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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)

 

combines PTL’s fleet operations expertise with our market knowledge of commercial vehicles to rent heavy-duty commercial vehicles in Australia. This venture is accounted for as an equity method investment as discussed in Note 2.

 

In September 2016, PTG completed the sale of certain assets to PTL, a related party. The assets sold consisted of approximately 300 vehicles, together with the associated full-service truck leasing and truck rental contracts with various PTG customers. PTL purchased these assets at fair value, which exceeded our carrying value for these assets, for a total purchase price of approximately $17.0 million.

 

In 2014, we acquired Transportation Resource Partners’ (“TRP”) ownership interest in PTG for $58.8 million, increasing our ownership to 91%. TRP is an organization that invests in transportation-related industries in which our CEO, Roger S. Penske, is a managing member.

 

Joint Venture Relationships

 

From time to time we enter into joint venture relationships in the ordinary course of business, pursuant to which we own and operate automotive dealerships together with other investors. We may also provide these dealerships with working capital and other debt financing at costs that are based on our incremental borrowing rate. As of December 31, 2016, our automotive joint venture relationships were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

Location

    

Dealerships

    

Ownership Interest

Fairfield, Connecticut

 

Audi, Mercedes-Benz, Sprinter, Porsche, smart

 

80.00

% (A) (B)

Greenwich, Connecticut

 

Mercedes-Benz

 

80.00

% (A) (B)

Northern Italy

 

BMW, MINI, Maserati, Porsche, Audi, Land Rover, Volvo, Nissan

 

84.00

% (B) (E)

Aachen, Germany

 

Audi, Maserati, SEAT, Skoda, Volkswagen

 

68.00

% (C)

Frankfurt, Germany

 

Lexus, Toyota, Volkswagen

 

50.00

% (D)

Barcelona, Spain

 

BMW, MINI

 

50.00

% (D)

Tokyo, Japan

 

BMW, MINI, Rolls-Royce, Ferrari, ALPINA

 

49.00

% (D)

 

                                                 

(a)

An entity controlled by one of our directors, Lucio A. Noto, owns a 20% interest in this joint venture.

(b)

Entity is consolidated in our financial statements.

(c)

Entity is consolidated in our financial statements as a result of our purchase of an additional 10% interest in this joint venture in the third quarter of 2015. In March 2016, we acquired an additional 8% interest in this joint venture.

(d)

Entity is accounted for using the equity method of accounting.

(e)

In October 2016, we made an additional investment in this joint venture, which increased our ownership interest from 70% to 84%. This additional investment funded our acquisition of seven retail automotive franchises in October 2016, consisting of three Porsche franchises, one Audi franchise, one Land Rover franchise, one Volvo franchise, and one Nissan franchise in the Bologna, Italy market.

 

Additionally, we are party to non-automotive joint ventures including our investments in Penske Commercial Leasing Australia (33%), Penske Vehicle Services (31%), PTL (23.4%), and National Powersport Auctions (7%) that are accounted for under the equity method, as more fully discussed in Note 2.

 

13. Stock‑Based Compensation

 

Key employees, outside directors, consultants and advisors of PAG are eligible to receive stock‑based compensation pursuant to the terms of our 2015 Equity Incentive Plan (the “2015 Plan”). This plan allows for the issuance of shares for stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and other awards. The 2015 Plan is a five year plan which allows for up to 4,000,000 awards of which 3,575,856 shares of common stock were

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