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, | ||
Bloomfield Hills, Michigan | 48302-0954 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
2
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
(In thousands, except | ||||||||
per share amounts) | ||||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 7,735 | $ | 17,808 | ||||
Accounts receivable, net of allowance for doubtful accounts of $2,259 and $1,898 |
385,137 | 383,379 | ||||||
Inventories |
1,481,629 | 1,449,157 | ||||||
Other current assets |
88,676 | 68,355 | ||||||
Assets held for sale |
54,168 | 117,018 | ||||||
Total current assets |
2,017,345 | 2,035,717 | ||||||
Property and equipment, net |
821,421 | 719,762 | ||||||
Goodwill |
915,433 | 807,874 | ||||||
Franchise value |
232,814 | 203,401 | ||||||
Equity method investments |
293,819 | 288,406 | ||||||
Other long-term assets |
14,637 | 14,672 | ||||||
Total assets |
$ | 4,295,469 | $ | 4,069,832 | ||||
LIABILITIES AND EQUITY |
||||||||
Floor plan notes payable |
$ | 902,163 | $ | 918,628 | ||||
Floor plan notes payable non-trade |
597,982 | 491,889 | ||||||
Accounts payable |
226,709 | 253,277 | ||||||
Accrued expenses |
247,185 | 202,480 | ||||||
Current portion of long-term debt |
9,642 | 10,593 | ||||||
Liabilities held for sale |
34,464 | 84,139 | ||||||
Total current liabilities |
2,018,145 | 1,961,006 | ||||||
Long-term debt |
841,927 | 769,285 | ||||||
Deferred tax liabilities |
183,708 | 178,406 | ||||||
Other long-term liabilities |
139,271 | 115,282 | ||||||
Total liabilities |
3,183,051 | 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; 90,242 shares issued and
outstanding at September 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 |
700,949 | 738,728 | ||||||
Retained earnings |
419,814 | 304,486 | ||||||
Accumulated other comprehensive loss |
(12,455 | ) | (1,673 | ) | ||||
Total Penske Automotive Group stockholders equity |
1,108,317 | 1,041,550 | ||||||
Non-controlling interest |
4,101 | 4,303 | ||||||
Total equity |
1,112,418 | 1,045,853 | ||||||
Total liabilities and equity |
$ | 4,295,469 | $ | 4,069,832 | ||||
3
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Unaudited) | ||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||
Revenue: |
||||||||||||||||
New vehicle |
$ | 1,471,606 | $ | 1,373,240 | $ | 4,288,746 | $ | 3,882,945 | ||||||||
Used vehicle |
890,251 | 750,720 | 2,580,261 | 2,170,006 | ||||||||||||
Finance and insurance, net |
73,289 | 65,185 | 208,765 | 184,577 | ||||||||||||
Service and parts |
354,616 | 326,494 | 1,049,467 | 974,913 | ||||||||||||
Fleet and wholesale vehicle |
161,284 | 154,134 | 496,471 | 485,329 | ||||||||||||
Total revenues |
2,951,046 | 2,669,773 | 8,623,710 | 7,697,770 | ||||||||||||
Cost of sales: |
||||||||||||||||
New vehicle |
1,346,995 | 1,263,386 | 3,932,360 | 3,565,684 | ||||||||||||
Used vehicle |
823,562 | 694,806 | 2,375,508 | 1,999,446 | ||||||||||||
Service and parts |
153,153 | 139,906 | 451,600 | 420,552 | ||||||||||||
Fleet and wholesale |
160,229 | 153,506 | 490,170 | 478,712 | ||||||||||||
Total cost of sales |
2,483,939 | 2,251,604 | 7,249,638 | 6,464,394 | ||||||||||||
Gross profit |
467,107 | 418,169 | 1,374,072 | 1,233,376 | ||||||||||||
Selling, general and administrative expenses |
375,432 | 339,120 | 1,111,812 | 1,003,151 | ||||||||||||
Depreciation |
12,590 | 11,820 | 36,578 | 35,123 | ||||||||||||
Operating income |
79,085 | 67,229 | 225,682 | 195,102 | ||||||||||||
Floor plan interest expense |
(7,020 | ) | (8,805 | ) | (21,131 | ) | (24,907 | ) | ||||||||
Other interest expense |
(11,288 | ) | (12,229 | ) | (33,264 | ) | (37,491 | ) | ||||||||
Debt discount amortization |
| (1,647 | ) | (1,718 | ) | (6,990 | ) | |||||||||
Equity in earnings of affiliates |
9,623 | 7,370 | 17,527 | 11,725 | ||||||||||||
Gain on debt repurchase |
| 607 | | 1,634 | ||||||||||||
Income from continuing operations before income taxes |
70,400 | 52,525 | 187,096 | 139,073 | ||||||||||||
Income taxes |
(13,355 | ) | (17,428 | ) | (51,293 | ) | (48,485 | ) | ||||||||
Income from continuing operations |
57,045 | 35,097 | 135,803 | 90,588 | ||||||||||||
Loss from discontinued operations, net of tax |
(1,000 | ) | (4,837 | ) | (5,702 | ) | (10,312 | ) | ||||||||
Net income |
56,045 | 30,260 | 130,101 | 80,276 | ||||||||||||
Less: Income attributable to non-controlling interests |
338 | 283 | 907 | 504 | ||||||||||||
Net income attributable to
Penske Automotive Group common stockholders |
$ | 55,707 | $ | 29,977 | $ | 129,194 | $ | 79,772 | ||||||||
Basic earnings per share attributable to
Penske Automotive Group common stockholders: |
||||||||||||||||
Continuing operations |
$ | 0.62 | $ | 0.38 | $ | 1.46 | $ | 0.98 | ||||||||
Discontinued operations |
(0.01 | ) | (0.05 | ) | (0.06 | ) | (0.11 | ) | ||||||||
Net income attributable to
Penske Automotive Group common stockholders |
$ | 0.61 | $ | 0.33 | $ | 1.40 | $ | 0.87 | ||||||||
Shares used in determining basic earnings per share |
91,390 | 92,018 | 92,106 | 92,097 | ||||||||||||
Diluted earnings per share attributable to
Penske Automotive Group common stockholders: |
||||||||||||||||
Continuing operations |
$ | 0.62 | $ | 0.38 | $ | 1.46 | $ | 0.98 | ||||||||
Discontinued operations |
(0.01 | ) | (0.05 | ) | (0.06 | ) | (0.11 | ) | ||||||||
Net income attributable to
Penske Automotive Group common stockholders |
$ | 0.61 | $ | 0.33 | $ | 1.40 | $ | 0.87 | ||||||||
Shares used in determining diluted earnings per share |
91,431 | 92,141 | 92,169 | 92,171 | ||||||||||||
Amounts attributable to
Penske Automotive Group common stockholders: |
||||||||||||||||
Income from continuing operations |
$ | 57,045 | $ | 35,097 | $ | 135,803 | $ | 90,588 | ||||||||
Less: Income attributable to non-controlling interests |
338 | 283 | 907 | 504 | ||||||||||||
Income from continuing operations, net of tax |
56,707 | 34,814 | 134,896 | 90,084 | ||||||||||||
Loss from discontinued operations, net of tax |
(1,000 | ) | (4,837 | ) | (5,702 | ) | (10,312 | ) | ||||||||
Net income attributable to
Penske Automotive Group common stockholders |
$ | 55,707 | $ | 29,977 | $ | 129,194 | $ | 79,772 | ||||||||
Cash dividends per share |
$ | 0.08 | $ | | $ | 0.15 | $ | |
4
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
Operating Activities: |
||||||||
Net income |
$ | 130,101 | $ | 80,276 | ||||
Adjustments to reconcile net income to net cash from continuing operating
activities: |
||||||||
Depreciation |
36,578 | 35,123 | ||||||
Debt discount amortization |
1,718 | 6,990 | ||||||
Earnings of equity method investments |
(17,527 | ) | (11,725 | ) | ||||
Loss from discontinued operations, net of tax |
5,702 | 10,312 | ||||||
Deferred income taxes |
14,801 | 14,596 | ||||||
Gain on debt repurchase |
| (1,634 | ) | |||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
691 | (39,961 | ) | |||||
Inventories |
28,775 | (124,780 | ) | |||||
Floor plan notes payable |
(16,464 | ) | 112,148 | |||||
Accounts payable and accrued expenses |
15,580 | 34,471 | ||||||
Other |
(24,155 | ) | 2,907 | |||||
Net cash from continuing operating activities |
175,800 | 118,723 | ||||||
Investing Activities: |
||||||||
Purchase of equipment and improvements |
(80,269 | ) | (56,433 | ) | ||||
Dealership acquisitions, net, including repayment of sellers floor plan
notes payable of
$54,453 and $5,683, respectively |
(232,106 | ) | (9,280 | ) | ||||
Other |
2,865 | | ||||||
Net cash used in continuing investing activities |
(309,510 | ) | (65,713 | ) | ||||
Financing Activities: |
||||||||
Proceeds from borrowings under U.S. credit agreement revolving credit line |
494,500 | 511,500 | ||||||
Repayments under U.S. credit agreement revolving credit line |
(374,500 | ) | (475,000 | ) | ||||
Repurchase of 3.5% senior subordinated convertible notes |
(87,278 | ) | (156,604 | ) | ||||
Net borrowings (repayments) of other long-term debt |
32,461 | 9,895 | ||||||
Net borrowings of floor plan notes payable non-trade |
106,092 | 50,656 | ||||||
Proceeds from exercises of options, including excess tax benefit |
3,018 | 403 | ||||||
Repurchases of common stock |
(44,263 | ) | (751 | ) | ||||
Dividends |
(13,866 | ) | | |||||
Net cash from (used in) continuing financing activities |
116,164 | (59,901 | ) | |||||
Discontinued operations: |
||||||||
Net cash from discontinued operating activities |
(35,013 | ) | (2,511 | ) | ||||
Net cash from discontinued investing activities |
47,913 | 2,340 | ||||||
Net cash from discontinued financing activities |
(5,427 | ) | 626 | |||||
Net cash from discontinued operations |
7,473 | 455 | ||||||
Net change in cash and cash equivalents |
(10,073 | ) | (6,436 | ) | ||||
Cash and cash equivalents, beginning of period |
17,808 | 14,489 | ||||||
Cash and cash equivalents, end of period |
$ | 7,735 | $ | 8,053 | ||||
Supplemental disclosures of cash flow information: |
||||||||
Cash paid for: |
||||||||
Interest |
$ | 47,004 | $ | 56,456 | ||||
Income taxes |
38,664 | 22,839 | ||||||
Seller financed/assumed debt |
4,865 | |
5
Total | ||||||||||||||||||||||||||||||||
Accumulated | Stockholders Equity | |||||||||||||||||||||||||||||||
Common Stock | Additional | Other | Attributable to | |||||||||||||||||||||||||||||
Issued | Paid-in | Retained | Comprehensive | 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 |
380,315 | | 4,094 | | | 4,094 | | 4,094 | ||||||||||||||||||||||||
Repurchases of common stock |
(2,449,768 | ) | | (44,263 | ) | | | (44,263 | ) | | (44,263 | ) | ||||||||||||||||||||
Dividends |
| | | (13,866 | ) | | (13,866 | ) | | (13,866 | ) | |||||||||||||||||||||
Exercise of options, including tax benefit of $955 |
211,668 | | 3,018 | | | 3,018 | | 3,018 | ||||||||||||||||||||||||
Distributions to non-controlling interests |
| | | | | | (1,269 | ) | (1,269 | ) | ||||||||||||||||||||||
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 |
| | | | (1,170 | ) | (1,170 | ) | | (1,170 | ) | |||||||||||||||||||||
Other |
| | | | (9,612 | ) | (9,612 | ) | | (9,612 | ) | |||||||||||||||||||||
Net income |
| | | 129,194 | | 129,194 | 907 | 130,101 | ||||||||||||||||||||||||
Balance, September 30, 2011 |
90,241,767 | $ | 9 | $ | 700,949 | $ | 419,814 | $ | (12,455 | ) | $ | 1,108,317 | $ | 4,101 | $ | 1,112,418 | ||||||||||||||||
6
7
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues |
$ | 61,524 | $ | 86,346 | $ | 231,721 | $ | 268,549 | ||||||||
Pre-tax (loss) income |
(1,625 | ) | (7,668 | ) | (11,080 | ) | (15,950 | ) | ||||||||
Gain (loss) on
disposal |
250 | | 2,016 | (261 | ) |
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
Inventories |
$ | 27,452 | $ | 75,069 | ||||
Other assets |
26,716 | 41,949 | ||||||
Total assets |
$ | 54,168 | $ | 117,018 | ||||
Floor plan notes payable (including
non-trade) |
$ | 25,419 | $ | 68,198 | ||||
Other liabilities |
9,045 | 15,941 | ||||||
Total liabilities |
$ | 34,464 | $ | 84,139 | ||||
September 30, 2011 | ||||||||
Carrying Value | Fair Value | |||||||
7.75% senior
subordinated notes due 2016 |
$ | 375,000 | $ | 375,000 | ||||
3.5% senior subordinated convertible notes
due 2026 |
63,324 | 59,366 |
8
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
New vehicles |
$ | 949,357 | $ | 1,008,005 | ||||
Used vehicles |
453,180 | 366,404 | ||||||
Parts, accessories and other |
79,092 | 74,748 | ||||||
Total inventories |
$ | 1,481,629 | $ | 1,449,157 | ||||
September 30, | ||||||||
2011 | 2010 | |||||||
Accounts receivable |
$ | 953 | $ | | ||||
Inventory |
61,247 | 6,336 | ||||||
Other current assets |
| 17 | ||||||
Property and equipment |
40,190 | | ||||||
Goodwill |
107,498 | 3,014 | ||||||
Franchise value |
29,491 | | ||||||
Other assets |
628 | | ||||||
Current liabilities |
(6,190 | ) | (87 | ) | ||||
Total consideration |
233,817 | 9,280 | ||||||
Seller financed/assumed debt |
(1,711 | ) | | |||||
Cash used in dealership acquisitions |
$ | 232,106 | $ | 9,280 | ||||
9
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues |
$ | 2,951,046 | $ | 2,795,667 | $ | 8,822,713 | $ | 8,075,752 | ||||||||
Income from continuing operations |
57,045 | 36,451 | 138,110 | 94,753 | ||||||||||||
Net income |
56,045 | 31,614 | 132,408 | 84,441 | ||||||||||||
Income from continuing operations
per diluted common share |
$ | 0.62 | $ | 0.40 | $ | 1.50 | $ | 1.03 | ||||||||
Net income per diluted common
share |
$ | 0.61 | $ | 0.34 | $ | 1.44 | $ | 0.92 |
Franchise | ||||||||
Goodwill | Value | |||||||
Balance, January 1, 2011 |
$ | 807,874 | $ | 203,401 | ||||
Additions |
107,498 | 29,491 | ||||||
Foreign currency translation |
61 | (78 | ) | |||||
Balance, September 30, 2011 |
$ | 915,433 | $ | 232,814 | ||||
10
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Weighted average number of common shares
outstanding |
91,390 | 92,018 | 92,106 | 92,097 | ||||||||||||
Effect of non-participatory equity compensation |
41 | 123 | 63 | 74 | ||||||||||||
Weighted average number of common shares
outstanding,
including effect of dilutive securities |
91,431 | 92,141 | 92,169 | 92,171 | ||||||||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
U.S. credit agreement revolving credit line |
$ | 120,000 | $ | | ||||
U.S. credit agreement term loan |
134,000 | 134,000 | ||||||
U.K. credit agreement revolving credit line |
67,020 | 54,597 | ||||||
U.K. credit agreement term loan |
| 5,505 | ||||||
U.K. credit agreement overdraft line of credit |
5,012 | 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 |
77,914 | 46,052 | ||||||
Other |
9,299 | 8,724 | ||||||
Total long-term debt |
851,569 | 779,878 | ||||||
Less: current portion |
(9,642 | ) | (10,593 | ) | ||||
Net long-term debt |
$ | 841,927 | $ | 769,285 | ||||
11
12
13
14
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Attributable to Penske Automotive Group: |
||||||||||||||||
Net income |
$ | 55,707 | $ | 29,977 | $ | 129,194 | $ | 79,772 | ||||||||
Other comprehensive income (loss): |
||||||||||||||||
Foreign currency translation |
(20,904 | ) | 31,922 | (1,170 | ) | (10,909 | ) | |||||||||
Other |
(4,923 | ) | (117 | ) | (9,612 | ) | 7,098 | |||||||||
Total attributable to Penske Automotive
Group |
29,880 | 61,782 | 118,412 | 75,961 | ||||||||||||
Attributable to the non-controlling interest: |
||||||||||||||||
Income |
338 | 283 | 907 | 504 | ||||||||||||
Total comprehensive income |
$ | 30,218 | $ | 62,065 | $ | 119,319 | $ | 76,465 | ||||||||
15
PAG | ||||||||||||
Retail | Investments | Total | ||||||||||
Revenues |
||||||||||||
2011 |
$ | 2,951,046 | $ | | $ | 2,951,046 | ||||||
2010 |
2,669,773 | | 2,669,773 | |||||||||
Adjusted segment income |
||||||||||||
2011 |
61,925 | 8,475 | 70,400 | |||||||||
2010 |
45,153 | 6,765 | 51,918 |
PAG | ||||||||||||
Retail | Investments | Total | ||||||||||
Revenues |
||||||||||||
2011 |
$ | 8,623,710 | $ | | $ | 8,623,710 | ||||||
2010 |
7,697,770 | | 7,697,770 | |||||||||
Adjusted segment income |
||||||||||||
2011 |
171,229 | 15,867 | 187,096 | |||||||||
2010 |
127,077 | 10,362 | 137,439 |
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Adjusted segment income |
$ | 70,400 | $ | 51,918 | $ | 187,096 | $ | 137,439 | ||||||||
Gain on debt repurchase |
| 607 | | 1,634 | ||||||||||||
Income from continuing
operations before
income taxes |
$ | 70,400 | $ | 52,525 | $ | 187,096 | $ | 139,073 | ||||||||
16
Penske | Non- | |||||||||||||||||||
Total | Automotive | Guarantor | Guarantor | |||||||||||||||||
Company | Eliminations | Group | Subsidiaries | Subsidiaries | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Cash and cash equivalents |
$ | 7,735 | $ | | $ | | $ | 6,156 | $ | 1,579 | ||||||||||
Accounts receivable, net |
385,137 | (297,782 | ) | 297,782 | 186,608 | 198,529 | ||||||||||||||
Inventories |
1,481,629 | | | 805,587 | 676,042 | |||||||||||||||
Other current assets |
88,676 | | 2,141 | 39,914 | 46,621 | |||||||||||||||
Assets held for sale |
54,168 | | | 54,168 | | |||||||||||||||
Total current assets |
2,017,345 | (297,782 | ) | 299,923 | 1,092,433 | 922,771 | ||||||||||||||
Property and equipment, net |
821,421 | | 5,134 | 518,945 | 297,342 | |||||||||||||||
Intangible assets |
1,148,247 | | | 707,451 | 440,796 | |||||||||||||||
Equity method investments |
293,819 | | 241,598 | | 52,221 | |||||||||||||||
Other long-term assets |
14,637 | (1,341,834 | ) | 1,349,226 | 5,719 | 1,526 | ||||||||||||||
Total assets |
$ | 4,295,469 | $ | (1,639,616 | ) | $ | 1,895,881 | $ | 2,324,548 | $ | 1,714,656 | |||||||||
Floor plan notes payable |
$ | 902,163 | $ | | $ | | $ | 446,364 | $ | 455,799 | ||||||||||
Floor plan notes payable
non-trade |
597,982 | | 89,008 | 261,497 | 247,477 | |||||||||||||||
Accounts payable |
226,709 | | 1,761 | 85,387 | 139,561 | |||||||||||||||
Accrued expenses |
247,185 | (297,782 | ) | 370 | 152,696 | 391,901 | ||||||||||||||
Current portion of long-term debt |
9,642 | | | 5,161 | 4,481 | |||||||||||||||
Liabilities held for sale |
34,464 | | | 34,464 | | |||||||||||||||
Total current liabilities |
2,018,145 | (297,782 | ) | 91,139 | 985,569 | 1,239,219 | ||||||||||||||
Long-term debt |
841,927 | (37,810 | ) | 692,324 | 77,571 | 109,842 | ||||||||||||||
Deferred tax liabilities |
183,708 | | | 163,025 | 20,683 | |||||||||||||||
Other long-term liabilities |
139,271 | | | 92,207 | 47,064 | |||||||||||||||
Total liabilities |
3,183,051 | (335,592 | ) | 783,463 | 1,318,372 | 1,416,808 | ||||||||||||||
Total equity |
1,112,418 | (1,304,024 | ) | 1,112,418 | 1,006,176 | 297,848 | ||||||||||||||
Total liabilities and equity |
$ | 4,295,469 | $ | (1,639,616 | ) | $ | 1,895,881 | $ | 2,324,548 | $ | 1,714,656 | |||||||||
17
Penske | Non- | |||||||||||||||||||
Total | Automotive | Guarantor | Guarantor | |||||||||||||||||
Company | Eliminations | Group | Subsidiaries | Subsidiaries | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Cash and cash equivalents |
$ | 17,808 | $ | | $ | | $ | 15,437 | $ | 2,371 | ||||||||||
Accounts receivable, net |
383,379 | (269,021 | ) | 269,021 | 227,978 | 155,401 | ||||||||||||||
Inventories |
1,449,157 | | | 874,182 | 574,975 | |||||||||||||||
Other current assets |
68,355 | | 1,127 | 32,269 | 34,959 | |||||||||||||||
Assets held for sale |
117,018 | | | 117,018 | | |||||||||||||||
Total current assets |
2,035,717 | (269,021 | ) | 270,148 | 1,266,884 | 767,706 | ||||||||||||||
Property and equipment, net |
719,762 | | 4,957 | 447,044 | 267,761 | |||||||||||||||
Intangible assets |
1,011,275 | | | 488,687 | 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 |
$ | 918,628 | $ | | $ | | $ | 566,615 | $ | 352,013 | ||||||||||
Floor plan notes payable
non-trade |
491,889 | | 25,000 | 287,568 | 179,321 | |||||||||||||||
Accounts payable |
253,277 | | 2,186 | 85,779 | 165,312 | |||||||||||||||
Accrued expenses |
202,480 | (269,021 | ) | 564 | 95,806 | 375,131 | ||||||||||||||
Current portion of long-term debt |
10,593 | | | 1,264 | 9,329 | |||||||||||||||
Liabilities held for sale |
84,139 | | | 84,139 | | |||||||||||||||
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 | |||||||||
18
Penske | Non- | |||||||||||||||||||
Total | Automotive | Guarantor | Guarantor | |||||||||||||||||
Company | Eliminations | Group | Subsidiaries | Subsidiaries | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Revenues |
$ | 2,951,046 | $ | | $ | | $ | 1,715,582 | $ | 1,235,464 | ||||||||||
Cost of sales |
2,483,939 | | | 1,427,489 | 1,056,450 | |||||||||||||||
Gross profit |
467,107 | | | 288,093 | 179,014 | |||||||||||||||
Selling, general and administrative
expenses |
375,432 | | 4,381 | 226,720 | 144,331 | |||||||||||||||
Depreciation |
12,590 | | 471 | 6,687 | 5,432 | |||||||||||||||
Operating income (loss) |
79,085 | | (4,852 | ) | 54,686 | 29,251 | ||||||||||||||
Floor plan interest expense |
(7,020 | ) | | (449 | ) | (3,258 | ) | (3,313 | ) | |||||||||||
Other interest expense |
(11,288 | ) | | (6,347 | ) | (988 | ) | (3,953 | ) | |||||||||||
Debt discount amortization |
| | | | | |||||||||||||||
Equity in earnings of affiliates |
9,623 | | 7,359 | 825 | 1,439 | |||||||||||||||
Equity in earnings of subsidiaries |
| (74,351 | ) | 74,351 | | | ||||||||||||||
Income (loss) from continuing operations
before income taxes |
70,400 | (74,351 | ) | 70,062 | 51,265 | 23,424 | ||||||||||||||
Income taxes |
(13,355 | ) | 14,173 | (13,355 | ) | (7,439 | ) | (6,734 | ) | |||||||||||
Income (loss) from continuing operations |
57,045 | (60,178 | ) | 56,707 | 43,826 | 16,690 | ||||||||||||||
(Loss) income from discontinued
operations,
net of tax |
(1,000 | ) | 1,000 | (1,000 | ) | (1,000 | ) | | ||||||||||||
Net income (loss) |
56,045 | (59,178 | ) | 55,707 | 42,826 | 16,690 | ||||||||||||||
Less: Income attributable to non-
controlling interests |
338 | | | | 338 | |||||||||||||||
Net income (loss) attributable to Penske
Automotive Group common
stockholders |
$ | 55,707 | $ | (59,178 | ) | $ | 55,707 | $ | 42,826 | $ | 16,352 | |||||||||
19
Penske | Non- | |||||||||||||||||||
Total | Automotive | Guarantor | Guarantor | |||||||||||||||||
Company | Eliminations | Group | Subsidiaries | Subsidiaries | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Revenues |
$ | 2,669,773 | $ | | $ | | $ | 1,518,861 | $ | 1,150,912 | ||||||||||
Cost of sales |
2,251,604 | | | 1,266,293 | 985,311 | |||||||||||||||
Gross profit |
418,169 | | | 252,568 | 165,601 | |||||||||||||||
Selling, general and administrative
expenses |
339,120 | | 4,547 | 202,676 | 131,897 | |||||||||||||||
Depreciation |
11,820 | | 241 | 6,490 | 5,089 | |||||||||||||||
Operating income (loss) |
67,229 | | (4,788 | ) | 43,402 | 28,615 | ||||||||||||||
Floor plan interest expense |
(8,805 | ) | | (380 | ) | (5,975 | ) | (2,450 | ) | |||||||||||
Other interest expense |
(12,229 | ) | | (7,471 | ) | (558 | ) | (4,200 | ) | |||||||||||
Debt discount amortization |
(1,647 | ) | | (1,647 | ) | | | |||||||||||||
Equity in earnings of affiliates |
7,370 | | 6,441 | | 929 | |||||||||||||||
Gain on debt repurchase |
607 | | 607 | | | |||||||||||||||
Equity in earnings of subsidiaries |
| (59,480 | ) | 59,480 | | | ||||||||||||||
Income (loss) from continuing operations
before income taxes |
52,525 | (59,480 | ) | 52,242 | 36,869 | 22,894 | ||||||||||||||
Income taxes |
(17,428 | ) | 19,843 | (17,428 | ) | (13,221 | ) | (6,622 | ) | |||||||||||
Income (loss) from continuing operations |
35,097 | (39,637 | ) | 34,814 | 23,648 | 16,272 | ||||||||||||||
(Loss) income from discontinued
operations,
net of tax |
(4,837 | ) | 4,837 | (4,837 | ) | (4,837 | ) | | ||||||||||||
Net income (loss) |
30,260 | (34,800 | ) | 29,977 | 18,811 | 16,272 | ||||||||||||||
Less: Income attributable to non-
controlling interests |
283 | | | | 283 | |||||||||||||||
Net income (loss) attributable to Penske
Automotive Group common
stockholders |
$ | 29,977 | $ | (34,800 | ) | $ | 29,977 | $ | 18,811 | $ | 15,989 | |||||||||
20
Penske | Non- | |||||||||||||||||||
Total | Automotive | Guarantor | Guarantor | |||||||||||||||||
Company | Eliminations | Group | Subsidiaries | Subsidiaries | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Revenues |
$ | 8,623,710 | $ | | $ | | $ | 4,932,204 | $ | 3,691,506 | ||||||||||
Cost of sales |
7,249,638 | | | 4,096,523 | 3,153,115 | |||||||||||||||
Gross profit |
1,374,072 | | | 835,681 | 538,391 | |||||||||||||||
Selling, general and administrative
expenses |
1,111,812 | | 14,120 | 670,668 | 427,024 | |||||||||||||||
Depreciation |
36,578 | | 1,013 | 19,537 | 16,028 | |||||||||||||||
Operating income (loss) |
225,682 | | (15,133 | ) | 145,476 | 95,339 | ||||||||||||||
Floor plan interest expense |
(21,131 | ) | | (911 | ) | (10,608 | ) | (9,612 | ) | |||||||||||
Other interest expense |
(33,264 | ) | | (18,581 | ) | (2,237 | ) | (12,446 | ) | |||||||||||
Debt discount amortization |
(1,718 | ) | | (1,718 | ) | | | |||||||||||||
Equity in earnings of affiliates |
17,527 | | 14,711 | 825 | 1,991 | |||||||||||||||
Equity in earnings of subsidiaries |
| (207,667 | ) | 207,667 | | | ||||||||||||||
Income (loss) from continuing operations
before income taxes |
187,096 | (207,667 | ) | 186,035 | 133,456 | 75,272 | ||||||||||||||
Income taxes |
(51,293 | ) | 57,085 | (51,139 | ) | (35,773 | ) | (21,466 | ) | |||||||||||
Income (loss) from continuing operations |
135,803 | (150,582 | ) | 134,896 | 97,683 | 53,806 | ||||||||||||||
(Loss) income from discontinued
operations,
net of tax |
(5,702 | ) | 5,702 | (5,702 | ) | (5,702 | ) | | ||||||||||||
Net income (loss) |
130,101 | (144,880 | ) | 129,194 | 91,981 | 53,806 | ||||||||||||||
Less: Income attributable to non-
controlling interests |
907 | | | | 907 | |||||||||||||||
Net income (loss) attributable to Penske
Automotive Group common
stockholders |
$ | 129,194 | $ | (144,880 | ) | $ | 129,194 | $ | 91,981 | $ | 52,899 | |||||||||
21
Penske | Non- | |||||||||||||||||||
Total | Automotive | Guarantor | Guarantor | |||||||||||||||||
Company | Eliminations | Group | Subsidiaries | Subsidiaries | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Revenues |
$ | 7,697,770 | $ | | $ | | $ | 4,364,444 | $ | 3,333,326 | ||||||||||
Cost of sales |
6,464,394 | | | 3,624,683 | 2,839,711 | |||||||||||||||
Gross profit |
1,233,376 | | | 739,761 | 493,615 | |||||||||||||||
Selling, general and administrative
expenses |
1,003,151 | | 12,634 | 604,122 | 386,395 | |||||||||||||||
Depreciation |
35,123 | | 831 | 19,309 | 14,983 | |||||||||||||||
Operating income (loss) |
195,102 | | (13,465 | ) | 116,330 | 92,237 | ||||||||||||||
Floor plan interest expense |
(24,907 | ) | | (380 | ) | (17,463 | ) | (7,064 | ) | |||||||||||
Other interest expense |
(37,491 | ) | | (23,861 | ) | (1,147 | ) | (12,483 | ) | |||||||||||
Debt discount amortization |
(6,990 | ) | | (6,990 | ) | | | |||||||||||||
Equity in earnings of affiliates |
11,725 | | 10,724 | | 1,001 | |||||||||||||||
Gain on debt repurchase |
1,634 | | 1,634 | | | |||||||||||||||
Equity in earnings of subsidiaries |
| (170,907 | ) | 170,907 | | | ||||||||||||||
Income (loss) from continuing operations
before income taxes |
139,073 | (170,907 | ) | 138,569 | 97,720 | 73,691 | ||||||||||||||
Income taxes |
(48,485 | ) | 59,800 | (48,485 | ) | (39,033 | ) | (20,767 | ) | |||||||||||
Income (loss) from continuing operations |
90,588 | (111,107 | ) | 90,084 | 58,687 | 52,924 | ||||||||||||||
(Loss) income from discontinued
operations,
net of tax |
(10,312 | ) | 10,312 | (10,312 | ) | (10,312 | ) | | ||||||||||||
Net income (loss) |
80,276 | (100,795 | ) | 79,772 | 48,375 | 52,924 | ||||||||||||||
Less: Income attributable to non-
controlling interests |
504 | | | | 504 | |||||||||||||||
Net income (loss) attributable to Penske
Automotive Group common
stockholders |
$ | 79,772 | $ | (100,795 | ) | $ | 79,772 | $ | 48,375 | $ | 52,420 | |||||||||
22
Penske | Non- | |||||||||||||||
Total | Automotive | Guarantor | Guarantor | |||||||||||||
Company | Group | Subsidiaries | Subsidiaries | |||||||||||||
(In thousands) | ||||||||||||||||
Net cash from continuing operating activities |
$ | 175,800 | $ | (39,647 | ) | $ | 229,486 | $ | (14,039 | ) | ||||||
Investing activities: |
||||||||||||||||
Purchase of equipment and improvements |
(80,269 | ) | (1,972 | ) | (44,779 | ) | (33,518 | ) | ||||||||
Dealership acquisitions, net |
(232,106 | ) | | (230,426 | ) | (1,680 | ) | |||||||||
Other |
2,865 | | | 2,865 | ||||||||||||
Net cash from continuing investing activities |
(309,510 | ) | (1,972 | ) | (275,205 | ) | (32,333 | ) | ||||||||
Financing activities: |
||||||||||||||||
Repurchase of 3.5% senior subordinated convertible notes |
(87,278 | ) | (87,278 | ) | | | ||||||||||
Net borrowings (repayments) of other long-term debt |
152,461 | 120,000 | 57,015 | (24,554 | ) | |||||||||||
Net borrowings (repayments) of floor plan notes payable
non-trade |
106,092 | 64,008 | (33,622 | ) | 75,706 | |||||||||||
Proceeds from exercises of options, including excess
tax benefit |
3,018 | 3,018 | | | ||||||||||||
Repurchases of common stock |
(44,263 | ) | (44,263 | ) | | | ||||||||||
Dividends |
(13,866 | ) | (13,866 | ) | | | ||||||||||
Distributions from (to) parent |
| | 5,572 | (5,572 | ) | |||||||||||
Net cash from continuing financing activities |
116,164 | 41,619 | 28,965 | 45,580 | ||||||||||||
Net cash from discontinued operations |
7,473 | | 7,473 | | ||||||||||||
Net change in cash and cash equivalents |
(10,073 | ) | | (9,281 | ) | (792 | ) | |||||||||
Cash and cash equivalents, beginning of period |
17,808 | | 15,437 | 2,371 | ||||||||||||
Cash and cash equivalents, end of period |
$ | 7,735 | $ | | $ | 6,156 | $ | 1,579 | ||||||||
23
Penske | Non- | |||||||||||||||
Total | Automotive | Guarantor | Guarantor | |||||||||||||
Company | Group | Subsidiaries | Subsidiaries | |||||||||||||
(In thousands) | ||||||||||||||||
Net cash from continuing operating activities |
$ | 118,723 | $ | 109,785 | $ | 37,411 | $ | (28,473 | ) | |||||||
Investing activities: |
||||||||||||||||
Purchase of equipment and improvements |
(56,433 | ) | 367 | (38,691 | ) | (18,109 | ) | |||||||||
Dealership acquisitions, net |
(9,280 | ) | | (9,280 | ) | | ||||||||||
Other |
| | 83 | (83 | ) | |||||||||||
Net cash from continuing investing activities |
(65,713 | ) | 367 | (47,888 | ) | (18,192 | ) | |||||||||
Financing activities: |
||||||||||||||||
Repurchase of 3.5% senior subordinated convertible notes |
(156,604 | ) | (156,604 | ) | | | ||||||||||
Net borrowings (repayments) of other long-term debt |
46,395 | 26,500 | (12,520 | ) | 32,415 | |||||||||||
Net borrowings (repayments) of floor plan notes payable
non-trade |
50,656 | 20,300 | 15,809 | 14,547 | ||||||||||||
Proceeds from exercises of options, including excess
tax benefit |
403 | 403 | | | ||||||||||||
Repurchases of common stock |
(751 | ) | (751 | ) | | | ||||||||||
Distributions from (to) parent |
| | 954 | (954 | ) | |||||||||||
Net cash from continuing financing activities |
(59,901 | ) | (110,152 | ) | 4,243 | 46,008 | ||||||||||
Net cash from discontinued operations |
455 | | 455 | | ||||||||||||
Net change in cash and cash equivalents |
(6,436 | ) | | (5,779 | ) | (657 | ) | |||||||||
Cash and cash equivalents, beginning of period |
14,489 | | 12,834 | 1,655 | ||||||||||||
Cash and cash equivalents, end of period |
$ | 8,053 | $ | | $ | 7,055 | $ | 998 | ||||||||
24
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
25
26
27
28
2011 vs. 2010 | ||||||||||||||||
Dollars in millions, except per unit amounts | 2011 | 2010 | Change | % Change | ||||||||||||
New retail unit sales |
38,487 | 38,936 | (449 | ) | (1.2 | %) | ||||||||||
Same store new retail unit sales |
36,990 | 38,697 | (1,707 | ) | (4.4 | %) | ||||||||||
New retail sales revenue |
$ | 1,471.6 | $ | 1,373.2 | 98.4 | 7.2 | % | |||||||||
Same store new retail sales revenue |
$ | 1,397.9 | $ | 1,368.2 | 29.7 | 2.2 | % | |||||||||
New retail sales revenue per unit |
$ | 38,236 | $ | 35,269 | 2,967 | 8.4 | % | |||||||||
Same store new retail sales revenue per unit |
$ | 37,792 | $ | 35,356 | 2,436 | 6.9 | % | |||||||||
Gross profit new |
$ | 124.6 | $ | 109.9 | 14.7 | 13.4 | % | |||||||||
Same store gross profit new |
$ | 117.9 | $ | 109.4 | 8.5 | 7.8 | % | |||||||||
Average gross profit per new vehicle retailed |
$ | 3,238 | $ | 2,821 | 417 | 14.8 | % | |||||||||
Same store average gross profit per new vehicle
retailed |
$ | 3,188 | $ | 2,826 | 362 | 12.8 | % | |||||||||
Gross margin % new |
8.5 | % | 8.0 | % | 0.5 | % | 6.3 | % | ||||||||
Same store gross margin % new |
8.4 | % | 8.0 | % | 0.4 | % | 5.0 | % |
2011 vs. 2010 | ||||||||||||||||
Dollars in millions, except per unit amounts | 2011 | 2010 | Change | % Change | ||||||||||||
Used retail unit sales |
33,717 | 29,058 | 4,659 | 16.0 | % | |||||||||||
Same store used retail unit sales |
32,698 | 28,952 | 3,746 | 12.9 | % | |||||||||||
Used retail sales revenue |
$ | 890.3 | $ | 750.7 | 139.6 | 18.6 | % | |||||||||
Same store used retail sales revenue |
$ | 861.6 | $ | 749.3 | 112.3 | 15.0 | % | |||||||||
Used retail sales revenue per unit |
$ | 26,404 | $ | 25,835 | 569 | 2.2 | % | |||||||||
Same store used retail sales revenue per unit |
$ | 26,349 | $ | 25,879 | 470 | 1.8 | % | |||||||||
Gross profit used |
$ | 66.7 | $ | 55.9 | 10.8 | 19.3 | % | |||||||||
Same store gross profit used |
$ | 64.2 | $ | 55.8 | 8.4 | 15.1 | % | |||||||||
Average gross profit per used vehicle retailed |
$ | 1,978 | $ | 1,924 | 54 | 2.8 | % | |||||||||
Same store average gross profit per used
vehicle retailed |
$ | 1,962 | $ | 1,927 | 35 | 1.8 | % | |||||||||
Gross margin % used |
7.5 | % | 7.4 | % | 0.1 | % | 1.4 | % | ||||||||
Same store gross margin % used |
7.4 | % | 7.4 | % | 0.0 | % | 0.0 | % |
29
2011 vs. 2010 | ||||||||||||||||
Dollars in millions, except per unit amounts | 2011 | 2010 | Change | % Change | ||||||||||||
Finance and insurance revenue |
$ | 73.3 | $ | 65.2 | $ | 8.1 | 12.4 | % | ||||||||
Same store finance and insurance revenue |
$ | 70.9 | $ | 64.9 | $ | 6.0 | 9.2 | % | ||||||||
Finance and insurance revenue per unit |
$ | 1,015 | $ | 959 | $ | 56 | 5.8 | % | ||||||||
Same store finance and insurance revenue per
unit |
$ | 1,018 | $ | 959 | $ | 59 | 6.2 | % |
2011 vs. 2010 | ||||||||||||||||
Dollars in millions, except per unit amounts | 2011 | 2010 | Change | % Change | ||||||||||||
Service and parts revenue |
$ | 354.6 | $ | 326.5 | 28.1 | 8.6 | % | |||||||||
Same store service and parts revenue |
$ | 339.1 | $ | 325.8 | 13.3 | 4.1 | % | |||||||||
Gross profit |
$ | 201.5 | $ | 186.6 | 14.9 | 8.0 | % | |||||||||
Same store gross profit |
$ | 192.8 | $ | 186.2 | 6.6 | 3.5 | % | |||||||||
Gross margin |
56.8 | % | 57.2 | % | (0.4 | %) | (0.7 | %) | ||||||||
Same store gross margin |
56.9 | % | 57.2 | % | (0.3 | %) | (0.5 | %) |
30
31
2011 vs. 2010 | ||||||||||||||||
Dollars in millions, except per unit amounts | 2011 | 2010 | Change | % Change | ||||||||||||
New retail unit sales |
114,943 | 111,961 | 2,982 | 2.7 | % | |||||||||||
Same store new retail unit sales |
109,084 | 109,498 | (414 | ) | (0.4 | %) | ||||||||||
New retail sales revenue |
$ | 4,288.7 | $ | 3,882.9 | 405.8 | 10.5 | % | |||||||||
Same store new retail sales revenue |
$ | 4,047.3 | $ | 3,802.5 | 244.8 | 6.4 | % | |||||||||
New retail sales revenue per unit |
$ | 37,312 | $ | 34,681 | 2,631 | 7.6 | % | |||||||||
Same store new retail sales revenue per unit |
$ | 37,102 | $ | 34,727 | 2,375 | 6.8 | % | |||||||||
Gross profit new |
$ | 356.4 | $ | 317.3 | 39.1 | 12.3 | % | |||||||||
Same store gross profit new |
$ | 336.3 | $ | 310.6 | 25.7 | 8.3 | % | |||||||||
Average gross profit per new vehicle retailed |
$ | 3,101 | $ | 2,834 | 267 | 9.4 | % | |||||||||
Same store average gross profit per new vehicle
retailed |
$ | 3,083 | $ | 2,836 | 247 | 8.7 | % | |||||||||
Gross margin % new |
8.3 | % | 8.2 | % | 0.1 | % | 1.2 | % | ||||||||
Same store gross margin % new |
8.3 | % | 8.2 | % | 0.1 | % | 1.2 | % |
32
2011 vs. 2010 | ||||||||||||||||
Dollars in millions, except per unit amounts | 2011 | 2010 | Change | % Change | ||||||||||||
Used retail unit sales |
97,494 | 83,460 | 14,034 | 16.8 | % | |||||||||||
Same store used retail unit sales |
92,548 | 81,760 | 10,788 | 13.2 | % | |||||||||||
Used retail sales revenue |
$ | 2,580.3 | $ | 2,170.0 | 410.3 | 18.9 | % | |||||||||
Same store used retail sales revenue |
$ | 2,458.1 | $ | 2,134.9 | 323.2 | 15.1 | % | |||||||||
Used retail sales revenue per unit |
$ | 26,466 | $ | 26,001 | 465 | 1.8 | % | |||||||||
Same store used retail sales revenue per unit |
$ | 26,561 | $ | 26,112 | 449 | 1.7 | % | |||||||||
Gross profit used |
$ | 204.8 | $ | 170.5 | 34.3 | 20.1 | % | |||||||||
Same store gross profit used |
$ | 196.4 | $ | 169.1 | 27.3 | 16.1 | % | |||||||||
Average gross profit per used vehicle retailed |
$ | 2,100 | $ | 2,043 | 57 | 2.8 | % | |||||||||
Same store average gross profit per used vehicle retailed |
$ | 2,122 | $ | 2,068 | 54 | 2.6 | % | |||||||||
Gross margin % used |
7.9 | % | 7.9 | % | 0.0 | % | 0.0 | % | ||||||||
Same store gross margin % used |
8.0 | % | 7.9 | % | 0.1 | % | 1.3 | % |
2011 vs. 2010 | ||||||||||||||||
Dollars in millions, except per unit amounts | 2011 | 2010 | Change | % Change | ||||||||||||
Finance and insurance revenue |
$ | 208.8 | $ | 184.6 | $ | 24.2 | 13.1 | % | ||||||||
Same store finance and insurance revenue |
$ | 201.2 | $ | 181.8 | $ | 19.4 | 10.7 | % | ||||||||
Finance and insurance revenue per unit |
$ | 983 | $ | 945 | $ | 38 | 4.0 | % | ||||||||
Same store finance and insurance revenue per
unit |
$ | 998 | $ | 951 | $ | 47 | 4.9 | % |
33
2011 vs. 2010 | ||||||||||||||||
Dollars in millions, except per unit amounts | 2011 | 2010 | Change | % Change | ||||||||||||
Service and parts revenue |
$ | 1,049.5 | $ | 974.9 | 74.6 | 7.7 | % | |||||||||
Same store service and parts revenue |
$ | 997.7 | $ | 958.8 | 38.9 | 4.1 | % | |||||||||
Gross profit |
$ | 597.9 | $ | 554.4 | 43.5 | 7.8 | % | |||||||||
Same store gross profit |
$ | 569.2 | $ | 545.5 | 23.7 | 4.3 | % | |||||||||
Gross margin |
57.0 | % | 56.9 | % | 0.1 | % | 0.2 | % | ||||||||
Same store gross margin |
57.0 | % | 56.9 | % | 0.1 | % | 0.2 | % |
34
35
36
37
38
Nine Months Ended | ||||||||
September 30, | ||||||||
Dollars in millions | 2011 | 2010 | ||||||
Net cash from continuing operating activities as reported |
$ | 175.8 | $ | 118.7 | ||||
Floor plan notes payable non-trade as reported |
106.1 | 50.7 | ||||||
Net cash from continuing operating activities including
all floor plan notes payable |
$ | 281.9 | $ | 169.4 | ||||
39
40
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. |
41
| 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, popularity and availability 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 natural disasters such as 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; |
42
| non-compliance with the financial ratios and other covenants under our credit agreements
and operating leases; |
| 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. |
43
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
| 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. |
Item 4. | Controls and Procedures |
44
Item 1. | Legal Proceedings |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
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 | per Share | or Programs | the Plans or Program | ||||||||||||
July 1 to July 31, 2011 |
| $ | | | $ | 138,580,578 | ||||||||||
August 1 to August 31, 2011 |
1,166,423 | 17.55 | 1,166,423 | 118,108,185 | ||||||||||||
September 1 to September
30, 2011 |
665,136 | 17.03 | 665,136 | 106,778,845 | ||||||||||||
1,831,559 | $ | 17.39 | 1,831,559 | |||||||||||||
45
Item 6. | Exhibits |
4.1 | Fourth Amendment dated September 30, 2011 to the Third Amended and
Restated Credit Agreement dated September 30, 2008 by and among
us, Mercedes-Benz Financial Services USA LLC and Toyota Motor
Credit Corporation (incorporated by reference to exhibit 4.1 to
the 8-K filed September 30, 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. |
46
PENSKE AUTOMOTIVE GROUP, INC. |
||||
Date: November 7, 2011 | By: | /s/ Roger S. Penske | ||
Roger S. Penske | ||||
Chief Executive Officer | ||||
Date: November 7, 2011 | By: | /s/ David K. Jones | ||
David K. Jones | ||||
Chief Financial Officer | ||||
47
Exhibit | ||||
No. | Description | |||
4.1 | Fourth Amendment dated September 30, 2011 to the Third
Amended and Restated Credit Agreement dated September
30, 2008 by and among us, Mercedes-Benz Financial
Services USA LLC and Toyota Motor Credit Corporation
(incorporated by reference to exhibit 4.1 to the 8-K
filed September 30, 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. |
48
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||
September 30, | September 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 |
$ | 70.4 | 52.5 | 187.1 | 139.1 | 195.8 | 129.6 | (553.1 | ) | 178.7 | 185.7 | |||||||||||||||||||||||||
Less undistributed earnings of equity
method investments |
$ | (9.6 | ) | (7.4 | ) | (17.5 | ) | (11.7 | ) | (20.6 | ) | (13.8 | ) | (16.5 | ) | (4.1 | ) | (8.2 | ) | |||||||||||||||||
Plus distributed earnings of equity
method investments |
$ | | 0.3 | 8.5 | 9.7 | 9.9 | 21.3 | 3.5 | 6.2 | 0.3 | ||||||||||||||||||||||||||
Plus amortization of capitalized interest |
$ | 0.2 | 0.2 | 0.6 | 0.6 | 0.8 | 0.8 | 0.8 | 0.6 | 0.5 | ||||||||||||||||||||||||||
$ | 61.0 | 45.6 | 178.7 | 137.7 | 185.9 | 137.9 | (565.3 | ) | 181.4 | 178.3 | ||||||||||||||||||||||||||
Plus: |
||||||||||||||||||||||||||||||||||||
Fixed charges: |
||||||||||||||||||||||||||||||||||||
Other interest expense (includes
amortization of deferred financing costs) |
$ | 11.3 | 12.2 | 33.3 | 37.5 | 49.3 | 55.2 | 54.5 | 55.3 | 48.4 | ||||||||||||||||||||||||||
Debt discount amortization |
$ | | 1.6 | 1.7 | 7.0 | 8.6 | 13.0 | 14.0 | 13.0 | 11.1 | ||||||||||||||||||||||||||
Floor plan interest expense |
$ | 7.0 | 8.8 | 21.1 | 24.9 | 33.7 | 34.2 | 61.8 | 70.5 | 56.2 | ||||||||||||||||||||||||||
Capitalized interest |
$ | 0.2 | 0.1 | 0.4 | 0.4 | 0.5 | 0.9 | 4.8 | 5.5 | 7.1 | ||||||||||||||||||||||||||
Interest factor in rental expense |
$ | 14.2 | 13.4 | 42.3 | 39.7 | 53.9 | 51.9 | 51.0 | 48.2 | 41.8 | ||||||||||||||||||||||||||
Total fixed charges |
$ | 32.7 | 36.1 | 98.8 | 109.5 | 146.0 | 155.2 | 186.1 | 192.5 | 164.6 | ||||||||||||||||||||||||||
Less: |
||||||||||||||||||||||||||||||||||||
Capitalized interest |
$ | 0.2 | 0.1 | 0.4 | 0.4 | 0.5 | 0.9 | 4.8 | 5.5 | 7.1 | ||||||||||||||||||||||||||
Earnings |
$ | 93.5 | 81.6 | 277.1 | 246.8 | 331.4 | 292.2 | (384.0 | ) | 368.4 | 335.8 | |||||||||||||||||||||||||
Ratio of earnings to fixed charges (a) |
2.9 | 2.3 | 2.8 | 2.3 | 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 | ||||
/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 | ||||
Segment Information (Details 1) (USD $) In Thousands | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Reconciliation of total adjusted segment income to consolidated income from continuing operations before income taxes | ||||
Adjusted segment income | $ 70,400 | $ 51,918 | $ 187,096 | $ 137,439 |
Gain on debt repurchase | 607 | 1,634 | ||
Income from continuing operations before income taxes | $ 70,400 | $ 52,525 | $ 187,096 | $ 139,073 |
Inventories (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories Net |
|
Document and Entity Information | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Nov. 01, 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 | Sep. 30, 2011 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2011 | |
Document Fiscal Period Focus | Q3 | |
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 | 90,241,767 |
Equity (Details Textuals) (USD $) In Thousands, except Share data | 3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2011 | Sep. 30, 2011 | |
Equity (Textuals) [Abstract] | ||
Repurchased shares | 2,450,000 | |
Repurchased shares, average price | $ 18.07 | |
Repurchased shares, total price | $ 44,263 | |
Share Repurchase Program [Member] | ||
Equity (Textuals) [Abstract] | ||
Repurchased shares | 1,832,000 | |
Repurchased shares, average price | $ 17.39 | |
Repurchased shares, total price | 31,850 | |
Remaining authorization under the program | $ 106,779 |
Earnings Per Share (Tables) | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reconciliation of number of shares used in calculation of basic and diluted earnings per share |
|
Equity (Details) (USD $) In Thousands | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Attributable to Penske Automotive Group: | ||||
Net income | $ 55,707 | $ 29,977 | $ 129,194 | $ 79,772 |
Other comprehensive income (loss): | ||||
Foreign currency translation | (20,904) | 31,922 | (1,170) | (10,909) |
Other | (4,923) | (117) | (9,612) | 7,098 |
Total attributable to Penske Automotive Group | 29,880 | 61,782 | 118,412 | 75,961 |
Attributable to the non-controlling interest: | ||||
Income (loss) | 338 | 283 | 907 | 504 |
Total comprehensive income (loss) | $ 30,218 | $ 62,065 | $ 119,319 | $ 76,465 |
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Intangible Assets | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 nine months ended September 30, 2011:
|
Long-Term Debt (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long Term Debt |
|
Long-Term debt (Details) (USD $) In Thousands | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Long Term Debt | ||
Long-term Debt | $ 851,569 | $ 779,878 |
Less: current portion | (9,642) | (10,593) |
Net long-term debt | 841,927 | 769,285 |
US Credit Agreement Revolving Credit Line [Member] | ||
Long Term Debt | ||
Long-term Debt | 120,000 | 0 |
US Credit Agreement Term Loan [Member] | ||
Long Term Debt | ||
Long-term Debt | 134,000 | 134,000 |
UK Credit Agreement Revolving Credit Line [Member] | ||
Long Term Debt | ||
Long-term Debt | 67,020 | 54,597 |
UK Credit Agreement Term Loan [Member] | ||
Long Term Debt | ||
Long-term Debt | 0 | 5,505 |
UK Credit Agreement Overdraft Line Of Credit [Member] | ||
Long Term Debt | ||
Long-term Debt | 5,012 | 7,116 |
7.75% senior subordinated notes due 2016 [Member] | ||
Long Term Debt | ||
Long-term Debt | 375,000 | 375,000 |
3.5% senior subordinated convertible notes due 2026 [Member] | ||
Long Term Debt | ||
Long-term Debt | 63,324 | 148,884 |
Mortgages [Member] | ||
Long Term Debt | ||
Long-term Debt | 77,914 | 46,052 |
Other Debt Securities [Member] | ||
Long Term Debt | ||
Long-term Debt | $ 9,299 | $ 8,724 |
Business Combinations (Details 1) (USD $) In Thousands, except Per Share data | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Summary of unaudited consolidated pro forma results of operations | ||||
Revenues | $ 2,951,046 | $ 2,795,667 | $ 8,822,713 | $ 8,075,752 |
Income from continuing operations | 57,045 | 36,451 | 138,110 | 94,753 |
Net income | $ 56,045 | $ 31,614 | $ 132,408 | $ 84,441 |
Income from continuing operations per diluted common share | $ 0.62 | $ 0.40 | $ 1.50 | $ 1.03 |
Net income per diluted common share | $ 0.61 | $ 0.34 | $ 1.44 | $ 0.92 |
Intangible Assets (Tables) | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the changes in the carrying amount of goodwill and franchise value |
|
Commitments and Contingent Liabilities | 9 Months Ended |
---|---|
Sep. 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 September 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 September 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 September 30, 2011, and has
posted $17,177 of surety bonds in the ordinary course of business.
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Consolidated Condensed Statement of Equity (Unaudited) (Parenthetical) (USD $) In Thousands | 9 Months Ended |
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Sep. 30, 2011 | |
Tax benefit, exercise of options | $ 955 |
Total Stockholders' Equity Attributable to Penske Automotive Group | |
Tax benefit, exercise of options | 955 |
Additional Paid-in Capital | |
Tax benefit, exercise of options | $ 955 |
Inventories (Details) (USD $) In Thousands | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Inventories Net | ||
Total inventories | $ 1,481,629 | $ 1,449,157 |
New vehicle [Member] | ||
Inventories Net | ||
Total inventories | 949,357 | 1,008,005 |
Used vehicle [Member] | ||
Inventories Net | ||
Total inventories | 453,180 | 366,404 |
Parts accessories and other [Member] | ||
Inventories Net | ||
Total inventories | $ 79,092 | $ 74,748 |
Earnings Per Share | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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
nine months ended September 30, 2011 and 2010 follows:
There were no anti-dilutive stock options outstanding during the three and nine months
ended September 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 September 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.
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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
sold to DVI in 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 September 30
Nine Months Ended September 30
The following table reconciles total adjusted segment income to consolidated income from
continuing operations before income taxes.
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Long-Term Debt | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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
$375,000 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. The term of the
credit agreement was extended on September 20, 2011, by one year through September 30, 2014. In
addition, the U.S. Credit Agreement was amended to, among other things, increase the revolving loan
availability to up to $375,000 and to reduce the rate for collateralized revolving loan borrowings
from LIBOR plus 2.75% to LIBOR plus 2.50%. The revolving loans now bear interest at a defined
LIBOR plus 2.50%, subject to an
incremental 1.0% 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 September 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 September 30, 2011, $134,000 of term
loans, $1,250 of letters of credit, and $120,000 of revolver borrowings 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%.
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 September 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 September 30, 2011, outstanding loans
under the U.K. Credit Agreement amounted to £46,216 ($72,032).
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 September 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 September 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 September 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
September 30, 2011, we owed $77,914 of principal under our mortgage facilities.
|
Interim Financial Statements (Details 1) (USD $) In Thousands | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Balance Sheet information regarding entities accounted for as discontinued operations | ||
Inventories | $ 27,452 | $ 75,069 |
Other assets | 26,716 | 41,949 |
Total assets | 54,168 | 117,018 |
Floor plan notes payable (including non-trade) | 25,419 | 68,198 |
Other liabilities | 9,045 | 15,941 |
Liabilities held for sale | $ 34,464 | $ 84,139 |
Floor Plan Notes Payable - Trade and Non-trade | 9 Months Ended |
---|---|
Sep. 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.
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Consolidated Condensed Statements of Cash Flows (Unaudited) (Parenthetical) (USD $) In Thousands, unless otherwise specified | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | |
Investing Activities: | ||
Repayment of sellers' floor plan notes payable, Dealership acquisitions | $ 54,453 | $ 5,683 |
Financing Activities: | ||
Senior subordinated convertible notes, Interest rate | 3.50% | 3.50% |
Interim Financial Statements | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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 September 30, 2011, the Company
operated 327 retail franchises, of which 172 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 nine months ended September 30, 2011, the Company was awarded four franchises,
acquired seven franchises, and disposed of seven franchises.
In 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 reconciliation of working capital and other
assets delivered at closing was finalized in the third quarter of 2011. The final aggregate cash
purchase price for the assets, which included certain vehicles, parts, signage and other items
valued at fair market value, was $44,611. 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
September 30, 2011 and December 31, 2010 and for the three and nine month periods ended September
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 September 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 nine months ended September 30, 2010 include a $607 and $1,634 pre-tax
gain relating to the repurchase of $43,000 and $155,658 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 occurred in June 2011 and
was finalized in the third quarter of 2011. The Company does not have any continuing role in the
distribution of the smart fortwo, and as a result, no longer has any 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:
New Accounting Pronouncements
In September 2011, the FASB issued ASU No. 2011-08, Intangibles – Goodwill and other (“ASU No. 2011-08”), with the
objective of simplifying how entities test goodwill for impairment. Under the new pronouncement, the Company will be
allowed to first assess qualitative factors to determine if it is necessary to perform the two-step quantitative
goodwill impairment test and would not be required to determine the fair value of the reporting unit unless it
determines, on a qualitative basis, that it is more likely than not that the fair value of the reporting unit is less
than the carrying value. The Company expects to adopt ASU No. 2011-08 during the fourth quarter of 2011 as a part of
its annual consideration of intangibles impairment. This pronouncement is not expected to have a material impact on
the Company’s consolidated financial statements.
|
Intangible Assets (Details) (USD $) In Thousands | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Summary of the changes in the carrying amount of goodwill and franchise value | |
Goodwill, Beginning Balance | $ 807,874 |
Goodwill, additions | 107,498 |
Goodwill, foreign currency translation | 61 |
Goodwill, Ending Balance | 915,433 |
Franchise value, Beginning Balance | 203,401 |
Franchise value, Additions | 29,491 |
Franchise value, foreign currency translation | (78) |
Franchise value, Ending Balance | $ 232,814 |
Interim Financial Statements (Details) (USD $) In Thousands | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Combined financial information regarding entities accounted for as discontinued operations | ||||
Revenues | $ 61,524 | $ 86,346 | $ 231,721 | $ 268,549 |
Pre-tax (loss) income | (1,625) | (7,668) | (11,080) | (15,950) |
Gain (loss) on disposal | $ 250 | $ 2,016 | $ (261) |
Segment Information (Details Textuals) | 9 Months Ended |
---|---|
Sep. 30, 2011
Franchise
Segment | |
Segment Information (Textuals) | |
Number of reportable segments | 2 |
Number of geographic operating segments | 4 |
Inventories | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 $22,939 and $19,070
during the nine months ended September 30, 2011 and 2010, respectively.
|
Earnings Per Share (Details) In Thousands | 3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | Sep. 30, 2011 | Sep. 30, 2010 | |
Reconciliation of number of shares used in calculation of basic and diluted earnings per share | ||||
Weighted average number of common shares outstanding | 91,390 | 92,018 | 92,106 | 92,097 |
Effect of non-participatory equity compensation | 41 | 123 | 63 | 74 |
Weighted average number of common shares outstanding including effect of dilutive securities | 91,431 | 92,141 | 92,169 | 92,171 |
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 |
Equity (Tables) | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive income (loss) |
|
Interim Financial Statements (Details 2) (USD $) In Thousands | Sep. 30, 2011 | Dec. 31, 2010 |
---|---|---|
Summary of fair value of subordinated notes | ||
Net carrying amount of the liability component | $ 851,569 | $ 779,878 |
7.75% senior subordinated notes due 2016 [Member] | ||
Summary of fair value of subordinated notes | ||
Net carrying amount of the liability component | 375,000 | 375,000 |
Net fair amount of the liability component | 375,000 | |
3.5% senior subordinated convertible notes due 2026 [Member] | ||
Summary of fair value of subordinated notes | ||
Net carrying amount of the liability component | 63,324 | 148,884 |
Net fair amount of the liability component | $ 59,366 |
Floor Plans Notes Payable - Trade and Non -Trade (Details Textuals) | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Floor Plans Notes Payable - Trade and Non Trade (Textuals) [Abstract] | |
Maturity period of floor plan arrangements outside the U.S. if not payable on demand | 90 days or less |
Consolidating Condensed Financial Information (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidating Condensed Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONSOLIDATING CONDENSED BALANCE SHEET |
CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2011
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2010
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CONSOLIDATING CONDENSED STATEMENT OF INCOME |
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended September 30, 2011
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended September 30, 2010
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Nine Months Ended September 30, 2011
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Nine Months Ended September 30, 2010
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CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS |
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine Months Ended September 30, 2011
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine Months Ended September 30, 2010
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Equity | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity |
10. Equity
Share Repurchase
During the three months ended September 30, 2011, the Company acquired 1,832 shares of our
outstanding common stock for $31,850, or an average of $17.39 per share, under a program approved
by the Company’s board of directors. As of September 30, 2011, our remaining authorization under
the program was $106,779.
During the nine months ended September 30, 2011, the Company acquired 2,450 shares of our
outstanding common stock for $44,263, or an average of $18.07 per share.
Comprehensive income (loss)
Other comprehensive income (loss) includes foreign currency translation gains and losses, as
well as changes relating to other individually immaterial items, including certain defined benefit
plans in the U.K. and changes in the fair value of interest rate swap agreements, each of which has
been excluded from net income and reflected in equity. Total comprehensive income (loss) is
summarized as follows:
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Business Combinations | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations |
3. Business Combinations
The Company acquired seven and two franchises during the nine months ended September 30, 2011
and 2010, respectively, in its retail operations (not including the German operations noted below).
The Company’s financial statements include the results of operations of the acquired dealerships
from the date of acquisition. The fair value of the assets acquired and liabilities assumed have
been recorded in the Company’s consolidated condensed financial statements, and may be subject to
adjustment pending completion of the final valuation. A summary of the aggregate consideration
paid and the aggregate amounts of the assets acquired and liabilities assumed for the nine months
ended September 30, 2011 and 2010 follows:
In the first quarter of 2010, the Company exited one of its German joint ventures by
exchanging its 50% interest in the joint venture for 100% ownership in three BMW franchises
previously held by the joint venture. The Company recorded $13,331 of intangible assets in
connection with this transaction.
The following unaudited consolidated pro forma results of operations of the Company for the
three and nine months ended September 30, 2011 and 2010 give effect to acquisitions consummated
during 2011 and 2010 as if they had occurred on January 1, 2010:
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Interim Financial Statements (Policies) | 9 Months Ended |
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Sep. 30, 2011 | |
Interim Financial Statements [Abstract] | |
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 September 30, 2011, the Company
operated 327 retail franchises, of which 172 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 nine months ended September 30, 2011, the Company was awarded four franchises,
acquired seven franchises, and disposed of seven franchises.
In 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 reconciliation of working capital and other
assets delivered at closing was finalized in the third quarter of 2011. The final aggregate cash
purchase price for the assets, which included certain vehicles, parts, signage and other items
valued at fair market value, was $44,611. 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.
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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
September 30, 2011 and December 31, 2010 and for the three and nine month periods ended September
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 September 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 nine months ended September 30, 2010 include a $607 and $1,634 pre-tax
gain relating to the repurchase of $43,000 and $155,658 aggregate principal amount of the Company’s
3.5% senior subordinated convertible notes (“Convertible Notes”).
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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 occurred in June 2011 and
was finalized in the third quarter of 2011. The Company does not have any continuing role in the
distribution of the smart fortwo, and as a result, no longer has any operations or cash flows
relating to distribution activities.
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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.
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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:
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New Accounting Pronouncement |
In September 2011, the FASB issued ASU No. 2011-08, Intangibles – Goodwill and other (“ASU No. 2011-08”), with the
objective of simplifying how entities test goodwill for impairment. Under the new pronouncement, the Company will be
allowed to first assess qualitative factors to determine if it is necessary to perform the two-step quantitative
goodwill impairment test and would not be required to determine the fair value of the reporting unit unless it
determines, on a qualitative basis, that it is more likely than not that the fair value of the reporting unit is less
than the carrying value. The Company expects to adopt ASU No. 2011-08 during the fourth quarter of 2011 as a part of
its annual consideration of intangibles impairment. This pronouncement is not expected to have a material impact on
the Company’s consolidated financial statements.
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Business Combinations (Details Textuals) (USD $) In Thousands, unless otherwise specified | 3 Months Ended | 9 Months Ended | |
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Mar. 31, 2010
Franchise | Sep. 30, 2011
Franchise
Segment | Sep. 30, 2010
Franchise | |
Business Combinations (Textuals) [Abstract] | |||
Number of franchises acquired | 3 | 7 | 2 |
Intangible Assets recorded in connection with exchange of joint venture ownership | $ 13,331 | ||
Ownership percentage of joint venture exchanged | 50.00% | ||
Ownership percentage in franchises acquired by exchange of joint venture ownership | 100.00% |
Segment Information (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues and adjusted segment income by reportable segment |
Three Months Ended September 30
Nine Months Ended September 30
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Reconciliation of total adjusted segment income to consolidated income from continuing operations before income taxes |
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Interim Financial Statements (Tables) | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interim Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Combined financial information regarding entities accounted for as discontinued operations. |
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Balance Sheet information regarding entities accounted for as discontinued operations |
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Summary of fair value of subordinated notes |
|
Long-Term Debt (Details Textuals) | 9 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2011
USD ($) | Mar. 31, 2011
USD ($) | Dec. 31, 2010
USD ($) | Sep. 30, 2010 | Sep. 30, 2011
US Credit Agreement Revolving Credit Line [Member]
USD ($) | Dec. 31, 2010
US Credit Agreement Revolving Credit Line [Member]
USD ($) | Sep. 30, 2011
US Credit Agreement Revolving Credit Line [Member]
Minimum [Member] | Sep. 30, 2011
US Credit Agreement Term Loan [Member]
USD ($) | Dec. 31, 2010
US Credit Agreement Term Loan [Member]
USD ($) | Sep. 30, 2011
US Credit Agreement Term Loan [Member]
Maximum [Member] | Sep. 30, 2011
UK Credit Agreement Revolving Credit Line [Member]
USD ($) | Sep. 30, 2011
UK Credit Agreement Revolving Credit Line [Member]
GBP (£) | Dec. 31, 2010
UK Credit Agreement Revolving Credit Line [Member]
USD ($) | Sep. 30, 2011
UK Credit Agreement Revolving Credit Line [Member]
Maximum [Member] | Sep. 30, 2011
UK Credit Agreement Revolving Credit Line [Member]
Minimum [Member] | Sep. 30, 2011
UK Credit Agreement Term Loan [Member]
USD ($) | Dec. 31, 2010
UK Credit Agreement Term Loan [Member]
USD ($) | Sep. 30, 2011
UK Credit Agreement Overdraft Line Of Credit [Member]
GBP (£) | Sep. 30, 2011
UK Credit Agreement Overdraft Line Of Credit [Member]
USD ($) | Dec. 31, 2010
UK Credit Agreement Overdraft Line Of Credit [Member]
USD ($) | Sep. 30, 2011
7.75% senior subordinated notes due 2016 [Member]
USD ($) | Dec. 31, 2010
7.75% senior subordinated notes due 2016 [Member]
USD ($) | Dec. 31, 2006
7.75% senior subordinated notes due 2016 [Member]
USD ($) | Sep. 30, 2011
3.5% senior subordinated convertible notes due 2026 [Member] | Mar. 31, 2011
3.5% senior subordinated convertible notes due 2026 [Member] | Sep. 30, 2011
3.5% senior subordinated convertible notes due 2026 [Member]
USD ($) | Dec. 31, 2010
3.5% senior subordinated convertible notes due 2026 [Member]
USD ($) | Sep. 30, 2011
Mortgages [Member]
USD ($) | Dec. 31, 2010
Mortgages [Member]
USD ($) | Sep. 30, 2011
UK Credit Agreement [Member]
USD ($) | Sep. 30, 2011
UK Credit Agreement [Member]
GBP (£) | Sep. 30, 2011
US Credit Agreement Revolver Borrowing [Member]
USD ($) | Sep. 30, 2011
US Credit Agreement Letter of Credit [Member]
USD ($) | |
Long-Term Debt (Textuals) [Abstract] | |||||||||||||||||||||||||||||||||
Maximum credit available under US and UK credit agreement | $ 375,000,000 | $ 134,000,000 | £ 92,000,000 | $ 10,000,000 | |||||||||||||||||||||||||||||
Line of credit basis spread on variable rate | 2.50% | 2.50% | 2.75% | 3.00% | 1.10% | 1.75% | |||||||||||||||||||||||||||
Debt instrument redemption rate of principal | 100.00% | 100.00% | |||||||||||||||||||||||||||||||
Debt instrument redemption rate of principal exceeded | 120.00% | ||||||||||||||||||||||||||||||||
Incremental interest rate for uncollateralized borrowings in excess of maximum limit | 0.10% | ||||||||||||||||||||||||||||||||
Term loan outstanding under credit agreement | 134,000,000 | 72,032,000 | 46,216,000 | 120,000,000 | 1,250,000 | ||||||||||||||||||||||||||||
Demand over draft line of credit | 10,000,000 | ||||||||||||||||||||||||||||||||
Debt Instrument, Face Amount | 375,000,000 | ||||||||||||||||||||||||||||||||
Convertible notes prior period | 6 months | ||||||||||||||||||||||||||||||||
Senior subordinated convertible notes, Interest rate | 3.50% | 3.50% | 7.75% | 7.75% | 3.50% | ||||||||||||||||||||||||||||
Outstanding Convertible senior notes | 87,278,000 | 63,324,000 | |||||||||||||||||||||||||||||||
Conversion rate of convertible notes | 42.7796 | ||||||||||||||||||||||||||||||||
Conversion principal amount | 1,000 | ||||||||||||||||||||||||||||||||
Conversion price per share | $ 23.38 | ||||||||||||||||||||||||||||||||
Closing price of common stock | $ 28.05 | ||||||||||||||||||||||||||||||||
Conversion Period | 10 days | ||||||||||||||||||||||||||||||||
Payment of cash, common stock or a combination of two, if conversion value exceed | 1,000,000 | ||||||||||||||||||||||||||||||||
Annual effective interest rate on liability component | 3.50% | 8.25% | |||||||||||||||||||||||||||||||
Long-term Debt | $ 851,569,000 | $ 779,878,000 | $ 120,000,000 | $ 0 | $ 134,000,000 | $ 134,000,000 | $ 67,020,000 | $ 54,597,000 | $ 0 | $ 5,505,000 | $ 5,012,000 | $ 7,116,000 | $ 375,000,000 | $ 375,000,000 | $ 63,324,000 | $ 148,884,000 | $ 77,914,000 | $ 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 |
Business Combinations (Tables) | 9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the aggregate consideration paid and the aggregate amounts of the assets acquired and liabilities assumed |
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Summary of unaudited consolidated pro forma results of operations |
|
Consolidated Condensed Statement of Equity (Unaudited) (USD $) In Thousands, except Share data | Total | Total Stockholders' Equity Attributable to Penske Automotive Group | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Non-controlling Interest |
---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2010 | $ 1,045,853 | $ 1,041,550 | $ 9 | $ 738,728 | $ 304,486 | $ (1,673) | $ 4,303 |
Balance, shares at Dec. 31, 2010 | 92,099,552 | ||||||
Equity compensation | 4,094 | 4,094 | 4,094 | ||||
Equity compensation, shares | 380,315 | ||||||
Repurchases of common stock | (44,263) | (44,263) | (44,263) | ||||
Repurchases of common stock, shares | (2,450,000) | (2,449,768) | |||||
Dividends | (13,866) | (13,866) | (13,866) | ||||
Exercise of options, including tax benefit of $955 | 3,018 | 3,018 | 3,018 | ||||
Exercise of options, including tax benefit of $955, shares | 211,668 | ||||||
Distributions to non-controlling interests | (1,269) | (1,269) | |||||
Purchase of subsidiary shares from non-controlling interest | (850) | (853) | (853) | 3 | |||
Sale of subsidiary shares to non-controlling interest | 382 | 225 | 225 | 157 | |||
Foreign currency translation | (1,170) | (1,170) | (1,170) | ||||
Other | (9,612) | (9,612) | (9,612) | ||||
Net income | 130,101 | 129,194 | 129,194 | 907 | |||
Balance at Sep. 30, 2011 | $ 1,112,418 | $ 1,108,317 | $ 9 | $ 700,949 | $ 419,814 | $ (12,455) | $ 4,101 |
Balance, shares at Sep. 30, 2011 | 90,241,767 |
Interest Rate Swaps | 9 Months Ended |
---|---|
Sep. 30, 2011 | |
Interest Rate Swaps [Abstract] | |
Interest Rate Swaps |
8. Interest Rate Swaps
The Company periodically uses interest rate swaps to manage interest rate risk associated with
the Company’s variable rate floor plan debt. The Company is party to forward-starting interest rate
swap agreements beginning January 2012 and maturing December 2014 pursuant to which the LIBOR
portion of $300,000 of the Company’s floating rate floor plan debt is fixed at a rate of 2.135% and
$100,000 of the Company’s floating rate floor plan debt is fixed at a rate of 1.55%. The Company
may terminate these agreements at any time, subject to the settlement of the then current fair
value of the swap arrangements.
The Company used Level 2 inputs to estimate the fair value of the interest rate swap
agreements. As of September 30, 2011, the fair value of the swaps designated as hedging
instruments was estimated to be a net liability of $15,157.
During 2010 and through January 2011, the Company was party to interest rate swap agreements
pursuant to which the LIBOR portion of $300,000 of the Company’s floating rate floor plan debt was
fixed at 3.67%. During the nine months ended September 30, 2011, there was no hedge
ineffectiveness recorded in the Company’s income statement and the impact of the swaps on the
weighted average interest rate of the Company’s floor plan borrowings was insignificant. During
the nine months ended September 30, 2010, the Company recognized a net gain in accumulated other
comprehensive income (loss) of $3,643 related to the effective portion of the interest rate swap
agreements designated as hedging instruments, and reclassified $6,482 of the existing derivative
losses from accumulated other comprehensive income (loss) into floor plan interest expense.
Additionally, during the nine months ended September 30, 2010, the swaps increased the weighted
average interest rate on the Company’s floor plan borrowings by approximately 0.8%.
|
Interim Financial Statements (Details Textuals) (USD $) In Thousands, unless otherwise specified | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2010 | Sep. 30, 2011
Franchise
Segment | Sep. 30, 2010 | Sep. 30, 2011
7.75% senior subordinated notes due 2016 [Member] | Dec. 31, 2006
7.75% senior subordinated notes due 2016 [Member] | Sep. 30, 2010
3.5% senior subordinated convertible notes due 2026 [Member] | Sep. 30, 2010
3.5% senior subordinated convertible notes due 2026 [Member] | Sep. 30, 2011
3.5% senior subordinated convertible notes due 2026 [Member] | |
Interim Financial Statement (Textuals) | ||||||||
Pre tax gain relating to convertible notes repurchased | $ 607 | $ 1,634 | $ 607 | $ 1,634 | ||||
Face value of 3.5% senior subordinated convertible notes repurchased | 43,000 | 155,658 | ||||||
Senior subordinated convertible notes due 2026, interest rate | 3.50% | 3.50% | 3.50% | 7.75% | 7.75% | 3.50% | ||
Interim Financial Statements (Textuals) [Abstract] | ||||||||
Total number of owned and operated franchises | 327 | |||||||
Number of owned and operated franchises in US | 172 | |||||||
Number of owned and operated franchises outside US | 155 | |||||||
Awarded franchises | 4 | |||||||
Acquired franchises | 7 | |||||||
Disposed franchises | 7 | |||||||
Aggregate cash purchase price for the assets | $ 44,611 | |||||||
Limited partnership interest in Penske Truck Leasing Co. | 9.00% |
Consolidating Condensed Financial Information | 9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2011 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidating Condensed Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidating Condensed Financial Information |
12. Consolidating Condensed Financial Information
The following tables include condensed consolidating financial information as of September 30,
2011 and December 31, 2010 and for the three and nine month periods ended September 30, 2011 and
2010 for Penske Automotive Group, Inc. (as the issuer of the Convertible Notes and the 7.75%
Notes), guarantor subsidiaries and non-guarantor subsidiaries (primarily representing foreign
entities). The condensed consolidating financial information includes certain allocations of
balance sheet, income statement and cash flow items which are not necessarily indicative of the
financial position, results of operations and cash flows of these entities on a stand-alone basis.
CONDENSED CONSOLIDATING BALANCE SHEET
September 30, 2011
CONDENSED CONSOLIDATING BALANCE SHEET
December 31, 2010
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended September 30, 2011
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Three Months Ended September 30, 2010
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Nine Months Ended September 30, 2011
CONDENSED CONSOLIDATING STATEMENT OF INCOME
Nine Months Ended September 30, 2010
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine Months Ended September 30, 2011
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
Nine Months Ended September 30, 2010
|
Inventories (Details Textuals) (USD $) In Thousands | 9 Months Ended | |
---|---|---|
Sep. 30, 2011 | Sep. 30, 2010 | |
Inventories (Textuals) [Abstract] | ||
Interest credits and advertising assistance | $ 22,939 | $ 19,070 |
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