Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 22, 2017 | Jun. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | PENSKE AUTOMOTIVE GROUP, INC. | ||
Entity Central Index Key | 1,019,849 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 1,184,017,046 | ||
Entity Common Stock, Shares Outstanding | 85,478,121 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
ASSETS | ||
Cash and cash equivalents | $ 24 | $ 62.4 |
Accounts receivable, net of allowance for doubtful accounts of $4.5 and $4.2 | 879 | 782.3 |
Inventories | 3,408.2 | 3,463.5 |
Other current assets | 102 | 85.6 |
Assets held for sale | 8.3 | 12.7 |
Total current assets | 4,421.5 | 4,406.5 |
Property and equipment, net | 1,806.5 | 1,520.1 |
Goodwill | 1,291.3 | 1,323.2 |
Other indefinite-lived intangible assets | 420.1 | 408 |
Equity method investments | 893.4 | 336.4 |
Other long-term assets | 28.3 | 19.2 |
Total assets | 8,861.1 | 8,013.4 |
LIABILITIES AND EQUITY | ||
Floor plan notes payable | 2,084.5 | 2,247.2 |
Floor plan notes payable - non-trade | 1,233.3 | 1,132.4 |
Accounts payable | 497.4 | 493.8 |
Accrued expenses | 360 | 378.1 |
Current portion of long-term debt | 48.3 | 28 |
Liabilities held for sale | 6.1 | 6.2 |
Total current liabilities | 4,229.6 | 4,285.7 |
Long-term debt | 1,828.8 | 1,247 |
Deferred tax liabilities | 592.7 | 433.4 |
Other long-term liabilities | 430.5 | 212.4 |
Total liabilities | 7,081.6 | 6,178.5 |
Commitments and contingent liabilities (Note 11) | ||
Penske Automotive Group stockholders' equity: | ||
Preferred Stock, $0.0001 par value; 100,000 shares authorized; none issued and outstanding | ||
Common Stock | ||
Additional paid-in-capital | 497.1 | 656 |
Retained earnings | 1,504.5 | 1,256.7 |
Accumulated other comprehensive income (loss) | (250.7) | (122.5) |
Total Penske Automotive Group stockholders' equity | 1,750.9 | 1,790.2 |
Non-controlling interest | 28.6 | 44.7 |
Total equity | 1,779.5 | 1,834.9 |
Total liabilities and equity | 8,861.1 | 8,013.4 |
Non-voting Common Stock | ||
Penske Automotive Group stockholders' equity: | ||
Common Stock | ||
Class C Common Stock | ||
Penske Automotive Group stockholders' equity: | ||
Common Stock |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 4.5 | $ 4.2 |
Preferred Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred Stock, shares authorized | 100,000 | 100,000 |
Preferred Stock, shares issued | 0 | 0 |
Preferred Stock, shares outstanding | 0 | 0 |
Common Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, shares authorized | 240,000,000 | 240,000,000 |
Common Stock, shares issued | 85,214,345 | 89,524,724 |
Common Stock, shares outstanding | 85,214,345 | 89,524,724 |
Non-voting Common Stock | ||
Common Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, shares authorized | 7,125,000 | 7,125,000 |
Common Stock, shares issued | 0 | 0 |
Common Stock, shares outstanding | 0 | 0 |
Class C Common Stock | ||
Common Stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common Stock, shares authorized | 20,000,000 | 20,000,000 |
Common Stock, shares issued | 0 | 0 |
Common Stock, shares outstanding | 0 | 0 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue: | |||
Total revenues | $ 20,118.5 | $ 19,284.9 | $ 17,232 |
Cost of sales: | |||
Total cost of sales | 17,151.9 | 16,417.4 | 14,652.8 |
Gross profit | 2,966.6 | 2,867.5 | 2,579.2 |
Selling, general and administrative expenses | 2,302 | 2,223 | 2,008.6 |
Depreciation | 89.7 | 78 | 70.2 |
Operating income | 574.9 | 566.5 | 500.4 |
Floor plan interest expense | (50.9) | (44.5) | (46.5) |
Other interest expense | (85.4) | (69.4) | (52.8) |
Gain on investment | 16 | ||
Equity in earnings of affiliates | 69.5 | 39.3 | 40.8 |
Income from continuing operations before income taxes | 508.1 | 491.9 | 457.9 |
Income taxes | (160.7) | (158) | (153.1) |
Income from continuing operations | 347.4 | 333.9 | 304.8 |
Loss from discontinued operations, net of tax | (1) | (3.5) | (14.7) |
Net income | 346.4 | 330.4 | 290.1 |
Less: Income attributable to non-controlling interests | 3.5 | 4.3 | 3.4 |
Net income attributable to Penske Automotive Group common stockholders | $ 342.9 | $ 326.1 | $ 286.7 |
Basic earnings per share attributable to Penske Automotive Group common stockholders: | |||
Continuing operations (in dollars per share) | $ 4 | $ 3.67 | $ 3.34 |
Discontinued operations (in dollars per share) | (0.01) | (0.04) | (0.16) |
Net income attributable to Penske Automotive Group common stockholders (in dollars per share) | $ 3.99 | $ 3.63 | $ 3.17 |
Shares used in determining basic earnings per share (in shares) | 86,000,754 | 89,759,626 | 90,318,839 |
Diluted earnings per share attributable to Penske Automotive Group common stockholders: | |||
Continuing operations (in dollars per share) | $ 4 | $ 3.67 | $ 3.34 |
Discontinued operations (in dollars per share) | (0.01) | (0.04) | (0.16) |
Net income attributable to Penske Automotive Group common stockholders (in dollars per share) | $ 3.99 | $ 3.63 | $ 3.17 |
Shares used in determining diluted earnings per share (in shares) | 86,000,754 | 89,759,626 | 90,354,839 |
Amounts attributable to Penske Automotive Group common stockholders: | |||
Income from continuing operations | $ 347.4 | $ 333.9 | $ 304.8 |
Less: Income attributable to non-controlling interests | 3.5 | 4.3 | 3.4 |
Income from continuing operations, net of tax | 343.9 | 329.6 | 301.4 |
Loss from discontinued operations, net of tax | (1) | (3.5) | (14.7) |
Net income attributable to Penske Automotive Group common stockholders | $ 342.9 | $ 326.1 | $ 286.7 |
Cash dividends per share (in dollars per share) | $ 1.1 | $ 0.94 | $ 0.78 |
Retail Automotive Dealership | |||
Revenue: | |||
Total revenues | $ 18,673.2 | $ 17,896.3 | $ 16,657.5 |
Cost of sales: | |||
Total cost of sales | 15,968.4 | 15,288.3 | 14,180.1 |
Retail Commercial Truck Dealership | |||
Revenue: | |||
Total revenues | 1,000.7 | 944.1 | 125.6 |
Cost of sales: | |||
Total cost of sales | 857.8 | 797.1 | 104.5 |
Commercial Vehicle Distribution and Other | |||
Revenue: | |||
Total revenues | 444.6 | 444.5 | 448.9 |
Cost of sales: | |||
Total cost of sales | $ 325.7 | $ 332 | $ 368.2 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income | $ 346.4 | $ 330.4 | $ 290.1 |
Other comprehensive income: | |||
Foreign currency translation adjustment | (117.3) | (62.9) | (64.4) |
Unrealized gain (loss) on interest rate swaps: | |||
Unrealized loss arising during the period, net of tax benefit of $0.0, $0.0 and $0.1, respectively | (0.2) | ||
Reclassification adjustment for loss included in floor plan interest expense, net of tax provision of $0.0, $0.0 and $3.2, respectively | 4.9 | ||
Unrealized gain (loss) on interest rate swaps, net of tax | 4.7 | ||
Other adjustments to comprehensive income, net | (11.7) | (7.4) | (6.5) |
Other comprehensive income (loss), net of tax | (129) | (70.3) | (66.2) |
Comprehensive income | 217.4 | 260.1 | 223.9 |
Less: Comprehensive income attributable to non-controlling interests | 2.7 | 3.2 | 2.1 |
Comprehensive income attributable to Penske Automotive Group common stockholders | $ 214.7 | $ 256.9 | $ 221.8 |
CONSOLIDATED STATEMENTS OF COM6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME | |||
Unrealized loss arising during the period, tax benefit | $ 0 | $ 0 | $ 0.1 |
Reclassification adjustment for loss included in floor plan interest expense, tax provision | $ 0 | $ 0 | $ 3.2 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Operating Activities: | |||
Net income | $ 346.4 | $ 330.4 | $ 290.1 |
Adjustments to reconcile net income to net cash from continuing operating activities: | |||
Depreciation | 89.7 | 78 | 70.2 |
Gain on investment | (16) | ||
Earnings of equity method investments | (50) | (28) | (28.8) |
Loss from discontinued operations, net of tax | 1 | 3.5 | 14.7 |
Deferred income taxes | 162.2 | 44.6 | 50.5 |
Changes in operating assets and liabilities: | |||
Accounts receivable | (92.5) | (23.5) | (41.2) |
Inventories | 130.4 | (428.4) | (120.6) |
Floor plan notes payable | (162.8) | 360.8 | 140.7 |
Accounts payable and accrued expenses | (17.8) | 66 | 19.6 |
Other | (41.1) | (11.9) | (19.9) |
Net cash provided by continuing operating activities | 365.5 | 391.5 | 359.3 |
Investing Activities: | |||
Purchase of equipment and improvements | (203.1) | (199.5) | (176.1) |
Acquisition of additional ownership interest in Penske Truck Leasing | (498.5) | ||
Acquisitions net, including repayment of sellers’ floor plan notes payable of $62.2, $60.3 and $117.8, respectively | (140.8) | (156.9) | (355) |
Other | 5.7 | 4.7 | (22.6) |
Net cash used in continuing investing activities | (836.7) | (351.7) | (553.7) |
Financing Activities: | |||
Proceeds from borrowings under U.S. credit agreement revolving credit line | 1,476.5 | 1,420.4 | 1,272.6 |
Repayments under U.S. credit agreement revolving credit line | (1,396.5) | (1,260.4) | (1,362.6) |
Repayment of U.S. credit agreement term loan | (88) | (10) | |
Repayment of U.S. commercial truck capital loan | (60.5) | ||
Net borrowings (repayments) of other long-term debt | 42.9 | (73.6) | 28.7 |
Net borrowings of floor plan notes payable — non-trade | 101 | 154.2 | 26.1 |
Payment of debt issuance costs | (6.7) | (1.8) | (4.4) |
Repurchases of common stock | (173.6) | (48.9) | (15.5) |
Dividends | (95.1) | (84.8) | (70.5) |
Other | (9.7) | (5.9) | 0.3 |
Net cash provided by (used in) continuing financing activities | 438.8 | (49.3) | 164.7 |
Discontinued operations: | |||
Net cash provided by (used in) discontinued operating activities | 1.6 | (5.5) | 8.6 |
Net cash provided by discontinued investing activities | 1.7 | 129.6 | 19.8 |
Net cash used in discontinued financing activities | (0.2) | (87.1) | (11.4) |
Net cash provided by discontinued operations | 3.1 | 37 | 17 |
Effect of exchange rate changes on cash and cash equivalents | (9.1) | (1.4) | (1.3) |
Net change in cash and cash equivalents | (38.4) | 26.1 | (14) |
Cash and cash equivalents, beginning of period | 62.4 | 36.3 | 50.3 |
Cash and cash equivalents, end of period | 24 | 62.4 | 36.3 |
Cash paid for: | |||
Interest | 129.8 | 110.1 | 98.4 |
Income taxes | 48.6 | 114.9 | 114.3 |
Seller financed/assumed debt | $ 2.6 | 136.4 | |
5.50% senior subordinated notes due 2026 | |||
Financing Activities: | |||
Issuance of senior subordinated notes | $ 500 | ||
5.375% Senior Subordinated Notes Due 2024 | |||
Financing Activities: | |||
Issuance of senior subordinated notes | $ 300 |
CONSOLIDATED STATEMENTS OF CAS8
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Repayment of Sellers' Floor Plan Notes Payable Dealership Acquisitions | $ 62.2 | $ 60.3 | $ 117.8 |
5.50% senior subordinated notes due 2026 | |||
Interest rate (as a percent) | 5.50% | ||
5.375% Senior Subordinated Notes Due 2024 | |||
Interest rate (as a percent) | 5.375% | 5.375% | 5.375% |
CONSOLIDATED STATEMENT OF EQUIT
CONSOLIDATED STATEMENT OF EQUITY - USD ($) $ in Millions | Total Stockholders' Equity Attributable to Penske Automotive Group | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interest | Total |
Balance at Dec. 31, 2013 | $ 1,504.4 | $ 693.6 | $ 799.2 | $ 11.6 | $ 17.7 | $ 1,522.1 | |
Balance (in shares) at Dec. 31, 2013 | 90,243,731 | ||||||
Increase (decrease) in stockholders' equity | |||||||
Equity compensation | 12.3 | 12.3 | 12.3 | ||||
Equity compensation (in shares) | 336,459 | ||||||
Repurchases of common stock | (15.5) | (15.5) | (15.5) | ||||
Repurchases of common stock (in shares) | (335,350) | ||||||
Dividends | (70.5) | (70.5) | (70.5) | ||||
Purchase of controlling interest | 10.2 | 10.2 | |||||
Distributions to non-controlling interests | (1.7) | (1.7) | |||||
Sale of subsidiary shares to non-controlling interest | 0.3 | 0.3 | 0.1 | 0.4 | |||
Foreign currency translation | (63.1) | (63.1) | (1.3) | (64.4) | |||
Interest rate swaps | 4.7 | 4.7 | 4.7 | ||||
Other | (6.5) | (6.5) | (6.5) | ||||
Net income | 286.7 | 286.7 | 3.4 | 290.1 | |||
Balance at Dec. 31, 2014 | 1,652.8 | 690.7 | 1,015.4 | (53.3) | 28.4 | 1,681.2 | |
Balance (in shares) at Dec. 31, 2014 | 90,244,840 | ||||||
Increase (decrease) in stockholders' equity | |||||||
Equity compensation | 14 | 14 | 14 | ||||
Equity compensation (in shares) | 290,580 | ||||||
Repurchases of common stock | (48.9) | (48.9) | (48.9) | ||||
Repurchases of common stock (in shares) | (1,010,696) | ||||||
Dividends | (84.8) | (84.8) | (84.8) | ||||
Purchase of controlling interest | 22.5 | 22.5 | |||||
Purchase of subsidiary shares from non-controlling interest | (6.1) | (6.1) | |||||
Distributions to non-controlling interests | (3.8) | (3.8) | |||||
Sale of subsidiary shares to non-controlling interest | 0.2 | 0.2 | 0.5 | 0.7 | |||
Foreign currency translation | (61.8) | (61.8) | (1.1) | (62.9) | |||
Other | (7.4) | (7.4) | (7.4) | ||||
Net income | 326.1 | 326.1 | 4.3 | 330.4 | |||
Balance at Dec. 31, 2015 | 1,790.2 | 656 | 1,256.7 | (122.5) | 44.7 | 1,834.9 | |
Balance (in shares) at Dec. 31, 2015 | 89,524,724 | ||||||
Increase (decrease) in stockholders' equity | |||||||
Equity compensation | 14.3 | 14.3 | 14.3 | ||||
Equity compensation (in shares) | 346,663 | ||||||
Repurchases of common stock | (173.6) | (173.6) | (173.6) | ||||
Repurchases of common stock (in shares) | (4,657,042) | ||||||
Dividends | (95.1) | (95.1) | (95.1) | ||||
Purchase of subsidiary shares from non-controlling interest | (0.3) | (0.3) | (10.4) | (10.7) | |||
Distributions to non-controlling interests | (2.4) | (2.4) | |||||
Foreign currency translation | (116.5) | (116.5) | (0.8) | (117.3) | |||
Other | (11) | 0.7 | (11.7) | (6) | (17) | ||
Net income | 342.9 | 342.9 | 3.5 | 346.4 | |||
Balance at Dec. 31, 2016 | $ 1,750.9 | $ 497.1 | $ 1,504.5 | $ (250.7) | $ 28.6 | $ 1,779.5 | |
Balance (in shares) at Dec. 31, 2016 | 85,214,345 |
CONSOLIDATED STATEMENT OF EQU10
CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED CONDENSED STATEMENT OF EQUITY | |||
Dividends per share (in dollars per share) | $ 1.1 | $ 0.94 | $ 0.78 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Organization and Summary of Significant Accounting Policies | |
Organization and Summary of Significant Accounting Policies | 1. Organization and Summary of Significant Accounting Policies Unless the context otherwise requires, the use of the terms “PAG,” “we,” “us,” and “our” in these Notes to the Consolidated Financial Statements refers to Penske Automotive Group, Inc. and its consolidated subsidiaries. Business Overview and Concentrations We are an international transportation services company that operates automotive and commercial truck dealerships principally in the United States, Canada and Western Europe, and distributes commercial vehicles, diesel engines, gas engines, power systems and related parts and services principally in Australia and New Zealand. In 2016, our business generated $20.1 billion in total revenue, which is comprised of $18.7 billion from retail automotive dealerships, $1.0 billion from retail commercial truck dealerships and $0.4 billion from commercial vehicle distribution and other operations. Retail Automotive Dealership. We believe we are the second largest automotive retailer headquartered in the U.S. as measured by the $18.7 billion in total retail automotive dealership revenue we generated in 2016. As of December 31, 2016, we operated 355 retail automotive franchises, of which 164 franchises are located in the U.S. and 191 franchises are located outside of the U.S. The franchises outside the U.S. are located primarily in the U.K. We are engaged in the sale of new and used motor vehicles and related products and services, including vehicle service, collision repair, and placement of finance and lease contracts, third-party insurance products and other aftermarket products. We operate dealerships under franchise agreements with a number of automotive manufacturers and distributors. In accordance with individual franchise agreements, each dealership is subject to certain rights and restrictions typical of the industry. The ability of the manufacturers to influence the operations of the dealerships, or the loss of a significant number of franchise agreements, could have a material impact on our results of operations, financial position and cash flows. For the year ended December 31, 2016, BMW/MINI franchises accounted for 25% of our total retail automotive dealership revenues, Audi/Volkswagen/Porsche/Bentley franchises accounted for 24%, Toyota/Lexus franchises accounted for 15%, and Mercedes-Benz/Sprinter/smart accounted for 10%. No other manufacturers’ franchises accounted for more than 10% of our total retail automotive dealership revenues. At December 31, 2016 and 2015, we had receivables from manufacturers of $196.5 million and $178.9 million, respectively. In addition, a large portion of our contracts in transit, which are included in accounts receivable, are due from manufacturers’ captive finance companies. During the year ended December 31, 2016, we acquired twenty retail automotive franchises in the U.K. and Italy. Twelve of these franchises were acquired in July 2016 and represent our acquisition of a dealer group in the U.K., which includes seven Volkswagen franchises, one BMW franchise, one MINI franchise, one Audi franchise, one Skoda franchise, and one SEAT franchise. Seven of these franchises were acquired in Italy in October 2016, which include three Porsche franchises, one Audi franchise, one Land Rover franchise, one Volvo, and one Nissan franchise in the Bologna, Italy market. To fund the Italian acquisitions, we invested additional capital into our Italian joint venture and now own 84% of that venture. We were also awarded seven retail automotive franchises, disposed of ten retail automotive franchises, and transitioned seventeen franchises which represented the Scion brand to our existing Toyota franchises. Additionally, during the first quarter of 2016, we acquired an additional 8% interest in the Jacobs Group, one of our German automotive dealership joint ventures, and now own 68% of that joint venture. In September 2015, we increased our ownership interest in the Jacobs Group from 50% to 60% upon acquisition of an additional 10% interest, resulting in us owning a controlling interest in this joint venture; we therefore began consolidating this entity in our financial results in the year ended December 31, 2015. We also acquired a 49% interest in the Nicole Group, a luxury dealership group in Tokyo and nearby suburbs in January 2016. The Nicole Group operates four BMW and two MINI dealerships, a Rolls-Royce dealership, a Ferrari dealership, and is the exclusive importer and distributor of ALPINA and also operates two ALPINA dealerships. This investment is accounted for under the equity method. Retail Commercial Truck Dealership. In November 2014, we acquired a controlling interest in a heavy and medium duty truck dealership group located primarily in Texas and Oklahoma, which we renamed Premier Truck Group (“PTG”). Prior to the 2014 transaction, we held a 32% interest in PTG and accounted for this investment under the equity method. In 2015, we acquired an additional 5% of PTG, bringing our ownership interest to 96%. In April 2016, we acquired the remaining ownership interests of PTG, bringing our total ownership interest to 100%. As of December 31, 2016, PTG operated twenty locations in the U.S. and Canada, including fourteen full-service dealerships offering primarily Freightliner and Western Star branded trucks. Two of these locations, Chattanooga and Knoxville, were acquired in February 2015. Four of these locations were acquired in April 2016 and represent Freightliner and Western Star in the greater Toronto, Canada market area. We acquired two additional retail commercial truck dealerships that also represent Freightliner in December 2016 in the Niagara Falls, Canada market area. PTG also offers a full range of used trucks available for sale as well as service and parts departments, many of which are open 24 hours a day, seven days a week. Commercial Vehicle Distribution . We are the exclusive importer and distributor of Western Star heavy-duty trucks (a Daimler brand), MAN heavy and medium duty trucks and buses (a VW Group brand), and Dennis Eagle refuse collection vehicles, together with associated parts, across Australia, New Zealand and portions of the Pacific. This business, known as Penske Commercial Vehicles Australia (“PCV Australia”), distributes commercial vehicles and parts to a network of more than 70 dealership locations, including six company-owned retail commercial vehicle dealerships. We are also a leading distributor of diesel and gas engines and power systems, principally representing MTU, Detroit Diesel, Mercedes-Benz Industrial, Allison Transmission and MTU Onsite Energy. This business, known as Penske Power Systems (“PPS”), offers products across the on- and off-highway markets in Australia, New Zealand and portions of the Pacific and supports full parts and aftersales service through a network of branches, field locations and dealers across the region. The on-highway portion of this business complements our existing PCV Australia distribution business. Penske Truck Leasing. We currently hold a 23.4% ownership interest in Penske Truck Leasing Co., L.P. (“PTL”), a leading provider of transportation services and supply chain management. PTL is capable of meeting customers’ needs across the supply chain with a broad product offering that includes full-service truck leasing, truck rental and contract maintenance, along with logistic services such as dedicated contract carriage, distribution center management, transportation management and lead logistics provider. On July 27, 2016, we acquired an additional 14.4% ownership interest in PTL from subsidiaries of GE Capital Global Holdings, LLC (collectively, “GE Capital”) for approximately $498.5 million in cash to bring our total ownership interest to 23.4%. Prior to this acquisition, we held a 9.0% ownership interest in PTL. PTL is currently owned 41.1% by Penske Corporation, 23.4% by us, 20.0% by affiliates of Mitsui & Co., Ltd. (“Mitsui”), and 15.5% by GE Capital. We account for our investment in PTL under the equity method, and we therefore record our share of PTL’s earnings on our statements of income under the caption “Equity in earnings of affiliates,” which also includes the results of our other equity method investments. Basis of Presentation The consolidated financial statements include all majority‑owned subsidiaries. Investments in affiliated companies, representing an ownership interest in the voting stock of the affiliate of between 20% and 50% or an investment in a limited partnership or a limited liability corporation for which our investment is more than minor, are stated at the cost of acquisition plus our equity in undistributed net earnings since acquisition. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements, including the comparative periods presented, have been adjusted for entities that have been treated as discontinued operations prior to adoption of ASU No. 2014-08 in accordance with generally accepted accounting principles. In 2016, we adopted ASU 2015-03 and applied the new guidance retrospectively, which resulted in the reclassification of debt issuance costs from other current and other long-term assets to current and long-term debt for the periods presented. Amounts reclassified from “Other current assets” to “Current portion of long-term debt” were $1.2 million as of December 31, 2015. Amounts reclassified from “Other long-term assets” to “Long-term debt” were $8.1 million as of December 31, 2015. Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accounts requiring the use of significant estimates include accounts receivable, inventories, income taxes, intangible assets and certain reserves. Cash and Cash Equivalents Cash and cash equivalents include all highly‑liquid investments that have an original maturity of three months or less at the date of purchase. Contracts in Transit Contracts in transit represent receivables from unaffiliated finance companies relating to the sale of customers’ installment sales and lease contracts arising in connection with the sale of a vehicle by us. Contracts in transit, included in accounts receivable, net in our consolidated balance sheets, amounted to $322.7 million and $261.7 million as of December 31, 2016 and 2015, respectively. Inventory Valuation Inventories are stated at the lower of cost or market. Cost for new and used vehicle inventories includes acquisition, reconditioning, dealer installed accessories, and transportation expenses and is determined using the specific identification method. Inventories of dealership parts and accessories are accounted for using the “first‑in, first‑out” (“FIFO”) method of inventory accounting and the cost is based on factory list prices. Property and Equipment Property and equipment are recorded at cost and depreciated over estimated useful lives using the straight‑line method. Useful lives for purposes of computing depreciation for assets, other than leasehold improvements, range between 3 and 15 years. Leasehold improvements and equipment under capital lease are depreciated over the shorter of the term of the lease or the estimated useful life of the asset, not to exceed 40 years. Expenditures relating to recurring repair and maintenance are expensed as incurred. Expenditures that increase the useful life or substantially increase the serviceability of an existing asset are capitalized. When equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the balance sheet, with any resulting gain or loss being reflected in income. Income Taxes Tax regulations may require items to be included in our tax return at different times than when those items are reflected in our financial statements. Some of the differences are permanent, such as expenses that are not deductible on our tax return, and some are temporary differences, such as the timing of depreciation expense. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that will be used as a tax deduction or credit in our tax return in future years which we have already recorded in our financial statements. Deferred tax liabilities generally represent deductions taken on our tax return that have not yet been recognized as an expense in our financial statements. We establish valuation allowances for our deferred tax assets if the amount of expected future taxable income is not more likely than not to allow for the use of the deduction or credit. Intangible Assets Our principal intangible assets relate to our franchise agreements with vehicle manufacturers and distributors, which represent the estimated value of franchises acquired in business combinations, our distribution agreements with commercial vehicle manufacturers, which represent the estimated value of distribution rights acquired in business combinations, and goodwill, which represents the excess of cost over the fair value of tangible and identified intangible assets acquired in business combinations. We believe the franchise values of our automotive dealerships and the distribution agreements of our commercial vehicle distribution operations have an indefinite useful life based on the following: · Automotive retailing and commercial vehicle distribution are mature industries and are based on franchise and distribution agreements with the vehicle manufacturers and distributors; · There are no known changes or events that would alter the automotive retailing franchise or commercial vehicle distribution environments; · Certain franchise agreement terms are indefinite; · Franchise and distribution agreements that have limited terms have historically been renewed by us without substantial cost; and · Our history shows that manufacturers and distributors have not terminated our franchise or distribution agreements. Impairment Testing Other indefinite-lived intangible assets are assessed for impairment annually on October 1 and upon the occurrence of an indicator of impairment through a comparison of its carrying amount and estimated fair value. An indicator of impairment exists if the carrying value exceeds its estimated fair value and an impairment loss may be recognized up to that excess. The fair value is determined using a discounted cash flow approach, which includes assumptions about revenue and profitability growth, profit margins, and the cost of capital. We also evaluate in connection with the annual impairment testing whether events and circumstances continue to support our assessment that the other indefinite-lived intangible assets continue to have an indefinite life. Goodwill impairment is assessed at the reporting unit level annually on October 1 and upon the occurrence of an indicator of impairment. Our operations are organized by management into operating segments by line of business and geography. We have determined that we have four reportable segments as defined in generally accepted accounting principles for segment reporting: (i) Retail Automotive, consisting of our retail automotive dealership operations; (ii) Retail Commercial Truck, consisting of our retail commercial truck dealership operations in the U.S. and Canada; (iii) Other, consisting of our commercial vehicle and power systems distribution operations and other non-automotive consolidated operations; and (iv) Non-Automotive Investments, consisting of our equity method investments in non-automotive operations. We have determined that the dealerships in each of our operating segments within the Retail Automotive reportable segment are components that are aggregated into four geographical reporting units for the purpose of goodwill impairment testing, as they (A) have similar economic characteristics (all are automotive dealerships having similar margins), (B) offer similar products and services (all sell new and used vehicles, service, parts and third-party finance and insurance products), (C) have similar target markets and customers (generally individuals), and (D) have similar distribution and marketing practices (all distribute products and services through dealership facilities that market to customers in similar fashions). The geographic reporting units are Eastern, Central, and Western United States and International. Our Retail Commercial Truck reportable segment has been determined to represent one operating segment and reporting unit. The goodwill included in our Other reportable segment relates primarily to our commercial vehicle distribution operating segment. There is no goodwill recorded in our Non-Automotive Investments reportable segment. For our Retail Automotive and Retail Commercial Truck reporting units, we prepared a qualitative assessment of the carrying value of goodwill using the criteria in ASC 350-20-35-3 to determine whether it is more likely than not that a reporting unit’s fair value is less than its carrying value. If it were determined through the qualitative assessment that a reporting unit’s fair value is more likely than not greater than its carrying value, additional analysis would be unnecessary. During 2016, we concluded that it was not more likely than not that any of the retail automotive or retail commercial truck reporting units’ fair values were less than their carrying amount. If additional impairment testing was necessary, we would have estimated the fair value of our reporting units using an “income” valuation approach. The “income” valuation approach estimates our enterprise value using a net present value model, which discounts projected free cash flows of our business using the weighted average cost of capital as the discount rate. In connection with this process, we also reconcile the estimated aggregate fair values of our reporting units to our market capitalization. We believe this reconciliation process is consistent with a market participant perspective. This consideration would also include a control premium that represents the estimated amount an investor would pay for our equity securities to obtain a controlling interest, and other significant assumptions including revenue and profitability growth, franchise profit margins, residual values and the cost of capital. For our Other reportable segment, we performed our impairment test by comparing the estimated fair value of each reporting unit with its carrying value. We estimated the fair value of these reporting units using an “income” valuation approach, as described above. We concluded that the fair value of each of these reporting units exceeded its carrying value. Investments We account for each of our investments under the equity method, pursuant to which we record our proportionate share of the investee’s income each period. The net book value of our investments was $893.4 million and $336.4 million as of December 31, 2016 and 2015, respectively, including $823.8 million and $290.6 million relating to PTL as of December 31, 2016 and 2015, respectively. In July 2016, we increased our ownership interest in PTL from 9.0% to 23.4% as a result of our acquisition of an additional 14.4% ownership interest, as discussed previously. Investments for which there is not a liquid, actively traded market are reviewed periodically by management for indicators of impairment. If an indicator of impairment is identified, management estimates the fair value of the investment using a discounted cash flow approach, which includes assumptions relating to revenue and profitability growth, profit margins, residual values and our cost of capital. Declines in investment values that are deemed to be other than temporary may result in an impairment charge reducing the investments’ carrying value to fair value. Foreign Currency Translation For all of our non-U.S. operations, the functional currency is the local currency. The revenue and expense accounts of our non-U.S. operations are translated into U.S. dollars using the average exchange rates that prevailed during the period. Assets and liabilities of non-U.S. operations are translated into U.S. dollars using period end exchange rates. Cumulative translation adjustments relating to foreign functional currency assets and liabilities are recorded in accumulated other comprehensive income (loss), a separate component of equity. Fair Value of Financial Instruments Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which 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: Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted market prices in markets that are not active; or model‑derived valuations or other inputs that are observable or 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 Our financial instruments consist of cash and cash equivalents, debt, floor plan notes payable, forward exchange contracts and interest rate swaps used to hedge future cash flows. Other than our fixed rate debt, the carrying amount of all significant financial instruments approximates fair value due either to length of maturity, the existence of variable interest rates that approximate prevailing market rates, or as a result of mark to market accounting. Our fixed rate debt consists of amounts outstanding under our senior subordinated notes and mortgage facilities. We estimate the fair value of our senior unsecured notes using quoted prices for the identical liability (Level 2), and we estimate the fair value of our mortgage facilities using a present value technique based on our current market interest rates for similar types of financial instruments (Level 2). A summary of the carrying values and fair values of our 5.75% senior subordinated notes, 5.375% senior subordinated notes, 5.50% senior subordinated notes, and our fixed rate mortgage facilities are as follows: December 31, 2016 December 31, 2015 Carrying Value Fair Value Carrying Value Fair Value 5.75% senior subordinated notes due 2022 $ $ $ $ 5.375% senior subordinated notes due 2024 5.50% senior subordinated notes due 2026 — — Mortgage facilities Revenue Recognition Dealership Vehicle, Parts and Service Sales We record revenue when vehicles are delivered and title has passed to the customer, when vehicle service or repair work is completed and when parts are delivered to our customers. Sales promotions that we offer to customers are accounted for as a reduction of revenues at the time of sale. Rebates and other incentives offered directly to us by manufacturers are recognized as a reduction of cost of sales. Reimbursements of qualified advertising expenses are treated as a reduction of selling, general and administrative expenses. The amounts received under certain manufacturer rebate and incentive programs are based on the attainment of program objectives, and such earnings are recognized either upon the sale of the vehicle for which the award was received, or upon attainment of the particular program goals if not associated with individual vehicles. Taxes collected from customers and remitted to governmental authorities are recorded on a net basis (excluded from revenue). Dealership Finance and Insurance Sales Subsequent to the sale of a vehicle to a customer, we sell installment sale contracts to various financial institutions on a non‑recourse basis (with specified exceptions) to mitigate the risk of default. We receive a commission from the lender equal to either the difference between the interest rate charged to the customer and the interest rate set by the financing institution or a flat fee. We also receive commissions for facilitating the sale of various products to customers, including guaranteed vehicle protection insurance, vehicle theft protection and extended service contracts. These commissions are recorded as revenue at the time the customer enters into the contract. In the case of finance contracts, a customer may prepay or fail to pay their contract, thereby terminating the contract. Customers may also terminate extended service contracts and other insurance products, which are fully paid at purchase, and become eligible for refunds of unused premiums. In these circumstances, a portion of the commissions we received may be charged back based on the terms of the contracts. The revenue we record relating to these transactions is net of an estimate of the amount of chargebacks we will be required to pay. Our estimate is based upon our historical experience with similar contracts, including the impact of refinance and default rates on retail finance contracts and cancellation rates on extended service contracts and other insurance products. Aggregate reserves relating to chargeback activity were $23.5 million and $23.8 million as of December 31, 2016 and 2015, respectively. Commercial Vehicle Distribution Revenue from the distribution of vehicles, engines, power systems and parts is recognized at the time of delivery of goods to the retailer or the ultimate customer. Defined Contribution Plans We sponsor a number of defined contribution plans covering a significant majority of our employees. Our contributions to such plans are discretionary and are based on the level of compensation and contributions by plan participants. We incurred expense of $14.5 million, $16.0 million, and $17.7 million relating to such plans during the years ended December 31, 2016, 2015, and 2014, respectively. Advertising Advertising costs are expensed as incurred or when such advertising takes place. We incurred net advertising costs of $102.5 million, $101.0 million, and $93.7 million during the years ended December 31, 2016, 2015, and 2014, respectively. Qualified advertising expenditures reimbursed by manufacturers, which are treated as a reduction of advertising expense, were $16.6 million, $17.2 million, and $14.3 million during the years ended December 31, 2016, 2015, and 2014, respectively. Self-Insurance We retain risk relating to certain of our general liability insurance, workers’ compensation insurance, vehicle physical damage insurance, property insurance, employment practices liability insurance, directors and officers insurance and employee medical benefits in the U.S. As a result, we are likely to be responsible for a significant portion of the claims and losses incurred under these programs. The amount of risk we retain varies by program, and, for certain exposures, we have pre‑determined maximum loss limits for certain individual claims and/or insurance periods. Losses, if any, above the pre‑determined loss limits are paid by third‑party insurance carriers. Certain insurers have limited available property coverage in response to the natural catastrophes experienced in recent years. Our estimate of future losses is prepared by management using our historical loss experience and industry‑based development factors. Aggregate reserves relating to retained risk were $28.3 million and $26.4 million as of December 31, 2016 and 2015, respectively. Earnings Per Share Basic earnings per share is computed using net income attributable to Penske Automotive Group common stockholders and the number of weighted average shares of voting common stock outstanding, including outstanding unvested restricted stock awards which contain rights to non-forfeitable dividends. Diluted earnings per share is computed using net income attributable to Penske Automotive Group common stockholders and the number of weighted average shares of voting common stock outstanding, adjusted for any dilutive effects. A reconciliation of the number of shares used in the calculation of basic and diluted earnings per share for the years ended December 31, 2016, 2015, and 2014 follows: Year Ended December 31, 2016 2015 2014 Weighted average number of common shares outstanding Effect of non-participatory equity compensation — — Weighted average number of common shares outstanding, including effect of dilutive securities Hedging Generally accepted accounting principles relating to derivative instruments and hedging activities require all derivatives, whether designated in hedging relationships or not, to be recorded on the balance sheet at fair value. These accounting principles also define requirements for designation and documentation of hedging relationships, as well as ongoing effectiveness assessments, which must be met in order to qualify for hedge accounting. For a derivative that does not qualify as a hedge, changes in fair value are recorded in earnings immediately. If the derivative is designated in a fair‑value hedge, the changes in the fair value of the derivative and the hedged item are recorded in earnings. If the derivative is designated as a cash‑flow hedge, effective changes in the fair value of the derivative are recorded in accumulated other comprehensive income (loss), a separate component of equity, and recorded in the income statement only when the hedged item affects earnings. Changes in the fair value of the derivative attributable to hedge ineffectiveness are recorded in earnings immediately. Stock‑Based Compensation Generally accepted accounting principles relating to share‑based payments require us to record compensation expense for all awards based on their grant‑date fair value. Our share‑based payments have generally been in the form of “non‑vested shares,” the fair value of which are measured as if they were vested and issued on the grant date. Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” This ASU supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU No. 2014-09 will require an entity to recognize revenue when it transfers promised goods or services to customers using a five-step model that requires entities to exercise judgment when considering the terms of contracts with customers. This ASU can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption. In August 2015, the FASB issued ASU 2015-14 “Revenue from Contracts with Customers (Topic 606) — Deferral of the Effective Date” providing for a one-year deferral of the effective date of ASU 2014-09 from January 1, 2017 to January 1, 2018. The FASB has since also issued additional ASUs containing various updates to Topic 606 which will all be adopted along with ASU 2014-09. We are currently assessing the impact the adoption of these accounting standard updates will have on our consolidated financial position, results of operations, and cash flows. However, at this time, we do not expect the adoption of these accounting standard updates to have a material impact our consolidated financial position, results of operations, and cash flows, and therefore, we expect to adopt using a cumulative-effect adjustment as of the date of adoption. In April 2015, the FASB issued ASU No. 2015-03, “Interest — Imputation of Interest (Subtopic 835-30) — Simplifying the Presentation of Debt Issuance Costs.” ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU No. 2015-15, “Interest — Imputation of Interest (Subtopic 835-30) — Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” which clarifies the treatment of de |
Equity Method Investees
Equity Method Investees | 12 Months Ended |
Dec. 31, 2016 | |
Equity Method Investees | |
Equity Method Investees | 2. Equity Method Investees As of December 31, 2016, we have investments in the following companies that are accounted for under the equity method: the Nix Group (50%), Ibericar Keldinich SL (50%), the Nicole Group (49%), Penske Commercial Leasing Australia (33%), Penske Vehicle Services (31%), and National Powersport Auctions (7%). Nix Group, Ibericar Keldinich SL, and the Nicole Group are engaged in the sale and servicing of automobiles. Penske Commercial Leasing Australia rents heavy-duty commercial vehicles in Australia, Penske Vehicle Services is an automotive fleet management company, and National Powersport Auctions is an auctioneer of powersport vehicles. Investments in these entities accounted for under the equity method amounted to $69.6 million and $45.8 million at December 31, 2016 and 2015, respectively. In January 2016, we acquired a 49% interest in the Nicole Group, a luxury dealership group in Tokyo and nearby suburbs accounted for under the equity method. In September 2016, we sold a 12% interest in our Penske Commercial Leasing Australia joint venture to Penske Truck Leasing and continue to account for this investment under the equity method under our current 33% ownership. In September 2015, we sold our 50% interest in our Max Cycles non-automotive joint venture, which operated BMW motorcycle dealerships. In October 2015, our Penske-Wynn Ferrari/Maserati joint venture sold substantially all of its assets to a third party. We accounted for both of these investments using the equity method of accounting. The equity earnings associated with these investments is included within continuing operations under the caption “Equity in earnings of affiliates” for the two years ended December 31, 2015. In September 2015, we acquired an additional 10% interest in the Jacobs Group, which was previously accounted for under the equity method, resulting in us owning a 60% controlling interest in this joint venture; we therefore began consolidating this entity in our financial results in the year ended December 31, 2015. Additionally, during the first quarter of 2016, we acquired an additional 8% interest in the Jacobs Group and now own 68% of that joint venture. The equity earnings associated with this investment prior to consolidation were included within continuing operations under the caption “Equity in earnings of affiliates” through September 2015 and for the year ended December 31, 2014. We also have a 23.4% ownership interest in PTL, a leading provider of transportation services and supply chain management. Our investment in PTL, which is accounted for under the equity method, amounted to $823.8 million and $290.6 million at December 31, 2016 and 2015, respectively. In July 2016, we increased our ownership interest in PTL from 9.0% to 23.4% as a result of our acquisition of an additional 14.4% ownership interest, as discussed previously. We recorded $69.5 million, $39.3 million, and $40.8 million during the years ended December 31, 2016, 2015, and 2014, respectively, on our statements of income under the caption “Equity in earnings of affiliates” related to earnings from our equity method investments. The combined results of operations and financial position of our equity method investees as of December 31 for each of the years presented are summarized as follows: Condensed income statement information: Year Ended December 31, 2016 2015 2014 Revenues $ $ $ Gross profit Net income Condensed balance sheet information: December 31, 2016 2015 Current assets $ $ Noncurrent assets Total assets $ $ Current liabilities $ $ Noncurrent liabilities Equity Total liabilities and equity $ $ |
Business Combinations
Business Combinations | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations | |
Business Combinations | 3. Business Combinations During 2016, we acquired twenty retail automotive franchises and seven retail commercial truck dealerships. The companies acquired in 2016 generated $315.9 million of revenue and $0.5 million of pre-tax income from our date of acquisition through December 31, 2016. During 2015, we acquired five retail automotive franchises and two retail commercial truck dealerships, and made an additional investment in the Jacobs Group, discussed previously, to gain control of that joint venture which was previously accounted for under the equity method. Our financial statements include the results of operations of the acquired entities from the date of acquisition. The fair value of the assets acquired and liabilities assumed have been recorded in our consolidated financial statements, and may be subject to adjustment pending completion of final valuation. A summary of the aggregate consideration paid and the aggregate amounts of the assets acquired and liabilities assumed for the years ended December 31, 2016 and 2015 follows: December 31, 2016 2015 Accounts receivable $ $ Inventory Other current assets Property and equipment Indefinite-lived intangibles Other non-current assets Current liabilities Non-current liabilities Total consideration $ $ Seller financed/assumed debt — Seller assumed floor plan — Fair value of previously held interest — Fair value of non-controlling interest — Total cash used in acquisitions $ $ The following unaudited consolidated pro forma results of operations of PAG for the years ended December 31, 2016 and 2015 give effect to acquisitions consummated during 2016 and 2015 as if they had occurred on January 1, 2015: Year Ended December 31, 2016 2015 Revenues $ $ Income from continuing operations Net income Income from continuing operations per diluted common share $ $ Net income per diluted common share $ $ |
Discontinued Operations and Div
Discontinued Operations and Divestitures | 12 Months Ended |
Dec. 31, 2016 | |
Discontinued Operations and Divestitures | |
Discontinued Operations and Divestitures | 4. Discontinued Operations and Divestitures Assets Held for Sale and Discontinued Operations We classify an entity as held for sale in the period in which all of the following criteria are met: management, having the authority to approve the action, commits to a plan to sell the entity; the entity is available for immediate sale in its present condition; an active program to locate a buyer and other actions required to complete the plan to sell have been initiated; the sale is probable and transfer is expected to be completed within one year; the entity is being actively marketed for sale at a price that is reasonable in relation to its current fair value; and actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. In April 2014, the FASB issued ASU No. 2014-08 that changed the definition of a discontinued operation to include only those disposals of components of an entity or components of an entity that are classified as held for sale that represent a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. We adopted this accounting standard update effective January 1, 2015. Prior to the adoption of ASU No. 2014-08, we accounted for dispositions as discontinued operations when it was evident that the operations and cash flows of an entity being disposed of would be eliminated from ongoing operations and we would not have any significant continuing involvement in its operations. The results of operations for those entities that were classified as discontinued operations prior to adoption of ASU No. 2014-08 are included in “Loss from discontinued operations” in the accompanying Consolidated Statements of Income for all periods presented and will continue to be reported within discontinued operations in the future. Beginning with disposals or entities classified as held for sale subsequent to January 1, 2015, only those that represent a strategic shift that has, or will have, a major impact on our operations and financial results will be included in discontinued operations. We had no entities newly classified as held for sale in 2016 or 2015 that met the criteria to be classified as discontinued operations. As such, the combined financial information presented below represents only retail automotive dealerships and our car rental business that were classified as discontinued operations prior to adoption of ASU No. 2014-08: Year Ended December 31, 2016 2015 2014 Revenues $ $ $ Pre-tax loss Pre-tax gain on disposal — December 31, 2016 2015 Inventories $ $ Other assets Total assets $ $ Floor plan notes payable (including non-trade) $ $ Other liabilities Total liabilities $ $ Divestitures In 2016, we disposed of ten retail automotive franchises, closed one retail commercial truck dealership and one retail commercial truck parts location, and transitioned seventeen retail automotive franchises which represented the Scion brand to our existing Toyota franchises. The results of operations for two of the retail automotive franchises are included in discontinued operations for the years ended December 31, 2016, 2015, and 2014. The remaining retail automotive franchises and retail commercial truck dealership and parts locations did not meet the criteria to be classified as held for sale and treated as discontinued operations; therefore, the results of operations for these businesses are included within continuing operations for the years ended December 31, 2016, 2015, and 2014. In December 2016, we sold our 90% ownership interest in i.M. Branded, a provider of dealership graphics and millwork, which we previously consolidated in our financial statements. The results of operations for this business are included within continuing operations for the years ended December 31, 2016, 2015, and 2014, as this business did not meet the criteria to be classified as held for sale and treated as discontinued operations. In February 2015, we divested our car rental business that included Hertz car rental franchises in the Memphis, Tennessee market and certain markets throughout Indiana. We received proceeds of $17.8 million from the sale excluding sales of car rental vehicles. The results of operations of our car rental business are included in discontinued operations for the years ended December 31, 2015, and 2014. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2016 | |
Inventories | |
Inventories | 5. Inventories Inventories consisted of the following: December 31, 2016 2015 Retail automotive dealership new vehicles $ $ Retail automotive dealership used vehicles Retail automotive parts, accessories and other Retail commercial truck dealership vehicles and parts Commercial vehicle distribution vehicles and parts Total inventories $ $ We receive credits from certain vehicle manufacturers that reduce cost of sales when the vehicles are sold. Such credits amounted to $51.6 million, $43.7 million, and $39.7 million during the years ended December 31, 2016, 2015, and 2014, respectively. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2016 | |
Property and Equipment | |
Property and Equipment | 6. Property and Equipment Property and equipment consisted of the following: December 31, 2016 2015 Buildings and leasehold improvements $ $ Furniture, fixtures and equipment Total $ $ Less: Accumulated depreciation Property and equipment, net $ $ Approximately $27.1 million of capitalized interest is included in buildings and leasehold improvements as of December 31, 2016 and 2015, respectively, and is being depreciated over the useful life of the related assets. In the fourth quarter of 2016, we recorded $229.9 million within property and equipment to appropriately reflect deferred sales transactions in which we retained substantial risk of ownership and have accounted for such transactions as operating leases instead of revenues. We recorded $60.1 million within “Accrued expenses” and $182.4 million within “Other long-term liabilities” to reflect the deferred revenue and guaranteed residual value associated with these operating leases. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2016 | |
Intangible Assets | |
Intangible Assets | 7. Intangible Assets Following is a summary of the changes in the carrying amount of goodwill and other indefinite-lived intangible assets during the years ended December 31, 2016 and 2015, net of accumulated impairment losses recorded prior to December 31, 2012 of $606.3 million and $37.1 million, respectively: Other Indefinite‑ Lived Intangible Goodwill Assets Balance — December 31, 2014 $ $ Additions Foreign currency translation Balance — December 31, 2015 $ $ Additions Disposals Foreign currency translation Balance — December 31, 2016 $ $ Goodwill for our Retail Automotive reportable segment was $1,050.3 million and $1,095.7 million for the years ended December 31, 2016 and 2015, respectively. The changes to goodwill during 2016 represented additions of $9.8 million, disposals of $0.2 million, and adjustments for foreign currency translation of $55.0 million. The changes to goodwill during 2015 represented additions of $63.9 million and adjustments for foreign currency translation of $23.5 million. The additions in 2016 and 2015 related to our dealership acquisitions during those years. Goodwill for our Retail Commercial Truck reportable segment was $162.0 million and $147.5 million for the years ended December 31, 2016 and 2015, respectively. The changes to goodwill during 2016 represented additions of $15.1 million and adjustments for foreign currency translation of $0.6 million. The changes to goodwill during 2015 represented additions of $19.8 million. The additions in 2016 and 2015 related to our dealership acquisitions during those years. Goodwill for our Other reportable segment was $79.0 million and $80.0 million for the years ended December 31, 2016 and 2015, respectively. The changes to goodwill during 2016 and 2015 represented adjustments for foreign currency translation, and in 2016 related to a disposal associated with our sale of i.M. Branded in December 2016, as discussed previously. There is no goodwill recorded in our Non-Automotive Investments reportable segment. We test for impairment of our intangible assets at least annually. We did not record any impairment charges relating to our intangible assets in 2016, 2015 or 2014. |
Vehicle Financing
Vehicle Financing | 12 Months Ended |
Dec. 31, 2016 | |
Vehicle Financing | |
Vehicle Financing | 8. Vehicle Financing We finance substantially all of the commercial vehicles we purchase for distribution, new vehicles for retail sale, and a portion of our used vehicle inventories for retail sale, under floor plan and other revolving arrangements with various lenders, including the captive finance companies associated with automotive manufacturers. In the U.S., the floor plan arrangements are due on demand; however, we have not historically been required to repay floor plan advances prior to the sale of the vehicles that have been financed. We typically make monthly interest payments on the amount financed. Outside of the U.S., substantially all of the floor plan arrangements are payable on demand or have an original maturity of 90 days or less, and we are generally required to repay floor plan advances at the earlier of the sale of the vehicles that have been financed or the stated maturity. The agreements typically grant a security interest in substantially all of the assets of our dealership and distribution subsidiaries and, in the U.S., Australia and New Zealand, are guaranteed or partially guaranteed by us. Interest rates under the arrangements are variable and increase or decrease based on changes in the prime rate, defined London Interbank Offered Rate (“LIBOR”), the Finance House Base Rate, the Euro Interbank Offered Rate, the Canadian Prime Rate, or the Australian or New Zealand Bank Bill Swap Rate (“BBSW”). To date, we have not experienced any material limitation with respect to the amount or availability of financing from any institution providing us vehicle financing. We also receive non-refundable credits from certain of our vehicle manufacturers, which are treated as a reduction of cost of sales as vehicles are sold. The weighted average interest rate on floor plan borrowings was 1.5%, 1.5%, and 1.7% for 2016, 2015, and 2014, respectively, including for 2014 the effect of the interest rate swap discussed in Note 10. We classify floor plan notes payable to a party other than the manufacturer of a particular new vehicle, and all floor plan notes payable relating to pre-owned vehicles, as “Floor plan notes payable — non-trade” on our consolidated balance sheets and classify related cash flows as a financing activity on our consolidated statements of cash flows. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Dec. 31, 2016 | |
Long-Term Debt | |
Long-Term Debt | 9. Long‑Term Debt Long‑term debt consisted of the following: December 31, 2016 2015 U.S. credit agreement — revolving credit line $ $ U.K. credit agreement — revolving credit line U.K. credit agreement — overdraft line of credit — 5.50% senior subordinated notes due 2026 — 5.375% senior subordinated notes due 2024 5.75% senior subordinated notes due 2022 Australia working capital loan agreement Mortgage facilities Other Total long-term debt $ $ Less: current portion Net long-term debt $ $ Scheduled maturities of long‑term debt for each of the next five years and thereafter are as follows: 2017 $ 2018 2019 2020 2021 2022 and thereafter Total long-term debt reported $ U.S. Credit Agreement Our U.S. credit agreement (the “U.S. credit agreement”) with Mercedes-Benz Financial Services USA LLC and Toyota Motor Credit Corporation provides for up to $700.0 million in revolving loans for working capital, acquisitions, capital expenditures, investments and other general corporate purposes, which includes $250.0 million in revolving loans solely for future U.S. acquisitions. In connection with the purchase of PTL interests noted previously, we amended the U.S. credit agreement to allow for the purchase of interests, to provide for a maximum of $150.0 million of future borrowings under the U.S. credit agreement for foreign acquisitions and to extend the facility for an additional year through September 30, 2019, pursuant the U.S. credit agreement’s “evergreen” termination provisions. The revolving loans bear interest at LIBOR plus 2.00%, subject to an incremental 1.50% for uncollateralized borrowings in excess of a defined borrowing base. The U.S. credit agreement is fully and unconditionally guaranteed on a joint and several basis by substantially all of our U.S. subsidiaries and contains a number of significant covenants that, among other things, restrict our ability to dispose of assets, incur additional indebtedness, repay other indebtedness, pay dividends, create liens on assets, make investments or acquisitions and engage in mergers or consolidations. We are also required to comply with specified financial and other tests and ratios, each as defined in the U.S. credit agreement including: a ratio of current assets to current liabilities, a fixed charge coverage ratio, a ratio of debt to stockholders’ equity and a ratio of debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”). A breach of these requirements would give rise to certain remedies under the agreement, the most severe of which is the termination of the agreement and acceleration of the amounts owed. The U.S. credit agreement also contains typical events of default, including change of control, non-payment of obligations and cross-defaults to our other material indebtedness. Substantially all of our U.S. assets are subject to security interests granted to the lenders under the U.S. credit agreement. As of December 31, 2016, we had $240.0 million of revolver borrowings outstanding under the U.S. credit agreement. U.K. Credit Agreement Our subsidiaries in the U.K. (the “U.K. subsidiaries”) are party to a £150.0 million revolving credit agreement with the Royal Bank of Scotland plc (RBS) and BMW Financial Services (GB) Limited, and an additional demand overdraft line of credit with RBS (collectively, the “U.K. credit agreement”) to be used for working capital, acquisitions, capital expenditures, investments and general corporate purposes. The loans mature on the termination date of the facility, which is December 19, 2019. The revolving loans bear interest between defined LIBOR plus 1.35% and defined LIBOR plus 3.0% and the demand overdraft line of credit bears interest at the Bank of England Base Rate plus 1.75%. As of December 31, 2016, outstanding loans under the U.K. credit agreement amounted to £41.2 million ($50.8 million). The U.K. credit agreement is fully and unconditionally guaranteed on a joint and several basis by our U.K. subsidiaries, and contains a number of significant covenants that, among other things, restrict the ability of our U.K. subsidiaries to pay dividends, dispose of assets, incur additional indebtedness, repay other indebtedness, create liens on assets, make investments or acquisitions and engage in mergers or consolidations. In addition, our U.K. subsidiaries are required to comply with defined ratios and tests, including: a ratio of earnings before interest, taxes, amortization, and rental payments (“EBITAR”) to interest plus rental payments, a measurement of maximum capital expenditures, and a debt to EBITDA ratio. A breach of these requirements would give rise to certain remedies under the agreement, the most severe of which is the termination of the agreement and acceleration of any amounts owed. The U.K. credit agreement also contains typical events of default, including change of control and non-payment of obligations and cross-defaults to other material indebtedness of our U.K. subsidiaries. Substantially all of our U.K. subsidiaries’ assets are subject to security interests granted to the lenders under the U.K. credit agreement. 5.50% Senior Subordinated Notes due 2026 In May 2016, we issued $500.0 million in aggregate principal amount of 5.50% Senior Subordinated Notes due 2026 (the “5.50% Notes”). Interest on the 5.50% Notes is payable semi-annually on May 15 and November 15 of each year. The 5.50% Notes mature on May 15, 2026, unless earlier redeemed or purchased by us. The 5.50% Notes are our unsecured senior subordinated obligations and are guaranteed on an unsecured senior subordinated basis by our 100% owned U.S. subsidiaries. The 5.50% Notes also contain customary negative covenants and events of default. Prior to May 15, 2021, we may redeem the 5.50% Notes at a redemption price equal to 100% of the principal amount of the 5.50% Notes, plus an applicable make whole premium, and any accrued and unpaid interest. On or after May 15, 2021, we may redeem the 5.50% Notes for cash at the redemption prices noted in the indenture, plus any accrued and unpaid interest. We may also redeem up to 40% of the 5.50% Notes using the proceeds of specified equity offerings at any time prior to May 15, 2019 at a price specified in the indenture. If we experience certain “change of control” events specified in the indenture, holders of the 5.50% Notes will have the option to require us to purchase for cash all or a portion of their notes at a price equal to 101% of the principal amount of the notes, plus accrued and unpaid interest. In addition, if we make certain asset sales and do not reinvest the proceeds thereof or use such proceeds to repay certain debt, we will be required to use the proceeds of such asset sales to make an offer to purchase the notes at a price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest. 5.375% Senior Subordinated Notes due 2024 In November 2014, we issued $300.0 million in aggregate principal amount of 5.375% Senior Subordinated Notes due 2024 (the “5.375% Notes”). Interest on the 5.375% Notes is payable semi-annually on June 1 and December 1 of each year. The 5.375% Notes mature on December 1, 2024, unless earlier redeemed or purchased by us. The 5.375% Notes are our unsecured senior subordinated obligations and are guaranteed on an unsecured senior subordinated basis by our 100% owned U.S. subsidiaries. The 5.375% Notes also contain customary negative covenants and events of default. Prior to December 1, 2019, we may redeem the 5.375% Notes at a redemption price equal to 100% of the principal amount of the 5.375% Notes, plus an applicable make whole premium, and any accrued and unpaid interest . On or after December 1, 2019, we may redeem the 5.375% Notes for cash at the redemption prices noted in the indenture, plus any accrued and unpaid interest. We may also redeem up to 40% of the 5.375% Notes using the proceeds of specified equity offerings at any time prior to December 1, 2017 at a price specified in the indenture. If we experience certain “change of control” events specified in the indenture, holders of the 5.375% Notes will have the option to require us to purchase for cash all or a portion of their notes at a price equal to 101% of the principal amount of the notes, plus accrued and unpaid interest. In addition, if we make certain asset sales and do not reinvest the proceeds thereof or use such proceeds to repay certain debt, we will be required to use the proceeds of such asset sales to make an offer to purchase the notes at a price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest. 5.75% Senior Subordinated Notes due 2022 In August 2012, we issued $550.0 million in aggregate principal amount of 5.75% Senior Subordinated Notes due 2022 (the “5.75% Notes”). Interest on the 5.75% Notes is payable semi‑annually on April 1 and October 1 of each year. The 5.75% Notes mature on October 1, 2022, unless earlier redeemed or purchased by us. The 5.75% Notes are our unsecured senior subordinated obligations and are guaranteed on an unsecured senior subordinated basis by our 100% owned U.S. subsidiaries. The 5.75% Notes also contain customary negative covenants and events of default. Prior to October 1, 2017, we may redeem the 5.75% Notes at a redemption price equal to 100% of the principal amount of the 5.75% Notes, plus an applicable make whole premium, and any accrued and unpaid interest . On or after October 1, 2017, we may redeem the 5.75% Notes for cash at the redemption prices noted in the indenture, plus any accrued and unpaid interest. If we experience certain “change of control” events specified in the indenture, holders of the 5.75% Notes will have the option to require us to purchase for cash all or a portion of their notes at a price equal to 101% of the principal amount of the notes, plus accrued and unpaid interest. In addition, if we make certain asset sales and do not reinvest the proceeds thereof or use such proceeds to repay certain debt, we will be required to use the proceeds of such asset sales to make an offer to purchase the notes at a price equal to 100% of the principal amount of the notes, plus accrued and unpaid interest. Australia Working Capital Loan Agreement In March 2016, our commercial vehicle distribution business expanded its working capital loan agreement with Mercedes-Benz Financial Services Australia Pty Ltd principally to increase the borrowing capacity from AU $28.0 million to AU $44.3 million and to provide working capital availability for use by both Penske Commercial Vehicles Australia and Penske Power Systems. This agreement provides the lender with a secured interest in all assets of our commercial vehicle distribution business. The loan bears interest at the Australian BBSW 30-day Bill Rate plus 2.35%. In July 2016, we expanded the capacity of this agreement by AU $6.2 million and now have AU $50.5 million of borrowing capacity under the working capital loan agreement. As of December 31, 2016, we had AU $34.3 million ($24.7 million) outstanding under the working capital loan agreement. Mortgage Facilities We are party to several mortgages that bear interest at defined rates and require monthly principal and interest payments. These mortgage facilities also contain typical events of default, including non‑payment of obligations, cross‑defaults to our other material indebtedness, certain change of control events, and the loss or sale of certain franchises operated at the properties. Substantially all of the buildings and improvements on the properties financed pursuant to the mortgage facilities are subject to security interests granted to the lender. As of December 31, 2016, we owed $199.9 million of principal under our mortgage facilities. |
Derivatives and Hedging
Derivatives and Hedging | 12 Months Ended |
Dec. 31, 2016 | |
Derivatives and Hedging | |
Derivatives and Hedging | 10. Derivatives and Hedging Penske Commercial Vehicles Australia and Penske Power Systems sell vehicles, engines, parts and other products purchased from manufacturers in the U.S., Germany, and the U.K. In order to protect against exchange rate movements, Penske Commercial Vehicles Australia and Penske Power Systems enter into foreign exchange forward contracts against anticipated cash flows. The contracts are timed to mature when major shipments are scheduled to arrive in Australia and when receipt of payment from customers is expected. We classify our foreign exchange forward contracts as cash flow hedges and state them at fair value. We used Level 2 inputs to estimate the fair value of the foreign exchange forward contracts. The fair value of the contracts designated as hedging instruments was estimated to be an asset of $0.3 million and a liability of $1.1 million as of December 31, 2016 and 2015, respectively. We previously were party to interest rate swap agreements through December 2014 pursuant to which the LIBOR portion of $300.0 million of our floating rate floor plan debt was fixed at a rate of 2.135% and $100.0 million of our floating rate floor plan debt was fixed at a rate of 1.55%. During the year ended December 31, 2014, the swaps increased the weighted average interest rate on our floor plan borrowings by approximately 30 basis points. We are not party to any interest rate swap agreements, and were not party to any such agreements during 2016 or 2015. |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingent Liabilities | |
Commitments and Contingent Liabilities | 11. Commitments and Contingent Liabilities We are involved in litigation which may relate to claims brought by governmental authorities, issues with customers, and employment related matters, including class action claims and purported class action claims. As of December 31, 2016, we were 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. However, the results of these matters cannot be predicted with certainty, and an unfavorable resolution of one or more of these matters could have a material adverse effect on our results of operations, financial condition or cash flows. We have historically structured our operations so as to minimize ownership of real property. As a result, we lease or sublease substantially all of our facilities. These leases are generally for a period of between 5 and 20 years, and are typically structured to include renewal options at our election. We estimate the total rent obligations under these leases, including any extension periods we may exercise at our discretion and assuming constant consumer price indices, to be $4.5 billion. Pursuant to the leases for some of our larger facilities, we are required to comply with specified financial ratios, including a “rent coverage” ratio and a debt to EBITDA ratio, each as defined. For these leases, non‑compliance with the ratios may require us to post collateral in the form of a letter of credit. A breach of the other lease covenants gives rise to certain remedies by the landlord, the most severe of which include the termination of the applicable lease and acceleration of the total rent payments due under the lease. Minimum future rental payments required under operating leases in effect as of December 31, 2016 are as follows: 2017 $ 2018 2019 2020 2021 2022 and thereafter $ Rent expense for the years ended December 31, 2016, 2015, and 2014 amounted to $206.6 million, $201.8 million, and $191.3 million, respectively. We have sold a number of dealerships to third parties and, as a condition to certain of those sales, remain liable for the lease payments relating to the properties on which those businesses operate in the event of non‑payment by the buyer. We are also party to lease agreements on properties that we no longer use in our retail operations that we have sublet to third parties. We rely on subtenants to pay the rent and maintain the property at these locations. In the event the subtenant does not perform as expected, we may not be able to recover amounts owed to us and we could be required to fulfill these obligations. We believe we have made appropriate reserves relating to these locations. The aggregate rent paid by the tenants on those properties in 2016 was approximately $20.6 million, and, in aggregate, we currently guarantee or are otherwise liable for approximately $211.4 million of these lease payments, including lease payments during available renewal periods. We currently hold a 23.4% ownership interest in PTL. Historically, affiliates of GE Capital (“GEC”) provided PTL with a majority of its financing, though PTL has refinanced all of its GEC indebtedness. As part of that refinancing, we and the other PTL partners created a new company (“Holdings”), which, together with GEC, co‑issued $700.0 million of 3.8% senior unsecured notes due 2019 (the “Holdings Bonds”). GEC agreed to be a co‑obligor of the Holdings Bonds in order to achieve lower interest rates on the Holdings Bonds. As part of Mitsui’s purchase of its 20.0% ownership interest in PTL in March 2015, the ownership interest of GEC in Holdings was redeemed, Holdings was relieved of its obligations under the indenture for the Holdings Bonds, and Holdings became obligated to pay to GEC 50.1% of all interest and principal due under, and 100% of the expenses related to, the Holdings Bonds to the extent Holdings has cash in excess of a certain level of permitted working capital, subject to certain limitations. Additional capital contributions from the members may be required to the extent Holdings is unable to pay those amounts. We have agreed to indemnify GEC for 9.0% of any principal or interest that GEC is required to pay on these bonds and pay GEC an annual fee of approximately $0.95 million for acting as obligor. The maximum amount of our contingent obligations to GEC under this agreement is 9.0% of the required principal repayment due in 2019 (which is expected to be $63.1 million) and 9.0% of interest payments under the Holdings Bonds, plus fees and default interest, if any. Our floor plan credit agreement with Mercedes Benz Financial Services Australia (“MBA”) provides us revolving loans for the acquisition of commercial vehicles for distribution to our retail network. This facility includes a limited parent guarantee and a commitment to repurchase dealer vehicles in the event the dealer’s floor plan agreement with MBA is terminated. We have $32.5 million of letters of credit outstanding as of December 31, 2016, and have posted $11.4 million of surety bonds in the ordinary course of business. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions | |
Related Party Transactions | 12. Related Party Transactions We sometimes pay to and/or receive fees from Penske Corporation and its affiliates for services rendered in the normal course of business, or to reimburse payments made to third parties on each other’s behalf. These transactions are reviewed periodically by our Audit Committee and reflect the provider’s cost or an amount mutually agreed upon by both parties. During 2016, 2015, and 2014, Penske Corporation and its affiliates billed us $6.9 million, $6.7 million, and $7.3 million, respectively, and we billed Penske Corporation and its affiliates $148 thousand, $101 thousand, and $56 thousand, respectively, for such services. As of December 31, 2016 and 2015, we had $98 thousand and $64 thousand of receivables from and $0.8 million and $0.6 million of payables to Penske Corporation and its subsidiaries, respectively. On July 27, 2016, we acquired an additional 14.4% ownership interest in PTL, a leading provider of transportation services and supply chain management, from GE Capital for approximately $498.5 million in cash. After the transaction, PTL is owned 41.1% by Penske Corporation, 23.4% by us, 20.0% by Mitsui, and 15.5% by GE Capital. In connection with this transaction, the PTL partners agreed to amend and restate the existing partnership agreement among the partners which, among other things, provides us with specified partner distribution and governance rights and restricts our ability to transfer our interests. Specifically, as a limited partner, we are now entitled to one of seven representatives of PTL’s Advisory Committee and approval rights over significant governance items of PTL. We continue to have the right to pro rata quarterly distributions equal to 50% of PTL’s consolidated net income, and we expect to realize significant cash tax savings. We may only transfer our 23.4% ownership interest in PTL with the unanimous consent of the other partners, or if we provide the remaining partners with a right of first offer to acquire our interests, except that we may transfer up to 9.02% of our interests to Penske Corporation without complying with the right of first offer to the remaining partners. We and Penske Corporation have previously agreed that (1) in the event of any transfer by Penske Corporation of their partnership interests to a third party, we shall be entitled to “tag-along” by transferring a pro rata amount of our partnership interests on similar terms and conditions, and (2) Penske Corporation is entitled to a right of first refusal in the event of any transfer of our partnership interests, subject to the terms of the partnership agreement. Additionally, PTL has agreed to indemnify the general partner for any actions in connection with managing PTL, except those taken in bad faith or in violation of the partnership agreement. The partnership agreement allows GE Capital or Penske Corporation, beginning December 31, 2017, to give notice to require PTL to begin to effect an initial public offering of equity securities, subject to certain limitations, as soon as practicable after the first anniversary of the initial notice. The party that is not exercising this right may seek to find a third party to purchase all of the partnership interests from the exercising party or to propose another alternative to such equity offers. In connection with the right to cause PTL to conduct an initial public offering, the PTL partners have agreed to customary demand and piggyback registration rights. As part of the transaction, beginning in 2025, PAG and Mitsui have been granted a similar right to require PTL to begin an initial public offering of equity securities, subject to certain limitations, as soon as reasonably practicable. The term of the partnership agreement was extended to December 31, 2035 or such later date as the limited partners may agree. In 2016, 2015, and 2014, we received $21.7 million, $13.8 million, and $11.6 million, respectively, from PTL in pro rata cash dividends. In 2014, we formed a venture with PTL, Penske Commercial Leasing Australia. This venture combines PTL’s fleet operations expertise with our market knowledge of commercial vehicles to rent heavy-duty commercial vehicles in Australia. This venture is accounted for as an equity method investment as discussed in Note 2. In September 2016, PTG completed the sale of certain assets to PTL, a related party. The assets sold consisted of approximately 300 vehicles, together with the associated full-service truck leasing and truck rental contracts with various PTG customers. PTL purchased these assets at fair value, which exceeded our carrying value for these assets, for a total purchase price of approximately $17.0 million. In 2014, we acquired Transportation Resource Partners’ (“TRP”) ownership interest in PTG for $58.8 million, increasing our ownership to 91%. TRP is an organization that invests in transportation-related industries in which our CEO, Roger S. Penske, is a managing member. Joint Venture Relationships From time to time we enter into joint venture relationships in the ordinary course of business, pursuant to which we own and operate automotive dealerships together with other investors. We may also provide these dealerships with working capital and other debt financing at costs that are based on our incremental borrowing rate. As of December 31, 2016, our automotive joint venture relationships were as follows: Location Dealerships Ownership Interest Fairfield, Connecticut Audi, Mercedes-Benz, Sprinter, Porsche, smart % (A) (B) Greenwich, Connecticut Mercedes-Benz % (A) (B) Northern Italy BMW, MINI, Maserati, Porsche, Audi, Land Rover, Volvo, Nissan % (B) (E) Aachen, Germany Audi, Maserati, SEAT, Skoda, Volkswagen % (C) Frankfurt, Germany Lexus, Toyota, Volkswagen % (D) Barcelona, Spain BMW, MINI % (D) Tokyo, Japan BMW, MINI, Rolls-Royce, Ferrari, ALPINA % (D) (a) An entity controlled by one of our directors, Lucio A. Noto, owns a 20% interest in this joint venture. (b) Entity is consolidated in our financial statements. (c) Entity is consolidated in our financial statements as a result of our purchase of an additional 10% interest in this joint venture in the third quarter of 2015. In March 2016, we acquired an additional 8% interest in this joint venture. (d) Entity is accounted for using the equity method of accounting. (e) In October 2016, we made an additional investment in this joint venture, which increased our ownership interest from 70% to 84%. This additional investment funded our acquisition of seven retail automotive franchises in October 2016, consisting of three Porsche franchises, one Audi franchise, one Land Rover franchise, one Volvo franchise, and one Nissan franchise in the Bologna, Italy market. Additionally, we are party to non-automotive joint ventures including our investments in Penske Commercial Leasing Australia (33%), Penske Vehicle Services (31%), PTL (23.4%), and National Powersport Auctions (7%) that are accounted for under the equity method, as more fully discussed in Note 2. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2016 | |
Stock-Based Compensation | |
Stock-Based Compensation | 13. Stock‑Based Compensation Key employees, outside directors, consultants and advisors of PAG are eligible to receive stock‑based compensation pursuant to the terms of our 2015 Equity Incentive Plan (the “2015 Plan”). This plan allows for the issuance of shares for stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and other awards. The 2015 Plan is a five year plan which allows for up to 4,000,000 awards of which 3,575,856 shares of common stock were available for grant as of December 31, 2016. Compensation expense related to our equity incentive plan was $14.8 million, $14.1 million, and $12.8 million during 2016, 2015, and 2014, respectively. Restricted Stock During 2016, 2015, and 2014, we granted 316,486, 295,148, and 314,677 shares, respectively, of restricted common stock and restricted stock units at no cost to participants under the plan. These awards provide the holder voting and dividend rights prior to vesting. The awards are subject to forfeiture and are non‑transferable, which restrictions generally lapse over a four year period from the grant date at a rate of 15%, 15%, 20% and 50% per year. We have determined that the grant date quoted market price of the underlying common stock is the appropriate measure of compensation cost. This cost is amortized as expense over the restriction period. As of December 31, 2016, there was $21.2 million of unrecognized compensation cost related to the restricted stock, which is expected to be recognized over the restricted period. Presented below is a summary of the status of our restricted stock as of December 31, 2016 and 2015, and changes during the year ended December 31, 2016: Weighted Average Aggregate Shares Grant Date Fair Value Intrinsic Value December 31, 2015 $ Granted Vested Forfeited December 31, 2016 $ $ |
Equity
Equity | 12 Months Ended |
Dec. 31, 2016 | |
Equity | |
Equity | 14. Equity A summary of shares repurchased under our securities repurchase program, and shares acquired, is as follows: Year Ended December 31, 2016 2015 2014 Shares repurchased (1) Aggregate purchase price $ $ $ Average purchase price per share $ $ $ Shares acquired (2) Aggregate purchase price $ $ $ Average purchase price per share $ $ $ (1) Shares were repurchased under our securities repurchase program. As of December 31, 2016, we have $32.1 million in repurchase authorization under the repurchase program . (2) Shares were acquired from employees in connection with a net share settlement feature of employee equity awards . |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income/(Loss) | 12 Months Ended |
Dec. 31, 2016 | |
Accumulated Other Comprehensive Income/(Loss) | |
Accumulated Other Comprehensive Income/(Loss) | 15. Accumulated Other Comprehensive Income/(Loss) Changes in accumulated other comprehensive income/(loss) by component and the reclassifications out of accumulated other comprehensive income/(loss) during the years ended December 31, 2016, 2015, and 2014 attributable to Penske Automotive Group common stockholders follows: Accumulated Foreign Other Currency Comprehensive Translation Other Income (Loss) Balance at January 1, 2014 $ $ $ Other comprehensive income before reclassifications Amounts reclassified from accumulated other comprehensive income — net of tax provision of $3.2 — Net current-period other comprehensive income Balance at December 31, 2014 $ $ $ Other comprehensive income before reclassifications Amounts reclassified from accumulated other comprehensive income — net of tax provision $0.0 — — — Net current-period other comprehensive income Balance at December 31, 2015 $ $ $ Other comprehensive income before reclassifications Amounts reclassified from accumulated other comprehensive income — net of tax provision of $0.0 — — — Net current-period other comprehensive income Balance at December 31, 2016 $ $ $ Within the amounts reclassified from accumulated other comprehensive income in 2014, the amounts associated with “Other” relate to interest rate swaps and are included in floor plan interest expense. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Income Taxes | 16. Income Taxes Income taxes relating to income from continuing operations consisted of the following: Year Ended December 31, 2016 2015 2014 Current: Federal $ $ $ State and local Foreign Total current $ $ $ Deferred: Federal State and local Foreign Total deferred $ $ $ Income taxes relating to continuing operations $ $ $ Income taxes relating to income from continuing operations varied from the U.S. federal statutory income tax rate due to the following: Year Ended December 31, 2016 2015 2014 Income taxes relating to continuing operations at federal statutory rate of 35% $ $ $ State and local income taxes, net of federal taxes Non-U.S. income taxed at other rates Other Income taxes relating to continuing operations $ $ $ The components of deferred tax assets and liabilities as of December 31, 2016 and 2015 were as follows: 2016 2015 Deferred Tax Assets Accrued liabilities $ $ Net operating loss carryforwards Other Total deferred tax assets Valuation allowance Net deferred tax assets Deferred Tax Liabilities Depreciation and amortization Partnership investments Convertible notes Other Total deferred tax liabilities Net deferred tax liabilities $ $ We do not provide for U.S. taxes relating to undistributed earnings or losses of our non-U.S. subsidiaries. Income from continuing operations before income taxes of non-U.S. subsidiaries (which subsidiaries are predominately in the U.K.) was $191.4 million, $182.5 million, and $170.6 million during 2016, 2015, and 2014, respectively. It is our belief that such earnings will be indefinitely reinvested in the companies that produced them. As of December 31, 2016, we have not provided U.S. federal income taxes on a total temporary difference of $816.5 million related to the excess of financial reporting basis over tax basis in the non-U.S. subsidiaries. As a result of our acquisition of the remaining ownership interests of Premier Truck Group in April 2016, bringing our total ownership interest to 100%, the partnership entity was liquidated, thereby yielding an adjustment to the tax basis of this investment. The result was an elimination of $5.1 million of deferred tax liabilities, which reduced income tax expense by the same amount in the current year. As of December 31, 2016, we have $240.1 million of state net operating loss carryforwards in the U.S. that expire at various dates beginning in 2017 through 2036, U.S. and Puerto Rico federal and state credit carryforwards of $8.5 million that will not expire, U.K. capital loss carryforwards of $4.7 million that will not expire, German net operating loss carryforwards of $20.1 million that will not expire, Australian net operating loss carryforwards of $22.1 million that will not expire, Canadian net operating loss carryforwards of $1.7 million that will not expire, and Italian net operating loss carryforwards of $0.1 million that will not expire. The Company generated $174.2 million of state net operating loss carryforwards in the U.S. in 2016. A valuation allowance of $2.6 million has been recorded against the state net operating loss carryforwards in the U.S. and a valuation allowance of $0.3 million has been recorded against the state credit carryforwards in the U.S. as of December 31, 2016. A valuation allowance of $7.3 million has been recorded against German net operating losses and other deferred tax assets as of December 31, 2016. A valuation allowance of $6.5 million has been recorded against U.K. deferred tax assets related to buildings as of December 31, 2016. A valuation allowance of $0.4 million has been recorded against Canadian net operating losses as of December 31, 2016. A valuation allowance of $0.1 million has been recorded against Australian capital losses as of December 31, 2016. Generally accepted accounting principles relating to uncertain income tax positions prescribe a minimum recognition threshold a tax position is required to meet before being recognized, and provides guidance on the derecognition, measurement, classification, and disclosure relating to income taxes. The movement in uncertain tax positions for the years ended December 31, 2016, 2015, and 2014 were as follows: 2016 2015 2014 Uncertain tax positions — January 1 $ $ $ Gross increase — tax position in prior periods Gross decrease — tax position in prior periods — Gross increase — current period tax position — — Settlements — — Lapse in statute of limitations — — — Foreign exchange Uncertain tax positions — December 31 $ $ $ We have elected to include interest and penalties in our income tax expense. The total interest and penalties included within uncertain tax positions at December 31, 2016 was $2.0 million. We do not expect a significant change to the amount of uncertain tax positions within the next twelve months. Our U.S. federal returns remain open to examination for 2013 through 2015 and various non-U.S. and U.S. state jurisdictions are open for periods ranging from 2009 through 2015. The portion of the total amount of uncertain tax positions as of December 31, 2016 that would, if recognized, impact the effective tax rate was $3.4 million. We have classified our tax reserves as a long‑term obligation on the basis that management does not expect to make payments relating to those reserves within the next twelve months. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2016 | |
Segment Information | |
Segment Information | 17. Segment Information Our operations are organized by management into operating segments by line of business and geography. We have determined that we have four reportable segments as defined in generally accepted accounting principles for segment reporting: (i) Retail Automotive, consisting of our retail automotive dealership operations; (ii) Retail Commercial Truck, consisting of our retail commercial truck dealership operations in the U.S. and Canada; (iii) Other, consisting of our commercial vehicle and power systems distribution operations and other non-automotive consolidated operations; and (iv) Non-Automotive Investments, consisting of our equity method investments in non-automotive operations. The Retail Automotive reportable segment includes all automotive dealerships and all departments relevant to the operation of the dealerships and our retail automotive joint ventures. The individual dealership operations included in the Retail Automotive reportable segment have been grouped into four geographic operating segments: Eastern, Central, and Western United States and International. The geographic operating segments have been aggregated into one reportable segment as their operations (A) have similar economic characteristics (all are automotive dealerships having similar margins), (B) offer similar products and services (all sell new and used vehicles, service, parts and third-party finance and insurance products), (C) have similar target markets and customers (generally individuals) and (D) have similar distribution and marketing practices (all distribute products and services through dealership facilities that market to customers in similar fashions). The accounting policies of the segments are the same and are described in Note 1. The following table summarizes revenues, floor plan interest expense, other interest expense, depreciation, equity in earnings of affiliates, and income (loss) from continuing operations before certain non‑recurring items and income taxes, which is the measure by which management allocates resources to its segments and which we refer to as adjusted segment income (loss), for each of our reportable segments. Adjusted segment income excludes the items in the table below in order to enhance the comparability of segment income from period to period. Retail Retail Commercial Non-Automotive Intersegment Automotive Truck Other Investments Elimination Total Revenues 2016 $ $ $ $ — $ $ 2015 — 2014 — Floor plan interest expense 2016 $ $ $ $ — $ — $ 2015 — — 2014 — — Other interest expense 2016 $ $ $ $ — $ — $ 2015 — — 2014 — — Depreciation 2016 $ $ $ $ — $ — $ 2015 — — 2014 — — Equity in earnings of affiliates 2016 $ $ — $ — $ $ — $ 2015 — — — 2014 — — Adjusted segment income 2016 $ $ $ $ $ — $ 2015 — 2014 — The following table reconciles total adjusted segment income to consolidated income from continuing operations before income taxes: Year Ended December 31, 2016 2015 2014 Adjusted segment income $ $ $ Gain on investment — — Income from continuing operations before income taxes $ $ $ Total assets, equity method investments, and capital expenditures by reporting segment are as set forth in the table below: Retail Retail Commercial Non-Automotive Intersegment Automotive Truck Other Investments Elimination Total Total assets (1) 2016 $ $ $ $ $ — $ 2015 — Equity method investments 2016 $ $ — $ — $ $ — $ 2015 — — — Capital expenditures 2016 $ $ $ $ — $ — $ 2015 — — 2014 — — (1) The following table presents certain data by geographic area: Year Ended December 31, 2016 2015 2014 Revenue from external customers: U.S. $ $ $ Non-U.S. Total revenue from external customers $ $ $ Long-lived assets, net: U.S. $ $ Non-U.S. Total long-lived assets $ $ The Company’s non-U.S. operations are predominantly based in the U.K. The following tables present our revenue from external customers by product type for our Retail Automotive and Retail Commercial Truck segments: Year Ended December 31, Retail Automotive Dealership Revenue 2016 2015 2014 New vehicle $ $ $ Used vehicle Finance and insurance, net Service and parts Fleet and wholesale Total retail automotive dealership revenue $ $ $ Year Ended December 31, Retail Commercial Truck Dealership Revenue 2016 2015 2014 (1) New truck $ $ $ Used truck Finance and insurance, net Service and parts Lease, rental and wholesale Total retail commercial truck dealership revenue $ $ $ (1) As we acquired a controlling interest in Premier Truck Group in November 2014, information for the year ended December 31, 2014 represents revenues since our date of acquisition in November 2014. |
Summary of Quarterly Financial
Summary of Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Quarterly Financial Data (Unaudited) | |
Summary of Quarterly Financial Data (Unaudited) | 18. Summary of Quarterly Financial Data (Unaudited) First Second Third Fourth Quarter Quarter Quarter Quarter 2016 (1)(2) Total revenues $ $ $ $ Gross profit Net income Net income attributable to Penske Automotive Group common stockholders Diluted earnings per share attributable to Penske Automotive Group common stockholders $ $ $ $ 2015 (1)(2) Total revenues $ $ $ $ Gross profit Net income Net income attributable to Penske Automotive Group common stockholders Diluted earnings per share attributable to Penske Automotive Group common stockholders $ $ $ $ (1) As discussed in Note 4, we have treated the operations of certain entities as discontinued operations. The results for all periods have been restated to reflect such treatment. (2) Per share amounts are calculated independently for each of the quarters presented. The sum of the quarters may not equal the full year per share amounts due to rounding. |
Condensed Consolidating Financi
Condensed Consolidating Financial Information | 12 Months Ended |
Dec. 31, 2016 | |
Condensed Consolidating Financial Information | |
Condensed Consolidating Financial Information | 19. Condensed Consolidating Financial Information The following tables include condensed consolidating financial information as of December 31, 2016 and 2015 and for the years ended December 31, 2016, 2015, and 2014 for Penske Automotive Group, Inc. (as the issuer of the 5.75% Notes, the 5.375% Notes, and the 5.50% Notes), guarantor subsidiaries and non-guarantor subsidiaries (primarily representing non-U.S. entities). Guarantor subsidiaries are directly or indirectly 100% owned by PAG, and the guarantees are full and unconditional, and joint and several. The guarantees may be released under certain circumstances upon resale, or transfer by us of the stock of the related guarantor or all or substantially all of the assets of the guarantor to a non-affiliate. CONDENSED CONSOLIDATING BALANCE SHEET December 31, 2016 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Cash and cash equivalents $ $ — $ — $ $ Accounts receivable, net Inventories — — Other current assets — Assets held for sale — — — Total current assets Property and equipment, net — Intangible assets — — Equity method investments — — Other long-term assets Total assets $ $ $ $ $ Floor plan notes payable $ $ — $ — $ $ Floor plan notes payable — non-trade — Accounts payable — Accrued expenses Current portion of long-term debt — — Liabilities held for sale — — — Total current liabilities Long-term debt Deferred tax liabilities — — Other long-term liabilities — — Total liabilities Total equity Total liabilities and equity $ $ $ $ $ CONDENSED CONSOLIDATING BALANCE SHEET December 31, 2015 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Cash and cash equivalents $ $ — $ — $ — $ Accounts receivable, net Inventories — — Other current assets — Assets held for sale — — Total current assets Property and equipment, net — Intangible assets — — Equity method investments — — Other long-term assets Total assets $ $ $ $ $ Floor plan notes payable $ $ — $ — $ $ Floor plan notes payable — non-trade — Accounts payable — Accrued expenses Current portion of long-term debt — — Liabilities held for sale — — Total current liabilities Long-term debt Deferred tax liabilities — — Other long-term liabilities — — Total liabilities Total equity Total liabilities and equity $ $ $ $ $ CONDENSED CONSOLIDATING STATEMENT OF INCOME Year Ended December 31, 2016 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Revenues $ $ — $ — $ $ Cost of sales — — Gross profit — — Selling, general and administrative expenses — Depreciation — Operating income — Floor plan interest expense — Other interest expense — Equity in earnings of affiliates — — Equity in earnings of subsidiaries — — — Income from continuing operations before income taxes Income taxes Income from continuing operations (Loss) income from discontinued operations, net of tax Net income Other comprehensive income (loss), net of tax — Comprehensive income Less: Comprehensive income attributable to non-controlling interests — Comprehensive income attributable to Penske Automotive Group common stockholders $ $ $ $ $ CONDENSED CONSOLIDATING STATEMENT OF INCOME Year Ended December 31, 2015 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Revenues $ $ — $ — $ $ Cost of sales — — Gross profit — — Selling, general and administrative expenses — Depreciation — Operating income — Floor plan interest expense — Other interest expense — Equity in earnings of affiliates — — Equity in earnings of subsidiaries — — — Income from continuing operations before income taxes Income taxes Income from continuing operations (Loss) income from discontinued operations, net of tax Net income Other comprehensive income (loss), net of tax — Comprehensive income Less: Comprehensive income attributable to non-controlling interests — Comprehensive income attributable to Penske Automotive Group common stockholders $ $ $ $ $ CONDENSED CONSOLIDATING STATEMENT OF INCOME Year Ended December 31, 2014 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Revenues $ $ — $ — $ $ Cost of sales — — Gross profit — — Selling, general and administrative expenses — Depreciation — Operating income — Floor plan interest expense — Other interest expense — Gain on investment — — — Equity in earnings of affiliates — — Equity in earnings of subsidiaries — — — Income from continuing operations before income taxes Income taxes Income from continuing operations (Loss) income from discontinued operations, net of tax Net income Other comprehensive income (loss), net of tax Comprehensive income Less: Comprehensive income attributable to non-controlling interests — Comprehensive income attributable to Penske Automotive Group common stockholders $ $ $ $ $ CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Year Ended December 31, 2016 Penske Total Automotive Guarantor Non-Guarantor Company Group Subsidiaries Subsidiaries Net cash provided by (used in) continuing operating activities $ $ $ $ Investing activities: Purchase of equipment and improvements Acquisition of additional ownership interest in Penske Truck Leasing — — Acquisitions, net — — Other — Net cash used in continuing investing activities Financing activities: Issuance of 5.50% senior subordinated notes — — Net borrowings of long-term debt Net borrowings (repayments) of floor plan notes payable — non-trade Payment of debt issuance costs — — Repurchases of common stock — — Dividends — — Other — — Distributions from (to) parent — Net cash provided by (used in) continuing financing activities Net cash provided by discontinued operations — Effect of exchange rate changes on cash and cash equivalents — — Net change in cash and cash equivalents — Cash and cash equivalents, beginning of period — — Cash and cash equivalents, end of period $ $ — $ $ CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Year Ended December 31, 2015 Penske Total Automotive Guarantor Non-Guarantor Company Group Subsidiaries Subsidiaries Net cash provided by (used in) continuing operating activities $ $ $ $ Investing activities: Purchase of equipment and improvements Acquisitions, net — Other — — Net cash used in continuing investing activities Financing activities: Net (repayments) borrowings of long-term debt Net borrowings (repayments) of floor plan notes payable — non-trade Payment of debt issuance costs — — Repurchases of common stock — — Dividends — — Other — — Distributions from (to) parent — — Net cash (used in) provided by continuing financing activities Net cash provided by discontinued operations — — Effect of exchange rate changes on cash and cash equivalents — — Net change in cash and cash equivalents — — Cash and cash equivalents, beginning of period — — Cash and cash equivalents, end of period $ $ — $ — $ CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Year Ended December 31, 2014 Penske Total Automotive Guarantor Non-Guarantor Company Group Subsidiaries Subsidiaries Net cash provided by (used in) continuing operating activities $ $ $ $ Investing activities: Purchase of equipment and improvements Acquisitions, net — Other — Net cash (used in) provided by continuing investing activities Financing activities: Issuance of 5.375% senior subordinated notes — — Net (repayments) borrowings of long-term debt Net borrowings (repayments) of floor plan notes payable — non-trade Payment of debt issuance costs — — Repurchases of common stock — — Dividends — — Other — — Distributions from (to) parent — — Net cash provided by continuing financing activities Net cash provided by discontinued operations — Effect of exchange rate changes on cash and cash equivalents — — Net change in cash and cash equivalents — Cash and cash equivalents, beginning of period — Cash and cash equivalents, end of period $ $ — $ — $ |
Schedule II VALUATION AND QUALI
Schedule II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2016 | |
Schedule II VALUATION AND QUALIFYING ACCOUNTS | |
Schedule II VALUATION AND QUALIFYING ACCOUNTS | Schedule II PENSKE AUTOMOTIVE GROUP, INC. VALUATION AND QUALIFYING ACCOUNTS (In millions) Balance at Deductions, Balance Beginning Recoveries, at End Description of Year Additions & Other of Year Year Ended December 31, 2016 Allowance for doubtful accounts $ $ $ $ Tax valuation allowance Year Ended December 31, 2015 Allowance for doubtful accounts $ $ $ $ Tax valuation allowance Year Ended December 31, 2014 Allowance for doubtful accounts $ $ $ $ Tax valuation allowance |
Organization and Summary of S31
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Organization and Summary of Significant Accounting Policies | |
Business Overview and Concentrations | Business Overview and Concentrations We are an international transportation services company that operates automotive and commercial truck dealerships principally in the United States, Canada and Western Europe, and distributes commercial vehicles, diesel engines, gas engines, power systems and related parts and services principally in Australia and New Zealand. In 2016, our business generated $20.1 billion in total revenue, which is comprised of $18.7 billion from retail automotive dealerships, $1.0 billion from retail commercial truck dealerships and $0.4 billion from commercial vehicle distribution and other operations. Retail Automotive Dealership. We believe we are the second largest automotive retailer headquartered in the U.S. as measured by the $18.7 billion in total retail automotive dealership revenue we generated in 2016. As of December 31, 2016, we operated 355 retail automotive franchises, of which 164 franchises are located in the U.S. and 191 franchises are located outside of the U.S. The franchises outside the U.S. are located primarily in the U.K. We are engaged in the sale of new and used motor vehicles and related products and services, including vehicle service, collision repair, and placement of finance and lease contracts, third-party insurance products and other aftermarket products. We operate dealerships under franchise agreements with a number of automotive manufacturers and distributors. In accordance with individual franchise agreements, each dealership is subject to certain rights and restrictions typical of the industry. The ability of the manufacturers to influence the operations of the dealerships, or the loss of a significant number of franchise agreements, could have a material impact on our results of operations, financial position and cash flows. For the year ended December 31, 2016, BMW/MINI franchises accounted for 25% of our total retail automotive dealership revenues, Audi/Volkswagen/Porsche/Bentley franchises accounted for 24%, Toyota/Lexus franchises accounted for 15%, and Mercedes-Benz/Sprinter/smart accounted for 10%. No other manufacturers’ franchises accounted for more than 10% of our total retail automotive dealership revenues. At December 31, 2016 and 2015, we had receivables from manufacturers of $196.5 million and $178.9 million, respectively. In addition, a large portion of our contracts in transit, which are included in accounts receivable, are due from manufacturers’ captive finance companies. During the year ended December 31, 2016, we acquired twenty retail automotive franchises in the U.K. and Italy. Twelve of these franchises were acquired in July 2016 and represent our acquisition of a dealer group in the U.K., which includes seven Volkswagen franchises, one BMW franchise, one MINI franchise, one Audi franchise, one Skoda franchise, and one SEAT franchise. Seven of these franchises were acquired in Italy in October 2016, which include three Porsche franchises, one Audi franchise, one Land Rover franchise, one Volvo, and one Nissan franchise in the Bologna, Italy market. To fund the Italian acquisitions, we invested additional capital into our Italian joint venture and now own 84% of that venture. We were also awarded seven retail automotive franchises, disposed of ten retail automotive franchises, and transitioned seventeen franchises which represented the Scion brand to our existing Toyota franchises. Additionally, during the first quarter of 2016, we acquired an additional 8% interest in the Jacobs Group, one of our German automotive dealership joint ventures, and now own 68% of that joint venture. In September 2015, we increased our ownership interest in the Jacobs Group from 50% to 60% upon acquisition of an additional 10% interest, resulting in us owning a controlling interest in this joint venture; we therefore began consolidating this entity in our financial results in the year ended December 31, 2015. We also acquired a 49% interest in the Nicole Group, a luxury dealership group in Tokyo and nearby suburbs in January 2016. The Nicole Group operates four BMW and two MINI dealerships, a Rolls-Royce dealership, a Ferrari dealership, and is the exclusive importer and distributor of ALPINA and also operates two ALPINA dealerships. This investment is accounted for under the equity method. Retail Commercial Truck Dealership. In November 2014, we acquired a controlling interest in a heavy and medium duty truck dealership group located primarily in Texas and Oklahoma, which we renamed Premier Truck Group (“PTG”). Prior to the 2014 transaction, we held a 32% interest in PTG and accounted for this investment under the equity method. In 2015, we acquired an additional 5% of PTG, bringing our ownership interest to 96%. In April 2016, we acquired the remaining ownership interests of PTG, bringing our total ownership interest to 100%. As of December 31, 2016, PTG operated twenty locations in the U.S. and Canada, including fourteen full-service dealerships offering primarily Freightliner and Western Star branded trucks. Two of these locations, Chattanooga and Knoxville, were acquired in February 2015. Four of these locations were acquired in April 2016 and represent Freightliner and Western Star in the greater Toronto, Canada market area. We acquired two additional retail commercial truck dealerships that also represent Freightliner in December 2016 in the Niagara Falls, Canada market area. PTG also offers a full range of used trucks available for sale as well as service and parts departments, many of which are open 24 hours a day, seven days a week. Commercial Vehicle Distribution . We are the exclusive importer and distributor of Western Star heavy-duty trucks (a Daimler brand), MAN heavy and medium duty trucks and buses (a VW Group brand), and Dennis Eagle refuse collection vehicles, together with associated parts, across Australia, New Zealand and portions of the Pacific. This business, known as Penske Commercial Vehicles Australia (“PCV Australia”), distributes commercial vehicles and parts to a network of more than 70 dealership locations, including six company-owned retail commercial vehicle dealerships. We are also a leading distributor of diesel and gas engines and power systems, principally representing MTU, Detroit Diesel, Mercedes-Benz Industrial, Allison Transmission and MTU Onsite Energy. This business, known as Penske Power Systems (“PPS”), offers products across the on- and off-highway markets in Australia, New Zealand and portions of the Pacific and supports full parts and aftersales service through a network of branches, field locations and dealers across the region. The on-highway portion of this business complements our existing PCV Australia distribution business. Penske Truck Leasing. We currently hold a 23.4% ownership interest in Penske Truck Leasing Co., L.P. (“PTL”), a leading provider of transportation services and supply chain management. PTL is capable of meeting customers’ needs across the supply chain with a broad product offering that includes full-service truck leasing, truck rental and contract maintenance, along with logistic services such as dedicated contract carriage, distribution center management, transportation management and lead logistics provider. On July 27, 2016, we acquired an additional 14.4% ownership interest in PTL from subsidiaries of GE Capital Global Holdings, LLC (collectively, “GE Capital”) for approximately $498.5 million in cash to bring our total ownership interest to 23.4%. Prior to this acquisition, we held a 9.0% ownership interest in PTL. PTL is currently owned 41.1% by Penske Corporation, 23.4% by us, 20.0% by affiliates of Mitsui & Co., Ltd. (“Mitsui”), and 15.5% by GE Capital. We account for our investment in PTL under the equity method, and we therefore record our share of PTL’s earnings on our statements of income under the caption “Equity in earnings of affiliates,” which also includes the results of our other equity method investments. |
Basis of Presentation | Basis of Presentation The consolidated financial statements include all majority‑owned subsidiaries. Investments in affiliated companies, representing an ownership interest in the voting stock of the affiliate of between 20% and 50% or an investment in a limited partnership or a limited liability corporation for which our investment is more than minor, are stated at the cost of acquisition plus our equity in undistributed net earnings since acquisition. All intercompany accounts and transactions have been eliminated in consolidation. The consolidated financial statements, including the comparative periods presented, have been adjusted for entities that have been treated as discontinued operations prior to adoption of ASU No. 2014-08 in accordance with generally accepted accounting principles. In 2016, we adopted ASU 2015-03 and applied the new guidance retrospectively, which resulted in the reclassification of debt issuance costs from other current and other long-term assets to current and long-term debt for the periods presented. Amounts reclassified from “Other current assets” to “Current portion of long-term debt” were $1.2 million as of December 31, 2015. Amounts reclassified from “Other long-term assets” to “Long-term debt” were $8.1 million as of December 31, 2015. |
Estimates | Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The accounts requiring the use of significant estimates include accounts receivable, inventories, income taxes, intangible assets and certain reserves. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include all highly‑liquid investments that have an original maturity of three months or less at the date of purchase. |
Contracts in Transit | Contracts in Transit Contracts in transit represent receivables from unaffiliated finance companies relating to the sale of customers’ installment sales and lease contracts arising in connection with the sale of a vehicle by us. Contracts in transit, included in accounts receivable, net in our consolidated balance sheets, amounted to $322.7 million and $261.7 million as of December 31, 2016 and 2015, respectively. |
Inventory Valuation | Inventory Valuation Inventories are stated at the lower of cost or market. Cost for new and used vehicle inventories includes acquisition, reconditioning, dealer installed accessories, and transportation expenses and is determined using the specific identification method. Inventories of dealership parts and accessories are accounted for using the “first‑in, first‑out” (“FIFO”) method of inventory accounting and the cost is based on factory list prices. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost and depreciated over estimated useful lives using the straight‑line method. Useful lives for purposes of computing depreciation for assets, other than leasehold improvements, range between 3 and 15 years. Leasehold improvements and equipment under capital lease are depreciated over the shorter of the term of the lease or the estimated useful life of the asset, not to exceed 40 years. Expenditures relating to recurring repair and maintenance are expensed as incurred. Expenditures that increase the useful life or substantially increase the serviceability of an existing asset are capitalized. When equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the balance sheet, with any resulting gain or loss being reflected in income. |
Income Taxes | Income Taxes Tax regulations may require items to be included in our tax return at different times than when those items are reflected in our financial statements. Some of the differences are permanent, such as expenses that are not deductible on our tax return, and some are temporary differences, such as the timing of depreciation expense. Temporary differences create deferred tax assets and liabilities. Deferred tax assets generally represent items that will be used as a tax deduction or credit in our tax return in future years which we have already recorded in our financial statements. Deferred tax liabilities generally represent deductions taken on our tax return that have not yet been recognized as an expense in our financial statements. We establish valuation allowances for our deferred tax assets if the amount of expected future taxable income is not more likely than not to allow for the use of the deduction or credit. |
Intangible Assets | Intangible Assets Our principal intangible assets relate to our franchise agreements with vehicle manufacturers and distributors, which represent the estimated value of franchises acquired in business combinations, our distribution agreements with commercial vehicle manufacturers, which represent the estimated value of distribution rights acquired in business combinations, and goodwill, which represents the excess of cost over the fair value of tangible and identified intangible assets acquired in business combinations. We believe the franchise values of our automotive dealerships and the distribution agreements of our commercial vehicle distribution operations have an indefinite useful life based on the following: · Automotive retailing and commercial vehicle distribution are mature industries and are based on franchise and distribution agreements with the vehicle manufacturers and distributors; · There are no known changes or events that would alter the automotive retailing franchise or commercial vehicle distribution environments; · Certain franchise agreement terms are indefinite; · Franchise and distribution agreements that have limited terms have historically been renewed by us without substantial cost; and · Our history shows that manufacturers and distributors have not terminated our franchise or distribution agreements. |
Impairment Testing | Impairment Testing Other indefinite-lived intangible assets are assessed for impairment annually on October 1 and upon the occurrence of an indicator of impairment through a comparison of its carrying amount and estimated fair value. An indicator of impairment exists if the carrying value exceeds its estimated fair value and an impairment loss may be recognized up to that excess. The fair value is determined using a discounted cash flow approach, which includes assumptions about revenue and profitability growth, profit margins, and the cost of capital. We also evaluate in connection with the annual impairment testing whether events and circumstances continue to support our assessment that the other indefinite-lived intangible assets continue to have an indefinite life. Goodwill impairment is assessed at the reporting unit level annually on October 1 and upon the occurrence of an indicator of impairment. Our operations are organized by management into operating segments by line of business and geography. We have determined that we have four reportable segments as defined in generally accepted accounting principles for segment reporting: (i) Retail Automotive, consisting of our retail automotive dealership operations; (ii) Retail Commercial Truck, consisting of our retail commercial truck dealership operations in the U.S. and Canada; (iii) Other, consisting of our commercial vehicle and power systems distribution operations and other non-automotive consolidated operations; and (iv) Non-Automotive Investments, consisting of our equity method investments in non-automotive operations. We have determined that the dealerships in each of our operating segments within the Retail Automotive reportable segment are components that are aggregated into four geographical reporting units for the purpose of goodwill impairment testing, as they (A) have similar economic characteristics (all are automotive dealerships having similar margins), (B) offer similar products and services (all sell new and used vehicles, service, parts and third-party finance and insurance products), (C) have similar target markets and customers (generally individuals), and (D) have similar distribution and marketing practices (all distribute products and services through dealership facilities that market to customers in similar fashions). The geographic reporting units are Eastern, Central, and Western United States and International. Our Retail Commercial Truck reportable segment has been determined to represent one operating segment and reporting unit. The goodwill included in our Other reportable segment relates primarily to our commercial vehicle distribution operating segment. There is no goodwill recorded in our Non-Automotive Investments reportable segment. For our Retail Automotive and Retail Commercial Truck reporting units, we prepared a qualitative assessment of the carrying value of goodwill using the criteria in ASC 350-20-35-3 to determine whether it is more likely than not that a reporting unit’s fair value is less than its carrying value. If it were determined through the qualitative assessment that a reporting unit’s fair value is more likely than not greater than its carrying value, additional analysis would be unnecessary. During 2016, we concluded that it was not more likely than not that any of the retail automotive or retail commercial truck reporting units’ fair values were less than their carrying amount. If additional impairment testing was necessary, we would have estimated the fair value of our reporting units using an “income” valuation approach. The “income” valuation approach estimates our enterprise value using a net present value model, which discounts projected free cash flows of our business using the weighted average cost of capital as the discount rate. In connection with this process, we also reconcile the estimated aggregate fair values of our reporting units to our market capitalization. We believe this reconciliation process is consistent with a market participant perspective. This consideration would also include a control premium that represents the estimated amount an investor would pay for our equity securities to obtain a controlling interest, and other significant assumptions including revenue and profitability growth, franchise profit margins, residual values and the cost of capital. For our Other reportable segment, we performed our impairment test by comparing the estimated fair value of each reporting unit with its carrying value. We estimated the fair value of these reporting units using an “income” valuation approach, as described above. We concluded that the fair value of each of these reporting units exceeded its carrying value. |
Investments | Investments We account for each of our investments under the equity method, pursuant to which we record our proportionate share of the investee’s income each period. The net book value of our investments was $893.4 million and $336.4 million as of December 31, 2016 and 2015, respectively, including $823.8 million and $290.6 million relating to PTL as of December 31, 2016 and 2015, respectively. In July 2016, we increased our ownership interest in PTL from 9.0% to 23.4% as a result of our acquisition of an additional 14.4% ownership interest, as discussed previously. Investments for which there is not a liquid, actively traded market are reviewed periodically by management for indicators of impairment. If an indicator of impairment is identified, management estimates the fair value of the investment using a discounted cash flow approach, which includes assumptions relating to revenue and profitability growth, profit margins, residual values and our cost of capital. Declines in investment values that are deemed to be other than temporary may result in an impairment charge reducing the investments’ carrying value to fair value. |
Foreign Currency Translation | Foreign Currency Translation For all of our non-U.S. operations, the functional currency is the local currency. The revenue and expense accounts of our non-U.S. operations are translated into U.S. dollars using the average exchange rates that prevailed during the period. Assets and liabilities of non-U.S. operations are translated into U.S. dollars using period end exchange rates. Cumulative translation adjustments relating to foreign functional currency assets and liabilities are recorded in accumulated other comprehensive income (loss), a separate component of equity. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which 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: Level 1 Quoted prices in active markets for identical assets or liabilities Level 2 Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted market prices in markets that are not active; or model‑derived valuations or other inputs that are observable or 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 Our financial instruments consist of cash and cash equivalents, debt, floor plan notes payable, forward exchange contracts and interest rate swaps used to hedge future cash flows. Other than our fixed rate debt, the carrying amount of all significant financial instruments approximates fair value due either to length of maturity, the existence of variable interest rates that approximate prevailing market rates, or as a result of mark to market accounting. Our fixed rate debt consists of amounts outstanding under our senior subordinated notes and mortgage facilities. We estimate the fair value of our senior unsecured notes using quoted prices for the identical liability (Level 2), and we estimate the fair value of our mortgage facilities using a present value technique based on our current market interest rates for similar types of financial instruments (Level 2). A summary of the carrying values and fair values of our 5.75% senior subordinated notes, 5.375% senior subordinated notes, 5.50% senior subordinated notes, and our fixed rate mortgage facilities are as follows: December 31, 2016 December 31, 2015 Carrying Value Fair Value Carrying Value Fair Value 5.75% senior subordinated notes due 2022 $ $ $ $ 5.375% senior subordinated notes due 2024 5.50% senior subordinated notes due 2026 — — Mortgage facilities |
Revenue Recognition | Revenue Recognition Dealership Vehicle, Parts and Service Sales We record revenue when vehicles are delivered and title has passed to the customer, when vehicle service or repair work is completed and when parts are delivered to our customers. Sales promotions that we offer to customers are accounted for as a reduction of revenues at the time of sale. Rebates and other incentives offered directly to us by manufacturers are recognized as a reduction of cost of sales. Reimbursements of qualified advertising expenses are treated as a reduction of selling, general and administrative expenses. The amounts received under certain manufacturer rebate and incentive programs are based on the attainment of program objectives, and such earnings are recognized either upon the sale of the vehicle for which the award was received, or upon attainment of the particular program goals if not associated with individual vehicles. Taxes collected from customers and remitted to governmental authorities are recorded on a net basis (excluded from revenue). Dealership Finance and Insurance Sales Subsequent to the sale of a vehicle to a customer, we sell installment sale contracts to various financial institutions on a non‑recourse basis (with specified exceptions) to mitigate the risk of default. We receive a commission from the lender equal to either the difference between the interest rate charged to the customer and the interest rate set by the financing institution or a flat fee. We also receive commissions for facilitating the sale of various products to customers, including guaranteed vehicle protection insurance, vehicle theft protection and extended service contracts. These commissions are recorded as revenue at the time the customer enters into the contract. In the case of finance contracts, a customer may prepay or fail to pay their contract, thereby terminating the contract. Customers may also terminate extended service contracts and other insurance products, which are fully paid at purchase, and become eligible for refunds of unused premiums. In these circumstances, a portion of the commissions we received may be charged back based on the terms of the contracts. The revenue we record relating to these transactions is net of an estimate of the amount of chargebacks we will be required to pay. Our estimate is based upon our historical experience with similar contracts, including the impact of refinance and default rates on retail finance contracts and cancellation rates on extended service contracts and other insurance products. Aggregate reserves relating to chargeback activity were $23.5 million and $23.8 million as of December 31, 2016 and 2015, respectively. Commercial Vehicle Distribution Revenue from the distribution of vehicles, engines, power systems and parts is recognized at the time of delivery of goods to the retailer or the ultimate customer. |
Defined Contribution Plans | Defined Contribution Plans We sponsor a number of defined contribution plans covering a significant majority of our employees. Our contributions to such plans are discretionary and are based on the level of compensation and contributions by plan participants. We incurred expense of $14.5 million, $16.0 million, and $17.7 million relating to such plans during the years ended December 31, 2016, 2015, and 2014, respectively. |
Advertising | Advertising Advertising costs are expensed as incurred or when such advertising takes place. We incurred net advertising costs of $102.5 million, $101.0 million, and $93.7 million during the years ended December 31, 2016, 2015, and 2014, respectively. Qualified advertising expenditures reimbursed by manufacturers, which are treated as a reduction of advertising expense, were $16.6 million, $17.2 million, and $14.3 million during the years ended December 31, 2016, 2015, and 2014, respectively. |
Self-Insurance | Self-Insurance We retain risk relating to certain of our general liability insurance, workers’ compensation insurance, vehicle physical damage insurance, property insurance, employment practices liability insurance, directors and officers insurance and employee medical benefits in the U.S. As a result, we are likely to be responsible for a significant portion of the claims and losses incurred under these programs. The amount of risk we retain varies by program, and, for certain exposures, we have pre‑determined maximum loss limits for certain individual claims and/or insurance periods. Losses, if any, above the pre‑determined loss limits are paid by third‑party insurance carriers. Certain insurers have limited available property coverage in response to the natural catastrophes experienced in recent years. Our estimate of future losses is prepared by management using our historical loss experience and industry‑based development factors. Aggregate reserves relating to retained risk were $28.3 million and $26.4 million as of December 31, 2016 and 2015, respectively. |
Earnings Per Share | Earnings Per Share Basic earnings per share is computed using net income attributable to Penske Automotive Group common stockholders and the number of weighted average shares of voting common stock outstanding, including outstanding unvested restricted stock awards which contain rights to non-forfeitable dividends. Diluted earnings per share is computed using net income attributable to Penske Automotive Group common stockholders and the number of weighted average shares of voting common stock outstanding, adjusted for any dilutive effects. A reconciliation of the number of shares used in the calculation of basic and diluted earnings per share for the years ended December 31, 2016, 2015, and 2014 follows: Year Ended December 31, 2016 2015 2014 Weighted average number of common shares outstanding Effect of non-participatory equity compensation — — Weighted average number of common shares outstanding, including effect of dilutive securities |
Hedging | Hedging Generally accepted accounting principles relating to derivative instruments and hedging activities require all derivatives, whether designated in hedging relationships or not, to be recorded on the balance sheet at fair value. These accounting principles also define requirements for designation and documentation of hedging relationships, as well as ongoing effectiveness assessments, which must be met in order to qualify for hedge accounting. For a derivative that does not qualify as a hedge, changes in fair value are recorded in earnings immediately. If the derivative is designated in a fair‑value hedge, the changes in the fair value of the derivative and the hedged item are recorded in earnings. If the derivative is designated as a cash‑flow hedge, effective changes in the fair value of the derivative are recorded in accumulated other comprehensive income (loss), a separate component of equity, and recorded in the income statement only when the hedged item affects earnings. Changes in the fair value of the derivative attributable to hedge ineffectiveness are recorded in earnings immediately. |
Stock-Based Compensation | Stock‑Based Compensation Generally accepted accounting principles relating to share‑based payments require us to record compensation expense for all awards based on their grant‑date fair value. Our share‑based payments have generally been in the form of “non‑vested shares,” the fair value of which are measured as if they were vested and issued on the grant date. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” This ASU supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. ASU No. 2014-09 will require an entity to recognize revenue when it transfers promised goods or services to customers using a five-step model that requires entities to exercise judgment when considering the terms of contracts with customers. This ASU can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption. In August 2015, the FASB issued ASU 2015-14 “Revenue from Contracts with Customers (Topic 606) — Deferral of the Effective Date” providing for a one-year deferral of the effective date of ASU 2014-09 from January 1, 2017 to January 1, 2018. The FASB has since also issued additional ASUs containing various updates to Topic 606 which will all be adopted along with ASU 2014-09. We are currently assessing the impact the adoption of these accounting standard updates will have on our consolidated financial position, results of operations, and cash flows. However, at this time, we do not expect the adoption of these accounting standard updates to have a material impact our consolidated financial position, results of operations, and cash flows, and therefore, we expect to adopt using a cumulative-effect adjustment as of the date of adoption. In April 2015, the FASB issued ASU No. 2015-03, “Interest — Imputation of Interest (Subtopic 835-30) — Simplifying the Presentation of Debt Issuance Costs.” ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU No. 2015-15, “Interest — Imputation of Interest (Subtopic 835-30) — Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements,” which clarifies the treatment of debt issuance costs associated with line-of-credit arrangements that were not specifically addressed in ASU 2015-03. ASU 2015-15 states that entities may elect to continue to treat debt issuance costs associated with lines of credit as an asset, consistent with current treatment. We adopted these accounting standard updates in the first quarter of 2016. We applied this new guidance retrospectively, which resulted in the reclassification of debt issuance costs from other current and other long-term assets to current and long-term debt for the periods presented. Amounts reclassified from “Other current assets” to “Current portion of long-term debt” were $1.2 million as of December 31, 2015. Amounts reclassified from “Other long-term assets” to “Long-term debt” were $8.1 million as of December 31, 2015. In July 2015, the FASB issued ASU No. 2015-11, “Simplifying the Measurement of Inventory (Topic 330).” Under ASU 2015-11, inventory should be measured at the lower of cost or net realizable value, unless measured under the last-in, first-out (LIFO) or retail inventory methods. This ASU is effective for us beginning after January 1, 2017. We do not expect the adoption of this accounting standard update to have a material impact on our consolidated financial position, results of operations, and cash flows. In September 2015, the FASB issued ASU No. 2015-16, “Business Combinations (Topic 805) — Simplifying the Accounting for Measurement-Period Adjustments.” Under ASU 2015-16, acquirers will be required to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, eliminating the requirement to retrospectively account for such adjustments. We adopted this accounting standard update effective January 1, 2016. The adoption of ASU No. 2015-16 has not had a material impact on our consolidated financial position, results of operations, or cash flows. In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740) — Balance Sheet Classification of Deferred Taxes.” Under ASU 2015-17, entities will be required to classify all deferred tax liabilities and assets as noncurrent in a classified statement of financial position. This ASU is effective for us beginning after January 1, 2017. Other than the revised presentation of our consolidated balance sheets, we do not expect the adoption of this accounting standard update to have a material impact on our consolidated financial position, results of operations, and cash flows. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” Under this new guidance, a company will now recognize most leases on its balance sheet as lease liabilities with corresponding right-of-use assets. This ASU is effective for us beginning after January 1, 2019. The adoption of this ASU will result in a significant increase in lease liabilities and right-of-use assets on our consolidated balance sheets. We are currently evaluating the other effects the adoption of this ASU will have on our consolidated financial statements. We believe our current off-balance sheet leasing commitments are reflected in our credit rating. In March 2016, the FASB issued ASU No. 2016-09, “Compensation — Stock Compensation (Topic 718) — Improvement to Employee Share-Based Payment Accounting.” This ASU simplified several aspects of accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU is effective for us beginning after January 1, 2017. We do not expect the adoption of this accounting standard update to have a material impact on our consolidated financial position, results of operations, and cash flows. In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230) — Classification of Certain Cash Receipts and Cash Payments.” This ASU provides new guidance on eight specific cash flow issues related to how such cash receipts and cash payments should be presented in a statement of cash flows. This ASU is effective for us beginning after January 1, 2018. We are currently assessing the impact the adoption of this update will have on our consolidated cash flows. |
Organization and Summary of S32
Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Organization and Summary of Significant Accounting Policies | |
Summary of carrying values and fair values of senior subordinated notes and fixed rate mortgage facilities | December 31, 2016 December 31, 2015 Carrying Value Fair Value Carrying Value Fair Value 5.75% senior subordinated notes due 2022 $ $ $ $ 5.375% senior subordinated notes due 2024 5.50% senior subordinated notes due 2026 — — Mortgage facilities |
Reconciliation of number of shares used in calculation of basic and diluted earning per share | Year Ended December 31, 2016 2015 2014 Weighted average number of common shares outstanding Effect of non-participatory equity compensation — — Weighted average number of common shares outstanding, including effect of dilutive securities |
Equity Method Investees (Tables
Equity Method Investees (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity Method Investees | |
Equity method investment statement of operation and financial position | Condensed income statement information: Year Ended December 31, 2016 2015 2014 Revenues $ $ $ Gross profit Net income Condensed balance sheet information: December 31, 2016 2015 Current assets $ $ Noncurrent assets Total assets $ $ Current liabilities $ $ Noncurrent liabilities Equity Total liabilities and equity $ $ |
Business Combinations (Tables)
Business Combinations (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations | |
Summary of the aggregate consideration paid and the aggregate amounts of the assets acquired and liabilities assumed | December 31, 2016 2015 Accounts receivable $ $ Inventory Other current assets Property and equipment Indefinite-lived intangibles Other non-current assets Current liabilities Non-current liabilities Total consideration $ $ Seller financed/assumed debt — Seller assumed floor plan — Fair value of previously held interest — Fair value of non-controlling interest — Total cash used in acquisitions $ $ |
Summary of unaudited consolidated pro forma results of operations | Year Ended December 31, 2016 2015 Revenues $ $ Income from continuing operations Net income Income from continuing operations per diluted common share $ $ Net income per diluted common share $ $ |
Discontinued Operations and D35
Discontinued Operations and Divestitures (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Discontinued Operations and Divestitures | |
Combined financial information regarding entities accounted for as discontinued operations | Year Ended December 31, 2016 2015 2014 Revenues $ $ $ Pre-tax loss Pre-tax gain on disposal — December 31, 2016 2015 Inventories $ $ Other assets Total assets $ $ Floor plan notes payable (including non-trade) $ $ Other liabilities Total liabilities $ $ |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Inventories | |
Inventories | December 31, 2016 2015 Retail automotive dealership new vehicles $ $ Retail automotive dealership used vehicles Retail automotive parts, accessories and other Retail commercial truck dealership vehicles and parts Commercial vehicle distribution vehicles and parts Total inventories $ $ |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property and Equipment | |
Schedule of components of property and equipment | December 31, 2016 2015 Buildings and leasehold improvements $ $ Furniture, fixtures and equipment Total $ $ Less: Accumulated depreciation Property and equipment, net $ $ |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Intangible Assets | |
Summary of the changes in the carrying amount of goodwill and other indefinite-lived intangible assets | Other Indefinite‑ Lived Intangible Goodwill Assets Balance — December 31, 2014 $ $ Additions Foreign currency translation Balance — December 31, 2015 $ $ Additions Disposals Foreign currency translation Balance — December 31, 2016 $ $ |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Long-Term Debt | |
Long Term Debt | December 31, 2016 2015 U.S. credit agreement — revolving credit line $ $ U.K. credit agreement — revolving credit line U.K. credit agreement — overdraft line of credit — 5.50% senior subordinated notes due 2026 — 5.375% senior subordinated notes due 2024 5.75% senior subordinated notes due 2022 Australia working capital loan agreement Mortgage facilities Other Total long-term debt $ $ Less: current portion Net long-term debt $ $ |
Scheduled maturities of long-term debt for each of the next five years and thereafter | 2017 $ 2018 2019 2020 2021 2022 and thereafter Total long-term debt reported $ |
Commitments and Contingent Li40
Commitments and Contingent Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingent Liabilities | |
Minimum future rental payments required under operating leases | Minimum future rental payments required under operating leases in effect as of December 31, 2016 are as follows: 2017 $ 2018 2019 2020 2021 2022 and thereafter $ |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions | |
Schedule of automotive joint venture relationships | Location Dealerships Ownership Interest Fairfield, Connecticut Audi, Mercedes-Benz, Sprinter, Porsche, smart % (A) (B) Greenwich, Connecticut Mercedes-Benz % (A) (B) Northern Italy BMW, MINI, Maserati, Porsche, Audi, Land Rover, Volvo, Nissan % (B) (E) Aachen, Germany Audi, Maserati, SEAT, Skoda, Volkswagen % (C) Frankfurt, Germany Lexus, Toyota, Volkswagen % (D) Barcelona, Spain BMW, MINI % (D) Tokyo, Japan BMW, MINI, Rolls-Royce, Ferrari, ALPINA % (D) (a) An entity controlled by one of our directors, Lucio A. Noto, owns a 20% interest in this joint venture. (b) Entity is consolidated in our financial statements. (c) Entity is consolidated in our financial statements as a result of our purchase of an additional 10% interest in this joint venture in the third quarter of 2015. In March 2016, we acquired an additional 8% interest in this joint venture. (d) Entity is accounted for using the equity method of accounting. (e) In October 2016, we made an additional investment in this joint venture, which increased our ownership interest from 70% to 84%. This additional investment funded our acquisition of seven retail automotive franchises in October 2016, consisting of three Porsche franchises, one Audi franchise, one Land Rover franchise, one Volvo franchise, and one Nissan franchise in the Bologna, Italy market. |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stock-Based Compensation | |
Summary of the Company's restricted stock activity | Weighted Average Aggregate Shares Grant Date Fair Value Intrinsic Value December 31, 2015 $ Granted Vested Forfeited December 31, 2016 $ $ |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Stock-Based Compensation | |
Schedule of shares repurchased under our securities repurchase program and shares acquired | Year Ended December 31, 2016 2015 2014 Shares repurchased (1) Aggregate purchase price $ $ $ Average purchase price per share $ $ $ Shares acquired (2) Aggregate purchase price $ $ $ Average purchase price per share $ $ $ (1) Shares were repurchased under our securities repurchase program. As of December 31, 2016, we have $32.1 million in repurchase authorization under the repurchase program . (2) Shares were acquired from employees in connection with a net share settlement feature of employee equity awards . |
Accumulated Other Comprehensi44
Accumulated Other Comprehensive Income/(Loss) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accumulated Other Comprehensive Income/(Loss) | |
Schedule of the changes in accumulated other comprehensive income/(loss) by component and the reclassifications out of accumulated other comprehensive income/(loss) attributable to the entity's common stockholders | Accumulated Foreign Other Currency Comprehensive Translation Other Income (Loss) Balance at January 1, 2014 $ $ $ Other comprehensive income before reclassifications Amounts reclassified from accumulated other comprehensive income — net of tax provision of $3.2 — Net current-period other comprehensive income Balance at December 31, 2014 $ $ $ Other comprehensive income before reclassifications Amounts reclassified from accumulated other comprehensive income — net of tax provision $0.0 — — — Net current-period other comprehensive income Balance at December 31, 2015 $ $ $ Other comprehensive income before reclassifications Amounts reclassified from accumulated other comprehensive income — net of tax provision of $0.0 — — — Net current-period other comprehensive income Balance at December 31, 2016 $ $ $ |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Schedule of income taxes relating to income from continuing operations | Year Ended December 31, 2016 2015 2014 Current: Federal $ $ $ State and local Foreign Total current $ $ $ Deferred: Federal State and local Foreign Total deferred $ $ $ Income taxes relating to continuing operations $ $ $ |
Schedule of reconciliation of income taxes from continuing operations at federal statutory rate | Year Ended December 31, 2016 2015 2014 Income taxes relating to continuing operations at federal statutory rate of 35% $ $ $ State and local income taxes, net of federal taxes Non-U.S. income taxed at other rates Other Income taxes relating to continuing operations $ $ $ |
Schedule of components of deferred tax assets and liabilities | 2016 2015 Deferred Tax Assets Accrued liabilities $ $ Net operating loss carryforwards Other Total deferred tax assets Valuation allowance Net deferred tax assets Deferred Tax Liabilities Depreciation and amortization Partnership investments Convertible notes Other Total deferred tax liabilities Net deferred tax liabilities $ $ |
Schedule of movement in uncertain tax positions | 2016 2015 2014 Uncertain tax positions — January 1 $ $ $ Gross increase — tax position in prior periods Gross decrease — tax position in prior periods — Gross increase — current period tax position — — Settlements — — Lapse in statute of limitations — — — Foreign exchange Uncertain tax positions — December 31 $ $ $ |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Information | |
Revenues and segment income by reportable segment | Retail Retail Commercial Non-Automotive Intersegment Automotive Truck Other Investments Elimination Total Revenues 2016 $ $ $ $ — $ $ 2015 — 2014 — Floor plan interest expense 2016 $ $ $ $ — $ — $ 2015 — — 2014 — — Other interest expense 2016 $ $ $ $ — $ — $ 2015 — — 2014 — — Depreciation 2016 $ $ $ $ — $ — $ 2015 — — 2014 — — Equity in earnings of affiliates 2016 $ $ — $ — $ $ — $ 2015 — — — 2014 — — Adjusted segment income 2016 $ $ $ $ $ — $ 2015 — 2014 — |
Schedule of total adjusted segment income to consolidated income from continuing operations before income taxes reconciliation | Year Ended December 31, 2016 2015 2014 Adjusted segment income $ $ $ Gain on investment — — Income from continuing operations before income taxes $ $ $ |
Total assets, equity method investments, and capital expenditures by reporting segment | Retail Retail Commercial Non-Automotive Intersegment Automotive Truck Other Investments Elimination Total Total assets (1) 2016 $ $ $ $ $ — $ 2015 — Equity method investments 2016 $ $ — $ — $ $ — $ 2015 — — — Capital expenditures 2016 $ $ $ $ — $ — $ 2015 — — 2014 — — (1) |
Schedule of revenue and long-lived assets by geographic area | Year Ended December 31, 2016 2015 2014 Revenue from external customers: U.S. $ $ $ Non-U.S. Total revenue from external customers $ $ $ Long-lived assets, net: U.S. $ $ Non-U.S. Total long-lived assets $ $ |
Schedule of revenue from external customers by product type for the Retail Automotive and Retail Commercial Truck segments | Year Ended December 31, Retail Automotive Dealership Revenue 2016 2015 2014 New vehicle $ $ $ Used vehicle Finance and insurance, net Service and parts Fleet and wholesale Total retail automotive dealership revenue $ $ $ Year Ended December 31, Retail Commercial Truck Dealership Revenue 2016 2015 2014 (1) New truck $ $ $ Used truck Finance and insurance, net Service and parts Lease, rental and wholesale Total retail commercial truck dealership revenue $ $ $ (1) As we acquired a controlling interest in Premier Truck Group in November 2014, information for the year ended December 31, 2014 represents revenues since our date of acquisition in November 2014. |
Summary of Quarterly Financia47
Summary of Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Quarterly Financial Data (Unaudited) | |
Summary of Quarterly Financial Data (Unaudited) | First Second Third Fourth Quarter Quarter Quarter Quarter 2016 (1)(2) Total revenues $ $ $ $ Gross profit Net income Net income attributable to Penske Automotive Group common stockholders Diluted earnings per share attributable to Penske Automotive Group common stockholders $ $ $ $ 2015 (1)(2) Total revenues $ $ $ $ Gross profit Net income Net income attributable to Penske Automotive Group common stockholders Diluted earnings per share attributable to Penske Automotive Group common stockholders $ $ $ $ (1) As discussed in Note 4, we have treated the operations of certain entities as discontinued operations. The results for all periods have been restated to reflect such treatment. (2) Per share amounts are calculated independently for each of the quarters presented. The sum of the quarters may not equal the full year per share amounts due to rounding. |
Condensed Consolidating Finan48
Condensed Consolidating Financial Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Condensed Consolidating Financial Information | |
CONDENSED CONSOLIDATING BALANCE SHEET | CONDENSED CONSOLIDATING BALANCE SHEET December 31, 2016 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Cash and cash equivalents $ $ — $ — $ $ Accounts receivable, net Inventories — — Other current assets — Assets held for sale — — — Total current assets Property and equipment, net — Intangible assets — — Equity method investments — — Other long-term assets Total assets $ $ $ $ $ Floor plan notes payable $ $ — $ — $ $ Floor plan notes payable — non-trade — Accounts payable — Accrued expenses Current portion of long-term debt — — Liabilities held for sale — — — Total current liabilities Long-term debt Deferred tax liabilities — — Other long-term liabilities — — Total liabilities Total equity Total liabilities and equity $ $ $ $ $ CONDENSED CONSOLIDATING BALANCE SHEET December 31, 2015 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Cash and cash equivalents $ $ — $ — $ — $ Accounts receivable, net Inventories — — Other current assets — Assets held for sale — — Total current assets Property and equipment, net — Intangible assets — — Equity method investments — — Other long-term assets Total assets $ $ $ $ $ Floor plan notes payable $ $ — $ — $ $ Floor plan notes payable — non-trade — Accounts payable — Accrued expenses Current portion of long-term debt — — Liabilities held for sale — — Total current liabilities Long-term debt Deferred tax liabilities — — Other long-term liabilities — — Total liabilities Total equity Total liabilities and equity $ $ $ $ $ |
CONDENSED CONSOLIDATING STATEMENT OF INCOME | CONDENSED CONSOLIDATING STATEMENT OF INCOME Year Ended December 31, 2016 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Revenues $ $ — $ — $ $ Cost of sales — — Gross profit — — Selling, general and administrative expenses — Depreciation — Operating income — Floor plan interest expense — Other interest expense — Equity in earnings of affiliates — — Equity in earnings of subsidiaries — — — Income from continuing operations before income taxes Income taxes Income from continuing operations (Loss) income from discontinued operations, net of tax Net income Other comprehensive income (loss), net of tax — Comprehensive income Less: Comprehensive income attributable to non-controlling interests — Comprehensive income attributable to Penske Automotive Group common stockholders $ $ $ $ $ CONDENSED CONSOLIDATING STATEMENT OF INCOME Year Ended December 31, 2015 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Revenues $ $ — $ — $ $ Cost of sales — — Gross profit — — Selling, general and administrative expenses — Depreciation — Operating income — Floor plan interest expense — Other interest expense — Equity in earnings of affiliates — — Equity in earnings of subsidiaries — — — Income from continuing operations before income taxes Income taxes Income from continuing operations (Loss) income from discontinued operations, net of tax Net income Other comprehensive income (loss), net of tax — Comprehensive income Less: Comprehensive income attributable to non-controlling interests — Comprehensive income attributable to Penske Automotive Group common stockholders $ $ $ $ $ CONDENSED CONSOLIDATING STATEMENT OF INCOME Year Ended December 31, 2014 Penske Total Automotive Guarantor Non-Guarantor Company Eliminations Group Subsidiaries Subsidiaries Revenues $ $ — $ — $ $ Cost of sales — — Gross profit — — Selling, general and administrative expenses — Depreciation — Operating income — Floor plan interest expense — Other interest expense — Gain on investment — — — Equity in earnings of affiliates — — Equity in earnings of subsidiaries — — — Income from continuing operations before income taxes Income taxes Income from continuing operations (Loss) income from discontinued operations, net of tax Net income Other comprehensive income (loss), net of tax Comprehensive income Less: Comprehensive income attributable to non-controlling interests — Comprehensive income attributable to Penske Automotive Group common stockholders $ $ $ $ $ |
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS | CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Year Ended December 31, 2016 Penske Total Automotive Guarantor Non-Guarantor Company Group Subsidiaries Subsidiaries Net cash provided by (used in) continuing operating activities $ $ $ $ Investing activities: Purchase of equipment and improvements Acquisition of additional ownership interest in Penske Truck Leasing — — Acquisitions, net — — Other — Net cash used in continuing investing activities Financing activities: Issuance of 5.50% senior subordinated notes — — Net borrowings of long-term debt Net borrowings (repayments) of floor plan notes payable — non-trade Payment of debt issuance costs — — Repurchases of common stock — — Dividends — — Other — — Distributions from (to) parent — Net cash provided by (used in) continuing financing activities Net cash provided by discontinued operations — Effect of exchange rate changes on cash and cash equivalents — — Net change in cash and cash equivalents — Cash and cash equivalents, beginning of period — — Cash and cash equivalents, end of period $ $ — $ $ CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Year Ended December 31, 2015 Penske Total Automotive Guarantor Non-Guarantor Company Group Subsidiaries Subsidiaries Net cash provided by (used in) continuing operating activities $ $ $ $ Investing activities: Purchase of equipment and improvements Acquisitions, net — Other — — Net cash used in continuing investing activities Financing activities: Net (repayments) borrowings of long-term debt Net borrowings (repayments) of floor plan notes payable — non-trade Payment of debt issuance costs — — Repurchases of common stock — — Dividends — — Other — — Distributions from (to) parent — — Net cash (used in) provided by continuing financing activities Net cash provided by discontinued operations — — Effect of exchange rate changes on cash and cash equivalents — — Net change in cash and cash equivalents — — Cash and cash equivalents, beginning of period — — Cash and cash equivalents, end of period $ $ — $ — $ CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS Year Ended December 31, 2014 Penske Total Automotive Guarantor Non-Guarantor Company Group Subsidiaries Subsidiaries Net cash provided by (used in) continuing operating activities $ $ $ $ Investing activities: Purchase of equipment and improvements Acquisitions, net — Other — Net cash (used in) provided by continuing investing activities Financing activities: Issuance of 5.375% senior subordinated notes — — Net (repayments) borrowings of long-term debt Net borrowings (repayments) of floor plan notes payable — non-trade Payment of debt issuance costs — — Repurchases of common stock — — Dividends — — Other — — Distributions from (to) parent — — Net cash provided by continuing financing activities Net cash provided by discontinued operations — Effect of exchange rate changes on cash and cash equivalents — — Net change in cash and cash equivalents — Cash and cash equivalents, beginning of period — Cash and cash equivalents, end of period $ $ — $ — $ |
Organization and Summary of S49
Organization and Summary of Significant Accounting Policies - Business Overview (Details) $ in Millions | Jul. 27, 2016USD ($) | Jul. 26, 2016 | Dec. 31, 2016USD ($)item | Oct. 31, 2016item | Jul. 31, 2016item | Apr. 30, 2016item | Feb. 28, 2015item | Dec. 31, 2016USD ($)item | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Jan. 31, 2016 | Aug. 31, 2015 | Oct. 31, 2014 |
Significant Accounting Policies | |||||||||||||||||||||
Total revenues | $ | $ 4,887.8 | $ 5,152 | $ 5,254.1 | $ 4,824.6 | $ 4,921.3 | $ 4,960.1 | $ 4,920.6 | $ 4,482.9 | $ 20,118.5 | $ 19,284.9 | $ 17,232 | ||||||||||
Receivables from manufacturers | $ | $ 196.5 | $ 196.5 | $ 178.9 | $ 196.5 | $ 178.9 | ||||||||||||||||
German Automotive Dealership Group | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Ownership interest (as a percent) | 68.00% | 68.00% | 60.00% | 68.00% | 50.00% | ||||||||||||||||
Ownership acquired (as a percent) | 8.00% | 10.00% | |||||||||||||||||||
Nicole Group | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Ownership percentage of equity method investment | 49.00% | 49.00% | 49.00% | 49.00% | |||||||||||||||||
PTG | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Ownership interest (as a percent) | 100.00% | 100.00% | 100.00% | ||||||||||||||||||
PTL | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 9.00% | 23.40% | |||||||||||||||||||
Ownership acquired (as a percent) | 14.40% | ||||||||||||||||||||
Cost of acquisition | $ | $ 498.5 | ||||||||||||||||||||
Ownership percentage of equity method investment | 23.40% | 23.40% | 23.40% | ||||||||||||||||||
Penske Corporation | PTL | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 41.10% | ||||||||||||||||||||
Mitsui and Co | PTL | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 20.00% | ||||||||||||||||||||
GEC | PTL | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 15.50% | ||||||||||||||||||||
Retail Automotive Dealership | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Total number of owned and operated franchises | 355 | 355 | 355 | ||||||||||||||||||
Number of owned and operated franchises in US | 164 | 164 | 164 | ||||||||||||||||||
Number of owned and operated franchises outside US | 191 | 191 | 191 | ||||||||||||||||||
Number of acquired franchises | 20 | ||||||||||||||||||||
Number of franchises awarded to the reporting entity | 7 | ||||||||||||||||||||
Number of franchises disposed | 10 | ||||||||||||||||||||
Retail Automotive Dealership | Northern Italy | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of acquired franchises | 7 | ||||||||||||||||||||
Ownership interest (as a percent) | 84.00% | ||||||||||||||||||||
Retail Automotive Dealership | Nicole Group | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Ownership percentage of equity method investment | 49.00% | ||||||||||||||||||||
Retail Automotive Dealership | Dealer Group in UK | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of acquired franchises | 12 | ||||||||||||||||||||
Retail Commercial Truck Dealership | PTG | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of dealerships operated | 20 | ||||||||||||||||||||
Ownership interest (as a percent) | 100.00% | 100.00% | 96.00% | 100.00% | 96.00% | ||||||||||||||||
Ownership acquired (as a percent) | 5.00% | ||||||||||||||||||||
Number of full service retail locations operated | 14 | 14 | 14 | ||||||||||||||||||
Number of retail locations acquired | 2 | 4 | 2 | ||||||||||||||||||
Ownership percentage of equity method investment | 32.00% | ||||||||||||||||||||
Commercial Vehicle Distribution | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Minimum number of dealership locations | 70 | ||||||||||||||||||||
Number of retail dealerships owned by the reporting entity | 6 | ||||||||||||||||||||
BMW, MINI | Automotive dealership revenues | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Percentage of total | 25.00% | ||||||||||||||||||||
Audi/Volkswagen/Porsche/Bentley | Automotive dealership revenues | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Percentage of total | 24.00% | ||||||||||||||||||||
Mercedes-Benz/Sprinter/smart | Automotive dealership revenues | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Percentage of total | 10.00% | ||||||||||||||||||||
Toyota/Lexus | Automotive dealership revenues | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Percentage of total | 15.00% | ||||||||||||||||||||
Retail Automotive Dealership | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Total revenues | $ | $ 18,673.2 | $ 17,896.3 | 16,657.5 | ||||||||||||||||||
Retail Commercial Truck Dealership | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Total revenues | $ | 1,000.7 | 944.1 | 125.6 | ||||||||||||||||||
Commercial Vehicle Distribution and Other | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Total revenues | $ | $ 444.6 | $ 444.5 | $ 448.9 | ||||||||||||||||||
Volkswagen Dealership | Retail Automotive Dealership | Dealer Group in UK | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of acquired franchises | 7 | ||||||||||||||||||||
BMW Dealership | Nicole Group | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of dealerships operated | 4 | ||||||||||||||||||||
BMW Dealership | Retail Automotive Dealership | Dealer Group in UK | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of acquired franchises | 1 | ||||||||||||||||||||
MINI Dealership | Nicole Group | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of dealerships operated | 2 | ||||||||||||||||||||
MINI Dealership | Retail Automotive Dealership | Dealer Group in UK | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of acquired franchises | 1 | ||||||||||||||||||||
Audi Dealership | Retail Automotive Dealership | Northern Italy | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of acquired franchises | 1 | ||||||||||||||||||||
Audi Dealership | Retail Automotive Dealership | Dealer Group in UK | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of acquired franchises | 1 | ||||||||||||||||||||
Skoda Dealership | Retail Automotive Dealership | Dealer Group in UK | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of acquired franchises | 1 | ||||||||||||||||||||
SEAT Dealership | Retail Automotive Dealership | Dealer Group in UK | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of acquired franchises | 1 | ||||||||||||||||||||
Porsche Dealership | Retail Automotive Dealership | Northern Italy | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of acquired franchises | 3 | ||||||||||||||||||||
Land Rover Dealership | Retail Automotive Dealership | Northern Italy | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of acquired franchises | 1 | ||||||||||||||||||||
Volvo Dealership | Retail Automotive Dealership | Northern Italy | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of acquired franchises | 1 | ||||||||||||||||||||
Nissan Dealership | Retail Automotive Dealership | Northern Italy | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of acquired franchises | 1 | ||||||||||||||||||||
Scion | Retail Automotive Dealership | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of franchises disposed | 17 | ||||||||||||||||||||
ALPINA Dealership | Nicole Group | |||||||||||||||||||||
Significant Accounting Policies | |||||||||||||||||||||
Number of dealerships operated | 2 |
Organization and Summary of S50
Organization and Summary of Significant Accounting Policies - Prop and Equip, Contracts, Impairment, Investments (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Contracts in Transit | |||
Contracts in transit, included in accounts receivable | $ 322.7 | $ 261.7 | |
Impairment Testing | |||
Number of reportable Segments | item | 4 | ||
Goodwill | $ 1,291.3 | 1,323.2 | $ 1,270.8 |
Investments | |||
Net book value of investments | $ 893.4 | 336.4 | |
PTL | |||
Significant Accounting Policies | |||
Ownership interest in the voting stock of the affiliate (as a percent) | 23.40% | ||
Investments | |||
Net book value of investments | $ 823.8 | 290.6 | |
Minimum | |||
Significant Accounting Policies | |||
Ownership interest in the voting stock of the affiliate (as a percent) | 20.00% | ||
Minimum | Property and equipment other than leasehold improvements | |||
Property and Equipment | |||
Useful life of property and equipment | 3 years | ||
Maximum | |||
Significant Accounting Policies | |||
Ownership interest in the voting stock of the affiliate (as a percent) | 50.00% | ||
Maximum | Property and equipment other than leasehold improvements | |||
Property and Equipment | |||
Useful life of property and equipment | 15 years | ||
Maximum | Leasehold improvements and equipment under capital lease | |||
Property and Equipment | |||
Useful life of property and equipment | 40 years | ||
Retail Automotive Dealership | |||
Impairment Testing | |||
Number of geographical reporting units for the purpose of goodwill impairment testing | item | 4 | ||
Goodwill | $ 1,050.3 | 1,095.7 | |
Retail Commercial Truck Dealership | |||
Impairment Testing | |||
Number of operating segments and reporting units for the purpose of goodwill impairment testing | item | 1 | ||
Goodwill | $ 162 | 147.5 | |
Non-Automotive Investments | |||
Impairment Testing | |||
Goodwill | $ 0 | $ 0 |
Organization and Summary of S51
Organization and Summary of Significant Accounting Policies - Fair value (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Fair Value of Financial Instruments | |||
Debt instrument, Carrying Value | $ 1,877.1 | $ 1,275 | |
5.75% senior subordinated notes due 2022 | |||
Fair Value of Financial Instruments | |||
Interest rate (as a percent) | 5.75% | 5.75% | |
Debt instrument, Carrying Value | $ 545.1 | $ 544.3 | |
5.75% senior subordinated notes due 2022 | Fair Value, Inputs, Level 2 | |||
Fair Value of Financial Instruments | |||
Debt instrument, Carrying Value | 545.1 | 544.3 | |
Debt instrument, Fair Value | $ 567.6 | $ 558.6 | |
5.375% Senior Subordinated Notes Due 2024 | |||
Fair Value of Financial Instruments | |||
Interest rate (as a percent) | 5.375% | 5.375% | 5.375% |
Debt instrument, Carrying Value | $ 296.8 | $ 296.4 | |
5.375% Senior Subordinated Notes Due 2024 | Fair Value, Inputs, Level 2 | |||
Fair Value of Financial Instruments | |||
Debt instrument, Carrying Value | 296.8 | 296.4 | |
Debt instrument, Fair Value | $ 293 | 295.7 | |
5.50% senior subordinated notes due 2026 | |||
Fair Value of Financial Instruments | |||
Interest rate (as a percent) | 5.50% | ||
Debt instrument, Carrying Value | $ 493.7 | ||
5.50% senior subordinated notes due 2026 | Fair Value, Inputs, Level 2 | |||
Fair Value of Financial Instruments | |||
Debt instrument, Carrying Value | 493.7 | ||
Debt instrument, Fair Value | 489.4 | ||
Mortgage facilities | |||
Fair Value of Financial Instruments | |||
Debt instrument, Carrying Value | 199.9 | 165.8 | |
Mortgage facilities | Fair Value, Inputs, Level 2 | |||
Fair Value of Financial Instruments | |||
Debt instrument, Carrying Value | 199.9 | 165.8 | |
Debt instrument, Fair Value | $ 195.6 | $ 165.8 |
Organization and Summary of S52
Organization and Summary of Significant Accounting Policies - Revenue, Defined Contr. Plans, Advertising, Self-Insurance (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Finance and Insurance Sales | |||
Aggregate reserves relating to chargeback activity | $ 23.5 | $ 23.8 | |
Defined Contribution Plans | |||
Expense incurred relating to defined contribution plans | 14.5 | 16 | $ 17.7 |
Advertising | |||
Net advertising costs | 102.5 | 101 | 93.7 |
Reimbursement of advertising expense | 16.6 | 17.2 | $ 14.3 |
Self Insurance | |||
Aggregate reserves relating to retained risk | $ 28.3 | $ 26.4 |
Organization and Summary of S53
Organization and Summary of Significant Accounting Policies - Earnings per share (Details) - shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Earnings Per Share | |||
Weighted average number of common shares outstanding | 86,000,754 | 89,759,626 | 90,318,839 |
Effect of non-participatory equity compensation (in shares) | 36,000 | ||
Weighted average number of common shares outstanding, including effect of dilutive securities | 86,000,754 | 89,759,626 | 90,354,839 |
Organization and Summary of S54
Organization and Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Recent Accounting Pronouncements | ||
Decrease in other current assets due to reclassification related to ASU | $ (102) | $ (85.6) |
Decrease in current portion of long-term debt due to reclassifcation related to ASU | (48.3) | (28) |
Decrease in other long-term assets due to reclassifcation related to ASU | (28.3) | (19.2) |
Decrease in long-term debt due to reclassifcation related to ASU | $ (1,828.8) | (1,247) |
Accounting Standards Update 2015-03 | ||
Recent Accounting Pronouncements | ||
Decrease in other current assets due to reclassification related to ASU | 1.2 | |
Decrease in current portion of long-term debt due to reclassifcation related to ASU | 1.2 | |
Decrease in other long-term assets due to reclassifcation related to ASU | 8.1 | |
Decrease in long-term debt due to reclassifcation related to ASU | $ 8.1 |
Equity Method Investees (Detail
Equity Method Investees (Details) - USD ($) $ in Millions | Jul. 27, 2016 | Jul. 26, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Jan. 31, 2016 | Aug. 31, 2015 |
Equity Method Investment | ||||||||||
Equity method investments | $ 893.4 | $ 336.4 | ||||||||
Equity in earnings of affiliates | 69.5 | 39.3 | $ 40.8 | |||||||
Condensed income statement information | ||||||||||
Revenues | 7,397.2 | 6,770.3 | 6,620.1 | |||||||
Gross profit | 1,670.4 | 2,396.8 | 2,181.4 | |||||||
Net income | 411.5 | 398.5 | $ 357.2 | |||||||
Condensed balance sheet information | ||||||||||
Current assets | 1,188.2 | 1,069 | ||||||||
Noncurrent assets | 10,529.9 | 10,197.3 | ||||||||
Total assets | 11,718.1 | 11,266.3 | ||||||||
Current liabilities | 1,794.7 | 851.9 | ||||||||
Noncurrent liabilities | 7,393.6 | 8,105.5 | ||||||||
Equity | 2,529.8 | 2,308.9 | ||||||||
Total liabilities and equity | $ 11,718.1 | 11,266.3 | ||||||||
The Nix Group | ||||||||||
Equity Method Investment | ||||||||||
Ownership percentage of equity method investment | 50.00% | |||||||||
Ibericar Keldinich SL | ||||||||||
Equity Method Investment | ||||||||||
Ownership percentage of equity method investment | 50.00% | |||||||||
Nicole Group | ||||||||||
Equity Method Investment | ||||||||||
Ownership percentage of equity method investment | 49.00% | 49.00% | ||||||||
Penske Commercial Leasing Australia | ||||||||||
Equity Method Investment | ||||||||||
Ownership percentage of equity method investment | 33.00% | |||||||||
Ownership interest sold (as a percent) | 12.00% | |||||||||
Penske Vehicle Services | ||||||||||
Equity Method Investment | ||||||||||
Ownership percentage of equity method investment | 31.00% | |||||||||
National Powersport Auctions | ||||||||||
Equity Method Investment | ||||||||||
Ownership percentage of equity method investment | 7.00% | |||||||||
Max Cycles | ||||||||||
Equity Method Investment | ||||||||||
Ownership interest sold (as a percent) | 50.00% | |||||||||
PTL | ||||||||||
Equity Method Investment | ||||||||||
Ownership percentage of equity method investment | 23.40% | |||||||||
Ownership acquired (as a percent) | 14.40% | |||||||||
Equity method investments | $ 823.8 | 290.6 | ||||||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 9.00% | 23.40% | ||||||||
Nix Group, Ibericar Keldinich SL, the Nicole Group, Penske Commercial Leasing Australia, Penske Vehicle Services and National Powersport Auctions | ||||||||||
Equity Method Investment | ||||||||||
Equity method investments | $ 69.6 | |||||||||
Nix Group, Ibericar Keldinich SL, Penske Commercial Leasing Australia, Penske Vehicle Services and National Powersport Auctions | ||||||||||
Equity Method Investment | ||||||||||
Equity method investments | $ 45.8 | |||||||||
German Automotive Dealership Group | ||||||||||
Equity Method Investment | ||||||||||
Ownership acquired (as a percent) | 8.00% | 10.00% | ||||||||
Ownership interest (as a percent) | 60.00% | 68.00% | 50.00% | |||||||
German Automotive Dealership Group | ||||||||||
Equity Method Investment | ||||||||||
Ownership acquired (as a percent) | 10.00% | 8.00% | ||||||||
Ownership interest (as a percent) | 68.00% | 60.00% |
Business Combinations - Activit
Business Combinations - Activity (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2016USD ($)item | Dec. 31, 2015item | |
Business combinations | ||
Revenue from acquisition | $ | $ 315.9 | |
Pre-tax income from acquisition | $ | $ 0.5 | |
Retail Automotive Dealership | ||
Business combinations | ||
Number of acquired franchises | item | 20 | 5 |
Retail Commercial Truck Dealership | ||
Business combinations | ||
Number of dealerships acquired | item | 7 | 2 |
Business Combinations - Conside
Business Combinations - Consideration Paid and Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of the aggregate consideration paid and the aggregate amounts of the assets acquired and liabilities assumed | ||
Accounts receivable | $ 3.9 | $ 52 |
Inventory | 80.5 | 198.6 |
Other current assets | 0.1 | 3.2 |
Property and equipment | 16.4 | 98.1 |
Indefinite-lived intangibles | 51.1 | 115.6 |
Other non-current assets | 2.7 | 2.3 |
Current liabilities | (9.2) | (66) |
Non-current liabilities | (4.7) | (75.5) |
Total consideration | 140.8 | 328.3 |
Seller financed/assumed debt | (2.6) | |
Seller assumed floorplan | (118.3) | |
Fair value of previously held interest | (28) | |
Fair value of non-controlling interest | (22.5) | |
Total cash used in acquisitions | $ 140.8 | $ 156.9 |
Business Combinations - Pro For
Business Combinations - Pro Forma Information (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of unaudited consolidated pro forma results of operations | ||
Revenues | $ 20,513.1 | $ 20,646.3 |
Income from continuing operations | 347.1 | 338.8 |
Net income | $ 346 | $ 335.3 |
Income from continuing operations per diluted common share (in dollars per share) | $ 4.04 | $ 3.77 |
Net income per diluted common share (in dollars per share) | $ 4.02 | $ 3.74 |
Discontinued Operations and D59
Discontinued Operations and Divestitures (Details) $ in Millions | 1 Months Ended | 12 Months Ended | |||
Dec. 31, 2016USD ($) | Feb. 28, 2015USD ($) | Dec. 31, 2016USD ($)entityitem | Dec. 31, 2015USD ($)entity | Dec. 31, 2014USD ($) | |
Discontinued Operations and Divestitures | |||||
Number of entities newly classified as held for sale | entity | 0 | 0 | |||
Balance Sheet information regarding entities accounted for as discontinued operations | |||||
Total assets | $ 8.3 | $ 8.3 | $ 12.7 | ||
Total liabilities | 6.1 | 6.1 | 6.2 | ||
Held-for-sale | |||||
Combined financial information regarding entities accounted for as discontinued operations | |||||
Revenues | 24.8 | 75.8 | $ 206.8 | ||
Pre-tax loss | (1.7) | (6.7) | (31.5) | ||
Pre-tax gain on disposal | 2.9 | $ 14.8 | |||
Balance Sheet information regarding entities accounted for as discontinued operations | |||||
Inventories | 4.6 | 4.6 | 6.2 | ||
Other assets | 3.7 | 3.7 | 6.5 | ||
Total assets | 8.3 | 8.3 | 12.7 | ||
Floor plan notes payable (including non-trade) | 4.8 | 4.8 | 4.3 | ||
Other liabilities | 1.3 | 1.3 | 1.9 | ||
Total liabilities | $ 6.1 | $ 6.1 | $ 6.2 | ||
Disposed of by sale - Continuing Operations | i.M. Branded | |||||
Divestitures | |||||
Ownership interest sold in previous consolidated entity (as a percent) | 90.00% | ||||
Hertz car rental franchise | Disposed of by sale - Discontinued Operations | |||||
Divestitures | |||||
Proceeds from sale of business | $ 17.8 | ||||
Retail Automotive Franchise | |||||
Divestitures | |||||
Number of franchises disposed | item | 10 | ||||
Retail Automotive Franchise | Scion | |||||
Divestitures | |||||
Number of franchises disposed | item | 17 | ||||
Retail Automotive Franchise | Disposed of by sale - Discontinued Operations | |||||
Divestitures | |||||
Number of franchises disposed | item | 2 | ||||
Retail Commercial Truck Dealership | |||||
Divestitures | |||||
Number of dealerships disposed | item | 1 | ||||
Retail Commercial Truck Parts Locations | |||||
Divestitures | |||||
Number of locations disposed | item | 1 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Inventories | |||
Retail automotive dealership new vehicles | $ 2,153 | $ 2,218.6 | |
Retail automotive dealership used vehicles | 771.7 | 719 | |
Retail automotive parts, accessories and other | 119.1 | 113.6 | |
Retail commercial truck dealership vehicles and parts | 170.3 | 208.8 | |
Commercial vehicle distribution vehicles and parts | 194.1 | 203.5 | |
Total inventories | 3,408.2 | 3,463.5 | |
Interest credits and advertising assistance | $ 51.6 | $ 43.7 | $ 39.7 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Property and equipment | ||
Total | $ 2,332.7 | $ 2,019.7 |
Less: Accumulated depreciation | (526.2) | (499.6) |
Property and equipment, net | 1,806.5 | 1,520.1 |
Accrued expenses | ||
Property and equipment | ||
Deferred revenue and guaranteed residual value associated with the operating leases | 60.1 | |
Other long-term liabilities | ||
Property and equipment | ||
Deferred revenue and guaranteed residual value associated with the operating leases | 182.4 | |
Buildings and leasehold improvements | ||
Property and equipment | ||
Total | 1,438.4 | 1,357.1 |
Capitalized interest included in buildings and leasehold improvements | 27.1 | 27.1 |
Furniture, fixtures and equipment | ||
Property and equipment | ||
Total | 894.3 | $ 662.6 |
Deferred sales transactions related to operating leases | ||
Property and equipment | ||
Total | $ 229.9 |
Intangible Assets - Accumulated
Intangible Assets - Accumulated Impairment, Changes in Goodwill and Other Indefinite-Lived Intangibles (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2012 | |
Intangible Assets | |||
Goodwill, Accumulated impairment loss | $ 606.3 | ||
Other indefinite-lived intangible assets, Accumulated impairment loss | $ 37.1 | ||
Summary of the changes in the carrying amount of goodwill and other indefinite-lived intangible assets | |||
Goodwill, Beginning Balance | $ 1,323.2 | $ 1,270.8 | |
Goodwill, Additions | 24.9 | 83.7 | |
Goodwill, Disposals | (1.7) | ||
Goodwill, Foreign currency translation | (55.1) | (31.3) | |
Goodwill, Ending Balance | 1,291.3 | 1,323.2 | |
Other indefinite-lived intangible assets, Beginning Balance | 408 | 386.6 | |
Other indefinite-lived intangible assets, Additions | 26.2 | 31.9 | |
Other indefinite-lived intangible assets, Disposals | (0.3) | ||
Other indefinite-lived intangible assets, Foreign currency translation | (13.8) | (10.5) | |
Other indefinite-lived intangible assets, Ending Balance | $ 420.1 | $ 408 |
Intangible Assets - Changes in
Intangible Assets - Changes in Goodwill by Reportable Segment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Summary of the changes in the carrying amount of goodwill by reportable segment | |||
Goodwill | $ 1,291.3 | $ 1,323.2 | $ 1,270.8 |
Goodwill, Additions | 24.9 | 83.7 | |
Goodwill, Disposals | 1.7 | ||
Goodwill, Foreign currency translation | 55.1 | 31.3 | |
Impairment of intangible assets | 0 | 0 | $ 0 |
Retail Automotive Dealership | |||
Summary of the changes in the carrying amount of goodwill by reportable segment | |||
Goodwill | 1,050.3 | 1,095.7 | |
Goodwill, Additions | 9.8 | 63.9 | |
Goodwill, Disposals | 0.2 | ||
Goodwill, Foreign currency translation | 55 | 23.5 | |
Retail Commercial Truck Dealership | |||
Summary of the changes in the carrying amount of goodwill by reportable segment | |||
Goodwill | 162 | 147.5 | |
Goodwill, Additions | 15.1 | 19.8 | |
Goodwill, Foreign currency translation | 0.6 | ||
Other | |||
Summary of the changes in the carrying amount of goodwill by reportable segment | |||
Goodwill | 79 | 80 | |
Non-Automotive Investments | |||
Summary of the changes in the carrying amount of goodwill by reportable segment | |||
Goodwill | $ 0 | $ 0 |
Vehicle Financing (Details)
Vehicle Financing (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Vehicle Financing | |||
Maturity period of floor plan arrangements outside the U.S. if not payable on demand | 90 days | ||
Weighted average interest rate on floor plan borrowings (as a percent) | 1.50% | 1.50% | 1.70% |
Long-Term Debt (Details)
Long-Term Debt (Details) £ in Millions, AUD in Millions, $ in Millions | 1 Months Ended | 12 Months Ended | ||||||||||
Jul. 31, 2016AUD | May 31, 2016USD ($) | Nov. 30, 2014USD ($) | Aug. 31, 2012USD ($) | Dec. 31, 2016GBP (£) | Dec. 31, 2016AUD | Dec. 31, 2016USD ($) | Jul. 27, 2016USD ($) | Mar. 31, 2016AUD | Feb. 29, 2016AUD | Dec. 31, 2015USD ($) | Dec. 31, 2014 | |
Long Term Debt | ||||||||||||
Total long-term debt | $ 1,877.1 | $ 1,275 | ||||||||||
Less: current portion | (48.3) | (28) | ||||||||||
Net long-term debt | 1,828.8 | 1,247 | ||||||||||
Scheduled maturities of long-term debt for each of the next five years and thereafter | ||||||||||||
2,017 | 48.3 | |||||||||||
2,018 | 8.5 | |||||||||||
2,019 | 312.9 | |||||||||||
2,020 | 12.9 | |||||||||||
2,021 | 24.4 | |||||||||||
2022 and thereafter | 1,470.1 | |||||||||||
US Credit Agreement Revolving Credit Line | ||||||||||||
Long Term Debt | ||||||||||||
Total long-term debt | 240 | 160 | ||||||||||
Maximum credit available | 700 | |||||||||||
Balance outstanding under credit agreement | 240 | |||||||||||
Revolving loans solely for future U.S. acquisitions | 250 | |||||||||||
Future borrowings available for foreign acquisitions | $ 150 | |||||||||||
US Credit Agreement Revolving Credit Line | LIBOR portion | ||||||||||||
Long Term Debt | ||||||||||||
Base rate of interest on loans | LIBOR | |||||||||||
Line of credit basis spread on variable rate (as a percent) | 2.00% | |||||||||||
Incremental interest rate for uncollateralized borrowings in excess of maximum limit (as a percent) | 1.50% | |||||||||||
UK Credit Agreement Revolving Credit Line | ||||||||||||
Long Term Debt | ||||||||||||
Total long-term debt | 48.1 | 70.7 | ||||||||||
Maximum credit available | £ | £ 150 | |||||||||||
Balance outstanding under credit agreement | £ 41.2 | 50.8 | ||||||||||
UK Credit Agreement Revolving Credit Line | LIBOR portion | ||||||||||||
Long Term Debt | ||||||||||||
Base rate of interest on loans | LIBOR | |||||||||||
UK Credit Agreement Revolving Credit Line | Minimum | LIBOR portion | ||||||||||||
Long Term Debt | ||||||||||||
Line of credit basis spread on variable rate (as a percent) | 1.35% | |||||||||||
UK Credit Agreement Revolving Credit Line | Maximum | LIBOR portion | ||||||||||||
Long Term Debt | ||||||||||||
Line of credit basis spread on variable rate (as a percent) | 3.00% | |||||||||||
UK Credit Agreement Overdraft Line of Credit | ||||||||||||
Long Term Debt | ||||||||||||
Total long-term debt | 2.7 | |||||||||||
UK Credit Agreement Overdraft Line of Credit | Bank of England Base Rate | ||||||||||||
Long Term Debt | ||||||||||||
Base rate of interest on loans | Bank of England Base Rate | |||||||||||
Line of credit basis spread on variable rate (as a percent) | 1.75% | |||||||||||
5.50% senior subordinated notes due 2026 | ||||||||||||
Long Term Debt | ||||||||||||
Total long-term debt | $ 493.7 | |||||||||||
Interest rate (as a percent) | 5.50% | 5.50% | 5.50% | |||||||||
Debt issued | $ 500 | |||||||||||
Domestic Subsidiaries ownership guaranteeing obligations (as a percent) | 100.00% | 100.00% | 100.00% | |||||||||
Change of control, redemption price as a percentage of principal | 101.00% | |||||||||||
Sale of assets, redemption price as percentage of principal | 100.00% | |||||||||||
5.50% senior subordinated notes due 2026 | Debt Redemption Prior to May 15, 2021 | ||||||||||||
Long Term Debt | ||||||||||||
Percentage of principal amount at which the entity may redeem the notes | 100.00% | |||||||||||
5.50% senior subordinated notes due 2026 | Maximum | Debt Redemption Prior to May 15, 2019 | ||||||||||||
Long Term Debt | ||||||||||||
Specified equity offerings, percentage of debt which may be redeemed | 40.00% | |||||||||||
5.375% Senior Subordinated Notes Due 2024 | ||||||||||||
Long Term Debt | ||||||||||||
Total long-term debt | $ 296.8 | $ 296.4 | ||||||||||
Interest rate (as a percent) | 5.375% | 5.375% | 5.375% | 5.375% | 5.375% | |||||||
Debt issued | $ 300 | |||||||||||
Domestic Subsidiaries ownership guaranteeing obligations (as a percent) | 100.00% | 100.00% | 100.00% | |||||||||
Change of control, redemption price as a percentage of principal | 101.00% | |||||||||||
Sale of assets, redemption price as percentage of principal | 100.00% | |||||||||||
5.375% Senior Subordinated Notes Due 2024 | Debt Redemption Prior To December 1, 2019 | ||||||||||||
Long Term Debt | ||||||||||||
Percentage of principal amount at which the entity may redeem the notes | 100.00% | |||||||||||
5.375% Senior Subordinated Notes Due 2024 | Maximum | Debt Redemption Prior To December 1, 2017 | ||||||||||||
Long Term Debt | ||||||||||||
Specified equity offerings, percentage of debt which may be redeemed | 40.00% | |||||||||||
5.75% senior subordinated notes due 2022 | ||||||||||||
Long Term Debt | ||||||||||||
Total long-term debt | $ 545.1 | $ 544.3 | ||||||||||
Interest rate (as a percent) | 5.75% | 5.75% | 5.75% | 5.75% | ||||||||
Debt issued | $ 550 | |||||||||||
Domestic Subsidiaries ownership guaranteeing obligations (as a percent) | 100.00% | 100.00% | 100.00% | |||||||||
Change of control, redemption price as a percentage of principal | 101.00% | |||||||||||
Sale of assets, redemption price as percentage of principal | 100.00% | |||||||||||
5.75% senior subordinated notes due 2022 | Debt Redemption Prior To October 1, 2017 | ||||||||||||
Long Term Debt | ||||||||||||
Percentage of principal amount at which the entity may redeem the notes | 100.00% | |||||||||||
Australia Working Capital Loan Agreement | ||||||||||||
Long Term Debt | ||||||||||||
Total long-term debt | $ 24.7 | $ 5.5 | ||||||||||
Increase in maximum credit available | AUD | AUD 6.2 | |||||||||||
Maximum credit available | AUD | AUD 50.5 | AUD 44.3 | AUD 28 | |||||||||
Base rate of interest on loans | 30-day Bill Rate | |||||||||||
Line of credit basis spread on variable rate (as a percent) | 2.35% | |||||||||||
Balance outstanding under credit agreement | AUD 34.3 | 24.7 | ||||||||||
Mortgage facilities | ||||||||||||
Long Term Debt | ||||||||||||
Total long-term debt | 199.9 | 165.8 | ||||||||||
Balance outstanding under credit agreement | 199.9 | |||||||||||
Other Debt | ||||||||||||
Long Term Debt | ||||||||||||
Total long-term debt | $ 26.1 | $ 32.3 |
Derivatives and Hedging (Detail
Derivatives and Hedging (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Forward foreign exchange contracts | Fair Value, Inputs, Level 2 | |||
Derivative | |||
Estimated asset of contracts designated as hedging instruments, fair value | $ 0.3 | ||
Estimated liability of contracts designated as hedging instruments, fair value | $ 1.1 | ||
Interest Rate Swap Agreements | Floating Rate Floor Plan Debt | |||
Derivative | |||
Increase in the weighted average interest rate on floor plan borrowings due to the swaps (as a percent) | 0.30% | ||
Interest Rate Swap Agreements | Floating Rate Floor Plan Debt | LIBOR portion | |||
Derivative | |||
Portion of floating rate floor plan debt fixed by swap agreements | $ 300 | ||
Interest rate swap, fixed (as a percent) | 2.135% | ||
Interest Rate Swap Agreements | Floating Rate Floor Plan Debt | Fixed rate portion | |||
Derivative | |||
Portion of floating rate floor plan debt fixed by swap agreements | $ 100 | ||
Interest rate swap, fixed (as a percent) | 1.55% |
Commitments and Contingent Li67
Commitments and Contingent Liabilities - Leases (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Commitments and Contingent Liabilities | |||
Lease period, minimum | 5 years | ||
Lease period, maximum | 20 years | ||
Minimum future rental payments required under operating leases | |||
2,017 | $ 216 | ||
2,018 | 212.7 | ||
2,019 | 208.1 | ||
2,020 | 205.7 | ||
2,021 | 202.5 | ||
2022 and thereafter | 3,503.7 | ||
Total | 4,548.7 | ||
Rent expense | 206.6 | $ 201.8 | $ 191.3 |
Aggregate rent paid by the tenants | 20.6 | ||
Aggregate rent currently guaranteed by the Company | $ 211.4 |
Commitments and Contingent Li68
Commitments and Contingent Liabilities - Other (Details) - USD ($) $ in Thousands | Jul. 26, 2016 | Mar. 31, 2015 | Dec. 31, 2016 |
Commitments and Contingent Liabilities | |||
Letters of credit outstanding | $ 32,500 | ||
Surety bonds posted | 11,400 | ||
Holdings | Holdings Bond | |||
Commitments and Contingent Liabilities | |||
Senior unsecured notes issued | $ 700,000 | ||
Senior subordinated convertible notes, interest rate (as a percent) | 3.80% | ||
Percentage of interest and principal due to the co-obligor as a result of the change in ownership and subsequent relief of debt obligation | 50.10% | ||
Percentage of expenses relating to the debt obligation due to the co-obligor as a result of the change in ownership and subsequent relief of debt obligation | 100.00% | ||
PTL | |||
Commitments and Contingent Liabilities | |||
Ownership interest in Penske Truck Leasing Co (as a percent) | 9.00% | 23.40% | |
GEC | PTL | |||
Commitments and Contingent Liabilities | |||
Ownership interest in Penske Truck Leasing Co (as a percent) | 15.50% | ||
Mitsui and Co | |||
Commitments and Contingent Liabilities | |||
Purchase of ownership interest | 20.00% | ||
Mitsui and Co | PTL | |||
Commitments and Contingent Liabilities | |||
Ownership interest in Penske Truck Leasing Co (as a percent) | 20.00% | ||
Penske Corporation | PTL | |||
Commitments and Contingent Liabilities | |||
Ownership interest in Penske Truck Leasing Co (as a percent) | 41.10% | ||
Guarantee of Indebtedness of Others | GEC | |||
Commitments and Contingent Liabilities | |||
Percentage of interest agreed to indemnify if GEC required to make any payments of principal or interest | 9.00% | ||
Annual fee pay for acting as co-obligor | $ 950 | ||
Value of principal repayment included in maximum amount of Company's potential obligations | $ 63,100 |
Related Party Transactions - Tr
Related Party Transactions - Transactions (Details) $ in Thousands | Jul. 27, 2016USD ($) | Sep. 30, 2016USD ($)item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Penske Corporation and its affiliates | |||||
Related party transactions | |||||
Provider's cost reimbursed | $ 6,900 | $ 6,700 | $ 7,300 | ||
Amount of Provider's cost received | 148 | 101 | 56 | ||
Amount due from related party | 98 | 64 | |||
Amount due to related party | $ 800 | 600 | |||
PTL | |||||
Related party transactions | |||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 23.40% | ||||
Pro rata quarterly distribution rate (as a percent) | 50.00% | ||||
Partnership interest that my be transferred without complying with the right of first offer (as a percent) | 9.02% | ||||
Pro rata cash dividends received | $ 21,700 | $ 13,800 | 11,600 | ||
Ownership acquired (as a percent) | 14.40% | ||||
Cost of acquisition | $ 498,500 | ||||
PTL | Penske Corporation | |||||
Related party transactions | |||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 41.10% | ||||
PTL | GEC | |||||
Related party transactions | |||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 15.50% | ||||
PTL | Mitsui and Co | |||||
Related party transactions | |||||
Ownership interest in Penske Truck Leasing Co (as a percent) | 20.00% | ||||
PTL | Sale of certain assets to PTL | |||||
Related party transactions | |||||
Purchase price | $ 17,000 | ||||
PTG | |||||
Related party transactions | |||||
Purchase price | $ 58,800 | ||||
Ownership interest (as a percent) | 91.00% | ||||
PTG | Sale of certain assets to PTL | |||||
Related party transactions | |||||
Number of vehicles sold | item | 300 |
Related Party Transactions - Jo
Related Party Transactions - Joint ventures (Details) - item | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Oct. 31, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Dec. 31, 2016 | Sep. 30, 2016 | |
Audi, Mercedes-Benz, Sprinter, Porsche, Smart | Fairfield, Connecticut | |||||
Related party transactions | |||||
Ownership percentage of Consolidated Entity | 80.00% | ||||
Audi, Mercedes-Benz, Sprinter, Porsche, Smart | Fairfield, Connecticut | Lucio A. Noto | |||||
Related party transactions | |||||
Ownership percentage in joint venture | 20.00% | ||||
Mercedes-Benz | Greenwich, Connecticut | |||||
Related party transactions | |||||
Ownership percentage of Consolidated Entity | 80.00% | ||||
Mercedes-Benz | Greenwich, Connecticut | Lucio A. Noto | |||||
Related party transactions | |||||
Ownership percentage in joint venture | 20.00% | ||||
BMW, MINI, Maserati, Porsche, Audi, Land Rover, Volvo and Nissan | Northern Italy | |||||
Related party transactions | |||||
Ownership percentage of Consolidated Entity | 84.00% | 84.00% | 70.00% | ||
Audi, Maserati, SEAT, Skoda, Volkswagen | Aachen, Germany | |||||
Related party transactions | |||||
Ownership percentage of Consolidated Entity | 68.00% | ||||
Additional ownership percentage acquired | 8.00% | 10.00% | |||
Lexus Toyota Volkswagen | Frankfurt, Germany | |||||
Related party transactions | |||||
Ownership percentage of equity method investment | 50.00% | ||||
BMW, MINI | Barcelona Spain | |||||
Related party transactions | |||||
Ownership percentage of equity method investment | 50.00% | ||||
BMW, MINI, Rolls-Royce, Ferrari and ALPINA | Tokyo, Japan | |||||
Related party transactions | |||||
Ownership percentage of equity method investment | 49.00% | ||||
Penske Commercial Leasing Australia | |||||
Related party transactions | |||||
Ownership percentage of equity method investment | 33.00% | ||||
Penske Vehicle Services | |||||
Related party transactions | |||||
Ownership percentage of equity method investment | 31.00% | ||||
PTL | |||||
Related party transactions | |||||
Ownership percentage of equity method investment | 23.40% | ||||
National Powersport Auctions | |||||
Related party transactions | |||||
Ownership percentage of equity method investment | 7.00% | ||||
Retail Automotive Dealership | |||||
Related party transactions | |||||
Number of acquired franchises | 20 | ||||
Retail Automotive Dealership | Northern Italy | |||||
Related party transactions | |||||
Number of acquired franchises | 7 | ||||
Retail Automotive Dealership | Porsche Dealership | Northern Italy | |||||
Related party transactions | |||||
Number of acquired franchises | 3 | ||||
Retail Automotive Dealership | Audi Dealership | Northern Italy | |||||
Related party transactions | |||||
Number of acquired franchises | 1 | ||||
Retail Automotive Dealership | Land Rover Dealership | Northern Italy | |||||
Related party transactions | |||||
Number of acquired franchises | 1 | ||||
Retail Automotive Dealership | Volvo Dealership | Northern Italy | |||||
Related party transactions | |||||
Number of acquired franchises | 1 | ||||
Retail Automotive Dealership | Nissan Dealership | Northern Italy | |||||
Related party transactions | |||||
Number of acquired franchises | 1 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Stock-based compensation | |||
Compensation expense related to the Plan | $ 14.8 | $ 14.1 | $ 12.8 |
Restricted Stock | |||
Stock-based compensation | |||
Period over which forfeiture and non-transferable restrictions lapse | 4 years | ||
Percentage over which unrecognized compensation cost is expected to be recognized year one | 15.00% | ||
Percentage over which unrecognized compensation cost is expected to be recognized year two | 15.00% | ||
Percentage over which unrecognized compensation cost is expected to be recognized year three | 20.00% | ||
Percentage over which unrecognized compensation cost is expected to be recognized year four | 50.00% | ||
Unrecognized compensation cost related to the restricted stock | $ 21.2 | ||
Shares | |||
Balance at the beginning of the period (in shares) | 981,735 | ||
Granted (in shares) | 316,486 | 295,148 | 314,677 |
Vested (in shares) | (374,453) | ||
Forfeited (in shares) | (4,575) | ||
Balance at the end of the period (in shares) | 919,193 | 981,735 | |
Weighted Average Grant-Date Fair value | |||
Balance at the beginning of the period (in dollars per share) | $ 32.43 | ||
Granted (in dollars per share) | 44.74 | ||
Vested (in dollars per share) | 36.54 | ||
Forfeited (in dollars per share) | 21.19 | ||
Balance at the end of the period (in dollars per share) | $ 22.73 | $ 32.43 | |
Aggregate Intrinsic Value | |||
Balance at the end of the period (in dollars) | $ 47.7 | ||
2015 Plan | |||
Stock-based compensation | |||
Plan term | 5 years | ||
Maximum number of shares authorized under the plan | 4,000,000 | ||
Number of shares of common stock available for grant under the plan | 3,575,856 |
Equity (Details)
Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Securities Repurchase Program | |||
Repurchase of common stock | $ 173.6 | $ 48.9 | $ 15.5 |
Acquired Employee Equity Awards | |||
Securities Repurchase Program | |||
Repurchased shares | 144,717 | 156,383 | 160,350 |
Repurchase of common stock | $ 5.7 | $ 8 | $ 7.5 |
Repurchased shares, average price (in dollars per share) | $ 39.47 | $ 51.05 | $ 46.48 |
Share Repurchase Program | |||
Securities Repurchase Program | |||
Repurchased shares | 4,512,325 | 854,313 | 175,000 |
Repurchase of common stock | $ 167.9 | $ 40.9 | $ 8 |
Repurchased shares, average price (in dollars per share) | $ 37.21 | $ 47.86 | $ 45.95 |
Amount authorized to be repurchased | $ 32.1 | ||
Common Stock | |||
Securities Repurchase Program | |||
Repurchased shares | 4,657,042 | 1,010,696 | 335,350 |
Accumulated Other Comprehensi73
Accumulated Other Comprehensive Income/(Loss) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Changes in accumulated other comprehensive income (loss) by component | |||
Balance at the beginning of the period | $ 1,790.2 | ||
Balance at the end of the period | 1,750.9 | $ 1,790.2 | |
Foreign Currency Translation | |||
Changes in accumulated other comprehensive income (loss) by component | |||
Balance at the beginning of the period | (113.5) | (51.7) | $ 11.4 |
Other comprehensive income (loss) before reclassifications | (116.5) | (61.8) | (63.1) |
Net current period other comprehensive income (loss) | (116.5) | (61.8) | (63.1) |
Balance at the end of the period | (230) | (113.5) | (51.7) |
Other | |||
Changes in accumulated other comprehensive income (loss) by component | |||
Balance at the beginning of the period | (9) | (1.6) | 0.2 |
Other comprehensive income (loss) before reclassifications | (11.7) | (7.4) | (6.7) |
Amounts reclassified from accumulated other comprehensive income - net of tax | 4.9 | ||
Net current period other comprehensive income (loss) | (11.7) | (7.4) | (1.8) |
Balance at the end of the period | (20.7) | (9) | (1.6) |
Accumulated Other Comprehensive Income (Loss) | |||
Changes in accumulated other comprehensive income (loss) by component | |||
Balance at the beginning of the period | (122.5) | (53.3) | 11.6 |
Other comprehensive income (loss) before reclassifications | (128.2) | (69.2) | (69.8) |
Amounts reclassified from accumulated other comprehensive income - net of tax | 4.9 | ||
Net current period other comprehensive income (loss) | (128.2) | (69.2) | (64.9) |
Balance at the end of the period | (250.7) | (122.5) | (53.3) |
Amounts reclassified from accumulated other comprehensive income, tax provision | $ 0 | $ 0 | $ 3.2 |
Income Taxes - Income taxes rel
Income Taxes - Income taxes relating to continuing operations and deferred taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current: | |||
Federal | $ (47.2) | $ 61.8 | $ 51.2 |
State and local | 4.7 | 11.5 | 7.9 |
Foreign | 41 | 40.1 | 43.5 |
Total current | (1.5) | 113.4 | 102.6 |
Deferred: | |||
Federal | 140.6 | 40.1 | 42.9 |
State and local | 22.3 | 8.4 | 9.3 |
Foreign | (0.7) | (3.9) | (1.7) |
Total deferred | 162.2 | 44.6 | 50.5 |
Income taxes relating to continuing operations | $ 160.7 | $ 158 | $ 153.1 |
Reconciliation of income taxes from continuing operations at federal statutory rate | |||
Federal statutory income tax rate (as a percent) | 35.00% | 35.00% | 35.00% |
Income taxes relating to continuing operations at federal statutory rate of 35% | $ 177.8 | $ 172.2 | $ 160.3 |
State and local income taxes, net of federal taxes | 14.7 | 13.3 | 11 |
Non-U.S. income taxed at other rates | (26.8) | (27.4) | (17.7) |
Other | (5) | (0.1) | (0.5) |
Income taxes relating to continuing operations | 160.7 | 158 | 153.1 |
Deferred Tax Assets | |||
Accrued liabilities | 71.4 | 67.5 | |
Net operating loss carryforwards | 32.4 | 17.9 | |
Other | 18.7 | 26.2 | |
Total deferred tax assets | 122.5 | 111.6 | |
Valuation allowance | (17.2) | (17.3) | |
Net deferred tax assets | 105.3 | 94.3 | |
Deferred Tax Liabilities | |||
Depreciation and amortization | (210.9) | (198.1) | |
Partnership investments | (448.1) | (285.5) | |
Convertible notes | (5) | (7.5) | |
Other | (5.9) | (6.1) | |
Total deferred tax liabilities | (669.9) | (497.2) | |
Net deferred tax liabilities | (564.6) | (402.9) | |
Income from continuing operations before income taxes of non-U.S. subsidiaries | 191.4 | $ 182.5 | $ 170.6 |
Amount of total temporary difference related to the excess of financial reporting basis over tax basis in the non-U.S. subsidiaries on which U.S. federal income taxes are not provided | $ 816.5 |
Income Taxes - PTG (Details)
Income Taxes - PTG (Details) - PTG $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Income Taxes | |
Ownership interest (as a percent) | 100.00% |
Decrease in deferred tax liabilities due to an adjustment to the tax basis of the investment | $ 5.1 |
Income Taxes - Carryforwards (D
Income Taxes - Carryforwards (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Operating loss carryforwards | ||
Valuation allowance against deferred tax assets | $ 17.2 | $ 17.3 |
UK | ||
Operating loss carryforwards | ||
Amount of tax credit carryforwards not subject to expiration | 4.7 | |
Valuation allowance against deferred tax assets | 6.5 | |
German | ||
Operating loss carryforwards | ||
Net operating loss carryforwards not subject to expiration | 20.1 | |
Valuation allowance against net operating loss carryforwards | 7.3 | |
Australia | ||
Operating loss carryforwards | ||
Net operating loss carryforwards not subject to expiration | 22.1 | |
Australia | Capital loss carryforwards | ||
Operating loss carryforwards | ||
Valuation allowance against tax credit carryforwards | 0.1 | |
Italian | ||
Operating loss carryforwards | ||
Net operating loss carryforwards not subject to expiration | 0.1 | |
Canada | ||
Operating loss carryforwards | ||
Net operating loss carryforwards not subject to expiration | 1.7 | |
Valuation allowance against net operating loss carryforwards | 0.4 | |
State | ||
Operating loss carryforwards | ||
Net operating loss carryforwards that expire at various dates | 240.1 | |
Net operating loss carryforwards utilized | 174.2 | |
Valuation allowance against net operating loss carryforwards | 2.6 | |
Valuation allowance against tax credit carryforwards | 0.3 | |
Federal and state | ||
Operating loss carryforwards | ||
Amount of tax credit carryforwards not subject to expiration | $ 8.5 |
Income Taxes - Uncertain tax po
Income Taxes - Uncertain tax positions (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Movement in uncertain tax positions | |||
Uncertain tax positions at the beginning of the period | $ 12.8 | $ 13.1 | $ 14 |
Gross increase - tax position in prior periods | 0.2 | 0.2 | 0.2 |
Gross decrease - tax position in prior periods | (0.3) | (0.6) | |
Gross increase - current period tax position | 0.1 | ||
Settlements | (7.8) | ||
Foreign exchange | (1.5) | (0.5) | (0.6) |
Uncertain tax positions at the end of the period | 3.4 | $ 12.8 | $ 13.1 |
Interest and penalties included within uncertain tax positions | 2 | ||
Impact of uncertain tax positions on effective tax rate, if recognized | $ 3.4 |
Segment Information - Reporting
Segment Information - Reporting information by segment (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Segment Reporting Information | |||||||||||
Number of Reportable Segments | item | 4 | ||||||||||
Revenues and segment income by reportable segment | |||||||||||
Total revenues | $ 4,887.8 | $ 5,152 | $ 5,254.1 | $ 4,824.6 | $ 4,921.3 | $ 4,960.1 | $ 4,920.6 | $ 4,482.9 | $ 20,118.5 | $ 19,284.9 | $ 17,232 |
Floor plan interest expense | 50.9 | 44.5 | 46.5 | ||||||||
Other interest expense | 85.4 | 69.4 | 52.8 | ||||||||
Depreciation | 89.7 | 78 | 70.2 | ||||||||
Equity in earnings of affiliates | 69.5 | 39.3 | 40.8 | ||||||||
Adjusted Segment Income | 508.1 | 491.9 | 441.9 | ||||||||
Reconciliation of total adjusted segment income to consolidated income from continuing operations before income taxes | |||||||||||
Adjusted Segment Income | 508.1 | 491.9 | 441.9 | ||||||||
Gain on investment | 16 | ||||||||||
Income from continuing operations before income taxes | 508.1 | 491.9 | 457.9 | ||||||||
Total assets, equity method investments, and capital expenditures by reporting segment | |||||||||||
Total assets | 8,861.1 | 8,013.4 | 8,861.1 | 8,013.4 | |||||||
Equity method investments | 893.4 | 336.4 | 893.4 | 336.4 | |||||||
Capital expenditures | 203.1 | 199.5 | 176.1 | ||||||||
Intersegment Elimination | |||||||||||
Revenues and segment income by reportable segment | |||||||||||
Total revenues | $ (3.9) | (1.9) | (5.1) | ||||||||
Retail Automotive Dealership | |||||||||||
Segment Reporting Information | |||||||||||
Number of geographic operating segments | item | 4 | ||||||||||
Number of geographic reporting units | item | 1 | ||||||||||
Revenues and segment income by reportable segment | |||||||||||
Total revenues | $ 18,673.2 | 17,896.3 | 16,657.5 | ||||||||
Retail Automotive Dealership | Operating segments | |||||||||||
Revenues and segment income by reportable segment | |||||||||||
Total revenues | 18,673.2 | 17,896.3 | 16,657.5 | ||||||||
Floor plan interest expense | 47.1 | 41.3 | 45.1 | ||||||||
Other interest expense | 74.8 | 56.8 | 46.9 | ||||||||
Depreciation | 81.7 | 71.3 | 67.1 | ||||||||
Equity in earnings of affiliates | 4.9 | 4.4 | 3.8 | ||||||||
Adjusted Segment Income | 412.9 | 420.4 | 390.1 | ||||||||
Reconciliation of total adjusted segment income to consolidated income from continuing operations before income taxes | |||||||||||
Adjusted Segment Income | 412.9 | 420.4 | 390.1 | ||||||||
Total assets, equity method investments, and capital expenditures by reporting segment | |||||||||||
Total assets | 7,039.6 | 6,682.1 | 7,039.6 | 6,682.1 | |||||||
Equity method investments | 58.6 | 38.3 | 58.6 | 38.3 | |||||||
Capital expenditures | 195.6 | 187.7 | 170.8 | ||||||||
Retail Commercial Truck Dealership | |||||||||||
Revenues and segment income by reportable segment | |||||||||||
Total revenues | 1,000.7 | 944.1 | 125.6 | ||||||||
Retail Commercial Truck Dealership | Operating segments | |||||||||||
Revenues and segment income by reportable segment | |||||||||||
Total revenues | 1,000.7 | 944.1 | 125.6 | ||||||||
Floor plan interest expense | 2.9 | 2 | 0.3 | ||||||||
Other interest expense | 4.1 | 3.8 | 0.9 | ||||||||
Depreciation | 3.2 | 2 | 0.5 | ||||||||
Equity in earnings of affiliates | 6.5 | ||||||||||
Adjusted Segment Income | 26.2 | 35.4 | 11.7 | ||||||||
Reconciliation of total adjusted segment income to consolidated income from continuing operations before income taxes | |||||||||||
Adjusted Segment Income | 26.2 | 35.4 | 11.7 | ||||||||
Total assets, equity method investments, and capital expenditures by reporting segment | |||||||||||
Total assets | 489.1 | 525.5 | 489.1 | 525.5 | |||||||
Capital expenditures | 3.3 | 4.5 | 0.4 | ||||||||
Other | Operating segments | |||||||||||
Revenues and segment income by reportable segment | |||||||||||
Total revenues | 448.5 | 446.4 | 454 | ||||||||
Floor plan interest expense | 0.9 | 1.2 | 1.1 | ||||||||
Other interest expense | 6.5 | 8.8 | 5 | ||||||||
Depreciation | 4.8 | 4.7 | 2.6 | ||||||||
Adjusted Segment Income | 4.4 | 1.2 | 9.6 | ||||||||
Reconciliation of total adjusted segment income to consolidated income from continuing operations before income taxes | |||||||||||
Adjusted Segment Income | 4.4 | 1.2 | 9.6 | ||||||||
Total assets, equity method investments, and capital expenditures by reporting segment | |||||||||||
Total assets | 497.6 | 507.7 | 497.6 | 507.7 | |||||||
Capital expenditures | 4.2 | 7.3 | 4.9 | ||||||||
Non-Automotive Investments | Operating segments | |||||||||||
Revenues and segment income by reportable segment | |||||||||||
Equity in earnings of affiliates | 64.6 | 34.9 | 30.5 | ||||||||
Adjusted Segment Income | 64.6 | 34.9 | 30.5 | ||||||||
Reconciliation of total adjusted segment income to consolidated income from continuing operations before income taxes | |||||||||||
Adjusted Segment Income | 64.6 | 34.9 | $ 30.5 | ||||||||
Total assets, equity method investments, and capital expenditures by reporting segment | |||||||||||
Total assets | 834.8 | 298.1 | 834.8 | 298.1 | |||||||
Equity method investments | $ 834.8 | $ 298.1 | $ 834.8 | $ 298.1 |
Segment Information - Data by g
Segment Information - Data by geographic area (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue from external customers and Long-lived assets, net | |||||||||||
Revenues | $ 4,887.8 | $ 5,152 | $ 5,254.1 | $ 4,824.6 | $ 4,921.3 | $ 4,960.1 | $ 4,920.6 | $ 4,482.9 | $ 20,118.5 | $ 19,284.9 | $ 17,232 |
Long-lived assets, net | 2,728.2 | 1,875.7 | 2,728.2 | 1,875.7 | |||||||
U.S. | |||||||||||
Revenue from external customers and Long-lived assets, net | |||||||||||
Revenues | 12,005.9 | 11,806.9 | 10,435.9 | ||||||||
Long-lived assets, net | 1,847.3 | 1,248.7 | 1,847.3 | 1,248.7 | |||||||
Foreign | |||||||||||
Revenue from external customers and Long-lived assets, net | |||||||||||
Revenues | 8,112.6 | 7,478 | $ 6,796.1 | ||||||||
Long-lived assets, net | $ 880.9 | $ 627 | $ 880.9 | $ 627 |
Segment Information - Revenue b
Segment Information - Revenue by product type (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue from external customers by product type | |||||||||||
Total revenues | $ 4,887.8 | $ 5,152 | $ 5,254.1 | $ 4,824.6 | $ 4,921.3 | $ 4,960.1 | $ 4,920.6 | $ 4,482.9 | $ 20,118.5 | $ 19,284.9 | $ 17,232 |
Retail Automotive Dealership | |||||||||||
Revenue from external customers by product type | |||||||||||
Total revenues | 18,673.2 | 17,896.3 | 16,657.5 | ||||||||
Retail Automotive Dealership | Operating segments | |||||||||||
Revenue from external customers by product type | |||||||||||
Total revenues | 18,673.2 | 17,896.3 | 16,657.5 | ||||||||
Retail Automotive Dealership | Operating segments | New vehicle | |||||||||||
Revenue from external customers by product type | |||||||||||
Total revenues | 9,547.1 | 9,208.9 | 8,698.8 | ||||||||
Retail Automotive Dealership | Operating segments | Used vehicle | |||||||||||
Revenue from external customers by product type | |||||||||||
Total revenues | 5,663.7 | 5,425.5 | 4,971.1 | ||||||||
Retail Automotive Dealership | Operating segments | Finance and insurance, net | |||||||||||
Revenue from external customers by product type | |||||||||||
Total revenues | 495 | 478.3 | 436 | ||||||||
Retail Automotive Dealership | Operating segments | Service and parts | |||||||||||
Revenue from external customers by product type | |||||||||||
Total revenues | 1,948.6 | 1,830.7 | 1,716.9 | ||||||||
Retail Automotive Dealership | Operating segments | Fleet and wholesale | |||||||||||
Revenue from external customers by product type | |||||||||||
Total revenues | 1,018.8 | 952.9 | 834.7 | ||||||||
Retail Commercial Truck Dealership | |||||||||||
Revenue from external customers by product type | |||||||||||
Total revenues | 1,000.7 | 944.1 | 125.6 | ||||||||
Retail Commercial Truck Dealership | Operating segments | |||||||||||
Revenue from external customers by product type | |||||||||||
Total revenues | 1,000.7 | 944.1 | 125.6 | ||||||||
Retail Commercial Truck Dealership | Operating segments | New vehicle | |||||||||||
Revenue from external customers by product type | |||||||||||
Total revenues | 625.5 | 572.5 | 78.7 | ||||||||
Retail Commercial Truck Dealership | Operating segments | Used vehicle | |||||||||||
Revenue from external customers by product type | |||||||||||
Total revenues | 51.8 | 58.7 | 9.5 | ||||||||
Retail Commercial Truck Dealership | Operating segments | Finance and insurance, net | |||||||||||
Revenue from external customers by product type | |||||||||||
Total revenues | 7.3 | 6.7 | 0.9 | ||||||||
Retail Commercial Truck Dealership | Operating segments | Service and parts | |||||||||||
Revenue from external customers by product type | |||||||||||
Total revenues | 306 | 286 | 33.9 | ||||||||
Retail Commercial Truck Dealership | Operating segments | Lease, rental and wholesale | |||||||||||
Revenue from external customers by product type | |||||||||||
Total revenues | $ 10.1 | $ 20.2 | $ 2.6 |
Summary of Quarterly Financia81
Summary of Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly Financial Data | |||||||||||
Total revenues | $ 4,887.8 | $ 5,152 | $ 5,254.1 | $ 4,824.6 | $ 4,921.3 | $ 4,960.1 | $ 4,920.6 | $ 4,482.9 | $ 20,118.5 | $ 19,284.9 | $ 17,232 |
Gross profit | 727.3 | 744.2 | 771.3 | 723.8 | 717.1 | 729.2 | 731.3 | 689.9 | 2,966.6 | 2,867.5 | 2,579.2 |
Net income | 82.7 | 88.5 | 95 | 80.2 | 71.3 | 87.5 | 95.7 | 75.9 | 346.4 | 330.4 | 290.1 |
Net income attributable to Penske Automotive Group common stockholders | $ 82.6 | $ 87.5 | $ 93.5 | $ 79.3 | $ 70.3 | $ 86.6 | $ 94 | $ 75.2 | $ 342.9 | $ 326.1 | $ 286.7 |
Diluted earnings per share attributable to Penske Automotive Group common stockholders (in dollars per share) | $ 0.97 | $ 1.03 | $ 1.10 | $ 0.90 | $ 0.78 | $ 0.96 | $ 1.04 | $ 0.83 | $ 3.99 | $ 3.63 | $ 3.17 |
Condensed Consolidating Finan82
Condensed Consolidating Financial Information - Balance Sheet (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Condensed consolidating balance sheet | ||||
Cash and cash equivalents | $ 24 | $ 62.4 | $ 36.3 | $ 50.3 |
Accounts receivable, net | 879 | 782.3 | ||
Inventories | 3,408.2 | 3,463.5 | ||
Other current assets | 102 | 85.6 | ||
Assets held for sale | 8.3 | 12.7 | ||
Total current assets | 4,421.5 | 4,406.5 | ||
Property and equipment, net | 1,806.5 | 1,520.1 | ||
Intangible assets | 1,711.4 | 1,731.2 | ||
Equity method investments | 893.4 | 336.4 | ||
Other long-term assets | 28.3 | 19.2 | ||
Total assets | 8,861.1 | 8,013.4 | ||
Floor plan notes payable | 2,084.5 | 2,247.2 | ||
Floor plan notes payable - non-trade | 1,233.3 | 1,132.4 | ||
Accounts payable | 497.4 | 493.8 | ||
Accrued expenses | 360 | 378.1 | ||
Current portion of long-term debt | 48.3 | 28 | ||
Liabilities held for sale | 6.1 | 6.2 | ||
Total current liabilities | 4,229.6 | 4,285.7 | ||
Long-term debt | 1,828.8 | 1,247 | ||
Deferred tax liabilities | 592.7 | 433.4 | ||
Other long-term liabilities | 430.5 | 212.4 | ||
Total liabilities | 7,081.6 | 6,178.5 | ||
Total equity | 1,779.5 | 1,834.9 | $ 1,681.2 | 1,522.1 |
Total liabilities and equity | $ 8,861.1 | $ 8,013.4 | ||
5.75% senior subordinated notes due 2022 | ||||
Condensed consolidating balance sheet | ||||
Interest rate (as a percent) | 5.75% | 5.75% | ||
Domestic Subsidiaries ownership guaranteeing obligations (as a percent) | 100.00% | |||
5.375% Senior Subordinated Notes Due 2024 | ||||
Condensed consolidating balance sheet | ||||
Interest rate (as a percent) | 5.375% | 5.375% | 5.375% | |
Domestic Subsidiaries ownership guaranteeing obligations (as a percent) | 100.00% | |||
5.50% senior subordinated notes due 2026 | ||||
Condensed consolidating balance sheet | ||||
Interest rate (as a percent) | 5.50% | |||
Domestic Subsidiaries ownership guaranteeing obligations (as a percent) | 100.00% | |||
Guarantor Subsidiaries | ||||
Condensed consolidating balance sheet | ||||
Domestic Subsidiaries ownership guaranteeing obligations (as a percent) | 100.00% | |||
Eliminations | ||||
Condensed consolidating balance sheet | ||||
Accounts receivable, net | $ (447) | $ (430.4) | ||
Total current assets | (447) | (430.4) | ||
Other long-term assets | (2,215) | (2,253.4) | ||
Total assets | (2,662) | (2,683.8) | ||
Accrued expenses | (447) | (430.4) | ||
Total current liabilities | (447) | (430.4) | ||
Long-term debt | (175.8) | (256.4) | ||
Total liabilities | (622.8) | (686.8) | ||
Total equity | (2,039.2) | (1,997) | ||
Total liabilities and equity | (2,662) | (2,683.8) | ||
Reportable legal entities | Penske Automotive Group | ||||
Condensed consolidating balance sheet | ||||
Accounts receivable, net | 447 | 430.4 | ||
Other current assets | 14.3 | 3.9 | ||
Total current assets | 461.3 | 434.3 | ||
Property and equipment, net | 3.3 | 4 | ||
Equity method investments | 833.7 | 298.2 | ||
Other long-term assets | 2,220.6 | 2,259.9 | ||
Total assets | 3,518.9 | 2,996.4 | ||
Floor plan notes payable - non-trade | 156 | 154.7 | ||
Accounts payable | 4.9 | 4.8 | ||
Accrued expenses | 0.9 | 0.1 | ||
Total current liabilities | 161.8 | 159.6 | ||
Long-term debt | 1,577.6 | 1,001.9 | ||
Total liabilities | 1,739.4 | 1,161.5 | ||
Total equity | 1,779.5 | 1,834.9 | ||
Total liabilities and equity | 3,518.9 | 2,996.4 | ||
Reportable legal entities | Guarantor Subsidiaries | ||||
Condensed consolidating balance sheet | ||||
Cash and cash equivalents | 9.4 | 13.1 | ||
Accounts receivable, net | 483.6 | 400.8 | ||
Inventories | 1,830.5 | 1,650.5 | ||
Other current assets | 32.5 | 28.3 | ||
Assets held for sale | 8.3 | 8.5 | ||
Total current assets | 2,364.3 | 2,088.1 | ||
Property and equipment, net | 961 | 822 | ||
Intangible assets | 1,079.7 | 878.9 | ||
Other long-term assets | 4.1 | 7.2 | ||
Total assets | 4,409.1 | 3,796.2 | ||
Floor plan notes payable | 1,178 | 1,295 | ||
Floor plan notes payable - non-trade | 623.2 | 339.8 | ||
Accounts payable | 171.9 | 143.3 | ||
Accrued expenses | 77.2 | 112.3 | ||
Current portion of long-term debt | 6 | 5.7 | ||
Liabilities held for sale | 6.1 | 4.4 | ||
Total current liabilities | 2,062.4 | 1,900.5 | ||
Long-term debt | 186 | 109.2 | ||
Deferred tax liabilities | 578.8 | 413.4 | ||
Other long-term liabilities | 65.2 | 68.9 | ||
Total liabilities | 2,892.4 | 2,492 | ||
Total equity | 1,516.7 | 1,304.2 | ||
Total liabilities and equity | 4,409.1 | 3,796.2 | ||
Reportable legal entities | Non-Guarantor Subsidiaries | ||||
Condensed consolidating balance sheet | ||||
Cash and cash equivalents | 14.6 | 62.4 | $ 36.3 | $ 37.2 |
Accounts receivable, net | 395.4 | 381.5 | ||
Inventories | 1,577.7 | 1,813 | ||
Other current assets | 55.2 | 53.4 | ||
Assets held for sale | 4.2 | |||
Total current assets | 2,042.9 | 2,314.5 | ||
Property and equipment, net | 842.2 | 694.1 | ||
Intangible assets | 631.7 | 852.3 | ||
Equity method investments | 59.7 | 38.2 | ||
Other long-term assets | 18.6 | 5.5 | ||
Total assets | 3,595.1 | 3,904.6 | ||
Floor plan notes payable | 906.5 | 952.2 | ||
Floor plan notes payable - non-trade | 454.1 | 637.9 | ||
Accounts payable | 320.6 | 345.7 | ||
Accrued expenses | 728.9 | 696.1 | ||
Current portion of long-term debt | 42.3 | 22.3 | ||
Liabilities held for sale | 1.8 | |||
Total current liabilities | 2,452.4 | 2,656 | ||
Long-term debt | 241 | 392.3 | ||
Deferred tax liabilities | 13.9 | 20 | ||
Other long-term liabilities | 365.3 | 143.5 | ||
Total liabilities | 3,072.6 | 3,211.8 | ||
Total equity | 522.5 | 692.8 | ||
Total liabilities and equity | $ 3,595.1 | $ 3,904.6 |
Condensed Consolidating Finan83
Condensed Consolidating Financial Information - Statement of Income (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Condensed consolidating statement of income | |||||||||||
Revenues | $ 4,887.8 | $ 5,152 | $ 5,254.1 | $ 4,824.6 | $ 4,921.3 | $ 4,960.1 | $ 4,920.6 | $ 4,482.9 | $ 20,118.5 | $ 19,284.9 | $ 17,232 |
Cost of sales | 17,151.9 | 16,417.4 | 14,652.8 | ||||||||
Gross profit | 727.3 | 744.2 | 771.3 | 723.8 | 717.1 | 729.2 | 731.3 | 689.9 | 2,966.6 | 2,867.5 | 2,579.2 |
Selling, general and administrative expenses | 2,302 | 2,223 | 2,008.6 | ||||||||
Depreciation | 89.7 | 78 | 70.2 | ||||||||
Operating income | 574.9 | 566.5 | 500.4 | ||||||||
Floor plan interest expense | (50.9) | (44.5) | (46.5) | ||||||||
Other interest expense | (85.4) | (69.4) | (52.8) | ||||||||
Gain on investment | 16 | ||||||||||
Equity in earnings of affiliates | 69.5 | 39.3 | 40.8 | ||||||||
Income from continuing operations before income taxes | 508.1 | 491.9 | 457.9 | ||||||||
Income taxes | (160.7) | (158) | (153.1) | ||||||||
Income from continuing operations | 347.4 | 333.9 | 304.8 | ||||||||
(Loss) income from discontinued operations, net of tax | (1) | (3.5) | (14.7) | ||||||||
Net income | $ 82.7 | $ 88.5 | $ 95 | $ 80.2 | $ 71.3 | $ 87.5 | $ 95.7 | $ 75.9 | 346.4 | 330.4 | 290.1 |
Other comprehensive income (loss), net of tax | (129) | (70.3) | (66.2) | ||||||||
Comprehensive income | 217.4 | 260.1 | 223.9 | ||||||||
Less: Comprehensive income attributable to non-controlling interests | 2.7 | 3.2 | 2.1 | ||||||||
Comprehensive income attributable to Penske Automotive Group common stockholders | 214.7 | 256.9 | 221.8 | ||||||||
Eliminations | |||||||||||
Condensed consolidating statement of income | |||||||||||
Equity in earnings of subsidiaries | (523.3) | (527) | (473.2) | ||||||||
Income from continuing operations before income taxes | (523.3) | (527) | (473.2) | ||||||||
Income taxes | 166.6 | 170.5 | 157.9 | ||||||||
Income from continuing operations | (356.7) | (356.5) | (315.3) | ||||||||
(Loss) income from discontinued operations, net of tax | 1 | 4 | 16.8 | ||||||||
Net income | (355.7) | (352.5) | (298.5) | ||||||||
Other comprehensive income (loss), net of tax | 123.9 | 62.9 | 62.5 | ||||||||
Comprehensive income | (231.8) | (289.6) | (236) | ||||||||
Less: Comprehensive income attributable to non-controlling interests | 0.8 | 1.1 | 1.4 | ||||||||
Comprehensive income attributable to Penske Automotive Group common stockholders | (232.6) | (290.7) | (237.4) | ||||||||
Reportable legal entities | Penske Automotive Group | |||||||||||
Condensed consolidating statement of income | |||||||||||
Selling, general and administrative expenses | 19.2 | 23.6 | 28.7 | ||||||||
Depreciation | 1.7 | 1.6 | 1.3 | ||||||||
Operating income | (20.9) | (25.2) | (30) | ||||||||
Floor plan interest expense | (3) | (2.8) | (10.4) | ||||||||
Other interest expense | (59.2) | (45.6) | (29.8) | ||||||||
Gain on investment | 16 | ||||||||||
Equity in earnings of affiliates | 64.6 | 34.8 | 36.5 | ||||||||
Equity in earnings of subsidiaries | 523.3 | 527 | 473.2 | ||||||||
Income from continuing operations before income taxes | 504.8 | 488.2 | 455.5 | ||||||||
Income taxes | (160.7) | (158) | (152) | ||||||||
Income from continuing operations | 344.1 | 330.2 | 303.5 | ||||||||
(Loss) income from discontinued operations, net of tax | (1) | (4) | (16.8) | ||||||||
Net income | 343.1 | 326.2 | 286.7 | ||||||||
Other comprehensive income (loss), net of tax | (129) | (70.3) | (66.2) | ||||||||
Comprehensive income | 214.1 | 255.9 | 220.5 | ||||||||
Less: Comprehensive income attributable to non-controlling interests | (0.8) | (1.1) | (1.4) | ||||||||
Comprehensive income attributable to Penske Automotive Group common stockholders | 214.9 | 257 | 221.9 | ||||||||
Reportable legal entities | Guarantor Subsidiaries | |||||||||||
Condensed consolidating statement of income | |||||||||||
Revenues | 10,946.2 | 10,152.4 | 9,589 | ||||||||
Cost of sales | 9,251.8 | 8,582.4 | 8,092.5 | ||||||||
Gross profit | 1,694.4 | 1,570 | 1,496.5 | ||||||||
Selling, general and administrative expenses | 1,284.4 | 1,193 | 1,133.9 | ||||||||
Depreciation | 47.3 | 42 | 37.8 | ||||||||
Operating income | 362.7 | 335 | 324.8 | ||||||||
Floor plan interest expense | (29.1) | (22) | (20.7) | ||||||||
Other interest expense | (5.1) | (5.3) | (5) | ||||||||
Income from continuing operations before income taxes | 328.5 | 307.7 | 299.1 | ||||||||
Income taxes | (124.4) | (117.4) | (110.3) | ||||||||
Income from continuing operations | 204.1 | 190.3 | 188.8 | ||||||||
(Loss) income from discontinued operations, net of tax | (0.9) | (1.4) | (2.4) | ||||||||
Net income | 203.2 | 188.9 | 186.4 | ||||||||
Other comprehensive income (loss), net of tax | 4.7 | ||||||||||
Comprehensive income | 203.2 | 188.9 | 191.1 | ||||||||
Comprehensive income attributable to Penske Automotive Group common stockholders | 203.2 | 188.9 | 191.1 | ||||||||
Reportable legal entities | Non-Guarantor Subsidiaries | |||||||||||
Condensed consolidating statement of income | |||||||||||
Revenues | 9,172.3 | 9,132.5 | 7,643 | ||||||||
Cost of sales | 7,900.1 | 7,835 | 6,560.3 | ||||||||
Gross profit | 1,272.2 | 1,297.5 | 1,082.7 | ||||||||
Selling, general and administrative expenses | 998.4 | 1,006.4 | 846 | ||||||||
Depreciation | 40.7 | 34.4 | 31.1 | ||||||||
Operating income | 233.1 | 256.7 | 205.6 | ||||||||
Floor plan interest expense | (18.8) | (19.7) | (15.4) | ||||||||
Other interest expense | (21.1) | (18.5) | (18) | ||||||||
Equity in earnings of affiliates | 4.9 | 4.5 | 4.3 | ||||||||
Income from continuing operations before income taxes | 198.1 | 223 | 176.5 | ||||||||
Income taxes | (42.2) | (53.1) | (48.7) | ||||||||
Income from continuing operations | 155.9 | 169.9 | 127.8 | ||||||||
(Loss) income from discontinued operations, net of tax | (0.1) | (2.1) | (12.3) | ||||||||
Net income | 155.8 | 167.8 | 115.5 | ||||||||
Other comprehensive income (loss), net of tax | (123.9) | (62.9) | (67.2) | ||||||||
Comprehensive income | 31.9 | 104.9 | 48.3 | ||||||||
Less: Comprehensive income attributable to non-controlling interests | 2.7 | 3.2 | 2.1 | ||||||||
Comprehensive income attributable to Penske Automotive Group common stockholders | $ 29.2 | $ 101.7 | $ 46.2 |
Condensed Consolidating Finan84
Condensed Consolidating Financial Information - Statement of Cash Flows (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Condensed consolidating statement of cash flows | |||
Net cash provided by (used in) continuing operating activities | $ 365.5 | $ 391.5 | $ 359.3 |
Investing activities: | |||
Purchase of equipment and improvements | (203.1) | (199.5) | (176.1) |
Acquisition of additional ownership interest in Penske Truck Leasing | (498.5) | ||
Acquisitions, net | (140.8) | (156.9) | (355) |
Other | 5.7 | 4.7 | (22.6) |
Net cash used in continuing investing activities | (836.7) | (351.7) | (553.7) |
Financing activities: | |||
Net borrowings (repayments) of long-term debt | 122.9 | (62.1) | (71.3) |
Net borrowings (repayments) of floor plan notes payable—non-trade | 101 | 154.2 | 26.1 |
Payment of debt issuance costs | (6.7) | (1.8) | (4.4) |
Repurchases of common stock | (173.6) | (48.9) | (15.5) |
Dividends | (95.1) | (84.8) | (70.5) |
Other | (9.7) | (5.9) | 0.3 |
Net cash provided by (used in) continuing financing activities | 438.8 | (49.3) | 164.7 |
Net cash provided by discontinued operations | 3.1 | 37 | 17 |
Effect of exchange rate changes on cash and cash equivalents | (9.1) | (1.4) | (1.3) |
Net change in cash and cash equivalents | (38.4) | 26.1 | (14) |
Cash and cash equivalents, beginning of period | 62.4 | 36.3 | 50.3 |
Cash and cash equivalents, end of period | 24 | 62.4 | 36.3 |
5.50% senior subordinated notes due 2026 | |||
Financing activities: | |||
Issuance of senior subordinated notes | 500 | ||
5.375% Senior Subordinated Notes Due 2024 | |||
Financing activities: | |||
Issuance of senior subordinated notes | 300 | ||
Reportable legal entities | Penske Automotive Group | |||
Condensed consolidating statement of cash flows | |||
Net cash provided by (used in) continuing operating activities | (37.4) | (4.9) | (70.7) |
Investing activities: | |||
Purchase of equipment and improvements | (1) | (1.3) | (1.7) |
Acquisition of additional ownership interest in Penske Truck Leasing | (498.5) | ||
Other | 4.2 | ||
Net cash used in continuing investing activities | (499.5) | (1.3) | 2.5 |
Financing activities: | |||
Net borrowings (repayments) of long-term debt | 80 | 72 | (100) |
Net borrowings (repayments) of floor plan notes payable—non-trade | 1.3 | 67.9 | (41.4) |
Payment of debt issuance costs | (6.7) | (4.4) | |
Repurchases of common stock | (173.6) | (48.9) | (15.5) |
Dividends | (95.1) | (84.8) | (70.5) |
Distributions from (to) parent | 231 | ||
Net cash provided by (used in) continuing financing activities | 536.9 | 6.2 | 68.2 |
Reportable legal entities | Penske Automotive Group | 5.50% senior subordinated notes due 2026 | |||
Financing activities: | |||
Issuance of senior subordinated notes | 500 | ||
Reportable legal entities | Penske Automotive Group | 5.375% Senior Subordinated Notes Due 2024 | |||
Financing activities: | |||
Issuance of senior subordinated notes | 300 | ||
Reportable legal entities | Guarantor Subsidiaries | |||
Condensed consolidating statement of cash flows | |||
Net cash provided by (used in) continuing operating activities | 52.1 | 230.3 | 209.7 |
Investing activities: | |||
Purchase of equipment and improvements | (126.6) | (119.7) | (101.2) |
Acquisitions, net | (93.2) | (175.3) | |
Other | 17 | ||
Net cash used in continuing investing activities | (109.6) | (212.9) | (276.5) |
Financing activities: | |||
Net borrowings (repayments) of long-term debt | 21.6 | (4.9) | 9 |
Net borrowings (repayments) of floor plan notes payable—non-trade | 270.8 | (58.3) | 35.9 |
Distributions from (to) parent | (226.2) | 8.8 | 5.5 |
Net cash provided by (used in) continuing financing activities | 66.2 | (54.4) | 50.4 |
Net cash provided by discontinued operations | 0.7 | 37 | 3.3 |
Net change in cash and cash equivalents | 9.4 | (13.1) | |
Cash and cash equivalents, beginning of period | 13.1 | ||
Cash and cash equivalents, end of period | 9.4 | ||
Reportable legal entities | Non-Guarantor Subsidiaries | |||
Condensed consolidating statement of cash flows | |||
Net cash provided by (used in) continuing operating activities | 350.8 | 166.1 | 220.3 |
Investing activities: | |||
Purchase of equipment and improvements | (75.5) | (78.5) | (73.2) |
Acquisitions, net | (140.8) | (63.7) | (179.7) |
Other | (11.3) | 4.7 | (26.8) |
Net cash used in continuing investing activities | (227.6) | (137.5) | (279.7) |
Financing activities: | |||
Net borrowings (repayments) of long-term debt | 21.3 | (129.2) | 19.7 |
Net borrowings (repayments) of floor plan notes payable—non-trade | (171.1) | 144.6 | 31.6 |
Payment of debt issuance costs | (1.8) | ||
Other | (9.7) | (5.9) | 0.3 |
Distributions from (to) parent | (4.8) | (8.8) | (5.5) |
Net cash provided by (used in) continuing financing activities | (164.3) | (1.1) | 46.1 |
Net cash provided by discontinued operations | 2.4 | 13.7 | |
Effect of exchange rate changes on cash and cash equivalents | (9.1) | (1.4) | (1.3) |
Net change in cash and cash equivalents | (47.8) | 26.1 | (0.9) |
Cash and cash equivalents, beginning of period | 62.4 | 36.3 | 37.2 |
Cash and cash equivalents, end of period | $ 14.6 | $ 62.4 | $ 36.3 |
Schedule II VALUATION AND QUA85
Schedule II VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Allowance for doubtful accounts | |||
Valuation and qualifying accounts | |||
Balance at Beginning of Year | $ 4.2 | $ 3.5 | $ 2.9 |
Additions | 2.8 | 1.7 | 1 |
Deductions, Recoveries & Other | (2.5) | (1) | (0.4) |
Balance at Ending of Year | 4.5 | 4.2 | 3.5 |
Tax valuation allowance | |||
Valuation and qualifying accounts | |||
Balance at Beginning of Year | 17.3 | 18.2 | 14.6 |
Additions | 2.1 | 0.3 | 4.3 |
Deductions, Recoveries & Other | (2.2) | (1.2) | (0.7) |
Balance at Ending of Year | $ 17.2 | $ 17.3 | $ 18.2 |