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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)

 

A valuation allowance of $2.6 million has been recorded against the state net operating loss carryforwards in the U.S. and a valuation allowance of $0.3 million has been recorded against the state credit carryforwards in the U.S. as of December 31, 2016. A valuation allowance of $7.3 million has been recorded against German net operating losses and other deferred tax assets as of December 31, 2016. A valuation allowance of $6.5 million has been recorded against U.K. deferred tax assets related to buildings as of December 31, 2016. A valuation allowance of $0.4 million has been recorded against Canadian net operating losses as of December 31, 2016. A valuation allowance of $0.1 million has been recorded against Australian capital losses as of December 31, 2016.

 

Generally accepted accounting principles relating to uncertain income tax positions prescribe a minimum recognition threshold a tax position is required to meet before being recognized, and provides guidance on the derecognition, measurement, classification, and disclosure relating to income taxes. The movement in uncertain tax positions for the years ended December 31, 2016, 2015, and 2014 were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

    

2016

    

2015

    

2014

 

Uncertain tax positions — January 1

 

$

12.8

 

$

13.1

 

$

14.0

 

Gross increase — tax position in prior periods

 

 

0.2

 

 

0.2

 

 

0.2

 

Gross decrease — tax position in prior periods

 

 

(0.3)

 

 

 —

 

 

(0.6)

 

Gross increase — current period tax position

 

 

 —

 

 

 —

 

 

0.1

 

Settlements

 

 

(7.8)

 

 

 —

 

 

 —

 

Lapse in statute of limitations

 

 

 —

 

 

 —

 

 

 —

 

Foreign exchange

 

 

(1.5)

 

 

(0.5)

 

 

(0.6)

 

Uncertain tax positions — December 31

 

$

3.4

 

$

12.8

 

$

13.1

 

 

 

We have elected to include interest and penalties in our income tax expense. The total interest and penalties included within uncertain tax positions at December 31, 2016 was $2.0 million. We do not expect a significant change to the amount of uncertain tax positions within the next twelve months. Our U.S. federal returns remain open to examination for 2013 through 2015 and various non-U.S. and U.S. state jurisdictions are open for periods ranging from 2009 through 2015. The portion of the total amount of uncertain tax positions as of December 31, 2016 that would, if recognized, impact the effective tax rate was $3.4 million.

 

We have classified our tax reserves as a long‑term obligation on the basis that management does not expect to make payments relating to those reserves within the next twelve months.

 

17. Segment Information

 

Our operations are organized by management into operating segments by line of business and geography. We have determined that we have four reportable segments as defined in generally accepted accounting principles for segment reporting: (i) Retail Automotive, consisting of our retail automotive dealership operations; (ii) Retail Commercial Truck, consisting of our retail commercial truck dealership operations in the U.S. and Canada; (iii) Other, consisting of our commercial vehicle and power systems distribution operations and other non-automotive consolidated operations; and (iv) Non-Automotive Investments, consisting of our equity method investments in non-automotive operations. The Retail Automotive reportable segment includes all automotive dealerships and all departments relevant to the operation of the dealerships and our retail automotive joint ventures. The individual dealership operations included in the Retail Automotive reportable segment have been grouped into four geographic operating segments: Eastern, Central, and Western United States and International. The geographic operating segments have been aggregated into one reportable segment as their operations (A) have similar economic characteristics (all are automotive dealerships having similar margins), (B) offer similar products and services (all sell new and used vehicles, service, parts and third-party finance and insurance products), (C) have similar target markets and customers (generally individuals) and (D) have similar distribution and marketing practices (all distribute products and services through dealership facilities that market to customers in similar fashions). The accounting policies of the segments are the same and are described in Note 1.

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