Penske Automotive     Print Page | Close Window

SEC Filings

PENSKE AUTOMOTIVE GROUP, INC. filed this Form 10-Q on 10/26/2017
Entire Document



Item 1. Legal Proceedings


We are involved in litigation which may relate to claims brought by governmental authorities, customers, vendors, or employees, including class action claims and purported class action claims. We are not a 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 us. 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.


Item 1A. Risk Factors


In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016, which could materially affect our business, financial condition, or future results. The following updates the risk factors included in our 2016 Form 10-K:


Property loss, business interruption or other liabilities. Our business is subject to substantial risk of loss due to: the significant concentration of property values, including vehicle and parts inventories, at our operating locations; claims by employees, customers and third parties for personal injury or property damage; and fines and penalties in connection with alleged violations of regulatory requirements. While we have insurance for many of these risks, we retain risk relating to certain of these perils and certain perils are not covered by our insurance, including due to the hurricanes noted below. Certain insurers have limited available property coverage in response to the natural catastrophes experienced in recent years. If we experience significant losses that are not covered by our insurance, whether due to adverse weather conditions or otherwise, or we are required to retain a significant portion of a loss, it could have a significant and adverse effect on us.


Recent hurricanes have impacted our operations. Hurricane Maria has significantly impacted the island of Puerto Rico, as the power grid and communication systems on the island have been severely damaged. As a result, certain of the company’s operations have been suspended and are expected to remain impacted for the immediate future. Hurricanes Irma and Harvey disrupted our operations in Florida, Georgia (Atlanta market), and Texas (Houston market). Operations in Florida and Texas were impacted for nearly one week,  while Georgia experienced a disruption in operations for 1-2 days. Operations in Florida, Georgia and Texas are now operating at full capacity. The assessment of losses in Puerto Rico is ongoing and is expected to continue for the immediate future as basic services to the island resume. The company estimates that storm-related losses, expenses, and business interruption, net of expected insurance proceeds, reduced earnings per share by $0.04 for the three months ended September 30, 2017, and could continue to adversely impact our results in the fourth quarter.