
Total
Commitment
 Outstanding Available
    (In thousands)  
Floorplan Line (1) 
 $1,440,000
 $1,017,215
 $422,785
Acquisition Line (2) 
 360,000
 62,861
 297,139
Total Revolving Credit Facility 1,800,000
 1,080,076
 719,924
FMCC Facility (3)
 300,000
 131,732
 168,268
Total U.S. Credit Facilities (4) 
 $2,100,000
 $1,211,808
 $888,192

(1)The available balance at September 30, 2017 includes $46.2 million of immediately available funds.
(2)The outstanding balance of $62.9 million is related to outstanding letters of credit of $29.3 million and $33.5 million in borrowings as of September 30, 2017. The borrowings outstanding under the Acquisition Line represent 25.0 million British pound sterling translated at the spot rate on the day borrowed, solely for the purpose of calculating the Outstanding and Available borrowings under the Acquisition Line. The available borrowings may be limited from time to time, based on certain debt covenants.
(3)The available balance at September 30, 2017 includes $22.0 million of immediately available funds.
(4)The outstanding balance excludes $260.0 million of borrowingsin the U.S. and the U.K. with manufacturer-affiliates and third-party financial institutions, for foreign and rental vehicle financing not associated with any of our U.S. credit facilities.
Other Inventory Credit Facilities. We have credit facilities with BMW Financial Services NA, LLC ("BMWFS"), Volkswagen Finance, Toyota Motor Credit Corporation, FMCC and a third-party financial institution for the financing of new, used and rental vehicle inventories related to our U.K. operations. These facilities are denominated in British pound sterling and are evergreen arrangements that may be canceled with notice by either party and bear interest at a base rate, plus a surcharge that varies based upon the type of vehicle being financed. The annual interest rates charged on borrowings outstanding under

these facilities, after the grace period of zero to 30 days, range from 1.25% to 3.95%. As of September 30, 2017, borrowings outstanding under these facilities totaled $123.1 million.
We have credit facilities with financial institutions in Brazil, most of which are affiliated with the automobile manufacturers that provide financing for the financingportions of our new, used and rental vehicle inventories related to our Brazilian operations. These facilities are denominated in Brazilian real and have renewal terms ranging from one month to twelve months. They may be canceled with notice by either party and bear interest at a benchmark rate, plus a surcharge that varies based upon the type of vehicle being financed. As of September 30, 2017, the annual interest rates charged on borrowings outstanding under these facilities, after the grace period of zero to 90 days, range from 12.67% to 18.86%. As of September 30, 2017, borrowings outstanding under these facilities totaled $22.5 million.
Other Inventory Financing Arrangements. Excluding rental vehicles financed through the Revolving Credit Facility, financing for U.S. rental vehicles is typically obtained directly from the automobile manufacturers. These financing arrangements generally require small monthly payments and mature in varying amounts over a period of two years. As of September 30, 2017, the interest rate charged on borrowings related to our rental vehicle fleet varies up to 5.75%. Rental vehicles are typically transferred to used vehicle inventory when they are removed from service and repayment of the borrowing is required at that time. As of September 30, 2017, borrowings outstanding under these facilities totaled $114.3 million.
5.00% Senior Notes. On June 2, 2014, we issued $350.0 million aggregate principal amount of our 5.00% senior notes due June 1, 2022 ("5.00% Notes"). Subsequently, on September 9, 2014, we issued an additional $200.0 million of 5.00% Notes at a discount of 1.5% from face value. The 5.00% Notes pay interest semiannually, in arrears, in cash on each June 1 and December 1, beginning December 1, 2014. On or after June 1, 2017, we may redeem some or all of the 5.00% Notes at specified prices, plus accrued and unpaid interest. We may be required to purchase the 5.00% Notes if we sell certain assets or trigger the change in control provisions defined in the 5.00% Notes indenture. The 5.00% Notes are senior unsecured obligations and rank equal in right of payment to all of our existing and future senior unsecured debt and senior in right of payment to all of our future subordinated debt. The 5.00% Notes are guaranteed by substantially all of our U.S. subsidiaries. The U.S. subsidiary guarantees rank equally in the right of payment to all of our U.S. subsidiary guarantor’s existing and future subordinated debt.inventories. In addition, the 5.00% Notes are structurally subordinated to the liabilities ofwe have outstanding debt instruments, including our non-guarantor subsidiaries and are subject to customary covenants, including a restricted payment basket and debt limitations. The restricted payment basket calculation under the terms of the 5.00% Notes is the same as under the Credit Facility Restricted Payment Basket. The 5.00% Notes were registered with the Securities and Exchange Commission in June 2015. The 5.00% Notes are presented net of unamortized underwriters' fees, discount and debt issuance costs, which are being amortized over a period of eight years in conjunction with the term of the 5.00% Notes, of $8.3 million as of September 30, 2017.
5.25%4.00% Senior Notes,. On December 8, 2015, we issued $300.0 million aggregate principal amount of our 5.25% senior notes due to mature on December 15, 2023 ("5.25% Notes") in a private placement exempt from the registration requirements of the SEC. The 5.25% Notes and the related guarantees have not been, and will not be, registered under the Securities Act or the securities laws of any other jurisdiction. The 5.25% Notes pay interest semiannually, in arrears, in cash on each June 15 and December 15, beginning June 15, 2016. Using proceeds of certain equity offerings, we may redeem up to 35.0% of the 5.25% Notes prior to December 15, 2018, subject to certain conditions, at a redemption price equal to 105.25% of principal amount of the 5.25% Notes plus accrued and unpaid interest. Otherwise, we may redeem some or all of the 5.25% Notes prior to December 15, 2018 at a redemption price equal to 100% of the principal amount of the 5.25% Notes redeemed, plus an applicable make-whole premium, plus accrued and unpaid interest. On or after December 15, 2018, we may redeem some or all of the 5.25% Notes at specified prices, plus accrued and unpaid interest. We may be required to purchase the 5.25% Notes if we sell certain assets or trigger the change in control provisions defined in the 5.25% Notes indenture. The 5.25% Notes are senior unsecured obligations and rank equal in right of payment to all of our existing and future senior unsecured debt and senior in right of payment to all of our future subordinated debt. The 5.25% Notes are guaranteed by substantially all of our U.S. subsidiaries. The U.S. subsidiary guarantees rank equally in the right of payment to all of our U.S. subsidiary guarantor’s existing and future subordinated debt. In addition, the 5.25% Notes are structurally subordinated to the liabilities of our non-guarantor subsidiaries and are subject to customary covenants, including a restricted payment basket and debt limitations. The restricted payment basket calculation under the terms of the 5.25% Notes is the same as under the Credit Facility Restricted Payment Basket. The 5.25% Notes are presented net of unamortized underwriters' fees and debt issuance costs, which are being amortized over a period of eight years in conjunction with the term of the 5.25% Notes, of $4.0 million as of September 30, 2017.
Real Estate Related and Other Long-Term Debt. We have entered into separate term mortgage loans in the U.S. with three of our manufacturer-affiliated finance partners, Toyota Motor Credit Corporation, BMWFS and FMCC, as well as several third-party financial institutions. These mortgage loans may be expanded for borrowings related to specific buildings and/or properties and are guaranteed by us. Each mortgage loan was made in connection with, and is secured by mortgage liens on, the real property owned by us that is mortgaged under the loans. These mortgage loans bear interest at fixed rates between 3.00%

and 4.69%, and at variable indexed rates plus a spread between 1.50% and 2.50% per annum and mature between November 2017 and December 2024. As of September 30, 2017, the aggregate outstanding balance under these mortgage loans was $318.5 million, with $29.4 million classified as a current maturity of long-term debt in the accompanying Consolidated Balance Sheets. These mortgage loans are presented net of unamortized underwriters' fees, discount and debt issuance costs, which are being amortized over the terms of the mortgage loans, of $0.6 million as of September 30, 2017.
Additionally, we have entered into 16 separate term mortgage loans in the U.K. with other third-party financial institutions which are secured by our U.K. properties. These mortgage loans (collectively, “U.K. Notes”) are denominated in British pound sterling and are being repaid in monthly installments that will mature by September 2034. As of September 30, 2017, borrowings under the U.K. Notes totaled $80.4 million, with $7.4 million classified as a current maturity of long-term debt in the accompanying Consolidated Balance Sheets.
In addition to the real estate related and other long-term debt we have two short-term revolving working capital loaninstruments. Refer to Note 9. Debt in our Notes to Condensed Consolidated Financial Statements for further information.
Covenants
Our Revolving Credit Facility, indentures governing our senior notes and certain mortgage term loans contain customary financial and operating covenants that place restrictions on us, including our ability to incur additional indebtedness, create liens or to sell or otherwise dispose of assets and to merge or consolidate with other entities. Certain of our mortgage agreements contain cross-default provisions that, in the event of a default of certain mortgage agreements and of our Revolving Credit Facility, could trigger an unsecured loan agreement with third-party financial institutions in the U.K. and U.S., respectively. uncured default.
As of September 30, 2017, short-term borrowings2022, we were in compliance with the requirements of the financial covenants under our debt agreements. We are required to maintain the U.K. and U.S. third-party loans totaled $13.2 million and $25.1 million, respectively, and are included in current maturities of long-term debt and short-term financingratios detailed in the Company's Consolidated Balance Sheets.
We have also entered into a separate term mortgage loan in Brazil with a third-party financial institution to finance the purchase and construction of dealership properties (the "Brazil Note"). The Brazil Note is denominated in Brazilian real and is secured by one of our Brazilian properties as purchased and/or constructed, as well as a guarantee from us. The Brazil Note is being repaid in monthly installments that will mature by April 2025. As of September 30, 2017, borrowings under the Brazil Note totaled $3.6 million, with $0.3 million classified as a current maturity of long-term debt in the accompanying Consolidated Balance Sheets.
We also have a working capital loan agreement with a third-party financial institution in Brazil. The principal balance on this loan is due by February 2020 with interest only payments being made quarterly until the due date. As of September 30, 2017, borrowings under the Brazilian third-party loan totaled $7.0 million classified as long-term debt in the accompanying Consolidated Balance Sheets.
Stock Issuances. No shares of our common stock were issued during the three months ended September 30, 2017 or September 30, 2016.
Stock Repurchases. From time to time, our Board of Directors gives authorization to repurchase shares of our common stock, subject to the restrictions of various debt agreements and our judgment. We issue new shares or treasury shares, if available, when restricted stock vests. With respect to shares issued under the Employee Stock Purchase Plan, as amended (the "Purchase Plan", formerly named the 1998 Employee Stock Purchase Plan), our Board of Directors has authorized specific share repurchases to fund the shares issuable under the Purchase Plan.
During the three months ended September 30, 2017, we repurchased 20,000 shares at an average price of $53.46 per share, for a total of $1.1 million. In May 2017, our Board of Directors approved a new authorization of $75.0 million for the purchase of our common shares, replacing the prior $150.0 million authorization. As of September 30, 2017, we have $49.6 million of repurchase authorization remaining. Future repurchases are subject to the discretion of our Board of Directors after considering our results of operations, financial condition, cash flows, capital requirements, existing debt covenants, outlook for our business, general business conditions and other factors.
Dividends. The payment of dividends is subject to the discretion of our Board of Directors after considering the results of operations, financial condition, cash flows, capital requirements, outlook for our business, general business conditions, the political and legislative environments and other factors.
Further, we are limited under the terms of the Revolving Credit Facility, certain mortgage loans, 5.00% Notes and 5.25% Notes in our ability to make cash dividend payments to our stockholders and to repurchase shares of our outstanding common stock. As of September 30, 2017, the restricted payment baskets limit us to $134.4 million in restricted payments. Generally, these restricted payment baskets will increase in future periods by 50.0% of our future cumulative net income, adjusted to exclude our foreign operations, non-cash interest expense, non-cash asset impairment charges, and non-cash stock-based compensation, plus the net proceeds received from the sale of our capital stock, and decrease by the amount of future payments for cash dividends and share repurchases. For the nine months ended September 30, 2017, we paid dividends of $14.7 million to common stock shareholders and $0.5 million to unvested restricted stock award holders.
Non-GAAP Financial Measures
In addition to evaluating the financial condition and results of our operations in accordance with U.S. GAAP, from time to time our management evaluates and analyzes results and any impact on the Company of strategic decisions and actions relating to, among other things, cost reduction, growth, and profitability improvement initiatives, and other events outside of normal, or

"core," business and operations, by considering alternative financial measures not prepared in accordance with U.S. GAAP. In our evaluation of results from time to time, we exclude items that do not arise directly from core operations, such as non-cash asset impairment charges, gains and losses on dealership franchise or real estate transactions, and catastrophic events, such as hail storms, hurricanes, and snow storms. Because these non-core charges and gains materially affect the Company's financial condition or results in the specific period in which they are recognized, management also evaluates, and makes resource allocation and performance evaluation decisions based on, the related non-GAAP measures excluding such items. This includes evaluating measures such as adjusted selling, general and administrative expenses, adjusted net income, adjusted diluted income per share, adjusted cash flows from operating, investing and financing activities and constant currency. These adjusted measures are not measures of financial performance under U.S. GAAP, but are instead considered non-GAAP financial performance measures. Non-GAAP measures do not have definitions under U.S. GAAP and may be defined differently by and not be comparable to similarly titled measures used by other companies. As a result, any non-GAAP financial measures considered and evaluated by management are reviewed in conjunction with a review of the most directly comparable measures calculated in accordance with U.S. GAAP. We caution investors not to place undue reliance on such non-GAAP measures, but also to consider them with the most directly comparable U.S. GAAP measures.
In addition to using such non-GAAP measures to evaluate results in a specific period, management believes that such measures may provide more complete and consistent comparisons of operational performance on a period-over-period historical basis and a better indication of expected future trends. Our management also uses these adjusted measures in conjunction with U.S. GAAP financial measures to assess our business, including communication with our Board of Directors, investors and industry analysts concerning financial performance. We disclose these non-GAAP measures, and the related reconciliations, because we believe investors use these metrics in evaluating longer-term period-over-period performance, and to allow investors to better understand and evaluate the information used by management to assess operating performance. The exclusion of certain expenses in the calculation of non-GAAP financial measures should not be construed as an inference that these costs are unusual or infrequent. We anticipate excluding these expenses in the future presentation of our non-GAAP financial measures.
In addition, we evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our underlying business and results of operations, consistent with how we evaluate our performance. We calculate constant currency percentages by converting our current period reported results for entities reporting in currencies other than U.S. dollars using comparative period exchange rates rather than the actual exchange rates in effect during the respective periods. The constant currency performance measures should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with U.S. GAAP.

The following tables reconcile certain reported non-GAAP measures to the most comparable U.S. GAAP measure from our Statements of Operations by segment and on a consolidated basis (dollars in thousands, except per share amounts). Only adjusted amounts are reconciled below:
  U.S. Adjustments for
  Three Months Ended September 30, 2017
  U.S. GAAP Catastrophic events Gain / loss on real estate and dealership transactions Legal settlements Non-cash asset impairment Allowance for uncertain tax positions Non-GAAP Adjusted
Finance, insurance and other revenues, net $96,383
 $6,550
 $—
 $—
 $—
 $—
 $102,933
Selling, general and administrative expenses 261,787
 (8,149) (798) (720) —
 —
 252,120
Asset impairments 9,526
 —
 —
 —
 (9,526) —
 —
Income from operations 69,874
 14,699
 798
 720
 9,526
 —
 95,617
Income before income taxes 41,133
 14,699
 798
 720
 9,526
 —
 66,876
Benefit (provision) for income taxes (16,258) (5,677) (301) (270) (3,579) 834
 (25,251)
Net income $24,875
 $9,022
 $497
 $450
 $5,947
 $834
 $41,625
               
SG&A as % Gross Profit: 74.0           70.0
Operating Margin %: 3.0           4.1
Pretax Margin %: 1.8           2.9
               
Same Store Finance, insurance and other revenues, net $95,195
 $6,550
 $—
 $—
 $—
 $—
 $101,745
Same Store SG&A 258,862
 (8,149) (798) (720) —
 —
 249,195
Same Store SG&A as % Gross Profit: 74.0
           69.9
               
Same Store income from operations $69,440
 $14,699
 $798
 $720
 $9,526
 $—
 $95,183
Same Store Operating Margin %: 3.0
           4.2
table:
As of September 30, 2022
RequiredActual
Total adjusted leverage ratio< 5.751.77
Fixed charge coverage ratio> 1.205.77

Based on our position as of September 30, 2022, and our outlook as discussed within Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations, we believe we have sufficient liquidity and do not anticipate any material liquidity constraints or issues with our ability to remain in compliance with our debt covenants.

Refer to Note 9. Debt and Note 10. Floorplan Notes Payable in our Notes to Condensed Consolidated Financial Statements for further discussion of our debt instruments, credit facilities and other financing arrangements existing as of September 30, 2022.
47
  Consolidated Adjustments for
  Three Months Ended September 30, 2017
  U.S. GAAP Catastrophic events Gain / loss on real estate and dealership transactions Legal settlements Non-cash asset impairment Allowance for uncertain tax positions Non-GAAP Adjusted
Finance, insurance and other revenues, net $110,993
 $6,550
 $—
 $—
 $—
 $—
 $117,543
Selling, general and administrative expenses 328,327
 (8,149) (798) (720) —
 —
 318,660
Asset impairments 9,526
 —
 —
 —
 (9,526) —
 —
Income from operations 78,508
 14,699
 798
 720
 9,526
 —
 104,251
Income before income taxes 47,143
 14,699
 798
 720
 9,526
 —
 72,886
Benefit (provision) for income taxes (17,262) (5,677) (301) (270) (3,579) 834
 (26,255)
Net income $29,881
 $9,022
 $497
 $450
 $5,947
 $834
 $46,631
Less: Adjusted earnings allocated to participating securities 1,023
 311
 17
 16
 206
 30
 1,603
Adjusted net income available to diluted common shares $28,858
 $8,711
 $480
 $434
 $5,741
 $804
 $45,028
               
Diluted income per common share $1.43
 $0.44
 $0.02
 $0.02
 $0.28
 $0.04
 $2.23
               
Effective tax rate % 36.6
           36.0
               
SG&A as % Gross Profit: 76.1
           72.8
Operating Margin %: 2.6
           3.5
Pretax Margin %: 1.6
           2.4
               
Same Store Finance, insurance and other revenues, net $106,839
 $6,550
 $—
 $—
 $—
 $—
 $113,389
Same Store SG&A 313,146
 (8,149) (798) (720) —
 —
 303,479
Same Store SG&A as % Gross Profit: 75.5
           72.0
               
Same Store income from operations $78,068
 $14,699
 $798
 $720
 $9,526
 $—
 $103,811
Same Store Operating Margin %: 2.7
           3.6

Table of Contents
  U.S. Adjustments for
  Nine Months Ended September 30, 2017
  U.S. GAAP Catastrophic events Gain / loss on real estate and dealership transactions 
Legal settlements (1)
 Non-cash asset impairment Allowance for uncertain tax positions Non-GAAP Adjusted
Finance, insurance and other revenues, net $276,754
 $6,550
 $—
 $—
 $—
 $—
 $283,304
Selling, general and administrative expenses 741,904
 (8,792) (798) 1,113
 —
 —
 733,427
Asset impairments 9,526
 —
 —
 —
 (9,526) —
 —
Income (loss) from operations 227,333
 15,341
 798
 (1,113) 9,526
 —
 251,885
Income (loss) before income taxes 142,808
 15,341
 798
 (1,113) 9,526
 —
 167,360
Benefit (provision) for income taxes (54,301) (5,926) (301) 426
 (3,579) 834
 (62,847)
Net income (loss) $88,507
 $9,415
 $497
 $(687) $5,947
 $834
 $104,513
               
SG&A as % Gross Profit: 73.1           71.8
Operating Margin %: 3.6           3.9
Pretax Margin %: 2.2           2.6
               
Same Store Finance, insurance and other revenues, net $274,464
 $6,550
 $—
 $—
 $—
 $—
 $281,014
Same Store SG&A 737,548
 (8,792) (798) 1,113
 —
 —
 729,071
Same Store SG&A as % Gross Profit: 73.1
           71.7
               
Same Store income (loss) from operations $227,404
 $15,341
 $798
 $(1,113) $9,526
 $—
 $251,956
Same Store Operating Margin %: 3.6
           4.0
Share Repurchases and Dividends

    U.K. Adjustments for  
  Nine Months Ended September 30, 2017
  U.S. GAAP Acquisition costs Non-GAAP Adjusted
Selling, general and administrative expenses $137,475
 $(288) $137,187
Income from operations 21,554
 288
 21,842
Income before income taxes 15,745
 288
 16,033
Provision for income taxes (2,781) —
 (2,781)
Net income $12,964
 $288
 $13,252
       
SG&A as % Gross Profit: 83.4
   83.2
Operating Margin %: 1.5
   1.5
Pretax Margin %: 1.1
   1.1
       
Same Store SG&A $113,338
 $(288) $113,050
Same Store SG&A as % Gross Profit: 80.0
   79.8
       
Same Store income from operations $23,488
 $288
 $23,776
Same Store Operating Margin %: 1.9
   1.9




  Consolidated Adjustments for
  Nine Months Ended September 30, 2017
  U.S. GAAP Catastrophic events Gain / loss on real estate and dealership transactions Acquisition costs 
Legal settlements (1)
 Non-cash asset impairment Allowance for uncertain tax positions Non-GAAP Adjusted
Finance, insurance and other revenues, net $314,297
 $6,550
 $—
 $—
 $—
 $—
 $—
 $320,847
Selling, general and administrative expenses 916,674
 (8,792) (798) (288) 1,113
 —
 —
 907,909
Asset impairments 9,526
 —
 —
 —
 —
 (9,526) —
 —
Income (loss) from operations 250,876
 15,341
 798
 288
 (1,113) 9,526
 —
 275,716
Income (loss) before income taxes 160,029
 15,341
 798
 288
 (1,113) 9,526
 —
 184,869
Benefit (provision) for income taxes (57,076) (5,926) (301) —
 426
 (3,579) 834
 (65,622)
Net income (loss) $102,953
 $9,415
 $497
 $288
 $(687) $5,947
 $834
 $119,247
Less: Adjusted earnings (loss) allocated to participating securities 3,659
 340
 18
 10
 (25) 215
 31
 4,248
Adjusted net income (loss) available to diluted common shares $99,294
 $9,075
 $479
 $278
 $(662) $5,732
 $803
 $114,999
                 
Diluted income (loss) per common share $4.85
 $0.44
 $0.03
 $0.02
 $(0.03) $0.27
 $0.04
 $5.62
                 
Effective tax rate % 35.7
             35.5
                 
SG&A as % Gross Profit: 75.1
             74.0
Operating Margin %: 3.1
             3.4
Pretax Margin %: 2.0
             2.3
                 
Same Store Finance, insurance and other revenues, net $306,875
 $6,550
 $—
 $—
 $—
 $—
 $—
 $313,425
Same Store SG&A 885,579
 (8,792) (798) (288) 1,113
 —
 —
 876,814
Same Store SG&A as % Gross Profit: 74.4
             73.3
                 
Same Store income (loss) from operations $78,068
 $15,341
 $798
 $288
 $(1,113) $9,526
 $—
 $102,908
Same Store Operating Margin %: 3.2
             3.5
(1) ForFrom time to time, our Board of Directors authorizes the repurchase of shares of our common stock up to a certain monetary limit. On August 16, 2022, our Board of Directors increased the share repurchase authorization by $130.5 million to $250.0 million. During the nine months ended September 30, 2017,2022, 2,047,658 shares were repurchased at an average price of $175.58 per share, for a total of $359.5 million. As of September 30, 2022, we recognizedhad $164.0 million available under our current stock repurchase authorization.
During the Current Quarter, we adopted a net pre-tax gain relatedRule 10b5-1 trading plan that was effective from October 3, 2022 to October 19, 2022. Under the plan, we repurchased an additional 638,072 shares subsequent to September 30, 2022, at an average price of $156.70 per share, for a settlement with an OEMtotal cost of $1.8$100.0 million.

During the Current Quarter, our Board of Directors approved a quarterly cash dividend of $0.38 per share on all shares of our common stock, which resulted in $5.8 million paid to common shareholders and $0.2 million to unvested RSA holders.

    U.S. Adjustments for  
  Three Months Ended September 30, 2016
  U.S. GAAP Catastrophic events Gain / loss on real estate and dealership transactions Non-cash asset impairment Non-GAAP Adjusted
Selling, general and administrative expenses $246,501
 $(450) $1,176
 $—
 $247,227
Asset impairments 10,855
 —
 (62) (10,793) —
Income (loss) from operations 78,308
 450
 (1,114) 10,793
 88,437
Income (loss) before income taxes 52,619
 450
 (1,114) 10,793
 62,748
Benefit (provision) for income taxes (19,722) (169) 418
 (4,047) (23,520)
Net income (loss) $32,897
 $281
 $(696) $6,746
 $39,228
           
SG&A as % Gross Profit: 71.1
       71.3
Operating Margin %: 3.4
       3.9
Pretax Margin %: 2.3
       2.8
           
2016 v. 2017          
Same Store SG&A $243,151
 $(450) $—
 $—
 $242,701
Same Store SG&A as % Gross Profit: 71.0
       70.8
           
Same Store income from operations $77,817
 $450
 $—
 $10,793
 $89,060
Same Store Operating Margin %: 3.5
       4.0
    
Brazil Adjustments for

  
  Three Months Ended September 30, 2016
  U.S. GAAP Foreign transaction tax Non-GAAP Adjusted
Selling, general and administrative expenses $12,896
 $(274) $12,622
Income (loss) from operations (696) 274
 (422)
Income (loss) before income taxes (854) 274
 (580)
Net income (loss) $(751) $274
 $(477)
       
SG&A as % Gross Profit: 103.6
   101.4
Operating Margin %: (0.6)   (0.4)
Pretax Margin %: (0.8)   (0.5)
       
2016 v. 2017      
Same Store SG&A $11,762
 $(274) $11,488
Same Store SG&A as % Gross Profit: 101.4
   99.1
       
Same Store income (loss) from operations $(418) $274
 $(144)
Same Store Operating Margin %: (0.4)
   (0.1)

    Consolidated Adjustments for  
  Three Months Ended September 30, 2016
  U.S. GAAP Catastrophic events Gain / loss on real estate and dealership transactions Foreign transaction tax Non-cash asset impairment Non-GAAP Adjusted
Selling, general and administrative expenses $299,006
 $(450) $1,176
 $(274) $—
 $299,458
Asset impairments 10,855
 —
 (62) —
 (10,793) —
Income (loss) from operations 83,916
 450
 (1,114) 274
 10,793
 94,319
Income (loss) before income taxes 55,687
 450
 (1,114) 274
 10,793
 66,090
Benefit (provision) for income taxes (20,321) (169) 418
 —
 (4,047) (24,119)
Net income (loss) 35,366
 281
 (696) 274
 6,746
 41,971
Less: Adjusted earnings (loss) allocated to participating securities 1,426
 11
 (28) 11
 275
 1,695
Adjusted net income (loss) available to diluted common shares $33,940
 $270
 $(668) $263
 $6,471
 $40,276
             
Diluted income (loss) per common share $1.65
 $0.01
 $(0.03) $0.01
 $0.32
 $1.96
             
Effective tax rate % 36.5
         36.5
             
SG&A as % Gross Profit: 73.5
         73.6
Operating Margin %: 3.0
         3.3
Pretax Margin %: 2.0
         2.3
             
2016 v. 2017            
Same Store SG&A $293,749
 $(450) $—
 $(274) $—
 $293,025
Same Store SG&A as % Gross Profit: 73.2
         73.1
             
Same Store income from operations $83,876
 $450
   $274
 $10,793
 $95,393
Same Store Operating Margin %: 3.0
         3.8
    U.S. Adjustments for 
  Nine Months Ended September 30, 2016
  U.S. GAAP Catastrophic events Gain / loss on real estate and dealership transactions Acquisition costs Non-cash asset impairment Non-GAAP Adjusted
Selling, general and administrative expenses $737,730
 $(5,873) $1,856
 $(30) $—
 $733,683
Asset impairments 12,389
 —
 (62) —
 (12,327) —
Income (loss) from operations 241,616
 5,873
 (1,794) 30
 12,327
 258,052
Income (loss) before income taxes 164,607
 5,873
 (1,794) 30
 12,327
 181,043
Benefit (provision) for income taxes (61,406) (2,207) 672
 (11) (4,634) (67,586)
Net income (loss) $103,201
 $3,666
 $(1,122) $19
 $7,693
 $113,457
             
SG&A as % Gross Profit: 72.0
         71.6
Operating Margin %: 3.7
         3.9
Pretax Margin %: 2.5
         2.8
             
2016 v. 2017            
Same Store SG&A $725,162
 $(5,873) $(384) $(30) $—
 $718,875
Same Store SG&A as % Gross Profit: 71.8         71.2
             
Same Store income from operations $241,149
 $5,873
 $385
 $30
 $12,327
 $259,764
Same Store Operating Margin %: 3.7
         4.0

    U.K. Adjustments for 
  Nine Months Ended September 30, 2016
  U.S. GAAP Acquisition costs Non-GAAP Adjusted
Selling, general and administrative expenses $119,154
 $(561) $118,593
Income from operations 24,474
 561
 25,035
Income before income taxes 17,371
 561
 17,932
Net income $13,913
 $561
 $14,474
       
SG&A as % Gross Profit: 80.2
   79.8
Operating Margin %: 1.8
   1.9
Pretax Margin %: 1.3
   1.3
       
2016 v. 2017      
Same Store SG&A $112,159
 $(561) $111,598
Same Store SG&A as % Gross Profit: 77.9   77.5
       
Same Store income from operations $27,172
 $561
 $27,733
Same Store Operating Margin %: 2.1   2.1
    Brazil Adjustments for  
  Nine Months Ended September 30, 2016
  U.S. GAAP Gain / loss on real estate and dealership transactions Foreign transaction tax Foreign deferred income tax benefit Non-GAAP Adjusted
Selling, general and administrative expenses $34,808
 $(372) $(274) $—
 $34,162
Asset impairments 423
 (423) —
 —
 —
Income (loss) from operations (2,773) 795
 274
 —
 (1,704)
Income (loss) before income taxes (3,127) 795
 274
 —
 (2,058)
Benefit (provision) for income taxes 2,250
 —
 —
 (1,686) 564
Net income (loss) $(877) $795
 $274
 $(1,686) $(1,494)
           
SG&A as % Gross Profit: 104.6
       102.6
Operating Margin %: (0.9)       (0.5)
Pretax Margin %: (1.0)       (0.7)
           
2016 v. 2017          
Same Store SG&A $29,192
 $—
 $(274) $—
 $28,918
Same Store SG&A as % Gross Profit: 97.2
       96.3
           
Same Store income from operations $—
 $—
 $274
 $—
 $274
Same Store Operating Margin %: (0.4)
       (0.1)

    
Consolidated Adjustments for

  
  
Nine Months Ended September 30, 2016

  U.S. GAAP Catastrophic events Gain / loss on real estate and dealership transactions Acquisition costs Foreign transaction tax Foreign deferred income tax benefit Non-cash asset impairment Non-GAAP Adjusted
Selling, general and administrative expenses $891,692
 $(5,873) $1,485
 $(591) $(274) $—
 $—
 $886,439
Asset impairments 12,812
 —
 (485) —
 —
 —
 (12,327) —
Income (loss) from operations 263,317
 5,873
 (1,000) 591
 274
 —
 12,327
 281,382
Income (loss) before income taxes 178,851
 5,873
 (1,000) 591
 274
 —
 12,327
 196,916
Benefit (provision) for income taxes (62,614) (2,207) 672
 (11) —
 (1,686) (4,634) (70,480)
Net income (loss) $116,237
 $3,666
 $(328) $580
 $274
 $(1,686) $7,693
 $126,436
Less: Adjusted earnings (loss) allocated to participating securities 4,651
 147
 (13) 23
 11
 (68) 310
 5,061
Adjusted net income (loss) available to diluted common shares $111,586
 $3,519
 $(315) $557
 $263
 $(1,618) $7,383
 $121,375
                 
Diluted income (loss) per common share $5.22
 $0.16
 $(0.01) $0.02
 $0.01
 $(0.07) $0.35
 $5.68
                 
Effective tax rate 35.0
             35.8
                 
SG&A as % Gross Profit: 73.9
             73.5
Operating Margin %: 3.2
             3.4
Pretax Margin %: 2.2
             2.4
                 
2016 v. 2017                
Same Store SG&A $866,513
 $(5,873) $(384) $(591) $(274) $—
 $—
 $859,391
Same Store SG&A as % Gross Profit: 73.2             72.6
                 
Same Store income from operations $268,321
 $5,873
 $385
 $591
 $274
 $—
 $12,327
 $287,771
Same Store Operating Margin %: 3.3             3.6


The following table reconciles cash flow provided by (used in) operating, investingFuture share repurchases and financing activities on a U.S. GAAP basisthe payment of any future dividends are subject to the corresponding adjusted amounts (dollars in thousands):business judgment of our Board of Directors, taking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements, covenant compliance, current economic environment and other factors considered relevant.
  Nine Months Ended September 30,
  2017 2016 % Change
CASH FLOWS FROM OPERATING ACTIVITIES      
Net cash provided by operating activities $309,867
 $386,612
 (19.9)
Change in floorplan notes payable-credit facilities, excluding floorplan offset account and net acquisition and disposition related activity (78,285) (145,819) 
Change in floorplan notes payable-manufacturer affiliates associated with net acquisition and disposition related activity —
 (3,000)  
Adjusted net cash provided by operating activities $231,582

$237,793
 (2.6)
CASH FLOWS FROM INVESTING ACTIVITIES      
Net cash used in investing activities $(246,733) $(157,023) 57.1
Change in cash paid for acquisitions, associated with floorplan notes payable 14,733
 —
  
Change in proceeds from disposition of franchises, property and equipment, associated with floorplan notes payable —
 (10,445)  
Adjusted net cash used in investing activities $(232,000)
$(167,468) 38.5
CASH FLOWS FROM FINANCING ACTIVITIES      
Net cash used in financing activities $(18,110) $(222,053) (91.8)
Change in net borrowings and repayments on floorplan notes payable-credit facilities, excluding net activity associated with our floorplan offset account 63,552
 159,264
 
Adjusted net cash provided by (used in) financing activities $45,442

$(62,789) 172.4
Item 3. Quantitative and Qualitative Disclosures About Market Risk
This Quantitative and Qualitative Disclosures About Market Risk contains information about our market-sensitive financial instruments that constitute forward-looking statements. See “Cautionary Statement about Forward-Looking Statements.”
We are exposed to a variety of market risks, including interest rate risk and foreign currency exchange rate risk. We address interest rate risks primarily through the use of interest rate swaps. We do not currently hedge foreign exchange risk, as discussed further below. The following quantitative and qualitative information is provided aboutregarding our foreign currency exchange rates and financial instruments to which we are a party at September 30, 2017,2022, and from which we may incur future gains or losses from changes in market interest rates and/or foreign currency rates. We do not enter into derivative or other financial instruments for speculative or trading purposes.
Hypothetical changes in interest rates and foreign currency exchange rates chosen for the following estimated sensitivity analysis are considered to be reasonable near-term changes generally based on consideration of past fluctuations for each risk category. However, since it is not possible to accurately predict future changes in interest rate and foreign currency exchange rates, these hypothetical changes may not necessarily be an indicator of probable future fluctuations.Interest Rates
As of September 30, 2017, our 5.00% Notes, with an outstanding principal amount of $550.0 million, had a fair value and carrying amount of $570.5 million and $541.7 million, respectively. At December 31, 2016, our 5.00% Notes, with an outstanding principal amount of $550.0 million, had a fair value and carrying amount of $548.4 million and $540.5 million, respectively. As of September 30, 2017, our 5.25% Notes, with an outstanding principal amount of $300.0 million, had a fair value and carrying amount of $304.4 million and $296.0 million, respectively. At December 31, 2016, our 5.25% Notes, with an outstanding principal amount of $300.0 million, had a fair value and carrying amount of $297.0 million and $295.6 million, respectively. Our other fixed-rate debt, primarily consisting of real estate related debt, had outstanding borrowings of $88.4 million and $93.9 million as of September 30, 2017 and December 31, 2016, respectively. The fair value of such fixed interest rate borrowings was $88.6 million and $94.5 million as of September 30, 2017 and December 31, 2016, respectively.
Interest Rates.We have interest rate risk in our variable-rate debt obligations. Our policy is to monitor the effects of market changes in interest rates and manage our interest rate exposure through the use of a combination of fixed and floating-rate debt and interest rate swaps.
We use interest rate swaps to adjust our exposure to interest rate movements, when appropriate, based upon market conditions. As of September 30, 2017, we held interest rate swaps in effect with aggregate notional amounts of $823.9 million that fixed our underlying one-month LIBOR at a weighted average rate of 2.5%. These hedge instruments are designed to convert floating rate vehicle floorplan payables under our Revolving Credit Facility and variable rate real estate related

borrowings to fixed rate debt. We entered into these swaps with several financial institutions that have investment grade credit ratings, thereby minimizing the risk of credit loss. We reflect the current fair value of all derivatives on our Consolidated Balance Sheets. The fair value of interest rate swaps is impacted by the forward one-month LIBOR curve and the length of time to maturity of the swap contracts. The related gains or losses on these transactions are deferred in stockholders’ equity as a component of accumulated other comprehensive loss. As of September 30, 2017, net unrealized losses, net of income taxes, totaled $5.8 million. These deferred gains and losses are recognized in income in the period in which the related items being hedged are recognized in expense. However, to the extent that the change in value of a derivative contract does not perfectly offset the change in the value of the items being hedged, that ineffective portion is immediately recognized in the results of operations. Allvariable-rate debt obligations, primarily consisting of our interest rate hedges are designated as cash flow hedges. As of September 30, 2017, all of our derivative contracts were determined to be effective. In addition to the $823.9 million of swaps in effect as of September 30, 2017, we also held 12 interest rate swaps with forward start dates between December 2017 and December 2020 and expiration dates between December 2020 and December 2030. As of September 30, 2017, the aggregate notional amount of these swaps was $625.0 million with a weighted average interest rate of 2.2%. The combination of these swaps is structured such that the notional value in effect at any given time through December 2030 does not exceed $918.4 million.
A summary of our interest rate swaps, including those in effect, as well as forward-starting, follows (dollars in millions):
  Q3 2017Q4 20172018201920202021202220232024202520262027202820292030
Weighted average notional amount in effect during the period $824
$822
$821
$917
$614
$432
$168
$134
$125
$125
$100
$100
$100
$100
$100
Weighted average interest rate during the period 2.53%2.53%2.59%2.28%2.21%1.76%1.74%1.81%1.81%1.81%1.85%1.85%1.85%1.85%1.85%
As of September 30, 2017, we had $1,587.9 million of variable-rate borrowings outstanding.U.S. Floorplan Line. Based on the average amount of variable-rate borrowings outstanding of $1.6 billion and $0.8 billion for the nine months ended September 30, 2017,2022 and before the impact of our interest rate swaps described above,2021, respectively, a 100 basis-point change in interest rates would have resulted in an approximate $16.3$6.2 million and $1.2 million change to our annual interest expense. Afterexpense, respectively, after consideration of the average interest rate swaps described in effect during the three months ended September 30, 2017, a 100 basis-point change would have yielded a net annual changeperiods.
To mitigate the impact of $8.1 million in annual interest expense. This interest rate sensitivity increased from September 30, 2016 primarily asfluctuations, we employ an interest rate hedging strategy, whereby we swap variable interest rate exposure on a resultportion of the increase in variable-rate floorplan borrowings.
Ourour borrowings for a fixed interest rate. In addition, our exposure to changes in interest rates with respect to our variable-rate floorplan borrowings is partially mitigated by manufacturers’ interest assistance, which historically has beenin some cases is influenced by changes in market basedmarket-based variable interest rates. We reflect interest assistance as a reduction of new vehicle inventory cost until the associated vehicle is sold. During the threenine months ended September 30, 2017,2022 and 2021, we recognized $13.6$42.1 million and $40.6 million, respectively, of interest assistance as a reduction of new vehicle cost of sales. For the past three years, the reduction to our new vehicle cost of sales has ranged from 88.0% of our floorplan interest expense for the first quarter of 2017 to 139.9% for the third quarter of 2015. In the U.S., manufacturer's interest assistance was 110.7% of floorplan interest expense in the third quarter of 2017. Although we can provide no assurance as to the amount of future interest assistance, it is our expectation, based on historical practice of the OEMS that an increase in prevailing interest rates would result in increased assistance from certain manufacturers over time.
Foreign Currency Exchange Rates. As of September 30, 2017, we had dealership operations in the U.K. and Brazil. Rates
The functional currency of our U.K. subsidiaries is the British pound sterling (£) andGBP. Our exposure to fluctuating foreign currency exchange rates relates to the effects of translating financial statements of those subsidiaries into our Brazil subsidiaries is the Brazilian real (R$). We intend to remain permanently invested in these foreign operations and, as such,reporting currency, which we do not hedge against foreign currency fluctuations that may temporarily impactbased on our investment strategy in our U.K. and Brazil subsidiaries. If we change our intent with respect to such international investment, we would expect to implement strategies designed to manage those risks in an effort to mitigate the effect ofthese foreign currency fluctuations on our earnings and cash flows.operations. A 10% devaluation in average foreign currency exchange rates for the British pound sterlingGBP to the U.S. dollarUSD would have resulted in a $134.4$194.6 million and $181.9 million decrease to our revenues for the nine months ended September 30, 2017. A 10% devaluation2022 and 2021, respectively.
Refer to Note 7. Financial Instruments and Fair Value Measurements in average exchange ratesour Notes to Condensed Consolidated Financial Statements for the Brazilian real to the U.S. dollar would have resulted in a $30.2 million decrease to our revenues for the nine months ended September 30, 2017. We believe that inflation rates over the last few years have not had a significant impact on our consolidated revenues or profitability. We do not expect inflation to have near-term material effects on the sale of our products and services on a consolidated basis; however, we cannot be sure there will be no such effect in the future. We finance substantially all of our inventory through various revolving floor plan arrangements with interest rates that vary based on various benchmarks. Such rates have historically increased during periods of increasing inflation.

For additionalfurther information about our market sensitive financial instruments please see Part II, “Item 7. Management’s Discussion & Analysisinstruments.
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Table of Financial Condition and Results of Operations," "Item 7A. Quantitative and Qualitative Disclosures About Market Risk” and Note 4 to “Item 8. Financial Statements and Supplementary Data” in our 2016 Form 10-K.Contents
Item 4.Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(b) under the Securities Exchange Act, of 1934, as amended (the “Exchange Act”), we have evaluated, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 20172022, at the reasonable assurance level.
Our management, including our principal executive officer and our principal financial officer, does not expect that our disclosure controls and procedures can prevent all possible errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that objectives of the control system are met. There are inherent limitations in all control systems, including the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the intentional acts of one or more persons. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events and while our disclosure controls and procedures are designed to be effective under circumstances where they should reasonably be expected to operate effectively, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitations in any control system, misstatements due to possible errors or fraud may occur and not be detected.
Changes in Internal Control over Financial Reporting
During the three months ended September 30, 2017,2022, there waswere no changechanges in our system of internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

49
Table of Contents
PART II. OTHER INFORMATION

Item 1. Legal Proceedings
In late June 2016, Volkswagen agreed to pay up to an aggregate of $14.7 billion to settle claims stemming from the diesel emissions scandal. In October 2016, we received notification from Volkswagen that we are entitled to receive, in the aggregate, approximately $13.2 million in connection with our current and prior ownership of seven Volkswagen dealerships in the U.S. We accepted and executed the offer in the fourth quarter of 2016 and received half of the compensation in a lump sum amount in January 2017 with the remaining amount to be paid over 18 months. We have received eight of the remaining 18 monthly installments as of September 30, 2017. Also, in conjunction with the Volkswagen diesel emissions scandal, Volkswagen agreed in March 2017 to settle allegations of damages by us relative to our three Audi branded dealerships. We received the cash settlement for Audi in the second quarter of 2017.
We are not party to any legal proceedings, including class action lawsuits that, individually or in the aggregate, are reasonably expected to have a material adverse effect on our results of operations, financial condition or cash flows. For a discussion of our legal proceedings, see Part I, “Item 1. Financial Statements,”refer to Note 12. Commitments and Contingencies within our Notes to Condensed Consolidated Financial Statements, Note 11, “Commitments and Contingencies.”Statements.
Item 1A. Risk Factors
In additionExcept as set forth below, during the nine months ended September 30, 2022, there were no changes to the information set forth in this Form 10-Q, you should carefully consider the risk factors previouslyRisk Factors disclosed in “ItemItem 1A. Risk Factors”Factors of our 20162021 Form 10-K. Readers should carefully consider
The Russian invasion of Ukraine and the factors discussedretaliatory measures imposed by the U.S., U.K., European Union and other countries and the responses of Russia to such measures have caused significant disruptions to domestic and foreign economies.
The Russia and Ukraine Conflict had an immediate impact on the global economy resulting in Part 1, “Itemhigher prices for oil and other commodities. The U.S., U.K., European Union and other countries responded to Russia’s invasion of Ukraine by imposing various economic sanctions and bans. Russia has responded with its own retaliatory measures. These measures have impacted the availability and price of certain raw materials throughout the global economy. The invasion and retaliatory measures also disrupted economic markets. The global impact of these measures is continually evolving and cannot be predicted with certainty and there is no assurance that Russia’s invasion of Ukraine and responses thereto will not further disrupt the global economy and supply chain. In particular, the Russia and Ukraine Conflict has further impacted the ability of certain OEMs to produce new vehicles and new vehicle parts, which may result in continued disruptions to the supply of new and used vehicles. Further, there is no assurance that when the Russia and Ukraine Conflict ends, countries will not continue to impose sanctions and bans.
While these events have not materially interrupted our operations, these or future developments resulting from the Russia and Ukraine Conflict, such as a cyberattack on the U.S. or our suppliers, could disrupt our operations, increase the cost or decrease the availability of certain materials necessary to produce vehicles we sell or obtain parts to complete maintenance and collision repair services, or make it difficult to access debt and equity capital on attractive terms, if at all, and impact our ability to fund business activities and/or limit future acquisition activity.
Recent economic and financial developments, including rising inflation, high energy prices, increasing interest rates and the potential recessionary environment could adversely affect our operations and financial condition.
During the Current Year, the global economy experienced rising inflation and an increase in gasoline and energy prices. In response to inflationary pressures and macroeconomic conditions, the U.S. Federal Reserve, along with other central banks, including in the U.K., continued to increase interest rates throughout 2022, which could lower demand for new and used vehicles in future periods. Additionally, U.S. GDP shrank for the second consecutive quarter as of the quarter ended June 30, 2022, indicating that the U.S. economy may be entering a recession. In Europe, rising energy costs as a result of supply disruptions and increased winter demand for heating could place additional strain on our suppliers’ ability to maintain current production levels of vehicles and vehicle parts. Across the European Union, these energy constraints could result in nations or regions enacting emergency energy related policies, limiting energy availability for manufacturers. Any such production constraints could further exacerbate an already ailing supply chain. The impact of these macroeconomic developments on our operations cannot be predicted with certainty.
Rising inflation, increased energy costs and a prolonged recession could adversely impact our operations, the operations of our suppliers and customer demand for our vehicles and services. Refer to Item 1A. Risk Factors” inFactors of our 20162021 Form 10-K for additional information regarding the potential impact of economic and financial risks on the Company. Continued interest rate increases could have a material adverse impact on our interest expense and ability to obtain financing through the debt markets, as well as consumers’ ability to obtain financing for the purchase of new and used vehicles. Refer to Item 3. Quantitative and Qualitative Disclosures About Market Risk for additional analysis regarding our interest rate sensitivity.
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Table of Contents
Recent proposed changes to regulations could adversely impact our operations.
New laws and regulations at the state and federal level may be enacted which could materially affectadversely impact our business, financial condition or future results. The risks describedbusiness. For example, in 2022, the Federal Trade Commission proposed new regulations for automotive dealers that would prohibit a wide range of current industry-accepted sales practices with regard to sales and advertising of our 2016 Form 10-K are not the only risks we face. Additional risksvehicles and uncertainties not currently known to us or that we currently deemproducts, require an extensive series of both oral and written disclosures to be immaterial alsomade at the initial contact in regard to the sale price of vehicles, financial terms and voluntary protection products, mandate the posting of certain pricing and other information on dealer websites, and impose burdensome recordkeeping requirements. Failure to adhere to these new policies could subject the Company to significant monetary and other penalties or require us to make adjustments to our products and services, any or all of which could result in lost revenues, increased expenses and substantial adverse publicity. These changes, if adopted as proposed, may materially adversely affectlead to additional transaction times for the sale of vehicles, complicate the transaction process, decrease customer satisfaction, and impose recordkeeping burdens on our business, financial conditionemployees, among other effects. If these regulations or future results.other adverse changes in law were to be enacted, it could have an adverse effect on our business.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Recent Sales of Unregistered Securities
None.
Use of Proceeds
None.
Issuer Purchases of Equity Securities
The following table providessets forth information about purchaseswith respect to shares of equity securities that are registeredcommon stock repurchased by us pursuant to Section 12 of the Exchange Act during the three months ended September 30, 2017:2022:
PeriodTotal Number of Shares PurchasedAverage Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions) (1)
July 1, 2022 — July 31, 20225,600 $175.41 5,600 $138.0 
August 1, 2022 — August 31, 2022230,229 $181.82 230,229 $226.6 
September 1, 2022 — September 30, 2022374,100 $167.28 374,100 $164.0 
Total609,929 609,929 
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
        (In thousands, excluding commissions)
July 1 - July 31, 2017 —
 $—
 —
 $50,710
August 1 - August 31, 2017 20,000
 $53.46
 20,000
 $49,641
September 1 - September 30, 2017 —
 $—
 —
 $49,641
Total 20,000
 $53.46
 20,000
  
(1)In May 2017, the Our Board of Directors approved a new authorization of upfrom time to $75.0 milliontime authorizes the repurchase of shares of our common stock replacingup to a certain monetary limit. On August 16, 2022, our Board of Directors increased the prior $150.0share repurchase authorization by $130.5 million authorization. to $250.0 million. Our share repurchase authorization does not have an expiration date.
During the three months ended September 30, 2022, we adopted a Rule 10b5-1 trading plan that was effective from October 3, 2022 to October 19, 2022. Under the plan, we repurchased an additional 638,072 shares subsequent to September 30, 2022 at an average price of $156.70, for a total cost of $100.0 million.
Future share repurchases are subject to the discretionbusiness judgment of our Board of Directors, after consideringtaking into consideration our historical and projected results of operations, financial condition, cash flows, capital requirements, existing debt covenants, outlook for our business, general business conditionscovenant compliance, current economic environment and other factors. During the three months endedfactors considered relevant. As of September 30, 2017, 20,000 shares were repurchased for a total cost2022, we had $164.0 million available under our current share repurchase authorization.
51
Table of $1.1 million.Contents


Item 6. Exhibits
ThoseThe exhibits required to be filed or furnished by Item 601 of Regulation S-K are listed in the Exhibit Index immediately preceding the exhibits filed herewith and such listing is incorporated herein by reference.below.


EXHIBIT INDEX
Exhibit
Number
Description
2.1#
—Purchase Agreement, dated as of September 12, 2021, by and among Group 1 Automotive, Inc., GPB Portfolio Automotive, LLC, Capstone Automotive Group, LLC, Capstone Automotive Group II, LLC, Automile Parent Holdings, LLC, Automile TY Holdings, LLC and Prime Real Estate Holdings, LLC (incorporated by reference to Exhibit 2.1 of Group 1 Automotive, Inc.’s Quarterly Report on Form 10-Q (File No. 001-13461) for the quarter ended September 30, 2021)
Exhibit
Number2.2
—Description
Share Repurchase Agreement, dated November 12, 2021, by and between Group 1 Automotive, Inc., Buyer and UAB as intervening party (English translation) (incorporated by reference to Exhibit 2.1 of Group 1 Automotive Inc.’s Current Report on Form 8-K (File No. 001-13461) filed on November 15, 2021)
3.1
—
Amended and Restated Certificate of Incorporation of Group 1 Automotive, Inc. (incorporated by reference to Exhibit 3.1 of Group 1 Automotive, Inc.’s Current Report on Form 8-K (File No. 001-13461) filed May 22, 2015)


3.2
—
Third Amended and Restated Bylaws of Group 1 Automotive, Inc. (incorporated by reference to Exhibit 3.1 of Group 1 Automotive, Inc.’s Current Report on Form 8-K (File No. 001-13461) filed April 6, 2017)


10.1
—First Amendment to the Twelfth Amended and Restated Revolving Credit Agreement dated effective as of August 18, 2022 (incorporated by reference to Exhibit 10.1 of Group 1 Automotive, Inc.’s Current Report on Form 8-K (File No. 001-13461) filed August 23, 2022)
10.2*†
—First Amendment to Incentive, Compensation, Confidentiality, Non-Disclosure and Non-Compete Agreement, effective as of August 24, 2022, between Group 1 Automotive, Inc. and Daryl A. Kenningham
10.3*†
—Second Amendment to Employment Agreement, effective as of August 24, 2022, between Group 1 Automotive, Inc. and Earl J. Hesterberg
31.1*
—Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
—Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*
—Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*
—Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*—XBRL Instance Document
 101.SCH*—XBRL Taxonomy Extension Schema Document
 101.CAL*—XBRL Taxonomy Extension Calculation Linkbase Document
 101.DEF*—XBRL Taxonomy Extension Definition Linkbase Document
 101.LAB*—XBRL Taxonomy Extension Label Linkbase Document
 101.PRE*—XBRL Taxonomy Extension Presentation Linkbase Document
 104*—Cover Page Interactive Data File (formatted in Inline XBRL and contained in exhibit 101)

*Filed or furnished herewith
†Management contract or compensatory plan or arrangement
#The exhibits and schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K and will be provided to the SEC upon request.
*Filed or furnished herewith

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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Group 1 Automotive, Inc.
Date:By:October 28, 2022                                  /s/  John C. RickelBy:/s/  Daniel J. McHenry
John C. RickelDaniel J. McHenry
Senior Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial
and Accounting Officer)
Date: November 2, 2017

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