On December 11, 2023, we completed the acquisition of the Jim Koons Dealerships. The results of the Jim Koons Dealerships have been included in our consolidated financial statements since that date. The Koons acquisition diversifies Asbury's geographic mix, with expansion in the greater Washington-Baltimore region of the United States.

As a result of the Koons acquisition, we acquired 20 new vehicle dealerships, six collision centers and the real property related thereto, for a total purchase price of approximately $1.50 billion, which includes $256.1 million of new vehicle floor plan financing and $103.8 million of assets held for sale related to Koons Lexus of Wilmington. The preliminary purchase price was paid in cash.

The sources of the preliminary purchase consideration are as follows:


	(In millions)
Cash	$	936.8
New vehicle floor plan facility	256.1
Used vehicle floor plan facility	307.1
Preliminary purchase price	$	1,500.0

Under the acquisition method of accounting, the tangible and intangible assets acquired and liabilities assumed are recorded at their estimated fair value based on information currently available. The following table summarizes the amounts recorded based on preliminary estimates of fair value:


Summary of Assets Acquired and Liabilities Assumed
	(In millions)
Assets
Inventories, net	$	311.6
Other current assets	10.3
Assets held for sale	103.8
Total current assets	425.7
Property and equipment, net	420.0
Goodwill	231.7
Intangible franchise rights	429.0
Operating lease right-of-use assets	11.2
Total assets acquired	$	1,517.6
Liabilities
Operating lease liabilities	$	11.2
Other liabilities	6.4
Total liabilities assumed	17.6
Net assets acquired	$	1,500.0

The preliminary acquisition accounting is based upon the Company’s estimates of fair value. The estimated fair values of the assets acquired and liabilities assumed and the related preliminary acquisition accounting are based on management’s estimates and assumptions, as well as other information compiled by management, including the books and records of Koons. Our estimates and assumptions are subject to change during the measurement period, not to exceed one year from the acquisition date. The areas of acquisition accounting that are not yet finalized primarily relate to the following significant items: (i) finalizing the review and valuation of inventory, land, land improvements, buildings and non-real property and equipment (including the models, key assumptions, estimates and inputs used) and assignment of remaining useful lives associated with

the depreciable assets, and (ii) finalizing the review and valuation of manufacturer franchise rights (including key assumptions, inputs and estimates). As the initial acquisition accounting is based on our preliminary assessments, actual values may differ (possibly materially) when final information becomes available that differs from our current estimates. Additionally, the total consideration transferred is subject to certain post-close adjustments. We believe that the information gathered to date provides a reasonable basis for estimating the preliminary fair values of assets acquired and liabilities assumed. We will continue to evaluate these items until they are satisfactorily resolved and adjust our acquisition accounting accordingly, within the allowable measurement period.

Approximately $429.0 million of the purchase price was assigned to the indefinite lived franchise rights intangible assets related to the dealer agreements applicable to each new vehicle dealership. In addition, goodwill of $231.7 million was recognized and is primarily attributable to the anticipated synergies that Asbury expects to derive from the Koons acquisition as well as the acquired assembled workforce of the Koons dealerships.

The Company recorded $4.1 million of acquisition related costs during the year ended December 31, 2023. These costs are included in selling, general, and administrative in the consolidated statements of income.

The Company's consolidated statements of income included revenue and net income attributable to the Jim Koons Dealerships from December 11, 2023 through December 31, 2023 of $168.2 million and $7.0 million, respectively.

The following represents the unaudited pro forma information as if the Koons acquisition had been included in the consolidated results of the Company since January 1, 2022:


	For the Year Ended December 31,
	2023		2022
	(In millions)
	(Unaudited)

Pro forma revenue	$	17,540.4	$	18,516.1
Pro forma net income	$	660.8	$	1,092.9

The above pro forma financial information adjusts the revenue and net income related to the Koons acquisition primarily for (1) depreciation and interest expense assuming that the fair value adjustments and indebtedness incurred in connection with the Koons acquisition had occurred on January 1, 2022 and (2) the exclusion of Koons Lexus of Wilmington, which is classified as assets held for sale as of December 31, 2023. The pro forma net income for the year ended December 31, 2023 includes $117.2 million of asset impairments recorded by the Company during the fourth quarter of 2023.

On December 17, 2021, we completed the acquisition of the equity interests of, and the real property related to the businesses of the Larry H. Miller Dealerships and TCA (the "LHM acquisition"). The results of the LHM Dealerships and TCA business have been included in the consolidated financial statements since that date. The acquisition diversified Asbury's geographic mix, with entry into six Western states; Arizona, Utah, New Mexico, Idaho, California and Washington, and added to the Company’s growing Colorado presence.

As a result of the LHM acquisition, we acquired 54 new vehicle dealerships, seven used car stores, 11 collision centers, a used vehicle wholesale business, the real property related thereto, and the entities comprising the TCA business for a total purchase price of approximately $3.48 billion. The purchase price was paid in cash.

The sources of the purchase consideration are as follows:


	(In millions)
Cash, net of cash acquired	$	195.0
Common stock offering	666.9
Senior notes	1,378.5
Revolving credit facility	200.0
Real estate facility	513.0
New vehicle floor plan facility	183.5
Used vehicle floor plan facility	51.0
Payable to sellers	6.0
Purchase price, net of cash acquired	$	3,193.9


Summary of Assets Acquired and Liabilities Assumed
	(In millions)
Assets
Cash and cash equivalents	$	287.4
Investments	133.5
Contracts-in-transit, net	99.5
Accounts receivable, net	110.0
Inventories, net	282.1
Other current assets	25.0
Total current assets	937.5
Property and equipment, net	805.6
Goodwill	1,205.3
Intangible franchise rights	1,309.7
Operating lease right-of-use assets	34.1
Deferred income taxes	139.7
Other long-term assets	5.6
Total assets acquired	$	4,437.6
Liabilities
Accounts payable and accrued liabilities	$	229.5
Operating lease liabilities	34.1
Deferred revenue	667.6
Other long-term liabilities	25.2
Total liabilities assumed	956.4
Net assets acquired	$	3,481.2

The acquisition accounting is based upon the Company’s estimates of fair value. The estimated fair values of the assets acquired and liabilities assumed and the related acquisition accounting are based on management’s estimates and assumptions, as well as other information compiled by management, including the books and records of LHM and TCA. The effects of the measurement-period adjustments on our consolidated statement of income for the year ended December 31, 2022 were not material.

Approximately $1.31 billion of the purchase price was assigned to the indefinite lived franchise rights intangible assets related to the dealer agreements applicable to each new vehicle dealership. In addition, goodwill of $1.21 billion was recognized and is primarily attributable to the anticipated synergies that Asbury expects to derive from the LHM acquisition as

well as the acquired assembled workforce of LHM and TCA. Goodwill of $536.6 million was assigned to the TCA segment while $668.7 million was assigned to the Dealerships segment.

The Company recorded $4.9 million of acquisition related costs during the year ended December 31, 2021. These costs are included in selling, general, and administrative in the consolidated statements of income.

The Company's consolidated statements of income included revenue and net income attributable to LHM from December 17, 2021 through December 31, 2021 of $256.4 million and $15.7 million, respectively.

The following represents the unaudited pro forma information as if the LHM acquisition had been included in the consolidated results of the Company since January 1, 2020:


	For the Year Ended December 31,
	2021		2020
	(In millions)
	(Unaudited)

Pro forma revenue	$	15,431.5	$	12,927.3
Pro forma net income	$	777.3	$	359.9

This pro forma information incorporates the Company's accounting policies and adjusts the results of the LHM acquisition for depreciation, rent expense, and interest expense assuming that the fair value adjustments and indebtedness incurred in connection with the LHM acquisition had occurred on January 1, 2020. They have also been adjusted to reflect the $4.9 million of acquisition related costs incurred during 2021 as having occurred on January 1, 2020.

In addition to the LHM acquisition during the year ended December 31, 2021, we acquired the assets of 11 franchises (10 dealership locations) in the Denver, Colorado market and three franchises (one dealership location) in the Indianapolis, Indiana market for a combined purchase price of $485.7 million. We funded these acquisitions with an aggregate of $455.1 million of cash and $9.6 million of floor plan borrowings for the purchase of the related new vehicle inventory. In the aggregate, these acquisitions included purchase price holdbacks of $21.0 million for potential indemnity claims made by us with respect to the acquired franchises.

On May 20, 2021, we exercised the purchase option for certain Park Place real estate leases whose original operating lease right-of-use assets and liabilities totaled $99.5 million. We acquired these properties for $217.1 million which was partly financed through the 2021 BofA Real Estate Facility.

Goodwill and manufacturer franchise rights associated with our Dealerships segment acquisitions is deductible for federal and state income tax purposes ratably over a 15-year period.

Below is the allocation of the purchase price for the acquisitions (other than the LHM acquisition) for the year ended December 31, 2021. The estimated fair values of the assets acquired and liabilities assumed and the related acquisition accounting are based on management’s estimates and assumptions, as well as other information compiled by management.


	As of December 31,
	2021
	(In millions)
Inventory	$	37.5
Real estate	99.9
Property and equipment	4.2
Goodwill	110.5
Manufacturer franchise rights	228.2
Loaner vehicles	8.9

Other	(3.5)
Total purchase price	$	485.7

During the year ended December 31, 2022, we sold one franchise (one dealership location) in St. Louis, Missouri, three franchises (three dealership locations) and one collision center in Denver, Colorado, two franchises (two dealership locations) in Spokane, Washington, one franchise (one dealership location) in Albuquerque, New Mexico and 11 franchises (nine dealership locations) and two collision centers in North Carolina. The Company recorded a pre-tax gain totaling $207.1 million.

During the year ended December 31, 2021, we sold one franchise (one dealership location) in the Charlottesville, Virginia market. The Company recorded a pre-tax gain totaling $8.0 million.