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SEC Filings

10-K
PENSKE AUTOMOTIVE GROUP, INC. filed this Form 10-K on 02/24/2017
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Table of Contents

 

PENSKE AUTOMOTIVE GROUP, INC.

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 

(In millions, except share and per share amounts)

 

Income taxes relating to income from continuing operations varied from the U.S. federal statutory income tax rate due to the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

    

2016

    

2015

    

2014

 

Income taxes relating to continuing operations at federal statutory rate of 35%

  

$

177.8

 

$

172.2

 

$

160.3

 

State and local income taxes, net of federal taxes

 

 

14.7

 

 

13.3

 

 

11.0

 

Non-U.S. income taxed at other rates

 

 

(26.8)

 

 

(27.4)

 

 

(17.7)

 

Other

 

 

(5.0)

 

 

(0.1)

 

 

(0.5)

 

Income taxes relating to continuing operations

 

$

160.7

 

$

158.0

 

$

153.1

 

 

 

The components of deferred tax assets and liabilities as of December 31, 2016 and 2015 were as follows:

 

 

 

 

 

 

 

 

 

 

    

2016

    

2015

 

Deferred Tax Assets

 

 

 

 

 

 

 

Accrued liabilities

 

$

71.4

 

$

67.5

 

Net operating loss carryforwards

 

 

32.4

 

 

17.9

 

Other

 

 

18.7

 

 

26.2

 

Total deferred tax assets

 

 

122.5

 

 

111.6

 

Valuation allowance

 

 

(17.2)

 

 

(17.3)

 

Net deferred tax assets

 

 

105.3

 

 

94.3

 

Deferred Tax Liabilities

 

 

 

 

 

 

 

Depreciation and amortization

 

 

(210.9)

 

 

(198.1)

 

Partnership investments

 

 

(448.1)

 

 

(285.5)

 

Convertible notes

 

 

(5.0)

 

 

(7.5)

 

Other

 

 

(5.9)

 

 

(6.1)

 

Total deferred tax liabilities

 

 

(669.9)

 

 

(497.2)

 

Net deferred tax liabilities

 

$

(564.6)

 

$

(402.9)

 

 

 

We do not provide for U.S. taxes relating to undistributed earnings or losses of our non-U.S. subsidiaries. Income from continuing operations before income taxes of non-U.S. subsidiaries (which subsidiaries are predominately in the U.K.) was $191.4 million, $182.5 million, and $170.6 million during 2016, 2015, and 2014, respectively. It is our belief that such earnings will be indefinitely reinvested in the companies that produced them. As of December 31, 2016, we have not provided U.S. federal income taxes on a total temporary difference of $816.5 million related to the excess of financial reporting basis over tax basis in the non-U.S. subsidiaries.

 

As a result of our acquisition of the remaining ownership interests of Premier Truck Group in April 2016, bringing our total ownership interest to 100%, the partnership entity was liquidated, thereby yielding an adjustment to the tax basis of this investment. The result was an elimination of $5.1 million of deferred tax liabilities, which reduced income tax expense by the same amount in the current year.

 

As of December 31, 2016, we have $240.1 million of state net operating loss carryforwards in the U.S. that expire at various dates beginning in 2017 through 2036, U.S. and Puerto Rico federal and state credit carryforwards of $8.5 million that will not expire, U.K. capital loss carryforwards of $4.7 million that will not expire, German net operating loss carryforwards of $20.1 million that will not expire, Australian net operating loss carryforwards of $22.1 million that will not expire, Canadian net operating loss carryforwards of $1.7 million that will not expire, and Italian net operating loss carryforwards of $0.1 million that will not expire. The Company generated $174.2 million of state net operating loss carryforwards in the U.S. in 2016.

 

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