þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware (State or other jurisdiction of incorporation or organization) |
22-3086739 (I.R.S. Employer Identification No.) |
|
2555 Telegraph Road, | 48302-0954 | |
Bloomfield Hills, Michigan | (Zip Code) | |
(Address of principal executive offices) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
Page | ||||||||
PART I FINANCIAL INFORMATION |
||||||||
Item 1. Financial Statements |
||||||||
3 | ||||||||
4 | ||||||||
5 | ||||||||
6 | ||||||||
7 | ||||||||
24 | ||||||||
43 | ||||||||
43 | ||||||||
44 | ||||||||
44 | ||||||||
44 | ||||||||
45 | ||||||||
Exhibit 10.1 | ||||||||
Exhibit 10.2 | ||||||||
Exhibit 12 | ||||||||
Exhibit 31.1 | ||||||||
Exhibit 31.2 | ||||||||
Exhibit 32 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
2
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
(In thousands, except | ||||||||
per share amounts) | ||||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 3,346 | $ | 17,868 | ||||
Accounts receivable, net of allowance for doubtful accounts of $2,180 and $1,902 |
365,794 | 383,675 | ||||||
Inventories |
1,456,409 | 1,453,546 | ||||||
Other current assets |
91,772 | 68,457 | ||||||
Assets held for sale |
56,826 | 110,485 | ||||||
Total current assets |
1,974,147 | 2,034,031 | ||||||
Property and equipment, net |
776,386 | 720,834 | ||||||
Goodwill |
826,969 | 808,488 | ||||||
Franchise value |
205,945 | 203,401 | ||||||
Equity method investments |
288,028 | 288,406 | ||||||
Other long-term assets |
15,404 | 14,672 | ||||||
Total assets |
$ | 4,086,879 | $ | 4,069,832 | ||||
LIABILITIES AND EQUITY |
||||||||
Floor plan notes payable |
$ | 854,224 | $ | 922,295 | ||||
Floor plan notes payable non-trade |
562,906 | 492,595 | ||||||
Accounts payable |
215,923 | 253,424 | ||||||
Accrued expenses |
232,431 | 202,644 | ||||||
Current portion of long-term debt |
10,285 | 10,593 | ||||||
Liabilities held for sale |
52,480 | 79,455 | ||||||
Total current liabilities |
1,928,249 | 1,961,006 | ||||||
Long-term debt |
706,522 | 769,285 | ||||||
Deferred tax liabilities |
169,993 | 178,406 | ||||||
Other long-term liabilities |
161,884 | 115,282 | ||||||
Total liabilities |
2,966,648 | 3,023,979 | ||||||
Commitments and contingent liabilities |
||||||||
Equity |
||||||||
Penske Automotive Group stockholders equity: |
||||||||
Preferred Stock, $0.0001 par value; 100 shares authorized; none issued and outstanding |
| | ||||||
Common Stock, $0.0001 par value, 240,000 shares authorized; 92,062 shares issued and
outstanding at June 30, 2011; 92,100 shares issued and outstanding at December 31, 2010 |
9 | 9 | ||||||
Non-voting Common Stock, $0.0001 par value, 7,125 shares authorized; none issued and outstanding |
| | ||||||
Class C Common Stock, $0.0001 par value, 20,000 shares authorized; none issued and outstanding |
| | ||||||
Additional paid-in-capital |
731,397 | 738,728 | ||||||
Retained earnings |
371,480 | 304,486 | ||||||
Accumulated other comprehensive income (loss) |
13,372 | (1,673 | ) | |||||
Total Penske Automotive Group stockholders equity |
1,116,258 | 1,041,550 | ||||||
Non-controlling interest |
3,973 | 4,303 | ||||||
Total equity |
1,120,231 | 1,045,853 | ||||||
Total liabilities and equity |
$ | 4,086,879 | $ | 4,069,832 | ||||
3
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Revenue: |
||||||||||||||||
New vehicle |
$ | 1,422,267 | $ | 1,314,904 | $ | 2,823,614 | $ | 2,516,795 | ||||||||
Used vehicle |
879,907 | 736,336 | 1,692,501 | 1,421,466 | ||||||||||||
Finance and insurance, net |
69,202 | 61,666 | 135,676 | 119,550 | ||||||||||||
Service and parts |
348,018 | 323,824 | 696,209 | 649,606 | ||||||||||||
Fleet and wholesale vehicle |
169,026 | 177,872 | 335,907 | 331,372 | ||||||||||||
Total revenues |
2,888,420 | 2,614,602 | 5,683,907 | 5,038,789 | ||||||||||||
Cost of sales: |
||||||||||||||||
New vehicle |
1,301,352 | 1,206,216 | 2,591,388 | 2,308,806 | ||||||||||||
Used vehicle |
807,425 | 677,382 | 1,554,114 | 1,306,620 | ||||||||||||
Service and parts |
149,040 | 138,558 | 299,014 | 281,113 | ||||||||||||
Fleet and wholesale |
166,963 | 175,640 | 330,674 | 325,392 | ||||||||||||
Total cost of sales |
2,424,780 | 2,197,796 | 4,775,190 | 4,221,931 | ||||||||||||
Gross profit |
463,640 | 416,806 | 908,717 | 816,858 | ||||||||||||
Selling, general and administrative expenses |
380,350 | 339,676 | 738,462 | 666,039 | ||||||||||||
Depreciation |
12,093 | 11,516 | 24,031 | 23,374 | ||||||||||||
Operating income |
71,197 | 65,614 | 146,224 | 127,445 | ||||||||||||
Floor plan interest expense |
(7,113 | ) | (7,983 | ) | (14,131 | ) | (16,125 | ) | ||||||||
Other interest expense |
(10,575 | ) | (12,542 | ) | (21,976 | ) | (25,262 | ) | ||||||||
Debt discount amortization |
| (2,428 | ) | (1,718 | ) | (5,343 | ) | |||||||||
Equity in earnings of affiliates |
7,882 | 4,784 | 7,904 | 4,355 | ||||||||||||
Gain on debt repurchase |
| 422 | | 1,027 | ||||||||||||
Income from continuing operations before income taxes |
61,391 | 47,867 | 116,303 | 86,097 | ||||||||||||
Income taxes |
(20,996 | ) | (16,628 | ) | (37,784 | ) | (30,878 | ) | ||||||||
Income from continuing operations |
40,395 | 31,239 | 78,519 | 55,219 | ||||||||||||
Loss from discontinued operations, net of tax |
(336 | ) | (1,555 | ) | (4,463 | ) | (5,203 | ) | ||||||||
Net income |
40,059 | 29,684 | 74,056 | 50,016 | ||||||||||||
Less: Income attributable to non-controlling interests |
499 | 243 | 569 | 221 | ||||||||||||
Net income attributable to
Penske Automotive Group common stockholders |
$ | 39,560 | $ | 29,441 | $ | 73,487 | $ | 49,795 | ||||||||
Basic earnings per share attributable to
Penske Automotive Group common stockholders: |
||||||||||||||||
Continuing operations |
$ | 0.43 | $ | 0.34 | $ | 0.84 | $ | 0.60 | ||||||||
Discontinued operations |
(0.00 | ) | (0.02 | ) | (0.05 | ) | (0.06 | ) | ||||||||
Net income attributable to
Penske Automotive Group common stockholders |
$ | 0.43 | $ | 0.32 | $ | 0.79 | $ | 0.54 | ||||||||
Shares used in determining basic earnings per share |
92,514 | 92,142 | 92,444 | 92,016 | ||||||||||||
Diluted earnings per share attributable to
Penske Automotive Group common stockholders: |
||||||||||||||||
Continuing operations |
$ | 0.43 | $ | 0.34 | $ | 0.84 | $ | 0.60 | ||||||||
Discontinued operations |
(0.00 | ) | (0.02 | ) | (0.05 | ) | (0.06 | ) | ||||||||
Net income attributable to
Penske Automotive Group common stockholders |
$ | 0.43 | $ | 0.32 | $ | 0.79 | $ | 0.54 | ||||||||
Shares used in determining diluted earnings per share |
92,570 | 92,206 | 92,514 | 92,086 | ||||||||||||
Amounts attributable to
Penske Automotive Group common stockholders: |
||||||||||||||||
Income from continuing operations |
$ | 40,395 | $ | 31,239 | $ | 78,519 | $ | 55,219 | ||||||||
Less: Income attributable to non-controlling interests |
499 | 243 | 569 | 221 | ||||||||||||
Income from continuing operations, net of tax |
39,896 | 30,996 | 77,950 | 54,998 | ||||||||||||
Loss from discontinued operations, net of tax |
(336 | ) | (1,555 | ) | (4,463 | ) | (5,203 | ) | ||||||||
Net income attributable to
Penske Automotive Group common stockholders |
$ | 39,560 | $ | 29,441 | $ | 73,487 | $ | 49,795 | ||||||||
Cash dividends per share |
$ | 0.07 | $ | | $ | 0.07 | $ | |
4
Six Months Ended | ||||||||
June 30, | ||||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
Operating Activities: |
||||||||
Net income |
$ | 74,056 | $ | 50,016 | ||||
Adjustments to reconcile net income to net cash from continuing operating activities: |
||||||||
Depreciation |
24,031 | 23,374 | ||||||
Debt discount amortization |
1,718 | 5,343 | ||||||
Earnings of equity method investments |
(7,904 | ) | (4,355 | ) | ||||
Loss from discontinued operations, net of tax |
4,463 | 5,203 | ||||||
Deferred income taxes |
12,888 | 11,398 | ||||||
Gain on debt repurchase |
| (1,027 | ) | |||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
20,290 | (25,757 | ) | |||||
Inventories |
5,060 | (47,111 | ) | |||||
Floor plan notes payable |
(68,071 | ) | 20,438 | |||||
Accounts payable and accrued expenses |
(10,691 | ) | 16,876 | |||||
Other |
(11,850 | ) | 3,128 | |||||
Net cash from continuing operating activities |
43,990 | 57,526 | ||||||
Investing Activities: |
||||||||
Purchase of equipment and improvements |
(51,784 | ) | (35,989 | ) | ||||
Dealership acquisitions, net, including repayment of sellers floor plan notes payable of
$5,862 and $5,683, respectively |
(14,011 | ) | (9,362 | ) | ||||
Other |
2,865 | | ||||||
Net cash from continuing investing activities |
(62,930 | ) | (45,351 | ) | ||||
Financing Activities: |
||||||||
Proceeds from borrowings under U.S. credit agreement revolving credit line |
156,000 | 320,600 | ||||||
Repayments under U.S. credit agreement revolving credit line |
(156,000 | ) | (292,600 | ) | ||||
Repurchase of 3.5% senior subordinated convertible notes |
(87,278 | ) | (113,604 | ) | ||||
Net borrowings (repayments) of other long-term debt |
15,372 | (9,497 | ) | |||||
Net borrowings of floor plan notes payable non-trade |
70,311 | 73,592 | ||||||
Proceeds from exercises of options, including excess tax benefit |
2,698 | 211 | ||||||
Repurchases of common stock |
(12,413 | ) | | |||||
Dividends |
(6,493 | ) | | |||||
Net cash from continuing financing activities |
(17,803 | ) | (21,298 | ) | ||||
Discontinued operations: |
||||||||
Net cash from discontinued operating activities |
(20,466 | ) | 5,627 | |||||
Net cash from discontinued investing activities |
47,915 | 4,796 | ||||||
Net cash from discontinued financing activities |
(5,228 | ) | 2,294 | |||||
Net cash from discontinued operations |
22,221 | 12,717 | ||||||
Net change in cash and cash equivalents |
(14,522 | ) | 3,594 | |||||
Cash and cash equivalents, beginning of period |
17,868 | 14,584 | ||||||
Cash and cash equivalents, end of period |
$ | 3,346 | $ | 18,178 | ||||
Supplemental disclosures of cash flow information: |
||||||||
Cash paid for: |
||||||||
Interest |
$ | 37,752 | $ | 43,876 | ||||
Income taxes |
23,442 | 14,121 | ||||||
Seller financed/assumed debt |
4,865 | |
5
Accumulated | Total | |||||||||||||||||||||||||||||||
Common Stock | Additional | Other | Stockholders Equity | |||||||||||||||||||||||||||||
Issued | Paid-in | Retained | Comprehensive | Attributable to Penske | Non-controlling | Total | ||||||||||||||||||||||||||
Shares | Amount | Capital | Earnings | Income (Loss) | Automotive Group | Interest | Equity | |||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||||||
Balance, January 1, 2011 |
92,099,552 | $ | 9 | $ | 738,728 | $ | 304,486 | $ | (1,673 | ) | $ | 1,041,550 | $ | 4,303 | $ | 1,045,853 | ||||||||||||||||
Equity compensation |
389,155 | | 3,012 | | | 3,012 | | 3,012 | ||||||||||||||||||||||||
Repurchases of common stock |
(618,209 | ) | | (12,413 | ) | | | (12,413 | ) | | (12,413 | ) | ||||||||||||||||||||
Dividends |
| | | (6,493 | ) | | (6,493 | ) | | (6,493 | ) | |||||||||||||||||||||
Exercise of options, including tax benefit of $856 |
191,668 | | 2,698 | | | 2,698 | | 2,698 | ||||||||||||||||||||||||
Distributions to non-controlling interests |
| | | | | | (1,059 | ) | (1,059 | ) | ||||||||||||||||||||||
Purchase of subsidiary shares from non-controlling interest |
| | (853 | ) | | | (853 | ) | 3 | (850 | ) | |||||||||||||||||||||
Sale of subsidiary shares to non-controlling interest |
| | 225 | | | 225 | 157 | 382 | ||||||||||||||||||||||||
Foreign currency translation |
| | | | 19,734 | 19,734 | | 19,734 | ||||||||||||||||||||||||
Other |
| | | | (4,689 | ) | (4,689 | ) | | (4,689 | ) | |||||||||||||||||||||
Net income |
| | | 73,487 | | 73,487 | 569 | 74,056 | ||||||||||||||||||||||||
Balance, June 30, 2011 |
92,062,166 | $ | 9 | $ | 731,397 | $ | 371,480 | $ | 13,372 | $ | 1,116,258 | $ | 3,973 | $ | 1,120,231 | |||||||||||||||||
6
7
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues |
$ | 73,943 | $ | 97,824 | $ | 158,954 | $ | 171,411 | ||||||||
Pre-tax (loss) income |
(1,153 | ) | (2,138 | ) | (9,061 | ) | (7,831 | ) | ||||||||
Gain (loss) on disposal |
695 | (235 | ) | 1,765 | (261 | ) |
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
Inventories |
$ | 28,515 | $ | 70,680 | ||||
Other assets |
28,311 | 39,805 | ||||||
Total assets |
$ | 56,826 | $ | 110,485 | ||||
Floor plan notes payable (including non-trade) |
$ | 26,519 | $ | 63,825 | ||||
Other liabilities |
25,961 | 15,630 | ||||||
Total liabilities |
$ | 52,480 | $ | 79,455 | ||||
June 30, 2011 | ||||||||
Carrying Value | Fair Value | |||||||
7.75% senior subordinated notes due 2016 |
$ | 375,000 | $ | 382,969 | ||||
3.5% senior subordinated convertible notes due 2026 |
63,324 | 64,970 |
8
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
New vehicles |
$ | 954,077 | $ | 1,011,299 | ||||
Used vehicles |
426,751 | 367,350 | ||||||
Parts, accessories and other |
75,581 | 74,897 | ||||||
Total inventories |
$ | 1,456,409 | $ | 1,453,546 | ||||
June 30, | ||||||||
2011 | 2010 | |||||||
Accounts receivable |
$ | 953 | $ | | ||||
Inventory |
7,923 | 6,336 | ||||||
Other current assets |
| 17 | ||||||
Property and equipment |
1,671 | | ||||||
Goodwill |
7,038 | 3,014 | ||||||
Other assets |
628 | | ||||||
Current liabilities |
(2,491 | ) | (5 | ) | ||||
Total consideration |
15,722 | 9,362 | ||||||
Seller financed/assumed debt |
(1,711 | ) | | |||||
Cash used in dealership acquisitions |
$ | 14,011 | $ | 9,362 | ||||
9
Franchise | ||||||||
Goodwill | Value | |||||||
Balance, January 1, 2011 |
$ | 808,488 | $ | 203,401 | ||||
Additions |
7,120 | | ||||||
Foreign currency translation |
11,361 | 2,544 | ||||||
Balance, June 30, 2011 |
$ | 826,969 | $ | 205,945 | ||||
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Weighted average number of common shares outstanding |
92,514 | 92,142 | 92,444 | 92,016 | ||||||||||||
Effect of non-participatory equity compensation |
56 | 64 | 70 | 70 | ||||||||||||
Weighted average number of common shares outstanding,
including effect of dilutive securities |
92,570 | 92,206 | 92,514 | 92,086 | ||||||||||||
10
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
U.S. credit agreement revolving credit line |
$ | | $ | | ||||
U.S. credit agreement term loan |
134,000 | 134,000 | ||||||
U.K. credit agreement revolving credit line |
77,050 | 54,597 | ||||||
U.K. credit agreement term loan |
| 5,505 | ||||||
U.K. credit agreement overdraft line of credit |
6,421 | 7,116 | ||||||
7.75% senior subordinated notes due 2016 |
375,000 | 375,000 | ||||||
3.5% senior subordinated convertible notes due 2026, net of debt discount |
63,324 | 148,884 | ||||||
Mortgage facilities |
50,249 | 46,052 | ||||||
Other |
10,763 | 8,724 | ||||||
Total long-term debt |
716,807 | 779,878 | ||||||
Less: current portion |
(10,285 | ) | (10,593 | ) | ||||
Net long-term debt |
$ | 706,522 | $ | 769,285 | ||||
11
12
13
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Attributable to Penske Automotive Group: |
||||||||||||||||
Net income |
$ | 39,560 | $ | 29,441 | $ | 73,487 | $ | 49,795 | ||||||||
Other comprehensive income (loss): |
||||||||||||||||
Foreign currency translation |
2,883 | (15,123 | ) | 19,734 | (42,831 | ) | ||||||||||
Other |
(4,359 | ) | 4,029 | (4,689 | ) | 7,215 | ||||||||||
Total attributable to Penske Automotive Group |
38,084 | 18,347 | 88,532 | 14,179 | ||||||||||||
Attributable to the non-controlling interest: |
||||||||||||||||
Income |
499 | 243 | 569 | 221 | ||||||||||||
Total comprehensive income |
$ | 38,583 | $ | 18,590 | $ | 89,101 | $ | 14,400 | ||||||||
14
PAG | ||||||||||||
Retail | Investments | Total | ||||||||||
Revenues |
||||||||||||
2011 |
$ | 2,888,420 | $ | | $ | 2,888,420 | ||||||
2010 |
2,614,602 | | 2,614,602 | |||||||||
Adjusted segment income |
||||||||||||
2011 |
55,123 | 6,268 | 61,391 | |||||||||
2010 |
43,343 | 4,102 | 47,445 |
PAG | ||||||||||||
Retail | Investments | Total | ||||||||||
Revenues |
||||||||||||
2011 |
$ | 5,683,907 | $ | | $ | 5,683,907 | ||||||
2010 |
5,038,789 | | 5,038,789 | |||||||||
Adjusted segment income |
||||||||||||
2011 |
108,911 | 7,392 | 116,303 | |||||||||
2010 |
81,473 | 3,597 | 85,070 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Adjusted segment income |
$ | 61,391 | $ | 47,445 | $ | 116,303 | $ | 85,070 | ||||||||
Gain on debt repurchase |
| 422 | | 1,027 | ||||||||||||
Income from continuing operations before income taxes |
$ | 61,391 | $ | 47,867 | $ | 116,303 | $ | 86,097 | ||||||||
15
Penske | ||||||||||||||||||||
Total | Automotive | Guarantor | Non-Guarantor | |||||||||||||||||
Company | Eliminations | Group | Subsidiaries | Subsidiaries | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Cash and cash equivalents |
$ | 3,346 | $ | | $ | | $ | 1,455 | $ | 1,891 | ||||||||||
Accounts receivable, net |
365,794 | (287,636 | ) | 287,635 | 191,091 | 174,704 | ||||||||||||||
Inventories |
1,456,409 | | | 784,818 | 671,591 | |||||||||||||||
Other current assets |
91,772 | | 3,529 | 40,711 | 47,532 | |||||||||||||||
Assets held for sale |
56,826 | | | 56,826 | | |||||||||||||||
Total current assets |
1,974,147 | (287,636 | ) | 291,164 | 1,074,901 | 895,718 | ||||||||||||||
Property and equipment, net |
776,386 | | 4,941 | 475,265 | 296,180 | |||||||||||||||
Intangible assets |
1,032,914 | | | 578,196 | 454,718 | |||||||||||||||
Equity method investments |
288,028 | | 232,836 | | 55,192 | |||||||||||||||
Other long-term assets |
15,404 | (1,206,290 | ) | 1,214,041 | 6,024 | 1,629 | ||||||||||||||
Total assets |
$ | 4,086,879 | $ | (1,493,926 | ) | $ | 1,742,982 | $ | 2,134,386 | $ | 1,703,437 | |||||||||
Floor plan notes payable |
$ | 854,224 | $ | | $ | | $ | 428,753 | $ | 425,471 | ||||||||||
Floor plan notes payable non-trade |
562,906 | | 45,200 | 265,768 | 251,938 | |||||||||||||||
Accounts payable |
215,923 | | 2,440 | 76,059 | 137,424 | |||||||||||||||
Accrued expenses |
232,431 | (287,636 | ) | 2,787 | 134,202 | 383,078 | ||||||||||||||
Current portion of long-term debt |
10,285 | | | 4,366 | 5,919 | |||||||||||||||
Liabilities held for sale |
52,480 | | | 52,480 | | |||||||||||||||
Total current liabilities |
1,928,249 | (287,636 | ) | 50,427 | 961,628 | 1,203,830 | ||||||||||||||
Long-term debt |
706,522 | (40,311 | ) | 572,324 | 53,016 | 121,493 | ||||||||||||||
Deferred tax liabilities |
169,993 | | | 156,787 | 13,206 | |||||||||||||||
Other long-term liabilities |
161,884 | | | 115,452 | 46,432 | |||||||||||||||
Total liabilities |
2,966,648 | (327,947 | ) | 622,751 | 1,286,883 | 1,384,961 | ||||||||||||||
Total equity |
1,120,231 | (1,165,979 | ) | 1,120,231 | 847,503 | 318,476 | ||||||||||||||
Total liabilities and equity |
$ | 4,086,879 | $ | (1,493,926 | ) | $ | 1,742,982 | $ | 2,134,386 | $ | 1,703,437 | |||||||||
16
Penske | ||||||||||||||||||||
Total | Automotive | Guarantor | Non-Guarantor | |||||||||||||||||
Company | Eliminations | Group | Subsidiaries | Subsidiaries | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Cash and cash equivalents |
$ | 17,868 | $ | | $ | | $ | 15,497 | $ | 2,371 | ||||||||||
Accounts receivable, net |
383,675 | (269,021 | ) | 269,021 | 228,274 | 155,401 | ||||||||||||||
Inventories |
1,453,546 | | | 878,571 | 574,975 | |||||||||||||||
Other current assets |
68,457 | | 1,127 | 32,371 | 34,959 | |||||||||||||||
Assets held for sale |
110,485 | | | 110,485 | | |||||||||||||||
Total current assets |
2,034,031 | (269,021 | ) | 270,148 | 1,265,198 | 767,706 | ||||||||||||||
Property and equipment, net |
720,834 | | 4,957 | 448,116 | 267,761 | |||||||||||||||
Intangible assets |
1,011,889 | | | 489,301 | 522,588 | |||||||||||||||
Equity method investments |
288,406 | | 234,214 | | 54,192 | |||||||||||||||
Other long-term assets |
14,672 | (1,212,538 | ) | 1,222,168 | 3,088 | 1,954 | ||||||||||||||
Total assets |
$ | 4,069,832 | $ | (1,481,559 | ) | $ | 1,731,487 | $ | 2,205,703 | $ | 1,614,201 | |||||||||
Floor plan notes payable |
$ | 922,295 | $ | | $ | | $ | 570,282 | $ | 352,013 | ||||||||||
Floor plan notes payable non-trade |
492,595 | | 25,000 | 288,274 | 179,321 | |||||||||||||||
Accounts payable |
253,424 | | 2,186 | 85,926 | 165,312 | |||||||||||||||
Accrued expenses |
202,644 | (269,021 | ) | 564 | 95,970 | 375,131 | ||||||||||||||
Current portion of long-term debt |
10,593 | | | 1,264 | 9,329 | |||||||||||||||
Liabilities held for sale |
79,455 | | | 79,455 | | |||||||||||||||
Total current liabilities |
1,961,006 | (269,021 | ) | 27,750 | 1,121,171 | 1,081,106 | ||||||||||||||
Long-term debt |
769,285 | (77,593 | ) | 657,884 | 49,689 | 139,305 | ||||||||||||||
Deferred tax liabilities |
178,406 | | | 165,666 | 12,740 | |||||||||||||||
Other long-term liabilities |
115,282 | | | 99,238 | 16,044 | |||||||||||||||
Total liabilities |
3,023,979 | (346,614 | ) | 685,634 | 1,435,764 | 1,249,195 | ||||||||||||||
Total equity |
1,045,853 | (1,134,945 | ) | 1,045,853 | 769,939 | 365,006 | ||||||||||||||
Total liabilities and equity |
$ | 4,069,832 | $ | (1,481,559 | ) | $ | 1,731,487 | $ | 2,205,703 | $ | 1,614,201 | |||||||||
17
Penske | ||||||||||||||||||||
Total | Automotive | Guarantor | Non-Guarantor | |||||||||||||||||
Company | Eliminations | Group | Subsidiaries | Subsidiaries | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Revenues |
$ | 2,888,420 | $ | | $ | | $ | 1,659,489 | $ | 1,228,931 | ||||||||||
Cost of sales |
2,424,780 | | | 1,372,419 | 1,052,361 | |||||||||||||||
Gross profit |
463,640 | | | 287,070 | 176,570 | |||||||||||||||
Selling, general and administrative expenses |
380,350 | | 4,790 | 232,097 | 143,463 | |||||||||||||||
Depreciation |
12,093 | | 257 | 6,538 | 5,298 | |||||||||||||||
Operating income (loss) |
71,197 | | (5,047 | ) | 48,435 | 27,809 | ||||||||||||||
Floor plan interest expense |
(7,113 | ) | | (329 | ) | (3,458 | ) | (3,326 | ) | |||||||||||
Other interest expense |
(10,575 | ) | | (5,818 | ) | (638 | ) | (4,119 | ) | |||||||||||
Debt discount amortization |
| | | | | |||||||||||||||
Equity in earnings of affiliates |
7,882 | | 6,121 | | 1,761 | |||||||||||||||
Equity in earnings of subsidiaries |
| (65,965 | ) | 65,965 | | | ||||||||||||||
Income (loss) from continuing operations
before income taxes |
61,391 | (65,965 | ) | 60,892 | 44,339 | 22,125 | ||||||||||||||
Income taxes |
(20,996 | ) | 22,745 | (20,996 | ) | (16,296 | ) | (6,449 | ) | |||||||||||
Income (loss) from continuing operations |
40,395 | (43,220 | ) | 39,896 | 28,043 | 15,676 | ||||||||||||||
(Loss) income from discontinued operations,
net of tax |
(336 | ) | 336 | (336 | ) | (336 | ) | | ||||||||||||
Net income (loss) |
40,059 | (42,884 | ) | 39,560 | 27,707 | 15,676 | ||||||||||||||
Less: Income attributable to non-
controlling interests |
499 | | | | 499 | |||||||||||||||
Net income (loss) attributable to Penske
Automotive Group common
stockholders |
$ | 39,560 | $ | (42,884 | ) | $ | 39,560 | $ | 27,707 | $ | 15,177 | |||||||||
18
Penske | ||||||||||||||||||||
Total | Automotive | Guarantor | Non-Guarantor | |||||||||||||||||
Company | Eliminations | Group | Subsidiaries | Subsidiaries | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Revenues |
$ | 2,614,602 | $ | | $ | | $ | 1,529,401 | $ | 1,085,201 | ||||||||||
Cost of sales |
2,197,796 | | | 1,272,432 | 925,364 | |||||||||||||||
Gross profit |
416,806 | | | 256,969 | 159,837 | |||||||||||||||
Selling, general and administrative expenses |
339,676 | | 3,497 | 209,910 | 126,269 | |||||||||||||||
Depreciation |
11,516 | | 300 | 6,446 | 4,770 | |||||||||||||||
Operating income (loss) |
65,614 | | (3,797 | ) | 40,613 | 28,798 | ||||||||||||||
Floor plan interest expense |
(7,983 | ) | | | (5,829 | ) | (2,154 | ) | ||||||||||||
Other interest expense |
(12,542 | ) | | (8,343 | ) | (33 | ) | (4,166 | ) | |||||||||||
Debt discount amortization |
(2,428 | ) | | (2,428 | ) | | | |||||||||||||
Equity in earnings of affiliates |
4,784 | | 3,937 | | 847 | |||||||||||||||
Gain on debt repurchase |
422 | | 422 | | | |||||||||||||||
Equity in earnings of subsidiaries |
| (57,833 | ) | 57,833 | | | ||||||||||||||
Income (loss) from continuing operations
before income taxes |
47,867 | (57,833 | ) | 47,624 | 34,751 | 23,325 | ||||||||||||||
Income taxes |
(16,628 | ) | 20,192 | (16,628 | ) | (13,554 | ) | (6,638 | ) | |||||||||||
Income (loss) from continuing operations |
31,239 | (37,641 | ) | 30,996 | 21,197 | 16,687 | ||||||||||||||
(Loss) income from discontinued operations,
net of tax |
(1,555 | ) | 1,555 | (1,555 | ) | (1,555 | ) | | ||||||||||||
Net income (loss) |
29,684 | (36,086 | ) | 29,441 | 19,642 | 16,687 | ||||||||||||||
Less: Income attributable to non-
controlling interests |
243 | | | | 243 | |||||||||||||||
Net income (loss) attributable to Penske
Automotive Group common
stockholders |
$ | 29,441 | $ | (36,086 | ) | $ | 29,441 | $ | 19,642 | $ | 16,444 | |||||||||
19
Penske | ||||||||||||||||||||
Total | Automotive | Guarantor | Non-Guarantor | |||||||||||||||||
Company | Eliminations | Group | Subsidiaries | Subsidiaries | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Revenues |
$ | 5,683,907 | $ | | $ | | $ | 3,227,865 | $ | 2,456,042 | ||||||||||
Cost of sales |
4,775,190 | | | 2,678,525 | 2,096,665 | |||||||||||||||
Gross profit |
908,717 | | | 549,340 | 359,377 | |||||||||||||||
Selling, general and administrative expenses |
738,462 | | 9,739 | 446,030 | 282,693 | |||||||||||||||
Depreciation |
24,031 | | 542 | 12,893 | 10,596 | |||||||||||||||
Operating income (loss) |
146,224 | | (10,281 | ) | 90,417 | 66,088 | ||||||||||||||
Floor plan interest expense |
(14,131 | ) | | (462 | ) | (7,370 | ) | (6,299 | ) | |||||||||||
Other interest expense |
(21,976 | ) | | (12,234 | ) | (1,249 | ) | (8,493 | ) | |||||||||||
Debt discount amortization |
(1,718 | ) | | (1,718 | ) | | | |||||||||||||
Equity in earnings of affiliates |
7,904 | | 7,352 | | 552 | |||||||||||||||
Equity in earnings of subsidiaries |
| (133,077 | ) | 133,077 | | | ||||||||||||||
Income (loss) from continuing operations
before income taxes |
116,303 | (133,077 | ) | 115,734 | 81,798 | 51,848 | ||||||||||||||
Income taxes |
(37,784 | ) | 43,446 | (37,784 | ) | (28,714 | ) | (14,732 | ) | |||||||||||
Income (loss) from continuing operations |
78,519 | (89,631 | ) | 77,950 | 53,084 | 37,116 | ||||||||||||||
(Loss) income from discontinued operations,
net of tax |
(4,463 | ) | 4,463 | (4,463 | ) | (4,463 | ) | | ||||||||||||
Net income (loss) |
74,056 | (85,168 | ) | 73,487 | 48,621 | 37,116 | ||||||||||||||
Less: Income attributable to non-
controlling interests |
569 | | | | 569 | |||||||||||||||
Net income (loss) attributable to Penske
Automotive Group common
stockholders |
$ | 73,487 | $ | (85,168 | ) | $ | 73,487 | $ | 48,621 | $ | 36,547 | |||||||||
20
Penske | ||||||||||||||||||||
Total | Automotive | Guarantor | Non-Guarantor | |||||||||||||||||
Company | Eliminations | Group | Subsidiaries | Subsidiaries | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Revenues |
$ | 5,038,789 | $ | | $ | | $ | 2,856,374 | $ | 2,182,415 | ||||||||||
Cost of sales |
4,221,931 | | | 2,367,531 | 1,854,400 | |||||||||||||||
Gross profit |
816,858 | | | 488,843 | 328,015 | |||||||||||||||
Selling, general and administrative expenses |
666,039 | | 8,075 | 403,466 | 254,498 | |||||||||||||||
Depreciation |
23,374 | | 590 | 12,890 | 9,894 | |||||||||||||||
Operating income (loss) |
127,445 | | (8,665 | ) | 72,487 | 63,623 | ||||||||||||||
Floor plan interest expense |
(16,125 | ) | | | (11,511 | ) | (4,614 | ) | ||||||||||||
Other interest expense |
(25,262 | ) | | (16,390 | ) | (589 | ) | (8,283 | ) | |||||||||||
Debt discount amortization |
(5,343 | ) | | (5,343 | ) | | | |||||||||||||
Equity in earnings of affiliates |
4,355 | | 4,283 | | 72 | |||||||||||||||
Gain on debt repurchase |
1,027 | | 1,027 | | | |||||||||||||||
Equity in earnings of subsidiaries |
| (110,964 | ) | 110,964 | | | ||||||||||||||
Income (loss) from continuing operations
before income taxes |
86,097 | (110,964 | ) | 85,876 | 60,387 | 50,798 | ||||||||||||||
Income taxes |
(30,878 | ) | 39,899 | (30,878 | ) | (25,754 | ) | (14,145 | ) | |||||||||||
Income (loss) from continuing operations |
55,219 | (71,065 | ) | 54,998 | 34,633 | 36,653 | ||||||||||||||
(Loss) income from discontinued operations,
net of tax |
(5,203 | ) | 5,203 | (5,203 | ) | (5,203 | ) | | ||||||||||||
Net income (loss) |
50,016 | (65,862 | ) | 49,795 | 29,430 | 36,653 | ||||||||||||||
Less: Income attributable to non-
controlling interests |
221 | | | | 221 | |||||||||||||||
Net income (loss) attributable to Penske
Automotive Group common
stockholders |
$ | 49,795 | $ | (65,862 | ) | $ | 49,795 | $ | 29,430 | $ | 36,432 | |||||||||
21
Penske | ||||||||||||||||
Total | Automotive | Guarantor | Non-Guarantor | |||||||||||||
Company | Group | Subsidiaries | Subsidiaries | |||||||||||||
(In thousands) | ||||||||||||||||
Net cash from continuing operating activities |
$ | 43,990 | $ | 84,594 | $ | 5,591 | $ | (46,195 | ) | |||||||
Investing activities: |
||||||||||||||||
Purchase of equipment and improvements |
(51,784 | ) | (1,308 | ) | (27,754 | ) | (22,722 | ) | ||||||||
Dealership acquisitions, net |
(14,011 | ) | | (12,331 | ) | (1,680 | ) | |||||||||
Other |
2,865 | | | 2,865 | ||||||||||||
Net cash from continuing investing activities |
(62,930 | ) | (1,308 | ) | (40,085 | ) | (21,537 | ) | ||||||||
Financing activities: |
||||||||||||||||
Repurchase of 3.5% senior subordinated convertible notes |
(87,278 | ) | (87,278 | ) | | | ||||||||||
Net borrowings (repayments) of other long-term debt |
15,372 | | 23,215 | (7,843 | ) | |||||||||||
Net borrowings (repayments) of floor plan notes payable
non-trade |
70,311 | 20,200 | (30,056 | ) | 80,167 | |||||||||||
Proceeds from exercises of options, including excess tax benefit |
2,698 | 2,698 | | | ||||||||||||
Repurchases of common stock |
(12,413 | ) | (12,413 | ) | | | ||||||||||
Dividends |
(6,493 | ) | (6,493 | ) | | | ||||||||||
Distributions from (to) parent |
| | 4,245 | (4,245 | ) | |||||||||||
Net cash from continuing financing activities |
(17,803 | ) | (83,286 | ) | (2,596 | ) | 68,079 | |||||||||
Net cash from discontinued operations |
22,221 | | 22,221 | | ||||||||||||
Net change in cash and cash equivalents |
(14,522 | ) | | (14,869 | ) | 347 | ||||||||||
Cash and cash equivalents, beginning of period |
17,868 | | 16,324 | 1,544 | ||||||||||||
Cash and cash equivalents, end of period |
$ | 3,346 | $ | | $ | 1,455 | $ | 1,891 | ||||||||
22
Penske | ||||||||||||||||
Total | Automotive | Guarantor | Non-Guarantor | |||||||||||||
Company | Group | Subsidiaries | Subsidiaries | |||||||||||||
(In thousands) | ||||||||||||||||
Net cash from continuing operating activities |
$ | 57,526 | $ | 55,493 | $ | (35,703 | ) | $ | 37,736 | |||||||
Investing activities: |
||||||||||||||||
Purchase of equipment and improvements |
(35,989 | ) | | (26,176 | ) | (9,813 | ) | |||||||||
Dealership acquisitions, net |
(9,362 | ) | | (9,362 | ) | | ||||||||||
Other |
| | 83 | (83 | ) | |||||||||||
Net cash from continuing investing activities |
(45,351 | ) | | (35,455 | ) | (9,896 | ) | |||||||||
Financing activities: |
||||||||||||||||
Repurchase of 3.5% senior subordinated convertible notes |
(113,604 | ) | (113,604 | ) | | | ||||||||||
Net borrowings (repayments) of other long-term debt |
18,503 | 28,000 | 7,739 | (17,236 | ) | |||||||||||
Net borrowings (repayments) of floor plan notes payable
non-trade |
73,592 | 29,900 | 51,354 | (7,662 | ) | |||||||||||
Proceeds from exercises of options, including excess tax benefit |
211 | 211 | | | ||||||||||||
Distributions from (to) parent |
| | 473 | (473 | ) | |||||||||||
Net cash from continuing financing activities |
(21,298 | ) | (55,493 | ) | 59,566 | (25,371 | ) | |||||||||
Net cash from discontinued operations |
12,717 | | 12,717 | | ||||||||||||
Net change in cash and cash equivalents |
3,594 | | 1,125 | 2,469 | ||||||||||||
Cash and cash equivalents, beginning of period |
14,584 | | 12,929 | 1,655 | ||||||||||||
Cash and cash equivalents, end of period |
$ | 18,178 | $ | | $ | 14,054 | $ | 4,124 | ||||||||
23
24
25
26
2011 vs. 2010 | ||||||||||||||||
Dollars in millions, except per unit amounts | 2011 | 2010 | Change | % Change | ||||||||||||
New retail unit sales |
37,830 | 38,238 | (408 | ) | -1.1 | % | ||||||||||
Same store new retail unit sales |
37,231 | 38,238 | (1,007 | ) | -2.6 | % | ||||||||||
New retail sales revenue |
$ | 1,422.3 | $ | 1,314.9 | 107.4 | 8.2 | % | |||||||||
Same store new retail sales revenue |
$ | 1,396.8 | $ | 1,314.9 | 81.9 | 6.2 | % | |||||||||
New retail sales revenue per unit |
$ | 37,596 | $ | 34,387 | 3,209 | 9.3 | % | |||||||||
Same store new retail sales revenue per unit |
$ | 37,517 | $ | 34,387 | 3,130 | 9.1 | % | |||||||||
Gross profit new |
$ | 120.9 | $ | 108.7 | 12.2 | 11.2 | % | |||||||||
Same store gross profit new |
$ | 118.8 | $ | 108.7 | 10.1 | 9.3 | % | |||||||||
Average gross profit per new vehicle retailed |
$ | 3,196 | $ | 2,842 | 354 | 12.5 | % | |||||||||
Same store average gross profit per new vehicle retailed |
$ | 3,191 | $ | 2,842 | 349 | 12.3 | % | |||||||||
Gross margin % new |
8.5 | % | 8.3 | % | 0.2 | % | 2.4 | % | ||||||||
Same store gross margin % new |
8.5 | % | 8.3 | % | 0.2 | % | 2.4 | % |
27
2011 vs. 2010 | ||||||||||||||||
Dollars in millions, except per unit amounts | 2011 | 2010 | Change | % Change | ||||||||||||
Used retail unit sales |
33,043 | 28,466 | 4,577 | 16.1 | % | |||||||||||
Same store used retail unit sales |
32,524 | 28,466 | 4,058 | 14.3 | % | |||||||||||
Used retail sales revenue |
$ | 879.9 | $ | 736.3 | 143.6 | 19.5 | % | |||||||||
Same store used retail sales revenue |
$ | 866.2 | $ | 736.3 | 129.9 | 17.6 | % | |||||||||
Used retail sales revenue per unit |
$ | 26,629 | $ | 25,867 | 762 | 2.9 | % | |||||||||
Same store used retail sales revenue per unit |
$ | 26,632 | $ | 25,867 | 765 | 3.0 | % | |||||||||
Gross profit used |
$ | 72.5 | $ | 58.9 | 13.6 | 23.1 | % | |||||||||
Same store gross profit used |
$ | 71.3 | $ | 58.9 | 12.4 | 21.1 | % | |||||||||
Average gross profit per used vehicle retailed |
$ | 2,194 | $ | 2,070 | 124 | 6.0 | % | |||||||||
Same store average gross profit per used vehicle retailed |
$ | 2,193 | $ | 2,070 | 123 | 5.9 | % | |||||||||
Gross margin % used |
8.2 | % | 8.0 | % | 0.2 | % | 2.5 | % | ||||||||
Same store gross margin % used |
8.2 | % | 8.0 | % | 0.2 | % | 2.5 | % |
28
2011 vs. 2010 | ||||||||||||||||
Dollars in millions, except per unit amounts | 2011 | 2010 | Change | % Change | ||||||||||||
Finance and insurance revenue |
$ | 69.2 | $ | 61.7 | $ | 7.5 | 12.2 | % | ||||||||
Same store finance and insurance revenue |
$ | 68.3 | $ | 61.7 | $ | 6.6 | 10.7 | % | ||||||||
Finance and insurance revenue per unit |
$ | 976 | $ | 924 | $ | 52 | 5.6 | % | ||||||||
Same store finance and insurance revenue per unit |
$ | 980 | $ | 924 | $ | 56 | 6.1 | % |
2011 vs. 2010 | ||||||||||||||||
Dollars in millions, except per unit amounts | 2011 | 2010 | Change | % Change | ||||||||||||
Service and parts revenue |
$ | 348.0 | $ | 323.8 | 24.2 | 7.5 | % | |||||||||
Same store service and parts revenue |
$ | 343.3 | $ | 323.8 | 19.5 | 6.0 | % | |||||||||
Gross profit |
$ | 199.0 | $ | 185.3 | 13.7 | 7.4 | % | |||||||||
Same store gross profit |
$ | 196.4 | $ | 185.3 | 11.1 | 6.0 | % | |||||||||
Gross margin |
57.2 | % | 57.2 | % | 0.0 | % | 0.0 | % | ||||||||
Same store gross margin |
57.2 | % | 57.2 | % | 0.0 | % | 0.0 | % |
29
30
2011 vs. 2010 | ||||||||||||||||
Dollars in millions, except per unit amounts | 2011 | 2010 | Change | % Change | ||||||||||||
New retail unit sales |
76,703 | 73,307 | 3,396 | 4.6 | % | |||||||||||
Same store new retail unit sales |
73,543 | 72,200 | 1,343 | 1.9 | % | |||||||||||
New retail sales revenue |
$ | 2,823.6 | $ | 2,516.8 | 306.8 | 12.2 | % | |||||||||
Same store new retail sales revenue |
$ | 2,701.0 | $ | 2,479.7 | 221.3 | 8.9 | % | |||||||||
New retail sales revenue per unit |
$ | 36,812 | $ | 34,332 | 2,480 | 7.2 | % | |||||||||
Same store new retail sales revenue per unit |
$ | 36,727 | $ | 34,345 | 2,382 | 6.9 | % | |||||||||
Gross profit new |
$ | 232.2 | $ | 208.0 | 24.2 | 11.6 | % | |||||||||
Same store gross profit new |
$ | 222.4 | $ | 204.6 | 17.8 | 8.7 | % | |||||||||
Average gross profit per new vehicle retailed |
$ | 3,028 | $ | 2,837 | 191 | 6.7 | % | |||||||||
Same store average gross profit per new vehicle retailed |
$ | 3,024 | $ | 2,834 | 190 | 6.7 | % | |||||||||
Gross margin % new |
8.2 | % | 8.3 | % | -0.1 | % | -1.2 | % | ||||||||
Same store gross margin % new |
8.2 | % | 8.3 | % | -0.1 | % | -1.2 | % |
31
2011 vs. 2010 | ||||||||||||||||
Dollars in millions, except per unit amounts | 2011 | 2010 | Change | % Change | ||||||||||||
Used retail unit sales |
63,954 | 54,569 | 9,385 | 17.2 | % | |||||||||||
Same store used retail unit sales |
61,131 | 53,825 | 7,306 | 13.6 | % | |||||||||||
Used retail sales revenue |
$ | 1,692.5 | $ | 1,421.5 | 271.0 | 19.1 | % | |||||||||
Same store used retail sales revenue |
$ | 1,624.4 | $ | 1,405.0 | 219.4 | 15.6 | % | |||||||||
Used retail sales revenue per unit |
$ | 26,464 | $ | 26,049 | 415 | 1.6 | % | |||||||||
Same store used retail sales revenue per unit |
$ | 26,573 | $ | 26,103 | 470 | 1.8 | % | |||||||||
Gross profit used |
$ | 138.4 | $ | 114.8 | 23.6 | 20.6 | % | |||||||||
Same store gross profit used |
$ | 134.2 | $ | 114.3 | 19.9 | 17.4 | % | |||||||||
Average gross profit per used vehicle retailed |
$ | 2,164 | $ | 2,104 | 60 | 2.9 | % | |||||||||
Same store average gross profit per used vehicle retailed |
$ | 2,195 | $ | 2,124 | 71 | 3.3 | % | |||||||||
Gross margin % used |
8.2 | % | 8.1 | % | 0.1 | % | 1.2 | % | ||||||||
Same store gross margin % used |
8.3 | % | 8.1 | % | 0.2 | % | 2.5 | % |
2011 vs. 2010 | ||||||||||||||||
Dollars in millions, except per unit amounts | 2011 | 2010 | Change | % Change | ||||||||||||
Finance and insurance revenue |
$ | 135.7 | $ | 119.6 | $ | 16.1 | 13.5 | % | ||||||||
Same store finance and insurance revenue |
$ | 132.0 | $ | 118.4 | $ | 13.6 | 11.5 | % | ||||||||
Finance and insurance revenue per unit |
$ | 965 | $ | 935 | $ | 30 | 3.2 | % | ||||||||
Same store finance and insurance revenue per unit |
$ | 980 | $ | 940 | $ | 40 | 4.3 | % |
32
2011 vs. 2010 | ||||||||||||||||
Dollars in millions, except per unit amounts | 2011 | 2010 | Change | % Change | ||||||||||||
Service and parts revenue |
$ | 696.2 | $ | 649.6 | 46.6 | 7.2 | % | |||||||||
Same store service and parts revenue |
$ | 670.3 | $ | 642.7 | 27.6 | 4.3 | % | |||||||||
Gross profit |
$ | 397.2 | $ | 368.5 | 28.7 | 7.8 | % | |||||||||
Same store gross profit |
$ | 382.7 | $ | 364.6 | 18.1 | 5.0 | % | |||||||||
Gross margin |
57.1 | % | 56.7 | % | 0.4 | % | 0.7 | % | ||||||||
Same store gross margin |
57.1 | % | 56.7 | % | 0.4 | % | 0.7 | % |
33
34
35
36
37
Six Months Ended June 30, | ||||||||
Dollars in millions | 2011 | 2010 | ||||||
Net cash from continuing operating activities as reported |
$ | 44.0 | $ | 57.5 | ||||
Floor plan notes payable non-trade as reported |
70.3 | 73.6 | ||||||
Net cash from continuing operating activities including all floor plan notes payable |
$ | 114.3 | $ | 131.1 | ||||
38
39
Ownership | ||||||
Location | Dealerships | Interest | ||||
Fairfield, Connecticut |
Audi, Mercedes-Benz, Porsche, smart | 86.56% (A | ) (B) | |||
Las Vegas, Nevada |
Ferrari, Maserati | 50.00% | (C) | |||
Frankfurt, Germany |
Lexus, Toyota | 50.00% | (C) | |||
Aachen, Germany |
Audi, Lexus, Skoda, Toyota, Volkswagen, Citroën | 50.00% | (C) |
(A) | An entity controlled by one of our directors, Lucio A. Noto (the Investor), owns a 13.44% interest
in this joint venture which entitles the Investor to 20% of the joint ventures operating profits.
In addition, the Investor has an option to purchase up to a 20% interest in the joint venture for
specified amounts. |
|
(B) | Entity is consolidated in our financial statements. |
|
(C) | Entity is accounted for using the equity method of accounting. |
40
| our future financial and operating performance; |
||
| future acquisitions and dispositions; |
||
| future potential capital expenditures and securities repurchases; |
||
| our ability to realize cost savings and synergies; |
||
| our ability to respond to economic cycles; |
||
| trends in the automotive retail industry and in the general economy in the
various countries in which we operate; |
||
| our ability to access the remaining availability under our credit agreements; |
||
| our liquidity; |
||
| performance of joint ventures, including PTL; |
||
| future foreign exchange rates; |
||
| the outcome of various legal proceedings; |
||
| trends affecting our future financial condition or results of operations; and |
||
| our business strategy. |
| our business and the automotive retail industry in general are susceptible to
adverse economic conditions, including changes in interest rates, foreign exchange
rates, consumer demand, consumer confidence, fuel prices, unemployment rates and
credit availability; |
||
| the number of new and used vehicles sold in our markets; |
||
| automobile manufacturers exercise significant control over our operations, and we
depend on them in order to operate our business; |
||
| we depend on the success and popularity of the brands we sell, and adverse
conditions affecting one or more automobile manufacturers, such as the impact on the
vehicle and parts supply chain due to the earthquake and tsunami that struck Japan
in March 2011, may negatively impact our revenues and profitability; |
||
| a restructuring of any significant automotive manufacturers or automotive
suppliers; |
||
| our dealership operations may be affected by severe weather or other periodic
business interruptions; |
||
| we may not be able to satisfy our capital requirements for acquisitions,
dealership renovation projects, financing the purchase of our inventory, or
refinancing of our debt when it becomes due; |
||
| our level of indebtedness may limit our ability to obtain financing generally and
may require that a significant portion of our cash flow be used for debt service; |
||
| non-compliance with the financial ratios and other covenants under our credit
agreements and operating leases; |
41
| our operations outside of the U.S. subject our profitability to fluctuations
relating to changes in foreign currency valuations; |
||
| import product restrictions and foreign trade risks that may impair our ability
to sell foreign vehicles profitably; |
||
| with respect to PTL, changes in the financial health of its customers, labor
strikes or work stoppages by its employees, a reduction in PTLs asset utilization
rates and industry competition which could impact distributions to us; |
||
| we are dependent on continued availability of our information technology systems; |
||
| if we lose key personnel, especially our Chief Executive Officer, or are unable
to attract additional qualified personnel; |
||
| new or enhanced regulations relating to automobile dealerships; |
||
| changes in tax, financial or regulatory rules or requirements; |
||
| we are subject to numerous legal and administrative proceedings which, if the
outcomes are adverse to us, could have a material adverse effect on our business; |
||
| if state dealer laws in the U.S. are repealed or weakened, our automotive
dealerships may be subject to increased competition and may be more susceptible to
termination, non-renewal or renegotiation of their franchise agreements; and |
||
| some of our directors and officers may have conflicts of interest with respect to
certain related party transactions and other business interests. |
| the price of our common stock is subject to substantial fluctuation, which may be
unrelated to our performance; and |
||
| shares eligible for future sale, or issuable under the terms of our convertible
notes, may cause the market price of our common stock to drop significantly, even if
our business is doing well. |
42
| the maintenance of our overall debt portfolio with targeted fixed and
variable rate components; |
||
| the use of authorized derivative instruments; |
||
| the prohibition of using derivatives for trading or other speculative
purposes; and |
||
| the prohibition of highly leveraged derivatives or derivatives which we
are unable to reliably value, or for which we are unable to obtain a market
quotation. |
43
Total Number of | Approximate Dollar | |||||||||||||||
Shares Purchased as | Value of Shares | |||||||||||||||
Part of Publicly | that May Yet be | |||||||||||||||
Total Number of | Average Price Paid | Announced Plans | Purchased Under | |||||||||||||
Period | Shares Purchased (1) | per Share | or Programs | the Plans or Program | ||||||||||||
April 1 to April 30, 2011 |
| $ | | | $ | 150,000,000 | ||||||||||
May 1 to May 31, 2011 |
| | | 150,000,000 | ||||||||||||
June 1 to June 30, 2011 |
618,209 | 20.08 | 568,742 | 138,580,578 | ||||||||||||
618,209 | $ | 20.08 | 568,742 | |||||||||||||
(1) | Includes shares withheld from employees to satisfy employee withholding taxes in connection with the vesting of restricted stock. |
44
10.1 | Asset Purchase Agreement dated June 16, 2011 between smart USA
Distributor LLC and Daimler Vehicle Innovations USA LLC. |
|||
10.2 | Relocation Agreement with respect to David K. Jones dated August 1, 2011. |
|||
12 | Computation of Ratio of Earnings to Fixed Charges |
|||
31.1 | Rule 13(a)-14(a)/15(d)-14(a) Certification. |
|||
31.2 | Rule 13(a)-14(a)/15(d)-14(a) Certification. |
|||
32 | Section 1350 Certification. |
|||
101.INS | XBRL Instance Document. |
|||
101.SCH | XBRL Taxonomy Extension Schema Document. |
|||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |
|||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
|||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
|||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
45
PENSKE AUTOMOTIVE GROUP, INC. |
||||
Date: August 2, 2011 | By: | /s/ Roger S. Penske | ||
Roger S. Penske | ||||
Chief Executive Officer |
Date: August 2, 2011 | By: | /s/ David K. Jones | ||
David K. Jones | ||||
Chief Financial Officer |
46
Exhibit | ||||
No. | Description | |||
10.1 | Asset Purchase Agreement dated June 16, 2011 between
smart USA Distributor LLC and Daimler Vehicle
Innovations USA LLC. |
|||
10.2 | Relocation Agreement with respect to David K. Jones dated August 1, 2011. |
|||
12 | Computation of Ratio of Earnings to Fixed Charges. |
|||
31.1 | Rule 13(a)-14(a)/15(d)-14(a) Certification. |
|||
31.2 | Rule 13(a)-14(a)/15(d)-14(a) Certification. |
|||
32 | Section 1350 Certification. |
|||
101.INS | XBRL Instance Document. |
|||
101.SCH | XBRL Taxonomy Extension Schema Document. |
|||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document. |
|||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document. |
|||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
|||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document. |
A. | smart USA currently holds the exclusive distribution rights for new smart fortwo vehicles,
parts and accessories within the United States and Puerto Rico (the Distribution
Rights) pursuant to a Distributor Agreement dated October 31, 2006 and related documents
between smart USA and Daimler AG (Daimler) as successor to smart GmbH (the
Distributor Agreement); |
B. | The parties wish to enter into this Agreement which will govern the terms and conditions of
the sale of certain smart USA assets and the assumption of certain liabilities by DVIUSA which
relate to smart USA. |
2
3
4
(a) | At the Closing, DVIUSA shall pay to smart USA an amount equal to the
sum of the following: (i) the purchase price of the New Vehicles calculated in
accordance with Section 4.1(b) and the costs noted in Section 4.1(e); (ii) the
Other Payments; and (iii) Ninety Percent (90%) of the purchase price for the assets
noted in Sections 4.1(a), (c), and (d). |
||
(b) | Within 90 days of the Closing, the parties shall have a final
reconciliation of any amounts owed pursuant to this Agreement. DVIUSA shall pay to
smart USA an amount equal to the remaining Ten Percent (10%) of the purchase price
for the assets noted in Sections 4.1(a), (c), and (d) (the Subsequent
Closing). To the extent the parties identify additional or missing Acquired
Assets or unreimbursed amounts owing in relation to the Other Payments or otherwise
hereunder, such amounts shall be credited or paid at the Subsequent Closing. The
parties shall make reasonable efforts to have a final reconciliation of such
amounts at such time. |
||
(c) | Unless otherwise agreed to by the Parties in writing, all obligations
of DVIUSA to purchase any assets pursuant to this Asset Purchase Agreement shall
cease after the conclusion of the Subsequent Closing. |
5
6
7
8
9
10
11
12
13
14
smart USA Distributor LLC
|
Daimler Vehicle Innovations USA LLC | |||||
/s/ Jill Lajdziak
|
/s/ Herbert Werner
|
|||||
Its: President
|
Its: | |||||
Date: 6/16/11
|
Date: 6/16/11 | |||||
/s/ Charles Shady
|
||||||
Its: General Counsel | ||||||
Date: 6/16/11 | ||||||
/s/ Ernst H. Lieb
|
||||||
Its: President & CEO | ||||||
Date: 6/16/11 |
15
| I understand that the relocation benefits that have been
and/or are extended by my employer to me are conditional upon
my continued employment with my employer for a minimum of
three (3) years from the date hereof (the transfer date).
Relocation benefits shall consist of a lump sum payment of
four hundred thousand dollars ($400,000). Employee shall be
responsible for any and all taxes associated with the
relocation benefits. This sum shall constitute full and total
reimbursement for costs associated with my relocation from
New Jersey to Michigan. |
|
| I understand that in the event that I voluntarily terminate
my employment, or if my employment is terminated for cause,
within this three year period from my effective transfer
date, I hereby promise to reimburse PAG for the relocation
benefits distributed to me or on my behalf for my relocation
within 30 days after termination of my employment, according
to the following schedule: |
|
| If I terminate my employment, or if my employment is
terminated for cause, prior to twelve (12) months from my
effective transfer date, I promise to reimburse PAG for 100%
of the full amount of financial assistance provided. |
|
| If I terminate my employment, or if my employment is
terminated for cause, between twelve (12) months and prior
to two (2) years from my effective transfer date, I promise
to repay PAG for 66% of the financial assistance provided. |
|
| If I terminate my employment, or if my employment is
terminated for cause, between twenty-four (24) months and
prior to three (3) years of my transfer date, I promise to
repay PAG for 33% of the financial assistance provided. |
(a) | My conviction of, plea of guilty or nolo contendere to, or
confession of any crime (whether or not involving my employer) involving an act of
moral turpitude or which constitutes a felony in the jurisdiction involved. |
||
(b) | Any act of theft, fraud, misappropriation of funds or embezzlement by
me in connection with my work with my employer or its affiliate, or any other act
or acts of dishonesty or other conduct on my part resulting, or intended, or
tending to result, directly or indirectly in substantial financial loss to my
employer. |
||
(c) | My failure to comply with the PAG Code of Conduct. |
(d) | My refusal or failure to follow directions of my employers Chief
Executive Officer or designee or failure to devote my best efforts to my assigned
duties. For purposes of this Agreement, best efforts means that I shall
contribute my best professional skills and services on a full-time basis for the
business and benefit of PAG. |
||
(e) | Any other act or event that state statutory or common law has
recognized as good cause for terminating employment. |
Employee Name: (Please Print):
Signature:
|
David K. Jones
|
|||
Date:
|
August 1, 2011 | |||
Management Signature:
|
/s/ Randall W. Johnson | |||
Date:
|
August 1, 2011 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||
June 30, | June 30, | Year Ended December 31, | |||||||||||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||||||||||||
Income from continuing operations
before
undistributed earnings of equity
method
investments, amortization of
capitalized
interest, and taxes |
$ | 61.4 | 47.9 | 116.3 | 86.1 | 194.9 | 128.6 | (553.8 | ) | 177.8 | 184.9 | ||||||||||||||||||||||||||
Less undistributed earnings of
equity
method investments |
$ | (7.9 | ) | (4.8 | ) | (7.9 | ) | (4.4 | ) | (20.6 | ) | (13.8 | ) | (16.5 | ) | (4.1 | ) | (8.2 | ) | ||||||||||||||||||
Plus distributed earnings of equity
method investments |
$ | 0.3 | 0.5 | 8.5 | 9.4 | 9.9 | 21.3 | 3.5 | 6.2 | 0.3 | |||||||||||||||||||||||||||
Plus amortization of capitalized
interest |
$ | 0.2 | 0.2 | 0.4 | 0.4 | 0.8 | 0.8 | 0.8 | 0.6 | 0.5 | |||||||||||||||||||||||||||
$ | 54.0 | 43.8 | 117.3 | 91.5 | 185.0 | 136.9 | (566.0 | ) | 180.5 | 177.5 | |||||||||||||||||||||||||||
Plus: |
|||||||||||||||||||||||||||||||||||||
Fixed charges: |
|||||||||||||||||||||||||||||||||||||
Other interest expense (includes
amortization of deferred
financing costs) |
$ | 10.6 | 12.5 | 22.0 | 25.3 | 49.3 | 55.2 | 54.5 | 55.3 | 48.4 | |||||||||||||||||||||||||||
Debt discount amortization |
$ | | 2.4 | 1.7 | 5.3 | 8.6 | 13.0 | 14.0 | 13.0 | 11.1 | |||||||||||||||||||||||||||
Floor plan interest expense |
$ | 7.1 | 8.0 | 14.1 | 16.1 | 33.8 | 34.2 | 61.9 | 70.7 | 56.4 | |||||||||||||||||||||||||||
Capitalized interest |
$ | 0.1 | 0.1 | 0.2 | 0.2 | 0.5 | 0.9 | 4.8 | 5.5 | 7.1 | |||||||||||||||||||||||||||
Interest factor in rental expense |
$ | 14.2 | 13.2 | 28.2 | 26.4 | 54.1 | 52.1 | 51.2 | 48.4 | 42.0 | |||||||||||||||||||||||||||
Total fixed charges |
$ | 32.0 | 36.2 | 66.2 | 73.3 | 146.3 | 155.4 | 186.4 | 192.9 | 165.0 | |||||||||||||||||||||||||||
Less: |
|||||||||||||||||||||||||||||||||||||
Capitalized interest |
$ | 0.2 | 0.1 | 0.2 | 0.2 | 0.5 | 0.9 | 4.8 | 5.5 | 7.1 | |||||||||||||||||||||||||||
Earnings |
$ | 85.8 | 79.9 | 183.3 | 164.6 | 330.8 | 291.4 | (384.4 | ) | 367.9 | 335.4 | ||||||||||||||||||||||||||
Ratio of earnings to fixed charges
(a) |
2.7 | 2.2 | 2.8 | 2.2 | 2.3 | 1.9 | | 1.9 | 2.0 | ||||||||||||||||||||||||||||
(a) | In the year ended December 31, 2008, earnings were insufficient to cover fixed
charges by $534.2 million due to a non-cash impairment charge of $643.5 million. |
/s/ Roger S. Penske | ||||
Roger S. Penske | ||||
Chief Executive Officer | ||||
August 2, 2011 |
/s/ David K. Jones | ||||
David K. Jones | ||||
Chief Financial Officer | ||||
/s/ Roger S. Penske | ||||
Roger S. Penske | ||||
Chief Executive Officer |
/s/ David K. Jones | ||||
David K. Jones | ||||
Chief Financial Officer |
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Consolidating Condensed Financial Information (Details 1) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
CONSOLIDATING CONDENSED STATEMENT OF INCOME | ||||
Revenues | $ 2,888,420 | $ 2,614,602 | $ 5,683,907 | $ 5,038,789 |
Cost of sales | 2,424,780 | 2,197,796 | 4,775,190 | 4,221,931 |
Gross profit | 463,640 | 416,806 | 908,717 | 816,858 |
Selling, general and administrative expenses | 380,350 | 339,676 | 738,462 | 666,039 |
Depreciation | 12,093 | 11,516 | 24,031 | 23,374 |
Operating income | 71,197 | 65,614 | 146,224 | 127,445 |
Floor plan interest expense | (7,113) | (7,983) | (14,131) | (16,125) |
Other interest expense | (10,575) | (12,542) | (21,976) | (25,262) |
Debt discount amortization | (2,428) | (1,718) | (5,343) | |
Equity in earnings of affiliates | 7,882 | 4,784 | 7,904 | 4,355 |
Gain on debt repurchase | 422 | 1,027 | ||
Income (loss) from continuing operations before income taxes | 61,391 | 47,867 | 116,303 | 86,097 |
Income taxes | (20,996) | (16,628) | (37,784) | (30,878) |
Income (loss) from continuing operations | 40,395 | 31,239 | 78,519 | 55,219 |
(Loss) income from discontinued operations, net of tax | (336) | (1,555) | (4,463) | (5,203) |
Net income (loss) | 40,059 | 29,684 | 74,056 | 50,016 |
Less: Income attributable to non-controlling interests | 499 | 243 | 569 | 221 |
Net income attributable to Penske Automotive Group common stockholders | 39,560 | 29,441 | 73,487 | 49,795 |
Penske Automotive Group [Member]
|
||||
CONSOLIDATING CONDENSED STATEMENT OF INCOME | ||||
Selling, general and administrative expenses | 4,790 | 3,497 | 9,739 | 8,075 |
Depreciation | 257 | 300 | 542 | 590 |
Operating income | (5,047) | (3,797) | (10,281) | (8,665) |
Floor plan interest expense | (329) | (462) | ||
Other interest expense | (5,818) | (8,343) | (12,234) | (16,390) |
Debt discount amortization | (2,428) | (1,718) | (5,343) | |
Equity in earnings of affiliates | 6,121 | 3,937 | 7,352 | 4,283 |
Gain on debt repurchase | 422 | 1,027 | ||
Equity in earnings of subsidiaries | 65,965 | 57,833 | 133,077 | 110,964 |
Income (loss) from continuing operations before income taxes | 60,892 | 47,624 | 115,734 | 85,876 |
Income taxes | (20,996) | (16,628) | (37,784) | (30,878) |
Income (loss) from continuing operations | 39,896 | 30,996 | 77,950 | 54,998 |
(Loss) income from discontinued operations, net of tax | (336) | (1,555) | (4,463) | (5,203) |
Net income (loss) | 39,560 | 29,441 | 73,487 | 49,795 |
Net income attributable to Penske Automotive Group common stockholders | 39,560 | 29,441 | 73,487 | 49,795 |
Eliminations [Member]
|
||||
CONSOLIDATING CONDENSED STATEMENT OF INCOME | ||||
Equity in earnings of subsidiaries | (65,965) | (57,833) | (133,077) | (110,964) |
Income (loss) from continuing operations before income taxes | (65,965) | (57,833) | (133,077) | (110,964) |
Income taxes | 22,745 | 20,192 | 43,446 | 39,899 |
Income (loss) from continuing operations | (43,220) | (37,641) | (89,631) | (71,065) |
(Loss) income from discontinued operations, net of tax | 336 | 1,555 | 4,463 | 5,203 |
Net income (loss) | (42,884) | (36,086) | (85,168) | (65,862) |
Net income attributable to Penske Automotive Group common stockholders | (42,884) | (36,086) | (85,168) | (65,862) |
Guarantor Subsidiaries [Member]
|
||||
CONSOLIDATING CONDENSED STATEMENT OF INCOME | ||||
Revenues | 1,659,489 | 1,529,401 | 3,227,865 | 2,856,374 |
Cost of sales | 1,372,419 | 1,272,432 | 2,678,525 | 2,367,531 |
Gross profit | 287,070 | 256,969 | 549,340 | 488,843 |
Selling, general and administrative expenses | 232,097 | 209,910 | 446,030 | 403,466 |
Depreciation | 6,538 | 6,446 | 12,893 | 12,890 |
Operating income | 48,435 | 40,613 | 90,417 | 72,487 |
Floor plan interest expense | (3,458) | (5,829) | (7,370) | (11,511) |
Other interest expense | (638) | (33) | (1,249) | (589) |
Income (loss) from continuing operations before income taxes | 44,339 | 34,751 | 81,798 | 60,387 |
Income taxes | (16,296) | (13,554) | (28,714) | (25,754) |
Income (loss) from continuing operations | 28,043 | 21,197 | 53,084 | 34,633 |
(Loss) income from discontinued operations, net of tax | (336) | (1,555) | (4,463) | (5,203) |
Net income (loss) | 27,707 | 19,642 | 48,621 | 29,430 |
Net income attributable to Penske Automotive Group common stockholders | 27,707 | 19,642 | 48,621 | 29,430 |
Non-Guarantor Subsidiaries [Member]
|
||||
CONSOLIDATING CONDENSED STATEMENT OF INCOME | ||||
Revenues | 1,228,931 | 1,085,201 | 2,456,042 | 2,182,415 |
Cost of sales | 1,052,361 | 925,364 | 2,096,665 | 1,854,400 |
Gross profit | 176,570 | 159,837 | 359,377 | 328,015 |
Selling, general and administrative expenses | 143,463 | 126,269 | 282,693 | 254,498 |
Depreciation | 5,298 | 4,770 | 10,596 | 9,894 |
Operating income | 27,809 | 28,798 | 66,088 | 63,623 |
Floor plan interest expense | (3,326) | (2,154) | (6,299) | (4,614) |
Other interest expense | (4,119) | (4,166) | (8,493) | (8,283) |
Equity in earnings of affiliates | 1,761 | 847 | 552 | 72 |
Income (loss) from continuing operations before income taxes | 22,125 | 23,325 | 51,848 | 50,798 |
Income taxes | (6,449) | (6,638) | (14,732) | (14,145) |
Income (loss) from continuing operations | 15,676 | 16,687 | 37,116 | 36,653 |
Net income (loss) | 15,676 | 16,687 | 37,116 | 36,653 |
Less: Income attributable to non-controlling interests | 499 | 243 | 569 | 221 |
Net income attributable to Penske Automotive Group common stockholders | $ 15,177 | $ 16,444 | $ 36,547 | $ 36,432 |
Inventories (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories (Tables) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories Net |
|
Document and Entity Information
|
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Jul. 20, 2011
|
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | PENSKE AUTOMOTIVE GROUP, INC. | |
Entity Central Index Key | 0001019849 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2011 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 92,062,166 |
Segment Information (Details Textuals)
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Segment Information (Textuals) | |
Number of reportable segments | 2 |
Number of geographic operating segments | 4 |
Earnings Per Share (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Earnings Per Share (Tables) [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of number of shares used in calculation of basic and diluted earnings per share |
|
Segment Information (Details 1) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Reconciliation of total adjusted segment income to consolidated income from continuing operations before income taxes | ||||
Adjusted segment income | $ 61,391 | $ 47,445 | $ 116,303 | $ 85,070 |
Gain on debt repurchase | 422 | 1,027 | ||
Income from continuing operations before income taxes | $ 61,391 | $ 47,867 | $ 116,303 | $ 86,097 |
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Intangible Assets
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Intangible Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets |
4. Intangible Assets
Following is a summary of the changes in the carrying amount of goodwill and
franchise value during the six months ended June 30, 2011:
|
Long-Term Debt (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Long Term Debt (Tables) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long Term Debt |
|
Intangible Assets (Details) (USD $)
In Thousands |
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Summary of the changes in the carrying amount of goodwill and franchise value | |
Goodwill, Beginning Balance | $ 808,488 |
Goodwill, additions | 7,120 |
Goodwill, foreign currency translation | 11,361 |
Goodwill, Ending Balance | 826,969 |
Franchise value, Beginning Balance | 203,401 |
Franchise value, additions | 0 |
Franchise value, foreign currency translation | 2,544 |
Franchise value, Ending Balance | $ 205,945 |
Intangible Assets (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Intangible Assets (Tables) [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the changes in the carrying amount of goodwill and franchise value |
|
Commitments and Contingent Liabilities
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Commitments and Contingent Liabilities [Abstract] | |
Commitments and Contingent Liabilities |
9. Commitments and Contingent Liabilities
The Company is 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 June 30, 2011,
the Company is 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 the Company’s 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 the Company’s results of operations, financial condition or cash flows.
The Company has historically structured its operations so as to minimize ownership
of real property. As a result, the Company leases or subleases substantially all of its
facilities. These leases are generally for a period between five and 20 years, and are
typically structured to include renewal options at the Company’s election. Pursuant to
the leases for some of the Company’s larger facilities, the Company is required to
comply with defined financial ratios, including a “rent coverage” ratio and a debt to
EBITDA ratio. For these leases, non-compliance with the ratios may require the Company
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. As of June 30, 2011, the Company was in compliance with
all covenants under these leases.
The Company has sold a number of dealerships to third parties and, as a condition
to certain of those sales, remains liable for the lease payments relating to the
properties on which those businesses operate in the event of non-payment by the buyer.
The Company is also party to lease agreements on properties that it no longer uses in
its retail operations that it has sublet to third parties. The Company relies on
subtenants to pay the rent and maintain the property at these locations. In the event
the subtenant does not perform as expected, the Company may not be able to recover
amounts owed to it and the Company could be required to fulfill these obligations.
The Company has $20,066 of letters of credit outstanding as of June 30, 2011, and
has posted $14,263 of surety bonds in the ordinary course of business.
|
Consolidated Condensed Statement of Equity (Unaudited) (Parenthetical) (USD $)
In Thousands |
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Tax benefit, exercise of stock options | $ 856 |
Total Stockholders' Equity Attributable to Penske Automotive Group
|
|
Tax benefit, exercise of stock options | 856 |
Additional Paid-in Capital
|
|
Tax benefit, exercise of stock options | $ 856 |
Inventories (Details) (USD $)
In Thousands |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Inventories Net | ||
Total inventories | $ 1,456,409 | $ 1,453,546 |
New vehicle
|
||
Inventories Net | ||
Total inventories | 954,077 | 1,011,299 |
Used vehicle
|
||
Inventories Net | ||
Total inventories | 426,751 | 367,350 |
Parts accessories and other [Member]
|
||
Inventories Net | ||
Total inventories | $ 75,581 | $ 74,897 |
Earnings Per Share
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share |
6. 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 the
dilutive effect of stock options. A reconciliation of the number of shares used in the
calculation of basic and diluted earnings per share for the three and six months ended
June 30, 2011 and 2010 follows:
There were no anti-dilutive stock options outstanding during the three and six
months ended June 30, 2011 or 2010. In addition, the Company has senior subordinated
convertible notes outstanding which, under certain circumstances discussed in Note 7,
may be converted to voting common stock. As of June 30, 2011 and 2010, no shares
related to the senior subordinated convertible notes were included in the calculation of
diluted earnings per share because the effect of such securities was anti-dilutive.
|
Segment Information
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information |
11. Segment Information
The Company’s operations are organized by management into operating segments by
line of business and geography. The Company has determined it has two reportable
segments as defined in generally accepted accounting principles for segment reporting,
including: (i) Retail, consisting of our automotive retail operations and (ii) PAG
Investments, consisting of our investments in businesses other than automotive retail
operations. The Retail reportable segment includes all automotive dealerships and all
departments relevant to the operation of the dealerships and the retail automotive joint
ventures. The individual dealership operations included in the Retail reportable segment
have been grouped into four geographic operating segments, which 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 Company previously presented its smart
USA distribution operation as a third reportable segment. That operation was
transitioned to DVI on June 30, 2011 and is presented in discontinued operations.
The following table summarizes revenues and income from continuing operations
before certain 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,
for each of our reportable segments. Adjusted segment income excludes the item in the
table below in order to enhance the comparability of segment income from period to
period.
Three Months Ended June 30
Six Months Ended June 30
The following table reconciles total adjusted segment income to consolidated
income from continuing operations before income taxes.
|
Long-Term Debt
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
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Long-Term Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt |
7. Long-Term Debt
Long-term debt consisted of the following:
U.S. Credit Agreement
The Company is party to a credit agreement with Mercedes-Benz Financial Services
USA LLC and Toyota Motor Credit Corporation, as amended (the “U.S. Credit Agreement”),
which provides for up to $300,000 in revolving loans for working capital, acquisitions,
capital expenditures, investments and other general corporate purposes, a non-amortizing
term loan with a remaining balance of $134,000, and for an additional $10,000 of
availability for letters of credit, through September 30, 2013. The revolving loans bear
interest at a defined LIBOR plus 2.75%, subject to an incremental 0.75% for
uncollateralized borrowings in excess of a defined borrowing base. The term loan, which
bears interest at defined LIBOR plus 2.50%, may be prepaid at any time, but then may not
be re-borrowed.
The U.S. Credit Agreement is fully and unconditionally guaranteed on a joint and
several basis by the Company’s domestic subsidiaries and contains a number of
significant covenants that, among other things, restrict the Company’s 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. The Company is also required to comply with defined financial
and other tests and ratios, 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. As of June 30, 2011, the Company was in compliance with all covenants
under the U.S. Credit Agreement.
The U.S. Credit Agreement also contains typical events of default, including change
of control, non-payment of obligations and cross-defaults to the Company’s other
material indebtedness. Substantially all of the Company’s domestic assets are subject to
security interests granted to lenders under the U.S. Credit Agreement. As of June 30,
2011, $134,000 of term loans and $1,250 of letters of credit were outstanding under the
U.S. Credit Agreement.
U.K. Credit Agreement
The Company’s subsidiaries in the U.K. (the “U.K. Subsidiaries”) are party to an
agreement with the Royal Bank of Scotland plc, as agent for National Westminster Bank
plc, which provides for a funded term loan, a revolving credit agreement and a demand
overdraft line of credit (collectively, the “U.K. Credit
Agreement”) to be used for working capital, acquisitions,
capital expenditures, investments and general corporate purposes. The U.K.
Credit Agreement provides for (1) up to £92,000 in revolving loans through August 31,
2013, which bear interest between a defined LIBOR plus 1.1% and defined LIBOR plus 3.0%,
and (2) a demand overdraft line of credit for up to £10,000 that bears interest at the
Bank of England Base Rate plus 1.75%. A term loan component to the credit agreement
which bore interest between 6.39% and 8.29% and was payable ratably in quarterly
intervals was fully repaid on June 30, 2011.
The U.K. Credit Agreement is fully and unconditionally guaranteed on a joint and
several basis by the U.K. Subsidiaries, and contains a number of significant covenants
that, among other things, restrict the ability of the 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, the 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 the amounts owed. As of June 30, 2011, the U.K.
Subsidiaries were in compliance with all covenants under the U.K. Credit Agreement.
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 the U.K. Subsidiaries. Substantially all of the U.K. Subsidiaries’
assets are subject to security interests granted to lenders under the U.K. Credit
Agreement. As of June 30, 2011, outstanding loans under the U.K. Credit Agreement
amounted to £52,000 ($83,471).
7.75% Senior Subordinated Notes
In December 2006, the Company issued $375,000 aggregate principal amount of 7.75%
senior subordinated notes (the “7.75% Notes”) due 2016. The 7.75% Notes are unsecured
senior subordinated notes and are subordinate to all existing and future senior debt,
including debt under the Company’s credit agreements, mortgages and floor plan
indebtedness. The 7.75% Notes are guaranteed by substantially all of the Company’s
wholly-owned domestic subsidiaries on an unsecured senior subordinated basis. Those
guarantees are full and unconditional and joint and several. The Company can redeem all
or some of the 7.75% Notes at its option beginning in December 2011 at specified
redemption prices, or prior to December 2011 at 100% of the principal amount of the
notes plus a defined “make-whole” premium. Upon certain sales of assets or specific
kinds of changes of control the Company is required to make an offer to purchase the
7.75% Notes. The 7.75% Notes also contain customary negative covenants and events of
default. As of June 30, 2011, the Company was in compliance with all negative covenants
and there were no events of default.
Senior Subordinated Convertible Notes
Holders of the Convertible Notes had the right to require the Company to purchase
their Convertible Notes on April 1, 2011. Of the Convertible Notes outstanding on April
1, 2011, $87,278 were validly tendered to the Company. As a result, $63,324 of the
Convertible Notes remained outstanding as of June 30, 2011. Remaining holders of the
Convertible Notes may require the Company to purchase all or a portion of their Convertible Notes
for cash on each of April 1, 2016 or April 1, 2021 at a purchase price equal to 100% of
the principal amount of the Convertible Notes to be purchased, plus accrued and unpaid
interest, if any, to the applicable purchase date.
The remaining Convertible Notes mature on April 1, 2026, unless earlier converted,
redeemed or purchased by the Company, as discussed below. The Convertible Notes are
unsecured senior subordinated obligations and are subordinate to all future and existing
debt under the Company’s credit agreements, mortgages and floor plan indebtedness. The
Convertible Notes are guaranteed on an unsecured senior subordinated basis by
substantially all of the Company’s wholly-owned domestic subsidiaries. The guarantees
are full and unconditional and joint and several. The Convertible Notes also contain
customary negative covenants and events of default. As of June 30, 2011, the Company was
in compliance with all negative covenants and there were no events of default.
Holders of the Convertible Notes may convert them based on a conversion rate of
42.7796 shares of the Company’s common stock per $1,000 principal amount of the
Convertible Notes (which is equal to a conversion price of approximately $23.38 per
share), subject to adjustment, only under the following circumstances: (1) in any
quarterly period, if the closing price of our common stock for twenty of the last thirty
trading days in the prior quarter exceeds $28.05 (subject to adjustment), (2) for
specified periods, if the trading price of the Convertible Notes falls below specific
thresholds, (3) if the Convertible Notes are called for redemption, (4) if specified
distributions to holders of our common stock are made or specified corporate
transactions occur, (5) if a fundamental change (as defined) occurs, or (6) during the
ten trading days prior to, but excluding, the maturity date.
Upon conversion of the Convertible Notes, for each $1,000 principal amount of the
Convertible Notes, a holder will receive an amount in cash, equal to the lesser of (i)
$1,000 or (ii) the conversion value, determined in the manner set forth in the indenture
covering the Convertible Notes, of the number of shares of common stock equal to the
conversion rate. If the conversion value exceeds $1,000, the Company will also deliver,
at its election, cash, common stock or a combination of cash and common stock with
respect to the remaining value deliverable upon conversion. The Company will pay
additional cash interest commencing with six-month periods beginning on April 1, 2011,
if the average trading price of a Convertible Note for certain periods in the prior
six-month period equals 120% or more of the principal amount of the Convertible Notes.
The Company may redeem the Convertible Notes, in whole at any time or in part from
time to time, for cash at a redemption price of 100% of the principal amount of the
Convertible Notes to be redeemed, plus any accrued and unpaid interest to the applicable
redemption date, plus any applicable conversion premium.
On issuance of the Convertible Notes, the Company recorded a debt discount which
was amortized as additional interest expense through March 31, 2011. The annual
effective interest rate on the liability component was 8.25% through March 31, 2011.
Beginning April 1, 2011, the annual effective interest rate was 3.5%.
Mortgage Facilities
The Company is party to several mortgages which 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 the
Company’s 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 June 30,
2011, we owed $50,249 of principal under our mortgage facilities.
|
Interim Financial Statements (Details 1) (USD $)
In Thousands |
Jun. 30, 2011
|
Dec. 31, 2010
|
---|---|---|
Balance Sheet information regarding entities accounted for as discontinued operations | ||
Inventories | $ 28,515 | $ 70,680 |
Other assets | 28,311 | 39,805 |
Total assets | 56,826 | 110,485 |
Floor plan notes payable (including non-trade) | 26,519 | 63,825 |
Other liabilities | 25,961 | 15,630 |
Liabilities held for sale | $ 52,480 | $ 79,455 |
Floor Plan Notes Payable - Trade and Non-trade
|
6 Months Ended |
---|---|
Jun. 30, 2011
|
|
Floor Plan Notes Payable - Trade and Non-trade [Abstract] | |
Floor Plan Notes Payable - Trade and Non-trade |
5. Floor Plan Notes Payable — Trade and Non-trade
The Company finances substantially all of its new and a portion of its used vehicle
inventories under revolving floor plan arrangements with various lenders, including the
captive finance companies associated with automotive manufacturers. In the U.S.,
substantially all of our floor plan arrangements are due on demand; however, the Company
has not historically been required to repay floor plan advances prior to the sale of the
vehicles that have been financed. The Company typically makes 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
the Company is 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 floor plan agreements grant a security interest in substantially all of the
assets of the Company’s dealership subsidiaries, and in the U.S. are guaranteed by the
Company. Interest rates under the floor plan arrangements are variable and increase or
decrease based on changes in the prime rate, defined London Interbank Offered Rate
(“LIBOR”), the Finance House Bank Rate, or the Euro Interbank Offer Rate. The Company
classifies 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 its consolidated condensed balance sheets
and classifies related cash flows as a financing activity on its consolidated condensed
statements of cash flows.
|
Consolidated Condensed Statements of Cash Flows (Unaudited) (Parenthetical) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | |
---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Investing Activities: | ||
Repayment of sellers' floor plan notes payable, Dealership acquisitions | $ 5,862 | $ 5,683 |
Financing Activities: | ||
Senior subordinated convertible notes, Interest rate | 3.50% | 3.50% |
Interim Financial Statements
|
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Jun. 30, 2011
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Interim Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interim Financial Statements |
1. Interim Financial Statements
Business Overview
Penske Automotive Group, Inc. (the “Company”) is the second largest automotive
retailer headquartered in the U.S. as measured by total revenue. As of June 30, 2011, the
Company operated 323 retail franchises, of which 168 franchises are located in the U.S.
and 155 franchises are located outside of the U.S. The franchises outside the U.S. are
located primarily in the U.K. Each of the Company’s dealerships offers a wide selection
of new and used vehicles for sale. In addition to selling new and used vehicles, the
Company generates higher-margin revenue at each of its dealerships through maintenance
and repair services and the sale and placement of higher-margin products, such as
third-party finance and insurance products, third-party extended service contracts and
replacement and aftermarket automotive products. The Company also holds a 9.0% limited
partnership interest in Penske Truck Leasing Co., L.P. (“PTL”), a leading global
transportation services provider.
During
the six months ended June 30, 2011, the Company was awarded four franchises,
acquired three franchises, and disposed of seven franchises.
On June 30, 2011, smart USA Distributor, LLC, the Company’s wholly owned subsidiary,
completed the sale of certain assets and the transfer of certain liabilities relating to
the distribution rights, management, sales and marketing activities of smart USA to
Daimler Vehicle Innovations LLC (“DVI”), a wholly owned subsidiary of Mercedes-Benz USA.
The aggregate cash purchase price for the assets, which included certain vehicles, parts,
signage and other items valued at fair market value, was $44,462, of which $688 is to be paid in the third quarter of 2011 subject to a final reconciliation of the assets delivered at closing.
This amount also includes reimbursement of certain operating and wind-down costs
of smart USA. As a result, smart USA has been treated as a discontinued operation for
all periods presented in the accompanying financial statements.
Basis of Presentation
The unaudited consolidated condensed financial statements of the Company
have been prepared pursuant to the rules and regulations of the Securities and Exchange
Commission (“SEC”). Certain information and disclosures normally included in the
Company’s annual financial statements prepared in accordance with accounting principles
generally accepted in the United States have been condensed or omitted pursuant to the
SEC rules and regulations. The information presented as of June 30, 2011 and December 31,
2010 and for the three and six month periods ended June 30, 2011 and 2010 is unaudited,
but includes all adjustments which the management of the Company believes to be necessary
for the fair presentation of results for the periods presented. The consolidated
condensed financial statements for prior periods have been revised for entities which
have been treated as discontinued operations through June 30, 2011, and the results for
interim periods are not necessarily indicative of results to be expected for the year.
These consolidated condensed financial statements should be read in conjunction with the
Company’s audited financial statements for the year ended December 31, 2010, which are
included as part of the Company’s Annual Report on Form 10-K.
Results for three and six months ended June 30, 2010 include a $422 and $1,027
pre-tax gain relating to the repurchase of $41,548 and $112,658 aggregate principal
amount of the Company’s 3.5% senior subordinated convertible notes (“Convertible Notes”).
Discontinued Operations
The Company accounts for dispositions in its retail operations as discontinued
operations when it is evident that the operations and cash flows of a franchise being
disposed of will be eliminated from on-going operations and that the Company will not
have any significant continuing involvement in its operations. As noted above, the
Company has accounted for the disposition of its smart USA distribution operation as a
discontinued operation.
In evaluating whether the cash flows of a dealership in its Retail reportable segment
will be eliminated from ongoing operations, the Company considers whether it is likely
that customers will migrate to similar franchises that it owns in the same geographic
market. The Company’s consideration includes an evaluation of the brands sold at other
dealerships it operates in the market and their proximity to the disposed dealership.
When the Company disposes of franchises, it typically does not have continuing brand representation in that market. If the franchise being disposed of
is located in a complex of Company owned dealerships, the Company does not treat the
disposition as a discontinued operation if it believes that the cash flows previously
generated by the disposed franchise will be replaced by expanded operations of the
remaining or replacement franchises.
The distribution segment has been presented as a discontinued operation due to the
transition of the distribution rights of the smart fortwo from smart USA to DVI that was
completed in June 2011. The Company does not have any continuing role in the
distribution of the smart fortwo, and as a result, no longer has any significant
operations or cash flows relating to distribution activities.
Combined financial information regarding entities accounted for as discontinued
operations follows:
Estimates
The preparation of financial statements in conformity 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.
Fair Value of Financial Instruments
Financial instruments consist of cash and cash equivalents, accounts receivable,
accounts payable, debt, floor plan notes payable, and interest rate swaps used to hedge
future cash flows. Other than our subordinated notes, 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. A summary of the fair value of the
subordinated notes, based on quoted, level one market data, follows:
|
Earnings Per Share (Details)
In Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Reconciliation of number of shares used in calculation of basic and diluted earnings per share | ||||
Weighted average number of common shares outstanding | 92,514 | 92,142 | 92,444 | 92,016 |
Effect of non-participatory equity compensation | 56 | 64 | 70 | 70 |
Weighted average number of common shares outstanding including effect of dilutive securities | 92,570 | 92,206 | 92,514 | 92,086 |
Convertible Debt Securities [Member]
|
||||
Earnings Per Share (Textuals) [Abstract] | ||||
Anti dilutive shares related to senior subordinated convertible notes included in calculation of diluted earnings per share | 0 | 0 | 0 | 0 |
Stock Options [Member]
|
||||
Earnings Per Share (Textuals) [Abstract] | ||||
Anti-dilutive stock options outstanding | 0 | 0 | 0 | 0 |
Interim Financial Statements (Details) (USD $)
In Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2011
|
Jun. 30, 2010
|
Jun. 30, 2011
|
Jun. 30, 2010
|
|
Combined financial information regarding entities accounted for as discontinued operations | ||||
Revenues | $ 73,943 | $ 97,824 | $ 158,954 | $ 171,411 |
Pre-tax (loss) income | (1,153) | (2,138) | (9,061) | (7,831) |
Gain (loss) on disposal | $ 695 | $ (235) | $ 1,765 | $ (261) |
Inventories
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Inventories [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories |
2. Inventories
Inventories consisted of the following:
The Company receives non-refundable credits from certain vehicle manufacturers
that reduce cost of sales when the vehicles are sold. Such credits amounted to $16,267
and $12,108 during the six months ended June 30, 2011 and 2010, respectively.
|
Long-Term Debt (Details Textuals)
|
6 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | 6 Months Ended | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2011
USD ($)
|
Jun. 30, 2011
GBP (£)
|
Mar. 31, 2011
USD ($)
|
Dec. 31, 2010
USD ($)
|
Jun. 30, 2010
|
Jun. 30, 2011
US Credit Agreement Revolving Credit Line [Member]
USD ($)
|
Dec. 31, 2010
US Credit Agreement Revolving Credit Line [Member]
USD ($)
|
Jun. 30, 2011
US Credit Agreement Term Loan [Member]
USD ($)
|
Dec. 31, 2010
US Credit Agreement Term Loan [Member]
USD ($)
|
Jun. 30, 2011
US Credit Agreement Letter of Credit [Member]
USD ($)
|
Jun. 30, 2011
UK Credit Agreement Term Loan [Member]
USD ($)
|
Dec. 31, 2010
UK Credit Agreement Term Loan [Member]
USD ($)
|
Jun. 30, 2011
UK Credit Agreement Revolving Credit Line [Member]
USD ($)
|
Dec. 31, 2010
UK Credit Agreement Revolving Credit Line [Member]
USD ($)
|
Jun. 30, 2011
UK Credit Agreement Overdraft Line Of Credit [Member]
GBP (£)
|
Jun. 30, 2011
UK Credit Agreement Overdraft Line Of Credit [Member]
USD ($)
|
Dec. 31, 2010
UK Credit Agreement Overdraft Line Of Credit [Member]
USD ($)
|
Jun. 30, 2011
7.75% senior subordinated notes due 2016 [Member]
USD ($)
|
Dec. 31, 2010
7.75% senior subordinated notes due 2016 [Member]
USD ($)
|
Dec. 31, 2006
7.75% senior subordinated notes due 2016 [Member]
USD ($)
|
Jun. 30, 2011
3.5% senior subordinated convertible notes due 2026 [Member]
USD ($)
|
Mar. 31, 2011
3.5% senior subordinated convertible notes due 2026 [Member]
|
Jun. 30, 2011
3.5% senior subordinated convertible notes due 2026 [Member]
USD ($)
|
Sep. 30, 2010
3.5% senior subordinated convertible notes due 2026 [Member]
USD ($)
|
Dec. 31, 2010
3.5% senior subordinated convertible notes due 2026 [Member]
USD ($)
|
Jun. 30, 2010
3.5% senior subordinated convertible notes due 2026 [Member]
|
Jun. 30, 2011
Mortgages [Member]
USD ($)
|
Dec. 31, 2010
Mortgages [Member]
USD ($)
|
|
Long-Term Debt (Textuals) [Abstract] | ||||||||||||||||||||||||||||
Maximum credit available under US and UK credit agreement | £ 92,000,000 | $ 300,000,000 | $ 134,000,000 | $ 10,000,000 | ||||||||||||||||||||||||
Revolving credit interest rate at LIBOR plus | LIBOR Plus 2.75% | LIBOR plus 2.5% | Between 6.39% And 8.29% Payable Quarterly | LIBOR plus 1.1% and Libor Plus 3.0% | Bank of England Base rate plus 1.75 | |||||||||||||||||||||||
Incremental interest rate for uncollateralized borrowings in excess of maximum limit | 0.75% | |||||||||||||||||||||||||||
Term loan outstanding under credit agreement | 83,471,000 | 52,000,000 | 134,000,000 | 1,250,000 | ||||||||||||||||||||||||
Interest rate range for revolving borrowing under credit agreement | LIBOR Plus 2.75% | LIBOR plus 2.5% | Between 6.39% And 8.29% Payable Quarterly | LIBOR plus 1.1% and Libor Plus 3.0% | Bank of England Base rate plus 1.75 | |||||||||||||||||||||||
Demand over draft line of credit | 10,000,000 | |||||||||||||||||||||||||||
Debt Instrument, Face Amount | 375,000,000 | |||||||||||||||||||||||||||
Senior subordinated convertible notes, Interest rate | 3.50% | 3.50% | 7.75% | 7.75% | 3.50% | 3.50% | 3.50% | |||||||||||||||||||||
Notes Redemption before due date | 100% Of Principal Plus Make-Whole Premium | 100% Of Principal Plus accrued and unpaid interest | ||||||||||||||||||||||||||
Outstanding Convertible senior notes | 87,278,000 | 63,324,000 | 63,324,000 | |||||||||||||||||||||||||
Conversion rate of convertible notes | 42.7796 | |||||||||||||||||||||||||||
Conversion price | 23.38 | 23.38 | ||||||||||||||||||||||||||
Terms of conversion | (1) in any quarterly period, if the closing price of the common stock for twenty of the last thirty trading days in the prior quarter exceeds $28.05 (subject to adjustment), (2) for specified periods, if the trading price of the Convertible Notes falls below specific thresholds, (3) if the Convertible Notes are called for redemption, (4) if specified distributions to holders of common stock are made or specified corporate transactions occur, (5) if a fundamental change (as defined) occurs, or (6) during the ten trading days prior to, but excluding, the maturity date. | |||||||||||||||||||||||||||
7.75% Notes Beneficial Conversion Feature | equal to the lesser of (i) $1,000 or (ii) the conversion value | |||||||||||||||||||||||||||
Payment of cash, common stock or a combination of two, if conversion value exceed | 1,000 | |||||||||||||||||||||||||||
Terms in event of a conversion due to a change of control | Make-Whole premium by Increasing the Conversion Rate Plus Additional Interest if Average Trading Price Exceed 120% of Principal | |||||||||||||||||||||||||||
Annual effective interest rate on liability component | 3.50% | 8.25% | ||||||||||||||||||||||||||
Long-term Debt | $ 716,807,000 | $ 779,878,000 | $ 0 | $ 0 | $ 134,000,000 | $ 134,000,000 | $ 0 | $ 5,505,000 | $ 77,050,000 | $ 54,597,000 | $ 6,421,000 | $ 7,116,000 | $ 375,000,000 | $ 375,000,000 | $ 63,324,000 | $ 63,324,000 | $ 148,884,000 | $ 50,249,000 | $ 46,052,000 | |||||||||
Dates on which holders of the convertible notes may require the company to purchase | April 1, 2011, April 1, 2016 or April 1, 2021 |
Equity (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2011
|
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Equity (Tables) [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) |
|
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